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U.S. v. QUINN

November 23, 2005.

UNITED STATES OF AMERICA
v.
ROBERT E. QUINN, MICHAEL H. HOLLAND, MOHAMMED A. SHARBAF Defendants.



The opinion of the court was delivered by: JOHN BATES, District Judge

MEMORANDUM OPINION

On April 28, 2005, a federal grand jury in the District of Columbia handed up a six-count indictment charging Robert E. Quinn and Michael H. Holland ("defendants"), both of Lexington, Kentucky — as well as a third individual, Mohammed A. Sharbaf of Iran — with violating laws restricting the export of goods and technology from the United States to Iran. Trial of defendants is scheduled to begin on November 7, 2005. The parties have filed more than a dozen pre-trial motions, and the Court has received briefing on those motions and heard oral argument from counsel. For the reasons stated herein, the Court will (1) deny defendants' motion to transfer the case to the Eastern District of Kentucky; (2) grant the government's motion to strike portions of the indictment; (3) grant defendants' motion to dismiss Count One of the indictment for failing to properly charge the offense of conspiracy; (4) grant in part and deny in part defendants' motions to strike from the indictment alleged surplusage; (5) deny defendants' as-applied due process challenge to the laws underlying the offenses alleged; (6) deny defendants' motion to dismiss Counts Two through Six for failure to state an offense; (7) deny defendants' motion to dismiss the indictment as duplicitous; (8) defer ruling on the pending evidentiary motions; and (9) deny defendants' motion for a supplemental jury questionnaire.

BACKGROUND

  Defendants were, at all relevant times, employees of Clark Material Handling Company ("CMHC"), a Kentucky-based manufacturer and distributor of lift trucks and lift-truck parts, or its affiliate company, Clark Material Handling International ("CMHI"), based in Seoul, South Korea. See Indict. at 1-2. Defendant Quinn was CMHC's vice president for global parts marketing and later became CMHI's executive vice president for global business. Id. at 2. Defendant Holland was employed by CMHC as a parts sales representative for its government/national accounts. Id. Mohammed Sharbaf, presently indicted but outside U.S. jurisdiction, was the president and managing director of Sepahan Lifter Company ("Sepahan"), based in Esfahan, Iran. Id. Alleged co-conspirator Khalid Mahmood "did business as Sharp Line Trading," based out of Dubai, United Arab Emirates. Id.

  The origin of the laws that defendants are accused of violating can be traced back nearly 100 years to the Trading With the Enemy Act of 1917 ("TWEA"), considered to be the predecessor to the present-day International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. §§ 1701-06 (2005). See United States v. Arch Trading, 987 F.2d 1087, 1093 (4th Cir. 1993) (describing IEEPA as an "extension to" the TWEA). IEEPA provides that the President may — upon declaration of a national emergency — "regulate . . . prevent or prohibit, any . . . transfer . . . or exportation of, or dealing in, . . . or transactions involving, any property in which any foreign country or a national thereof has any interest," 50 U.S.C. § 1702(a)(1)(B). In effect, it gives the President sweeping authorization to impose economic sanctions on foreign countries to "deal with an unusual and extraordinary threat [that] has its source in whole or substantial part outside the United States," 50 U.S.C. § 1701(a). To ensure the effectiveness of those sanctions, IEEPA creates criminal penalties for violations of regulations issued under it. See 50 U.S.C. § 1705(b) ("Whoever willfully violates, or willfully attempts to violate, any license, order, or regulation issued under this chapter shall, upon conviction, be fined not more than $50,000, or, if a natural person, may be imprisoned for not more than ten years, or both; and any officer, director, or agent of any corporation who knowingly participates in such violation may be punished by a like fine, imprisonment, or both.")

  Pursuant to the regulatory authority that IEEPA vests in the Executive Branch, see 50 U.S.C. § 1704 ("The President may issue such regulations, including regulations prescribing definitions, as may be necessary for the exercise of the authorities granted by this chapter."), and a series of executive orders invoking that authority and proclaiming emergencies based on threats to national security, the Department of Treasury has promulgated a series of rules governing trade with Iran. Collectively known as the Iranian Transaction Regulations ("ITR"), these rules are codified as Part 560 of Title 31 of the Code of Federal Regulations, and they form the basis for the bulk of the charges defendants face. The Treasury Department's Office of Foreign Assets Control ("OFAC") is responsible for administering these regulations and for granting licenses that authorize transactions with Iran otherwise prohibited by the ITR. See Indict. at 5.

  Also relevant to the current charges is the Export Administration Act ("EAA"), which was originally passed in 1969, comprehensively rewritten in 1979, and subsequently amended. See 50 U.S.C. App. §§ 2101-2420. That statute empowers the President and the Secretary of Commerce to issue regulations, see § 2414(b), prohibiting or curtailing the export of any goods or technology for purposes of protecting national security, see § 2404, furthering foreign policy, see § 2405, or addressing supply shortages, see § 2406. The Commerce Department has promulgated a set of rules, known as the Export Administration Regulations ("EAR") to enforce the EAA, and those regulations are codified at Parts 730-774 of Title 15 of the Code of Federal Regulations. From its inception, the EAA has had "sunset" provisions, under which it would expire on a specified date unless Congress affirmatively acted to reauthorize the law. Such a lapse occurred on August 20, 2001.

  In anticipation of the EAA's sunset, President George W. Bush issued Executive Order 13,222, which, in relevant part, declared that "[a]ll rules and regulations issued or continued in effect by the Secretary of Commerce under the authority of the Export Administration Act of 1979 . . . and all orders, regulations, licenses, and other forms of administrative action issued, taken, or continued in effect pursuant thereto, shall . . . remain in full force and effect as if issued or taken pursuant to this order. . . ." Exec. Order No. 13,222 § 2, 66 Fed. Reg. 44,025 (August 17, 2001). The order purported to be an exercise of executive authority pursuant to IEEPA. Id.

  All of the events at issue in this case took place between February 2003 and December 2004, a period during which the EAA was in lapse. According to the indictment, defendants Quinn, Holland, and Sharbaf collaborated to export CMHC lift-truck parts from the United States to Iran, via Dubai. See Indict. at 6-8. The indictment alleges that Sharbaf and an unidentified co-conspirator would send requests to Quinn and Holland for price quotations on CMHC parts, sometimes using Mahmood as an intermediary. Id. at 7-8. Quinn and Holland, the indictment states, would provide the quotes and, if Sharbaf and his employer approved of the prices, Quinn and Holland would arrange to ship the parts to Mahmood in Dubai, knowing that Mahmood was simply a middleman and that the parts were destined for Iran. Id. at 8. All of this, the indictment asserts, was done without obtaining (or seeking) OFAC approval of the transactions. Id.

  Count One of the indictment alleges the crime of "Conspiracy to Violate the United States Iranian Trade Embargo," and is based on a series of alleged overt acts in furtherance of that conspiracy, including a number of e-mail communications among the alleged conspirators. Id. at 6-16. Counts Two through Six allege "Violation of the United States Iranian Embargo," as well as the crime of "aiding and abetting" an offense against the United States, with each count addressing a separate export transaction. Id. at 17-20.

  ANALYSIS

  I. Motion for Transfer of Venue under Rule 21(b)

  Defendants have filed a motion to transfer this case to the Eastern District of Kentucky, pursuant to Rule 21(b) of the Federal Rules of Criminal Procedure, "for the convenience of the parties and witnesses and in the interest of justice." In Platt v. Minn. Mining & Mfg. Co., 376 U.S. 240 (1964), the Supreme Court provided federal courts with guidance on how to balance the conflicting interests of parties with regard to transfer-of-venue motions in criminal cases. The parties here agree that Platt states the relevant considerations. The ten so-called "Platt factors" are: (1) location of the defendant; (2) location of possible witnesses; (3) location of events likely to be in issue; (4) location of documents and records likely to be involved; (5) disruption of defendant's business unless the case is transferred; (6) expense to the parties; (7) location of counsel; (8) relative accessibility of place of trial; (9) docket condition of each district or division involved; and (10) any other special elements which might affect the transfer. See id. at 243-44.

  The defendant, as the only possible moving party under Rule 21(b), bears the burden of proving that "all things considered, the case would be better off transferred to another district." See In re Balsimo, 68 F.3d 185, 187 (7th Cir. 1995). The fact-intensive and discretionary nature of the Platt inquiry makes it difficult to generalize about how courts decide which of two districts is more appropriate when, as here, either venue would be proper. "No one of [the Platt] considerations is dispositive, and `[i]t remains for the court to try to strike a balance and determine which factors are of greatest importance.'" United States v. Maldonado-Rivera, 922 F.2d 934, 966 (2d Cir. 1990) (quoting United States v. Stephenson, 895 F.2d 867, 875 (2d Cir. 1990)). Nevertheless, some patterns are discernable. For instance, several judges have interpreted Rule 21(b) as favoring the government's choice of forum, so long as venue is proper. See, e.g., United States v. The Spy Factory, Inc., 951 F.Supp. 450, 464 (S.D.N.Y. 1997) (recognizing a "general presumption that `a criminal prosecution should be retained in the original district'") (citation omitted); In re United States of America, 46 Fed. Appx. 133, 136 (3d Cir. 2002) (Barry, J., dissenting from denial of mandamus petition) ("all things being equal, a case should stay put"). In other words, if consideration of the Platt factors leaves the Court in equipoise, the Court should err on the side of denying the motion to transfer.

  Such a view of Rule 21(b) is consistent with the trend in recent years away from granting transfers to mitigate the financial, emotional, or practical burdens of trial in a distant locale. A leading treatise on federal criminal procedure collects "illustrative" cases in which courts have either granted or denied transfer for reasons of trial convenience, and — with the exception of an unusual 1990 case in which the considerations supporting transfer to the Western District of Washington included the possibility of a volcanic eruption in Alaska*fn1 — the most recent cited opinion in which a district court granted transfer under Rule 21(b) was in 1984. See 2 C. Wright, Federal Practice & Procedure: Criminal § 344 at n. 29 (3d ed. 2005) (citing United States v. Daewoo Indus. Co., Ltd., 591 F.Supp. 157 (D. Ore. 1984)). The list of cases in which transfer was denied, on the other hand, includes numerous decisions from the 1990s. See id. at n. 30. The collection of cases is not comprehensive,*fn2 but the Court's own research supports the observation that transfer under Rule 21(b), although not unheard of, has been rare in recent years. This is hardly surprising when one considers the massive expansion of technology and the relative decline in costs for long-distance travel over the past few decades.

  The 1997 Spy Factory ruling out of the Southern District of New York — a case involving criminal charges against a Texas-based company and its employees for allegedly conspiring to import and sell in the United States illegal wiretapping devices — is reflective of the modern approach to Rule 21(b) motions. Then-District Judge Sotomayor conducted a thorough Platt analysis on defendants' motion to transfer to the Western District of Texas and concluded that "most of the factors" (i.e., location of witnesses, events, counsel, documents and records, and the relative accessibility of the respective venues) "weigh[ed] in favor of neither party." See Spy Factory, 951 F.Supp. at 463 (emphasis added). Weighing in favor of defendants' motion for transfer were "the location of the defendants, the potential for disruption of the defendants' businesses and employment, and the defendants' expenses in trying the case in New York." Id. The only factors clearly supporting denial of the motion were "the docket conditions of each district — to the extent that a transfer would inevitably necessitate some delay in the trial date — and the defendants' delay in bringing the motion to change venue." Id. On these facts, the court found that a change of venue was "unnecessary and not in the interests of justice." See id. The denial of the motion to transfer was, however, conditioned on the government's "representation to make available to the defendant, upon a good faith showing of need, reasonable funds for transportation to New York City and for subsistence for the defendant and witnesses residing in the [alternate venue] whom he may reasonably call in his defense." Id. at 464 (quoting United States v. Wheaton, 463 F.Supp. 1073, 1078 (S.D.N.Y. 1979)).

  A review of the Platt factors in the present case reveals many similarities to the circumstances in Spy Factory and compels a similar conclusion:

  (1) Location of defendants. All parties agree that this factor favors transfer to Kentucky, but it is only a minor consideration. Indeed, the D.C. Circuit has indicated that, although the defendant's residence is "a factor to be considered," it is "not the controlling factor," and indeed its significance derives "solely from its relationship to the convenience of witnesses, records, and counsel." See Jones v. Gasch, 404 F.2d 1231, 1240 (D.C. Cir. 1967). Likewise, other courts have observed that "the location of the defendant's home [lacks] `independent significance in determining whether transfer to that district would be in the interest of justice.'" United States v. McManus, 535 F.2d 460, 463 (8th Cir. 1976) (quoting Platt, 376 U.S. at 245-46). Nor does a defendant's home have any constitutional significance. Quite the contrary, the constitutional provisions addressing venue speak only in terms of the public's interest in trying criminals in the vicinity where the criminal acts or omissions occurred (i.e., where the effects of the crime were felt). See U.S. Const. art. III, § 2, cl. 3 & amend. VI.

  (2) Location of possible witnesses. Representations by the parties indicate that this factor provides a slight edge to defendants on their motion to transfer, in that more potential witnesses reside in Kentucky than reside near Washington, D.C. But there also are numerous witnesses who live in neither location — such as the investigating agents, who are based in Chicago, and other prosecution witnesses who reside overseas — and they will be required to travel to either Kentucky or Washington for a trial. Moreover, the Court declines to assign much weight to the residences of possible character witnesses for the accused (considering the ease with which the number of such witnesses can be inflated pre-trial) and rejects defendants' suggestion that it ought to take account of the relative "effectiveness [of character witnesses] before a distant jury." See Defs.' Reply Mem. in Supp. of Mot. to Trans. at 4. Thus, this factor provides only minimal support for a transfer to the Eastern District of Kentucky.

  (3) Location of events likely to be in issue. Defendants make much of the fact that no "acts" related to these charges occurred in Washington, D.C., for purposes of the Platt analysis, but they do not dispute that venue is proper here because of the alleged omissions that are part of the crimes charged (namely the failure to secure licenses for exports to Iran from OFAC). In fact, the events comprising the offenses charged occurred in Kentucky, Washington, and overseas. To the extent that Platt calls for a consideration of the "location of events," however, that factor appears to contemplate a case where jurors might benefit from a visit to a crime scene or might require some understanding of local geography. See In re United States of America, 46 Fed. Appx. at 136 (Barry, J. dissenting). This is not such a case. Therefore, this factor neither supports transfer nor weighs against it.

  (4) Location of documents and records likely to be involved. In light of the availability of electronic storage and transfer of the documents relevant to this matter, which the parties acknowledge, this factor is of no significance to the analysis.

  (5) Disruption of defendant's business unless the case is transferred. Defendants Quinn and Holland report that they are on administrative leave from their respective positions at CMHC. Nevertheless, they attempt to spin this factor in favor of transfer by asserting that the business activities of CMHC (a non-defendant) would be disrupted by a trial in Washington because Kentucky-based CMHC employees will be called to testify. On its face, this fact is irrelevant under the business-disruption prong of the Platt analysis.

  (6) Expense to the parties. On the question of party expenses, defendants contend that they, their families, and their witnesses will incur significantly greater travel and lodging expenses for a trial in Washington, D.C., than they would if the trial were in Lexington, Kentucky. As in the Spy Factory case, where the government's pledge to pay many of defendants' costs was significant for the Rule 21(b) analysis, this Court considers the fact that CMHC "has established a budget for [defendants'] attorneys fees and trial expenses," Defs.' Reply Mem. Supp. Mot. to Trans. at 7, to be an important consideration. Although it cannot be disputed that costs for defendants and their witnesses during the trial period (estimated to be two weeks) will be marginally higher if the trial is held in Washington rather than Kentucky, there would be at least a partially offsetting increase in prosecution expenses associated with a trial in Kentucky because the government would have to transfer a cooperating witness, Khalid Mahmood, from the Washington, D.C., prison facility where he is currently incarcerated to a Kentucky prison, and because government counsel, who are based in Washington, would incur greater travel expenses. Furthermore, the inevitable delay in trial that would result from a transfer could produce incalculable costs — for both parties — that otherwise would not be incurred. In any event, on the facts now before the Court, there is no way to readily assess whether the total cost of trial would be greater or lesser if a transfer were granted at this point in time. Moreover, the parties conceded at the motions hearing that the record does not permit an assessment of whether the incremental increase in expense to defendants from a trial in Washington are greater than the corresponding increase in expense to the government from a transfer to Kentucky.

  Even if the Court is willing to assume that defendants will likely incur some added overall expense if the case remains in Washington, the showing that defendants have made with respect to these costs does not demonstrate a "considerably greater" burden. See United States v. Jessup, 38 F.R.D. 42, 47 (M.D. Tenn. 1965). Given that defendants' attorneys fees and trial expenses will, at least in part, be paid by CMHC wherever the trial is held, the Court is unable to conclude that defendants themselves will incur significant additional expenses if the case remains here. And, although the Court does not conclude that the "financial strength of a defendant," standing alone, "is a reason for rejecting [a defendant's] argument that proof of added expense calls for transfer," see Daewoo, 591 F.Supp. at 164 (emphasis omitted), it takes note of the holdings of other courts that "it is not the fact or size of any expense the defendant may incur as a result of trial in this District but rather his ability to bear the expense that concerns the Court" in conducting a Platt analysis, see, e.g., United States v. Culoso, 461 F.Supp. 128, 136 n. 12 (S.D.N.Y. 1978). Since Platt explicitly calls for courts to consider the "expense to the parties," 376 U.S. at 244 (emphasis added), rather than the "expense to the defendant," it is not inappropriate to focus on defendants' financial means when there is no clear evidence that transfer will result in lower total litigation costs for the parties. Here, defendants have not shown that they will be unable to bear any additional expense resulting from trial in Washington. On that point, it is significant that neither Quinn nor Holland has made a motion under Rule 17(b) for a court order compelling the government to pay the expenses of essential defense witnesses, see Fed.R.Crim.P. 17(b) ("Upon a defendant's ex parte application, the court must order that a subpoena be issued for a named witness if the defendant shows an inability to pay the witness's fees and the necessity of the witness's presence for an adequate defense."), and that they have access to the CMHC-financed defense fund. In the final analysis, the alleged increase in party expenses does little to tip the Platt scales in favor of defendants' motion for transfer, and instead must be considered a neutral factor.

  (7) Location of counsel. Although defendant Holland's primary counsel resides in Lexington, Kentucky, defendant Quinn's lead counsel resides in Indiana (about a three-hour drive to Lexington)*fn3 and, as already noted, the prosecuting attorneys reside in or around Washington, ...


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