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United States v. Concord Management & Consulting LLC

United States District Court, District of Columbia

November 15, 2018




         Concord Management and Consulting LLC moves to dismiss count I of the indictment- brought under the conspiracy statute, 18 U.S.C. § 371-on the grounds that it (1) fails to allege a defraud conspiracy under § 371 that interferes with a lawful government function; (2) fails to allege a mens rea of “willfulness”; (3) applies § 371's conspiracy-to-defraud clause to Concord in an unconstitutionally vague manner; and (4) fails to allege the deprivation of government property. For the reasons that follow, the Court will deny Concord's motion.

         I. BACKGROUND

         On February 16, 2018, the grand jury returned an eight-count indictment against thirteen individuals and three corporate entities, including defendant Concord Management and Consulting LLC. Indictment, Dkt. 1.[1] Count I of the indictment-the sole count against Concord-charges that Concord and others “knowingly and intentionally conspired to defraud the United States by impairing, obstructing, and defeating the lawful functions of the Federal Election Commission, the U.S. Department of Justice, and the U.S. Department of State in administering federal requirements for disclosure of foreign involvement in certain domestic activities.” Id. ¶ 9. The indictment explains that U.S. law “bans foreign nationals from making certain expenditures or financial disbursements for the purpose of influencing federal elections[, ] . . . bars agents of any foreign entity from engaging in political activities within the United States without first registering with the Attorney General, ” and “requires certain foreign nationals seeking entry to the United States to obtain a visa by providing truthful and accurate information to the government.” Id. ¶ 1. The indictment further states that “[v]arious federal agencies, including [the FEC, DOJ, and DOS], are charged with enforcing these laws.” Id.

         According to the indictment, Concord or its co-conspirators “interfere[d] with the U.S. political system” by, among other things, “posing as U.S. persons and creating false U.S. personas, ” “operating] social media pages and groups” that “falsely claimed to be controlled by U.S. activists, ” “us[ing] the stolen identities of real U.S. persons to post” on social media, id. ¶ 4, “traveling] to the United States under false pretenses for the purpose of collecting intelligence, ” “procuring] and us[ing] computer infrastructure . . . to hide the Russian origin of their activities and to avoid detection by U.S. regulators and law enforcement, ” id. ¶ 5, “buying political advertisements on social media in the names of U.S. persons and entities, ” and “soliciting] and compensat[ing] real U.S persons” while “posing as U.S. grassroots entities and U.S. persons, ” id. ¶ 6.

         To do all of this “without detection of their Russian affiliation, ” the defendants jointly “conspired to obstruct the lawful functions of the United States government through fraud and deceit, including by making expenditures in connection with the 2016 U.S. presidential election without proper regulatory disclosure; failing to register as foreign agents carrying out political activities within the United States; and obtaining visas through false and fraudulent statements.” Id. ¶ 7.

         Concord allegedly contributed to this conspiracy by “spen[ding] significant sums, ” id. ¶ 3, “control[ling] funding, ” “recommend[ing] personnel, ” and “overs[eeing] [a co-defendant organization's] activities through reporting and interaction with [that organization's] management, ” id. ¶ 11.

         Concord previously moved to dismiss the indictment based on Special Counsel Robert Mueller's “unlawful appointment and lack of authority.” Dkt. 36. The Court held a hearing on the motion and denied it. See Concord, 317 F.Supp.3d at 626. Concord now moves to dismiss count I on the merits. Dkt. 46. The Court held a hearing on October 15, 2018, requested supplemental briefing on October 18, 2018, Dkt. 68, and now resolves the motion.


         Under Rule 12(b)(1) of the Federal Rules of Criminal Procedure, a party “may raise by pretrial motion any defense, objection, or request that the court can determine without a trial on the merits.” Fed. R. Crim. P. 12(b)(1). That includes “a defect in the indictment or information” such as a “lack of specificity” or a “failure to state an offense.” Id. 12(b)(3)(B)(iii), (v).

         “When considering a motion to dismiss for failure to state an offense, the court is limited to reviewing the face of the indictment and, more specifically, the language used to charge the crimes.” United States v. Hillie, 289 F.Supp.3d 188, 193 (D.D.C. 2018) (internal quotation marks omitted). “Adherence to the language of the indictment is essential because the Fifth Amendment requires that criminal prosecutions be limited to the unique allegations of the indictments returned by the grand jury.” United States v. Hitt, 249 F.3d 1010, 1016 (D.C. Cir. 2001). The government “cannot cure a defective indictment” by clarifying the charges in “a bill of particulars” or at “oral argument.” United States v. Conlon, 628 F.2d 150, 156 (D.C. Cir. 1980). However, the “court must presume the allegations of the indictment to be true, and may not dismiss an indictment on a determination of facts that should have been developed at trial.” Hillie, 289 F.Supp.3d at 193 (internal quotation marks omitted).

         “[A]n indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against which he must defend, and, second, enables him to plead an acquittal or conviction in bar of future prosecutions for the same offense.” Hamling v. United States, 418 U.S. 87, 117 (1974). Sufficiency “is not a question of whether [the indictment] could have been more definite and certain, ” United States v. Debrow, 346 U.S. 374, 378 (1953), but of “whether it is fair to require the accused to defend himself on the basis of the charge as stated, ” Conlon, 628 F.2d at 155.

         When pleading a conspiracy charge, the government “cannot simply charge [the] offense by using the general language of the statute or the common law, but must accompany the generic language ‘with such a statement of the facts and circumstances as will inform the accused of the specific offense[] coming under the general description.'” United States v. Treadwell, 760 F.2d 327, 337 (D.C. Cir. 1985) (quoting Hamling, 418 U.S. at 117-18).

         III. ANALYSIS

         To address Concord's challenges to the indictment, it is necessary to first identify the “lawful government functions” that the defendants allegedly conspired to impair. In doing so, the Court “must construe the indictment in light of its principal purposes of clarity and notice” and will “adhere to the indictment's plain language” even if some “language on which the government relies may point to possible ambiguities.” Hitt, 249 F.3d at 1019-20. The government has at times described the relevant function broadly, as “regulat[ing] and monitor[ing] the participation of foreign nationals in the American electoral process, ” Hr'g Tr. at 29; see also Id. at 31, 33, 35-36, 42, or “promot[ing] transparency in the American political and electoral process, ” Hr'g Tr. at 49. Likewise, Concord has described the relevant function-to the extent one exists-as “electoral processes, ” Def.'s Reply at 23, Dkt. 62, or “administering an election, ” Def.'s Mot. to Dismiss at 2.

         The text and structure of the indictment, however, point to a narrower set of functions. The indictment specifies the lawful government functions targeted by the conspiracy in two places: paragraph 9 and paragraphs 25 to 27.

         Paragraph 9 serves as a capsule summary that distills the essence of the conspiracy and frames the allegations that follow. See Indictment ¶ 9. That paragraph-the heart of the conspiracy charge-alleges a conspiracy to impair three specific lawful functions of three specific agencies. Id. It alleges that the defendants conspired to impair the functions of the FEC, DOJ, and DOS “in administering federal requirements for disclosure of foreign involvement in certain domestic activities.” Id. (emphasis added).

         Later, in a subsection entitled “Federal Regulatory Agencies, ” the indictment describes the relevant disclosure requirements in more detail. See Id. ¶¶ 25-27. First, paragraph 25 explains that the FEC “administers the Federal Election Campaign Act (‘FECA'), ” which requires the reporting of certain independent expenditures. Id. ¶ 25. Although this paragraph also mentions FECA's ban on foreign expenditures, it focuses on FEC's administration of FECA's “reporting requirements, ” which, when followed, “permit [the FEC] to fulfill its statutory duties of providing the American public with accurate data about the financial activities of individuals and entities supporting federal candidates, and enforcing FECA's limits and prohibitions, including the ban on foreign expenditures.” Id. Second, paragraph 26 explains that DOJ “administers the Foreign Agent Registration Act (‘FARA'), ” which “establishes a registration, reporting, and disclosure regime for agents of foreign principals.” Id. ¶ 26. Finally, paragraph 27 explains that DOS issues “non-immigrant visas” to certain foreign nationals entering the United States and requires visa applicants to “provide truthful information in response to questions on the visa application form.” Id. ¶ 27.

         Portions of the indictment arguably support a broader reading. For example, an introductory paragraph refers generally to the ban on certain foreign expenditures and the United States' interest in “prevent[ing], disclos[ing], and counteract[ing] improper foreign influence on U.S. elections.” Id. ¶ 1. The indictment also contains allegations of conduct designed to “avoid detection by U.S. regulators and law enforcement.” Indictment ¶ 5; see also Id. ¶ 58. But this language cannot be fairly read to allege the impairment of government functions distinct from or broader than the disclosure regimes delineated in paragraphs 9 and 25 to 27.

         In sum, the text and structure of the indictment reveal that the government functions targeted by the conspiracy are alleged solely to be the “administ[ration]” of “federal requirements for disclosure.” Id. ¶ 9. The Court will now consider Concord's challenges to the indictment based on that understanding.

         A. Failure to State an Offense Under § 371

          Section 371 prohibits two distinct types of conspiracies: (1) conspiracies “to commit any offense against the United States” and (2) conspiracies “to defraud the United States, or any agency thereof[, ] in any manner or for any purpose.” 18 U.S.C. § 371. The Supreme Court has “stated repeatedly” that the “defraud” clause of § 371 is not limited to common-law fraud but “reaches any conspiracy for the purpose of impairing, obstructing or defeating the lawful function of any department of Government.” Tanner v. United States, 483 U.S. 107, 128 (1987) (internal quotation marks omitted) (collecting cases). A conspiracy to impede the functions of a government agency “need not aim to deprive the government of property” or “involve any detrimental reliance.” United States v. Caldwell, 989 F.2d 1056, 1059 (9th Cir. 1993), overruled on other grounds by Neder v. United States, 527 U.S. 1, 8-9, (1999). Nor must “the conspiracy's goal” or “the means used to achieve it” be “independently illegal.” Id. As long as the conspiracy aims to obstruct the lawful functions of a government agency through some form of “deceit, craft or trickery, or at least by means that are dishonest, ” Hammerschmidt v. United States, 265 U.S. 182, 188 (1924), it falls within § 371's reach.

         In short, a defraud-clause conspiracy requires four elements: “that (1) [the defendants] entered into an agreement, (2) to obstruct a lawful function of the government or an agency of the government, (3) by deceitful or dishonest means, and (4) at least one overt act was taken in furtherance of that conspiracy.” United States v. Kanchanalak, 41 F.Supp.2d 1, 9 (D.D.C. 1999), rev'd on other grounds, 192 F.3d 1037 (D.C. Cir. 1999).

         1. Obstruction of a Lawful Government Function

         Concord argues that the indictment fails at the second element-the obstruction of a lawful government function-because it does not explain “what is meant-under statute or regulation-by a ‘lawful government function'” with respect to the FEC or DOJ.[2] Def.'s Mot. to Dismiss at 13-14 (emphasis added). Although the indictment invokes FECA's disclosure requirements, see Indictment ¶¶ 7, 9, 25, and FARA's registration requirements, see Id. ¶¶ 1, 7, 9, 26, it does not-according to Concord-allege that Concord “actually violated” or agreed to violate those requirements, Def.'s Mot. to Dismiss at 15. In Concord's view, that omission is dispositive: the indictment cannot accuse Concord of conspiring to obstruct lawful government functions “without any identified or recognized statutory offense” because a conspiracy conviction cannot be “based strictly on lawful conduct” even if that conduct is “concealed from the government.” Id. (emphasis omitted).

         Concord is correct that the indictment must identify the lawful government functions at issue with some specificity. And it does. See Indictment ΒΆΒΆ 9, 25-27. A defraud-clause conspiracy need not, however, allege an agreement to ...

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