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United States v. Doost

United States District Court, District of Columbia

April 10, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
AZAM DOOST, Defendant.

          MEMORANDUM OPINION AND ORDER

          Amit P. Mehta United States District Judge.

         I. INTRODUCTION

         After an eight-day trial, a jury returned a verdict of guilty against Defendant Azam (“Adam”) Doost on (1) three counts of major fraud against the United States in violation of 18 U.S.C. § 1031(a); (2) eight counts of wire fraud in violation of 18 U.S.C. § 1343; (3) four counts of making a false statement on a loan application or an extension in violation of 22 U.S.C. § 2197(n); and (4) five counts of money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i). The jury acquitted Defendant on three counts of money laundering. Following the jury's verdict, Defendant's trial counsel withdrew, and Defendant retained new counsel for the purpose of filing post-trial motions and sentencing. With the assistance of new counsel, Defendant now files a motion pursuant to Rules 29 and 33 of the Federal Rules of Criminal Procedure, seeking entry of a judgment of acquittal as to all counts or, in the alternative, a new trial.

         For the reasons discussed below, the court denies Defendant's motion in large part. The only exception is Defendant's contention that trial counsel was ineffective for failing to move to dismiss the false statements and money laundering counts as time barred. The court defers ruling on that issue until after the parties develop a factual record concerning the performance prong of the ineffectiveness claim and Defendant has had an opportunity to respond to arguments raised for the first time in the government's sur-reply.

         II. BACKGROUND

         A high-level summary of the trial evidence is sufficient for present purposes. These facts are recited in the light most favorable to the government. See United States v. Kayode, 254 F.3d 204, 212 (D.C. Cir. 2001).

         Defendant Adam Doost and his brother owned a company named Equity Capital Group, LLC (“ECG”) located in Dubai, United Arab Emirates. In or around 2006, an ECG subsidiary, Equity Capital Mining, LLC (“ECM”) secured a 10-year lease on a marble mine located in Cheshti-i-Sharif, Afghanistan. At about the same time, the Doost brothers began to construct a marble processing factory in Herat, Afghanistan. The factory opened in May 2011.

         On or about February 19, 2010, to finance the mining operations, Defendant executed a loan agreement between ECM and the Overseas Private Investment Corporation (“OPIC”), an agency of the United States government. The agreement called for OPIC to loan $15.8 million to ECM to develop, maintain, and operate the marble mine. Defendant was personally responsible for a matching capital contribution. As part of the loan agreement, Defendant promised that, on a quarterly basis, he would disclose “all transactions between the borrower”-ECM-“on the one hand, ” and “a Shareholder” of ECM-Defendant or his brother-or “any Affiliate of a Shareholder, on the other hand . . .” There was testimony presented at trial that accurate disclosure of these so-called “affiliate transactions” was a material to OPIC.

         After OPIC approved the loan, Defendant and a business consultant submitted three requests to OPIC to disburse loan funds: (1) $7 million on April 18, 2010; (2) $7 million on July 15, 2010; and (3) $1.8 million on November 28, 2010. OPIC did not provide these funds directly to ECM. Rather, the loan agreement required ECM to submit purchase orders from vendors confirming the sale price of equipment, and OPIC in turn would pay the vendor directly for the invoiced amount.

         The trial evidence showed that Defendant carried out a fraudulent scheme against OPIC in two related ways. First, Defendant failed to disclose any affiliate transactions to OPIC, when in truth there were many. Second, Defendant submitted invoices for equipment purchases that were demonstrably false or exhibited badges of fraud, such as sequential numbering or the absence of detail. The evidence showed that several of the purported vendors were owned or controlled by Defendant, his brother, and/or another relative. A reasonable jury could have concluded that these vendors were no more than shell companies. Financial records presented by the government established that these purported vendors did not conduct any actual business, and that within days of receiving a wire transfer from OPIC to pay for purported equipment, the money would be transferred to bank accounts in Dubai, after which the money could not be traced. In another instance, Defendant arranged to have an Italian equipment supplier submit false invoices to OPIC.

         Ultimately, the OPIC loan went into default. ECM did not make any principal payments on the loan and left unpaid nearly $2 million more in interest.

         III. LEGAL STANDARD

         On a motion under Rule 29, the court must consider the evidence in the light most favorable to the government and determine whether such evidence “it is sufficient to permit a rational trier of fact to find all of the essential elements of the crime beyond a reasonable doubt.'” Kayode, 254 F.3d at 212 (quoting United States v. Harrington, 108 F.3d 1460, 1464 (D.C. Cir. 1997)). The court must “accord[ ] the government the benefit of all legitimate inferences.” United States v. Weisz, 718 F.2d 413, 437 (D.C. Cir. 1983). Granting a motion for judgment of acquittal after a jury verdict is appropriate only where “a reasonable juror must necessarily have had a reasonable doubt as to the defendant['s] guilt.” Id.

         Under Rule 33, “the court may vacate any judgment and grant a new trial if the interest of justice so requires.” Fed. R. Crim. P. 33(a). Courts enjoy “broad discretion” in deciding whether to grant a new trial. United States v. Wheeler, 753 F.3d 200, 208 (D.C. Cir. 2014). “A new trial motion is warranted only in those limited circumstances where ‘a serious miscarriage of justice may have occurred.'” Id. (citation omitted).

         IV. ANALYSIS

         Defendant offers a battery of reasons why the court must vacate the guilty verdicts and enter judgments of acquittal or a new trial in his favor. The court takes these arguments in the order in which they appear in Defendant's motion.

         A. The Alleged False Statement Underlying Count Fifteen is not Fundamentally Ambiguous.

         Defendant begins by challenging the sufficiency of the evidence as to the false statements charge in Count Fifteen. The false statement at issue is Defendant's certification contained in an email to John Aldonas of OPIC, dated December 12, 2010, stating that “[t]here is no affiliate transaction have accurred [sic] during the quarter ending september 30th 2010.” Def.'s Mot., Ex. 13, ECF No. 105-13.[1] In truth, multiple transactions took place between ECM and affiliated companies during the quarter in question. Defendant nevertheless argues that, as to Count Fifteen, he is entitled to judgment of acquittal because the exchange with Aldonis was “‘fundamentally ambiguous' such that a rational juror could not have found Doost guilty beyond a reasonable doubt.” Def.'s Combined Rule 29 and 33 Mot., ECF No. 105 [hereinafter Def.'s Mot.], at 6. Defendant's argument is without merit.

         Although the D.C. Circuit has recognized that “some questions . . . may be so vague as to prohibit the government from even attempting to prove that the defendant knowingly answered falsely, ” United States v. Chapin, 515 F.2d 1274, 1279 (D.C. Cir. 1975), such questions will be rare. “‘[M]ere vagueness or ambiguity in the questions is not enough to establish a defense . . . [for] [a]lmost any question or answer can be interpreted in several ways when subjected to ingenious scrutiny after the fact.'” Id. (quoting United States v. Ceccerelli, 350 F.Supp. 475, 478 (W.D. Pa. 1972)). Instead, the alleged false answer must be “consider[ed] [ ] in context, taking into account the setting in which it appeared and the purpose for which it was used. This [is] a matter for the jury.” United States v. Milton, 8 F.3d 39, 45 (D.C. Cir. 1993). It is up to the jury “to determine how the defendant construed the question or answer and to decide, in that light, whether the defendant knowingly gave a false answer.” Id. at 46; see also Chapin, 515 F.2d at 1280 (observing that “the possibility that a question or an answer may have a number of interpretations does not invalidate either an indictment or a conviction after a jury charge which, as here, requires the jury to determine that the question as the defendant understood it was falsely answered in order to convict.”).

         Applying these principles, the court cannot override the jury's verdict on Count Fifteen. The jury could have reasonably found, and did find beyond a reasonable doubt, that Defendant knew he was making a false statement when he represented that there were “no affiliate transaction[s]” for the quarter ending September 30, 2010. To start, Defendant's exchange with Aldonis did not occur in a vacuum. It must be read in the context of the loan agreement with OPIC. That agreement required ECM to disclose, on a quarterly basis, “all transactions between [ECM], on the one hand, and a Shareholder or any Affiliate of a Shareholder, on the other hand.” Def.'s Mot., Ex. 14, ECF No. 105-14 [hereinafter Loan Agreement], at 14. The loan agreement defined “Affiliate” to mean “with respect to any Person, (i) any other Person that is directly or indirectly controlled by, under common control with, or controlling such Person; . . . (iii) any officer or director of such Person; or (iv) any spouse or relative of such Person.” Id. at 34. The loan agreement further defined “Person” to include an “individual, a legal entity, including a partnership, a joint venture, a corporation, a trust, and an unincorporated organization[.]” Id. at 40. Defendant and his brother were shareholders of ECM, therefore the loan agreement required ECM to disclose any transactions between ECM and an “Affiliate” controlled by him or his brother. When Defendant's answer is read together with the loan agreement and its definitions, the jury reasonably could have concluded that Defendant knew exactly what he was being asked when Aldonis referred to “Affiliated Transactions.”

         To the extent Aldonis created any confusion, he also gave guidance on what he precisely meant by “Affiliated Transactions.” In the last sentence of his email, Aldonis directed Defendant to the loan agreement's “definition of Affiliated Transactions so you can consider what if any types of transactions might fit the reportable category.” Def.'s Mot., Ex. 13, ECF No. 105-13. The jury could have found that this statement dispelled any ambiguity or vagueness about what Aldonis was asking Defendant to report.

         Finally, this was not the first time Defendant had certified to OPIC that there were no transactions to disclose between the shareholders of ECM and “affiliates.” Defendant made a similar disclosure five months earlier, on July 15, 2010, affirming that “[f]or the financial quarters ending March 31st and June 30th 2010, there were no affiliate transactions that occurred.” Trial Tr., Sept. 11, 2018 AM, at 391. Defendant does not contend that there was any fundamental ambiguity about OPIC's June 2010 “affiliate transaction” inquiry, and the jury found him guilty of providing a knowing false response in that instance. The same jury that found Defendant guilty of making a false certification in June 2010 reasonably could have concluded that Defendant knew he was making a nearly identical false certification five months later.

         Defendant makes various arguments to support his assertion of “fundamental vagueness, ” but none are convincing. He contends that “it is nearly impossible to tell what the precise question was or to which question Defendant was responding.” Def.'s Mot. at 9. But, as discussed above, when viewing the email in the context of all the evidence, a reasonable jury could have found Defendant knowingly provided a false answer to the inquiry concerning affiliate transactions. Additionally, Defendant asserts that the email exchange with Aldonis, and other referenced emails, demonstrate his “weak proficiency in the English language, ” id. at 10, which would have exacerbated his confusion about Aldonis's inquiry, id. at 12. Defendant's claimed “limited proficiency in the English language, ” id., however, is nothing more than a self-serving statement that lacks any evidentiary support. And, in any event, he was free to make such an argument to the jury but did not. The court will not draw that conclusion now to override the jury's verdict. Finally, Defendant contends that the portion of his response in which he states that no affiliate transactions “have accurred”-a clear misspelling-is ambiguous and could be construed to mean “no affiliate transactions have accrued.” (Emphasis added.) Once more, Defendant could have made this argument to the jury but did not, and, given the context, the jury readily could have understood Defendant to mean that “no affiliate transactions have occurred.” Mere conjecture as to how the jury might have understood a misspelling cannot reverse its considered judgment.

         Accordingly, for the foregoing reasons, the court denies Defendant's motion to enter a judgment of acquittal as to Count Fifteen.

         B. Ineffective Assistance of Counsel

         Defendant advances multiple grounds of ineffective assistance of counsel that he insists require the court to enter a judgment of acquittal as to all or certain counts, or to grant him a new trial. Two of Defendant's ineffectiveness claims concern trial counsel's failure to move to dismiss counts of the indictment. See Def.'s Mot. at 15-19 (asserting ineffectiveness for not moving to dismiss certain counts as multiplicitous and all but two counts as time barred). The court considers those arguments not in this section, but in the next one concerning alleged defects in the indictment that warrant dismissal. In this section, the court addresses only those claims of ineffectiveness that relate to alleged shortcomings in counsel's performance at the trial itself.

         The standard under Strickland v. Washington for an ineffectiveness claim is a familiar one. To be entitled to relief, a defendant must show “both that his counsel provided deficient assistance and that there was prejudice as a result.” Harrington v. Richter, 562 U.S. 86, 104 (2011) (citing Strickland v. Washington, 466 U.S. 669, 688 (1984)). As to the performance prong, a court must apply a “strong presumption” that counsel's performance was within the “wide range” of reasonable professional assistance. Id. (citation omitted). To overcome that strong presumption and prevail, a defendant must show that “counsel made errors so serious that counsel was not functioning as the ‘counsel' guaranteed the defendant by the Sixth Amendment.” Id. (citation omitted). The standard against which to assess trial counsel's performance is one of objective reasonableness. See id.

         As for the prejudice prong, the defendant must show “a reasonable probability that, but for counsel's unprofessional errors, the result of the would have been different.” Id. (internal quotation marks and citation omitted). “A reasonable probability is a probability sufficient to undermine confidence in the outcome.” Id. (internal quotation marks and citation omitted). Some conceivable effect on the outcome is not sufficient, see id., but rather, counsel's error “must be so serious as to deprive the defendant of a fair trial, a trial whose result is reliable, ” id. (internal quotation marks and citation omitted). Ultimately, under Strickland, the “question is whether an attorney's representation amounted to incompetence under ‘prevailing professional norms,' not whether it deviated from best practices or most common custom.” Id. at 105 (quoting Strickland, 466 U.S. at 690).

         1. Failure to Present Evidence of Equipment Value

         Defendant maintains that his trial counsel was ineffective for failing to present evidence to contradict the government's suggestion that ECM had not purchased equipment using the OPIC loan funds, when the produced discovery contained records showing that ECM possessed equipment valued at millions of dollars. Specifically, Defendant points to audited financial statements showing that EMC had assets valued at over $23 million in 2010 and over $25 million in 2011 and 2012. See Def.'s Mot. at 15 (citing Def.'s Mot., Exs. 15-17, ECF Nos. 105-15-105-17). Defendant also identifies two records that appear to be correspondence on the letterhead of the company that eventually acquired ECM, Greengate Group, that itemize various pieces of equipment that Greengate received from ECM. One record, dated July 18, 2017, lists the equipment that ECM transferred to Greengate in 2017. See Def.'s Mot., Ex. 19, ECF No. 105-19. The other, dated November 7, 2017, “confirm[s]” that Greengate “received” certain equipment, though it does not say from whom. See Def.'s Mot., Ex. 18, ECF No. 105-18. Although both letters bear signatures of Greengate officials, the recipient of neither letter is identified on its face and the circumstances under which the letters were drafted is not apparent. Finally, Defendant proffers that his new counsel hired forensic accountants who, based on the available records, were able to show “that most, if not all, of the equipment alleged to have never been purchased was accounted for in the sale to Greengate.” See Def.'s Mot. at 17 (citing Def.'s Mot., Exs. 20-22, ECF Nos. 105-20-105-22). Ultimately, Defendant posits that, had his trial counsel presented the foregoing evidence, it would have undermined the government's suggestion that the OPIC funds were used for purposes other than to purchase equipment, and it would have “completely negated intent.” Id.

         The court holds otherwise, finding that the failure to present the foregoing evidence does not undermine the court's confidence in the outcome of trial. The financial records in question are of limited probative value in multiple respects. For starters, those records in no way undermine the government's case that Defendant defrauded OPIC by purposely concealing affiliate transactions and by lying about them. See Indictment, ECF No. 1, at 8 (“Doost would report to OPIC that he did not have an affiliation with any companies [other than those he identified], . . . when in fact he had financial relationships with several vendors from which he purported to purchase equipment for the Marble Mine . . .”); id. (“Doost and his Business Partner would cause . . . transfer of funds from those vendors to companies and individuals with whom Doost was associated . . .”). The government's proof as to that theory of prosecution, by itself, is sufficient to sustain all but two of the convictions in this case.[2] Second, neither the certified audit reports nor the inventory lists compiled by Greengate can erase the false and misleading nature of the invoices submitted to OPIC. The government's proof established numerous badges of fraud associated with the invoices submitted to OPIC, such as the sequential numbering, the absence of detail, and the omission of VIN numbers. The evidence presented at trial further showed that Defendant participated in preparing these invoices, requested that a vendor in Italy prepare and transmit false invoices to OPIC, and submitted invoices to OPIC for expenses already paid by other aid organizations. Evidence regarding equipment possessed by EMC would not diminish the damaging nature of these facts. Finally, neither the records in question nor the proffered expert testimony would show that ECM bought the actual equipment that Defendant represented to OPIC was being purchased with the loan proceeds. Indeed, the experts themselves candidly acknowledge the limitation of their opinion and the evidence upon which they relied: “[Our services] did not include - physically observing the equipment, matching of serial numbers of the equipment from the purchase orders, tracing funds from either OPIC or Doost entities to bank accounts to the vendors . . .” See Def.'s Mot., Ex. 20, ECF Nos. 105-20, at 1. Thus, the mere fact that Greengate received some equipment when it purchased ECM does not establish that these acquired assets match the equipment that Defendant told OPIC that ECM was purchasing, or that Defendant in fact used the specific OPIC funds to make equipment purchases at all.

         In short, Defendant was not prejudiced by trial counsel's failure to offer, at best, ambiguous records relating to the existence and value of equipment.

         2. Failure to Object to the Admission of Foreign Business Records

         Part of the government's evidence at trial included records obtained from Gaspari Menotti, an Italian vendor of marble finishing equipment. The government gave the defense written notice under 18 U.S.C. § 3505 that it intended to offer these foreign records into evidence, and it obtained a certification as to their authenticity, as the statute permits. See Gov't Notice, ECF No. 21. The government also obtained a certification that the Gaspari Menotti records met the requirements of a “foreign record of regularly conducted activity” records, rendering them admissible notwithstanding the rule against hearsay. 18 U.S.C. § 3505(a). The court admitted the Gaspari Menotti records without objection from the defense. Defendant now claims that reasonable counsel would have objected to the admissibility of the Gaspari Menotti records. He contends that the records do not qualify as foreign business records under section ...


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