Free Response to Motion - District Court of Arizona - Arizona

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PAUL K. CHARLTON United States Attorney District of Arizona RACHEL C. HERNANDEZ Arizona State Bar No. 016543 GARY M. RESTAINO Arizona State Bar No. 017450 Assistant U.S. Attorneys Two Renaissance Square 40 N. Central Avenue, Suite 1200 Phoenix, Arizona 85004-4408 Telephone (602) 514-7500 [email protected] [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America, Plaintiff, v. Harvey Sloniker, Jr., Defendant. UNITED STATES' RESPONSE TO DEFENDANT HARVEY SLONIKER'S MOTION TO SEVER CR04-0820-001-PHX-FJM

The United States, through counsel undersigned, responds in opposition to defendant 17 Harvey Sloniker's Motion to Sever. Sloniker founded and led the telemarketing operations 18 charged in the indictment. He organized the fraudulent scheme, laundered assets through the 19 scheme, overstated his income and earnings from the scheme and under reported withheld 20 employee taxes from the scheme. All charges against him are properly joined, and defendant 21 has articulated no prejudice from this joinder. 22 A. 23 Defendant Sloniker operated telemarketing boiler rooms in Arizona, in which Sloniker and 24 his companies pitched a scam presentation for a major credit card to consumers with deficient 25 credit, arranged with a third party processor to debit consumers' accounts, received wire 26 transfers from the third party processor, laundered the money and ultimately failed to provide 27 consumers with the benefit of the bargain they believed they had made. (Indictment at ¶¶ 1228 Background

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1 25.) He and other co-defendants arranged to obtain credit through the use of overstated income 2 figures from the scheme (Indictment at ¶ 45), and Sloniker failed to turn over withheld employee 3 taxes from the scheme to the IRS. (Indictment at ¶¶ 50-51). All charges against Sloniker are 4 joined in the same indictment, and Sloniker's sister, brother and associates are charged with him. 5 B. 6 Argument All charges against Sloniker are properly joined, under the broad standards of Fed. R.

7 Crim. P. 8(a). Defendant has failed to articulate any prejudice under Fed. R. Crim. P. 14, as 8 defendants charged together are generally tried together, and associates in a telemarketing 9 operation are no exception to this general rule. This Court should deny defendant's motion. 10 11 1. The government properly joined all charges against Sloniker

In seeking a misjoinder ruling, Sloniker focuses his analysis on the nature of the claims

12 rather than the number of defendants but he bases his legal argument for misjoinder on the 13 wrong provision of the Federal Rules of Criminal Procedure. When a defendant charged in all 14 counts of the indictment alleges misjoinder based on the nature of the joined charges, the proper 15 rule to apply is Fed. R. Crim. P. 8(a),1 and the right to join multiple charges is more expansive 16 than the right to join multiple defendants. United States v. Sanchez-Lopez, 879 F.2d 541, 550 17 (9th Cir. 1989). The government may join multiple charges if the offenses "are of the same or 18 similar character, or are based on the same act or transaction, or are connected with or constitute 19 parts of a common scheme or plan." Fed. R. Crim. P. 8(a). Sloniker displayed a similar 20 character for fraud in all of the alleged acts. 21 The underlying allegations of telemarketing and money laundering form the basis for

22 counts 1-49. Counts 70-73 clearly flow from the underlying count, for it is well-established that 23 the failure to pay over taxes on illegal income is properly joined with the allegations that give 24 rise to the illegal income. E.g. United States v. Whitworth, 856 F.2d 1268, 1277 (9th Cir. 25 1988); United States v. Roselli, 432 F.2d 879, 899 (9th Cir. 1970). The loan fraud charges in 26 Joinder with other defendants who are not charged in all counts is also proper under 27 Fed. R. Crim. P. 8(b). (See generally Gov. Resp. to Def. Desiderio's Mot. to Sever.) 28
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1 counts 50-69 are also of a similar character. Defendant used his income from the underlying 2 fraud to acquire the loans at issue in the loan fraud counts. This fraud flows from the 3 telemarketing fraud, and the purchase of homes and home equity helps clean the telemarketing 4 earnings. 5 6 2. Sloniker has not shown that a joint trial would be prejudicial

The burden rests squarely with defendant to establish prejudice. Defendants indicted

7 together are generally tried together. "There is a preference in the federal system for joint trials 8 of defendants who are indicted together .... [Joint trials] promote efficiency and serve the 9 interests of justice by avoiding the scandal and inequity of inconsistent verdicts." Zafiro v. 10 United States, 506 U.S. 534, 537 (1993) (internal citations omitted). 11 Absent prejudice to a party ­ i.e., a "serious risk that a joint trial would compromise a

12 specific trial right of one of the defendants, or prevent the jury from making a reliable judgment 13 about guilt or innocence" ­ a court need not provide any relief under Fed. R. Crim. P. 14. Id. 14 at 539. Defendants main contention is that he is likely to have a mutually antagonistic defense 15 as to other defendants, although defendant fails to articulate the nature of that defense. It is 16 difficult to sever based on putative antagonistic defenses. United States v. Johnson, 297 F.3d 17 845, 858 (9th Cir. 2002). In the telemarketing context, the Ninth Circuit has upheld joinder 18 even where different groupings within the operation tried to deflect blame onto each other. Id. 19 at 859. A court should only consider a severance based on prejudice if the "core" defenses are 20 completely unreconcilable. United States v. Hanley, 190 F.3d 1017, 1028 (9th Cir. 1999) (in 21 the context of a telemarketing case). No such contention appears plausible here. 22 The Court may mitigate the risk of prejudice through various methods. It may, for

23 example, use limiting instructions throughout and at the close of the trial to compartmentalize 24 the evidence only as to those against whom it is admitted. E.g. Johnson, 297 F.3d at 859; 25 Hanley, 190 F.3d 26 27 28
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1 at 1027.

Post-conspiracy confessions may be redacted to cure any Bruton problems.2

2 Richardson v. Marsh, 481 U.S. 200, 210-11 (1987). With these mitigation efforts, defendant's 3 putative prejudice argument is outweighed by the judicial economy inherent in a joint trial: 4 5 6 7 United States v. Kennedy, 564 F.2d 1329, 1334 (9th Cir. 1977). To the extent this Court finds 8 any prejudice in a joint trial, it should use the mitigation measures in the above cases to 9 ameliorate the prejudice in a joint trial of all participants. 10 C. 11 The charges against Sloniker are properly joined under Fed. R. Crim. P. 8(a), and 12 defendant has not met his burden to establish prejudice under Fed. R. Crim. P. 14(a), 13 particularly where, as here, defendant is named in every count of the indictment and led and 14 organized the unlawful scheme. Furthermore, any prejudice to the joinder may be overcome 15 through compartmentalization and, if necessary, Bruton redactions. For the foregoing reasons, 16 this Court should deny defendant's motion. 17 18 19 20 21 22
2 Defendant claims that a Bruton problem exists, but cites no specifics, and claims that 23 he can cite to no specifics because he has not received all witness statements (Def. Motion at 5:9-11) and that "a significant quantity of discovery items have not been provided." (Def. 24 Motion at 3:2-3.) Defendant's claim is absurd. The government has provided extensive early discovery, including statements of defendants and potential witnesses. (See generally Resp. to 25 Def. Desiderio's Mot. for Brady Material.) Some additional statements may be disclosed as the government names its employee/victim witnesses, but those statements also may be redacted 26 consistent with Bruton. The government stands ready to provide any and all statements to the Court for in camera review, but such a review would not appear in the interests of judicial 27 economy without some glimmer of defendant's contentions with respect to those statements.

It is not surprising that a defendant might prefer to be tried separately so that only evidence admissible strictly against him would be heard by the jury. However, if this formed the only basis for prejudice required for severance, the consequent volume of separate trials of multiple actions in a series of similar and connected illegal transactions would create an intolerable burden on the trial courts.

Conclusion

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Respectfully submitted this 16th day of September, 2005. PAUL K. CHARLTON United States Attorney District of Arizona s/ Gary M. Restaino RACHEL C. HERNANDEZ GARY M. RESTAINO Assistant U.S. Attorney

CERTIFICATE OF SERVICE

I hereby certify that on this date, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic 10 Filing to the following CM/ECF registrants: Bruce Blumberg, Jeanette Alvarado, Ivan Mathew, Tom Hoidal, Greg Parzych and Michael Bresnehan. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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