United States v. Mikell (163 F. Supp. 2d 720, 2001)

ORDER GRANTING DEFENDANTS’ VENUE MOTIONS; GRANTING DEFENDANTS’ MATERIALITY MOTIONS; DENYING AS MOOT DEFENDANTS’ MOTION FOR MISTRIAL; DENYING AS MOOT DEFENDANT GRISEL’S MOTION TO REPLACE COUNSEL; DENYING AS MOOT DAVID HERRING-TON’S MOTION TO WITHDRAW AS COUNSEL; AND DENYING AS MOOT PLAINTIFF’S MOTION SEEKING RESOLUTION OF RULE 29 MOTIONS AND OTHER MATTERS

CLELAND, District Judge.

Pending before the court are the following motions by Defendants Alan Mikell and Christopher Grisel: (1) “Motion for Judgment of Acquittal or in the Alternative for Arrest of Judgment (Venue)” (‘Venue Motions”), filed on June 29 and July 20, 1999 respectively; (2) “Motion for Judgment of Acquittal Pursuant to Rule 29(c) FRCrP and for Arrest of Judgment Pursuant to Rule 34 FRCrP” (“Materiality Motions”), filed on June 29, 1999 and July 20, 1999 respectively; and (3) “Motion for Mistrial for Denial of Right of Counsel and for Mistrial” (Green & Purtell), filed on April 26, 1999. Also pending before the court are (1) Grisel’s “Motion to Replace Counsel,” filed on November 17, 1999, (2) David Herrington’s “Motion to Withdraw as Counsel,” filed on November 17, 1999, and (3) Plaintiff United States of America’s (“Government’s”) “Motion Seeking Resolution of Rule 29 Motions and Other Pending Matters,” filed on August 6, 2001. For the reasons set forth, the court will grant Defendants’ Venue and Materiality Motions, while denying the remaining motions as moot.

I. BACKGROUND

During all relevant times, Defendants owned Real Pinconning Cheese (“RPC”) in Pinconning, Michigan., On September 26, 1995, RPC entered into an agreement to purchase milk from National Farmers Organization Dairy Custodial Account (“NFO”). Because RPC already owed NFO approximately $1,000,000 for previously shipped milk, NFO only agreed to ship additional milk under certain conditions: namely, a collateral pledge and security agreement whereby RPC could be held in default for failure to remain current on milk payments and whereby NFO could obtain a security interest in RPC’s cheese inventory.

By January 1996, RPC owed NFO approximately $2,400,000 (including the previous $1,000,000 debt) for unpaid milk invoices. NFO then notified Defendants that it was holding RPC in default and exercising control of the collateral, that is, approximately 771,338 pounds of cheese which was then warehoused at, and/or in transit to, Pinconning.

After receiving formal notification that they were being held in default, Defendants devised a scheme whereby they could avoid their obligations to NFO without themselves suffering financially. First, Defendants sold the cheese to Nor-Tech Dairy Advisors, Inc. (“Nor-Tech”), which was owned by Ronald Hines. Although the Pinconning cheese was almost entirely grade “A,” and thus at the time worth approximately $1.35 to $1.40 per pound, Defendant sold the cheese to Nor-Tech at $0.25 per pound. A companion agreement required Hines to quickly resell the cheese back to Grisel’s company Inno-quest for $0.30 per pound plus shipping costs. Grisel, through Innoquest, then resold the cheese to a company called Sor-rento at $1.40 per pound and a second entity named E.J. Marketing for an average of $1.36 per pound. RPC was only required to pay NFO the money from the initial sale of cheese to Nor-Tech, which was priced at $0.25 per pound and not at the market value then prevailing.

In an effort to conceal the transaction between Hines and Innoquest, Grisel directed Sorrento and E.J. Marketing to send the majority of payments for the cheese to Nor-Tech, rather than to Inno-quest directly. Hines then forwarded this money to Innoquest, who disbursed some of the money to Mikell and others.

As a result of the above stated actions, a grand jury charged Defendants in a fifty-two count Second Superseding Indictment with, among other things, mail fraud, wire fraud, and money laundering. After a lengthy trial, the jury returned a guilty verdict against Defendants on numerous counts. The instant motions followed.

II. CHRISTOPHER GRISEL

Three days after the jury’s May 25,1999 verdict, Grisel filed a motion for extension of time until June 30, 1999 to file motions pursuant to Federal Rules of Criminal Procedure 29(c) and 34. The court granted the motion on June 4, 1999. Grisel then filed a supplemental motion to extend time until July 16, 1999 to file his post-verdict motions. The court granted this motion on July 22, 1999, two days after Grisel filed his post-verdict motions.

Federal Rule of Criminal Procedure 29(c) provides that “[i]f the jury returns a verdict of guilty ..., a motion for judgment of acquittal may be made or renewed within 7 days after the jury is discharged or within such further time as the court may fix during the 7-day period.” Rule 34 mandates an identical time frame for filing of motions. Rule 45(b) provides in turn that “the court may not extend the time for taking any action under Rule 29, 33, 34 and 35, except to the extent and under the conditions stated in them.”

On June 4, 1999, within seven days after the jury verdict, the court granted Grisel’s first motion for extension and directed him to file his post-verdict motions on or before June 30, 1999. Even though the court also permitted a second extension of time to file Rule 29 and 33 motions, the second motion was untimely because “Rules 29 and 33 do not allow successive extensions of time; Rule 45(b) expressly forbids them.” United States v. Hocking, 841 F.2d 735, 737 (7th Cir.1988); see Carlisle v. United States, 517 U.S. 416, 420-22, 116 S.Ct. 1460, 134 L.Ed.2d 613 (1996) (holding that plain and unambiguous language of Rule 29 does not permit the granting of an untimely post-verdict motion for judgment of acquittal). Thus, in hindsight, the court should not have granted Grisel’s second extension motion because it lacked the authority to do so.

Some courts have held, however, that untimely motions can be acted upon when the district court induced parties to rely to their detriment on erroneous extensions of time. See Hocking, 841 F.2d at 737. Nevertheless, this court did not induce Grisel to rely upon the erroneous extension of time to his detriment. As stated by the Court of Appeals for the Seventh Circuit (“Seventh Circuit”) in a virtually identical set of circumstances, “[a]ny error was generated by the [defense lawyer]; the district court simply granted a motion.” Id. Hence, the mere granting of an unopposed motion for extension of time does not rise to the level of inducement.

Even though the court lacks jurisdiction to resolve Grisel’s post-verdict motions, the substance of his arguments were contained within motions that either was reserved by the court during the trial or are still pending without reservation. Insofar as pre-verdict motions are still pending, the court has the authority to resolve those issues raised in them. With respect to motions in which a ruling has been reserved, the court is limited to the evidence presented up to the time of the reservation. Fed.R.Crim.P. 29(b). For the unreserved, pending motions, the court is not restricted by limited evidence.

III. VENUE MOTIONS

Mikell asks the court to arrest judgment or to grant a judgment of acquittal as to Counts 8, 25, and 27 because the Government has failed to prove by a preponderance of evidence that venue is proper in this district. Similarly, Grisel asks the court to arrest judgment or to grant a judgment of acquittal as to Counts 9-11, 13-20, 22-24, and 29 based on the same venue argument. The Government opposes these requests, arguing that venue is proper in this district because Defendants had the following ties with the Eastern District of Michigan:

1) The cheese subject to the fraud was located in Pinconning, Michigan.

2) The defendants’ company, Real Pin-conning Cheese, involved in the fraud was located in Pinconning, Michigan.

3) The security agreement that NFO had with RPC was filed in the Eastern District of Michigan.

4) NFO’s restraining order to prevent the movement of the cheese at RPC on January 14, 1996 was located in Pinconning, Michigan.

5) The defendants conspired in Pincon-ning, Michigan to defraud NFO.

6) The defendants’ negotiations with Mike Hines to sell the cheese at 25 cents a pound took place in Pincon-ning, Michigan.

7) The RPC letter confirming the 25-cent sale to Hines was typed on RPC letterhead that was located in Pincon-ning, Michigan.

8) Some of the parties on the January 14, 1996 conference call between NFO and the defendants were located in Pinconning, Michigan. That was the conference call in which the [defendants lied to NFO about the sale of the cheese.

9) The fraudulent invoices to Hines stating “price to be determined upon inspection” instead of 25 cents per pound were generated at Defendant Mikell’s direction in Pinconning, Michigan and faxed from Pinconning.

10) Alan Mikell’s letter of January 10, 1996, signed by Mikell and transmitted to Hines on or about that date was prepared in the Eastern District of Michigan and transmitted from here.

11) Both Mikell and Grisel, who were then in Pinconning, engaged Hines in two separate conference telephone calls during the week spanning January 10-12, 1996, in which they introduced Hines to their fraudulent scheme and enlisted his agreement to join in it.

(Gov’t Resp. to Venue Mots, at 5-6.)

A. Standard

Proper venue in criminal proceedings is mandated by the Constitution; Article III, § 2, cl. 3, requires that “[t]he Trials of all Crimes ... shall be held in the State where the said Crimes shall have been committed,” and the Sixth Amendment provides that “[i]n all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed.” This mandate is echoed in Federal Rule of Criminal Procedure 18, which provides, in part, that “the prosecution shall be had in a district in which the offense was committed.” When multiple counts are alleged in an indictment, as in the instant case, the government must prove that venue is proper on each count by a preponderance of the evidence. United States v. Villarini, 238 F.3d 530, 533 (4th Cir.2001); United States v. Corona, 34 F.3d 876, 879 (9th Cir.1994); United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1188 (2d Cir.1989) (“[W]hen a defendant is charged in more than one count, venue must be proper with respect to each count .... ”).

Where Congress fails to explicitly define venue under a criminal statute, “the locus delicti [of the charged offense] must be determined from the nature of the crime alleged and the location of the act or acts constituting it.” United States v. Cabrales, 524 U.S. 1, 6-7, 118 S.Ct. 1772, 141 L.Ed.2d 1 (1998) (quotation marks omitted). While some courts have looked to the verbs of the statute to determine the nature of the substantive offense, the Supreme Court recently cautioned against heavy reliance on a “verb test”:

[Wje never before held, and decline to do so here, that verbs are the sole consideration in identifying the conduct that constitutes an offense. While the “verb test” certainly has value as an interpretative tool, it cannot be applied rigidly, to the exclusion of other relevant statutory language. The test unduly limits the inquiry into the nature of the offense and thereby creates a danger that certain conduct prohibited by statute will be missed.

United States v. Rodriguez-Moreno, 526 U.S. 275, 279-80, 119 S.Ct. 1239, 143 L.Ed.2d 388 (1999). Instead, the Supreme Court has instructed courts to conduct a two-part inquiry: namely, to “initially identify the conduct constituting the offense (the nature of the crime) and then discern the location of the commission of the criminal acts.” Id. at 279, 119 S.Ct. 1239. Thus, venue is proper only in a district in which essential conduct elements of the offense take place. Id. at 280, 119 S.Ct. 1239; United States v. Bowens, 224 F.3d 302, 311 (4th Cir.2000) (‘We therefore hold that the place where a criminal offense is committed is determined solely by the essential conduct elements of that offense.”).

B. Analysis

Prior to the trial in this matter, Defendants raised identical arguments as those presented in the instant venue motions. In rejecting the earlier motions, Magistrate Judge Charles E. Binder concluded as follows:

At this stage, I am persuaded that § 3237(a) is the touchstone for determining the proper outcome of this motion ....

The defendants’ arguments parse the four corners of the indictment entirely too closely. The charges made in the Second Superseding Indictment are, I suggest, precisely what is contemplated by the second paragraph of § 3237. A conspiracy with overt acts is charged. A long and complicated inter-related series of actions are then charged as being the acts which brought the conspiracy to fruition. That the individual counts are part of an underlying scheme of alleged criminal conduct and that because there is, in the words of § 3237[,] “no express provision by enactment of Congress otherwise,” I therefore conclude that venue for the challenged counts is appropriate in this district.

I further conclude that the Cabmles case cited by counsel is distinguishable in that it effectively involved discrete offenses within different states. In this case, there is an overall conspiracy, which is alleged to have taken place in multiple states in multiple different ways, all of which the government says are charged and listed in the indictment. To summarize, since Congress has not said otherwise, I can only conclude that the conduct charged is a continuing offense and that venue is appropriate in this district.

(9/16/98 Order at 3-4.) This court overruled Defendants’ objections to the magistrate judge’s September 16th order, finding that such order was not clearly erroneous or contrary to law. (See Order.)

court now reconsiders its De-cern er 3, 1998 order. In the Second Superseding Indictment, both Defendants were charged with conspiracy to commit money laundering, as well as with substantive money laundering and wire and mail fraud offenses. Even if the substantive offenses were committed in furtherance of the money laundering conspiracy, this court must conduct a separate analysis for the substantive crimes and the conspiracy. United States v. Granados, 117 F.3d 1089, 1090 (8th Cir.1997); Corona, 34 F.3d at 879 (“The court must conduct a separate venue analysis for the substantive crimes and the conspiracy, even if the substantive crimes are committed in furtherance of the conspiracy.”); United States v. Walden, 464 F.2d 1015, 1016 (4th Cir.1972).

1. Mail Fraud Count

The jury returned a guilty verdict on, among other things, count 11 of the Second Superseding Indictment, which charged Grisel with violating either the mail fraud statute, 18 U.S.C. § 1341, or the wire fraud statute, 18 U.S.C. § 1343. Specifically, Grisel was indicted and convicted for the following overt acts:

On or about January 18, 1996, Christopher Grisel ... transmitted or caused to be transmitted via the U.S. Postal Service, and/or via facsimile transmission, a letter to Edward Buchberger, E.J. Marketing, Inc., Marathon, Wisconsin, confirming that Innoquest, Inc. was selling eighteen loads of cheese to Buchberger for a price approximately 2