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Timestamp: 2019-04-19 21:16:05+00:00

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Jeffrey Brian Cohen is charged with wire fraud,  aggravated identity theft,  money laundering,  making false statements to an insurance regulator,  and obstructing justice. ECF No. 78 (third superseding indictment). Pending are pretrial motions. A hearing was held on May 4, 2015. For the following reasons, the motions will be resolved as discussed herein.
From 2008 to 2013, Cohen operated a group of related insurance companies. ECF No. 284 at 1. Until August 2013, Cohen was the President, Chairman of the Board, and majority owner of the companies. Id. at 1-2. In 2012, the Delaware Insurance Commissioner ("Commissioner") began investigating Indemnity's financial stability. Id. at 2. Delaware regulators were concerned about Indemnity's ability to collect $20 million owed by IDG and $5.1 million purportedly on deposit at Susquehanna Bank. Id.; Gov. Ex. 1 (January 2, 2014 Delaware Court of Chancery Opinion, attached to the search warrant affidavit) (hereinafter "Del. Ct. Chancery Op.") at 3. The $20 million receivable potentially overstated Indemnity's assets and "should have been written down or written off as uncollectable." ECF No. 284 at 2 n. 1.
In May 2013, the Commissioner obtained a seizure order from the Delaware Court of Chancery authorizing the regulatory takeover of Indemnity. Del. Ct. Chancery Op. at 1-2. In July 2013, after examining Indemnity under the seizure order, the Commissioner filed a petition to liquidate Indemnity "in light of (i) acts of fraud by Cohen and (ii) Indemnity's unsound financial condition." Id. at 3. Thereafter, Delaware Department of Insurance representatives and Cohen used office space at 950 Ridgebrook Road, Sparks, Maryland ("950 Ridgebrook Road"). ECF No. 284 at 3.
On August 5, 2013, Cohen resigned as Indemnity's Chairman of the Board, and the Board removed him from officer positions. Del. Ct. Chancery Op. at 8. "[A]fter August 5, Cohen's only connection to Indemnity was as the owner of [RB], an entity that purports to own 99% of Indemnity's equity by virtue of having been issued a zero-dollar insurance policy by Indemnity." Id.  On September 1, 2013, "Cohen was banished" from 950 Ridgebrook Road. ECF No. 76 at 5.
In September 2013, Indemnity sought to modify the seizure order because Cohen had interfered with the company "and the efforts of the Commissioner." Del. Ct. Chancery Op. at 9. The amended seizure order "clarif[ied] that Cohen was prohibited from accessing Indemnity's IT systems and from communicating with Indemnity's employees and business associates." Id. at 10. Although the seizure order "had granted the Commissioner title and control over all of Indemnity's assets, " the amended seizure order confirmed that those assets "included intangible assets like Indemnity's information systems and electronic records." Id. at 11.
On November 1, 2013, the U.S. Attorney's Office for the District of Maryland began a criminal investigation of Cohen. ECF No. 284 at 6.
On April 30, 2014, FBI Special Agent Jennifer Perry obtained Jeffrey Miceli's consent to search 950 Ridgebrook Road. ECF No. 299-1 at 1-3. Miceli acted as the Commissioner's agent following Indemnity's and IDG's regulatory takeover. ECF No. 299 at 1. During the search agents took video and still photographs of the premises and received a copy of the floor plan, a "server inventory[, ] and printouts of [miscellaneous] network details." ECF No. 299-1 at 2, 4.
On May 5, 2014, Agent Perry obtained a warrant to search 950 Ridgebrook Road for evidence of mail and wire fraud and false statements to insurance regulators. Gov. Ex. 1 at 6. The affidavit supporting the search warrant incorporated the January 2, 2014 Delaware Court of Chancery Opinion by Vice Chancellor Laster sanctioning Cohen for violating previous orders about the seizure of Indemnity, and the April 9, 2014 Delaware Supreme Court Opinion affirming the Court of Chancery's Orders. See Gov. Ex. 1.
On May 8, 2014, federal agents conducted the search and seized about 50 boxes of documents. ECF No. 284 at 6-7; Gov. Ex. 2. The documents "were taken to the FBI document laboratory, scanned, and produced to [Cohen] in searchable electronic format." ECF No. 284 at 7. On site procedures were used "to ensure that consideration was shown to the possibility of obtaining attorney-client privileged material." Id. The list of items seized shows certain documents marked as "TAINT DOCUMENTS." Gov. Ex. 2 at 3.
On June 24, 2014, Postal Inspector Kalliopi Tserkis-Mullins of the United States Postal Inspection Service obtained a warrant to search Cohen's home at 2419 Long Ridge Road, Reisterstown, Maryland ("2419 Long Ridge Road") for evidence of mail and wire fraud and false statements to insurance regulators. Gov. Ex. 3 at 5. The search warrant authorized the seizure of various documents and records and computers, "related peripheral" devices, and electronic data "pertaining to the" list of items to be seized. Id. at 3-4. The affidavit stated the procedure by which Cohen's electronic data would be reviewed to minimize the risk that information not subject to the search warrant would be viewed. Id. at 18-19.
On June 25, 2014, federal agents executed the search warrant. ECF No. 284 at 8. According to the government, "Cohen inquired why the agents were executing the warrant that day." Id. As in the search of 950 Ridgebrook Road, "procedures were employed to minimize the risk that the investigative team had access to attorney-client privileged information." Id. During the search, agents found notes containing a "target list" that included "DE Folks" and "MD government and judges, " a recently-executed will, survivalist gear, firearms, financial and corporate records, and electronic evidence. Id.; Gov. Ex. 4; Hr'g Tr. at 16.
That day, Cohen was arrested at his home and given his Miranda warnings. ECF No. 284 at 8; Hr'g Tr. at 11-12. Cohen signed a written Miranda waiver form and made a lengthy statement to Agents Costello and Perry about "major financial frauds." Gov. Ex's. 5, 6 at 18. During the interview, the scope of the investigation changed when agents executing the search warrant alerted Agents Perry and Costello that wigs, masks, survivalist gear, notebook, firearms, and Cohen's last will and testament had been found in the home. Hr'g Tr. at 14-15. Agents Perry and Costello asked Cohen about those items, and whether he had planned to harm Delaware officials or other government personnel. Id. at 15-17.
At the end of the interview, Cohen signed a written consent form authorizing the search of his Lexus car. Gov. Ex. 7; Hr'g Tr. at 18. The consent form notified Cohen that he had "the right to refuse" consent and to "require us to secure a search warrant, " and "any incriminating evidence... may be used against [him] in court." Gov. Ex. 7. Cohen later added his Mercedes car to the consent form; however, nothing was seized from that car. Id.; Gov. Ex. 9; ECF No. 284 at 11.
Inside the Lexus agents found, attached to a clipboard, a Google Maps printout of directions from Baltimore to the Delaware Lieutenant Governor's home and from there to Vice Chancellor Laster's home. ECF No. 284 at 11; Hr'g Tr. at 21-22. Inside the clipboard were about 119 pages of computer printouts and handwritten notes. ECF No. 284 at 11. Agents also found a voice recorder, spotting scope, rifle tripod, and ammunition. Id.; Gov. Ex. 8.
After agents found an empty 9mm Smith & Wesson pistol case at Cohen's home, and Cohen told agents the firearm was at "Checks N' Keno, " agents obtained a warrant to search the business premises located at 6408 Reisterstown Road. Gov. Ex. 10. Agents seized the pistol, electronic media, and documents. Gov. Ex. 11.
According to the government, agents continued to subject the seized evidence to measures designed to protect the attorney-client privilege. ECF No. 284 at 12.
On June 24, 2014, a grand jury indicted Cohen on five counts of making false statements to an insurance regulator under 18 U.S.C § 1033(a). ECF No. 1.
On June 27, 2014, Magistrate Judge Beth P. Gesner ordered Cohen detained pending trial. ECF No. 12.
On September 16, 2014, a superseding indictment charged Cohen with five counts of wire fraud in violation of 18 U.S.C. § 1343, two counts of money laundering in violation of 18 U.S.C. § 1957, and five counts of making false statements to an insurance regulator in violation of 18 U.S.C § 1033(a). ECF No. 26. The superseding indictment "expanded the scope of the charges from a six month time span involving false statements to one regulatory authority about one bank to a five-year wire fraud scheme." ECF No. 117-1 at 3. It included forfeiture allegations of $100, 000, 000.00 in connection with the wire fraud charges, $866, 667.67 in connection with the money laundering charges, and $100, 866, 666.67 in substitute assets. ECF No. 26 at 15-16.
On November 5, 2014, the government obtained warrants to seize the following property subject to forfeiture: (1) a toy collection; (2) Fidelity investment accounts; (3) jewelry found at 2419 Long Ridge Road; (4) personal property found at 950 Ridgebrook Road; (5) four M&T Bank accounts; and (6) nine Susquehanna Bank accounts. See ECF Nos. 86-1 to 86-6 (seizure warrant applications). On November 12, 2014, the government obtained warrants to seize (7) the monetary value of a Cincinnati Life Insurance policy; and (8) a 2012 Infiniti G37 coupe ("Infiniti G37"). See ECF Nos. 86-7, 86-8. The seizure warrant applications sought assets constituting proceeds of the offenses and substitute assets.
On November 17, 2014, after a hearing, Magistrate Judge Timothy J. Sullivan granted Cohen's appointed counsel's motion to withdraw and found that Cohen had made a "knowing, voluntary[, ] and intelligent waiver of the right to counsel and will proceed pro se. " ECF No. 66.
On November 18, 2014, the government moved for a speedy trial order excluding time until trial. ECF No. 67. On November 19, 2014, Judge Sullivan appointed Alan Bussard, Esq., as Cohen's standby counsel. ECF No. 69. On November 21, 2014, Cohen moved to dismiss the indictment. ECF No. 71.
On November 25, 2014 a second superseding indictment charged Cohen with fifteen counts of wire fraud, five counts of aggravated identity theft under 18 U.S.C. § 1028A, two counts of money laundering, five counts of making false statements to an insurance regulator, and four counts of obstructing justice under 18 U.S.C. §§ 1512, 1513. ECF No. 73.
On November 26, 2014, Cohen moved to suppress evidence. ECF No. 76.
On December 2, 2014, a third superseding indictment charged Cohen with the same counts and made minor corrections to the second superseding indictment. ECF Nos. 78, 80.
On December 23, 2014, Cohen moved to sever the obstructing justice counts. ECF No. 100. On December 31, 2014, Cohen moved for a jury determination on forfeiture, ECF No. 107, to shorten time to trial, ECF No. 108, and to disqualify the Office of the U.S. Attorney, ECF No. 110. On January 6, 2015, Cohen moved for judicial action. ECF No. 115.
On January 7, 2015, the government moved for leave to file a two-day late response to two of Cohen's motions to dismiss. ECF No. 117. On January 9, 2015, the government moved for the Court to consider ECF No. 117-1 as a supplemental response. ECF No. 121. On January 15, 2015, Judge Sullivan denied Cohen's request for two paralegals. ECF No. 124. On January 20, 2015, Cohen moved for an order of contempt or sanctions against the government. ECF No. 135. On January 29, 2015, Cohen moved for reconsideration of Judge Sullivan's January 26, 2015 Order denying his motion for temporary and injunctive relief. ECF No. 153.
On February 27, 2015, the government moved for an extension of time to file a one-day late response to two motions. ECF No. 177.
On March 6, 2015, Cohen moved for Rule 404(b) notice. ECF No. 182. On March 9, 2015, Cohen moved for Rule 12(b)(4) notice, ECF No. 192, for leave to file motions after the April 1, 2015 deadline, ECF No. 190, and in limine to preclude hearsay evidence at trial, ECF No. 193. On March 16 and March 27, 2015, Cohen moved for judicial notice. ECF Nos. 213, 238.
On April 16, 2015, Cohen filed a Rule 59 objection to Judge Sullivan's oral March 30, 2015 Order denying his motion for a Farmer hearing. ECF No. 286. On April 17, 2015, Judge Sullivan granted Cohen's motion to terminate standby counsel and appointed a paralegal to assist Cohen. ECF No. 290. On April 21, 2015, Judge Sullivan appointed William Purpura, Esq. as Cohen's standby counsel. ECF No. 294. On April 27, 2015, Cohen moved in limine to call prosecution witnesses as adverse witnesses, ECF No. 308, and objected to Judge Sullivan's oral April 10, 2015 ruling about his access to standby counsel, paralegal support, and his discovery notes, ECF No. 307.
Cohen testified that "the extraordinary delay of this matter" has prejudiced his preparation of his defense and caused personal hardship. Hr'g Tr. at 64. As to personal hardship, several bills went unpaid, and Cohen's credit rating and "personal psyche" have been affected. Id. at 64-66. He has not had a "solid night['s]" sleep while detained and has had anxiety and weight loss. Id. at 66.
Cohen testified that his trial preparation has been hampered because the detention facility lacks a law library,  and he has only just received "satisfactory paralegal support, ... stand-by counsel, and IT [assistance]." Id. at 67. Cohen "accepted" that he had decided to represent himself but his "inability or non-existent ability at CDF' to do proper research is impairing [his] ability to provide a defense." Id. at 67-68. Cohen has "lost evidence as a result of the delay, because [he has not] had access to the evidence, " but he has not lost witnesses. Id. at 68. Cohen acknowledged that he has been able to visit the courthouse several days each week since January 2015 to review discovery. Id. at 69. Cohen further testified that he was not concerned about the fraud charges because "[he] know[s his] innocence will be proven." Id. at 76. Cohen acknowledged that his conduct was "a factor" giving rise to the instant charges. Id. at 80.
At the end of the hearing, the Court extended Cohen's deadline for proposing jury instructions and voir dire to May 15, 2015, and stated that the parties will be ordered to propose verdict sheets by the same date. Id. at 95.
Counts six and seven charge Cohen with money laundering under 18 U.S.C. § 1957. ECF No. 26 at 12. Cohen seeks dismissal of counts six and seven and related forfeiture provisions of the superseding indictment because those counts fail to allege the manner in which the wire frauds adversely affected a financial institution. ECF No. 71 at 1-2. The government argues that the money laundering charges underlying counts six and seven do not require an adverse effect on a financial institution. ECF No. 86 at 4.
The money laundering statute provides that "[w]hoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10, 000 and is derived from specified unlawful activity, shall be punished as provided in subsection (b)." 18 U.S.C. § 1957 (a) (emphasis added). Under 18 U.S.C. § 1956 (c) (7) (A),  "specified unlawful activity" includes offenses listed in 18 U.S.C. § 1961; wire fraud under 18 U.S.C. § 1343 is one of the enumerated offenses. See 18 U.S.C. § 1961 (1).
Cohen appears to argue that because wire fraud under 18 U.S.C. § 1343 is the "specified unlawful activity" underlying the money laundering counts the indictment is inadequate because the government has omitted "relevant information that deflates [its] violation theory." ECF No. 103 at 2. However, Cohen concedes that "the government include[d] the statutory language required to properly allege a money laundering violation." Id.
An indictment alleging money laundering need not allege the elements of the underlying specified unlawful activity. United States v. Cherry, 330 F.3d 658, 667 (4th Cir. 2003) (money laundering properly alleged when neither the money laundering counts nor the bank embezzlement counts - the specified unlawful activity at issue - stated all the elements of bank embezzlement); United States v. Smith, 44 F.3d 1265 (4th Cir. 1995) ("[D]etails about the nature of the unlawful activity underlying the [money laundering] need not be alleged."). Money laundering is sufficiently alleged when, as here, the government alleges "that the money laundering transactions involved funds derived from a specified unlawful activity, and that such activity violated [18 U.S.C. § 1343]." Cherry, 330 F.3d at 668. Accordingly, Cohen's motion to dismiss counts six and seven and related forfeiture provisions will be denied.
Counts one to twenty-two of the third superseding indictment charge Cohen with wire fraud, aggravated identity theft, and money laundering. ECF No. 78 at 1-15. Cohen seeks dismissal of those counts on the grounds that discovery provided to him lacks direct evidence of his specific intent to harm policy holders ;  thus, Cohen argues, the grand jury must have been improperly instructed and may have improperly relied on hearsay evidence. ECF Nos. 195 at 1-3; 262 at 1. The government argues that Cohen's intent is a trial issue that may be proved through circumstantial evidence. ECF No. 231 at 3-5.
If indictments were to be held open to challenge on the ground that there was inadequate or incompetent evidence before the grand jury, the resulting delay would be great indeed. The result of such a rule would be that before trial on the merits a defendant could always insist on a kind of preliminary trial to determine the competency and adequacy of the evidence before the grand jury. This is not required by the Fifth Amendment. An indictment returned by a legally constituted and unbiased grand jury, like an information drawn by the prosecutor, if valid on its face, is enough to call for trial of the charge on the merits.
Id. at 408-09. The Fourth Circuit has "consistently adhered to Costello's guiding and settled principles." United States v. Jefferson, 546 F.3d 300, 313 (4th Cir. 2008).
Cohen relies on United States v. Ruggiero, 934 F.2d 440 (2d Cir. 1991). see ECF No. 295 at 3, which states that "the use of hearsay evidence before a grand jury may render an indictment invalid if... there is a high probability that the defendant would not have been indicted had only nonhearsay evidence been used." Ruggiero, 934 F.2d at 447. Cohen argues that "there is such a probability [here] because there is no evidence or witnesses whom the government interviewed that can reasonably support [Cohen's intent to harm]." ECF No. 195 at 3. Ruggiero, however, is not binding on this Court. In United States v. Alexander, 789 F.2d 1046, 1048-49 (4th Cir. 1986), the Fourth Circuit - following Costello - rejected the defendant's argument that the indictment should have been dismissed because the government's "primary grand jury witness... presented unsubstantiated and hearsay testimony to the grand jury" and "the evidence before the grand jury was not sufficiently specific as to support the allegations of the indictment." There, the Fourth Circuit held that the defendant "was properly brought to trial for the charges of which he was eventually convicted." Id. at 1049. Cohen's speculation is an insufficient basis for relief. Mechanik, 475 U.S. at 75.
Additionally, because "[f]raudulent intent may be inferred from the totality of the circumstances and need not be proven by direct evidence, " and Cohen does not attack the superseding indictment's facial validity, trial on the merits of counts one to twenty-two is merited, see Costello, 350 U.S. at 409. Accordingly, Cohen's motion to dismiss those counts will be denied.
Counts 16 to 20 of the third superseding indictment charge Cohen with aggravated identity theft under 18 U.S.C. § 1028A. ECF No. 78 at 13-14. Those counts allege that Cohen unlawfully used the personal identifying information of "T.M., " "L.S.", and "N.B." Id.
Cohen seeks dismissal on the basis that the government has not sufficiently identified the "person" whose identity was allegedly stolen. ECF No. 169 at 1-2. The government argues that the superseding indictment complies with Fed. R. Crim. P 7(c)'s "notice pleading" requirement, it is Department of Justice policy to refer to identity theft victims by their initials in the indictment to prevent additional victimization, Cohen knows the identity of the persons whose identities he allegedly stole, and "Cohen's complaints go to issues of proof which have to be resolved at trial." ECF No. 198 at 1-3.
Under Rule 7(c), the indictment must have "a plain, concise, and definite written statement of the essential facts constituting the offense charged." There is no requirement that the indictment state the full names of the individuals whose identities were allegedly stolen or provide additional identifying information; Cohen's reliance on United States v. Mitchell, 518 F.3d 230, 233 (4th Cir. 2008) is misplaced. There, the Fourth Circuit addressed whether someone's name was a sufficiently unique identifier to constitute "a means of identification of another person" such that the defendant's use of that name amounted to aggravated identity theft under 18 U.S.C. § 1028A. Mitchell, 518 F.3d at 233-235. The Court held that "[a] name alone... would likely not be sufficiently unique to identify a specific individual because many persons have the same name." Id. at 234. Mitchell, however, did not address whether the government had sufficiently alleged aggravated identity theft. Cohen's motion lacks merit, and will be denied.
Counts 23 to 27 of the third superseding indictment charge Cohen with making false statements to an insurance regulator under 18 U.S.C. § 1033. ECF No. 78 at 16-17. Cohen allegedly made several misrepresentations about Indemnity's financial status. Id.
18 U.S.C. § 1033 (a) (emphasis added).
Cohen seeks dismissal of those counts on the basis that "person" in the underlying statute, 18 U.S.C. § 1033, means "an entity" and not "an individual." ECF No. 180 at 1. The government argues that Cohen is the "whoever" in the first paragraph and that Congress has defined "whoever" and "person" to include corporations and individuals. ECF No. 218 at 1-2 ( citing the Dictionary Act, 1 U.S.C. § 1). The government further argues that if "only corporations could be convicted under Section 1033(a), the prescribed penalty would have been for a fine only and not imprisonment for 10 or 15 years." Id. at 3.
According to Cohen, the government should have charged Indemnity - not him - with making false statements because "individuals do not submit financial reports to regulators regarding themselves; only an entity submits financial reports to regulators on behalf of the entity." ECF No. 180 at 4. Though unclear, Cohen appears to argue that because he allegedly made false statements about Indemnity, the "whoever" and the "person" are not the same; thus, he cannot be held liable.
Section 1033 (a) (1) has been applied to individuals who allegedly made false statements about the companies for which they worked. See United States v. Womack, 514 F.Appx. 351, 352 (4th Cir. 2013) (per curiam) (unpublished); see also United States v. Renzi, 769 F.3d 731, 752 (9th Cir. 2014); United States v. Goff, 400 F.Appx. 507 (11th Cir. 2010) (unpublished); United States v. Sanders, No. 4:11CR13-RH/WCS, 2012 WL 385414, at *1 (N.D. Fla. Feb. 5, 2012); United States v. Segal, No. 02 CR 112, 2004 WL 2931331, at *4 (N.D. Ill.Dec. 13, 2004) (statute applied to individual defendants but judgment of acquittal was merited because the government failed to present sufficient evidence that license renewal applications submitted on behalf of the company were "financial reports or documents"). And, as noted above, the statute provides for a penalty - imprisonment - that cannot be conferred on a corporation. See 18 U.S.C. § 1033 (a) (2). Accordingly, Cohen's motion to dismiss counts 23 to 27 will be denied.
Counts 28 to 31 of the third superseding indictment charge Cohen with obstructing justice. ECF No. 78 at 18-23. Cohen seeks dismissal of count 28 on the basis that the indictment lacks "a description of the factual content" surrounding the circumstances under which Cohen allegedly stated "you are next [Attorney#2's name], I am coming after you"; thus, Cohen argues, the indictment violates his Sixth Amendment right to be informed about the "nature and cause of the accusation." ECF No. 134 at 2. Cohen also contends that the failure to provide factual context deprives him of his First Amendment rights. ECF No. 134 at 2. Cohen relies on United States v. Carrier, 672 F.2d 300 (2d Cir. 1982). See id. The government argues that Cohen's reliance on Carrier is misplaced, ECF No. 157 at 2. The government is correct.
In Carrier, the Second Circuit reversed the district court's dismissal of an indictment that had alleged threats against the president on the ground that it lacked sufficient "factual context in which the actions of the defendant occurred." 672 F.2d at 301. The Court held that "[t]he indictment [which tracked the language of the underlying offense] is valid on its face. Rule 7(c) (1)4 of the Federal Rules of Criminal Procedure neither requires nor permits that a different rule - one engrafted by judicial construction - should apply where free speech' considerations may constitute a defense to the crime charged." Id. at 301, 303. Accordingly, Cohen's argument lacks merit.

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