Currently pending before the Court are four motions to dismiss filed by Defendant Ben Wootton and joined by Defendant Race Miner by Order dated October 16, 2018. (Doc. 92). Those motions are as follows: Defendant Ben Wootton's Motion to Dismiss Counts 1, 3-8, and 9 with Incorporated Brief, (Doc. 70), Defendant Ben Wootton's Motion to Dismiss Count 9 - Failure to Allege Commission of a Crime, (Doc. 72), Defendant Ben Wootton's Motion to Dismiss Count 2 - Duplicitous, (Doc. 73), Defendant Ben Wootton's Motion to Dismiss Count 2 - Statute of Limitations, (Doc. 74). Also pending are Defendant Race Miner's Motion to Dismiss Count 2, (Doc. 93), Defendant Race Miner's Motion to Sever Defendant, (Doc. 98), and Defendant Ben Wootton's Motion for Severance of Charges, (Doc. 71). All of these motions have been fully briefed and are ripe for disposition. For the reasons that follow, all of these aforementioned motions shall be denied.
I. STATEMENT OF FACTS
On May 3, 2017, the Government charged Ben Wootton, Race Miner, and Keystone Biofuels in a seven count Indictment, alleging that Wootton, Miner, and Keystone conspired to commit a criminal offense. (Doc. 1). On January 24, 2018, the Government filed a nine-count Superseding Indictment, the operative indictment in this case. (Doc. 41). In Count 1, the Government charged that, between August 13, 2009 and September 24, 2013, Wootton, Miner, and Keystone conspired to falsify or conceal a material fact or make materially false or fraudulent statements to the Environmental Protection Agency ("EPA"). According to the Government, Wootton, Miner, and Keystone unlawfully generated over sixteen million biodiesel Renewable Identification Numbers ("RINs") through the EPA's online Moderated Transaction System, knowing that the biodiesel for which these RINs were being generated did not meet the standards established by the American Society of Testing and Materials provision D6751 ("ASTM D6751") as required by EPA regulations. These RINs were then traded or sold pursuant to the Energy Independence and Security Act of 2007, generating in excess of $10 million for Wootton, Miner, and Keystone. As overt acts in furtherance of this conspiracy, the Government cited emails between unindicted co-conspirators, Wootton, and Miner which indicated that samples of Keystone's biodiesel had failed testing for conformity with ASTM D6751, as well as certificates signed by Wootton which certified that the biodiesel for which Keystone had generated the RINs conformed to ATSM D6751. Relatedly, in Counts 3 through 8 of the Superseding Indictment, the Government alleged that the codefendants' false statements to the EPA directly violated
In Count 2, the Government charged that Wootton and Miner conspired to defraud the Internal Revenue Service ("IRS"). As relevant background, the IRS provides a refundable Biodiesel Mixture Credit ("BMC") to individuals or businesses that mix
II. DEFENDANTS' MOTIONS TO DISMISS
A federal indictment need include only "a plain, concise, and definite written statement of the essential facts constituting the offense charged" and "the official or customary citation of the statute, rule, regulation, or other provision of law that the defendant is alleged to have violated." FED.R.CRIM.P. 7(c)(1). An indictment is sufficient under Rule 7 if it:
(1) contains the elements of the offense intended to be charged, (2) sufficiently apprises the defendant of what he must be prepared to meet, and (3) allows the defendant to show with accuracy to what extent he may plead a former acquittal or conviction in the event of a subsequent prosecution.
United States v. Kemp ,
a. Defendants' Motion to Dismiss Counts 1, 3-8, and 9 Based Upon the Government's Failure to Allege the Commission of Criminal Conduct, the Rules of Statutory Construction, the Rule of Lenity, and the Void for Vagueness Doctrine
In their first set of issues, Defendants move to dismiss Counts 1, 3-8, and 9 of the Superseding Indictment for a variety of reasons. By way of background, Defendants outline the history of ASTM D6751 and its development as a part of Congress' delegation of the Renewable Fuel Standard program ("RFS program") to the EPA. For purposes of this memorandum, it is sufficient to note that, according to Defendants, ASTM D6751 provides a qualitative definition of blended biofuel at "time and place of delivery," without further defining the contours of that assertedly-nebulous period. (See Doc. 70 at 9). Defendants also posit that the RFS program designates violations of this qualitative regulation as a strict-liability offense subject to only civil penalties.
With that background, Defendants aver that the Government has failed to prove that the biodiesel for which Defendants generated RINs in Counts 1 and 3-8 or for which the Defendants applied for the BMC in Count 9 did not comply with ASTM D6751. Defendants contend that the Government's reliance upon mid-production analyses to prove that Keystone's final product did not comply with ASTM D6751 at "time and place of delivery" as required by ASTM D6751, fails to consider that Keystone remedied the final product prior to delivery to comply with the regulation. Moreover, Defendants postulate, if the Government conducted their own tests outside of Keystone's facility following delivery, the Government has failed to show that those tests reliably measured the fuel's compliance with ASTM D6751 because it is entirely possible that the tested fuel was tainted in some way after delivery. Indeed, Defendants argue, despite the voluminous discovery turned over, the Government has failed to identify the results of a single post-production test and, importantly, the Government has failed to identify a single customer complaint concerning the quality of Keystone's biofuels. Accordingly, Defendants conclude, in the absence of direct evidence proving that Keystone's biofuel for which it generated RINs or requested the BMC did not conform to ASTM D6751 at the time and place of delivery, there can be no conspiracy as charged in Count 1, no false statements as charged in Counts 3-8, and no aiding or assisting in the preparation of false tax claims in Count 9.
Alternatively, Defendants argue that, because the RFS program designates a violation of ASTM D6751 as a purely civil offense, the plain meaning rule of
Finally, Defendants charge that ASTM D6751 should be deemed void for vagueness. According to Defendants, because ASTM D6751 maintains strict standards for biodiesel "at the time and place of delivery"-without further defining what that means-the regulation is vague and must be voided. In turn, Defendants argue, because Counts 1, 3-8, and 9 rely upon ASTM D6751 as the basis for the charges, those charges must be dismissed.
In response, the Government asserts that Defendants' arguments fail to consider the deferential standard of review applicable to a motion to dismiss in the criminal context and improperly ask this Court to evaluate the sufficiency of the Government's evidence. The Government posits that, at trial, it will present evidence showing that Keystone did not produce fuel meeting the requirements of ASTM D6751, nonetheless generated RINs, and claimed the relevant tax credits. The Government further notes that, at this stage, taking the allegations in the Superseding Indictment as true as is the district court's obligation, the Superseding Indictment sufficiently outlines the elements of the offenses charged and the facts in support thereof, and dismissal is not warranted. Indeed, the Government argues, Defendants' self-serving pretrial claims that they remedied mid-production tests which indicated that the biodiesel failed to comply with ASTM D6751 prior to delivery, or that none of Keystone's customers ever complained concerning the quality of Keystone's biofuels, are insufficient to overcome the veracity of the Superseding Indictment's allegations.
Concerning the Defendants' construal of the RFS program and ASTM D6751 as imposing only civil penalties, the Government points out that it has not alleged that the Defendants violated the RFS program's regulatory framework. Rather, Defendants are charged with conspiracy to defraud the EPA and the IRS and other associated predicate crimes-crimes that are wholly separate from and unrelated to the RFS program. The fact that the crimes alleged rely upon definitions in ASTM D6751 as the basis for allegations of fraud and false statements does not import the civil penalties outlined thereunder as the only basis for the Government to proceed. For the same reason, the Government posits, neither the plain meaning rule, nor the rule of lenity, nor the void for vagueness doctrine warrant dismissal of the instant prosecution. According to the Government,
First, in challenging the Superseding Indictment as they have, Defendants have failed to consider the deferential standard of review applicable to a criminal pretrial motion to dismiss. A federal indictment requires "no greater specificity than the statutory language ... so long as there is sufficient factual orientation to permit the defendant to prepare his defense and to invoke double jeopardy in the event of a subsequent prosecution." Kemp ,
Second, Defendants' reliance upon the rules of statutory construction, the rule of lenity, and the void for vagueness doctrine are misguided. All of Defendants' arguments supporting this line of reasoning assume that the Defendants have been charged with violations of the RFS program and/or ASTM D6751 specifically. However, Defendants fail to consider that, although the conspiracy and predicate offenses with which they have been charged necessarily rely upon the definition of biodiesel as outlined in ASTM D6751, the Defendants have actually been charged with conspiracy to make false statements to the EPA and the IRS in violation of
a. Motion to Dismiss Count 2 Based upon Duplicity
In their second set of issues, Defendants argue that Count 2 should be dismissed as duplicitous. Specifically, Defendants aver that, although Count 2 is framed as a single conspiracy, it is, in fact, three separate conspiracies that involve different overt acts, different locations, and different participants. Therefore, Defendants conclude, Count 2 is duplicitous and must be dismissed.
According to Defendants, Count 2 is comprised of three conspiracies. The first conspiracy involved off-spec fuel that was mixed but did not comply with ASTM D6751, was alleged to have occurred between 2009 and 2012, and took place at Keystone's Shiremanstown facility and at Keystone's Camp Hill facility. The second conspiracy involved the never-produced phantom fuel and was alleged to have occurred in only 2009 at only the Shiremanstown facility. The third conspiracy involved the unmixed fuel and was alleged to have occurred between December 2011 and January 2012 at only Keystone's Camp Hill location. In further support of their view that these allegations constitute distinct conspiracies, Defendants explain that the Government has alleged that the Defendants tried to cover up only the phantom fuel conspiracy by falsifying transaction records, but did not do so in the other two alleged conspiracies. Thus, Defendants aver, each conspiracy involves different witnesses, took place at different times, and in different locations, and, therefore, cannot be charged in a single count.
In further support of their position, the Defendants rely upon United States v. Kelly ,
First, we examine whether there was a common goal among the conspirators. Second, we look at the nature of the scheme to determine whether "the agreement contemplated bringing to pass a continuous result that will not continue without the continuous cooperation of the conspirators." Third, we examine the extent to which the participants overlap in the various dealings.
The Defendants argue that under the Kelly test, Count 2 includes multiple conspiracies because the "unmixed fuel conspiracy has no common goal with the other two conspiracies." (Doc. 77 at 5). Specifically, "because failing to splash biodiesel with inexpensive diesel clearly would save only a few dollars in a multi-million dollar sale, and, thus, purposefully failing to splash is not an action taken to enrich anyone," the unmixed fuel conspiracy is separate and distinct from the others. (Id. ). Moreover, Defendants argue generally that each conspiracy's success is unrelated to the success of the others. Thus, Defendants reiterate, Count 2 involves
In response, the Government argues that, although the conspiracy between Wootton and Miner to defraud the IRS by fraudulently claiming the BMC may have involved a number of false representations (i.e. , off-spec fuel, phantom fuel, and unmixed fuel), those representations were all made as part of the same underlying agreement. Relying upon the Kelly inquiry, the Government contends that each false representation necessarily depended upon the co-conspirators' fraudulent proposition that the biodiesel conformed to ASTM D6751. Thus, the Government delineates:
As alleged, the key conspirators, Ben Wootton, and Race Miner, had an agreement between themselves and with other conspirators to defraud the IRS by submitting false Forms 8849 to the IRS and by concealing their fraud through sham paperwork and transactions. While the Forms 8849 may have been false in different ways over the course of the conspiracy (and, in fact, were consistent in falsely representing the quality of the fuel), the overarching goal (defrauding the IRS) and the overarching method of obtaining that goal (submitting false Forms 8849) remained the same.
(Doc. 89 at 8). We agree.
An indictment is duplicitous where it combines two or more "distinct and separate offenses in a single count." United States v. Rigas ,
Although, as noted, our Court of Appeals has provided a three-part inquiry to identify whether a "series of events constitutes a single conspiracy or separate and unrelated conspiracies," see Kelly ,
On its face, Count 2 of the Superseding Indictment outlines a single conspiracy to defraud the IRS by unlawfully claiming the BMC in a variety of ways. This end was alleged to have been achieved by claiming the credit for fuel that was mixed but was not actually eligible for the credit (the off-spec fuel), for fuel that was never produced (the phantom fuel), and for fuel that had never been mixed (the unmixed fuel). "Although its objectives may be numerous and diverse, a single conspiracy exists if there is one overall agreement among the parties to carry out those objectives.' " Bobb ,
Even so, because Kelly is instructive in the post-trial context as to whether the Government has provided sufficient evidence of a single or multiple conspiracies, that test is in some ways helpful sub judice . Indeed, the allegations in Count 2 meet at least two out of the three Kelly factors.
First, it is clear that the Superseding Indictment alleges that Wootton and Miner "contemplated bringing to pass a continuous result"-namely, enriching themselves by defrauding the IRS, thus meeting the first Kelly factor. See Kelly ,
b. Motion to Dismiss Count 2 Based upon Statute of Limitations and Count 9 for Failing to Allege the Commission of a Crime
In their third set of issues, Defendants argue that Count 2 is barred by the six-year statute of limitations applicable to conspiracy to defraud the IRS. Although Defendants recognize that the Government has alleged in Count 2 that Wootton and Miner submitted a fraudulent IRS Form 8849 as late as January 31, 2012 and, therefore, the January 24, 2018 Superseding Indictment was filed within the relevant
In response, the Government contends that this Court's well-settled standard of review dictates that, at this stage of the prosecution, the Court must accept as true all of the Superseding Indictment's allegations. Therefore, the Government concludes, Defendants' motion to dismiss Count 2 based upon the statute of limitations "should be denied because the government has alleged an overt act falling within the applicable statute of limitations ... [r]egardless of the defendant's beliefs about the correctness of the allegation." (Doc. 87 at 3). Indeed, the Government points out, Defendants concede in their brief that, "[i]f these allegations are correct, the Government timely charged Defendants with the misconduct alleged in Count 2." (Doc. 74 at 3).
The Government also explains that the allegations in Count 9 satisfy this same well-settled standard. According to the Government, "Count Nine alleges the elements of the offense and goes beyond those elements to sufficiently apprise the defendant of the nature of the charge against him and to allow him to prepare his defense." (Doc. 88 at 5). Moreover, the Government avers that, at bottom, Defendants' challenge to Count 9 is based on their contention that the Superseding Indictment lacks sufficient evidence to support the claim-an improper inquiry at this preliminary, pretrial stage.
In their Reply brief, Defendants maintain that, despite our well-standard of review, this Court is authorized to hold an evidentiary hearing concerning the lawfulness of the January 31, 2012 IRS submission and then use the evidence gleaned at that hearing to dismiss Counts 2 and 9 under United States v. McGill ,
In this case, Defendants have failed entirely to identify why this Court's
Finally, Defendants' reliance upon McGill is misguided. McGill 's holding that a trial court may, "in limited circumstances," look to documents referenced in pretrial filings to decide pretrial joinder issues does not authorize this Court to conduct a pretrial evidentiary hearing for the purposes of evaluating a defendant's pretrial motion to dismiss a count of the indictment. To expand McGill 's statement as Defendants request flies in the face of this Court's well-settled standard of review in the pretrial motion to dismiss context and would, in essence, force the trial court to conduct a pretrial mini-trial simply because a defendant alleges that the Government has failed to adequately support the charges levied against that defendant in a criminal indictment. Doing so would render trial nugatory and usurp the role of the jury as fact-finder. Indeed, Federal Rule of Criminal Procedure 12(b)(3) under which Defendants have raised the instant motion allows a criminal defendant to file pre-trial motions only when "the basis for the motion is then reasonably available and the motion can be determined without a trial on the merits." FED.R.CRIM.P. 12(b)(3). Other than a single out-of-context quotation from McGill , Defendants have failed entirely to identify the procedural and/or precedential basis for their request. Accordingly, Defendants' motion to dismiss Count 2 based upon statute of limitations and Count 9 based upon failure to allege the commission of a crime shall be denied.
III. DEFENDANTS' MOTIONS TO SEVER
Fed.R.Crim.P. 8 provides that an indictment may charge a single defendant with multiple counts so long as "the offenses charged ... are of the same or similar character, or are based on the same act or transaction, or are connected with or constitute parts of a common scheme or plan." FED.R.CRIM.P. 8. Likewise, an indictment may charge two or more defendants in the same document provided "they are alleged to have participated in the same act or transaction, or in the same series of acts or transactions, constituting an offense or offenses. The defendants may be charged in one or more counts together or separately. All defendants need not be charged in each count."
a. Wootton's Motion to Sever Counts 2 and 9
In his motion, Wootton asks this Court to sever Counts 2 and 9 concerning the IRS-related frauds from Counts 1 and 3-8 concerning the EPA-related frauds. Although recognizing that "similarities exist in the proof which will be presented in support of both the EPA [frauds in Count 1 and Counts 3-8] and the IRS frauds [in Counts 2 and 9]," Wootton contends that "the trial of the two distinct conspiracies in a single trial is inherently prejudicial," (Doc. 71), and that severance is warranted because the two prosecutions amount to "repetitious wrongdoing" that is not "temporally related." (Doc. 75 at 2). Wootton also argues that the Government's decision to include Counts 2 and 9 within the Superseding Indictment was "motivated by a desire to provide a date within the applicable statute of limitations." (Id. at 3). Thus, Wootton concludes, because the EPA-related charges in Counts 1 and 3-8 were rendered timely only by including the IRS-related charges in Counts 2 and 9, joining the two prosecutions in one trial would be inherently prejudicial, and the charges must be severed.
In response, the Government contends that all of the charges in the Superseding Indictment have a strong transactional nexus sufficient to warrant joinder under Fed.R.Crim.P. 8 -that is, whether the biodiesel at issue was eligible for the credits at issue-and that Wootton has demonstrated no more than generic prejudice inherent in any multi-count indictment. Here again, we agree with the Government.
At bottom, Wootton's arguments constitute generalized allegations "that severance would improve [his] chance of acquittal." See Reicherter ,
b. Miner's Motion to Sever his Trial from that of his Codefendants
In his motion, Miner argues that his trial should be severed from that of his
In support thereof, Miner relies upon United States v. Provenzano ,
[I]f the jury had been persuaded that Cotler alone received the payoffs and was unconnected with any of the other defendants, there would have been a failure of proof on the conspiracy and RICO counts. Not only his co-defendants, but Cotler as well, would have walked away from the indictment had sole culpability been fastened on him.
Alternatively, in the instant case, Miner argues generally that severance is warranted because "the jury [will] be unable to separate culpability between Mr. Miner and Mr. Wootton as to the wrongdoing that is alleged to have occurred at Keystone"-a company that Miner once owned and operated. (Doc. 99 at 7).
In response, the Government argues that joinder is appropriate under Rule 8. This is so, the Government contends, even if Miner did not participate in every aspect of the conspiracy, (Doc. 114 at 7 (citing United States v. Thornton ,
The Government also contests Miner's allegation that his allegedly antagonistic defense warrants severance. According to the Government, the record reveals that, until this point, Wootton's challenges have not sought to shift blame to Miner. Thus, Miner's attempt to sever his trial based upon what he imagines Wootton's defense may be is wholly unsupported and speculative.
Moreover, the Government challenges Miner's reliance upon Provenzano , which, in the Government's view, not only fails to support Miner's position but, in fact, cuts against granting him the relief requested. In Provenzano , the Third Circuit agreed that severance was not warranted, despite Defendant Colter's proffer of what he considered to be an antagonistic defense. Not only did the Provenzano Court fail to see Defendant Colter's alleged defense as meeting the "irreconcilable and mutually exclusive" standard to warrant severance, but the Court understood that the codefendants' placement of blame upon solely Defendant Colter amounted to a legitimate trial defense to conspiracy charges. See Provenzano ,
In this case, Miner has failed to "demonstrate clear and substantial prejudice resulting in a manifestly unfair trial" such that severance of his trial from that of his codefendants is warranted. Reicherter ,
Moreover, even if Wootton's defense does point the finger at Miner, Miner has failed to identify why such a defense is necessarily irreconcilable and/or mutually exclusive of Miner's defense. As noted by the Provenzano Court, if the jury believes
IV. CONCLUSION
In accordance with the foregoing, all of Defendants' motions to dismiss and to sever shall be denied.
NOW, THEREFORE, IT IS HEREBY ORDERED:
1. Defendants' Motion to Dismiss Counts 1, 3-8, and 9 with Incorporated Brief (Doc. 70) is DENIED.
2. Defendants' Motion to Dismiss Count 9 - Failure to Allege Commission of a Crime (Doc. 72) is DENIED.
3. Defendants' Motion to Dismiss Count 2 - Duplicitous (Doc. 73) is DENIED.
4. Defendants' Motion to Dismiss Count 2 - Statute of Limitations (Doc. 74) is DENIED.
5. Defendant Race Miner's Motion to Dismiss Count 2 (Doc. 93) is DENIED .
6. Defendant Ben Wootton's Motion for Severance of Charges (Doc. 71) is DENIED.
7. Defendant Race Miner's Motion to Sever Defendant (Doc. 98) is DENIED .
Notes
In the biodiesel industry, this process is sometimes referred to as "mixing," "blending," or "splashing." These terms are used interchangeably throughout the parties' briefing.
"Because it is presumed that Congress expresses its intent through the ordinary meaning of its language, every exercise of statutory interpretation begins with an examination of the plain language of the statute." Alston v. Countrywide Fin. Corp. ,
Under the rule of lenity, "an ambiguous criminal statute is to be construed in favor of the accused." Staples v. United States ,