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United States v. Lacey

United States District Court, D. Arizona

January 9, 2020

United States of America, Plaintiff,
Michael Lacey, et al., Defendants.


          Honorable Susan M. Brnovich United States District Judge.

         Pending before the Court is Defendants' Joint Motion to Dismiss Indictment for Grand Jury Abuse or, in the Alternative, for Disclosure of Grand Jury Transcripts. (Doc. 782, “Mot.” or “Motion”.) The Government responded and Defendants replied. (Doc. 812, “Resp.”; Doc. 826, “Repl.”.) Defendants requested oral argument, but the Court elects to resolve the Motion without it. See LRCiv 7.2(f). Defendants move to dismiss the indictment because the grand jury process was “unconstitutionally tainted, ” or alternatively, for “the disclosure of the grand jury transcripts so that the Defendants and the Court can examine the government's actions before the grand jury.” (Mot. at 8; see Repl. at 6.) Having considered the parties' briefings, the superseding indictment, (Doc. 230, “SI”), and pertinent case law, the Court denies Defendants' Motion as explained below.

         I. BACKGROUND

         The grand jury initially returned a 93-count indictment against Defendants on March 28, 2018. (Doc. 3.) Roughly five months later, it returned a 100-count superseding indictment against them. (Doc. 230, “SI”.) The SI charges conspiracy (Count 1), facilitating prostitution under the Travel Act (Counts 2-51), conspiracy to commit money laundering (Count 52), concealment of money laundering (Count 53-62), international promotion of money laundering (Count 63-68), transactional money laundering (Counts 69-99), and international concealment of money laundering (Count 100) against Defendants. (See generally id.) Defendants now move to dismiss the SI in its entirety for grand jury abuse, or alternatively, for disclosure of the grand jury's transcripts. (Mot. at 8.)


         “[T]he grand jury is deeply rooted in Anglo-American history.” United States v. Calandra, 414 U.S. 338, 342 (1974); see Costello v. United States, 350 U.S. 359, 361-62 (1956). It exists to “determin[e] whether there is probable cause to believe a crime has been committed” and to “protect[] . . . citizens against unfounded criminal prosecutions.” Calandra, 414 U.S. at 343. “The grand jury proceeding is accorded a presumption of regularity, which generally may be dispelled only upon particularized proof of irregularities in the grand jury process.” United States v. Mechanik, 475 U.S. 66, 75 (1986) (O'CONNOR, J., concurring); see also Costello, 350 U.S. at 363 (“An indictment returned by a legally constituted and unbiased grand jury, . . . if valid on its face, is enough to call for trial of the charge on the merits. The Fifth Amendment requires nothing more[]”); see also United States v. R. Enters, Inc., 498 U.S. 292, 300 (1991) (noting how “the law presumes, absent a showing to the contrary, that a grand jury acts within the legitimate scope of its authority”).

         A. Dismissing Indictment for Error in Grand Jury Proceedings

         “[A]s a general matter, a district court may not dismiss an indictment for errors in grand jury proceedings unless such errors prejudiced the defendants.” Bank of Nova Scotia v. United States, 487 U.S. 250, 254 (1988). In line with this, Federal Rule of Criminal Procedure 52(a)'s harmless error inquiry requires federal courts disregard errors, defects, irregularities, or variances not affecting substantial rights. See Mechanik, 475 U.S. at 70- 72 (finding post-trial refusal to dismiss indictment for Rule 6(d)[1] violation because error rendered harmless after guilty verdict). “[T]here is ‘no reason not to apply [Rule 52(a)] to errors, defects, irregularities, or variances occurring before a grand jury[.]'” Bank of Nova Scotia, 487 U.S. at 255 (quoting Mechanik, 475 U.S. at 71-72).

         When “a court is asked to dismiss an indictment prior to the conclusion of the trial, . . . dismissal of the indictment is appropriate only ‘if it is established that the violation substantially influenced the grand jury's decision to indict,' or if there is ‘grave doubt' that the decision to indict was free from the substantial influence of such violations.” Bank of Nova Scotia, 487 U.S. at 256 (emphasis added) (quoting Mechanick, 475 U.S. at 78 (O'CONNOR, J., concurring)). “[Bank of Nova Scotia's ‘grave doubts'] standard does not ‘circumvent the harmless-error inquiry prescribed by Federal Rule of Criminal Procedure 52(a),' because it requires the defendant[s] suffer prejudice.” United States v. Navarro, 608 F.3d at 539. Instead, the “grave doubts” standard merely defines when an error is harmless.[2]Id.

         In cases of alleged prosecutorial misconduct, “[t]he Court's power to dismiss an indictment on the ground of prosecutorial misconduct is frequently discussed but rarely invoked.” United States v. Samango, 607 F.2d 877, 881 (9th Cir. 1979). “One challenging an indictment carries a difficult burden. He must demonstrate that the prosecutor engaged in flagrant misconduct that deceived the grand jury or significantly impaired its ability to exercise independent judgment.” United States v. Al Mudarris, 695 F.2d 1182, 1185 (9th Cir. 1983) (citing United States v. Wright, 667 F.2d 793, 796 (9th Cir. 1982)). “Dismissal of an indictment is required only in flagrant cases in which the grand jury has been overreached or deceived in some significant way, as where perjured testimony has knowingly been presented[.]” Samango, 607 F.2d at 882 (quoting United States v. Thompson, 576 F.2d 784, 786 (9th Cir. 1978)).

         In evaluating whether to dismiss, a court may not look beyond the indictment to determine if the evidence upon which it was based is sufficient. See Costello, 350 U.S. at 363; see also United States v. Lunstedt, 997 F.2d 665, 667 (9th Cir. 1993) (“A district court cannot grant a motion to dismiss an indictment if the motion is substantially founded upon and intertwined with evidence concerning the alleged offense” (citations and internal quotations omitted)). A court can only grant “such a dismissal if it is entirely segregable from the evidence to be presented at trial.” Id. (citations and internal quotations omitted). If this is not the case, “the motion falls within the province of the ultimate finder of fact and must be deferred [to the jury].” Id. (citations omitted).

         B. Disclosing Grand Jury Transcripts

         The longstanding cornerstone of the grand jury is that “[i]t deliberates in secret and may determine alone the course of its inquiry.” Calandra, 414 U.S. at 343; see also United States v. Johnson, 319 U.S. 503, 513 (1943); Costello, 350 U.S. at 362. Not even a judge presides to monitor its proceedings. Calandra, 414 U.S. at 343. “This ‘indispensable secrecy of grand jury proceedings,' must not be broken except where there is a compelling necessity” that is “shown with particularity.” United States v. Procter & Gamble Co, 356 U.S. 677, 682 (1958) (internal citation omitted). “To allow the intrusion . . . into the indispensable secrecy of grand jury proceedings-as important for the protection of the innocent as for the pursuit of the guilty-would subvert the functions of federal grand juries by all sorts of devices . . . such as ready resort to inspection of grand jury minutes.” Johnson, 319 U.S. at 513.

         The Supreme Court has acknowledged numerous public policy principles justifying the ...

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