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United States v. Hardy

United States District Court, D. Nevada

February 24, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
DELMAR L. HARDY, Defendant.

          ORDER

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE

         I. SUMMARY

         Defendant Delmar L. Hardy (“Hardy”) was indicted on five counts - one count of conspiracy, three counts of false tax returns and one count of corruptly obstructing or impeding due administration of the Internal Revenue laws. (ECF No. 1.) Hardy has filed the following pretrial motions: (1) motion to dismiss indictment (ECF No. 40); (2) motion for bill of particulars (ECF No. 34); (3) motion for statement of primary factual basis for each count (ECF No. 35); (4) motion for release of grand jury transcript (ECF No. 36); (5) motion to take deposition (ECF No. 37); (6) motion to compel discovery (ECF No. 39); (7) motion to suppress (ECF No. 38); and (8) three motions requesting notice of intent to use Rule 404(b) evidence, for government notice of intent to use evidence, and for written summary of expert witness testimony (collectively, “Requests”) (ECF Nos. 41, 42, 47). The Court has reviewed the briefs relating to these motions, including the government’s responses and Hardy’s replies. For the reasons discussed below, Hardy’s motions are denied.

         II. RELEVANT BACKGROUND

         On January 27, 2016, the Grand Jury returned the Indictment in this case, charging Hardy with five counts relating to tax fraud. (ECF No. 1.) The conspiracy offense charged in Count One alleges that between July 2009 and January 2012, Hardy agreed and conspired with A.S.[1] and others to commit the offense of Structuring Financial Transactions against the United States in violation of 31 U.S.C. §§ 5324(a)(3) and (d)(2). (Id. at 3.) The Indictment alleges that Hardy and A.S. concealed the true source of their limited liability company XYZ Real Estate, LLC’s (“XYZ”) funds “by purchasing structured money orders from domestic financial institutions[] and by making structured deposits of A.S.’s cash into XYZ accounts so as to avoid the currency transaction reporting requirements of [] financial institutions.” (Id. at 2.) The purported “objects of the conspiracy were to conceal from banks and creditors[ ] the true source of funds and the identity of assets[] by knowingly structuring the purchase of money orders from domestic financial institutions[] and by knowingly depositing cash and money orders in accounts held by federally insured banks.” (Id. at 3.) Counts Two through Four allege Hardy filed false tax returns for tax years 2008, 2009 and 2010 in violation of 26 U.S.C. § 7206(1). (Id. at 4-8.) Count Five alleges that between approximately December 2010 and November 2011, Hardy “did corruptly endeavor to obstruct and impede the due administration of the Internal Revenue laws by concealing A.S.’s contributions to, and taxable interests in, XYZ” and by “executing United States Income Tax Return, Form 1040, for each of tax years 2009 and 2010, showing on Schedule E the rental income and expenses incurred by XYZ as that of Hardy [sic] for each of those tax years.” (Id. at 8.)

         III. DISCUSSIONS

         A. Motion to Dismiss (ECF No. 40)

         Hardy seeks dismissal under Federal Rule of Criminal Procedure 12(b)(3)(B)(v) for failure to state an offense. In considering a dismissal under Rule 12(b)(3)(B)(v), the district court “must accept the truth of the allegations in the indictment in analyzing whether a cognizable offense has been charged.” United States v. Boren, 278 F.3d 911, 914 (9th Cir. 2002). The government is not required to state its theory of the case or allege supporting evidence in an indictment; rather, the government need only allege the “essential facts necessary to apprise a defendant of the crime charged.” United States v. Buckley, 689 F.2d 893, 897 (9th Cir. 1982) (quoting United States v. Markee, 425 F.2d 1043, 1047-48 (9th Cir. 1970), cert. denied, 400 U.S. 847 (1970)).

         The gist of Hardy’s argument is that Count One fails to adequately allege a conspiracy to structure financial transactions because the relevant law does not require a currency transaction report (“CTR”) for deposits of money orders.[2] (See, e.g., ECF No. 40 at 3 (citing 31 C.F.R. § 1010.311).). The government responds that Hardy’s argument is based on a selective reading of the Indictment and that Hardy relies on some “precise word or words that in isolation do not undermine the sufficiency of each count” while ignoring the Indictment as a whole. (ECF No. 53 at 3.) The government further points out that Hardy does not dispute that each alleged offense recites the essential elements. (Id.)

         The Court agrees with the government that Hardy’s reading of the Indictment is inappropriately selective. “[A]n indictment should be: (1) read as a whole; (2) read to include facts which are necessarily implied; and (3) construed according to common sense.” Buckley, 689 F.2d. at 899.

         Here, the Indictment alleges that Hardy concealed “the true source of funds and the identity of assets [] by knowingly structuring the purchase of money orders from domestic financial institutions[] and by knowingly depositing cash and money orders in accounts held by federally insured banks.” (ECF No. 1 at 2-3.) Read as a whole, the Indictment alleges that the prohibited financial structuring involved not just money orders but also cash and cashier’s checks. Hardy discriminately focuses on the Indictment’s references to “money orders” and their monetary amounts to argue that the Indictment fails to sufficiently allege an offense of conspiracy. For example, Hardy claims that because the maximum amount of money that may be purchased for a money order is $1,000, the fact that A.S. delivered “each money order” in an amount under $3,000 does not constitute illegal structuring. (ECF No. 40 at 7.) But this selective focus on the monetary limit of each money order again ignores the Indictment as a whole. The Indictment alleges that “money orders and cashier checks purchased” were made in structured amounts to conceal “the true source of the funds and identity of the assets.” (ECF No. 1 at 3.)

         Hardy also claims that the Indictment does not allege any false information in Schedule E of the 2008 tax return. (ECF No. 40 at 8.) The government responds that the allegations in Count Two do not depend on whether Schedule E contains false information. (ECF No. 53 at 4.) The Court agrees with the government. Count Two alleges Hardy’s Individual Income Tax Return Form 1040 (with Schedules C and E thereto), which he verified, contains false information relating to his business income and adjusted gross income. (ECF No. 1 at 5.)

         The Indictment sufficiently states the charged offenses against Hardy. Therefore, Hardy’s motion to dismiss is denied.

         B. Motion for Bill of Particulars (ECF No. 34)

         Hardy asks for a bill of particulars - i.e., a detailed list of the government’s claims against him - including what evidence the government intends to offer and in “what form it intends to present its evidence.” (ECF No. 34 at 9.) The government argues that Hardy relies on a bill of particulars not for its intended purpose and instead requests one in an attempt to obtain discovery. (ECF No. 48 at 4-6.) In his reply, Hardy appears to concede that his motion exceeds the scope of a bill of particulars. (See ECF No. 64 at 3.) Hardy contends he “seeks information about the theory of the case.” (Id.) Hardy urges the Court to construe his motion more liberally because of the complex nature of the tax charges. (Id. at 2-3.)

         Federal Rule of Criminal Procedure 7(f) gives the court authority to “direct the government to file a bill of particulars.” It also provides that “[t]he defendant may move for a bill of particulars before or within 14 days after ...


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