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United States v. Drake

United States District Court, M.D. North Carolina

April 24, 2018




         This court notes that a number of motions remain pending on the docket. Additionally, with respect to motions which have been previously denied, this court finds it appropriate, sua sponte, to file a written order addressing those to either clarify this court's rulings from the bench or clarify the record for purposes of the trial scheduled to begin on April 30, 2018.

         I. Motion to Dismiss (Doc. 52)

         Defendant Shannon Drake (“Drake”) filed a Motion to Dismiss the Superseding Indictment for Insufficient Allegations. (Doc. 52.) That motion was filed prior to the return of a Superseding Indictment, (Doc. 85), which is currently the relevant indictment in this case. As a result, Drake's motion to dismiss, (Doc. 52), will be denied as moot.

         II. Motion to Quash Subpoenas (Docs. 126, 127)

         This court previously addressed these motions in part during the course of a November 9, 2017 hearing on this matter. With respect to Motion to Quash Subpoenas Issued to James Medford by the United States and Ronald Keith Earnest, (Doc. 127), Mr. Medford did appear, (Tr. of Nov. 9, 2017 Hr'g (Doc. 135) at 20). The parties were permitted to interview Mr. Medford and proffer to the court any relevant information with respect to his potential testimony and the objection to his appearance raised in the motion to quash. (Id. at 22-24.) As a result of the agreed-upon proffer and the information tendered to the court, this court finds the motion to quash, (Doc. 127), should be denied as moot.

         The remaining motion to quash addressed the subpoenas to individuals requesting testimony and documents. (Doc. 126.) As to the requested testimony, this court overruled the objections contained in the motion to quash and permitted the testimony of the individuals subject to any objections at that time from interested parties, including GrandSouth Bank (the “Bank”) and Smith Moore Leatherwood (“Smith Moore”). (See generally Tr. of Nov. 9, 2017 Hr'g (Doc. 135).) That testimony is now completed under the procedure outlined herein, and this court finds the motion to quash, (Doc. 126), relating to testimony of individuals should be denied.

         The motion to quash, (Doc. 126), also objected to the production of certain records. The objection to the subpoenas as overly broad or unduly burdensome is overruled. The objection to Smith Moore's invoices and the entries contained therein is overruled for the reasons outlined previously; those invoices have been disclosed. As to the objection to disclosure of any remaining documents as protected under the attorney-client privilege, that objection is sustained as this court has found those documents subject to an attorney-client privilege existing between the Bank, Drake, and Smith Moore. (Doc. 266.) As a result, those documents may not be disclosed by Smith Moore pursuant to the subpoenas absent the consent of the Bank and Drake. Any further issues relating to disclosure will have to be resolved by and between the United States, Drake and her counsel, the Bank, and the Bank's counsel, Nexsen Pruet. As a result, this court finds that Smith Moore's motion to quash should be granted in part as to any further disclosure of records except as may be required by the Bank and Drake.

         III. Motions to Produce (Docs. 143, 218)

         Defendant Ronald Earnest (“Earnest”) has filed a motion to produce documents, (Doc. 143), seeking production of IRS, FBI, and FDIC Case Reports, (id. at 1). While this court does not fully agree with the suggested conclusions that might be reached from an IRS Memo completed on October 27, 2017, (Def. Earnest's Br. in Supp. of Mot. to Produce Documents, Ex. 1, Memorandum of Conversation (Doc. 144-1) at 1-2), this court finds the requested discovery overly broad and inclusive of matters and documents not required to be disclosed, see, e.g., Fed. R. Crim. P. 16(a)(2) (“[T]his rule does not authorize the discovery or inspection of reports, memoranda, or other internal government documents made by an attorney for the government or other government agent . . . .”). For this reason, Earnest's motion, (Doc. 143), will be denied.

         Similarly, Defendant Drake's motion to compel discovery, (Doc. 218), is a request for production that is also overly broad and inclusive of records not generally subject to disclosure. Furthermore, as this court has found that Drake did at least meet the definition of the term “target” in 2013, the production of additional records on that subject is moot. Drake's motion, (Doc. 218), will therefore be denied.

         IV. Government Motions to Quash (Docs. 192, 211)

         The motions by the Government to quash certain subpoenas were addressed in open court prior to the hearings held on February 8, 2018 and on March 7, 2018. In summary, with respect to the objection to certain testimony lodged by the Government based upon the Government's regulations establishing the circumstances under which a federal employee may be compelled to testify or produce evidence as set forth in United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951). During the course of these two hearings, this court permitted the calling of the Government witnesses but limited the testimony to those matters relevant to the limited purposes of the hearing. (Tr. of Mar. 7, 2018 Hr'g (Doc. 248) at 19.) As a result, this court granted in part and denied in part the motions to quash for reasons more fully addressed on the record.

         V. Motions to Dismiss - Multiplicity (Docs. 141, 154, 161, 168)

         Defendant Earnest filed a Motion to Dismiss Counts Three through Fourteen Based on Multiplicity. (Doc. 141.) Defendants Robert Taylor (“Taylor”) and Drake joined in that motion. (Docs. 154, 168.) Following a hearing on March 8, 2018, this court denied the motions as filed pretrial, but without prejudice to further motion following the presentation of evidence. (Tr. of Mar. 8, 2018 Hr'g (Doc. 249) at 35-36.) In summary, this court is unable to determine, pretrial, whether the separately-charged counts were “planned or contemplated together” or whether they are “chronologically and substantively independent from the other acts charged as the scheme.” See, e.g., United States v. Colton, 231 F.3d 890, 909 (4th Cir. 2000).

         Defendant Drake's motion alleging duplicity and the insufficiency of the pleadings in the Superseding Indictment, (Doc. 161), was also denied, (Tr. ...

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