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United States v. Katakis

United States District Court, E.D. California

May 11, 2017




         Before the court is defendant Andrew B. Katakis' Second Amended Motion for New Trial Under Fed. R. Crim. P. 33 filed February 21, 2017 (Docket No. 611), and defendant Donald M. Parker's joinder in Katakis' motion (Docket No. 622).

         I. Factual and Procedural History

         This case concerns allegations of a scheme to rig bids at public real estate foreclosure auctions in San Joaquin County, California in 2008 and 2009. Specifically, the government alleges that Katakis and Parker, two real estate investors, along with other individuals, and aided by auctioneer or “crier” W. Theodore Longley, agreed not to compete to purchase certain properties at public auctions, designated which conspirator would bid for the properties at the auctions, refrained from bidding for the properties, and made payoffs to and received payoffs from one another in return for refraining from bidding at the auctions. (Superseding Indictment 3-4 (Docket No. 136).)

         The agreement eventually developed into a scheme whereby Katakis and others agreed that only one person would bid on a property at the public auction on the courthouse steps, and then the conspirators would hold a secondary auction or “round robin” across the street. The winner of the secondary auction would then pay the other bidders at the secondary auction the “pot, ” or the difference between the price paid at the public auction and the round robin, with each failed bidder receiving a portion, or “chop, ” of the pot. The government also alleges that after Katakis learned about the government's investigation into the conspiracy, he deleted emails using computer software to overwrite the records so they could not be recovered, in an attempt to obstruct the investigation. (Superseding Indictment 8-9.)

         In the Superseding Indictment, the government charged defendants Katakis, Parker, and Longley with violation of the Sherman Antitrust Act under 15 U.S.C. § 1 and conspiracy to commit mail fraud under 18 U.S.C. § 1349.[1] The government also charged Katakis with obstruction of justice under 18 U.S.C. § 1519. After a twenty-three day jury trial, [2] the jury found Katakis and Parker guilty of the Sherman Act antitrust charge but was unable to reach a verdict on the mail fraud charge. The jury also found Katakis guilty of the obstruction of justice charge. The jury acquitted Longley on both the Sherman Act antitrust and mail fraud charges. (Docket Nos. 277, 278, 279.)

         After trial, Katakis moved for a new trial on his antitrust conspiracy conviction and separately moved for judgment of acquittal as to the obstruction of justice conviction. This court granted the motion for judgment of acquittal on the obstruction conviction, holding that evidence was insufficient to show that Katakis actually deleted or concealed electronic records or files. (Docket No. 317.) The Ninth Circuit affirmed, holding, among other things, that while there was “truly overwhelming” evidence of Katakis' intent to delete emails, there was insufficient evidence that he actually deleted any emails. United States v. Katakis, 800 F.3d 1017, 1027 (9th Cir. 2015).

         After the Ninth Circuit affirmed this court's judgment of acquittal as to Katakis' obstruction of justice conviction, and after Katakis obtained extensive further discovery, Katakis filed his Second Amended Motion for a New Trial, and Parker joined in the motion.

         II. Legal Standard

         Under Federal Rule of Criminal Procedure 33(a), a “court may vacate any judgment and grant a new trial if the interest of justice so requires.” In evaluating a motion for a new trial under Rule 33, “[t]he court is not obliged to view the evidence in the light most favorable to the verdict, and it is free to weigh the evidence and evaluate for itself the credibility of the witnesses.” Id. The burden of justifying a new trial rests with the defendant, United States v. Endicott, 869 F.2d 452, 454 (9th Cir. 1989), and “[a] motion for new trial is directed to the discretion of the judge, ” United States v. Pimentel, 654 F.2d 538, 545 (9th Cir. 1981). Accord United States v. Kellington, 217 F.3d 1084, 1097 (9th Cir. 2000) (district court's decision to grant or deny a new trial is reviewed for abuse of discretion). While the burden on a motion for new trial is not as demanding as that for a motion for acquittal, such motions are generally disfavored and should only be granted in exceptional cases. See United States v. Del Toro-Barboza, 673 F.3d 1136, 1153 (9th Cir. 2012).

         III. Discussion

         1. Newly discovered evidence

         Katakis' first argument in support of his motion is that he is entitled to a new trial based the discovery of new evidence obtained after trial. Specifically, he contends that new evidence, including a declaration from his co-defendant Wiley Chandler, shows that Chandler, Richard Northcutt, Ken Swanger, and Steve Swanger were conspiring against him and his companies, causing him to purchase properties at inflated prices and enriching themselves in the process. In his view, had the jury been presented with this additional evidence of the alleged conspiracy against Katakis, the jury would have discredited the cooperating witnesses' testimony and would have concluded that Katakis did not engage in a conspiracy which had the objective of defrauding him.[3]

         To prevail on a Rule 33 motion for a new trial based on newly discovered evidence, a defendant must show that (1) the evidence was newly discovered; (2) the failure to discover the evidence sooner was not the result of a lack of diligence on the defendant's part; (3) the evidence is material to the issues at trial; (4) the evidence is neither cumulative nor merely impeaching; and (5) the evidence indicates that a new trial would probably result in acquittal. United States v. Harrington, 410 F.3d 598, 601 (9th Cir. 2005) (quoting United States v. Kulczyk, 931 F.2d 542, 548 (9th Cir. 1991)).

         Here, even assuming Katakis has met all the other requirements of Harrington, 410 F.3d at 601, he has not shown that the new evidence he has identified would probably result in acquittal if he was allowed to present it in a new trial. Katakis' new evidence may support a theory that alleged co-conspirators Northcutt, Chandler, and the Swangers were profiting at Katakis' expense. However, evidence that these individuals were conspiring against Katakis does not disprove the persuasive evidence presented at trial tending to show Katakis was a participant in the primary conspiracy of bid rigging.

         While the jury could infer that Katakis was an innocent bystander being swindled by his co-defendants and others, an equally if not more compelling inference from the evidence presented at trial and on the motion for new trial is that Katakis fully participated in the bid rigging scheme by agreeing not to bid on certain properties, paying others not to bid, and receiving payments for not bidding, all while being swindled by his co-conspirators.[4] Notably, Chandler has never stated that Katakis did not participate in the agreements not to bid or that Katakis did not give or receive payouts. And the jury would hear that Chandler provided statements in support of Katakis only after Katakis agreed to dismiss his civil suit against Chandler, thus giving the jury reason to question Chandler's new testimony as a result of a deal between the two of them.

         Even discounting the testimony of the individuals alleged to have conspired against Katakis, there was ample evidence for the jury to infer that Katakis knowingly participated in the bid rigging scheme. Among other things, emails to and from Katakis regarding partner buyouts, along with the associated records and checks for partner buyouts; Katakis' email telling Steve Swanger to buy gift cards for the crier; and testimony of other witnesses were more than enough for the jury to infer Katakis' knowing involvement without crediting the testimony of Northcutt, Chandler, and the Swangers. (See, e.g., Gov't Ex. A Part 1 at 105 (Docket No. 625-2) (Anthony Ghio testifying that Katakis was going to start buying properties at auctions in Stockton “and was hoping we could all get along and not beat each other up every day, ”; Gov't Ex. C at 6-7 (Docket No. 631) (email from Katakis to Steve Swanger titled “Gift Cards” which reads “Please get if you haven't. Need ASAP as leverage. Very, very important to our success. Gift Cards Crier = $$$$$$$”; Gov't Ex. C at 8 (emails between Katakis and Steve Swanger discussing whether they “owe one to Rick and Wiley” because “they let us get” a property “at opening 198K” that was “pending across the street for 300K” and how Wiley “wanted 5k from me for them to back off”); Gov't Ex. C at 9-10 (email from Katakis to Steve Swanger discussing accounting for “partner buyouts, ” with Katakis stating “if we do a partner buyout and you put it into rehab, ” one amount should be listed for “actual rehab” and another amount for “B-Under Estimated Rehab, ” and “I will know what this means. (Buyout = B)”); Gov't Ex. C at 12-14 (emails from Steve Swanger to Katakis listing purchase price, partner buyout amount, and value of certain properties); Gov't Ex. C at 15 (emails between Katakis and Steve Swanger in which Katakis states that “Michael time knows about the partnership buy out thing. FYI, ” and Swanger responds “I know, he's fairly smart, I have always danced around it, but he figured it out on his own.”)).

         As Katakis' new evidence does not show that a new trial would probably result in acquittal, the court declines to grant a new trial based on newly discovered evidence.

         2. Prejudicial spillover

         Katakis next argues that the government presented false and prejudicial evidence regarding Katakis' use of the “DriveScrubber” software, leading the jury to convict Katakis of obstruction of justice based on insufficient evidence and leaving the jury unable to fairly assess the evidence on the bid rigging charge. Similarly, Parker argues ...

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