The opinion of the court was delivered by: Martini, U.S.D.J.
Sharpe James served as Mayor of Newark, New Jersey for twenty years, from 1986 until 2006, and as a New Jersey Senator from 1999 until January 2008. On July 12, 2007, a federal grand jury in Newark returned a thirty-three count Indictment against James and a co-defendant, Tamika Riley. The Indictment charges that while in office, James participated in several schemes that formed a pattern of fraudulent and corrupt conduct, some of which accrued to the benefit of Riley. The Indictment alleges that James and Riley had a close personal relationship. Riley was President and Chief Executive Officer of Tamika Riley, Inc., also known as Tamika Riley Images, Inc. ("TRI"), a public relations firm specializing in the entertainment industry.
The Indictment against James and Riley can essentially be divided into four different sets of charges. James alone is charged in the first set of charges (hereinafter, the "credit card scheme"), which allege that James schemed to defraud the City of Newark by misusing City credit cards and other means to pay personal, non-government expenses. The Indictment alleges that over a period of about five years, James charged more than $52,000 in improper expenses to the City. Some of the expenses were incurred locally, and others were incurred while James was traveling domestically and abroad. The Indictment also alleges that James was frequently accompanied in his travels by one or more individuals who are described in the Indictment. In connection with the credit card scheme, James is charged with seventeen counts of mail and wire fraud under 18 U.S.C. §§ 1341 and 1343 (Counts One through Seventeen) and three counts of fraud involving a local government receiving federal funds under 18 U.S.C. § 666(a)(1)(A) (Counts Eighteen through Twenty).
In the second set of charges (the "real estate scheme"), the Indictment alleges that James misused his official positions as Mayor and State Senator to improperly favor Riley by steering sales of City-owned property to Riley at steeply discounted prices. The properties were sold to Riley under the South Ward Redevelopment Plan ("SWRP"), a program instituted by the City Council to facilitate the rehabilitation of the South Ward neighborhood. The SWRP contemplated that the City would sell certain properties, most of which were vacant, to qualified developers at prices below market value for the purpose of building market-rate housing on the sites. The Indictment alleges that Riley lacked the experience and financial stability to qualify as a developer under the SWRP, and that in most cases, Riley resold the properties for lucrative profits without first redeveloping them as the SWRP required. In connection with the real estate scheme, James and Riley are charged with three counts of mail fraud in violation of 18 U.S.C. § 1341 (Counts Twenty-One through Twenty-Three) and one count of fraud involving a local government receiving federal funds under 18 U.S.C. § 666(a)(1)(A) (Count Twenty-Four).
In addition, Count Twenty-Five charges both James and Riley in an overarching conspiracy to use the United States mail to defraud the public of James's honest services, in violation of 18 U.S.C. §§ 371, 1341 and 1346, and encompassing the conduct described in both the credit card scheme and the real estate scheme.
Riley alone is charged in the remaining counts. In the third set of charges (the "Section 8 scheme"), the Indictment alleges that between December 2001 and September 2005, Riley misrepresented her income and employment status and fraudulently obtained housing subsidies from the New Jersey Department of Community Affairs Housing Assistance Program to assist her in paying rent at her apartment in Jersey City, New Jersey. Riley is charged with four counts of mail fraud under 18 U.S.C. § 1341 (Counts Twenty-Six through Twenty-Nine). In the fourth set of counts, Riley is charged with violations of the federal tax code. Count Thirty alleges that Riley violated 26 U.S.C. § 7206(1) by filing a Form 1120 for tax year 2001 which intentionally failed to disclose her real estate activities and associated gross receipts of more than $98,000. Count Thirty-One alleges a similar violation of 26 U.S.C. § 7206(1) for tax year 2002, charging that Riley intentionally failed to disclose her real estate activities and associated gross receipts of more than $43,000. Count Thirty-Two alleges that for calendar year 2005, Riley filed a Form 1120S for TRI which underreported real estate gains by more than $60,000, in violation of 26 U.S.C. § 7206(1). Count Thirty-Three alleges that Riley, in violation of 26 U.S.C. § 7201, attempted to evade the assessment of federal income taxes for tax year 2005 by intentionally failing to file a Form 1040 individual tax return for that year despite earning gross income of approximately $93,761, and by making false statements to her accountant in the course of preparing a Form 1040 which she intentionally did not file.
On November 5, 2007, James and Riley filed separate pretrial motions requesting a variety of relief. Following oral argument on December 19, 2007, the Court ruled on a majority of Defendants' motions, including James's Motion to Dismiss the Indictment, which was denied. The Court reserved judgment on Riley's Motion for Severance. At a January 8, 2008 hearing, the Court ordered a severance of the Indictment into three parts: (1) the real estate scheme and the tax counts; (2) the credit card scheme; and (3) the Section 8 scheme. On January 11, 2008, the Government asked the Court to reconsider the three-part severance, arguing that the Section 8 scheme should remain joined with the real estate scheme and the tax counts. The Court agreed, and ordered on January 15, 2008 that only the credit card scheme should be severed.
The Court writes now to supplement its December 19, 2007 ruling on James's Motion to Dismiss and its January 8 and 15, 2008 rulings on Riley's Motion for Severance.
I. MOTION TO DISMISS THE INDICTMENT
James argues that the Indictment fails to plead sufficient facts to establish a violation of federal law, and must therefore be dismissed pursuant to Fed. R. Crim. P. 12(b)(3)(B). Riley joins in James's motion to the extent that the arguments are applicable to her.
An indictment will generally be deemed sufficient so long as 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. Vitillo, 490 F.3d 314, 321 (3d Cir. 2007) (quoting United States v. Rankin, 870 F.2d 109, 112 (3d Cir. 1989)). "[N]o greater specificity than the statutory language is required 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." Rankin, 870 F.2d at 112.
In evaluating the sufficiency of an indictment, the Court must assume the truth of the facts alleged therein. United States v. Panarella, 277 F.3d 678, 681 (3d Cir. 2002). "It is well-established that '[a]n 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.'" Vitillo, 490 F.3d at 320 (quoting Costello v. United States, 350 U.S. 359, 363 (1956)) (emphasis added in Vitillo).
As discussed below, the Indictment against James and Riley is facially valid. James's arguments to the contrary are essentially challenges to the Government's evidence, which do not render the Indictment insufficient as a matter of law.
A. Counts One through Twenty
In Counts One through Seventeen, James is charged under 18 U.S.C. §§ 1341 and 1343 with mail and wire fraud in connection with improper expenditures on credit cards funded by the City of Newark. In Counts Eighteen through Twenty, James is charged with fraud involving a local government receiving federal funds, in violation of 18 U.S.C. § 666(a)(1)(A).
James argues that each of these counts must be dismissed because the Indictment fails to allege that the money James misspent did not come from his unrestricted annual salary, which included a $25,000 allowance in lieu of expenses and a car/fringe allowance of $780. The Court disagrees. Although the Indictment does mention James's salary and its various components, the credit card allegations are unequivocally directed at James's improper use of "two credit cards funded by the City of Newark." (Indictment 5 ¶ 4.) As such, the Indictment clearly alleges that the City's money was misappropriated for James's personal use. The language in the Indictment is sufficient to state a violation of the relevant statutes.*fn1
James also argues that the City Council reviewed his mayoral expenses at the end of each budget year and could have, but did not, question the allegedly improper expenses. This, again, is an argument for trial ...