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United States of America v. Thomas Reeves Todd Reeves

May 25, 2012

UNITED STATES OF AMERICA
v.
THOMAS REEVES TODD REEVES RENEE REEVES SHELLROCK, LLC KENNETH W. BAILEY MARK BRYAN PAMELA MELONEY HARBOR HOUSE, INC., DEFENDANTS.



The opinion of the court was delivered by: Simandle, Chief Judge:

OPINION

I. INTRODUCTION

This matter is before the Court on several pretrial motions in the above criminal action. The instant criminal case involves an alleged conspiracy to violate the Lacey Act and obstruct justice. These charges are based on the alleged over-harvesting of oysters and falsification of records regarding oyster sales. In the fifteen count Indictment, multiple Defendants are charged including Thomas Reeves, Todd Reeves, Renee Reeves, Shellrock, LLC, Kenneth W. Bailey, Mark Bryan, Pamela Meloney and Harbor House, Inc.

These defendants have intertwined relationships. Thomas Reeves and Todd Reeves are brothers. Both brothers are 50% co-owners of Shellrock, LLC. Renee Reeves is the wife of Todd Reeves. Mark Bryan is one of the owners and operators of Harbor House, Inc. Pamela Meloney is an employee of Harbor House.

Various motions were filed and heard on March 16, 2012.*fn1

The court resolved all the pending motions during oral argument and through its subsequent March 19, 2012 order [Docket Item 120] with the exception of the following: (1) Defendant Mark Bryan's motion to sever his trial from the trial of co-defendant Pamela Meloney pursuant to Fed. R. Crim P. 14 and Bruton v. U.S., 391 U.S. 123 (1968); (2) Defendant Thomas Reeves' motion to dismiss Counts VI and VIII of the Indictment; and (3) Defendant Pamela Meloney's motion to dismiss the Indictment for prosecutorial misconduct.

During oral argument, the court reserved decision on these issues and also ordered the government to produce certain segments of the grand jury transcript in order to fully evaluate Defendant Meloney's motion to dismiss. The court, having now fully reviewed the record (including the grand jury transcripts submitted in camera) and the arguments of counsel, addresses each motion in turn.

II. DEFENDANT MARK BRYAN'S MOTION TO SEVER

A. The Parties' Arguments

Defendant Mark Bryan moves the court to sever his trial from Defendant Meloney's trial on the basis of allegedly incriminating statements made by Defendant Meloney to National Oceanic and Atmospheric Administration ("NOAA") special agents during the execution of a search warrant at the Harbor House premises. Mark Bryan is one of the owners of Harbor House, Inc., and Pamela Meloney was employed by Harbor House as an office assistant and worked there for fourteen years. She is not a manager, but works as an employee in a secretarial capacity keeping the company's books and records.

Defendant Meloney made several statements to NOAA special agents during the course of an interview on February 9, 2009. The NOAA special agents interviewed Meloney with regard to the purchase of oysters from the Reeves Brothers. In particular, the invoices from the Reeves Brothers indicated a specific price for oyster bushels but the check from Harbor House to the Reeves Brothers was often in excess of the invoice amount, sometimes by upwards of $100,000.

Defendant Meloney was responsible for writing the checks to the Reeves Brothers for the oyster shipment, but not for signing the checks. During her interview, she stated that Defendant Bryan told her "what amount the checks for oyster purchases should be." The NOAA agents then asked Meloney about the discrepancies between the invoice amount and the check amount, and Meloney explained, "Bryan was the boss and she does what he asks by putting in the specific check amounts that he dictated." (Def. Ex. 1, NOAA Memorandum of Interview with Pamela Meloney, Feb. 4, 2009, 11:00AM).

Defendant Meloney was interviewed a second time an hour later regarding the discrepancies, and she stated again that "she creates a check in the amount that Bryan tells her" and that "she does what she is told." (Def. Ex. 2, NOAA Memorandum of Interview with Pamela Meloney, Feb. 4, 2009, 12:00PM).

Meloney was then interviewed a third time later that same day regarding a binder found in her desk. The binder was a recorded log book maintained by Meloney for the health department which the NOAA agents told Meloney correctly reflected Harbor House's purchases from the Reeves Brothers, and the lower amounts on the Reeves Brothers' invoices did not reflect the correct number of oyster bushels sold. Meloney then admitted she knew of the discrepancies between the actual purchase and the lower purchase amount reflected on the invoice for a few years. (Def. Ex. 3, NOAA Memorandum of Interview with Pamela Meloney, Feb. 4, 2009, 3:00PM).

Defendant Bryan argues Meloney's statements during these three interviews directly implicate him of conspiring with the Reeves Brothers to illegally over-harvest oysters and submitting false invoices to regulatory agencies. Defendant Bryan contends that if the government introduces Meloney's statements and Meloney does not testify, the admission will violate Mr. Bryan's Sixth Amendment confrontation right. The Defendant cites Bruton v. United States, 391 U.S. 123 (1968) and Richardson v. Marsh, 481 U.S. 200, 207 (1987) in support of his argument. Further, Defendant Bryan maintains that the proper remedy is severance pursuant Fed. R. Crim. P. 14, which permits a severance where the joinder of defendants appears to prejudice a defendant. In the alternative, the Defendant seeks an order prohibiting the government from introducing Meloney's statements at a joint trial.

The government opposes the Defendant's motion for severance and opposes the exclusion of the statement from a joint trial. First, the government argues that Meloney's statements do not facially incriminate Bryan and therefore the Bruton rule does not apply. The government relies on Bruton, infra, and Richardson, infra, as well as Gray v. Maryland, 523 U.S. 185 (1998). The government argues that Bruton, which held that a powerfully incriminating statement by a non-testifying witness was inadmissible, has been limited by Richardson and Gray.

In particular, the government maintains that Richardson held that a redaction could cure an otherwise facially incriminating statement as long as the statement no longer referred to the named defendant. Richardson, 481 U.S. at 208. Since the statement only became incriminating when linked with evidence introduced later at trial, the statement was admissible and not excluded by Bruton. Id.

The government also relies on the most recent of the Bruton cases, Gray v. Maryland. In Gray, the Supreme Court held that a redacted confession by a co-defendant which only removed the defendant's name from the statement was impermissibly incriminating. The court reasoned that this statement violated the Sixth Amendment because the incriminating co-defendant confession only required a jury to infer that an unnamed actor was actually the defendant.

The government cites the Bruton case law and argues that for a co-defendant statement to be directly incriminating, the statement must be incriminating independent of all other evidence. Here, the government argues Meloney's statement is only incriminating when viewed in conjunction with other evidence. Standing alone, the government contends that all Meloney's statements show is that Bryan made the financial decisions regarding payments at Harbor House and that Meloney functioned as Bryan's agent. Further, the government does not allege that the amounts written on the checks are false, so the fact that Bryan directed what amount was to be paid to the Reeves Brothers is not on its face incriminating.

B. Analysis

It is clear that Meloney's statement does expressly mention Bryan and states that it was his directive to pay the Reeves Brothers substantially more than their invoice and that this was a long standing practice. While this statement is not as drastic as the ones at issue in Bruton, Richardson and Gray (which all had to do with co-defendant confessions to murder and armed robbery), Meloney's interview statements do address the heart of Bryan's involvement in the alleged conspiracy to over-harvest oysters. In particular, Count I of the Indictment charges Defendant Bryan with processing invoices and "making payment to REEVES BROTHERS for greater quantities of oysters than the REEVES BROTHERS invoices indicated." (Docket Item 1, ¶ 23.) Therefore, Meloney's statement that Bryan was the one to direct the overpayment to the Reeves Brothers despite the lower amount due on the invoice is arguably as inculpatory here as the statements in Gray and Bruton, which directly incriminated a co-defendant for the crime charged.

The Supreme Court made clear in Richardson that the Bruton rule was to be applied narrowly. Specifically, when additional evidence is needed to understand the incriminatory nature of the co-defendant's statement, the Bruton exception does not apply. The Supreme Court explained: evidence requiring linkage differs from evidence incriminating on its face in the practical effects which application of the Bruton exception would produce. If limited to facially incriminating confessions, Bruton can be complied with by redaction -- a possibility suggested in that opinion itself. Id., at 134, n. 10. If extended to confessions incriminating by connection, not only is that not possible, but it is not even possible to predict the admissibility of a confession in advance of trial. Richardson, 481 U.S. at 208-09.

The statement that Meloney informed NOAA agents that Bryan told her the amount the check should be and that is why she wrote such a large amount tends to incriminate Bryan of criminal conduct when examined in the context of the crime charged. This statement by Meloney directly incriminates Bryan as determining that Harbor House would pay a larger amount of money to Reeves Brothers, reflecting the larger number of oyster bushels that were received but not reported on the invoices.

While the context of the crime of undereporting oyster transactions is necessary for a jury to understand the context of Meloney's statement, it does not make Meloney's statement any less incriminating of Bryan on its face under the Bruton analysis. Meloney's statement that Bryan was the one to direct the overpayment to the Reeves Brothers despite the lower amount due on the invoice is as inculpatory here as the statements in Gray and Bruton, because it directly incriminates Defendant Bryan for the crime charged, specifically the charge of processing invoices and making payment to the Reeves Brothers for greater quantities of oysters than the Reeves Brothers invoices indicated. Therefore, such statements must be redacted in a joint trial to protect Bryan's rights under Bruton.

Even if Bruton and its progeny in Richardson and Gray (which all dealt with confessions) did not bar evidence of Meloney's statements at a joint trial, the Court must examine the question of whether the Confrontation Clause bars the admission of Meloney's statement. The government argues that Meloney's statements are party opponent admissions and admissible as non-hearsay.

The Confrontation Clause of the Sixth Amendment provides that "[i]n all criminal prosecutions, the accused shall enjoy the right ... to be confronted with the witnesses against him." U.S. Const. amend. VI. In the trial context, the Supreme Court has recognized that "face-to-face confrontation forms the core of the values furthered by the Confrontation Clause." Maryland v. Craig, 497 U.S. 836 (1990) (internal quotations and citations omitted). However, the Court has also made clear that "the right to confrontation is a trial right." Pennsylvania v. Ritchie, 480 U.S. 39, 52 (1987) (plurality opinion) (emphasis in original); see also Barber v. Page, 390 U.S. 719, 725 (1968).

In addition, the Confrontation Clause "does not bar the use of testimonial statements for purposes other than establishing the truth of the matter asserted." Crawford v. Washington, 541 U.S. 36, 59 n. 9 (2004) (citing Tennessee v. Street, 471 U.S. 409, 414 (1985)). Rather, it bars the "admission of testimonial statements of a witness who did not appear at trial unless he was unavailable to testify, and the defendant had had a prior opportunity for cross-examination." Davis v. Washington, 547 U.S. 813, 821 (2006) (citing Crawford, 541 U.S. at 53-54).

The Court described the "core class of testimonial statements" as follows: ex parte in-court testimony or its functional equivalent-that is, material such as affidavits, custodial examinations, prior testimony that the defendant was unable to cross-examine, or similar pretrial statements that declarants would reasonably expect to be used prosecutorially; extra-judicial statements ... contained in formalized testimonial materials, such as affidavits, depositions, prior testimony, or confessions; statements that were made under circumstances which would lead an objective witness reasonably to believe that the statement would be available for use at a later trial.

Crawford, 541 U.S. at 51-52 (internal quotation marks and citations omitted).

"Only statements of this sort cause the declarant to be a 'witness' within the meaning of the Confrontation Clause." Davis v. Washington, 547 U.S. 813, 821 (2006) (citing Crawford, 541 U.S. at 51). "It is the testimonial character of the statement that separates it from other hearsay that, while subject to traditional limitations upon hearsay evidence, is not subject to the Confrontation Clause." Id.; see also Melendez-Diaz v. Massachusetts, 557 U.S. 305 (holding that non-interrogations may also be subject to the Confrontation Clause, e.g., such as certificates signed by state laboratory analysts that the Court likened to affidavits).

In this case, it is undisputed that Meloney is an unavailable declarant if she chooses not to testify. In addition, Defendant Bryan had no prior opportunity to cross examine Meloney. The remaining issue is whether her statements were testimonial and whether they are going to be offered for purposes other than the truth of the matter asserted.

It is clear that Meloney's statements are testimonial. They were pretrial statements made during an interview with NOAA special agents during the execution of a search warrant which a person "would reasonably expect to be used prosecutorially" and an objective witness would reasonably believe that a statement made under these circumstances would be available for use at a later trial. Crawford, 541 U.S. at 51-52.

The government argues that these statements are not hearsay and therefore, should not be considered testimonial. This misstates the law since Crawford, which focuses on whether a statement is testimonial, not whether a statement fits within a hearsay exception or can be considered non-hearsay. In particular, the government argues that Bryan's statements to Meloney are admissions by a party opponent and therefore admissible against Bryan. Further, the government cites Third Circuit law on the admission of an informant's statement in support of its argument. Specifically, the government cites U.S. v. Detelich, 351 Fed. Appx. 616, 623 (3d Cir. 2009), which states "the Confrontation Clause does not bar the introduction of the informant's portions of the conversation as are reasonably required to place the defendant or coconspirator's non-testimonial statements into context." Id. at 623. The government's citation to Detelich presumes Meloney's statements to the NOAA agents who were executing the search warrant were not testimonial.

The government's argument does not address the state of the law since Crawford and Davis which held that any out of court statement that is testimonial in nature is not admissible unless the declarant is unavailable to testify in court or the defendant has had a prior opportunity to cross-examine him or her. If Defendant Meloney's statement that Defendant Bryan told her what numbers to write in the checks is admitted, and Defendant Meloney exercises her right to not take the stand, then Defendant Bryan will be unable to confront Meloney about her statement and will be forced to take the stand himself to contradict it. This violates Defendant Bryan's Fifth Amendment right not to testify and his Sixth Amendment right to confrontation.

Finally, the government's argument that Meloney's statements should be admitted for purposes outside of the truth of the matter asserted, such as to prove an agency relationship or verbal act, is without merit. The existence of an agency relationship is not a contested matter in the case as it is undisputed that Meloney was Harbor House's employee and was supervised by Bryan. Further, the government does not specify what verbal act these statements establish. In addition, these statements would be extremely prejudicial to Bryan, since they go to the core of the criminal conduct he is charged with in the indictment.

The Court determines that Meloney's statements to the NOAA agents are directly incriminating against Bryan under Bruton and inadmissible against Bryan under Crawford. During oral argument, Defendant Bryan agreed that a redaction of Defendant Bryan's name from the statement would cure both the Bruton issue and the Crawford issue. The court agrees. Severance is an extreme remedy and should only be used as a last resort. There is generally a desirability in trying accused co-conspirators together in any conspiracy case. By redacting the statements to exclude any reference to Defendant Bryan, the statement would be cured of its incriminating nature and would not need to be excluded under Crawford in the event Defendant Meloney chooses not to testify.

Therefore, Defendant Meloney's motion to sever will be denied. However, the government must properly redact Defendant Meloney's statements and testimony concerning such statements to exclude any reference to Defendant Bryan directing her as to amounts of checks payable to Reeves Brothers prior to admitting testimony regarding these statements into evidence, unless Meloney testifies.

III. DEFENDANT THOMAS REEVES' MOTION TO DISMISS COUNTS VI AND VIII OF THE INDICTMENT

A. The Parties' Arguments

Defendant Thomas Reeves filed the second pretrial motion seeking to dismiss Counts VI and VIII of the Indictment which charge Thomas Reeves with Obstruction of Justice in violation of 18 U.S.C. § 1519. Reeves is also charged with False Records violations under the Lacey Act, in violation of 16 U.S.C. §§ 3372(d)(2) and 3373(d)(3)(A)(ii) which form the basis of Counts II and IV of the Indictment. Defendant Reeves maintains that the same facts which took place during the same periods of time support both the obstruction charges and the Lacey Act violations. However, Defendant Reeves argues that Congress, through the Lacey Act, has directly and explicitly addressed the precise unlawful conduct alleged by the Government, and the only material difference between the Lacey Act violation and the obstruction charges is that the obstruction charge imposes a much greater criminal penalty, namely a maximum of twenty years under § 1519 compared with a five-year maximum under 16 U.S.C. 3373(d)(3). Defendant Reeves contends that the government is not allowed to circumvent the penalties prescribed by Congress under the Lacey Act by also charging the Defendant with a broad and general criminal statute, such as the obstruction of justice statute.

In particular, Defendant Reeves cites to Dowling v. United States, 473 U.S. 207 (1985), for the proposition that the Government cannot utilize general criminal statutes to prosecute specific conduct when Congress has clearly spoken as to which criminal statutes (and corresponding penalties) apply to that specific conduct. Dowling dealt with the prosecution of a defendant for manufacturing bootleg copies of Elvis Presley recordings. The defendant in Dowling was charged with violations of copyright laws as well as interstate transportation of stolen property pertaining to the same conduct. The Supreme Court found that the defendant's conduct was explicitly addressed by the copyright laws and should be prosecuted and punished according to the narrowly tailored penalties prescribed by Congress in the Copyright Act, rather than the broader and more severe penalties associated with the transportation of stolen goods. This holding has been reinforced by lower courts in the Third Circuit and has primarily been aimed at prosecuting violations of copyright law.

See United States v. Alsugair, 256 F. Supp. 2d 306 (D.N.J. 2003)(dismissing mail fraud charge because conduct fell squarely within copyright infringement and citing Dowling for support); United States v. Brooks, 945 F. Supp. 830 (E.D. Pa. 1996)(dismissing false statement charges because the Copyright Office was not an agency under 18 U.S.C. § 1001 and stating in a footnote that under Dowling, 18 U.S.C. § 1001 was too broad and general to encompass copyright violations); United States v. Vitillo, 490 F.3d 314 (3d Cir. 2007)(applying the principles articulated in Dowling to analyze a charge under 18 U.S.C. § 666 for theft concerning a program receiving federal funds); United States v. Hodge, 321 F.3d 429, 437 (3d Cir. 2003)(applying Dowling to interpret the scope of the Analog Act, 21 U.S.C. § 802(32)(A), and noting that "[i]t is particularly important to confine ambiguous criminal statutes to their intended scope").

The government does not dispute Defendant Reeves' interpretation of the Dowling case but argues that Blockburger v. United States, 284 U.S. 299 (1932) applies to the instant action. The government maintains that Defendant Reeves is in essence arguing he is being subjected to double jeopardy, and therefore, the Blockburger test applies. In particular, the government argues that different elements are required to prove violations of the Lacey Act and obstruction of justice. Specifically, falsification of records under the Lacey Act requires proof that the false record is for a fish, wildlife or plant and also that the fish has been, or is intended to be, traded in interstate commerce. 16 U.S.C. § 3372(d)(2). Obstruction of justice requires proof that the defendant intended to impede a proper federal administration or investigation, as well as a showing that a federal department has jurisdiction to administer or investigate the said act. 18 U.S.C. § 1519.

The Defendant argues that even if Blockburger applies, charging Defendant Reeves with falsification of records under the Lacey Act and obstruction of justice is unconstitutionally duplicative and satisfies the Blockburger test for double jeopardy. The Defendant maintains that the government must rely on the false records which violated the Lacey Act in order to prove their obstruction of justice charge.

Finally, Defendant Reeves also maintains that the alleged falsified records at issue are creatures of state regulation and that no federal investigation existed at the time the records were falsified. The government opposes this argument and contends that the falsified records at issue were required to be maintained by the Federal Food and Drug Administration ("FDA"), 21 C.F.R. § 123.28, and the FDA may conduct an inspection at any time pursuant to 21 C.F.R. § 123.9(c). ...


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