Bass, Berry & Sims attorney Chris Lazarini discussed the case in which a defendant in an alleged fraud scheme moved to sever his case from those of his alleged co-conspirators. The court denied the motion since the defendant did not meet all four factors needed to grant severance: (1) a bona fide need for testimony from his co-conspirator, (2) the likelihood the co-conspirator would waive his Fifth Amendment privilege, (3) the substance of the co-conspirator’s testimony, and (4) the exculpatory nature of the testimony.
Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.
USA vs. Duke, No. 3:16-CR-00221 (W.D. N.C., 10/22/18)
A criminal defendant seeking to sever his trial from that of his alleged co-conspirators faces a high burden of showing improper joinder and actual prejudice that outweighs the court’s interest in judicial economy.
Duke and several others were indicted in an alleged investment fraud scheme. Duke moved to sever his case from those of his alleged co-conspirators and for his case to be tried after their cases concluded. The Court orally denied the motion to sever during a status conference and issued its written Order later. The Opinion explains that motions to sever in a criminal proceeding are subject to a two-step analysis under Rules 8 and 14 of the Federal Rules of Criminal Procedure. First, the Court must consider whether the defendants were properly joined under Rule 8. Second, under Rule 14, the Court must find no “unfair prejudice” to the defendant when “weighed against the court’s interest in judicial economy” with the moving party facing a high burden of showing “actual prejudice.”
On the Rule 8 question, the Court instructs that joinder is appropriate where the defendants allegedly participated in the same criminal act or transaction and is highly favored in conspiracy cases. Perhaps recognizing this, Duke did not challenge joinder under Rule 8, and the Court is satisfied that the first standard was proper. On the Rule 14 question, Duke first argued he needed testimony from a co-defendant (“Stencil”) to prove his innocence. The Court sets out four factors, each of which must exist for a court to grant severance in this situation: (1) a bona fide need for the testimony, (2) the likelihood the co-defendant would waive his Fifth Amendment privilege, (3) the substance of the co-defendant’s testimony, and (4) the exculpatory nature of the testimony.
Duke fails to satisfy the second factor, because Stencil has not indicated a willingness to testify for Duke and, based on Duke’s communications with Stencil’s counsel, it does not appear he will ever do so. The Court rejects Duke’s belief that, if his case followed Stencil’s case, Stencil would have no reason to maintain his privilege. The Court likens this to Stencil placing conditions on his testimony which also fails to satisfy the second factor needed for severance. Next, Duke argues that his defenses would be antagonistic to Stencil’s defenses. The Court rejects the argument because the standard for severance is that the defenses must be mutually exclusive, not merely antagonistic. That is, the jury must face a scenario where believing the core of one defense means it must not believe the core of the other.
Such is not the case here, the Court concludes, finding that Duke’s guilt or innocence will not turn on whether the jury believes he was misled by Stencil. The government alleged facts, including Duke’s receipt of significant commissions, suggesting Duke’s knowledge of the fraud. Duke’s final argument for severance is that his trial will be delayed and more costly because Stencil suffers from a medical condition that will prevent him from timely and consistently attending trial. The Court rejects this argument because Stencil’s medical condition is not “terminal” and Duke has not offered that Stencil is “physically incompetent” to stand trial.
Further, the government and the Court are willing to make reasonable accommodations to Stencil, including shortening trial days and moving the trial to a different court house. These accommodations, and appropriate limiting instructions to the jury, the Court concludes, mitigate the likelihood of any potential prejudice to Duke while maximizing judicial economy.