09/30/2010 112 Post-Hearing Brief as to Rufus Paul Harris, Benjamin Stanley, Darryl Horton filed by USA re 111 MOTION to Dismiss Indictment and in the alternative to suppress evidence (Hall, Jamila) (Entered: 09/30/2010)
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Defendants simply make no argument – much less point to any facts – to suggest that what occurred here went beyond these well accepted activities and instead entered the realm of bad faith.
The evidence introduced at the hearing showed that at no time did the United States Attorney’s Office request or imply that (1) the SEC take any action in its civil case to advance the criminal investigation; (2) the SEC depose any individuals or elicit any testimony from any deponents; or (3) the SEC should not disclose the possibility of a criminal investigation or the existence of a criminal investigation to anyone involved in the Conversion case government request that the SEC do anything in its civil investigation. (Doc. 104-11-12).
Contrary to Defendants’ assertions, there is no conflict between Ms. Black and Mr. Anand’s testimony. Defendants hinge their argument on the witnesses’ answers to a question regarding whether they had “substantive” discussions prior to the granting of the access request. However, a full read of the witnesses’ answers shows that there is, in fact, no conflict. Mr. Anand said that he received summary information from Ms. Black and others prior to the access request but had to submit an access request for documents and information the SEC obtained through subpoena power or testimony. Ms. Black testified that she did not provide any documents to the United States Attorney’s Office until after the access request had been granted and did not begin receiving detailed requests from the United States Attorney’s Office until mid-2007.
Further and contrary to Defendants’ contentions, there is no evidence that the SEC specifically timed its depositions of the Defendants for after the filing of the civil complaint so as not to have to provide the SEC Form 1662. There is also no evidence that the SEC made any misrepresentations about the existence or possibility of a criminal investigation.
Second, even though he was not represented by counsel, Defendant Harris had the benefit of receiving SEC Form 1662 during the investigative stage, which provided him with sufficient notice that any information provided to the SEC could be used against him in a subsequent criminal proceeding. Furthermore, at the time they were deposed, after the October 24, 2006 filing of the SEC complaint, all three Defendants were aware that the allegations of the civil complaint alleged fraud with respect to the sale of Conversion securities. In other words, all three Defendants were aware that a federal agency was alleging securities fraud – in essence, the same pump-and-dump scheme later alleged in the Indictment – by the company of which they served as senior officers. Yet they chose to testify.
Third, Defendants Horton and Stanley were represented by counsel. While Harris was not represented by counsel at the time he gave his deposition to the SEC, this factor alone does not amount to a violation of the defendant's constitutional rights. SEC Form 1662 notified Harris that he could retain counsel during the civil investigation.
Finally, although the Defendants were required by subpoena to appear for the SEC depositions, they were not prevented from asserting their Fifth Amendment right against self- incrimination.
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