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REPLY in Support of NOTICE OF MOTION AND MOTION to Dismiss Case for Prosecutorial… — USA v. Ayvazyan et al (Dkt. 329)

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Court	U.S. District Court for the Central District of California
Filed	2021-05-10

U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 329 · 2021-05-10 · Docket on CourtListener

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Defendant Richard Ayvazyan's Reply in Support of Motion to Dismiss for Prosecutorial Misconduct in United States of America v. Richard Ayvazyan, et al., No. 2:20-cr-00579-SVW, in the U.S. District Court for the Central District of California, filed May 10, 2021 as Document 329 by Steptoe & Johnson LLP. The reply argues that the government's misconduct began with Ayvazyan's interrogation at Miami International Airport on October 19, 2020. It alleges that the government withheld evidence from an FBI-state investigation past the March 15 discovery cut-off and that state charges followed the setting of a June 15, 2021 trial. Its section headings allege destroyed evidence, misleading the court, grand jury misuse and Brady violations. It asks the court to dismiss the indictments or, in the alternative, order discovery including grand jury transcripts and subpoenas.

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REPLY SUPP. MOTION TO DISMISS FOR PROSECUTORIAL MISCONDUCT
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Ashwin J. Ram (SBN 227513)
aram@steptoe.com
Michael A. Keough (SBN 327037)
mkeough@steptoe.com
Nicholas P. Silverman (pro hac vice)
nsilverman@steptoe.com
STEPTOE & JOHNSON LLP
633 West Fifth Street, Suite 1900
Los Angeles, CA 90071
Telephone: (213) 439-9400
Facsimile: (213) 439-9599

Counsel for Defendant Richard Ayvazyan

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA,

Plaintiff,

RICHARD AYVAZYAN,
et al.

Defendants.

Case No. 20-cr-579 (SVW)

DEFENDANT RICHARD
AYVAZYAN’S REPLY IN
SUPPORT OF MOTION TO
DISMISS FOR PROSECUTORIAL
MISCONDUCT

Judge: Hon. Stephen V. Wilson
Hearing Date: May 24, 2021
Time: 11:00 a.m.

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TABLE OF CONTENTS
I.
NEWLY DISCLOSED EVIDENCE OF GOVERNMENT
MISCONDUCT IN CONNECTION WITH STATE CHARGES
INVESTIGATED BY STATE AND FEDERAL MEMBERS OF THE
PROSECUTION TEAM WITHHELD DURING DISCOVERY .......................... 2
II.
THE GOVERNMENT’S MISCONDUCT BEGAN DURING THE
MIAMI AIRPORT STOP AND HAS CONTINUED THROUGH THE
LAST SIX MONTHS ............................................................................................. 5
A.
THE GOVERNMENT’S MISCONDUCT DURING THE MIAMI
AIRPORT STOP HAS TAINTED THIS CASE ......................................... 5
1.
The Government Lied About Its Pretextual Stop ............................ 5
2.
The Government Destroyed Evidence ............................................ 6
3.
The Government Misled the Court .................................................. 8
4.
The Government Intentionally Invaded Privileged
Confidential Marital Communications ............................................ 9
B.
THE GOVERNMENT’S MISCONDUCT TAINTED THE
INDICTMENTS ......................................................................................... 10
C.
THE GOVERNMENT COMMITTED SERIOUS MISCONDUCT
DURING THE SEARCH WARRANT EXECUTION, THEN
COMPOUNDED THAT MISCONDUCT WITH MISLEADING,
MERITLESS, AND BAD FAITH ARGUMENTS ................................... 12
D.
THE GOVERNMENT HAS CONTINUED TO COMMIT
SERIOUS MISCONDUCT SINCE THE INDICTMENT ........................ 14
1.
The Government Was Not Ready For Trial, So It
Abused the Grand Jury’s Powers to Gather Discovery
Beyond the Reach of Fed. R. Crim. P. 16 ..................................... 14
2.
The Government Contacted a Represented Defendant
Seeking Information Regarding a Co-Defendant .......................... 15
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3.
The Government Violated Its Obligations Under
Brady and Its Progeny and the California Rules of
Professional Conduct ..................................................................... 16
E.
THE GOVERNMENT FLAGRANTLY VIOLATED THE
COURT’S DISCOVERY ORDER AND COMPOUNDED THAT
MISCONDUCT BY LYING TO THE COURT ........................................ 18
III.
THE COURT SHOULD DISMISS THE CASE, OR IN THE
ALTERNATIVE, ORDER DISCOVERY ........................................................... 20
A.
THE COURT SHOULD DISMISS THE CASE UNDER THE DUE
PROCESS CLAUSE OR SUPERVISORY POWERS .............................. 20
B.
THE COURT SHOULD ORDER THE GOVERNMENT TO
PRODUCE DISCOVERY REGARDING ITS INTERNAL
DECISION-MAKING AND PRESENTATION OF TAINTED
EVIDENCE ................................................................................................ 22

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TABLE OF AUTHORITIES

Page(s)
Cases
Chavez v. Martinez,
538 U.S. 760 (2003) ................................................................................................... 22
In re Grand Jury Subpoenas Issued May 3, 1994 (Nash),
858 F. Supp. 132 (D. Ariz. 1994) .............................................................................. 13
Kastigar v. United States,
406 U.S. 441 (1972) ............................................................................................... 2, 23
Kinsella v. United States ex rel. Singleton,
361 U.S. 234 (1960) ................................................................................................... 20
United States v. Aguilar,
831 F. Supp. 2d 1180 (C.D. Cal. 2011) ....................................................... 1, 9, 20, 21
United States v. Allen,
864 F.3d 63 (2d Cir. 2017)................................................................................... 23, 24
United States v. Barrera-Moreno,
951 F.2d 1089 (9th Cir. 1991) ................................................................................... 20
United States v. Bayer,
331 U.S. 532 (1947) ................................................................................................... 14
United States v. Chapman,
524 F.3d 1073 (9th Cir. 2008) ................................................................................... 20
United States v. Dudden,
65 F.3d 1461 (9th Cir. 1995) ..................................................................................... 23
United States v. Felix,
503 U.S. 378 (1992) ................................................................................................... 14
United States v. Flores,
No. 16-cr-833, 2017 WL 2622733 (C.D. Cal. June 13, 2017) .................................. 24
United States v. Gross,
424 F. Supp. 3d 800 (C.D. Cal. 2019) ....................................................................... 17
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United States v. Hsia,
24 F. Supp. 2d 14 (D.D.C. 1998) ............................................................................... 17
United States v. Hylton,
294 F.3d 130 (D.C. Cir. 2002) ................................................................................... 23
United States v. Kojayan,
8 F.3d 1315 (9th Cir. 1993) ................................................................................... 1, 20
United States v. Russell,
411 U.S. 423 (1973) ................................................................................................... 20
United States v. Salyer,
No. 10-cr-61, 2010 WL 3036444 (E.D. Cal. Aug. 2, 2010) ...................................... 17
Other Authorities
Cal. R. Prof’l Conduct 3.8 ..................................................................................... 5, 15, 18
Fed. R. Crim. P. 16 .......................................................................................................... 14
Fed. R. Crim. P. 17 ................................................................................................ 2, 14, 22
U.S.S.G. § 1B1.3(a) ........................................................................................................ 14
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The Court should dismiss the indictments based on the government’s sustained
pattern of misconduct, which is both undeniable and more expansive than that leading
to dismissal in United States v. Aguilar, 831 F. Supp. 2d 1180 (C.D. Cal. 2011). In
Aguilar, the court dismissed the indictment even though a trial had already occurred
because of the “astonishing number of ‘mistakes’” that the government made
throughout the proceeding. Id. at 1207. Here, the government claims that it
“misspoke” (but did not correct itself) when lying to the U.S. District Court for the
Southern District of Florida during a detention hearing, that it “may not have been
truthful” when lying to the defendant during the Miami airport stop, lies that were
repeated on official government forms and twisted during the detention hearing; that it
“deleted video footage” but not willfully or deliberately; that it made “honest
mistake[s]”; that it unintentionally invaded privileged communications by searching a
wife’s cell phone for text messages with her husband and photographing them; but even
with all of these admissions, the government fails to be forthright about the rest of its
misconduct. See Opp’n to Motion to Dismiss at 5 n.2, 12 n.6, 13 n.7, 15 (Dkt. 310)
(“Opp’n”). The pattern of misconduct is too broad to be explained as mistakes; the
only reasonable inference is that the government has committed flagrant misconduct.
“[T]he judiciary—especially the court before which the primary misbehavior took
place—may exercise its supervisory power to make it clear that the misconduct was
serious and that steps must be taken to avoid a recurrence.” Aguilar, 831 F. Supp. 2d at
1206-07 (quoting United States v. Kojayan, 8 F.3d 1315, 1325 (9th Cir. 1993)). So too
here. The Court should dismiss the indictments to send a message of deterrence and
ensure that future defendants are not subjected to the same violations of their rights.
The government’s misconduct began with the unlawful interrogation of
Ayvazyan at Miami International Airport on October 19, 2020 and has continued into
new misconduct as recently as the last two weeks (see Section I). Having indicted a
case it was not prepared to try, the government exploited federal joinder rules by
holding back defendants and counts, then used a grand jury to subpoena additional
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evidence to get around Ayvazyan’s speedy trial rights and the limits placed on trial
subpoenas by Fed. R. Crim. P. 17. It further appears that when the Court ordered a trial
date over two months before the government’s requested date, the government
responded by working with state authorities to press charges against Ayvazyan,
imprison him for another week despite the ongoing pandemic, and (so far
unsuccessfully) seek prohibitive detention terms that would prevent him from preparing
for the Court-ordered trial and force a continuance. This follows a seven-month
campaign during which the government has exploited every dirty trick in its arsenal to
intimidate Ayvazyan and gain a tactical advantage.
The government is obligated to act as a minister of justice, not a mere advocate
or sharp-elbowed competitor, and dismissal will send the message that this level of
misconduct falls short of meeting that obligation. The government has failed to timely
produce exculpatory evidence and has committed misconduct leaving it with the “heavy
burden of proving that all of the evidence it proposes to use was derived from
legitimate independent sources.”1 However, the Court need not wait for the
government to fail to carry its production or litigation burdens because the
government’s sustained pattern of misconduct spanning the past seven months is
sufficient to merit dismissal.
I.
NEWLY DISCLOSED EVIDENCE OF GOVERNMENT MISCONDUCT
IN CONNECTION WITH STATE CHARGES INVESTIGATED BY
STATE AND FEDERAL MEMBERS OF THE PROSECUTION TEAM
WITHHELD DURING DISCOVERY
The government’s prosecution team includes the U.S. Attorney’s Office for the
Central District of California, the Department of Justice Criminal Division, the Federal
Bureau of Investigation, the Internal Revenue Service, the Small Business
Administration Office of Inspector General, the Federal Housing Finance Agency
Office of Inspector General, the Department of Homeland Security, and various state
and local authorities including the California Attorney General’s Office, the State of

1 Kastigar v. United States, 406 U.S. 441, 461-62 (1972).
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California Department of Justice, and the Los Angeles Police Department. These
agencies have worked together to investigate Ayvazyan’s case by executing searches
together, issuing subpoenas, sharing evidence, and consulting with each other on
strategic decisions.
After the government’s latest attempt to buy more time to investigate was denied
and trial was set for June 15, 2021, Dkt. 292, it appears that the government decided to
bring charges in a years-old FBI-state investigation that the Opposition cites as one of
the key sources of evidence in this case. See Opp’n at 4 (alleging that Ayvazyan’s
status as a “possible participant” in the FBI-state investigation was part of the reason he
became a suspect in this case). The government buried that FBI-state investigation and
the evidence it had obtained during the investigation until long after the March 15
discovery cut-off.
The government responded to the Court’s April 16 ruling by having the state
government charge Ayvazyan and co-defendants Tamara Dadyan and Artur Ayvazyan
in a state indictment, arrest them, and seek draconian state detention orders that would
inhibit the defendants’ abilities to prepare for a June 15 federal trial. Until the eve of
that state indictment, the government withheld all discovery, even the fact that the FBI-
state investigation existed. The government withheld evidence from the FBI-state
investigation that was material to the allegations and motions in this case, including:
 evidence that someone other than Ayvazyan controls the email account and bank
accounts belonging to Iuliia Zhadko, including the Turing Info Solutions account
in the superseding indictment, and is responsible for related transactions contrary
to the government’s allegations in the complaint, indictments, search warrant
affidavits, and briefs;
 evidence that someone other than Ayvazyan controls accounts belonging to
Viktoria Kauichko and is responsible for related transactions contrary to the
complaint, indictments, and search warrant affidavits;
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 evidence that someone other than Ayvazyan controls accounts belonging to Anna
Manukyan and is responsible for related transactions contrary to the
government’s allegations in the search warrant affidavits;
 evidence that certain co-defendants are victims of identity theft;
 evidence of additional sources of income that would explain the purportedly
PPP-related transfers among alleged co-conspirators;
 evidence tending to prove that the nearly $450,000 in cash seized from Ayvazyan
and Terabelian’s home was not a proceed of the crime charged in this case
(which would be material to the forfeiture allegations in addition to the return of
property briefing previously before this Court (another material government
misrepresentation by omission));
 exculpatory evidence that Ayvazyan is not “at the helm” of the alleged
conspiracy (see Tr. of Apr. 2, 2021 Hr’g at 6 (Dkt. 299));
 evidence that Ayvazyan did not commit the alleged mortgage fraud and that
Agent Palmerton’s conclusion that Ayvazyan is “the identity of one of our
subjects” (Dkt. 310-3) is therefore unreliable; and
 evidence that federal and state authorities have conspired to undermine Court
orders and Ayvazyan’s fundamental rights.
This evidence was all withheld by the government in violation of the Court-ordered
discovery cut-off of March 15, and appears to be only the tip of the iceberg of withheld
evidence.2
The circumstantial evidence strongly implies that the state government arrested
and charged Ayvazyan after a years-long investigation at the behest of the federal
government. The government aggressively pushed for Ayvazyan’s detention (and that
of his co-defendants) in the state case knowing that it would detract from federal trial

2 Last week, Ayvazyan sent a letter to the government seeking discovery relevant to evaluating just
how far the government’s latest misconduct stretches. See Decl. of Ashwin Ram Supp. Reply Supp.
Mot. to Dismiss for Prosecutorial Misconduct (“Ram Decl.”), Ex. A.
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preparation, force another continuance, or coerce defendants into pleading out. Such
gamesmanship is the latest piece in a pattern of misconduct meriting dismissal.
II.
THE GOVERNMENT’S MISCONDUCT BEGAN DURING THE MIAMI
AIRPORT STOP AND HAS CONTINUED THROUGH THE LAST SIX
MONTHS
A.
The Government’s Misconduct During the Miami Airport Stop Has
Tainted This Case
1.
The Government Lied About Its Pretextual Stop
The government committed flagrant misconduct by taking the Joint Terrorism
Task Force and Tactical Terrorism Response Team away from their work protecting
national security, and instead assigning them to investigate domestic loan fraud
allegations. Dkt. 130 at 5-6. This abuse of government resources and power led to a
ten-plus hour detention of Richard Ayvazyan and Marietta Terabelian during which
they were denied explicit requests for counsel, denied requests to speak to each other or
sit together, and forced to undergo repeated interrogations and searches. Id. at 7-11.
The government compounded this misconduct by lying about the stop’s national
security purpose in official government records, Dkt. 133 Ex. 7, 18, lying about the
stop’s contraband purpose to the magistrate judge presiding over the detention hearing
in the U.S. District Court for the Southern District of Florida, Oct. 22 Tr. at 11, and
lying to this Court regarding the content of evidence that undercut the government’s
previous lies, Dkt. 152 at 7. The government utterly failed to uphold its responsibility
as a minister of justice with respect to being honest and forthright about the purpose of
its investigatory stop, and instead acted simply as an advocate contrary to California
Rule of Professional Conduct 3.8 & cmt.1.
The Opposition tries to justify this misconduct by mischaracterizing the Court’s
Order: claiming that the Court found that none of its conduct “in connection with the
border stop”—not the misuse of national security resources, the lying, the refusal of
requests for counsel, the claims of being able to detain people indefinitely, the
destruction of evidence, or the misleading statements and lies in briefs and oral
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argument—was in bad faith or intentional misconduct. Opp’n at 6. That is not what
the Court found. The Court’s Order concluded that it could “infer[] that ‘national
security concerns’ were merely a pretext for the actual purpose of the search,” Dkt. 296
at 5, but that even if Agent Palmerton subjectively schemed in bad faith to evade the
Ninth Circuit’s prohibition on such searches, the reasonableness of his direction was an
objective inquiry, Dkt. 296 at 13 n.10. Contrary to the Opposition’s broad claim, the
Court made no finding that the government’s lies, misleading statements, or destruction
of evidence was in good or bad faith.
2.
The Government Destroyed Evidence
The government compounded its flagrant misconduct by destroying evidence.
See Dkt. 289 at 6; Dkt. 209 at 3-4; Dkt. 135 at 17-18. The government argues that
Ayvazyan’s opening brief was not clear enough in its description of “any evidence
supporting an inference that the [government’s] actions were willful or deliberate.”
Opp’n at 12 n.6. To be clear, here is the evidence:
 November 6, 2020: Ayvazyan’s counsel requested any records related to
Ayvazyan’s detention at Miami International Airport. Dkt. 133 ¶ 2.
 November 9, 2020: Ayvazyan’s counsel discussed with the government how
Ayvazyan had invoked his right to counsel and again requested any records
related to the airport detention. Dkt. 133 ¶ 2.
 November 18, 2020: Ayvazyan wrote a discovery letter requesting all recordings
of Ayvazyan, including all interactions from the waiting areas and interrogation
rooms, and reiterated that “[t]his request includes all audio or visual recordings
of Ayvazyan . . . .” Dkt. 133-1 ¶ 4.
 December 14, 2020: The government made its first production of CBP
documents including inaccurate reports that claimed the search was undertaken
pursuant to national security purposes and omitted the repeated invocations of
counsel. Dkt. 278-5 at 6 (production letter); Dkt. 133 Ex. 7, 16, 17, 18
(inaccurate reports). The government did not disclose any recordings or the fact
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that those recordings would soon be deleted because the government had not
issued a preservation notice.
 December 24, 2020: Ayvazyan again requested all recordings of Ayvazyan
including the waiting areas and interrogation rooms, and requested contact
information for the CBP officers on duty during the detention. Dkt. 133-2.
 December 31, 2020: The government deleted the recordings of Terabelian’s
initial interrogation and search in the fingerprint room. See Dkt. 152 Ex. 14.
 January 4, 2021: The government informed Ayvazyan that he could not contact
CBP employees because they were represented parties and requests for CBP
records must go through the government. Dkt. 133-3. The government did not
disclose any recordings or the fact that those recordings would soon be deleted
because the government had not issued a preservation notice.
 January 6, 2021: For the first time, the prosecutors transmitted some portion of
Ayvazyan’s November-December 2020 requests to CBP. See Dkt. 152 Ex. 14.
 January 15, 2021: Ayvazyan learned from publicly available information on the
internet that certain CBP camera systems had 90-day deletion policies and
immediately informed the government. Ayvazyan again requested all recordings
of Ayvazyan including the waiting areas and interrogation rooms. Ayvazyan
requested that the government issue a preservation notice to CBP that day, and
that the government produce all preservation notices that had been issued. The
government refused to disclose whether any such notices had been issued. Dkt.
133-3. The prosecutors do not appear to have transmitted this warning to CBP.
 January 17-18, 2021: The government deleted the recordings of the pre-
interrogation invocations of counsel and up to six hours of interrogating and
searching Ayvazyan (from 5:00 p.m. through 10:56 p.m.). See Dkt. 152 Ex. 14.
 February 2, 2021: The government’s first production of recordings from CBP,
which only included interactions with Ayvazyan beginning at 10:56 p.m. (over
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seven hours after he was detained and approximately six hours after his
interrogation and searches began, Dkt. 152 Ex. 14).
 March 8, 2021: Ayvazyan filed his motion to suppress noting the government’s
destruction of evidence.
 March 15, 2021: The government filed its opposition including a letter from CBP
dated March 10 confirming that either the prosecutors or CBP repeatedly failed
to heed Ayvazyan’s warnings and requests over the course of November 2020,
December 2020, and January 2021 and instead destroyed evidence.
It is difficult to see what more could be required to demonstrate that the
government acted in bad faith in light of the government’s refusal to produce additional
communications. The government either recklessly or intentionally destroyed evidence
that an individual defendant was repeatedly requesting for months on end.
3.
The Government Misled the Court
Ayvazyan’s opening motion described how the government misled the Court by
claiming to prove that Zhadko and Kauichko were not real because it “seized fake
identifying information for Iuliia Zhadko, fake driver’s licenses, and fake social
security numbers” both from physical cards in Ayvazyan’s possession and from
Ayvazyan’s phone. Dkt. 289 at 3-4 (citing Apr. 2, 2021 Hr’g Tr. at 10-11); see Opp’n
at 17.3 The government’s claims were false for two reasons.
First, Ayvazyan was not in possession of physical cards bearing any of this
identifying information but rather only had several of Zhadko’s credit cards. The
identifying information referenced by the government were text message photographs
or other image files contained on cell phones belonging to Zhadko and Kauichko.
There is a real and substantial difference between possession of a physical card and
possession of a device containing tens of thousands of files—particularly a device that

3 Similarly, the government claimed that Ayvazyan and Terabelian were found with “two different
identification documents for Viktoria Kauichko,” when the government actually found a cell phone
registered to and belonging to Kauichko that contained photographs of her IDs.
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the prosecutors claim was “pass[ed] around,” see Dkt. 289 at 16; Dkt. 289-3 ¶ 4—
particularly when the Court was tasked with determining whether the physical evidence
was sufficient to sustain consequent search warrants at the time of the hearing.
Second, neither of these pieces of evidence were found on Ayvazyan’s phone.
The government apparently believes that it is entitled to shade the evidence to fit its
theory of the case when making representations to the Court, see Opp’n at 17 n.12, but
it is not. As reflected in the government’s own discovery productions, it is perfectly
capable of distinguishing between “Iuliia Zhadko iPhone 11 (+1747xxx4170),” Dkt.
278-5 at 50, and Ayvazyan’s phone (+1818___6000). It simply failed to do so because
it wanted to convince the Court that the evidence belonged to Ayvazyan instead of
providing an accurate recitation of the facts.4
4.
The Government Intentionally Invaded Privileged Confidential
Marital Communications
After detaining and interrogating Ayvazyan and Terabelian, CBP Officers
searched Terabelian’s phone outside of her presence contrary to CBP regulations,5
found a text message conversation with “Rich” with a phone number matching the
Richard Ayvazyan cell phone they had also seized, and proceeded to review and
photograph extended portions of a privileged communication, which they then turned
over to the prosecutors in this case. The Opposition claims that this is distinguishable
from United States v. Aguilar because “there is no evidence supporting an inference
that an agent intentionally invaded communications he knew to be privileged.” Opp’n
at 13 n.7. It is difficult to conceive what more evidence could exist than a CBP officer

4 The government compounded these errors later in the hearing by claiming that CBP had merely
discussed its standard “5 Ws” with Ayvazyan and Terabelian, when in fact, they had been interrogated
about financial issues. To state the obvious, interrogation about sources of income, paying for a new
house, and affording a vacation or jewelry is not a typical, routine interview that ordinary travelers
encounter. These were tailored questions to investigate PPP loan fraud.
5 Dkt. 152 Ex. 4 ¶ 5.1.6 (“Searches of electronic devices should be conducted in the presence of the
individual whose information is being examined unless there are national security, law enforcement,
officer safety, or other operational considerations that make it inappropriate to permit the individual to
remain present.”)
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who coerced an individual and her husband into turning over their phones, separated
them from each other, then specifically reviewed a conversation between the two
phones that was specifically labeled as such. The Opposition also argues that the
government “established an independent filter team,” id. at 13 n.7, but the filter team
produced this entire text chain to the prosecutors without redaction or deletion. The
filter team took no steps to mitigate the government’s intentional violation of privilege.
B.
The Government’s Misconduct Tainted the Indictments
In 1957’s Witness for the Prosecution, Charles Laughton famously asks a
witness, in substance, “were you lying then or are you lying now?” Sixty-four years
later, that question is still relevant. Within two days of Ayvazyan’s arrest, Agent
Palmerton testified before the U.S. District Court for the Southern District of Florida
and was asked “how do you know that Mr. Ayvazyan and Miss Terabelian were the
ones who actually filed these applications through the computer?” Agent Palmerton
testified in response:
For some of the applications filed under the name Iuliia Zhadko, the funds
were deposited into a bank account. From there, the funds float into an
escrow account. And in reviewing the records from that escrow company,
there was an e-mail from a Richard Ayvazyan that appeared to be directing
the flow of funds from that bank account. And then, once the CBP
stopped for the secondary inspection, we learned that there was a
photograph of Iuliia Zhadko on the digital device and we made the
connection that Iuliia Zhadko was, in fact, an alias of Richard
Ayvazyan.
Dkt. 310-6 at 23-24 (emphasis added).
The indictment and superseding indictment each claim that Ayvazyan is “also
known as … Iuliia Zhadko,” Dkt. 32 ¶ 1; Dkt. 154 ¶ 2, and allege his control over key
bank accounts “in his legal name or using one of his aliases,” Dkt. 32 ¶ 16; Dkt. 154 ¶
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22 (emphasis added). The indictment and superseding indictment, for example, allege
that “On or about June 15, 2020, defendant R. Ayvazyan, using the alias ‘Iuliia
Zhadko,’ together with other coconspirators, submitted and caused to be submitted to
the SBA an application in the name of Timeline Transport, Inc.” Dkt. 154 Overt Act
No. 42. This allegation is typical of Ayvazyan’s alleged involvement in the loan
submissions: he is alleged to be responsible for the acts of Iuliia Zhadko. See, e.g., id.
Overt Act No. 19; id. Overt Act No. 59; id. Overt Act No. 61.6 Agent Palmerton’s
testimony makes clear that these allegations are tainted—indeed, they are directly
traceable to learning about tainted evidence.7

In a desperate attempt to save its indictment, and likely the majority of its yet-to-
be-disclosed trial exhibits pertaining to Ayvazyan, the Opposition argues, in effect, that
Agent Palmerton’s October 22, 2020 testimony was false. The Opposition even offers
an August 4, 2020 email (Dkt. 310-3) suggesting that—contrary to his in-court
testimony—Agent Palmerton “made the connection” that Zhadko was allegedly
Ayvazyan’s alias over two months earlier because Ayvazyan “was listed as a possible
participant” in the FBI-state investigation and Encore Escrow received a $110,000
transfer from Zhadko’s company Timeline Transport, Inc. for the benefit of Ayvazyan’s
escrow account—with no mention of the fact that far more of Zhadko’s money was
transferred to other recipients or remained in Zhadko’s possession.
This post hoc rationalization based on unclear mortgage fraud suspicions8 should
be rejected out of hand because it plainly contradicts Agent Palmerton’s sworn
testimony. Moreover, it is fundamentally incredible that the transfer to escrow and

6 Other allegations allege that co-defendants submitted different loan applications and that Ayvazyan
conspired with them without mentioning Zhadko. See, e.g., Overt Act Nos. 25-36. The superseding
indictment does not allege that Ayvazyan had any particular involvement in submitting those
applications, and he did not.
7 Ayvazyan sent a letter to the government late last week seeking discovery on the extent of the taint
caused by the government’s Fifth Amendment violations. See Ram Decl. Ex. B.
8 As discussed infra in section I, Ayvazyan has requested discovery regarding these allegations, but
the sole production to date that relates to Ayvazyan is a copy of his California DMV registration.
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Ayvazyan’s supposed status as a possible participant was sufficient for anyone to
conclude that Zhadko was an alias of Ayvazyan. If the FBI’s previous 2017
investigation were so important, then the government would have (presumably)
produced it in discovery. It didn’t. Instead, it withheld all information from the
defense about this investigation until long after the March 15, 2021 discovery cut-off
when it was necessary to respond to Agent Palmerton’s sworn testimony. The
government is attempting to pivot from its admission of the central nature of tainted
evidence because it knows that taint will ultimately require exclusion of all derivative
work product and evidence. See infra Section III.B. The government already conceded
the importance of the tainted evidence on the record and under oath. It was either lying
then, or—more likely—it is lying now.
C.
The Government Committed Serious Misconduct During the Search
Warrant Execution, Then Compounded That Misconduct With
Misleading, Meritless, and Bad Faith Arguments
The government committed serious misconduct during its search warrant
execution, and it cannot seriously dispute it because when agents tried to break or
disable all of the home’s security cameras, they missed one. The government claims
the SWAT team was just “doing its job,” Opp’n at 13 n.8, but no government agent’s
job includes assaulting children and holding them at gunpoint. The Opposition argues
that the video recording of the SWAT Team is insufficient, but ignores the fact that the
government itself destroyed the other cameras that would have provided additional
corroborating evidence. The government chose to destroy cameras to prevent its
conduct from being documented and now argues “lack of evidence” because its
misconduct was apparently not documented on a sufficient number of cameras.
The Opposition makes two arguments to defend the indefensible, but neither has
merit. First, the Opposition argues that the Court blessed the government’s warrant
execution tactics. See Opp’n at 7. That is false. The Court explicitly informed the
parties that it denied the motion to suppress solely because “the record does not reflect
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a flagrant general search.” Dkt. 296 at 40 & n.28 (“For this reason alone, the Court
rejects Defendants’ argument that all evidence should be suppressed because the
warrant was executed in an unreasonable manner. See Dkt. 146 at 20–21. Regardless of
the propriety of the Government’s tactical decisions in approaching Defendants’ home
and detaining persons on the premises, the search itself was not a flagrant general
search.” (emphasis added)). At no point did the Court endorse the government’s
misconduct as good faith or proper.
Second, the Opposition attempts to resuscitate the government’s lie that it
believed Richard Ayvazyan was a threat. As previously explained, at length and with
citation to contemporaneous documentation, the government knew Ayvazyan was not a
threat. See Dkt. 222 at 1-6. Contemporaneous documentation proves that even when
executing live surveillance on the home and following Ayvazyan, the government did
not deem him a threat of violence. Id. at 3. A fortiori, he could not be a threat of
violence during a dawn raid. (In fact, Ayvazyan was polite and courteous. The
government responded by assaulting Ayvazyan’s children and trashing his property
both of which continued after Ayvazyan and Terabelian had been handcuffed.) This
was a show of intimidation, not a necessary precaution.9 The government made these
bad-faith arguments because there is no excuse for its misconduct.

9 The government again cites a guilty plea from a former brother-in-law while withholding material
information from the Court: the pleadings in that former brother-in-law’s case reflected that the in-law
was not a member of the gang. Dkt. 222 at 4-5. Nor does the government allege that Ayvazyan has
any ties to the gang at all. Moreover, the Opposition claims that the former brother-in-law is
Ayvazyan’s “current business partner,” Opp’n at 14, but that claim is flatly incorrect and a transparent
attempt to make up for the government’s since-abandoned misrepresentation that Ayvazyan was
responsible for gun paraphernalia found in the trash at someone else’s home. See Dkt. 222 at 5 & n.3.
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D.
The Government Has Continued to Commit Serious Misconduct Since
the Indictment
1.
The Government Was Not Ready For Trial, So It Abused the
Grand Jury’s Powers to Gather Discovery Beyond the Reach of
Fed. R. Crim. P. 16
When Ayvazyan refused to waive his speedy trial rights, the government decided
to continue subpoenaing evidence of the same alleged conspiracy it had already
indicted. “The grand jury may not be used by the government for pretrial criminal
discovery.” In re Grand Jury Subpoenas Issued May 3, 1994 (Nash), 858 F. Supp. 132,
134 (D. Ariz. 1994). The government violated this black-letter law by engaging in
repeated fishing expedition subpoenas for people and businesses already alleged to be a
part of the conspiracy. The government unilaterally decided that it was not bound by
the limits of Fed. R. Crim. P. 16 and 17 and that it would wield the grand jury’s power
for the purpose of gathering evidence even though those rules do not provide for such
expansive evidence gathering.
The government’s counterargument is premised on a fundamental
misrepresentation of conspiracy law. A conspiracy is “an agreement of two or more
persons to commit one or more crimes.” Ninth Circuit Model Jury Instr. 8.20. “[T]he
‘essence’ of a conspiracy offense ‘is in the agreement or confederation to commit a
crime.’” United States v. Felix, 503 U.S. 378, 389-90 (1992) (quoting United States v.
Bayer, 331 U.S. 532, 542 (1947)). The initial indictment charges the same agreement
now charged in the superseding indictment.
The government argues repeatedly that it was able to gather additional
information about the conspiracy raising the alleged loss from $5.6 million to $21.9
million. The government’s argument is both fundamentally wrong and proof of the
prejudice to the defendants. It is fundamentally wrong because the conspiracy had the
same loss regardless of whether that loss is based on loans in the indictment or not. See
U.S.S.G. § 1B1.3(a)(1), (2) (relevant conduct). The government did not uncover
additional crimes raising the loss amount; it subpoenaed tainted evidence to support the
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same charge it had already levied. After all, the initial indictment alleged that the
conspiracy involved at least 35 loans and at least $4.6 million in proceeds. Indictment
¶ 22 (Dkt. 32). The fact that the government has used the grand jury’s subpoena power
to improve the government’s ability to adduce evidence on a wider variety of loans and
proceeds merely improves its tactical position regarding the same charged conspiracy to
the detriment of the individual defendants who lack symmetric subpoena power; it does
not change the conspiracy.
As shown in the table at pages 11-12 of the opening motion, the government
wielded the grand jury’s subpoena power to receive more and more detail on companies
and individuals who had already been charged as part of the alleged conspiracy. At the
very least, those subpoena returns should be suppressed and the government should be
compelled to produce a complete set of grand jury subpoenas to the defense.
2.
The Government Contacted a Represented Defendant Seeking
Information Regarding a Co-Defendant
The government claims that Agent Palmerton “accidentally” contacted Ayvazyan
rather than doing so out of frustration. It argues that Agent Palmerton attempted to
contact Grigoryan’s mother and dialed the wrong number, and that when a man picked
up the phone, he believed he was speaking to Manuk Grigoryan. Opp’n at 9-10. This
conflicts with Ayvazyan’s sworn recollection that Agent Palmerton referred to him by
name and conflicts with Ayvazyan’s recollection that Agent Palmerton referred to
Manuk in the third person repeatedly. Dkt. 289-2 ¶¶ 6, 10. To credit Agent
Palmerton’s version of events, one must believe the claims that: (1) Agent Palmerton—
having just spoken with Manuk Grigoryan, see Dkt. 310-1 ¶ 4—did not realize that he
was speaking to someone else when he called Ayvazyan; (2) after this confusing call in
which Agent Palmerton was surprised by a male voice “[u]nexpectedly” answering the
phone and saying they were represented by Ashwin Ram, neither Agent Palmerton nor
the Assistant U.S. Attorney’s thought to check the phone number Agent Palmerton had
dialed; (3) Agent Palmerton then conspicuously omitted his contact with a represented
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defendant from his FD-302 report of the event. Individually, each of these three claims
is dubious. In combination, they are incredible.
3.
The Government Violated Its Obligations Under Brady and Its
Progeny and the California Rules of Professional Conduct
California Rule of Professional Conduct 3.8(d) requires timely disclosure of all
“evidence or information” known to the prosecution team that the prosecutor “knows or
reasonably should know tends to negate the guilt of the accused, mitigate the offense, or
mitigate the sentence ….” Id. (noting that this obligation applies more broadly than
Brady). The dispute over whether the government has complied with its Brady and
Rule 3.8 obligations boils down to two questions: (1) does the government have an
obligation to produce evidence that a third person was responsible for the unlawful
actions charged against Ayvazyan? and (2) does this case involve sufficient information
that the government has an obligation to identify Brady material with specificity?
Although either would be sufficient to establish a violation, both answers are “yes.”
Despite being told six months ago that information or evidence that a third person
was responsible for the unlawful actions charged against Ayvazyan would be
exculpatory and the discovery cut-off passing almost two months ago, the Opposition
for the first time takes the novel position that the government is not obligated to
produce that information and evidence. Opp’n at 21. The Opposition takes the position
that “[s]uch information is not exculpatory” because “the charging theories in this case”
allege that Ayvazyan “acted, or caused others to act on his behalf.” Id. The
Opposition is plainly wrong. First, to state the obvious, if the government alleges two
theories and evidence would contradict one of them, then the evidence is exculpatory.
Second, the Superseding Indictment alleges that Ayvazyan is Zhadko and that, as
Zhadko, he took a number of direct actions including controlling checking accounts in
the name of Iuliia Zhadko; submitting fraudulent applications in the name of Iuliia
Zhadko (Overt Act No. 42); and purchasing property in the name of Iuliia Zhadko.
Dkt. 154 ¶¶ 22, 33. The government already argued to this Court that Ayvazyan was
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responsible for certain allegedly unlawful transactions from Turing Info Solutions
because the two accounts in question used Iuliia Zhadko’s “unique synthetic identity.”
Dkt. 219 at 10-11. Evidence that someone else—not Ayvazyan—is actually taking
actions in the name of Zhadko is facially and directly exculpatory.10 This evidence
exists—as shown by the government’s delinquent productions from the FBI-state
investigation—and the government failed its obligation to timely produce it.
The government’s attempt to avoid identifying Brady information and evidence
with particularity fares no better. Ayvazyan asked back in November 2020 for the
government to “identify with particularity” all Brady materials before it objected; the
government raised no objection until the Opposition (nearly two months after such
identifications were due as part of discovery). Setting aside the failure to make a timely
objection, the Opposition’s argument is wholly without merit. Its argument hinges on
the assertion that this case does not involve the “massive amount of discovery,” at issue
in United States v. Salyer, No. 10-cr-61, 2010 WL 3036444 (E.D. Cal. Aug. 2, 2010).
As the court observed in Salyer, Brady and Giglio duties are on the government, not the
defense. Id. at *5. The court held that in cases involving substantial enough disclosure,
Brady obligations require both disclosure and identification. Id. at *6; see also United
States v. Hsia, 24 F. Supp. 2d 14, 29 (D.D.C. 1998), rev’d in part on other grounds,
176 F.3d 517 (D.C. Cir. 1999) (“the government cannot meet its Brady obligations by
providing [the defendant] with access to 600,000 documents and then claiming that she
should have been able to find the exculpatory information in the haystack.”).
The Opposition argues that this case does not involve as substantial discovery as
Salyer because there discovery involved “multiple gigabytes” of electronic information
which it calculated as millions of pages but also two storage containers of
documentation. Opp’n at 22 n.14. Contrary to the Opposition’s argument, this case

10 Indeed, Ayvazyan made this argument to the Court when litigating the government’s second motion
for a protective order. See Dkt. 234 at 6-7. Although the Court did not explicitly rule on the factual
dispute, it denied the government’s request for relief. Dkt. 258.
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involves substantially more discovery than Salyer. There are 1,000 gigabytes in 1
terabyte. Even assuming the “multiple gigabytes” in Salyer meant “one thousands
gigabytes,” the government here has produced over 20 terabytes’ worth of data
including over 40 digital devices,11 i.e., more than twenty times as much discovery as
Salyer.12 Specific identification is appropriate in a case with discovery productions this
substantial.
The government’s objections have no merit and were waived during the six
months the government sat on their hands. The government committed misconduct by
failing to produce and identify Brady and Rule 3.8 evidence and it should be held
accountable.
E.
The Government Flagrantly Violated the Court’s Discovery Order
and Compounded That Misconduct By Lying to the Court
Contrary to the government’s in-court representations, the government did not
comply with the March 15 discovery order. The Opposition misrepresents Ayvazyan’s
position by claiming it relies on reading the discovery order to impose a “blanket
prohibition” on producing discovery after March 15; to the contrary, the discovery
order permits production of discovery after March 15 in “extraordinary circumstances.”
Dkt. 105. The problem is that the government committed misconduct by unilaterally
deciding that “extraordinary circumstances” is so capacious that it includes discovery
regarding the individuals, companies, and properties charged in the initial indictment
back in November 2020. The government failed to timely produce items like:

11 This does not include two 10-terabyte hard drives, which the government recently requested for
discovery productions and the defense provided.
12 The government also cites to United States v. Gross, attempting to score political points off of the
fact that the undersigned was an AUSA prosecuting that case. Unfortunately for the government, a
key fact underlying the court’s determination were the facts that the defense had more than one year to
review the vast majority of evidence, and that seventeen months earlier, the government had produced
binders containing the “key documents” that it planned to introduce in its case-in-chief. 424 F. Supp.
3d 800, 804 (C.D. Cal. 2019). Here, in contrast, the government has fought requests for early
discovery every step of the way and refused repeated requests to identify its trial exhibits.
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 Brady evidence listed above in Section I, which included evidence undercutting
Ayvazyan’s responsibility for the actions of various people who allegedly
committed fraud, demonstrates alternative sources of income explaining
purportedly PPP-related transfers, undercuts the government’s assertion that the
money seized from Ayvazyan is subject to forfeiture instead of return, and
generally mitigates even the alleged culpability of Ayvazyan, see supra Section I,
which was produced in part on April 26, May 3, and May 7 2021, and has not yet
been produced in substantial part.
 Bank statements regarding Secureline Realty, see Dkt. 32 Overt Act Nos. 1-9,
which were produced April 9, 2021.
 Bank statements regarding various other suspects who were not charged, which
were produced April 9, 2021.
 Bank statements for Marietta Terabelian and Richard Ayvazyan, which were
produced on May 3, 2021.
 Bank statements showing that other contributors to Ayvazyan’s home purchase
did not obtain money from PPP or EIDL loans, which were produced on May 3,
2021.
This ignores entirely the government’s failures to promptly produce discovery
devices including those that contain exculpatory data. See Dkt. 248 at 2, 9. To the
extent the government has previously blamed its failures on CART, Dkt. 278 at 7 n.5,
that was a misrepresentation. The recent discovery productions show that CART
repeatedly processed any and all devices the government gave it within mere days. The
problem was that the government waited until December 16, 2020 or later to request
discovery copies of materials that had been seized on or before November 5, 2020.13

13 DOJ_PROD_0000153655 shows a December 16, 2020 request completed by December 21, 2020.
DOJ_PROD_0000153807 shows a January 4, 2021 request completed by January 7, 2021.
DOJ_PROD_0000153808 shows another January 4, 2021 request completed by January 7, 2021
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The government could have applied to the Court if it could not comply with the
discovery order, but instead, it decided that it did not need to comply. The government
indicted a case that it was not ready to bring to trial and the result is that even when
given a charitable discovery cut-off with nearly four months’ notice, the government
flagrantly violated that Court order and compounded its error by lying to the Court
about whether it had complied with the Court’s order.
III.
THE COURT SHOULD DISMISS THE CASE, OR IN THE
ALTERNATIVE, ORDER DISCOVERY
The government’s aggregated misconduct has irreparably tainted its case against
Ayvazyan and merits dismissal. In the event that the Court does not grant this motion,
however, it should order the government to produce discovery regarding its internal
decision-making about whether and how to charge different individuals and discovery
regarding its presentation of tainted evidence to the grand jury.
A.
The Court Should Dismiss the Case Under the Due Process Clause or
Supervisory Powers
When prosecutors fail to live up to their role as representatives of a sovereignty
obligated to govern impartially with justice elevated above convictions, dismissal of an
indictment may be proper under either of two theories. First, a “court may dismiss an
indictment on the ground of outrageous government conduct if the conduct amounts to
a due process violation.” United States v. Chapman, 524 F.3d 1073, 1084 (9th Cir.
2008) (quoting United States v. Barrera-Moreno, 951 F.2d 1089, 1091 (9th Cir. 1991)).
The due process clause is violated when the conduct of law enforcement “violate[s] that
‘fundamental fairness, shocking to the universal sense of justice’ mandated by the Due
Process Clause of the Fifth Amendment.’” United States v. Russell, 411 U.S. 423, 431-
32 (1973) (quoting Kinsella v. United States ex rel. Singleton, 361 U.S. 234, 246
(1960). Second, “[i]f the conduct does not rise to the level of a due process violation,
the court may nonetheless dismiss under its supervisory powers.” Chapman, 524 F.3d
at 1084. Supervisory power dismissals require flagrant misconduct that substantially
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prejudices the defendant. Dkt. 289 at 19. Dismissal of Ayvazyan’s indictments is
proper under either theory, but it is particularly appropriate given the purpose of
supervisory power dismissals.
Deterring prosecutorial misconduct is one of the core reasons to exercise the
Court’s supervisory powers. United States v. Aguilar, 831 F. Supp. 2d 1180, 1206 &
n.20 (C.D. Cal. 2011); see also United States v. Kojayan, 8 F.3d 1315, 1325 (9th Cir.
1993) (emphasizing the use of supervisory power to establish and enforce standards of
prosecutorial conduct). Prosecutors need to be deterred from following the path laid
out by the government in this case.
The government—having gathered key evidence by intentionally violating
Ayvazyan and Terabelian’s Fifth Amendment rights during the Miami airport stop—
charged a case with no intention of providing a speedy trial. Instead of heading to trial,
the government empaneled a grand jury to continue gathering evidence on the
indictment it had already obtained. The government knew that it would seek a
superseding indictment, which is why it held back certain allegations to ensure that it
could add detail to the future superseding indictment to (wrongfully) excuse its post-
indictment use of the grand jury. When the government was ordered to produce “all
outstanding discovery” by March 15, the government decided that “all” did not mean
“all” (and now claims that the onus was somehow on Ayvazyan to seek relief before
March 15). The government then withheld multiple pieces of exculpatory evidence and
produced substantial discovery after the discovery cut-off without proof of
extraordinary circumstances. After the Court set trial for sooner than the government
would like, it tried to secure a continuance or a tactical advantage by colluding with
state authorities to charge and detain Ayvazyan pending trial.
These are not actions that should be tolerated from ministers of justice. They fall
below the level of objectivity and responsibility that the justice system requires of
prosecutors. This case—no less than Aguilar—presents a vehicle for the Court to send
a message that this sort of gamesmanship will not be tolerated.
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B.
The Court Should Order the Government to Produce Discovery
Regarding Its Internal Decision-Making and Presentation of Tainted
Evidence
Discovery is necessary for two independent purposes. First, discovery of the
government’s internal decision-making regarding whether and how to charge different
individuals is necessary because the government has abused its prosecutorial discretion.
The government has abused its prosecutorial powers for tactical gain both by holding
back certain charges to gain more time to investigate at the expense of the defendants’
rights and by conspiring with state authorities to bring charges after years of
investigation just in time for the government to secure another tactical gain from
detaining Ayvazyan. Second, discovery of the grand jury transcripts and subpoenas is
necessary because regardless of whether the government presented the suppressed
phones to the grand jury, the derivative taint is far broader.
Discovery of the government’s internal decision-making regarding whether and
how to charge different individuals is necessary to discern the extent to which the
government has abused that authority to evade the defendants’ speedy trial rights,
obtain continuances, and wield the grand jury’s subpoena power. Despite
contemporaneously averring probable cause to believe that certain co-defendants had
committed crimes or that the identity of N.T. had been “stolen,” Compl. ¶¶ 26.c-.e (Dkt.
152 Ex. 11 at 68); Search Warrant App. ¶¶ 33.k, 62.d (Dkt. 152 Ex. 11 at 31, 44-45),
the government held those allegations back from the Indictment and added them as part
of the superseding indictment four months later, see Superseding Ind. Overt Act Nos.
29-31 & ¶¶ 37, 44-45 (Dkt. 154 at 18, 29-30, 36). The government knew full well that
it intended to use a superseding indictment to extend its evidence gathering process
without being bound by the limitations in Fed. R. Crim. P. 16 and 17. The substantial
issues regarding the degree to which this misconduct was willful merits discovery
regarding the government’s internal decision-making about whether and when to charge
different individuals or include different loans in charging documents.
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Discovery of the government’s internal decision-making regarding whether and
how to charge different individuals is independently justified by the state charges and
detention of Ayvazyan immediately after the Court rejected the government’s bid to
delay trial. If the government is conspiring to shape charging decisions to gain a
tactical advantage, then it is both committing gross misconduct and violating the due
process rights of Ayvazyan.
Discovery of the grand jury transcripts and subpoenas is merited because the
ramifications of the government’s Fifth Amendment violations during the Miami
airport stop are not limited to the involuntarily obtained phones themselves.14 Any use
of compelled statements—including investigatory leads, influencing a witness to
testify, or informing the government’s theory of the case—is prohibited.15 The Fifth
Amendment prohibited the government from using the information on the Miami
airport phones in any way, but based on the direct links between the tainted evidence
highlighted by CBP for the government’s use and the government’s consequent
indictment and acquisition of a CI, it is a near certainty that the government has already
used the tainted evidence to build its case.
The tainted photographs taken by CBP and shared with Agent Palmerton and the
rest of the government team included an array of topics that the government has since

14 See Chavez v. Martinez, 538 U.S. 760, 769 (2003) (“[O]ur cases provide that those subjected to
coercive police interrogations have an automatic protection from the use of their involuntary
statements (or evidence derived from their statements) in any subsequent criminal trial.”); Kastigar v.
United States, 406 U.S. 441, 460-61 (1972) (the unlawful compulsion of evidence places an
“affirmative duty” on the government “to prove that the evidence it proposes to use is derived from a
legitimate source wholly independent of compelled testimony.”).
15 See Kastigar, 406 U.S. at 460 (“This total prohibition on use provides a comprehensive safeguard,
barring the use of compelled testimony as an ‘investigatory lead,’ and also barring the use of any
evidence obtained by focusing the investigation on a witness as a result of his compelled
disclosures.”); United States v. Hylton, 294 F.3d 130, 134 (D.C. Cir. 2002) (“[I]f Hylton’s statements
were a cause of Wright’s decision to plead and testify against Hylton, Wright's testimony was
impermissible even if the government had prior knowledge of Wright’s role.”); see also United States
v. Dudden, 65 F.3d 1461, 1469 (9th Cir. 1995) (“If the district court finds that the government did use
Dudden’s immunized statements, either directly or in developing the case against her, Dudden’s
conviction must be set aside.”).
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investigated: Iuliia Zhadko; Viktoria Kauichko; N.T.; Turing Info Solutions; the Palm
Desert house added to the Superseding Indictment as Residential Property 3; people
who have since been interviewed by the government including the person identified by
the government as its CI; Anton Kudiumov; Manuk Grigoryan; Mod Interiors; the
jewelry company checks cited by the government to oppose Ayvazyan’s motion to
suppress and return search warrant seizures; and more. See Ram Decl. Ex. B. This
evidence was tainted and neither it, nor any evidence derived from it, could lawfully be
presented to the grand jury. But that is exactly what appears to have occurred.
It is undisputed that “exploration of the question of taint can be made . . . by
review of the prosecution’s evidence and of the grand jury transcript.” United States v.
Allen, 864 F.3d 63, 99-100 (2d Cir. 2017) (internal quotation marks and citations
omitted). Indeed, where similarities between the case at bar and another involving
suppression “suggested that the grand jury transcripts contain information that is
material to defendants’ motion to suppress,” a court in this district concluded that the
defendants satisfied the required “particularized and compelling need for disclosure of
the grand jury testimony at issue” and ordered disclosure. United States v. Flores, No.
16-cr-833, 2017 WL 2622733, at *3 (C.D. Cal. June 13, 2017) (noting that the court has
“substantial discretion” regarding grand jury transcripts and that “[b]ecause indictments
have already issued, there is little reason for continuing secrecy”). In Allen, the grand
jury transcripts revealed that an FBI agent had testified after speaking to a witness who
had reviewed compelled statements. See 864 F.3d at 78-79. The court held that
because the agent’s testimony derived in part from a witness who had been tainted by
reviewing compelled statements, the agent’s testimony and consequent indictment were
also tainted. 864 F.3d at 100-01 (rejecting the argument that documentary evidence
insulated the grand jury’s indictment from taint).
The tainted evidence in this case strongly imply that further suppression or
dismissal will similarly be proper based on the grand jury’s transcripts and subpoenas.
The tainted evidence includes documents related to every alleged crime in the
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indictment and superseding indictment, including the counts added in the superseding
indictment that the government claims to have investigated after the Miami airport stop.
For example, the lead agent testified that exposure to the tainted evidence caused the
government to conclude “that Iuliia Zhadko was, in fact, an alias of Richard
Ayvazyan.” Dkt. 310-6 at 24. That allegation is explicitly made in the grand jury’s
indictment and superseding indictment, and is the basis of nearly every allegation
against Ayvazyan. As another example, after being exposed to their presence in the
tainted evidence, the government investigated several of the defendants and companies
added in the superseding indictment. As a third example, the government does not
appear to have contacted its CI until after it was exposed to information about her in the
tainted evidence. The taint appears to have stretched into every crevice of the
government’s case, and grand jury transcripts and subpoenas will aid in proving that
appearance correct.
While the government bears the burden of disproving taint, discovery is
necessary to ensure that litigation occurs via the adversarial process. The government
will not be prejudiced by producing the grand jury transcripts and subpoenas, as shown
by its offer to produce the grand jury transcripts for in camera inspection. See Opp’n at
8 n.4. At this point in the proceeding, with only five weeks until trial, there is no need
to withhold those transcripts from the defense. They should be produced to both the
Court and the defense along with a complete set of grand jury subpoenas to facilitate
evaluation of the government’s misconduct by opening it up to the adversarial process.
*
*
*
The government has committed an unparalleled array of flagrant misconduct to
Ayvazyan’s detriment. Ayvazyan respectfully submits that dismissal is the appropriate
remedy for that misconduct, but if the Court disagrees, then Ayvazyan respectfully
requests that it order discovery of the government’s internal decision-making regarding
whether and how to charge different individuals, and discovery of the grand jury
transcripts and subpoenas.
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Dated: May 10, 2021

Respectfully submitted,

STEPTOE & JOHNSON LLP

/s/ Ashwin J. Ram

Ashwin J. Ram (SBN 227513)

aram@steptoe.com
Michael A. Keough (SBN 327037)
mkeough@steptoe.com
Nicholas P. Silverman (pro hac vice)
aram@steptoe.com
STEPTOE & JOHNSON LLP
633 West Fifth Street, Suite 1900
Los Angeles, CA 90071
Telephone: (213) 439-9400
Facsimile: (213) 439-9599

Counsel for Defendant

Richard Ayvazyan
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