REPLY in support of Joint MOTION in Limine to Exclude Evidence of Prior Convictions… — USA v. Ayvazyan et al (Dkt. 414)

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U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 414 · 2021-06-03 · Docket on CourtListener

Summary

Richard Ayvazyan and Marietta Terabelian's joint reply supporting their motion in limine to exclude evidence of prior convictions, filed June 3, 2021 as Doc. 414 in USA v. Ayvazyan et al, No. 2:20-cr-00579-SVW, in the U.S. District Court for the Central District of California. It notes the government will not use Ayvazyan's 1999 conviction and argues that the couple's 2012 bank fraud conspiracy convictions, for conduct from 2007 to 2011, are too dissimilar and remote to prove intent without propensity reasoning barred by Rule 404(b)(1). The reply contrasts that mortgage case with the current charges involving synthetic identities and PPP and EIDL loans. It asks for exclusion under Rule 403 as well, allowing impeachment only with the date and fact of a prior felony conviction if either defendant testifies. The 10-page filing carries the /s/ signature of Ashwin J. Ram.

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AYVAZYAN & TERABELIAN’S JOINT REPLY BRIEF RE 
JOINT MOTION IN LIMINE TO EXCLUDE PRIOR CONVICTIONS 
 
 
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John L. Littrell (SBN 221601) 
jlittrell@bklwlaw.com  
Ryan V. Fraser (SBN 272196) 
rfraser@bklwlaw.com  
BIENERT KATZMAN LITTRELL WILLIAMS LLP 
601 W. 5th Street, Suite 720 
Los Angeles, CA 90071 
Telephone: (213) 528-3400 
Facsimile: (949) 369-3701 
 
Attorneys for Defendant MARIETTA TERABELIAN 
 
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 
Meghan Newcomer (pro hac vice) 
mnewcomer@steptoe.com 
STEPTOE & JOHNSON LLP 
633 West Fifth Street, Suite 1900 
Los Angeles, CA 90071 
Telephone: (213) 439-9400 
Facsimile: (213) 439-9599 
 
Attorneys for Defendant RICHARD AYVAZYAN 
  
 
 
IN THE UNITED STATES DISTRICT COURT 
FOR THE CENTRAL DISTRICT OF CALIFORNIA  
    
UNITED STATES OF AMERICA,  
Plaintiff, 
 
 
v. 
 
 
RICHARD AYVAZYAN,  
MARIETTA TERABELIAN, et al., 
 
 
Defendants. 
 
Case No.  2:20-cr-579-SVW 
Hon. Stephen V. Wilson   
AYVAZYAN & TERABELIAN’S 
JOINT REPLY TO 
GOVERNMENT’S OPPOSITION TO 
THEIR MOTION IN LIMINE TO 
EXCLUDE EVIDENCE OF PRIOR 
CONVICTIONS UNDER FED. R. 
EVID. 401–404 & 609  
 
 
 
Trial Date: June 15, 2021  
 
Hearing vacated (dkt. 404) 
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REPLY MEMORANDUM OF POINTS AND AUTHORITIES 
I. 
Introduction  
Husband and wife Richard Ayvazyan and Marietta Terabelian have moved jointly 
in limine to exclude evidence of their prior convictions. See Joint Motion, dkt. 340. The 
government’s opposition brief states that it will not use Ayvazyan’s 1999 conviction, 
which leaves for the Court to resolve the admissibility of the couple’s convictions for 
conspiring with each other from 2007 to 2011 to commit bank fraud in connection with 
their mortgage and home-equity line of credit. See Gov.’s Opp. to Joint Motion (“Opp. 
Br.”), dkt. 357, at 6 n.2 (brief page numbering). The essence of that offense was 
Ayvazyan and Terabelian exaggerating their income to qualify for the loans by 
submitting false W-2s and tax returns. See Plea Agreements, dkt. 357-1, 357-2, at 6–7 
(plea agreement page numbering). Because that conduct is only generically similar to the 
present charges, its ostensible connection to any of the permissible purposes of “other 
acts” evidence under Federal Rule of Evidence 404(b)(2) is necessarily rooted in the 
propensity reasoning forbidden by 404(b)(1). That is undoubtedly the reason why the 
government’s opposition brief fails to articulate a chain of inferences through which the 
prior convictions are relevant to a permissible 404(b)(2) purpose that does not involve 
propensity.  
Rule 403 calls for exclusion as well, because the government has little or no need 
for the prior convictions in light of other evidence of intent the government seeks to 
introduce. The Court should let the evidence of the alleged 2020 scheme stand on its own 
and exclude the 2012 convictions for 2007 to 2011 conduct, except for impeachment use 
against either defendant only if he or she testifies, limited to the date and fact of his or 
her prior felony conviction.  
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II. 
Reply arguments 
A. Because the 2007 to 2011 conduct underlying the 2012 convictions is 
dissimilar to the present charges and remote in time, it has little or no 
tendency to prove the mens rea alleged in the superseding indictment. 
The government’s attempts to demonstrate similarity only underscore how 
different the two cases really are when it comes to their non-generic facts. The 
government argues the cases are similar for involving or allegedly involving (1) these 
two defendants conspiring together (2) to fraudulently obtain loans (3) from a federally 
insured bank, by (4) “submitting false documents and information” and (5) “using the 
name of a close relative.” Opp. Br. 8–9; but see Gov.’s Motion In Limine #2, dkt. 384, at 
2–5 (alleging the use of fake or synthetic identities, many other coconspirators, 
fraudulent PPP and EIDL loan applications, and multiple forms of money laundering, all 
of which distinguish the frauds charged in the superseding indictment from the 2007 to 
2011 mortgage fraud in subject matter, sophistication, scope, and scale).  
The government’s first four similarities are too generic to enable a jury to use the 
prior convictions for a purpose other than other than for character. As for the involvement 
of a close relative, the government is referring to the fact that, in the prior case, Ayvazyan 
“caused his mother to submit a letter to the bank stating that she was not related to the 
owner of the property” that he sold her in a short sale. Ayvazyan Plea Agreement at 7. 
But the apparent similarity breaks down quickly in light of the fact that Terabelian was 
not involved in obtaining the letter from Ayvazyan’s mother. See Terabelian Plea 
Agreement at 6–7. Moreover, the allegations in the present case are not about persuading 
a living relative to make a misrepresentation, but rather allegedly usurping a deceased 
relative’s entire identity and committing fraud in his name, which the government 
contends amounted to aggravated identity theft under 18 U.S.C. § 1028A. No identify 
theft was charged in the prior case. Consequently, the prior acts are not similar to the 
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present allegations and the prejudice to both defendants, particularly Terabelian, is 
unfair.  
The government’s recent motion in limine #2 confirms that the superseding 
indictment is not about “essentially the same offense” as a mortgage fraud for which 
neither defendant received additional custody at sentencing. See Opp. Br. 9; Ayvazyan 
& Terabelian Judgments, No. 8:11-CR-180-CJC, dkt. 90 (Terabelian’s probation 
sentence), dkt. 99 (Ayvazyan’s time-served sentence); Gov.’s Motion In Limine #2, dkt. 
384, at 2–5 (brief page numbering). There, the government acknowledges it is currently 
charging “conspiracy to commit bank fraud and wire fraud, conspiracy to commit money 
laundering, bank fraud and attempted bank fraud, wire fraud, money laundering, and – 
for certain defendants - aggravated identity theft, concealment money laundering, and 
committing an offense while on pre-trial release.” Dkt. 384  at 2. Effectively highlighting 
the monumental differences from the mortgage fraud Ayvazyan and Terabelian admitted 
committing (in their own names), the government’s recent brief emphasizes the 
allegations that this case involves “combining stolen and fictitious names, dates of birth, 
and social security numbers, [and so] creat[ing] synthetic identities that could be used to 
create false business names and entities”; id. at 3; and thus “obtain[ing] COVID-19 
disaster relief funds intended to help workers stay employed and small businesses stay 
open through the pandemic.” Id. at 4. Here, the alleged essential misrepresentations were 
not about the couple’s ability to repay their mortgage, but rather the payroll and 
operational expenses of businesses, offered to qualify for funding under disaster-relief 
programs that were particular to 2020. Id. “The amount of money a business was eligible 
to receive depended on these self-reported expenses, and businesses were required to use 
that money towards business, and not personal, expenses.” Id. at 4–5. 
Also, to the extent the prior conduct ever could have had probative value for a 
permissible 404(b)(2) purpose in a trial over conduct alleged in 2020, it has long gone 
stale. The conduct underpinning the prior conviction began in 2007, thirteen years before 
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the alleged conduct underpinning the present charges. This temporal remoteness counts 
against admission.  
The age and dissimilarity problems are all the more reason why, in this case, “the 
district court should not just ask whether the proposed other-act evidence is relevant to a 
non-propensity purpose but how exactly the evidence is relevant to that purpose—or 
more specifically, how the evidence is relevant without relying on a propensity 
inference.” United States v. Gomez, 763 F.3d 845, 856 (7th Cir. 2014) (en banc) 
(emphasis in original) (reversing conviction); see also United States v. Smith, 725 F.3d 
340, 342 (3d Cir. 2013) (rejecting 404(b) evidence of past drug dealing at a particular 
location to show that the defendant threatened an officer with a gun at that location in 
order to defend his turf, because inferring that motive necessarily involved concluding 
the defendant was a drug dealer by character). The government’s failure to articulate a 
chain of non-propensity inferences from the intent to commit mortgage fraud from 2007 
to 2011 to the alleged intent in 2020 is telling. 
The government’s claim that 404(b) evidence has been admitted before in 
analogous contexts also comes up short on support from the cases cited. See Opp. Br. 9. 
While the cursory 404(b) discussion common to both United States v. Jenkins, 785 F.2d 
1387, 1395 (9th Cir. 1986), and United States v. Evans, 796 F.2d 264, 265 (9th Cir. 1986) 
(per curiam), prevents meaningfully comparing their respective similarity factors with 
that of this case, it is apparent that both involved significantly more recent prior acts. See 
Jenkins, 785 F.2d at 1395 (deeming it fair to describe the other acts as having occurred 
more than “a year” before the charged crimes); Evans, 796 F.2d at 265 (other acts 
occurred “six years prior to the commission of the [charged] offenses”).  
Though not a drug case, our situation is conceptually like United States v. 
Hernandez-Miranda, 601 F.2d 1104, 1108–09 (9th Cir. 1979). There, a defendant 
charged with heroin importation denied knowledge of the drugs in the car he was driving, 
and the Ninth Circuit explained that evidence the defendant had previously smuggled 
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marijuana across the border in his backpack should not have been admitted, “because the 
only similarity was that the defendant was again on trial for smuggling drugs across the 
border.” Id. The Court explained, “[t]he greater is the dissimilarity of the two offenses, 
the more tenuous is the relevance,” and required the government to establish the logical, 
non-propensity basis to infer mens rea from the 404(b) evidence, id., which the 
government has failed to do here. 
Contrary to the government’s suggestion, pleading not guilty to a fraud offense 
does not open the door to the automatic admission under 404(b) of any prior fraud-related 
conviction, no matter how old or dissimilar.1 Here, the prior convictions are inadmissible 
because their staleness and dissimilarity to the present charges leaves them relevant to 
mens rea only along the lines of “once a bank-fraud conspirator, again a bank-fraud 
conspirator,” which Rule 404(b)(1) prohibits. 
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1 The government inappropriately cites Huddleston v. United States, 485 U.S. 681 
(1988), for the false proposition that “evidence of prior false and misleading statements 
– particularly when made to obtain money or property from others – is admissible” 
(emphasis added) as though automatically, “under Rule 404(b) in a subsequent 
prosecution.” Opp. Br. 5. In Huddleston, 485 U.S. at 685, the similarity of the 
government’s “other acts” evidence was factually specific enough that the Court took for 
granted that it was properly relevant to knowledge. That was not the issue. Instead, the 
defendant objected that “the Government failed to prove to the District Court” that the 
prior act occurred as the government claimed—in particular, that the televisions he was 
selling in the uncharged incident “were in fact stolen.” Huddleston, 485 U.S. at 686. The 
Supreme Court held that the government did not need to prove this to the District Court; 
rather, the relevant precondition for admission was whether there was evidence sufficient 
for a reasonable jury to find that the televisions in the uncharged incident were stolen. Id. 
at 689.  
Despite being mostly inapposite, Huddleston does confirm that, to be admissible, 
prospective 404(b) evidence must be relevant to a permissible purpose, with its probative 
value not substantially outweighed by its potential for unfair prejudice. Id. at 691. Here 
the prospective 404(b) evidence fails to satisfy those conditions. 
 
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B. In addition to the foregoing reasons, the Court should exclude the prior 
convictions under Rule 403 because the government has not shown a 
particular need for this evidence, and the danger of the jury using this 
evidence for propensity overwhelms any relevance for a permissible 
purpose. 
The government purports to “need” the prior case as 404(b)(2) evidence but fails 
to explain that need, other than to acknowledge that intent is an element of the present 
charges. Id. This elides the volumes of other evidence the government proposes to admit 
to show intent, including dozens of loan applications containing alleged 
misrepresentations and the government’s tracing of the proceeds from those loans into 
bank accounts allegedly controlled by Ayvazyan or Terabelian. The Court has also 
declined to suppress debit cards in the names of allegedly synthetic or fake identities that 
were allegedly used in the scheme and found in Ayvazyan’s and Terabelian’s possession 
at Miami International Airport. In addition, the government has now filed twenty-five 
pages of briefing regarding other evidence, including extensive text messaging it 
attributes to Ayvazyan and codefendant Tamara Dadyan that the government argues is 
admissible under 404(b) if these acts are not deemed inextricably intertwined. See Gov.’s 
Motion In Limine #2, dkt. 384. Ayvazyan and Terabelian reserve their rights to object to 
admission of this evidence, but if the government’s evidentiary theories are correct, then 
it has no real need to rely on the conduct from 2007 to 2011 to prove Ayvazyan’s and 
Terabelian’s intent in 2020, even if were not propensity evidence being offered under the 
guise of intent, which it is.  
Therefore, in the alternative to exclusion under Rule 404(b)(1), the Court should 
exclude the prior convictions under Rule 403 because their already minimal probative 
value must be discounted further for the availability of other mens rea evidence. See Old 
Chief v. United States, 519 U.S. 172, 173 (1997) (“If an alternative were found to have 
substantially the same or greater probative value but a lower danger of unfair prejudice, 
sound judicial discretion would discount the value of the item first offered and exclude 
it if its discounted probative value were substantially outweighed by unfairly prejudicial 
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risk.”). Such discounted probative value, if any, is overwhelmed by the near-certainty of 
propensity use and the danger of jurors convicting Ayvazyan and Terabelian here to 
punish them for their prior offense.  
C. Impeachment use should not include reference to the factual details of the 
prior case. 
Ayvazyan and Terabelian acknowledge that testifying would subject either of them 
to impeachment with the fact, felony nature, and date of the prior conviction. See Fed. R. 
Evid. 609(a)(2). But disclosing to the jury the details of those aged prior convictions is 
another issue. This threat would overburden their fundamental rights to testify while 
inviting jurors to entertain improper character-based inferences. Courts frequently limit 
impeachment use of prior convictions to the date of the conviction and its felony nature. 
Cf., e.g., United States v. Martinez-Martinez, 369 F.3d 1076 (9th Cir. 2004) (affirming 
admission where district judge “sanitize[d] the conviction by only allowing it to be 
referred to as ‘a felony conviction’ in order to ameliorate any potential prejudice to the 
defendant”); United States v. Robinson, 8 F.3d 398, 409 (7th Cir. 1993) (“details of the 
prior conviction should not have been exposed to the jury”); United States v. Cox, No. 
CR-16-08202-001-PCT-ROS, 2018 WL 9786084, at *2 (D. Ariz. Apr. 27, 2018). (“to 
ensure the probative value of introducing the prior conviction outweighs its prejudicial 
effect, the government shall not reference the nature of the conviction, unless Cox 
testifies falsely or misrepresents her criminal history”); United States v. Swint, No. CR-
12-08080-PCT-PGR, 2012 WL 3962704, at *1 n. 1 (D. Ariz. Sept. 11, 2012). Ayvazyan 
and Terabelian respectfully ask the Court to do so here, as well, understanding that 
testifying falsely regarding the factual details of the prior convictions would open the 
door to the government exposing this to the jury. But otherwise, the government can 
derive enough impeachment value from the fact, felony nature, and date of the prior 
conviction without adding details that would risk (1) necessitating a mini-trial over those 
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details and (2) creating a risk of jurors punishing them for those details or misusing the 
details in violation of Rule 404(b)(1). 
III. 
Conclusion  
Ayvazyan and Terabelian request the Court prohibit any reference at trial to their 
prior convictions, except that if either of them testifies, then the government may 
impeach the testifying defendant by establishing that he or she was convicted of a felony 
in 2012.  
 
Dated:   June 3, 2021 
 
 
 
Respectfully submitted, 
 
BIENERT KATZMAN LITTRELL 
WILLIAMS LLP 
 
 
 
 
 
 
 
 
/s/ Ryan V. Fraser  
 
 
 
 
 
 
 
 
 
John L. Littrell  
Ryan V. Fraser 
Counsel for Defendant Marietta 
Terabelian 
 
 
 
 
 
 
 
 
STEPTOE & JOHNSON LLP 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/ Ashwin J. Ram  
 
 
 
 
 
 
 
 
 
Ashwin J. Ram 
Michael A. Keough  
Nicholas P. Silverman (pro hac vice) 
Meghan Newcomer (pro hac vice) 
Counsel for Defendant Richard Ayvazyan 
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CERTIFICATE OF SERVICE 
 
I declare that I am a citizen of the United States and I am a resident and employed 
in Los Angeles, California; that my business address is 601 W. 5th  Street, Suite 720, Los 
Angeles, CA 90071; that I am over the age of 18 and not a party to the above-entitled 
action.  
I am admitted to practice before the United States District Court for the Central 
District of California. I caused service of the foregoing document entitled 
AYVAZYAN & TERABELIAN’S JOINT REPLY TO GOVERNMENT’S 
OPPOSITION TO THEIR MOTION IN LIMINE TO EXCLUDE EVIDENCE 
OF PRIOR CONVICTIONS UNDER FED. R. EVID. 401–404 & 609 on all 
interested parties as follows:  
 
[X] 
BY ELECTRONIC TRANSMISSION: by electronically filing the foregoing 
with the Clerk of the District Court using its CM/ECF System pursuant to the 
Electronic Case Filing provision of the United States District Court General Order 
and the E-Government Act of 2002, which electronically notifies all parties in this 
case.  
 
I declare under penalty of perjury under the laws of the United States of America 
that the foregoing is true and correct. Executed on June 3, 2021 at Glendale, California.  
 
/s/ Ryan V. Fraser 
 
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