Court filing
OPPOSITION to MOTION in Limine to Admit Evidence Inextricably Intertwined with the… — USA v. Ayvazyan et al (Dkt. 419)
Record facts
| Court | U.S. District Court for the Central District of California |
|---|---|
| Filed | 2021-06-04 |
U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 419 · 2021-06-04 · Docket on CourtListener
Summary
Defendants' opposition to the government's motion in limine #2 to admit evidence inextricably intertwined with the charged offenses, filed June 4, 2021 as Document 419 in United States of America v. Richard Ayvazyan, et al., Case No. 20-cr-579 (SVW), in the U.S. District Court for the Central District of California. It is submitted by counsel for defendants Richard Ayvazyan, Artur Ayvazyan and Tamara Dadyan and noticed for hearing on June 14, 2021 before Judge Stephen V. Wilson. The brief argues that the evidence the government calls reserve identities relates to a separate State of California case and was not part of the conspiracy charged in the superseding indictment, so Federal Rule of Evidence 404(b) bars it. It further argues for exclusion under Rule 403 and says the evidence would introduce Fifth Amendment error. The filing is 20 pages.
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OPPOSITION TO MOTION IN LIMINE TO ADMIT “RESERVE IDENTITIES”
EVIDENCE
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Thomas A. Mesereau Jr. (SBN 91182)
mesereau@mesereaulaw.com
MESEREAU LAW GROUP, P.C.
10100 Santa Monica Blvd., Suite 300
Los Angeles, CA 90067
Telephone: (310) 651-9960
Jennifer J. Wirsching (SBN 263141)
wirschinglaw@outlook.com
ATTORNEY AT LAW
1935 Alpha Rd, Suite 216
Glendale, CA 91208
Telephone: (424) 902-9280
Counsel for Defendant Artur Ayvazyan
Fred G. Minassian (SBN 170974)
fgminassian@yahoo.com
LAW OFFICES OF FRED G.
MINASSIAN, INC.
101 N. Brand Ave, Suite 1970
Glendale, CA 91203
Telephone: (818) 240-2444
Counsel for Defendant Tamara Dadyan
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
RICHARD AYVAZYAN,
et al.,
Defendants.
Case No. 20-cr-579 (SVW)
DEFENDANTS’ OPPOSITION TO
GOVERNMENT’S MOTION IN
LIMINE #2 TO ADMIT EVIDENCE
INEXTRICABLY INTERTWINED
WITH THE CHARGED OFFENSES
Judge: Hon. Stephen V. Wilson
Hearing Date: June 14, 2021
Time: 11:00 a.m.
Ashwin J. Ram (SBN 227513)
aram@steptoe.com
Michael A. Keough (SBN 327037)
mkeough@steptoe.com
Meghan L. Newcomer (pro hac vice)
mnewcomer@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
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TABLE OF CONTENTS
PRELIMINARY STATEMENT....................................................................................... 1
I.
STATEMENT OF FACTS ..................................................................................... 1
II.
LEGAL STANDARD ............................................................................................ 3
III.
THE SUPPOSED “RESERVE IDENTITIES” EVIDENCE SHOULD BE
EXCLUDED UNDER RULE 404(B) BECAUSE, BY DEFINITION,
THEY WERE NOT PART OF THE CHARGED SCHEME ................................ 5
A.
THE “RESERVE IDENTITIES” EVIDENCE IS NOT
“INEXTRICABLY INTERTWINED” WITH THE CHARGES IN
THE INDICTMENT AND IS THEREFORE SUBJECT TO RULE
404(B) ........................................................................................................... 5
1.
To be “inextricably intertwined” with charged
conduct, other acts must be part of “a single criminal
transaction” ...................................................................................... 6
2.
The “reserve identities” evidence relates to the State
Case and thus cannot be part of the “transaction”
charged in this case. ......................................................................... 8
B.
“RESERVE IDENTITIES” EVIDENCE IS NOT ADMISSIBLE
UNDER ANY OF THE LIMITED PURPOSES PERMITTED BY
RULE 404(B) BECAUSE IT DOES NOT PROVE A MATERIAL
ELEMENT OF ANY OFFENSE CHARGED IN THE
INDICTMENT ........................................................................................... 11
IV.
THE “RESERVE IDENTITIES” EVIDENCE SHOULD BE EXCLUDED
UNDER RULE 403 .............................................................................................. 12
V.
“RESERVE IDENTITIES” EVIDENCE WOULD INTRODUCE FIFTH
AMENDMENT ERROR ...................................................................................... 14
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TABLE OF AUTHORITIES
Page(s)
Cases
United States v. Bailey,
696 F.3d 794 (9th Cir. 2012) ................................................................................. 4, 13
United States v. Bracy,
67 F.3d 1421 (9th Cir. 1995) ....................................................................................... 3
United States v. Bradley,
5 F.3d 1317 (9th Cir. 1993) ......................................................................................... 3
United States v. Garcia,
291 F.3d 127 (2d Cir. 2002) ........................................................................................ 3
United States v. Hodges,
770 F.2d 1475 (9th Cir. 1985) ..................................................................................... 3
United States v. Lignelli,
No. 2:11-CR-234, 2014 WL 2002294 (W.D. Pa. May 15, 2014) ............................... 4
United States v. Loftis,
843 F.3d 1173 (9th Cir. 2016) ..................................................................................... 7
United States v. Mayans,
17 F.3d 1174 (9th Cir. 1994) ................................................................................. 4, 11
United States v. Mehrmanesh,
689 F.2d 922 (9th Cir. 1982) ................................................................................. 4, 11
United States v. Montgomery,
384 F.3d 1050 (9th Cir. 2004) ..................................................................................... 6
United States v. Ramirez-Robles,
386 F.3d 1234 (9th Cir. 2004) ............................................................................... 4, 11
United States v. Vega,
188 F.3d 1150 (9th Cir. 1999) ................................................................................... 11
United States v. Vizcarra–Martinez,
66 F.3d 1006 (9th Cir. 1995) ....................................................................................... 6
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United States v. Williams,
989 F.2d 1061 (9th Cir. 1993) ..................................................................................... 6
Wilson v. Maricopa County,
No. CV-04-2873, 2007 WL 686726 (D. Ariz. Mar. 2, 2007) .......................... 4, 13, 14
Rules
Fed. R. Evid. 403 ...................................................................................................... passim
Fed. R. Evid. 404(b) ................................................................................................. passim
Other Authorities
State of California Department of Justice, Office of the Attorney General,
Press Release, “Attorney General Bonta Announces Arrests and
Arraignment in $15 Million Mortgage Fraud and Green Loan Scheme
in Southern California,” https://oag.ca.gov/news/press-
releases/attorney-general-bonta-announces-arrests-and-arraignment-15-
million-mortgage .......................................................................................................... 1
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PRELIMINARY STATEMENT
After repeatedly telling the defendants that it did not intend to use at trial any
evidence from the State of California’s mortgage fraud case charged against Defendants
R. Ayvazyan, T. Dadyan and A. Ayvazyan, the government has done an about-face,
claiming for the first time that evidence of the state case should be admitted as “other
acts” evidence in the government’s case-in-chief. The Government’s motion is a
transparent attempt to skirt Rule 404(b) and convince the jury to convict defendants
based on evidence of other crimes, wrongs, or acts. By the government’s own
definition, the proposed evidence was not used in and was unrelated to the conspiracy
charged in the indictment, and its introduction would violate Rule 404(b). Even if the
evidence were admissible under Rule 404(b), it should be excluded under Rule 403
because the probative value of the evidence is substantially outweighed by the undue
prejudice to defendants if it is introduced. Looming over the inadmissibility of the
proposed evidence is the fact that it was seized using tainted information and its use
would therefore violate the Fifth Amendment and require reversal of any convictions.
I.
STATEMENT OF FACTS
The superseding indictment alleges that defendants were members of a
conspiracy to use “stolen, fake, and synthetic identities to fraudulently apply for
COVID-19 relief funds.” Dkt. 307, Gov. Opp. to MTD.
Immediately after this case was set for a June 15, 2021 trial, authorities for the
State of California arrested defendants R. Ayvazyan, T. Dadyan and A. Ayvazyan and
others on charges of “allegedly operating a sophisticated mortgage fraud and green loan
scheme” that took place between 2014 and 2020 (hereinafter, “State Case”). See State
of California Department of Justice, Office of the Attorney General, Press Release,
“Attorney General Bonta Announces Arrests and Arraignment in $15 Million Mortgage
Fraud and Green Loan Scheme in Southern California,” May 3, 2021 (“Press Release”)
(available at https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-
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arrests-and-arraignment-15-million-mortgage). According to the government, “[t]he
state’s 133-count indictment names twelve defendants and is predicated on a six-year
fraud scheme that began more than half-a-decade before COVID-19 and the CARES
Act-related fraud at the heart of the federal case.” Dkt. No. 331-2, Gov.’s Sur-reply in
Response to Def. R. Ayvazyan’s Motion to Dismiss at 3. The government contends that
the state case addresses “violations of state law that are wholly separate from the
violations of federal law addressed in the indictment in this case.” Id. at 2 (emphasis
added). Moreover, in discussions regarding the discovery related to the State Case, the
government “assur[ed]” defendants that it “do[es] not intend to use any of these
materials during the government’s case-in-chief in this matter.” Id. at 3, Exhibit 1
(Letter to Counsel dated May 3, 2021 at 2).
Despite these assurances, on the eve of trial the government filed a motion in
limine to admit evidence related to the state case at trial. The government concedes that
it is seeking to introduce evidence that was not “directly used to fraudulently obtain and
use the loan proceeds described in the FSI.” Dkt. 384, Gov’t Br. at 2. Instead, under
the misleading title of “reserve identities,” the government intends to introduce
“evidence relating to additional stolen or synthetic identities and their supporting
instruments of fraud, to include fraudulent identification documents,
checks/checkbooks, credit and debit cards, purported official records or certifying
instruments, and related email and online accounts.” Id. (emphasis added). The purpose
of the government’s motion is to admit evidence that was not used in the fraud scheme
charged in the indictment. Dkt. 384, Gov’t Br. at 8, n.6. The “reserve identity”
evidence is only related to the State Case, and thus irrelevant to the present case given
that none of the “reserve identity” evidence was used to commit the fraud charged in
the indictment.
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II.
LEGAL STANDARD
Federal Rule of Evidence 404(b) excludes evidence of uncharged crimes,
wrongs, or acts to prove the character of a person in order to show that the person acted
in conformity with that character. Fed. R. Evid. 404(b). The rule prohibits evidence
from being admitted to prove propensity to commit a crime like fraud, but permits
evidence to be admitted solely for a limited purpose, such as proof of motive,
opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or
accident, provided that the government advances before trial its theory of admissibility
and carries its burden of satisfying the requirements for the admission of such evidence.
Id.
The Ninth Circuit has urged great caution in admitting evidence under Rule
404(b):
[E]xtrinsic acts evidence “is not looked upon with favor” and . . .
its use “must be narrowly circumscribed and limited.” [A] reluctance to
sanction the use of evidence of other crimes stems from the underlying
premise of our criminal justice system, that the defendant must be tried
for what he did, not for who he is. Under our system, an individual may
be convicted only for the offense of which he is charged and not for other
unrelated criminal acts which he may have committed. Therefore, the
guilt or innocence of the accused must be established by evidence
relevant to the particular offense being tried, not by showing that the
defendant has engaged in other acts of wrongdoing.
United States v. Hodges, 770 F.2d 1475, 1479 (9th Cir. 1985) (internal citation omitted)
(emphasis added). A criminal defendant “must be tried for what he did, not who he is.”
United States v. Bradley, 5 F.3d 1317, 1320 (9th Cir. 1993). The purpose of the rule is
to ensure that “evidence of prior bad acts or crimes may not be used to prove that a
defendant has a propensity to commit the crime charged.” United States v. Bracy, 67
F.3d 1421, 1432 (9th Cir. 1995). “The government may not invoke Rule 404(b) and
proceed to offer, carte blanche, any prior act of the defendant in the same category of
crime.” United States v. Garcia, 291 F.3d 127, 137 (2d Cir. 2002).
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In order to admit evidence pursuant to Rule 404(b), it is the government’s burden
to establish that the proffered evidence “(1) proves a material element of the offense for
which the defendant is now charged, (2) if admitted to prove intent, is similar to the
offense charged, (3) is based on sufficient evidence [to support a finding that the
defendant committed the other act], and (4) is not too remote in time.” United States v.
Ramirez-Robles, 386 F.3d 1234, 1242 (9th Cir. 2004). The government is required to
“‘articulate precisely the evidential hypothesis by which a fact of consequence may be
inferred from the other acts evidence.’” United States v. Mayans, 17 F.3d 1174, 1181
(9th Cir. 1994) (quoting United States v. Mehrmanesh, 689 F.2d 922, 830 (9th Cir.
1982). “If the evidence meets this test under Rule 404(b), the court must then decide
whether the probative value is substantially outweighed by the prejudicial impact under
Rule 403.” United States v. Bailey, 696 F.3d 794, 799 (9th Cir. 2012) (internal
quotation marks omitted).
Rule 403 also requires exclusion where the probative value of the otherwise
admissible evidence is substantially outweighed by the danger of confusing issues at
trial, or misleading the jury, or by considerations of undue delay, waste of time, or
needless presentation of cumulative evidence. Fed. R. Evid. 403; see also United States
v. Lignelli, No. 2:11-CR-234, 2014 WL 2002294, at *3 (W.D. Pa. May 15, 2014)
(excluding evidence in a bank fraud trial of alleged misconduct involving three
uncharged properties because the evidence would double the scope of the trial, and “the
evidence (and the jury) must remain focused on the three appraisals for which [the
defendant] faces the criminal charges in the Indictment”); Wilson v. Maricopa County,
No. CV-04-2873 PHX-DGC, 2007 WL 686726, at *13 (D. Ariz. Mar. 2, 2007)
(excluding evidence under Rule 403 regardless of its admissibility under Rule 404(b)
where “[t]he case would devolve into a series of mini-trials concerning the relevancy
and outcome of these other cases, resulting in an unnecessarily lengthy trial for the
parties, the Court, and the jury”).
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III.
THE SUPPOSED “RESERVE IDENTITIES” EVIDENCE SHOULD BE
EXCLUDED UNDER RULE 404(b) BECAUSE, BY DEFINITION, THEY
WERE NOT PART OF THE CHARGED SCHEME
The government defines “reserve identities” as “evidence relating to additional
stolen or synthetic identities and their supporting instruments of fraud, to include
fraudulent identification documents, checks/checkbooks, credit and debit cards,
purported official records or certifying instruments, and related email and online
accounts.” Dkt. 384, Gov’t Br. at 2. The crux of this definition is that the identities and
alleged supporting documents were never an intrinsic part of the charged scheme.
Rather, the government suspects that—had the scheme continued—it is possible that
the “reserve identities” could have become a part of the scheme at some time in the
future. Of course, no defendant can stand trial for a crime that the government believes
will be committed in the future. The “reserve identities” evidence should be excluded
because it is not “inextricably intertwined” with the charged scheme, and is thus subject
to Rule 404(b). Because the “reserve identities” evidence is subject to Rule 404(b), the
government can only admit that evidence if it proves that the “reserve identities”
“prove[] a material element of the offense for which the defendant is now charged.”
They do not, and admission of such unrelated and prejudicial evidence is not permitted
under Rule 404(b) or any other rule.
A.
The “Reserve Identities” Evidence Is Not “Inextricably Intertwined”
with the Charges in the Indictment and Is Therefore Subject to Rule
404(b)
The government’s attempt to admit the so called “reserve identities” evidence
violates Rule 404(b). The government argues that the “reserve identities” evidence is
“inextricably intertwined” with the charged conspiracy, and is thus admissible without
violating Rule 404(b). That argument fails.
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1.
To be “inextricably intertwined” with charged conduct, other
acts must be part of “a single criminal transaction”
The government’s brief focuses on the “inextricably intertwined” language as the
only requirement for finding that conduct falls outside Rule 404(b). But the
government ignored that, when creating the “inextricably intertwined” standard, the
Ninth Circuit explained: “[t]he policies underlying rule 404(b) are inapplicable when
offenses committed as part of a single criminal episode become other acts simply
because the defendant is indicted for less than all of his actions.” United States v.
Williams, 989 F.2d 1061 (9th Cir. 1993). The focus in the Ninth Circuit is on whether
the acts were part of a single criminal transaction or episode. See, e.g., United States v.
Montgomery, 384 F.3d 1050, 1062 (9th Cir. 2004) (“We conclude that each action was
“inextricably intertwined” with the conspiracy, and therefore not subject to Rule
404(b), because each occurred within the temporal scope of the conspiracy and
comprised the conspiracy.”); United States v. Vizcarra–Martinez, 66 F.3d 1006, 1012
(9th Cir. 1995) (“Thus, when it is clear that particular acts of the defendant are part of,
and thus inextricably intertwined with, a single criminal transaction, we have generally
held that the admission of evidence regarding those acts does not violate Rule 404(b).”)
(emphasis added to each).
For example, in Vizcarra–Martinez, the government sought to admit evidence
that defendant possessed a small, personal-use amount of methamphetamine when he
was arrested for “possession of hydriodic acid with knowledge that it would be used to
manufacture methamphetamine.” Id. at 1012. The Ninth Circuit found that the District
Court had abused its discretion by admitting the evidence. The Ninth Circuit explained
that the “methamphetamine found in the defendant’s pocket had nothing to do with the
incidents leading to the search, nor did it have any bearing upon the commission of the
crime. Thus, we reject the government's contention that the contested evidence was so
inextricably intertwined with the crime as to fall outside the scope of Rule 404(b).” Id.
at 1013. That analysis is equally applicable to the government’s attempt to introduce the
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“reserve identities” evidence at trial here. The defendants have made no 404(b)
objection to introduction of evidence of identities that the indictment actually alleges
were used in the charged conspiracy. The “reserve identities” evidence, in contrast,
were never used in the charged conspiracy and therefore are not inextricably
intertwined merely because the government can envision a counterfactual scenario in
which they might possibly have been used.
The government relies on United States v. Loftis, 843 F.3d 1173 (9th Cir. 2016),
but Loftis does not support their position. In Loftis, the defendant was charged with
five counts of wire fraud based on a broad scheme to defraud multiple investors across
multiple states. The indictment included five wires and three investor victims, but the
government attempted to introduce evidence of additional wires and additional victims
at trial. The District Court partially excluded the evidence under rule 404(b), and the
government filed an interlocutory appeal. The Ninth Circuit found that Rule 404(b) did
not apply because the uncharged transactions were part of the crime charged. The
Court then went on to conduct a 404(b) analysis, stating that “even if the uncharged
transactions at issue were not part of the crime charged, they would not be subject to
exclusion under Rule 404(b) because they are ‘part of the same transaction’ as the
charged transactions.” Id. at 1178.
Here, the government’s attempt to liken the “reserve identities” evidence with the
additional wire transfers in Loftis is an apples to oranges comparison that should be
rejected. The government is not seeking to introduce additional PPP or EIDL loan
applications, or additional wire transfers related to the PPP loan fraud charged in the
indictment. It is possible the government could prove additional PPP or EIDL
applications were “part of the same transaction” charged in the indictment, and thus
“inextricably intertwined” and admissible without violating Rule 404(b). However, the
government is attempting to introduce evidence of “fraudulent identification
documents, checks/checkbooks, credit and debit cards, purported official records or
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certifying instruments, and related email and online accounts” that have no ties to the
PPP loan fraud or the money laundering counts charged in the indictment. This is
especially true for the “notary stamps and seals” that the government alleges were
found at T. Dadyan and A. Ayvazyan’s residence. The indictment does not contain a
single allegation related to notary stamps, thus, possession of these items cannot be
“part of the same transaction” alleged in the indictment. The government characterizes
this evidence as part of an “assembly line for fraud,” but the indictment does not charge
any defendant with creating an assembly line for fraud. Accordingly, the alleged
possession of these items by two defendants does not make the evidence “inextricably
intertwined” with the conduct charged in the indictment.
2.
The “reserve identities” evidence relates to the State Case and
thus cannot be part of the “transaction” charged in this case.
The government is well aware that the “reserve identities” evidence is per se
evidence of other crimes, wrongs or acts—it is evidence related to allegations of
mortgage fraud charged against multiple defendants by the State of California. For
example, as a summary of the type of evidence seized during the search of A.
Ayvazyan and T. Dadyan’s home, the government cites “[l]ists of email addresses and
user account information with associated passwords, including a page titled, ‘TAMMY
INFO FOR MLS ECT.’” Dkt. 384, Gov’t Br. at 5. That page clearly shows login
information related to T. Dadyan’s real estate business. MLS stands for Multiple
Listing Service, which “is a tool to help listing brokers find cooperative brokers
working with buyers to help sell their clients' homes.” https://www.nar.realtor/nar-doj-
settlement/multiple-listing-service-mls-what-is-it. The first entry on the page the
government cites is an ID number for NRDS, which stands for the National
REALTOR® Database System, according to the National Associates of REALTORS.
See https://www.nexusaor.com/help-top-left-menu/293-how-do-i-find-my-nrds-id.html
(“Your National REALTOR® Database System ID, or NRDS, is a 9 digit number that
is given by the National Association of REALTORS®, through the local Primary
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board, to each of its members.”). The federal indictment does not charge any defendant
with mortgage fraud. Rather, it is the State Case that alleges a scheme to commit
mortgage fraud using stolen identities and forged instruments, and it is in the State Case
that this evidence would be relevant. See, e.g., Ram Decl. Ex. A, 4/26/2021 Indictment
filed in Superior Court of the State of California, Los Angeles County at 5-7. The
government contends that the state case addresses “violations of state law that are
wholly separate from the violations of federal law addressed in the indictment in this
case” and that those violations were part of “a six-year fraud scheme that began more
than half-a-decade before COVID-19 and the CARES Act-related fraud at the heart of
the federal case.” Dkt. No. 331-2, Gov.’s Sur-reply in Response to Def. R. Ayvazyan’s
Motion to Dismiss at 2-3 (emphasis added). Given the government’s position on the
State Case, it is impossible to see how evidence related to the State Case could be
“inextricably intertwined” with the charges in the superseding indictment related to PPP
loan fraud. The only logical conclusion is that the government is attempting to admit
the “reserve identities” evidence as propensity evidence.
Additionally, the evidence laid out by the government on pages 5-6 of their brief
predates March 2020, the alleged beginning of the conspiracies charged in the
indictment. The identities and documents cited on page 5 have been charged as part of
the State Case, with allegations about the use of those identities dating back to 2017.
For example, the government’s “reserve identities” evidence includes identity
documents, such as driver’s licenses and/or social security cards, for Luidmyla K.,
Adeliya T., Tetiana V., Egia K., Osbaldo V., Mykhail D., Peter R., and Roza A. See
Gov’t Br. at 5, citing Fenton Decl. (ECF 207) Exh. 8. Each of these identities is
incorporated into charges in the State Case for acts that allegedly occurred in 2016 and
2017, years before the PPP loan fraud is alleged to have occurred. Ram Decl. Ex. A,
4/26/2021 Indictment filed in Superior Court of the State of California, Los Angeles
County at 1 (Defendant’s a/k/a listed as Roza A.), 14 (Overt Act related to Peter R.), 15
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(Overt Acts related to Egia K., Tetiana V., Luidmyla K.), 36 (Overt Act related to
Osbaldo V.) 72 (Overt Act related to Adeliya T.), 93 (Overt Acts related to Mykhail D).
The government has repeatedly alleged that the state case is “wholly separate from the
violations of federal law addressed in the [superseding] indictment.” Thus, the
instrumentalities used to commit acts alleged in the State Case cannot be part of “a
single criminal transaction” with the fraud and money laundering alleged in the
superseding indictment. The “reserve identities” evidence is subject to rule 404(b) and
should be excluded.
The $450,000 in cash found at R. Ayvazyan and Terabelian’s house is also
subject to exclusion under Rule 404(b). The government argues that because the
“primary purpose” of financial fraud is obtaining money, the presence of cash at R.
Ayvazyan and Terabelian’s house “is part and parcel of the story of their criminal
conduct.” That is not the standard under Rule 404(b). The government cannot prove
that the cash was the proceeds of PPP loan fraud. Given that the government’s
discovery productions have not revealed $450,000 in withdrawals by R. Ayvazyan or
Terabelian or transfers of cash from others to them—despite months of surveillance—it
would appear that the cash was received from completely legitimate sources, or, at
worst, sources related to the State Case, not the PPP loan fraud. Given that Armenians
are culturally distrustful of banks and prefer to keep their money in cash, the logical
explanation for the cash is that R. Ayvazyan and Terabelian obtained the cash from
legitimate sources, and chose to keep the cash in their home.
Finally, the government argues that the use of the “reserve identities” evidence in
the State Case does not preclude the Court from concluding that the identities were also
used in the federal case charged in the superseding indictment. That argument ignores
that the government plans to introduce evidence of “identities directly used in the PPP
or EIDL fraud and related transactions.” Dkt. 384, Gov’t Br. at 8, n.6. The whole
purpose of the government’s motion is to admit evidence that was not used in the PPP
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or EIDL fraud or money laundering scheme charged in the indictment. Because the
“reserve identities” evidence is not part of the same transaction charged in the
indictment, it is not “inextricably intertwined” with charged conduct, and must be
excluded under 404(b).
B.
“Reserve Identities” Evidence Is Not Admissible Under Any of the
Limited Purposes Permitted by Rule 404(b) Because it Does Not Prove
A Material Element of any Offense Charged in the Indictment
In order to admit evidence pursuant to Rule 404(b), it is the government’s burden
to establish that the proffered evidence “(1) proves a material element of the offense for
which the defendant is now charged, (2) if admitted to prove intent, is similar to the
offense charged, (3) is based on sufficient evidence [to support a finding that the
defendant committed the other act], and (4) is not too remote in time.” United States v.
Ramirez-Robles, 386 F.3d 1234, 1242 (9th Cir. 2004).1 The government is required to
“‘articulate precisely the evidential hypothesis by which a fact of consequence may be
inferred from the other acts evidence.’” United States v. Mayans, 17 F.3d 1174, 1181
(9th Cir. 1994) (quoting United States v. Mehrmanesh, 689 F.2d 922, 830 (9th Cir.
1982)).
The government has not established that “reserve identities” evidence will prove
“a material element of the offense for which the defendant is now charged.” Ramirez-
1 The express language of Rule 404(b) also requires that the government provide “reasonable notice”
in advance of trial. Fed. R. Evid. 404(b)(2). “Reasonable notice is designed to reduce surprise and
promote early resolution of admissibility issues.” United States v. Vega, 188 F.3d 1150, 1153 (9th
Cir. 1999) (reversing conviction due to government’s failure to disclose other act evidence prior to
trial). “Because the notice requirement serves as condition precedent to admissibility of 404(b)
evidence, the offered evidence is inadmissible if the court decides that the notice requirement has not
been met.” Id. (quoting Fed. R. Evid. 404(b) 1991 amendment advisory committee note). The
government provided 404(b) notice to defendants about other evidence it seeks to introduce at trial,
demonstrating that the government understands that 404(b) notice is required to admit evidence of
other crimes, wrongs or acts. A throwaway argument at the end of a motion in limine is insufficient to
serve as notice under Rule 404(b), particularly when that information comes months after the close of
discovery and less than two weeks before trial.
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Robles, 386 F.3d at 1242. By definition, the “reserve identities” evidence was not used
in the commission of the alleged PPP loan fraud or money laundering conspiracies
charged in the indictment. Dkt. 384, Gov’t Br. at 8, n.6. As discussed above, the
evidence the government categorized as “reserve identities” evidence relates to the
State Case, not this case. The “reserve identities” evidence predates March 2020, the
alleged beginning of the conspiracies charged in the indictment. The government has
not established that admission of the evidence will prove “a material element of the
offense for which defendant is now charged.” Accordingly, the “reserve identities”
evidence is not admissible under the limited purposes in Rule 404(b).
It is worth noting that the government’s motion to admit evidence of the “reserve
identities” is just one more attempt by the government to make this case about conduct
that has not been charged in the indictment, as opposed to focusing on the actual overt
acts and conduct included in the indictment. The government charged the defendants
with conspiring to submit “151 fraudulent PPP and EIDL loan applications,” but, on the
eve of trial, informed the defendants of its plan to redact the paragraph of the
indictment concerning that allegation. See Ram Decl., Ex. B, Email from C. Ahn.
Nonetheless, the majority of the government’s exhibit list relates to evidence of loan
applications and bank records for conduct not charged in the indictment. Now, through
a last-minute motion in limine, the government is attempting to admit additional types
of evidence that have nothing to do with the conduct charged in the indictment. These
tactics violate defendants’ fundamental right to due process, and the Court should
prevent the government from further violating defendants’ constitutional rights by
excluding the “reserve identities” evidence.
IV.
THE “RESERVE IDENTITIES” EVIDENCE SHOULD BE EXCLUDED
UNDER RULE 403
The unduly prejudicial nature of the “reserve identities” evidence is obvious: any
juror who hears that defendants T. Dadyan and A. Ayvazyan possessed a “plethora” of
fake and synthetic identities, seals and notary stamps will assume that the defendants
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have a propensity for creating such fake identities and did so here. Dkt. 384, Gov.’s Br.
at 7. At the very least, jurors will assume that the fake and synthetic identities unrelated
to the PPP fraud case mean that defendants must have committed other crimes with
those identities and deserve to be punished.
Even if the court finds that “reserve identities” evidence is admissible under Rule
404(b), the Court should exclude the “reserve identities” evidence under Rule 403,
because the probative value of the evidence “is substantially outweighed by the
prejudicial impact” of its admittance. Fed. R. Evid. 403; United States v. Bailey, 696
F.3d 794, 799 (9th Cir. 2012). With respect to other act evidence in particular, “the
determination must be made whether the danger of undue prejudice outweighs the
probative value of the evidence in view of the availability of other means of proof and
other factors appropriate for making decisions of this kind under Rule 403.” Fed. R.
Evid. 404(b) Advisory Committee’s Note. Rule 403 also requires exclusion where the
probative value of the otherwise admissible evidence is substantially outweighed by the
danger of confusing issues at trial, or misleading the jury, or by considerations of undue
delay, waste of time, or needless presentation of cumulative evidence. Fed. R. Evid.
403; see also Wilson v. Maricopa County, No. CV-04-2873 PHX-DGC, 2007 WL
686726, at *13 (D. Ariz. Mar. 2, 2007) (excluding evidence under Rule 403 regardless
of its admissibility under Rule 404(b) where “[t]he case would devolve into a series of
mini-trials concerning the relevancy and outcome of these other cases, resulting in an
unnecessarily lengthy trial for the parties, the Court, and the jury”).
Here, “reserve identities” evidence should be excluded under Rule 403 for two
reasons. First, “the danger of undue prejudice outweighs the probative value of the
evidence in view of the availability of other means of proof.” Fed. R. Evid. 404(b)
Advisory Committee’s Note. The Government intends to introduce what it describes as
“direct identities” evidence related to the scheme charged in the indictment. Piling on
“reserve identities” evidence—alleged instrumentalities of fraud that have nothing to do
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with the charges in the federal case—is unduly prejudicial and cumulative. Given that
the government already intends to introduce evidence of “direct identities,” that undue
prejudice outweighs any probative value of “reserve identities” evidence.
Second, admitting “reserve identities” evidence would be an incredible waste of
both the court and jury’s time, requiring a mini-trial on each identity to determine
whether it was actually used in the federal case at issue, or whether it is evidence
unrelated to the federal case. See Wilson v. Maricopa County, No. CV-04-2873 PHX-
DGC, 2007 WL 686726, at *13 (D. Ariz. Mar. 2, 2007) (excluding evidence under Rule
403 regardless of its admissibility under Rule 404(b) where “[t]he case would devolve
into a series of mini-trials concerning the relevancy and outcome of these other cases,
resulting in an unnecessarily lengthy trial for the parties, the Court, and the jury”).
Given that the government can introduce the “direct identities” evidence, any probative
value to the “reserve identities” evidence is outweighed both by “considerations of
undue delay, waste of time, or needless presentation of cumulative evidence” and the
undue prejudice to defendants. Accordingly, the Court should exclude the “reserve
identities” evidence under Rule 403.
V.
“RESERVE IDENTITIES” EVIDENCE WOULD INTRODUCE FIFTH
AMENDMENT ERROR
As noted in the Kastigar briefing, the defendants are entitled not just to
suppression of the fruits of the poisonous tree, but to prohibit derivative use of tainted
information in any way whatsoever. Although the Court held that the search warrants
did not require suppression as fruits of the poisonous tree, the search warrants and
seized property remain tainted by the use of tainted information both in the search
warrants themselves and in the execution thereof. Permitting the introduction of such
tainted evidence would violate the Fifth Amendment.
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Dated: June 4, 2021
Respectfully submitted,
/s/ Ashwin J. Ram
Ashwin J. Ram (SBN 227513)
aram@steptoe.com
Michael A. Keough (SBN 327037)
mkeough@steptoe.com
Meghan L. Newcomer (pro hac vice)
mnewcomer@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
/s/ Thomas A. Mesereau
Thomas A. Mesereau Jr. (SBN 91182)
mesereau@mesereaulaw.com
MESEREAU LAW GROUP, P.C.
10100 Santa Monica Blvd., Suite 300
Los Angeles, CA 90067
Telephone: (310) 651-9960
Jennifer J. Wirsching (SBN 263141)
wirschinglaw@outlook.com
ATTORNEY AT LAW
1935 Alpha Rd, Suite 216
Glendale, CA 91208
Telephone: (424) 902-9280
Counsel for Defendant Artur Ayvazyan
/s/ Fred G. Minassian
Fred G. Minassian (SBN 170974)
fgminassian@yahoo.com
LAW OFFICES OF FRED G.
MINASSIAN, INC.
101 N. Brand Ave, Suite 1970
Glendale, CA 91203
Telephone: (818) 240-2444
Counsel for Defendant Tamara Dadyan
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SIGNATURE ATTESTATION
Pursuant to Local Rule 5-4.3.4(a)(i), the filer attests that all signatories listed, and
on whose behalf the filing is submitted, concur in the filing’s content and have
authorized the filing.
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