Indictment - United States v. Maurice Fayne related docket

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U.S. District Court for the Northern District of Georgia · No. 1:20-cr-00228-MHC-JKL · Doc. 268 · 2022-06-21 · Docket on CourtListener

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The government's motion in limine in United States v. Daniel Eric Jay, No. 1:20-cr-00228-MHC-JKL, in the U.S. District Court for the Northern District of Georgia, filed June 21, 2022 as Document 268 ahead of a trial set for July 19, 2022. The motion states that the Second Superseding Indictment charges Jay, Maurice Fayne, Mike Sargent and Mark Sargent with conspiracy to commit wire fraud under 18 U.S.C. § 1349 and wire fraud under 18 U.S.C. § 1343, and charges Jay and Fayne with bank fraud under 18 U.S.C. § 1344. It asks the Court to bar arguments that Jay should be acquitted because others were not indicted or because United Community Bank could have been more careful, and to bar blaming the victims and evidence about PPP fraud generally. It also asks the Court to preclude use of FBI-302s and SBA-OIG interview reports to impeach witnesses.

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IN THE UNITED STATES DISTRICT COURT 
FOR THE NORTHERN DISTRICT OF GEORGIA 
ATLANTA DIVISION 
 
UNITED STATES OF AMERICA 
V. 
DANIEL ERIC JAY 
CRIMINAL INDICTMENT 
1:20-CR-228-MHC-JKL 
SECOND SUPERSEDING 
 
Government’s Motion in Limine 
The United States moves the Court to preclude Defendant Daniel Eric Jay 
from suggesting to the jury—through argument, examination of witnesses, or in 
any other manner—that he should be acquitted of conspiracy and wire fraud 
because others participated in the charged conduct but were not indicted, and 
that he should be acquitted of bank fraud because the victim bank could have 
prevented the fraud if it had been more careful. In addition, the Government 
moves to preclude Defendant Jay from blaming the victims, eliciting evidence 
regarding PPP fraud generally, and using agent interview reports (302s and 
MOIs) to impeach witnesses. 
This case is currently set for trial on July 19, 2022. The Government makes 
this motion in order to narrow the issues for trial, to exclude irrelevant, 
extraneous, or unduly prejudicial arguments and evidence, and to expedite this 
Court’s determination of legal disputes likely to arise during trial. 
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Statement of Facts 
Count 1 of the Second Superseding Indictment charges Defendant Jay and 
three coconspirators—Maurice Fayne, a/k/a Arkansas Mo, Mike Sargent, and 
Mark Sargent—with conspiracy to commit wire fraud, in violation of 18 U.S.C. 
§ 1349. Counts 2 through 4 charge those same Defendants with wire fraud, in 
violation of 18 U.S.C. § 1343. And Count 5 charges Defendant Jay and Fayne (but 
not the Sargent brothers) with bank fraud, in violation of 18 U.S.C. § 1344. 
Fayne and Mike Sargent pleaded guilty, were sentenced, and are currently 
serving their sentences. Mark Sargent is deceased. Thus, Defendant Jay will be 
the only Defendant to stand trial. 
Argument and Citation of Authority 
The purpose of a motion in limine is “to exclude anticipated prejudicial 
evidence before the evidence is actually offered.” Luce v. United States, 469 U.S. 
38, 40 n.2 (1984). Such motions allow “the Court to rule in advance of trial on the 
relevance of certain forecasted evidence . . . without lengthy argument at, or 
interruption of, the trial.” Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996). “The 
prudent use of the in limine motion sharpens the focus of later trial proceedings 
and permits the parties to focus their preparation on those matters that will be 
considered by the jury.” Jonasson v. Lutheran Child & Fam. Servs., 115 F.3d 436, 440 
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(7th Cir. 1997). “An in limine ruling, made in a criminal case, serves to ensure 
that the jury will hear only that evidence which the district judge properly deems 
admissible.” United States v. Talley, 194 F.3d 758, 763 (6th Cir. 1999). “The district 
court has wide discretion in determining the relevance of evidence produced at 
trial.” United States v. Roland, No. 1:14-CR-291-SCJ, 2016 WL 11628078, at *1 (N.D. 
Ga. June 3, 2016) (quoting Boyd v. Ala. Dep’t. of Corr., 296 F. App’x 907, 908 (11th 
Cir. 2008)). 
A. 
Defendant Jay should not be permitted to argue that he should be 
acquitted of conspiracy and wire fraud because others participated in the 
charged conduct but were not indicted. 
Counts 1 through 4 of the Indictment allege that Defendant Jay, Maurice 
Fayne, and the Sargent brothers violated the conspiracy statute (18 U.S.C. § 1349) 
and the wire fraud statute (18 U.S.C. § 1343) while running a Ponzi scheme that 
defrauded individuals who invested in Fayne’s trucking company. (Doc. 96 at 
¶¶ 1-7). The Government anticipates that Defendant Jay intends to suggest to the 
jury that others profited from that Ponzi scheme but were not charged, and 
therefore he should be acquitted. 
 
 
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1. 
The “other people did it too” defense is not permissible under the 
Federal Rules of Evidence. 
“Evidence is relevant if: (a) it has any tendency to make a fact more or less 
probable than it would be without the evidence; and (b) the fact is of 
consequence in determining the action.” FED. R. EVID. 401. “Irrelevant evidence is 
not admissible.” FED. R. EVID. 402. And relevant evidence may be excluded “if its 
probative value is substantially outweighed by a danger of . . . unfair prejudice, 
confusing the issues, misleading the jury, undue delay, [or] wasting time.” FED. 
R. EVID. 403. 
Any suggestion by Defendant Jay that he should be acquitted of 
conspiracy and wire fraud because others participated in the charged conduct 
but were not indicted should be excluded under Rule 402 or, alternatively, under 
Rule 403. 
2. 
A defendant does not have a constitutional right to present the 
“other people did it too” defense. 
A defendant has a constitutional right “to present a complete defense.” 
Crane v. Kentucky, 476 U.S. 683, 690 (1986). But that “does not entitle him to place 
before the jury irrelevant or otherwise inadmissible evidence.” United States v. 
Anderson, 872 F.2d 1508, 1519 (11th Cir. 1989). A defendant is constitutionally 
entitled to present only evidence that is relevant to an element of the charged 
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offense or to an affirmative defense. See United States v. Hurn, 368 F.3d 1359, 1365-
66 (11th Cir. 2004). “[W]here the proffered evidence does not bear a logical 
relationship to an element of the offense or an affirmative defense . . . a 
defendant has no right to introduce that evidence.” United States v. Masferrer, 514 
F.3d 1158, 1161 (11th Cir. 2008) (internal quotations omitted). 
The fact that others engaged in similar conduct but were not prosecuted is 
irrelevant to Defendant Jay’s defense. No constitutional violation occurs when a 
defendant is “precluded from advancing only an irrelevant defense.” United 
States v. Mendez, 737 F. App’x 935, 943 (11th Cir. 2018). Therefore, Defendant Jay 
should not be permitted to “argue, expressly or impliedly, that the failure to 
indict others is a reason to acquit [him].” See United States v. Lepore, No. 1:15-CR-
367-WSD-JKL, 2016 WL 4473125, at *7 (N.D. Ga. Aug. 25, 2016) (granting the 
Government’s motion in limine to exclude argument that defendants should be 
acquitted because others “engaged in similar conduct but were not prosecuted”). 
3. 
The “other people did it too” defense is a thinly disguised jury 
nullification argument. 
A defense based on an argument that the defendant should be acquitted 
because others allegedly violated the same or similar laws but were not 
prosecuted is tantamount to a jury nullification argument. “[T]he law is crystal 
clear that such arguments to the jury are improper and impermissible.” United 
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States v. Smith, Criminal No. 08–00389–WS, 2009 WL 692149, at *4 n.3 (S.D. Ala. 
Mar. 13, 2009); accord United States v. Archie, No. 1:15-CR-338-MHC-CMS, 2017 
WL 11471580, at *3 (N.D. Ga. Jan. 19, 2017) (granting government’s motion in 
limine as to jury nullification). The Eleventh Circuit “has repeatedly disapproved 
of jury nullification.” United States v. Joseph, 567 F. App’x 844, 849 (11th Cir. 2014); 
see also United States v. Funches, 135 F.3d 1405, 1408 (11th Cir. 1998) (holding that 
a defendant has no “right to present evidence the only relevance of which is to 
inspire a jury to exercise its power of nullification”). 
B. 
Defendant Jay should not be permitted to argue that he should be 
acquitted of bank fraud because the victim bank could have prevented 
the fraud if it had been more careful. 
Count 5 of the Indictment alleges that Defendant Jay and Maurice Fayne 
committed bank fraud by submitting to United Community Bank a PPP loan 
application that falsely stated Fayne’s trucking company “had 107 employees 
and an average monthly payroll of $1,490,200.” (Doc. 96 at ¶ 12). The 
Government anticipates that Defendant Jay will argue that he should be 
acquitted of bank fraud because United Community Bank either did not properly 
vet the application before approving the loan, or did not rely on the false 
statements in the application. 
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To convict a defendant of bank fraud, in violation of 18 U.S.C. § 1344, the 
Government must prove the following: (1) the defendant knowingly carried out 
or attempted to carry out a scheme to defraud a financial institution or to get 
money from a financial institution by using false or fraudulent pretenses, 
representations, or promises about a material fact; (2) the false or fraudulent 
pretenses, representations, or promises were material; (3) the defendant intended 
to defraud the financial institution or someone; and (4) the financial institution 
was federally insured. Eleventh Circuit Pattern Jury Instructions, Criminal Cases, 
Offense Instruction No. 52 (2022). 
A “material fact” is an important fact that a reasonable person 
would use to decide whether to do or not do something. A fact is 
“material” if it has the capacity or natural tendency to influence a 
person’s decision. It doesn’t matter whether the decision-maker 
actually relied on the statement or knew or should have known that 
the statement was false. 
Id. 
“The materiality of any misrepresentation is measured against an objective 
standard, not the subjective impression of the person or entity to whom the 
misrepresentation was directed.” United States v. Benchick, No. 13-CR-20453, 2014 
WL 4181970, at *2 (E.D. Mich. Aug. 21, 2014). “So long as a defendant, in order to 
cause a bank to take some action, makes a misrepresentation that a reasonable 
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bank would consider important in deciding whether to act as the defendant 
wishes, and intends by this representation to deceive the bank, in the furtherance 
of fraud, the misrepresentation is material.” United States v. Menichino, 989 F.2d 
438, 440 (11th Cir. 1993) (punctuation marks and citations omitted). “False 
representations about income and employment on loan applications, for 
example, are material misrepresentations.” United States v. Leadbeater, No. 
CRIM.A. 13-121-1 JBS, 2015 WL 567025, at *9 (D.N.J. Feb. 10, 2015). 
“Reliance and materiality are separate concepts, and reliance is not an 
element of bank fraud.” United States v. Nicoletti, No. 15-20382, 2017 WL 1382290, 
at *3 (E.D. Mich. Apr. 18, 2017). “Indeed, a false statement can be material even if 
the decision maker actually knew or should have known that the statement was 
false.” United States v. Neder, 197 F.3d 1122, 1128 (11th Cir. 1999). Thus, whether 
United Community Bank used appropriate care in reviewing Fayne’s PPP loan 
application is irrelevant. 
Furthermore, a bank’s negligence “is not a defense to fraud.” Mendez, 737 
F. App’x at 942; see also United States v. Benchick, No. 13-20453, 2015 WL 3464091, 
at *3 (E.D. Mich. June 1, 2015) (granting motion in limine to preclude defendant’s 
argument that victim bank “invited the fraud by implementing insufficient loan 
approval practices, or could have prevented it with better practices”). 
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C. 
Defendant Jay should not be permitted to blame the victims. 
“[D]efendants in fraud cases may not adopt the ‘blame the victim’ theme 
in attacking the government’s case.” United States v. June, No. 10-CR-30021-MAP, 
2012 WL 245243, at *2 (D. Mass. Jan. 25, 2012). Such evidence is irrelevant and 
should be excluded. Nicoletti, 2017 WL 1382290, at *2 (granting government’s 
motion in limine to preclude any evidence and argument by defendant that the 
victim bank “did not care whether representations in loan applications were 
accurate so long as the representations qualified the applicants for the loans that 
they were seeking”); see also Leadbeater, 2015 WL 567025, at *9 (holding that 
“Defendants may not argue in opening statements, or elicit testimony on direct 
examination, about the lack of diligence on the part of the victim lenders . . . or 
suggest that the banks or mortgage companies were not sufficiently careful or 
prudent in protecting themselves from fraud”). 
 
 
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Also, Defendant Jay should be precluded from suggesting to the jury that 
the Ponzi victims are to blame because they were naive or greedy. See United 
States v. Schlyer, No. 17-CR-00030, 2018 WL 620057, at *7 (N.D. Ill. Jan. 30, 2018) 
(holding that “a fraud victim’s naivety or greed does not lessen the culpability of 
the person who commits fraud”); see also United States v. Amico, 486 F.3d 764, 780 
(2d Cir. 2007) (holding that “a victim’s lack of sophistication is not relevant to the 
intent element of mail or wire fraud”); United States v. Benson, 548 F.2d 42, 44 (2d 
Cir. 1977) (holding that a victim’s “gullibility or his own criminal background is 
not relevant”); United States v. Higgins, No. 3:18-CR-186, 2022 WL 36511, at *6 
(S.D. Ohio Jan. 4, 2022) (holding that the “victim’s negligence is not a defense to 
mail fraud and does not negate any of the elements of the mail fraud statute”). 
“The laws protecting against fraud are most needed to protect the careless and 
the naive from lupine predators, and they are designed for that purpose.” United 
States v. Kreimer, 609 F.2d 126, 132 (5th Cir. 1980). 
D. 
Defendant Jay should be precluded from eliciting evidence concerning 
PPP fraud generally. 
This Court should preclude Defendant Jay from eliciting evidence 
regarding the breadth of PPP fraud generally and the respective roles of the 
lenders and the government in managing and executing the PPP. See United 
States v. Powell, 509 F. App’x 958, 967 (11th Cir. 2013) (holding that “whether the 
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lenders negligently created an environment of lax lending standards is 
irrelevant”); United States v. Lindsey, 850 F.3d 1009, 1016 (9th Cir. 2017) (“We hold 
that a victim’s intentional disregard of relevant information is not a defense to 
wire fraud and thus evidence of such disregard is not admissible as a defense to 
mortgage fraud.”). 
E. 
The Court should preclude Defendant Jay from improperly using agent 
interview reports to impeach witnesses. 
The government anticipates that Defendant Jay may seek to use interview 
reports prepared by the FBI and the SBA-OIG to cross-examine and potentially 
impeach interviewees should they be called by the government as witnesses at 
trial. As the Federal Rules of Evidence dictate, however, witnesses may only be 
cross-examined on and, if appropriate, impeached with their own prior 
statements. See Fed. R. Evid. 613. Because these interview reports are not a 
witness’s own prior statement, it would not be proper to use them to cross-
examine or impeach the witnesses who were the subject of these reports. 
Accordingly, the government requests that Defendant Jay be precluded from 
using interview reports to cross-examine and impeach interviewees.  
In preparing these interview reports—FBI-302s and SBA-OIG Memoranda 
of Interviews (MOIs)—agents necessarily exercise some discretion by including 
their characterization of only those segments of a witness interview to which 
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they assign importance and relevance. As such, 302s and MOIs are not 
“statements” of the interviewee. United States v. Jordan, 316 F.3d 1215, 1252 (11th 
Cir. 2003) (agent reports “are not Jencks Act statements of the witness unless they 
are substantially verbatim and were contemporaneously recorded, or were 
signed or otherwise ratified by the witness”). A statement within the meaning of 
the Jencks Act is defined as “a written statement made by said witness and 
signed or otherwise adopted and approved by him”; a recording or transcription 
that “is a substantially verbatim recital of an oral statement made by said witness 
and recorded contemporaneously”; or a statement made by a witness to the 
grand jury. 18 U.S.C. § 3500(e). “[S]ummaries of an oral statement which 
evidence substantial selection of material” or “statements which contain [an] 
agent’s interpretation or impressions” are not statements of the interviewee 
under the Jencks Act. Palermo v. United States, 360 U.S. 343, 352-52 (1959).  
Because interview reports are not “statements,” the defense should be 
prohibited from using such summaries of witness interviews to cross-examine or 
impeach government witnesses (other than the author of such reports), including 
prohibiting Defendant Jay from introducing such documents into evidence as 
extrinsic impeachment evidence, without making a sufficient showing that the 
document is in fact a statement attributable to that particular witness. Indeed, the 
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Supreme Court has long recognized that it would be “grossly unfair to allow the 
defense to use statements to impeach a witness which could not fairly be said to 
be the witness’ own rather than the product of the investigator’s selections, 
interpretations, and interpolations.” Id. at 350; see also United States v. Carter, 776 
F.3d 1309, 1328-29 (11th Cir. 2015) (observing no error in the district court’s 
decision to “sustain[] the government’s objections to defense counsel’s questions 
on the ground that counsel was attempting to impeach the witness with notes 
from a law enforcement officer that did not constitute a statement of a witness”); 
United States v. Saget, 991 F.2d 702, 710 (11th Cir. 1993) (“a witness may not be 
impeached with a third party’s characterization or interpretation of a prior oral 
statement unless the witness has subscribed to or otherwise adopted the 
statement as his own”).  
More generally, this Court should hold that the defense may not use an 
interview report in any way that suggests to the jury that the report is a 
statement of the witness. To allow otherwise would subvert the meaning of the 
Jencks Act and the Supreme Court’s decision in Palermo. 
 
 
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Conclusion 
For all of these reasons, the Government’s Motion in Limine should be 
granted. 
Respectfully submitted, 
RYAN K. BUCHANAN 
United States Attorney 
 
/s/ John Russell Phillips 
JOHN RUSSELL PHILLIPS 
Assistant United States Attorney 
Georgia Bar Number 576335 
 
/s/ Bernita B. Malloy 
BERNITA B. MALLOY 
Assistant United States Attorney 
Georgia Bar Number 718905 
600 U.S. Courthouse 
75 Ted Turner Drive, SW 
Atlanta, GA 30303 
(404) 581-6000 
 
 
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CERTIFICATE OF SERVICE 
I hereby certify that, on June 21, 2022, I electronically filed the foregoing 
document with the Clerk of Court using the CM/ECF system. 
 
JOHN RUSSELL PHILLIPS 
ASSISTANT UNITED STATES ATTORNEY 
GEORGIA BAR NO. 576335 
 
 
 
600 U.S. Courthouse 
75 Ted Turner Drive, SW 
Atlanta, GA 30303 
(404) 581-6000 
 
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