Opinion and Order — United States v. Diyali (Dkt. 49, E.D. Ky.)

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An opinion and order in United States v. Shaan Ti Diyali, Criminal No. 5:22-CR-45-KKC-EBA-1, in the U.S. District Court for the Eastern District of Kentucky, dated and filed November 4, 2022 as Doc 49. It denies the defendant's motion for a judgment of acquittal or new trial under Rule 29 (DE 42). The order recounts that a jury found Diyali guilty of one count of wire fraud under 18 U.S.C. § 1343 for defrauding the government in connection with a loan provided by the Small Business Administration. It applies the standard that a defendant carries a very heavy burden on such a motion and that the evidence is viewed in the light most favorable to the prosecution, and it rejects an argument that the prosecution's use of the defendant's statements violated the Fifth Amendment.

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Case: 5:22-cr-00045-KKC-EBA Doc #: 49 Filed: 11/04/22 Page: 1 of 6 - Page ID#: 450




                            UNITED STATES DISTRICT COURT
                            EASTERN DISTRICT OF KENTUCKY
                                  CENTRAL DIVISION
                                     LEXINGTON


 UNITED STATES OF AMERICA,                          CRIMINAL NO. 5:22-CR-45-KKC-EBA-1
       Plaintiff,


 v.                                                           OPINION AND ORDER

 SHAAN TI DIYALI
       Defendant.


                                            *** *** ***

       A jury found defendant Shaan Ti Diyali guilty of one count of wire fraud in violation of 18

U.S.C. § 1343 for defrauding the government with regard to a loan provided by the Small Business

Administration ("SBA"). He now moves for a judgment of acquittal or new trial under Federal

Rule of Criminal Procedure 29 (DE 42.)

       Diyali has a “very heavy burden” on his motion for judgment of acquittal. United States v.

Vichitvongsa, 819 F.3d 260, 270 (6th Cir. 2016). The question is “whether, after viewing the

evidence in the light most favorable to the prosecution, any rational trier of fact could have found

the essential elements of the crime beyond a reasonable doubt.’” Id. (quoting Jackson v. Virginia,

443 U.S. 307, 319 (1979)). Importantly, the Court must “draw all available inferences and resolve

all issues of credibility in favor of the jury’s verdict.” United States v. Maliszewski, 161 F.3d 992,

1006 (6th Cir. 1998). The Court will “reverse a judgment for insufficient evidence only if the

judgment is not supported by substantial and competent evidence upon the record as a whole.”

Vichitvongsa, 819 F.3d at 270 (quoting United States v. Stewart, 729 F.3d 517, 526 (6th Cir.

2013)). “‘Substantial evidence’ is ‘such relevant evidence as a reasonable mind might accept to

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support a conclusion. It is evidence affording a substantial basis of fact from which the fact in issue

can be reasonably inferred.” Id. (quoting United States v. Taylor, 800 F.3d 701, 711 (6th Cir.

2015)). This Court cannot "reweigh the evidence, re-evaluate the credibility of witnesses, or

substitute [its] judgment for that of the jury.” United States v. Mathis, 738 F.3d 719, 735 (6th

Cir.2013).

       The evidence at trial established that, in March 2020, the CARES Act was enacted in

response to the COVID-19 pandemic. Among other measures, the CARES Act appropriated a

large amount of money to the Small Business Administration to fund Economic Injury Disaster

Loans (EIDL) for eligible small businesses experiencing substantial financial disruptions due to

the COVID-19 pandemic. The applicant was advised that the funds could be used only for

legitimate business expenses that could not be met as a result of COVID-19 such as rent, material

costs, and payroll. On the application, the applicant had to indicate the business's gross revenues

for 12 months prior to the disaster. Because the loans were urgently needed by businesses, the

SBA relied largely on what the applicant put on the application without requesting supporting

documents.

       The government presented evidence that, on May 9, 2020, Diyali applied for an EDIL loan

for an insurance brokerage called Your Choice Services, LLC, even though the company had no

significant business expenses, or even any business activity. Diyali represented on his loan

application that the company had business income in the amount of $100,000 during the 12 months

preceding the disaster, when in fact, it had no income that year. The company had no business at

all. Based on Diyali's application, he received a loan of $49,900, which he deposited in his personal

bank account. He invested most of those funds in Robin Hood, which is a company that allows




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investors to trade and purchase cryptocurrency and stock. Diyali ultimately lost almost all of the

loan money

       This was sufficient evidence for at least one rational juror to find Diyali guilty of wire fraud

beyond a reasonable doubt and that he did not act in good faith.

       In his motion, Diyali argues that the government failed to prove that he intended to deprive

the SBA of money. To support this argument, he first points to his own testimony regarding certain

matters, including that a friend of his actually applied for the loan, not Diyali. There was ample

evidence from which the jury could find that Diyali applied for the loan himself. The application

contained a lot of intimate detail about Diyali's life, including his address, phone number, social

security number, bank routing number, and bank account number. Moreover, the government

presented evidence that the loan documents contained Diyali's electronic signature and that a

company certified that the document was signed using Diyali's e-mail account. Most importantly,

however, the government presented uncontradicted evidence that the money from the loan went

into Diyali's personal bank account, and Diyali conceded he was the person who spent the money.

       Diyali also argues that, at the time of the trial, the loan was not yet due for repayment. He

argues that, without proof that he had defaulted on the loan, the government could not establish an

intent to deprive the SBA of money. The Sixth Circuit has previously rejected a similar argument

that a defendant cannot intend to deprive an entity of money if he intends to repay it. "While an

honest, good-faith belief in the truth of the misrepresentations may negate intent to defraud, a

good-faith belief that the victim will be repaid and will sustain no loss is no defense at all." United

States v. Daniel, 329 F.3d 480, 488 (6th Cir. 2003) (quoting United States v. Benny, 786 F.2d 1410,

1417 (9th Cir.1986)). "It is sufficient that the defendant by material misrepresentations intends the

victim to accept a substantial risk that otherwise would not have been taken." Id. This requires



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proof only that Diyali intended to deprive the SBA of money "in the short-term." Id. Diyali's

acceptance of the loan proceeds and subsequent spending of them is sufficient evidence of an intent

to deprive the SBA of the funds at least for the short term.

       Diyali argues that the government improperly pointed out at trial that, in pre-indictment

discussions with the government, Diyali never asserted that another person applied for the loan in

Diyali's name as he asserted at trial. Diyali argues that this violated his constitutional right to

remain silent when questioned by law enforcement officers.

       The Fifth Amendment to the U.S. Constitution grants individuals the right not to be

compelled to incriminate themselves. To safeguard that right, the Supreme Court has required that

a person taken into custody or otherwise deprived of his freedom "must be warned prior to any

questioning that he has the right to remain silent, that anything he says can be used against him in

a court of law, that he has the right to the presence of an attorney, and that if he cannot afford an

attorney one will be appointed for him prior to any questioning if he so desires." Miranda v.

Arizona, 384 U.S. 436, 479 (1966).

       The Fifth Amendment also prohibits the prosecution from commenting during trial on the

silence of a defendant who asserts the right to remain silent. Jenkins v. Anderson, 447 U.S. 231,

235 (1980) (citing Griffin v. California, 380 U.S. 609, 614 (1965)). It also precludes “the use for

impeachment purposes of petitioners' silence, at the time of arrest and after receiving Miranda

warnings." Doyle v. Ohio, 426 U.S. 610, 619 (1976). This is because an arrestee's silence after

receipt of Miranda warnings may be nothing more than an exercise of the rights explained in the

warnings. Thus, the meaning of the defendant's silence is not probative, but instead “insolubly

ambiguous.” Id. at 617. Further, it would be "fundamentally unfair" for the state to offer implicit




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assurances in the Miranda warnings that a defendant's silence will not penalize him, but then use

the subsequent silence to impeach his testimony at trial. Id at 619-20.

       There are a couple of problems with Diyali's argument that his right against self-

incrimination was violated in this case. First, he does not assert that he was ever arrested and given

Miranda warnings. The government asserts he was not, and there is no contradictory evidence in

the record. The Supreme Court has held that the Fifth Amendment does not prohibit the

prosecution from using for impeachment purposes the defendant's silence prior to his arrest and

prior to his receiving Miranda warnings. Jenkins v. Anderson, 447 U.S. 231, 238–240 (1980). This

is because using the defendant's silence prior to receiving the Miranda assurances does not present

the same "fundamental unfairness" as does the use of the defendant's silence after he has received

those assurances. Id. See also Greer v. Miller, 483 U.S. 756, 763 (1987) (Stating that, if a defendant

has not received the Miranda assurances, "the Constitution does not prohibit the use of a

defendant's postarrest silence to impeach him at trial.") Thus, any use of Diyali's silence prior to

the trial would not violate the Constitution because he was never given Miranda assurances.

       A second problem with Diyali's argument is that the government could not have been using

Diyali's silence against him because he was not silent. He spoke with the government prior to trial,

and he testified at trial. What the government used against Diyali was not his silence but his

statements prior to trial. It was Diyali's lawyer that first raised questions about those statements.

(DE 44, Tr. at 19.) On cross examination, the government pointed out that, in his discussions with

the government and with his bank prior to trial, Diyali never claimed that another person applied

for the loan. Instead, Diyali and his counsel attempted to show the government that Diyali and his

wife together made $100,000 in personal income during the year the application asked about and

that Diyali's representation on the application that his company made that amount was a simple



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misunderstanding. Thus, the government was not pointing out Diyali's silence, but instead a prior

inconsistent statement. The Fifth Amendment does not prohibit prosecutors from using the

defendant's statements against him. Anderson v. Charles, 447 U.S. 404, 408 (1980).

       For all these reasons, the Court hereby ORDERS that Diyali's motion for a judgment of

acquittal or for a new trial under Rule 29 (DE 42) is DENIED.

       This 4th day of November, 2022.




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