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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,
v. 22 CR 251 (LJL)
Arraignment
RAFAEL MARTINEZ,
Defendant.
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New York, N.Y.
May 12, 2022
11:01 a.m.
Before:
HON. LEWIS J. LIMAN,
District Judge
APPEARANCES
DAMIAN WILLIAMS,
United States Attorney for the
Southern District of New York
BY: MICAH F. FERGENSON
Assistant United States Attorney
WILLKIE FARR & GALLAGHER, LLP
Attorneys for Defendant
BY: RANDALL W. JACKSON
MICHAEL S. SCHACHTER
AND
MORVILLO ABRAMOWITZ GRAND IASON & ANELLO, PC
BY: TELEMACHUS P. KASULIS
ELKAN ABRAMOWITZ
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Case 1:22-cr-00251-LJL Document 24 Filed 06/17/22 Page 1 of 10
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
(In open court)
(Case called)
MR. FERGENSON: Good morning, your Honor. Micah
Fergenson for the government.
THE COURT: Good morning.
MR. JACKSON: Good morning, your Honor. Randall
Jackson, Michael Schachter, Tim Kasulis and Elkan Abramowitz on
behalf of the defendant, Rafael Martinez.
THE COURT: Good morning. Good morning, Mr. Martinez.
THE DEFENDANT: Good morning.
THE COURT: I understand, Mr. Fergenson, we're here
today for the purposes of arraigning the defendant on the
indictment and the initial appearance; is that correct?
MR. FERGENSON: That's correct, your Honor.
THE COURT: Okay. Mr. Martinez, I have in front of me
the indictment 22 CR 251. Have you received -- you may be
seated. Have you received a copy of the indictment?
THE DEFENDANT: Yes, your Honor.
THE COURT: And have you had a chance to review it
with your lawyers?
THE DEFENDANT: Yes, your Honor.
THE COURT: Would you like me to read the indictment
to you?
THE DEFENDANT: No, your Honor.
THE COURT: How do you plead to the indictment?
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
THE DEFENDANT: Not guilty, your Honor.
THE COURT: Thank you. Sir.
All right. Let me hear from the prosecution. Why
don't you tell me a little bit about your case, where you stand
with respect to discovery, and when the defendant was arrested
and indicted, and the conditions of bail?
MR. FERGENSON: Yes, your Honor. So this case
involves, most broadly speaking, a paycheck protection program
fraud. As detailed -- this defendant was initially arrested on
a complaint. As detailed in a rather extensive complaint, the
government charges that the defendant submitted false
applications both for a PPP, as it's known, loan for his
company, as well as an application to become a PPP lender; that
is, a commercial lender that actually issued these PPP loans to
other businesses.
The defendant was arrested on that complaint on
February -- charged and arrested on February 28th. He was
presented the following day, which I believe was March 1st. He
was then indicted on May 2nd, 2022, in five counts. The first
two counts relate to the -- call it the PPP lender scheme.
That first count is wire fraud, the second is false statements
to the SBA, the Small Business Administration.
The second two counts relate to the PPP loan scheme.
The third count is bank fraud. The fourth count is false
statements to a bank. And then the last count, aggravated
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
identity theft, is in connection with the PPP loan scheme in
which the defendant forged the signature and name of his
accountant. It's in connection with that application.
THE COURT: Where do you stand with respect to
discovery?
MR. FERGENSON: Yes, your Honor. So I'll give a brief
summary of what it consists of. It includes subpoena returns
from at least 30 different entities. It includes voluminous
financial records, corporate records, tax and accounting
records, as well as records relating to how proceeds were
spent, including records from a chartered jet service, luxury
car dealers.
In addition to those tax returns, there are IRS
records for the defendant and his companies, SBA records
relating to the defendant and his companies. These SBA records
are actually quite voluminous. There are over 43,000
documents, and I would say I'm still confirming if we'll be
producing those SBA records in their entirety, or if there are
some that are actually not rule 16 discovery included in there,
but I expect the bulk of it will be produced.
There are records from the federal reserve, which as
your Honor may have seen in the complaint, operated a liquidity
facility to provide capital to PPP lenders; so $823 million
came from the Fed to the defendant's company, MBE. Those are
not as voluminous as SBA. I think a little over a gigabyte of
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
records.
There's an e-mail search warrant on the defendant's
work e-mail, relatively voluminous. There are over 91,000
documents. There was an extraction on the defendant's phone
seized at his arrest, but it appeared to be wiped. There
was --
THE COURT: So there's nothing from the phone that
you're aware of?
MR. FERGENSON: That's correct. Seizure warrant for
several bank accounts, and there was a video of the defendant's
post-arrest questioning, albeit, I don't believe there was much
of substance in it.
I think in light of the voluminous nature, we would
anticipate being able to produce it in about three weeks, but
perhaps, to be conservative, call it a month, just for
technical delays that often come up.
THE COURT: Besides the search warrant for the e-mail,
were there any other search warrants?
MR. FERGENSON: There was a search warrant for the
cell phone at his arrest, but like I said --
THE COURT: There's nothing that was obtained from
that that you could use. Nothing that was obtained, period?
MR. FERGENSON: There was an extraction, but the
contents of the phone appeared to have been wiped.
THE COURT: Okay. And I gather there's something of a
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
post-arrest statement, and any other law enforcement techniques
that, from your perspective, that could give rise to a
suppression motion?
MR. FERGENSON: None that I'm aware of, your Honor, or
none that come to mind immediately.
THE COURT: And I'll turn to the defense in a moment,
but stay standing for a moment more because I have a couple
more questions.
First of all, I take it that the defendant has been
released. What are the conditions of bail?
MR. FERGENSON: Your Honor, I'm actually not -- I
don't have it in front of me right now, but he was released on
a negotiated package that included posting his property --
excuse me, posting as security four properties, two in
New Jersey, two in SDNY, and I'm not sure if I got that
incorrectly, but the defense can correct it.
I was actually not the AUSA on the case at the time of
the presentment, but it was a negotiated package. And I
believe he's being supervised by pretrial in New Jersey, which
was his --
THE COURT: District of residence?
MR. FERGENSON: Correct, your Honor.
THE COURT: And the last question I've got for you is
my standard one, which is, how does the government propose that
I proceed? It seems to me that the next step would be a status
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
conference, where I hear about any potential motions. But give
me your thoughts about next steps and the timing of next steps.
MR. FERGENSON: We agree with that, your Honor, and I
would defer, I think in the first instance, to how much time
the defense would like to review discovery and assess any
potential motions, and as long as that's reasonable, I'm sure
it will be fine with the government.
THE COURT: Okay. All right. Let me turn to the
defense, a lot of familiar faces on the defense side. Welcome
to all of you.
MR. JACKSON: Thank you, your Honor.
THE COURT: So tell me your perspective on next steps
and where you think the case should go.
MR. JACKSON: Yes, your Honor, and just to answer the
Court's question, I believe AUSA Fergenson described the bail
conditions correctly. It's also a $10 million personal
recognizance bond secured by the property, the four properties
that were described.
Your Honor, given the volume of the discovery, we
would request -- we do agree with the Court that a status
conference to follow up the production of discovery would be
appropriate. We would request something in area of 90 days
from now. Assuming that we get the discovery in 30 days, that
would give us several weeks to be able to make a determination
as to whether there are any applications we need to make and
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
also to be able to advise the Court with regard to additional
scheduling.
THE COURT: I think that puts us sometime in the month
of August, and I'd like to do it the second week in August. My
expectation would be that at that conference, I hear from you
with respect to whether you plan to make any motions, we set a
date for motions, and we set a tentative trial date for the
case.
MR. JACKSON: Yes, your Honor. That would make
perfect sense.
THE COURT: Okay. Mr. Fishman, sometime the week of
August 8th.
(Pause)
August 11 at 3:00 p.m., does that work for the
defense?
MR. JACKSON: Yes, your Honor.
THE COURT: And does that also work for the
government?
MR. FERGENSON: Yes, your Honor.
THE COURT: Okay. Before we get to the matter of the
Speedy Trial Act, anything further from the defense?
MR. JACKSON: No, your Honor. Thank you.
THE COURT: Anything from the government besides the
Speedy Trial Act?
MR. FERGENSON: Only that, your Honor.
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
M5CPMARA
THE COURT: Do you want to make your application?
MR. FERGENSON: Yes, your Honor. The government moves
to exclude time until the next conference on August 11th under
the Speedy Trial Act in order to allow the government to
produce discovery, the defense to review it and also assess any
potential motions.
THE COURT: Okay. What's the defense's position?
MR. JACKSON: Your Honor, we have no objection.
THE COURT: Okay. All right. The Court will exclude
time from today until August 11th, 2022, under the Speedy Trial
Act, 18 U.S.C. 3161(h)(7)(A). I find that the ends of justice
outweigh the interests of the defendant and the public in a
speedy trial, in that the time from today until August 11th can
be used by the government to make production and by the defense
to review the production of discovery and to consider any
potential motions.
Before we break, I do have an oral order that I'm
going to deliver to the government. It either has been
accompanied by or will be accompanied by a written order placed
on the docket.
I direct the prosecution to comply with its
obligations under Brady against Maryland and its progeny to
disclose to the defense all information, whether admissible or
not, that is favorable to the defendant, material either to
guilt or to punishment, and known to the prosecution.
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SOUTHERN DISTRICT REPORTERS, P.C.
(212) 805-0300
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Possible consequences for noncompliance may include
dismissal of individual charges or the entire case, exclusion
of evidence, and professional discipline or court sanctions on
the attorneys responsible.
I will or have entered a written order more fully
describing this obligation and the possible consequences of
failing to meet it, and I direct the prosecution to review and
comply with that order.
Does the prosecution confirm that it understands its
obligations and will fulfill them?
MR. FERGENSON: Yes, your Honor.
THE COURT: Okay. Thank you.
Anything further from the government, Mr. Fergenson?
MR. FERGENSON: No. Thank you, your Honor.
THE COURT: Mr. Jackson, anything further?
MR. JACKSON: No, your Honor. Thank you.
THE COURT: Okay. Good day. Everybody stay safe and
stay healthy and see you in August.
MR. JACKSON: Thank you, Judge.
(Adjourned)
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