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United States v. Rhame

United States District Court, N.D. Georgia, Atlanta Division

November 20, 2017




         This matter appears before the Court for consideration of a January 31, 2017 Report and Recommendation (“R&R”) (Doc. No. [167]) and a September 29, 2017 R&R (Doc. No. [245]), in which The Honorable Catherine M. Salinas, United States Magistrate Judge, recommended that Defendants' Motions to Dismiss the Indictment (Docs. No. [81], [150], [220], [221], [240]) be denied. Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Criminal Procedure 59(b)(2), Defendants timely filed their objections to the R&Rs (Docs. No. [176');">176');">176');">176], [255');">255');">255');">255], [256');">256');">256');">256]), and this matter is now ripe for consideration. The Court will “make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1).

         I. BACKGROUND

         On February 10, 2016, Defendants were indicted on 24 counts. Doc. No. [1]. They moved to dismiss the indictment (Docs. No. [80], [150]) and Judge Salinas issued an R&R recommending denying those motions (Doc. No. [167]). Defendants objected to the R&R (Doc. No. [176');">176');">176');">176]), but just four days later a grand jury returned a superseding indictment (Doc. No. [178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178]). The following facts are drawn from the superseding indictment, but the Court also considers the arguments from the first round of motions to dismiss because they are fundamentally unchanged by the superseding indictment.

         A. Defendants

         The Sterling Currency Group, LLC (“Sterling”) was a business that sold and exchanged so-called “exotic currencies.” Doc. No. [178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178], p. 2, ¶3. Between 2010 and June 2015, Sterling was one of the largest sellers of the Iraqi dinar[1] in the United States. Id. p. 3, ¶6. Defendants Tyson Rhame and James Shaw were the owners of Sterling. Id. p. 2, ¶3. Defendant Frank Bell was its Chief Operating Officer. Id. Collectively, these Defendants are referred to as the “Sterling Defendants.” Defendant Terrence Keller was the leader of a group known as “the GET Team” and ran a website, chat forum, and conference calls. Id. p. 3, ¶5.

         B. The Alleged Conspiracy

         During the time period of the conspiracy, the Sterling Defendants and Keller had a secret arrangement to “pump” the Iraqi dinar through the GET team. Id. p. 5, ¶9. Certain “websites, blogs, chat rooms and conference calls, ” including Keller's, predicted that “a ‘revaluation' [or ‘RV'] of the Iraqi dinar would occur imminently.” Id. p. 3, ¶¶5-6. Such a revaluation would have caused “a sudden, exponential rise in value of the Iraqi dinar as compared to . . . other relatively stable global currencies, ” which would have led to “potentially enormous gains” for individuals who owned Iraqi dinars. Id. ¶6. Keller falsely claimed to have information from, and verified by, high-level confidential sources in the United States government, the Iraqi government, international organizations, and major financial institutions, regarding an imminent revaluation. Id. p. 5, ¶9. Keller and the Sterling Defendants knew and believed that those representations would boost sales for Sterling. Id.

         The Sterling Defendants publicly maintained that they merely had an advertising relationship with promoters like Keller. Id. p. 6, ¶11. Keller, in turn, claimed that any advertising money he received merely covered the cost of running the GET team. Id. In actuality, Sterling paid Keller more than $160, 000, which was well in excess of the cost required to run and maintain the GET team, and nearly all of which Keller used for his own personal benefit. Id. p. 7, ¶12 The Sterling Defendants consistently downplayed the financial benefits to conceal the pumping relationship and make Keller's false claims seem more credible. Id.

         The Sterling Defendants also had financial relationships with other promoters of the Iraqi dinar who spread the false notion of an imminent revaluation. Id. ¶13. These financial arrangements included commissions based on how much dinar the promoter sold and monthly payments based upon how much business the promoter directed to Sterling. Id. The Sterling Defendants knew and believed that these payments would causes Keller and other promoters to continue to spread false and misleading information and to direct business to Sterling. Id. ¶14.

         Defendant Rhame himself also allegedly made misrepresentations to consumers to buttress the fraud. He told customers “Sterling would open secure Iraqi dinar exchanges at airports throughout the United States and Canada within a matter of hours or days of a revaluation, ” allowing investors to rapidly reap large profits. Id. p. 4');">p. 4, ¶7. In reality, Rhame knew “Sterling did not have the capacity to open these airport exchanges in the manner and timeframe” he represented. Id. ¶8. He made the representations to bolster the false rumors that a revaluation was imminent and to encourage customers to purchase dinars from Sterling “with the expectation that the company had the capacity to immediately open these airport exchanges.” Id. ¶7.

         C. The Charges

         The superseding indictment charges 36 counts. Doc. No. [178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178');">178]. Count 1 charges a conspiracy to commit mail and wire fraud, as outlined above. Id. pp. 1-9, ¶¶1-16. Counts 2 through 6 incorporate the above allegations and charge Defendants with five specific instances of mail fraud. Id. pp. 9-11, ¶¶17-19. Counts 7 through 17 likewise incorporate the above allegations and charge 11 instances of wire fraud. Id. pp. 11-12, ¶¶20-22. Count 18 is for an alleged conspiracy to commit money laundering, and Counts 19 through 30 are substantive money laundering charges. Id. pp. 12-15, ¶¶23-26. The money laundering charges are predicated on Defendants' alleged commission of mail and wire fraud.

         Finally, Counts 31 through 36 are for allegedly providing false statements to Federal Bureau of Investigation (“FBI”) special agents during the investigation of this case, in violation of 18 U.S.C. § 1001. Id. pp. 16-20, ¶¶27-38. Counts 31 through 34 are for allegedly false statements made by Defendant Rhame. Id. pp. 16-18, ¶¶27-34. Counts 35 and 36 are for allegedly false statements made by Defendant Bell. Id. pp. 19');">p. 19-20, ¶¶35-38. Specifically, Count 35 alleges Bell “falsely stated that he and Sterling maintained a ‘firewall' with Iraqi dinar promoters who were ‘hyping' the dinar and that he affirmatively told the promoters ‘not to drive business' to Sterling's website.” Id. p. 19');">p. 19, ¶36. The Government asserts that this statement is false because Bell “knew that he had not in fact told [Keller] to stop driving business to the Sterling website even though [Keller] consistently updated [Bell] on his promotional efforts.” Id. Count 36 accuses Bell of saying “that he had told [Defendant Keller], not to promote Sterling.” Id. p. 20, ¶38. Again, this statement is allegedly false because Bell “knew that he had not in fact told [Keller] to stop driving business to the Sterling website even though [Keller] consistently updated [Bell] on his promotional efforts.” Id.


         Pursuant to Federal Rule of Criminal Procedure 12(b)(3)(B), a defendant may move to dismiss a count for “failure to state an offense.” Fed. R. Crim. p. 12(b)(3)(B)(v). The Court must then determine whether “the factual allegations in the indictment, when viewed in the light most favorable to the government, [are] sufficient to charge the offense[s] as a matter of law.” United States v. deVegter, 198 F.3d 1324, 1327 (11th Cir. 1999). The focus is on the facts alleged in the indictment itself, not outside facts presented by Defendants or facts that need to be developed at trial. See United States v. Sharpe, 438 F.3d 1257, 1263 (11th Cir. 2006); United States v. Plummer, 221 F.3d 1298, 1302 n.3 (11th Cir. 2000).

         An indictment “must be sufficiently specific to inform the defendant of the charge against him and to enable him to plead double jeopardy in any future prosecution for the same offense.” United States v. Cole, 755 F.2d 748, 759 (11th Cir. 1985). To clear this bar, the indictment need only include language “set[ting] forth the essential elements of the crime.” Id. An indictment is sufficient “if it charges in the language of the statute” and apprises the defendant with reasonable certainty of the charged offense. Sharpe, 438 F.3d at 1263; see also United States v. Critzer, 951 F.2d 306, 307 (11th Cir. 1992) (per curiam).

         III. ...

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