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United States v. Ying

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

September 17, 2018

UNITED STATES OF AMERICA
v.
JUN YING

          MAGISTRATE TUDGE'S FINAL ORDER AND REPORT AND RECOMMENDATION ON DEFENDANT'S PRETRIAL MOTIONS

          RUSSELL G. VINEYARL UNITED STATES MAGISTRATE JUDGE.

         Defendant Jun Ying ("Ying") is charged in a two-count indictment with securities fraud, in violation of 18 U.S.C. § 1348, 15 U.S.C. §§ 78j(b) and 78ff, and 17 C.F.R. §§ 240.10b-5 and 240.10b5-l. [Doc. I].[1] Ying has filed a motion to dismiss the indictment, [Doc. 35], and a motion for a bill of particulars, [Doc. 36], both of which the government opposes, [Docs. 46 & 48]. Ying has filed a reply in support of both of his motions, [Docs. 53 & 54], and for the reasons that follow, Ying's motion for bill of particulars, [Doc. 36], is DENIED, and it is RECOMMENDED that his motion to dismiss the indictment, [Doc. 35], be DENIED.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On March 13, 2018, a grand jury returned an indictment against Ying, charging him with two counts of securities fraud and insider trading, in violation of 18 U.S.C. § 1348, 15 U.S.C. §§ 78j(b) and 78ff, and 17 C.F.R. §§ 240.10b-5 and 240.10b5-l. [Doc. 1]. According to the indictment, Ying was the Chief Information Officer ("CIO") for Equifax Inc/s ("Equifax") United States Information Solutions business unit.[2] [Id. ¶ 3]. The indictment alleges that from mid-May 2017 through July 2017, unknown individuals were able to hack into Equifax's databases and obtain personal identifying information of approximately 145 million people, and on July 29, 2017, Equifax discovered the network security breach and began an investigation as to the scope of the breach and to plan for remedial efforts. [Id. ¶¶ 6-8].

         From August 12, 2017, through August 15, 2017, Equifax changed internal administrative credentials for many of its internal databases, and Ying was aware of these changes. [Id. ¶ 9]. By August 15, 2017, Equifax concluded that consumers' personally identifiable information was likely taken as a result of the data breach, and on this same day, Equifax imposed a special trading ban for its employees who were aware of the data breach. [Id. ¶¶ 10-11]. On August 25, 2017, Ying, and several other employees who reported to Ying, were asked to assist in responding to the breach, but the breach was presented as a breach opportunity involving a potential Equifax customer rather than a breach of Equifax's databases. [Id. ¶ 12]. However, on this same day, Ying sent text messages to W.M. that stated, "Sounds bad. We may be the one breached" and "I'm starting to put 2 and 2 together." [Id. ¶ 13 (internal marks omitted)].

         On August 28, 2017, Ying conducted several Internet searches for information related to the value of the stock price of Experian, another consumer reporting agency and competitor to Equifax, following an Experian data breach in 2015. [Id. ¶ 14]. Less than an hour after conducting these Internet searches, Ying, who held stock options for Equifax securities in a UBS Financial Services account ending in 24 EF, accessed the UBS website; exercised all of his available stock options in the account ending in 24 EF, which resulted in him receiving 6, 815 shares of Equifax stock in the same account; and then sold all of these shares for a profit of over $480, 000. [Id. ¶¶ 15-16]. On the following day, Ying sent M.D. a text message that said, "I think some big media announcement is coming about us" and "I think it might be bad." [Id. ¶ 17 (internal marks omitted)]. Subsequently, on September 7, 2017, following the close of the stock market that day, Equifax publicly disclosed the data breach, and the following day, Equifax's stock dropped in price. [Id. ¶ 18]. The indictment alleges that Ying "traded in Equifax securities on the basis of material nonpublic information related to the data breach, and thereby earned illegal profits and illegally avoided losses" and that this activity was in violation of 18 U.S.C. § 1348, 15 U.S.C. §§ 78j(b) and 78ff, and 17 C.F.R. §§ 240.10b-5 and 240.10b5-l. [Id. ¶¶ 19-20, 22]. Ying has filed two motions in relation to the instant indictment, see [Docs. 35 & 36], and after having been fully briefed, the pending motions are ripe for ruling.

         II. DISCUSSION

         A. Motion to Dismiss the Indictment, [Doc. 35]

         Ying is charged with two counts of illegal insider trading, in violation of 18 U.S.C. § 1348 in Count One, and in violation of 15 U.S.C. §§ 78j(b) and 78ff in Count Two. [Doc. 1]. Ying moves to dismiss these charges, arguing that the indictment is multiplicitous and fails to allege the essential elements of the charged offenses. [Doc. 35-1]; see also [Doc. 53]. In response, the government maintains that the indictment is not multiplicitous because each count requires an element of proof that the other count does not require and that the indictment adequately alleges the charged offenses. [Doc. 46]. For the reasons that follow, the Court agrees with the government.

         1. Multiplicity

         "An indictment is multiplicitous if it charges a single offense in more than one count." United States v. Williams, 527 F.3d 1235, 1241 (11th Cir. 2008) (citations omitted). "A multiplicitous indictment not only subjects the defendant to numerous sentences for one offense, but also prejudice[s] the defendant and confuse[s] the jury by suggesting that not one but several crimes have been committed." Id. (alterations in original) (footnote, citation, and internal marks omitted). Therefore, "[a] multiplicitous indictment [] violates the principles of double jeopardy because it gives the jury numerous opportunities to convict the defendant for the same offense." Id. Thus," [b]ecause a multiplicitous indictment involves double jeopardy issues, multiplicity and double jeopardy challenges are typically evaluated under the same standards." United States v. Woods, 730 F.Supp.2d 1354, 1376 (S.D. Ga. 2010), affd, 684 F.3d 1045 (11th Cir. 2012) (per curiam). "Accordingly, the test enunciated in [Blockburger v. United States, 284 U.S. 299 (1932), ] used to evaluate double jeopardy challenges ... is also used to determine whether an indictment is multiplicitous, verifying that each count requires an element of proof that the other counts do not require." Id. (citation and internal marks omitted).

         "Under Blockburger[, ] the test to be applied to determine whether two statutory provisions prohibiting the same conduct violate the Double Jeopardy Clause, or whether each count of the indictment may result in a conviction for the same offense, is whether each provision [or count] requires proof of a fact which the other does not." Id. (last alteration in original) (citation and internal marks omitted). Pursuant to this test, "the focus is on the proof necessary to establish the statutory elements of the offense, not the actual evidence presented at trial." Id. (citation omitted). Ying asserts that the "elements of proof for [18 U.S.C. § 1348 and 15 U.S.C. §§ 78j and 78ff] are identical," see [Doc. 35-1 at 13-15], but this contention is incorrect. Count One of the indictment charges a violation of 18 U.S.C. § 1348, which provides:

         Whoever knowingly executes, or attempts to execute, a scheme or artifice-

(1) to defraud any person in connection with .. . any security of an issuer with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 781) or that is required to file reports under section 15(d) of ...

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