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United States v. Detling

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

April 30, 2019

UNITED STATES OF AMERICA,
v.
CHALMER DETLING, II, Defendant.

          MAGISTRATE JUDGE'S ORDER AND FINAL REPORT AND RECOMMENDATION AND ORDER CERTIFYING THIS CASE READY FOR TRIAL

          LINDA T. WALKER, CHIEF UNITED STATES MAGISTRATE JUDGE

         This matter is presently before the Court on Defendant Detling's Motion to Dismiss Counts for Lack of Jurisdiction, Motion to Dismiss Indictment for Failure to Allege an Offense, and Motion for Bill of Particulars. (Docs. 26, 27, 28). For the reasons outlined below, the Court RECOMMENDS that Defendant's Motion to Dismiss Counts for Lack of Jurisdiction be DENIED AS MOOT (Doc. 26), Motion to Dismiss the Indictment for Failure to Allege an Offense be DENIED (Doc. 27). Lastly, Defendant's Motion for Bill of Particulars is DENIED. (Doc. 28).

         BACKGROUND

         On August 8, 2018, a grand jury in the Northern District of Georgia returned an Indictment charging Defendant Chalmer Detling, II (“Defendant”) with seven counts of wire fraud in violation of 18 U.S.C. § 1343 (Counts One through Seven) and seven counts of aggravated identity theft in violation of 18 U.S.C. § 1028A(a)(1) (Counts Eight through Fifteen). (Doc. 1). After Defendant filed the motions now under consideration, a grand jury returned a Superseding Indictment. (Doc. 35). The Superseding Indictment is identical to the initial Indictment except for the addition of a sentence in the fourth paragraph: “SunTrust is headquartered in Atlanta, Georgia, and possesses its ACH and wire transfers in Orlando, Florida.” (Doc. 35, ¶4). For this reason, the Court construes Defendant's Motion to Dismiss Counts for Lack of Jurisdiction (Doc. 26) and Motion to Dismiss the Indictment for Failure to Allege an Offense (Doc. 27) as challenges to the Superseding Indictment. The Motion for Bill of Particulars (Doc. 28) is not specific to any charging instrument.

         I. THE SUPERSEDING INDICTMENT

         The Superseding Indictment alleges Defendant committed wire fraud and aggravated identity theft by obtaining litigation advances in his law firm's clients' names without the clients' knowledge or authorization. (Doc. 35, ¶1). The Superseding Indictment begins by providing background information about Defendant and the litigation financing entities he allegedly defrauded. (Id. ¶¶ 1-9). Defendant is an attorney[1] who owned and operated Detling Law Group, a law firm primarily engaged in personal injury law. (Id. ¶ 1). Injury Financial, LLC d/b/a Capital Financing, Litigation Ventures LLC, Mighty Financing LLC, and LFC Group (collectively, the “litigation financing entities”) are companies that provide litigation advances to plaintiffs. (Id. ¶¶ 5-8). The litigation financing entities provide modest sums to plaintiffs, mainly with pending personal injury cases, for non-litigation related expenses, such as living and medical expenses. (Id. ¶ 10). A plaintiff applies for a litigation advance by electronically submitting a signed financing agreement by email or through an online portal. (Id.). Although the financing agreement contemplated repayment with interest, the litigation financing entities do not consider litigations advances to be loans. (Id.). Instead, financing entities characterize litigation advances as investments because plaintiffs who do not receive any recovery from their lawsuits are not obligated to repay the advances. (Id.). In determining whether to provide a litigation advance to any particular plaintiff, the litigation financing entities consider the merits of the plaintiff's lawsuit. (Id.).

         Defendant is accused of using the personal identifying information[2] (“PII”) of his clients, without their permission, to apply for and obtain litigation advances in his clients' names. (Doc. 35, ¶ 12). Defendant allegedly submitted applications and agreements to the litigation financing entities with his clients' signatures knowing that the documents were not actually signed by his clients. (Id.). The litigation financing entities did not require the clients' presence to apply for or receive funds. (Id. ¶ 13). Defendant further concealed his actions by directing the litigation financing entities to send the litigation advances directly to his law firm's IOLTA[3] account, personally picking up the checks from the litigation financing entities, and providing the litigation financing entities with fake phone numbers and email addresses for the clients. (Id. ¶¶ 13, 14, 16). The Superseding Indictment states that the litigation advances were ultimately transferred to Defendant's law firm's operating or other accounts. (Id. ¶ 15). In total, Defendant is accused of obtaining approximately fifty (50) fraudulent litigation advances from the litigation financing entities. (Id. ¶¶ 17-20).

         The Superseding Indictment asserts seven counts of wire fraud (Counts One through Seven) in violation of 18 U.S.C. § 1343 and includes a chart with the date and brief description of each of the seven wire communications. (Doc. 35, ¶ 21). For the aggravated identity theft charges in violation of 18 U.S.C. § 1028A(a)(1) (Counts Eight through Fifteen), the Indictment incorporates the factual allegations and charges in paragraphs one through twenty-one of the Indictment. (Id. ¶¶ 22-23). Counts Eight through Fifteen are arranged in a chart that provides the date of the offense, the related felony, the initials of the client whose identity was used, and the means of identification. (Id. ¶ 23).

         MOTION TO DISMISS COUNTS FOR LACK OF JURISDICTION

         Defendant moved to dismiss Counts Four through Seven and Counts Eleven through Fifteen for lack of federal jurisdiction. (Doc. 26). Defendant posits that Counts Four through Seven fail to allege a federal offense because the Superseding Indictment does not provide the geographic location for SunTrust. (Id. ¶ 6.) Without the geographic location, the Superseding Indictment fails to show transmission of interstate wire communications as is required for § 1343. (Id.) As a result, Defendant contends that Counts Eleven through Fifteen for aggravated identity theft should be dismissed because they are not supported by a related felony.[4] (Id. ¶ 8.)

         The Superseding Indictment, however, added the location of SunTrust's headquarters (Atlanta, Georgia) and the location where SunTrust processes its ACH and wire transfers (Orlando, Florida). (Doc. 35, ¶ 4). Defendant concedes that the addition cured the jurisdictional deficiency. (Doc. 41, at 2). Accordingly, Defendant's Motion to Dismiss Counts For Lack of Jurisdiction should be DENIED AS MOOT. (Doc. 26).

         MOTION TO DISMISS THE INDICTMENT FOR FAILURE TO ALLEGE AN OFFENSE

         Defendant argues the Superseding Indictment should be dismissed for failing to allege an offense. (Doc. 27). Fraud requires intent to defraud and a lie about the nature of the bargain itself. (Id. at 4). Defendant asserts that the facts in the Superseding indictment, if true, do not indicate that Defendant intended to defraud the litigation financing entities. (Id. at 2-5). Further, the Superseding Indictment does not show that the litigation financing entities did not get what they sought: an equitable interest in the outcome of the lawsuit. (Id. at 2-3). Defendant's apparent authority bound his clients to the agreements; thus, the litigation financing entities obtained their investments in the ongoing lawsuits. (Id. at 2, 6). Because the aggravated identity theft charges are predicated upon wire fraud, the aggravated identity theft charges must also fail. (Id. at 6.)

         In response, the Government argues the litigation financing entities did not receive the benefit of the bargain. (Doc. 33, at 9). The Government asserts that the Superseding Indictment does not claim that the litigation financing entities sought an investment opportunity, but advanced funds to cover “living expenses and/or medical expenses” for plaintiffs with a pending lawsuit. (Id. at 10). None of Defendant's clients received the litigation advances because the funds were transferred to his law firm's accounts. (Id.). The Government contends that the litigation financing entities were unaware that Defendant's clients did not apply for or receive the litigation advances, which was the purpose of the transaction. (Id. at 10-11).

         I. LEGAL STANDARD

         Rule 7(c) of the Federal Rules of Criminal Procedure states that an indictment “must be a plain, concise, and definite written statement of the essential facts constituting the offense charged . . . ” Fed. R. Crim. P. 7(c). Defendant may file a motion alleging a defect in the indictment or information, including a defect amounting to “failure to state an offense.” Fed. R. Crim. P. 12(b)(3)(B)(v). “An indictment is considered legally sufficient if it: (1) presents the essential elements of the charged offense, (2) notifies the accused of the charges to be defended against, and (3) enables the accused to rely upon a judgment under the indictment as a bar against double jeopardy for any subsequent prosecution for the same offense.” United States v. Schmitz, 634 F.3d 1247, 1259 (11th Cir. 2011) (quoting United States v. Jordan, 582 F.3d 1239, 1245 (11th Cir. 2009)). “It is generally sufficient that an indictment set forth the offense in the words of the statute itself, as long as those words of themselves fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offense [sic] intended to be punished.” United States v. Garrett, 467 Fed.Appx. 864, 867 (11th Cir. 2012) (citing Hamling v. United States, 418 U.S. 87, 117 (1974)); see United States v. Critzer, 951 F.2d 306, 307-08 (11th Cir. 1992) (“The indictment is sufficient if it charges in the language of the statute.”); United States v. Malone, No. 804CR348T24TGW, 2005 WL 1243762, at *3 (M.D. Fla. May 25, 2005) (denying a motion to dismiss an indictment because it tracked the language of the statute setting forth the essential elements of the crime).

         An indictment that tracks the language of the statute must be accompanied by a statement of “facts and circumstances that will inform the accused of the specific offense, coming under the general description, with which he is charged.” Russell v. United States, 369 U.S. 749, 765 (1962) (quoting United States v. Hess, 124 U.S. 483, 487 (1888)); United States v. Bobo, 344 F.3d 1076, 1083 (11th Cir. 2003). But an indictment does not have to ‚Äúdetail the factual proof that will be relied upon to support the ...


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