Case 1:13-cr-00452-ENV Document 204 Filed 07/13/15 Page 1 of 13 PageID #: 669

U.S. Department of Justice

United States Attorney

Eastern District of New York
JPL:SSS/CAO
F. #2013R01274

271 Cadman Plaza East

Brooklyn, New York 11201

July 13, 2015

By ECF with Courtesy Copy by Interoffice Mail

The Honorable Eric N. Vitaliano
United States District Judge
Eastern District of New York
225 Cadman Plaza East
Brooklyn, New York 11201
Re:

United States v. Songkram Sahachaisere, Gary Kershner, et al.,

Criminal Docket No. 13-452 (S-1)(ENV)
_

Dear Judge Vitaliano:

The government respectfully submits this letter in response to defendant
Songkram Sahachaiseres June 12, 2015 motion to exclude certain evidence from the trial and to
sever certain counts, (Dkt No. 185), and defendant Gary Kershners similar June 2, 2015, and
June 12, 2015 motions, along with his motion for a bill of particulars, (Dkt Nos. 175, 177, 187).
Because the targeted evidence involves allegations central to the indictment that are also
otherwise admissible, the motions to exclude should be denied. Because the defendants do not
meet the high standard for severance, those motions should also be denied. Finally, because
Kershner is not entitled to the requested information in his bill of particulars, that motion should
be denied, as well. Trial is scheduled to begin on September 21, 2015.
I.

Factual Background

Sandy Winick and his co-conspirators controlled dozens of thinly traded target
stocks (the Target Stocks). His overarching fraudulent scheme called for him to form a
corporate team for the Target Stock and then engage a promotion team through a middleman such as Joseph Manfredonia or others. The middle-man would engage a promotion team,
which would then coordinate its promotion bursts (phone calls, emails, websites, etc.) with false
and misleading press releases from the corporate team. The content and timing of the corporate
materials was dictated by the shared desire of the conspirators to sell the Target Stocks, not by
facts or reality, and all of that coordination routed through the phones of the middle-man.

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A. Sahachaisere
Sahachaisere owned and operated Investsource, Inc., a public relations firm that
did business with penny stock companies. On March 2, 2009, the Securities and Exchange
Commission (SEC) issued a formal order of investigation in the matter of Investsource.
Sahachaisere was therefore aware that the SEC had commenced an official proceeding against
him for participating in the unlawful and fraudulent promotion of penny stocks.
On June 12, 2009, a co-conspirator and Sahachaisere discussed over a courtordered wiretap the use of a penny stock investor relations firm named Wall Street Grand to
promote RSGR:
CoConspirator:

How long do you think till you get [Wall Street Grand] on board?

Sahachaisere: I think till next week, mid-next week . . . .

CoConspirator:

OK then, lets do that then. Im gonna hold off on this other group I
was gonna bring in . . . . Let me ask you a question, are you gonna put
out the, put up the cash for them?

Sahachaisere: . . . Im gonna have to . . .

CoConspirator:

This is what Im gonna do for you, all right? Pay them the cash, and
then Ill do the journal at Moneyline for you.

See Session 1254, June 12, 2009, 14:06. Moneyline was a brokerage firm operating out of
Panama.
On or about June 17, 2009, Sahachaisere gave a sworn deposition to the SEC.
Among other false and misleading statements Sahachaisere made on June 17, 2009, Sahachaisere
falsely stated that he had no foreign brokerage accounts, when, in fact, he had foreign brokerage
accounts such as Moneyline and those accounts were used in the Penny Stock Scheme charged in
the instant indictment; Sahachaisere gave false and misleading testimony about his control of a
company called Siam Capital Ventures, which was later used for the deposit of RNER stock; and
Sahachaisere falsely stated that he always disclosed the compensation he received for the
stocks that Investsource profiled when, in fact, he did not disclose the compensation deposited in
his foreign brokerage accounts, including Moneyline and Siam Capital Ventures.
Barely a week later, on June 24, 2009, a co-conspirator and Sahachaisere
discussed over the Title III wiretap the continued promotion of RNER using Panamanian
brokerage accounts that Sahachaisere concealed from the SEC.
On June 26, 2009, RNER issued a press release, which was distributed by PR
Newswire. The press release stated that the patents and patent applications for the medical
equipment discussed in the June 9, 2009 press release had been approved. As a result, the

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company stated that it expected to generate between $12 million and $32 million in revenue. A
search of the China SIPO database found no patent application for or patent issued to RainEarth,
nor did the search reveal any applications or patents related to blood dialysis or any of the other
equipment listed in the press release. Because of Sahachaiseres false testimony on June 17,
2009, the SEC was unable to stop the fraudulent promotion.
Later that day, a co-conspirator continued talking to Sahachaisere over the Title
III wiretap about the RNER promotion campaign:
CoConspriator:

Monday [June 29, 2009] is going to be another piece of news coming,

OK, to support the program. . . . Dont worry about the stock price,
there is nothing out there. There is no stock out there 1. . . . So do what
you have to do, talk to whoever you have to talk to, and we are all
going to be getting out of the stock between 50 and 75 cents or as high
as one dollar.

Session 1473, June 26, 2009, 14:18.

The wire evidence in this case, already disclosed in discovery, and testimony
establish that Sahachaisere in 2009 and 2010 instructed a co-conspirator in Brooklyn to: (1)
deposit the proceeds of fraudulent promotions into foreign brokerage accounts that he controlled;
(2) deposit the proceeds of fraudulent penny stock promotions into the Siam Capital Ventures
accounts, which he admitted to his co-conspirator that he controlled; and (3) transfer undisclosed
compensation from these penny stock promotions, via brokerage firms and banks in Panama into
domestic bank accounts in Sahachaiseres control. These actions are already charged in the
superseding indictment. See, e.g., S-1 Indictment, Count 5 (describing an interstate phone call
from Sahachaisere to Brooklyn, New York); S-1 Indictment 28 (concealing offshore brokerage
accounts); S-1 Indictment 34 (concealing offshore brokerage accounts and kickbacks to
promoters such as Sahachaisere) . The October 19, 2009 phone call included Sahachaiseres
express agreement to distribute 35% of the undisclosed proceeds of a stock sale to promoters via
an undisclosed Panama brokerage firm.
The government will also present a witness who will say that he performed these
October 19, 2009 actions from Brooklyn with the understanding that Sahachaiseres goal, in part,
was to conceal his actions from the SEC. This information, if made available to the SEC, would
have enabled them to halt Sahachaiseres wide-reaching criminal conduct before some of the
events described in the superseding indictment.
On or about July 9, 2010, the SEC filed a civil complaint against Sahachaisere
and Investsource for the fraudulent promotion of several penny stocks. On or about November
15, 2010, based in part upon the June 17, 2009 testimony, Sahachaisere entered into a consent
judgment with the SEC. As noted by Sahachaisere, the complaint and consent order (the
Consent Order) concern penny stocks that were part of the Target Stocks defined in the
1

The phrase out there refers to publicly traded RNER stock not controlled by the coconspirators.

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superseding indictment. See June 12, 2015 Motion at 1, n.1. However, because of the
obstructive lies and behavior by Sahachaisere, the SEC was unable to address the other Target
Stocks fraudulently touted by Sahachaisere.
As stated in the superseding indictment, Sahachaisere and Investsources
fraudulent touting continued long after the Consent Order.
B. Kershner
Gary Kershner graduated from law school in June 1965. Since 1985, Kershner
has been suspended from the practice of law. Yet, in May 2013, as part of this scheme, Kershner
was intercepted talking to a co-conspirator in a consensual recording in which he stated that he
was a lawyer who worked for the Kansas Securities Commission. This entire statement was
false.
In 1989, The Kansas Securities Commissioner filed a criminal complaint against
Kershner consisting of 14 counts alleging violations of the Kansas Securities Act, one count of
making a false writing and one count of perjury. In July 1989, a Kansas jury convicted Kershner
of four felonies, which the Court of Appeals of Kansas affirmed on November 21, 1990. State of
Kansas v. Gary J. Kershner, 15 Kan. App. 2d 17 (1990); see also In the Matter of Gary J.
Kershner, 250 Kan. 383 (1992) (regarding Kershners public censure for committing a felony
while a member of the Kansas bar). Kershner was convicted of two counts of engaging in
business as a broker-dealer without being registered and two counts of selling or offering for sale
unregistered securities. In 1992, Kershner was publicly censured based on these convictions.
Kershner was nominally an executive in many of Winicks pump-and-dump
companies, and Kershner impersonated a retired attorney to create documents to facilitate trading
in at least one of the Target Stocks. As part of the scheme, Kershner made false statements to
regulators and investigators, and also created false and fraudulent documents which were
presented to transfer agents and clearing firms to surreptitiously trade in the Target Stocks.
On or about February 15, 2012, Kershner falsely told investigators in the SECs
Enforcement Division that he was the controlling shareholder of NKRN, one of the Target
Stocks, and had not sold a share. Then, on or about February 16, 2012, over a consensual
recording Kershner directed a co-conspirator to not send the SEC a damn thing that they
requested. Kershner discussed that he was also worried that the SEC was looking at them due to
the promoter groups that they hired. See Session 7829, February 16, 2012, 9:50:24.
On or about February 23, 2012, Kershner said over a consensual recording that he
was getting heat from the SEC. He and his co-conspirator discussed how the SEC and the FBI
were also now scrutinizing TMHO, another Target Stock, because the same promoter group
worked on it. Kershner said that he would not answer any more questions from the SEC and
would explore listing NKRN on another countrys exchange. Kershner said that the SEC ruined
a deal that was perfectly set. Kershner advised, Right now we just got to lay low on [NKRN]
. . . theyre not going away . . . Im just gonna get fairly uncooperative . . . its what it amounts
to . . . Im just gonna say . . . show me your complaints . . . show me your letter of directive.

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Kershner discussed how he falsely told the SEC that there was a newly developed device, when
he really took an existing machine from someone in Kansas City. Kershner said that they have
an engineer who they bribed with stock to back their technology claims because there is no real
technology involved. See Session 8095, February 23, 2012, 21:57:44.
On or about February 28, 2012, Kershner discussed over a consensual recording
creating a cover story to give to the FBI. See Session 8148, February 28, 2012, 17:01:50.
On or about March 1, 2012, Kershner discussed over a consensual recording a
fake promoter firm and phone number that he was creating with Winicks help. Kershner
discussed the need to profit from WGIH, another Target Stock, to fund the defense of NKRN.
See Session 8177, March 1, 2012, 15:57:12.
II.

Sahachaiseres Motion to Exclude Evidence

A.

The SEC Investigation, Complaint and Judgment All Constitute Relevant

Evidence

Sahachaisere argues that no portion of the SECs investigation, complaint, the

consent decree or his false statements should be admitted as evidence at trial. See June 12, 2015
Motion at 1-4. In large part, Sahachaiseres arguments rely on the false proposition that the SEC
investigation is unrelated to the superseding indictment. Indeed, the SEC investigation and the
superseding indictment occupy the same space. As conceded by the defendant, the government
provided notice to Sahachaisere that the superseding indictments Target Stocks include the
stocks charged in the SEC complaint and consent decree. See id. at 1 n.1. In addition, the
superseding indictment expressly charges Sahachaisere with wire fraud for the 2009 distribution
of undisclosed promotion proceeds through undisclosed Panamanian accounts. See, e.g., S-1
Indictment, Count 5 (describing an interstate phone call from Sahachaisere to Brooklyn, New
York); S-1 Indictment 28 (concealing offshore brokerage accounts); S-1 Indictment 34
(concealing offshore brokerage accounts and kickbacks to promoters such as Sahachaisere).
Therefore, the SECs investigation, Sahachaiseres obstruction of the same and the ultimate
resolution of the investigation constitute relevant evidence.
However, even if the SEC investigation and resolution were not embraced by the
superseding indictment, which they are, the evidence would still be admissible under Federal
Rule of Evidence 404(b). Rule 404(b), while barring the use of other crimes, wrongs, or acts to
prove the character of a person to show action in conformity therewith, permits the admission of
such evidence to prove motive, intent, knowledge, and for other purposes. See Fed. R. Evid.
404(b); United States v. Gilbert, 668 F.2d 94, 97 (2d Cir.1981) (SEC civil consent decree
admissible under Rule 404(b) in subsequent criminal trial regarding securities law violations to
show defendant knew of the securities law requirements involved in the decree). It is wellestablished that SEC consent decrees, and their underlying facts, are admissible as Rule 404(b)
evidence in securities fraud criminal trials. See, e.g., Gilbert, 668 F.2d at 97; United States v.
Warren, 2005 WL 1164195, at *4 (W.D. Va. May 17, 2005).

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Sahachaisere endeavors to invoke SEC v. Citigroup Global Markets, 752 F.3d 285
(2d Cir. 2014), for the proposition that Sahachaiseres consent decree does not constitute reliable
evidence. 752 F.3d at 295. This appears to be a non-sequitur. SEC v. Citigroup Global Markets
had no connection with any trial, let alone a criminal securities fraud trial. Rather, the case
concerns solely the discretion a district court possesses to approve or deny the entry of such a
consent decree. As the Second Circuit established in Gilbert, SEC consent decrees provide
viable Rule 404(b) evidence of intent, motive, modus operandi and absence of mistake in
securities fraud trials.
The government also submits that the underlying conduct and the SECs actions
each have their own independent bases for inclusion in this trial. For example, the SEC
examination about foreign brokerage accounts and Sahachaiseres lies constitute intent and
knowledge to conceal. Meanwhile the SEC consent decree proves lack of mistake and
knowledge as to the promotion of the later Target Stocks. Indeed, based upon the pre-trial
litigation, it appears that Sahachaisere is arguing mistake and lack of intent in the instant case
case. See, e.g., June 12, 2015 Affirmation 33. Sahachaiseres own motions underline the
necessity of this evidence.
B.

The Defendant and Any of his Witnesses Who Present Evidence of

Sahachaiseres Character for Truthfulness Will be Questioned About Specific
Instances of his Past Lies

Sahachaisere argues that Rule 608(b) bars any cross-examination about his past
false statements. See June 12, 2015 Motion at 6-7. In support of this argument, Sahachaisere
states that the SEC complaint had nothing to do with the superseding indictment. See id.
Sahachaisere does not address the core issues under Rule 608(b).
Under Rule 608(b), specific instances of a witnesss conduct may be the subject
of cross-examination if such instances are probative of the character for truthfulness or
untruthfulness of [ ] the witness. Fed. R. Evid. 608(b). It is axiomatic that questions regarding
the SEC fraud investigation could have been used under Federal Rule of Evidence 608(b) to
show [a defendant]s general character for untruthfulness. United States v. Parker, --- F.3d ----,
2015 WL 3895452, at *6 (4th Cir. June 25, 2015). The Second Circuit has ruled that past
instances of fraud and perjury are probative of truthfulness under Rule 608(b). United States v.
Flaharty, 295 F.3d 182, 191 (2d Cir. 2002). Therefore, cross examination upon the SEC
investigation, which concerns fraud, and Sahachaiseres lies are clearly permitted. See id.; see
also United States v. Leake, 642 F.2d 715, 718-19 (4th Cir.1981) (fraudulent conduct is an
instance[ ] of misconduct ... clearly probative of truthfulness or untruthfulness and such
evidence is admissible under Rule 608(b)).
Moreover, as outlined above, the SEC investigations should be admitted in the
case in chief as relevant evidence. Therefore, the SEC investigation will not constitute extrinsic
evidence.

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C.

FBI Investigation of RNER

Sahachaisere argues that the government should be precluded from presenting any
evidence of securities fraud relating the stock Rainearth, also known by ticker symbol RNER.
See June 12, 2015 Motion at 4-5. Without citing any authority, Sahachaiseres argument appears
to have two parts: (1) Sahachaisere had no obligation to fact-check the press releases given to his
company and (2) because the government began investigating one year after the promotion, it is
somehow barred from bringing a prosecution. Neither argument is supported by law.
Proceeding in order, the indictment has not charged Sahachaisere with violating a
fiduciary duty to fact-check the press releases upon which he based his promotions. Rather, the
indictment charges Sahachaisere with participated in a conspiracy and scheme to fraudulently
inflate and attempted to inflate, the share prices and trading volumes of the Target Stocks. After
fraudulently inflating the share prices and trading volumes of the Target Stocks, the Penny Stock
Defendants sold the Target Stocks at a profit, and attempted to do so, after their fraudulent
conduct deceived investors into believing that market forces alone set the Target Stocks
artificially inflated share prices and trading volumes. See S-1 Indictment at 25-34. The
Penny Stock Defendants acquired controlling interests in the lightly traded Target Stocks for
little or no cost. The Penny Stock Defendants then employed various means to artificially and
fraudulently inflate the Target Stocks share prices and trading volumes. Examples of these acts
include matched trades and the coordination of promotion with false and misleading press
releases. The Penny Stock Defendants also transferred shares of the Target Stocks into the
possession and control of stock promoters, such as Sahachaisere, who would then comment upon
the Target Stocks. Sahachaisere, in particular, used undisclosed offshore entities to conceal his
own profits as well as undisclosed kickbacks to promoters. All of these were affirmative acts by
Sahachaisere, not fiduciary duties. 2
Next, Sahachaisere argues that the government is somehow barred from bringing
this prosecution because it began its investigation of RNER in 2010, after the promotion. This
argument, which appears to suggest a new requirement of contemporaneous investigation, is
unsupported by any law or other authority.
Finally, in his affirmation, Sahachaisere argues that he is innocent of these
charges, as a matter of law, because he will be able to show that some of the uncharged
Investsource promotions were truthful. See June 12, 2015 Affirmation 33. The analogous
argument would be because a bank robber did not rob all banks that he visited, he is innocent of
the four that he actually robbed. Moreover, it is axiomatic that a defendant cannot put on
evidence of his or her failure to commit crimes on other occasions. See United States v. Scarpa,
897 F.2d 63, 70 (2d Cir. 1990) (defendant may not seek to establish his innocence, however,
2

It is true that Sahachaisere may have owed certain fiduciary duties under the regulatory
scheme for promotion of public companies. See Scott v. Dime Sav. Bank of New York, FSB,
886 F. Supp. 1073, 1079 (S.D.N.Y. 1995). However, the criminal charges in this case center on
Sahachaiseres affirmative fraudulent and misleading acts.

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through proof of the absence of criminal acts on specific occasions). The proposed evidence is
irrelevant as a matter of established Second Circuit law.
III.

Kershners Motion to Exclude Evidence

Like Sahachaisere, any false statements to regulators and investigators, as

described above, should come into evidence as part of the scheme.
In addition, Kershners suspension from the practice of law is direct evidence of
the scheme. As described above, during the conspiracy charged in the superseding indictment,
Kershner pretended to be an attorney who worked for the Kansas Securities Commission when,
in fact, Kershner was suspended from the practice of law and was prosecuted by the Kansas
Securities Commission. This evidence therefore proves a fact relevant to the charges in the
superseding indictment and should be admitted.
As for Kershners 1989 convictions for engaging in business as a broker-dealer
without being registered and selling or offering for sale unregistered securities, the defendant
appears to be laboring under a misconception. The government will not offer the convictions as
other act evidence. Rather, the government will present the testimony of a witness, who will
describe Kershners underlying fraudulent acts. See Fed. R. Evid. 404(b). Kershner
categorically denies that he engaged in the charged conduct. See June 12, 2015 Motion, & 13
(Dkt. No. 175). Evidence of a defendants other acts is admissible under Rule 404(b) if relevant
to an issue at trial other than the defendants character and if its probative value is not
substantially outweighed by the risk of unfair prejudice. United States v. Williams, 205 F.3d 23,
33 (2d Cir. 2000).
Federal Rule of Evidence 404(b) provides that uncharged crimes are admissible
for purposes other than to prove the character of a person in order to show action in conformity
therewith, including as proof of motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident. Courts in the Second Circuit take an inclusionary
approach to Rule 404(b) such that where evidence is relevant and it is not offered to prove
criminal propensity, it is admissible. United States v. Pipola, 83 F.3d 556, 565-566 (2d Cir.
1996); see also, United States v. Levy, 731 F.2d 997, 1002 (2d Cir. 1984) (We have adopted the
inclusionary or positive approach to [404(b)]; as long as the evidence is not offered to prove
propensity, it is admissible.).
The Second Circuit has established a three-prong test for the admission of other
acts evidence under Rule 404(b): (1) a trial court must determine that the evidence is offered for
a purpose other than to prove the defendants bad character or criminal propensity; (2) the trial
court must determine that the evidence is relevant under Rules 401 and 402 of the Federal Rules
of Evidence and that its probative value is not substantially outweighed by the danger of unfair
prejudice; and (3) the court must provide an appropriate limiting instruction to the jury, if one is
requested. See United States v. Pitre, 960 F.2d 1112, 1119 (2d Cir. 1992); United States v.
Mickens, 926 F.2d 1323, 1328 (2d Cir. 1991).
Evidence of Kershners involvement in securities violations prior to the time
charged in the indictment is relevant to establish his intent, knowledge and absence of mistake or

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accident that he had to abide by securities regulations, all of which will be at issue at trial. As
the Second Circuit stated in United States v. Mercado, the prior crimes are probative as they
established ... intent and knowledge. United States v. Mercado, 573 F.3d 138, 142 (2d Cir.
2009).
Further, because Kershner was previously convicted of securities violations in
which he was engaged in the business as a broker-dealer and sold securities, these prior acts
demonstrate that he was not mistaken or uninformed about his later involvement in the charged
crimes that also involved selling securities or the nature of his role that also involved him
working in ways similar to a broker-deal and talking to regulators and investigators. Inevitably,
Kershner will have to claim that he did not know that he was lying to regulators and
investigators, so his prior convictions go to prove his knowledge. United States v. Lombardozzi,
491 F.3d 61, 79 (2d Cir. 2007) (finding no abuse of discretion in allowing testimony
establishing similar acts of extortion to show intent and absence of mistake where testimony
was relevant and highly probative of the defendants relationship with other participants in the
extortionate scheme).
Here, given the highly probative value of the evidence, the evidence should be
admitted. Even were there a danger of undue prejudice, any such risk could be mitigated
effectively by a cautionary instruction limiting the jurys consideration of the evidence to the
purposes for which it is offered. See, e.g., United States v. Mickens, 926 F.2d 1323, 1328-29 (2d
Cir. 1991); United States v. Levy, 731 F.2d 997, 1002 (2d Cir. 1984).
Thus, the government respectfully submits that Kershners securities violations
should be admitted pursuant to Rule 404(b) to show his intent, knowledge and absence of
mistake or accident.
IV.

Kershners Motion for a Bill of Particulars

Kershner requested information concerning (1) the identity of the Talisman

Holdings and Nikron Technologies press releases that contained false and misleading
information and whether there was a spike in trading activity around those dates; (2) the
misstatements made by Kershner relating to false statements about sales contracts for Target
Stocks company products; (3) the identity of proceeds from co-defendants or nominees who
were wired to or paid directly to Kershner; (4) whether Kershner received money from certain
co-conspirators; (5) whether Kershner was connected to WGI Holdings, Inc; (6) the identity of
any wash sales involving Kershner; (7) the victim investors or the dates on which trading
occurred when investors were defrauded and the total dollar loss incurred by victim investors;
and (8) the identity of fraudulent documents or transactions.
When indictments merely generally describe the offenses charged, Federal Rule
of Criminal Procedure 7(f) allows defendants to move for a bill of particulars to lay out the
specific allegations of the offense charged. United States v. Wozniak, 126 F.3d 105, 110 (2d
Cir. 1997). Bills of particular are permitted to enable a defendant to identify with sufficient
particularity the nature of the charge pending against him, thereby enabling a defendant to
prepare for trial, to prevent surprise, and to interpose a plea of double jeopardy should he be

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prosecuted a second time for the same offense. United States v. Bornovsky, 820 F.2d 572, 574
(2d Cir. 1987). The Court has discretion as to whether to grant or deny a bill of particulars.
United States v. Panza, 750 F.2d 1141, 1148 (2d Cir. 1984).
A bill of particulars may be required to identify victims, United States v.
Davidoff, 845 F.2d 1151, 1154-55 (2d Cir. 1994), and fraudulent documents or transactions, see
Bornovsky, 820 F.2d at 574-75. And, an appropriate bill of particulars should not be denied
merely because it would disclose the governments evidence of theory of the case. United States
v. Barnes, 158 F.3d 662, 665 (2d Cir. 1998). Yet, a defendant cannot use a bill of particulars to
get evidentiary detail about the governments case. United States v. Torres, 901 F.2d 205,
234 (2d Cir. 1990) (citing Hemphill v. United States, 392 F.2d 45, 49 (8th Cir.) (affirming denial
of bill of particulars for identity of people and specific dates and locations of events described in
indictment); United States v. Cephas, 937 F.2d 816, 823 (2d Cir. 1991) (government not required
to identify specific activities by which defendant furthered conspiracy). The government
provided additional discovery today, regarding the identity of victims and fraudulent documents
that obviated the need for a bill of particulars. See United States v. Chen, 378 F.3d 151, 163 (2d
Cir. 2004); United States v. Panza, 750 F.2d 1141, 1148 (2d Cir. 1984). Therefore, the
government moves that the defendants request for a bill of particulars be denied, in part, as
moot.
Here, the superseding indictment is not drawn in general terms but contains
specific language in the introduction that readily permits the defendant to prepare for trial,
prevent surprise and to interpose any plea of double jeopardy. The request for additional
information in Kershners bill of particulars goes well beyond the information that the
government is required to provide. For example, Kershner can see from the dates of the press
releases whether there was a spike in trading activity around those dates. Therefore, the rest of
the defendants bill of particulars should be denied as unnecessary to prepare for trial or prevent
surprise.
V.

Severance

Rule 8(b) allows multiple defendants to be named in the same indictment if they
are alleged to have participated in the same act or transaction or in the same series of acts or
transactions, constituting an offense or offenses. Fed. R. Crim. P. 8(b). Multiple defendants
may be charged in one or more counts together or separately; they need not be charged in each
count. Id.; see United States v. Souza, No. 06-806 (SLT), 2008 U.S. Dist. LEXIS 21772, at *19
(E.D.N.Y. Mar. 19, 2008).
In 2008, the Second Circuit confirmed its interpretation of Rule 8(b) that joinder
is proper where two or more persons criminal acts are unified by some substantial identity of
facts or participants, or arise out of a common plan or scheme. United States v. Rittweger, 524
F.3d 171, 177 (2d Cir. 2008) (internal quotation marks and citations omitted). The Court also
applied a common sense rule to decide if joint proceedings would produce enough efficiencies
that would make joinder proper even where there is a possibility of prejudice to either or both
defendants. Id. at 177; see also United States v. Shellef, 507 F.3d 82, 98 (2d Cir. 2007); United
States v. Turoff, 853 F.2d 1037, 1044 (2d Cir. 1998).

10

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When, as here, defendants have been charged together in a single indictment,

there is a strong presumption under Rule 8 in favor of trying them together. See United States v.
Ramos, 346 F. Supp. 2d 567, 569 (S.D.N.Y. 2004) (citing United States v. Rosa, 11 F.3d 315,
341 (2d Cir. 1993)). Indeed, defendants requesting a severance bear a heavy burden. See
United States v. Walker, 142 F.3d 103, 110 (2d Cir. 1998). The presumption is even stronger
when the crime charged involves a common scheme or plan. Ramos, 346 F. Supp. 2d at 569
(citing Turoff, 853 F.2d at 1042-43). The district court in United States v. Gambino specifically
held that co-conspirators should be tried together whenever feasible. 729 F. Supp. 954, 970
(S.D.N.Y. 1990), affd in part, revd in part on other grounds, 920 F.2d 1108 (2d. Cir. 1990),
vacated on other grounds, 503 U.S. 978 (1992).
Here, Winick and Sahachaisere are charged with the same crimes in the same
indictment. The speaking portion of the controlling indictment provides an extensive factual
background for these joint crimes. The factual allegations make it abundantly clear that
Sahachaisere and Winicks Penny Stock crimes arise out of a common scheme. Therefore, under
Rule 8, they are properly joined defendants.
Furthermore, even though Kershner and Sahachaisere did not participate in all of
the Target Stock pump-and-dump schemes that other co-conspirators participated in, Rule 8(b)
makes clear that every defendant need not participate in every transaction as long as they are
unified by some substantial identity of facts or participants, or that the charges arise out of a
common plan or scheme. See Rittweger, 524 F.3d at 178; United States v. Feyrer, 333 F.3d 110,
114 (2d Cir. 2003); United States v. Attansio, 870 F.2d 809, 815 (2d. Cir. 1989).
Even if a defendant is properly indicted with others in a single indictment, a
district court may nonetheless grant severance of a defendants joint trial pursuant to Rule 14 of
the Federal Rules of Criminal Procedure if it appears that a defendant or the government is
prejudiced by joinder. Fed. R. Crim. P. 14(a); Feyrer, 333 F.3d at 114.
Severance based on prejudice under Rule 14 has a very high standard for a
defendant to overcome, and the defendants have not come close to meeting that burden. A
defendant urging severance must shoulder the extremely difficult burden, United States v.
Casamento, 887 F.2d 1141, 1149 (2d Cir. 1989), of showing that he would be so prejudiced by
the joinder that he would be denied a constitutionally fair trial. See Rosa, 11 F.3d at 341; United
States v. Salameh, 152 F.3d 88, 115 (2d Cir. 1998) (per curiam). Indeed, the Second Circuit has
held that a defendant raising a claim of prejudicial spillover bears an extremely heavy burden.
United States v. Nerlinger, 862 F.2d 967, 974 (2d Cir. 1988); see also United States v. Amato, 15
F.3d 230, 237 (2d. Cir. 1994) (Given the balance struck by Rule 8, which authorizes some
prejudice against the defendant, a defendant who seeks separate trials under Rule 14 carries a
heavy burden of showing that joinder will result in substantial prejudice.) (internal quotations
and citations omitted).
It is insufficient for a defendant seeking severance merely to show that he may
suffer some prejudice, or that he may have a better chance for acquittal at a separate trial. See
United States v. Torres, 901 F.2d 205, 230 (2d Cir. 1990); United States v. Scarpa, 913 F.2d 993,
1015 (2d Cir. 1990). Instead, the defendant must show that he may suffer prejudice so

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substantial that a miscarriage of justice will occur. United States v. Friedman, 854 F.2d 535,
563 (2d Cir. 1988); see also United States v. DeVillio, 983 F.2d 1185, 1192 (2d Cir. 1993)
(same); United States v. Lasanta, 978 F.2d 1300, 1306 (2d Cir. 1992) (same).
In evaluating similar claims, courts have determined that the fact that evidence
may be admissible against one defendant, but not another, does not necessarily require a
severance. Rittweger, 524 F.2d at 179 (quoting United States v. Carson, 702 F.2d 351, 367 (2d
Cir. 1983)); see also United States v. Losada, 674 F.2d 167, 171 (2d. Cir. 1982). [D]isparity in
the quantity of evidence and of proof of culpability are inevitable in any multi-defendant trial,
and by themselves do not warrant a severance. United States v. Cardascia, 951 F.2d 474, 482
(2d Cir. 1992). Thus, to the extent that either defendant raises concerns that the jury will hear
evidence at trial that does not pertain directly to him, his concerns do not warrant severance.
Even assuming that one defendant was somehow prejudiced by a joint trial, the
issue under Rule 14 is whether that prejudice is sufficiently severe to outweigh the judicial
economy that would be realized by avoiding lengthy multiple trials. United States v. Lanza,
790 F.2d 1015, 1019 (2d Cir. 1984) (citing United States v. Panza, 750 F.2d 1141, 1149 (2d Cir.
1984)). There is a strong preference in the federal courts for joint trials for defendants who are
indicted together for reasons of economy, convenience and avoidance of delay. Feyrer, 333 F.3d
at 114; see also Zafiro, 506 U.S. at 537; United States v. Diaz, 176 F. 3d 52, 102 (2d Cir. 1999).
The strong institutional considerations underlying this settled principle were explained by the
Supreme Court as follows:
It would impair both the efficiency and the fairness of the criminal
justice system to require . . . that prosecutors bring separate
proceedings, presenting the same evidence again and again,
requiring victims and witnesses to repeat the inconvenience (and
sometimes trauma) of testifying, and randomly favoring the lasttried defendants who have the advantage of knowing the
prosecutions case beforehand. Joint trials generally serve the
interests of justice by avoiding inconsistent verdicts and enabling
more accurate assessment of relative culpability advantages
which sometimes operate to the defendants benefit. Even apart
from these tactical considerations, joint trials generally serve the
interests of justice by avoiding the scandal and inequity of
inconsistent verdicts.
Richardson v. Marsh, 481 U.S. 200, 209-10 (1987); see also Bruton v. United States, 391 U.S.
123, 134 (1968) (noting that joint trials conserve state funds, diminish inconvenience to
witnesses and public authorities, and avoid delays in bringing those accused of a crime to trial);
United States v. Lyles, 593 F.2d 182, 191 (2d Cir. 1979) (presumption in favor of joint trials
conserves judicial resources, alleviates the burden on citizens serving as jurors, and avoids the
necessity of having witnesses reiterate testimony in a series of trials) (quoting United States v.
Borelli, 435 F.2d 500, 502 (2d Cir. 1970)). Thus, while joint trials may invite some prejudice to
defendants, [t]he risks of prejudice attendant in a joint trial are presumptively outweighed by

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the conservation of time, money and scarce judicial resources that joint trial permits. United
States v. Jimenez, 824 F. Supp. 351, 366 (S.D.N.Y. 1993).
In the event that there were separate trials for the defendants, the government
would have to call many of the same witnesses twice to give virtually the same testimony. For
example, the government will need to call some of the same cooperating witnesses, the same
agents, the same experts, and the same victims. See Richardson, 481 U.S. at 210 (stating that the
need for witnesses to testify multiple times favors trying joined co-defendants together).
Under these circumstances, severance would be extremely burdensome and would
needlessly disadvantage the public, the Court, and the government with complex and repetitive
trials. Thus, any potential prejudice that would be suffered by the defendants as a result of a
joint trial is far outweighed by the prejudice that would be suffered by the government if the trial
of one defendant were severed from that of his co-defendants.
Even in situations where the risk of prejudice associated with joinder is somewhat
higher, courts should consider less drastic means, such as limiting instructions, as an
alternative to granting a Rule 14 severance motion. Feyrer, 333 F.3d at 114 (quoting Zafiro, 506
U.S. at 539); see also United States v. Romero, 54 F.3d 56, 60 (2d Cir. 1995); United States v.
Hernandez, 85 F.3d 1023, 1029-30 (2d Cir. 1996). Indeed, juries are strongly presumed to be
capable of following a judges instructions in sorting out which evidence bears on the guilt of
any single defendant. Zafiro, 506 U.S. at 540 ([J]uries are presumed to follow their
instructions.) (quoting Richardson, 481 U.S. at 211)).
As a final point regarding joinder with Winick, the government notes that Winick
is the only remaining Advance Fee Defendant who has not yet pleaded guilty. If the Court were
to wait until 30 days prior to the trial, the government submits that this severance motion will
likely become moot.
VI.

Conclusion
For the foregoing reasons, all of the defendants motions should be denied.
Respectfully submitted,
KELLY T. CURRIE
Acting United States Attorney
By:

cc:

Joel Stein, Esq.

Lawrence Dubin, Esq.

13

/s/
Sylvia Shweder
Christopher A. Ott
Assistant U.S. Attorneys
(718) 254-6092/6154