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U.S. Department of Justice

United States Attorney Eastern District of New York

MKM:MKP/TH/MJL/KMT

271 Cadman Plaza East

F. #2017R01840

Brooklyn, New York 11201

April 10, 2019 By Hand and ECF The Honorable Nicholas G. Garaufis United States District Judge United States District Court 225 Cadman Plaza East Brooklyn, New York 11201 Re: United States v. Kathy Russell, et al. Criminal Docket No. 18-204 (S-2) (NGG) Dear Judge Garaufis: The government respectfully submits this letter (1) in connection with the

Court’s preliminary

ruling regarding Kath

y Russell’s motion to dismiss, which the Court

set forth during the status conference on April 8, 2019; and (2) in response to

Russell’s April 9,

2019 supplementary submission. (Dkt. No. 517). As set forth below, the government respectfully

submits that (1) Russell was neither a “target” nor a “subject” at the time of her May 10, 2018 grand jury testimony; and (2) regardless of Russell’s status, there is no basis

upon which the indictment may be dismissed as to her. In addition, the government respectfully requests that,

if the Court intends to make a finding that Russell was a “target” or “subject”

at the time of her May 10, 2018 grand jury testimony, the government be permitted to supplement the factual record on this issue.

1

1

As the government understood the Court’s

preliminary ruling, the Court

assumed without deciding that Russell was a “target” at the time of her grand jury testimony.

(See, e.g.

, Apr. 8, 2019 Transcript at 7 (“If that’s true, that would make the government’s

statement at the beginning of Ms. Russe

ll’s grand jury testimony that she was not a target misleading, at the very least.” (emphasis added)). The Court then found that Russell’s Fifth

Amendment rights were not violated and, even if they were, the Court held that dismissal of the indictment is

not warranted. If the government understood the Court’s preliminary ruling

correctly, the government does not object to it.

Case 1:18-cr-00204-NGG-VMS Document 521 Filed 04/10/19 Page 1 of 9 PageID #: 5538

2 I.

Russell Was not a Target or a Subject at the Time of Her May 10, 2018 Testimony As an initial matter, the government respectfully submits that the definition of

“target” set forth in Department of Justice’s

Justice

Manual (“

Justice Manual

”) § 9

-11.151, must be understood in the context of other applicable DOJ guidance. The

Justice Manual’s definition of “target” is based on the “judgment of the

prosecutor

”

that the individual is a

“putative defendant.”

Justice Manual § 9-11.151. As Russell notes in her motion to dismiss the first superseding indictment

, the Third Circuit has construed this as “an

objective standard

,” i.e., that the defendant “

could be indicted

.”

United States v. Crocker, 568 F.2d 1049, 1054 (3d Cir. 1977) (cited in Dkt. No. 270, Russell Br. at 8). But the assessment of

whether a defendant “could be indicted”

does not simply mean that an indictment is

“

conceivable

”

or “possible,” because that would make the phrase “putative defendant”

meaningless. See United States v. Drake, 310 F. Supp. 3d 607, 620 n.10 (M.D.N.C. 2018)

(defining “putative”). Indeed, the

Justice Manual

also instructs that “[t]

he attorney for the government should commence or recommend federal prosecution if he/she believes that the

person’

s conduct constitutes a federal offense, and that the admissible evidence will probably be sufficient to obtain and sustain a conviction

.”

Justice Manual § 9-

27.220 (“Grounds for Commencing or Declining Prosecution”)

(emphasis added). Read together, these provisions of the Justice Manual make clear that a prosecutor exercising her judgment in accordance with DOJ policy should not consider an individual a target merely because there is some information connecting that person to the commission of a crime. Nor do the cases suggest that it was clear that Russell was even a subject at the time of her testimony.

2

Although there are relatively few cases construing this term, the First

Circuit’s analysis in

United States v. Babb, is instructive. See 807 F.2d 272, 274-76 (1st Cir. 1986). In Babb, the First Circuit explained that, by the time the defendant appeared to testify

before the grand jury, “th

e grand jury had questioned a large number of witnesses

,” and those witnesses “

had named [the defendant] spontaneously or had responded to the

prosecutor’

s direct questions about

the [defendant].”

Id. at 274. One witnesses testified, for example, that

the defendant had been “

introduced to her as a friend [of a coconspirator] who sold cocaine or heroin in capsule

s.”

Id. at 274 n.1. One of the

defendant’s coconspirators testified that the defendant was “his associate in the sale of drugs.”

Id. On this record, the First Circuit

appeared inclined to conclude that the defendant was a “subject,” rather than “target,” but it

assumed the latter in l

ight of the government’s concession that the defendant was a “target.”

Id. at 276 n.4. Although the defendant

–

who was incarcerated at the time of his testimony

–

appeared without counsel and was subsequently convicted of narcotics crimes and perjury, the First Circuit rejected his argument that his testimony should have been suppressed in

light of the government’s failure to inform him of his status as a subject or target.

Id. at 279.

2

The

Justice Manual provides that a “‘subject’

of an investigation is a person whose conduct is within the scope of the grand

jury’

s investigation

.” Justice Manual § 9.11

-151.


3

The district court’s analysis in

United States v. Peterson, also provides useful guidance. See 544 F. Supp. 2d 1363 (M.D. Ga. 2008). In Peterson, the government served the defendant with a grand jury subpoena in connection with an investigation concerning obstruction of justice. At the time the government served the subpoena, it was in possession of a tape recorded conversation between the defendant and a coconspirator, during which the

coconspirator thanked the defendant for “disclosing to him the identity of the confidential informant.”

Id. at 1368. In light of this direct and presumably admissible evidence of the crime under investigation, th

e government informed the defendant that he was a “subject.”

Id. at 1367. The court agreed and

found that there was no “e

vidence in this case that would lead this Court to conclude that the Government misled Defendant about his status.

”

Id. Finally, th

e district court’s analysis in

United States v. Three Juveniles is consistent with these decisions. See 886 F. Supp. 934 (D. Mass. 1995) In Three Juveniles, the government was investigating a group involved in racist and anti-Semitic crimes. Id. at 936. The court explained that, on the date FBI agents went to the house of one of the juvenile members of the group to conduct a first interview, they had been informed by the leader of the gang that the juvenile had participated in the defacement of a Jewish temple. Id. at 40. In light of this evidence, the district court concluded that, at the time of the FBI

interview, the juvenile was “

a suspect in the investigation, but not yet a target.

”

Id. at 940. II.

Facts Concerning Russell’s

Status Prior to Her Grand Jury Testimony The government respectfully submits that Russell was plainly not a target and was likely not a subject at the time of her May 10, 2018 grand jury testimony. If the government is permitted to supplement the factual record on this point, it would establish the following, among other things: In the first superseding indictment

(“S

-

1”)

, which was returned on July 24, 2018, Russell was charged in Count One with racketeering conspiracy. She was named in two predicate acts: (1) conspiracy to commit identity theft and to unlawfully possess an identification document in connection with her role in a conspiracy to illegally transport a woman across the Canadian border

(the “Border Crossing

Act

”

(Racketeering Act One)), and (2) conspiracy to commit identity theft and identity theft in connection with her involvement in the installation of a

“

keylogger

”

on a computer belonging to an accountant for Nxivm, so that his email address and password could be obtained and his emails monitored

(the “Keylo

gging Act

”

(Racketeering Act Two)). At the time of

Russell’s

grand jury testimony on May 10, 2018, the government was aware of

Russell’s involvement in the

Border Crossing Act, but the incident, which occurred in 2004 (S-1 ¶ 17), was not chargeable as a stand-alone offense because the statute of limitations had expired. Nor at that time did the government have evidence of Russell

’s participation in the crime of

racketeering conspiracy, because the government did not yet have evidence of her involvement in a second predicate act. The

government first learned of Russell’s

involvement in the Keylogging Act on June 24, 2018

–

approximately two months after she was served with a grand jury subpoena and six weeks after her grand jury testimony on May 10, 2018.
