Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 1 of 9 THE HONORABLE ROBERT B. LEIGHTON 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT TACOMA 6 7 8 UNITED STATES OF AMERICA, Plaintiff, 9 10 11 12 Case No. 3:15-cr-05198-RBL vs. DEFENDANT’S MOTION TO CONTINUE TRIAL DATE AND FOR ENTRY OF CASE SCHEDULING ORDER TROY X. KELLEY, Defendant. NOTE FOR: Friday, September 18, 2015 13 14 15 16 17 18 19 20 21 22 23 24 25 I. INTRODUCTION Defendant Troy X. Kelley respectfully requests a short continuance of the trial date from January 16, 2016 to March 14, 2016. This continuance is necessitated by new events that result in the need for additional time for pretrial and trial preparation. Those events include: (1) the government’s filing, last week, of a Superseding Indictment alleging multiple new offenses; (2) the government’s seizure of nearly $1 million held in a trust account by Mr. Kelley’s former counsel, which will necessitate that the Court conduct a prompt evidentiary hearing; and (3) Mr. Kelley’s recent hiring of new trial counsel. Given the factual and legal complexity of this case, Mr. Kelley also requests that, at the same time it continues the trial, the Court enter a case scheduling order addressing the timing of the production of government and defense discovery, pretrial motions deadlines, briefing DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 1 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 2 of 9 1 schedules, exhibit lists, motions in limine, and other critical dates. Case scheduling orders of 2 this nature allow courts to more effectively manage pretrial and trial proceedings in complex 3 cases, provide certainty to the parties in terms of deadlines for discovery (such as discovery of 4 Rule 404(b) evidence and expert discovery), and avoid surprise and unfairness. It is for these 5 reasons that federal district courts routinely enter case scheduling orders (and usually with the 6 government’s consent) in cases of the same or similar complexity to the present matter. A case 7 schedule is particularly important in this case to allow counsel to prepare for a trial that, even 8 assuming the continuance requested in this motion is granted, is just six months away. 9 10 II. BACKGROUND On April 15, 2015, Troy X. Kelley was charged by indictment with ten counts, 11 including: one count of possession and concealment of stolen property, in violation of 18 12 U.S.C. § 2315; four counts of making a false declaration, in violation of 18 U.S.C. § 1623(a); 13 one count of attempted obstruction of a civil lawsuit, in violation of 18 U.S.C. § 1512(c)(2); 14 one count of corrupt interference with internal revenue laws, in violation of 26 U.S.C. 15 § 7212(a); two counts of filing false income tax returns for tax year 2008, in violation of 26 16 U.S.C. § 7206(1); and one count of making a false statement, in violation of 18 U.S.C. § 1001. 17 Dkt. No. 1. The indictment alleges offenses that stem from a commercial relationship between 18 Mr. Kelley’s company and certain title companies, and Mr. Kelley’s use of the proceeds from 19 that relationship, all of which lasted more than a decade. 20 On May 11, on the parties’ joint motion, the Court set a trial date for January 19, 2016. 21 Dkt. No. 16. The deadline for pretrial motions was set to October 2, 2015. Dkt. No. 19. No 22 other case deadlines have been set in the case to date. 23 On August 24, 2015, Mr. Kelley retained new trial counsel. While this change in 24 counsel was voluntary, it was not done for the purpose for delay, and this is the first (and only) 25 change in counsel anticipated by Mr. Kelley. DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 2 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 3 of 9 On September 3, 2015, the government returned a 47-page Superseding Indictment 1 2 adding five new money laundering counts relating to financial transactions occurring between 3 2011 and 2015. Dkt. No. 38. These money laundering counts allege new predicate crimes of 4 mail and wire fraud (which had not been previously alleged in the original indictment). The 5 Superseding Indictment also added three new false tax return counts relating to the tax years 6 2011 through 2013. 1 On September 8, 2015, the government obtained an order seizing nearly $1 million 7 8 from a trust account held by Mr. Kelley’s former counsel. Case No. 2:15-mc-00129, Dkt. No. 9 3. As discussed below, this seizure will require that the Court conduct an evidentiary hearing 10 on the propriety of the government’s taking of this property. Moreover, the forfeiture 11 allegation will require substantial additional preparation on any forfeiture trial that may follow 12 the trial on the merits. Discovery has so far proven voluminous, and includes documents and other materials 13 14 pulled from multiple sources. The discovery includes: 15 • Civil deposition transcripts of Mr. Kelley from previous litigation. These transcripts are lengthy and include a videotaped deposition Mr. Kelley gave in litigation with one of the title companies referenced in the superseding indictment, Old Republic Title Company. • Deposition transcripts of more than 12 additional witnesses from related civil litigation. • Over 8,100 pages of witness statements, interviews and grand jury testimony, for more than 45 witnesses. • Close to 10,000 of pages of document discovery from related litigation matters, as well as voluminous pleadings and discovery. • Over 50,000 pages of records produced pursuant to grand jury subpoenas. 16 17 18 19 20 21 22 23 24 25 1 The government did not include in the Superseding Indictment what had been Count Six (attempted obstruction of a civil lawsuit, in violation of 18 U.S.C. § 1512(c)(2)). According to a press release issued by the United States Attorney’s Office upon the return of the new indictment, this charge was determined not to be supported by the law. DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 3 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 4 of 9 1 2 • Two IRS Special Agent Reports with exhibits, together totaling 11,486 pages. Declaration of Angelo J. Calfo (“Calfo Dec.”), ¶ 12. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 III. DISCUSSION A. A Continuance Is Necessary to Give Defense Counsel Reasonable Time to Review the Voluminous Evidence, Research and Brief Relevant Case Law, and Prepare for Pretrial Motions and Trial. The current trial date is only four months away. Mr. Kelley submits that with the events that have recently occurred, including the return of the Superseding Indictment and the forfeiture of assets, the approximately 120 days remaining before the current trial date is insufficient time to prepare for trial. On the other hand, Mr. Kelley does not want this prosecution to drag on unnecessarily. He is confident in his ability to be successful at trial, but needs some additional time to adequately prepare. That is why he asks the Court for an additional two months to prepare for trial. He requests a trial date of March 14, 2015. Of course, whether to grant a continuance is committed to this Court’s discretion. United States v. Flynt, 756 F.2d 1352, 1358-62 (9th Cir. 1985). The Speedy Trial Act, 18 U.S.C. §§ 3161-3167, permits the Court to continue a trial if “the ends of justice served by taking such action outweigh the best interest of the public and defendant in a speedy trial.” 18 U.S.C. § 3161(h)(7)(A). In making this determination, the Court is permitted to consider both whether the failure to grant such a continuance would deny counsel “the reasonable time necessary for effective preparation, taking into account the exercise of due diligence.” 18 U.S.C. § 3161(h)(7)(B)(iv). The Ninth Circuit has identified five factors to guide courts in determining whether a continuance is appropriate: “1) whether the continuance would inconvenience the witnesses, the court, counsel, or the parties; 2) whether other continuances have been granted; 3) whether legitimate reasons exist for the delay; 4) whether the delay is the defendant's fault; and 5) whether a denial would prejudice the defendant.” United States v. DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 4 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 5 of 9 1 Fowlie, 24 F.3d 1059, 1069 (9th Cir. 1994). Applying these factors, Mr. Kelley respectfully 2 submits that the short continuance he seeks on this motion should be granted. 3 1. 4 The requested continuance would not unsettle the expectations of any witnesses, the 5 6 Inconvenience to witnesses, the Court, counsel, or the parties parties, or their counsel. Mr. Kelley recognizes that his request for continuance may be disruptive to the Court’s calendar, but given what is at stake here—the opportunity for his new 7 trial counsel to have sufficient time to prepare for the new charges and the evidentiary hearing 8 on forfeiture—this disruption is outweighed by the clear need for a continuance. 9 10 11 2. Whether other continuances have been granted This court has granted one previous continuance in this case. Dkt. No. 16. That 12 continuance was granted prior to Mr. Kelley’s change of counsel, prior to the government’s 13 filing of a Superseding Indictment charging several new offenses, and prior to the 14 government’s seizure of funds. 15 3. 16 Legitimate reasons exist for granting a further continuance in this case. In light of the 17 complex legal and factual issues raised by the Superseding Indictment, a continuance will be 18 needed to review the materials, investigate and research pretrial motions, and prepare for trial. 19 The factual allegations in the government’s 47-page Superseding Indictment span a period of 20 more than ten years. The indictment alleges conduct over a five-year period relating to the 21 commercial relationship between Mr. Kelley’s company and title companies with which he did 22 business. Dkt. No. 38, pp. 3-4. The handling of the profits Mr. Kelley received from this 23 business relationship between 2008 and at least 2014 are the subject of additional allegations. 24 Id., pp. 4-6. These allegations raise several novel and substantial legal questions, going to the Whether legitimate reasons exist for the delay 25 DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 5 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 6 of 9 1 nature of fraud, the dividing line between civil and criminal law, and complex statute of 2 limitations issues. 3 The factual complexity of this case is demonstrated by the voluminous discovery thus 4 far produced by the government. Additionally, the alleged practices engaged in by Mr. Kelley 5 and others in the reconveyance-tracking industry spawned a raft of class-action lawsuits 6 brought by borrowers. These lawsuits generated substantial discovery, pleadings, and judicial 7 decisions, which are directly relevant to Mr. Kelley’s case. Indeed, one title company, Old 8 Republic Title, filed suit against Mr. Kelley for actions substantially similar to that alleged by 9 the government here. That lawsuit generated hundreds of pages of transcripts from twelve 10 depositions and thousands of pages of documents potentially relevant to Mr. Kelley’s case. 11 Calfo Dec., ¶ 12. 12 Last week, the government added to this already-substantial complexity by returning a 13 Superseding Indictment adding five new money laundering counts, which alleges predicate 14 acts that had not previously been alleged. The Superseding Indictment also adds three new 15 false tax return counts. In short, given the complex legal and factual issues raised by the 16 government’s Superseding Indictment, under the current schedule Mr. Kelley’s counsel is left 17 with insufficient time for preparation for pretrial proceedings and the trial itself. Continuance 18 is therefore proper under 18 U.S.C. § 3161(h)(7)(B)(ii) and (iv). 19 Additionally, the government’s recent seizure of Mr. Kelley’s assets will generate 20 substantial additional work above and beyond that anticipated by the Superseding Indictment. 21 The seizure will require that the Court conduct a hearing on the propriety of the government’s 22 seizure. United States v. Crozier, 777 F.2d 1376, 1383 (9th Cir. 1985) (“Because [defendants] 23 had significant property interests in the real and personal property seized by the government, 24 due process requires that they be afforded the opportunity to be heard ‘at a meaningful time 25 and in a meaningful manner.’”). (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)); DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 6 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 7 of 9 1 United States v. Roth, 912 F.2d 1131, 1132 (9th Cir. 1990). The hearing will require additional 2 work and preparation time and further demonstrates the need for a continuance. 3 The need for a continuance is compounded by the fact that undersigned counsel was 4 retained only two weeks ago. While this change in counsel was voluntary, it was not done for 5 the purpose for delay, and this is the first (and only) change in counsel anticipated by Mr. 6 Kelley. As outlined in the attached declaration, Mr. Kelley’s new counsel has trials currently 7 scheduled for May and July 2016, in addition to ongoing work on other large cases. Calfo 8 Dec., ¶ 14. In light of this trial schedule, Mr. Kelley asks the Court to allow new counsel two 9 additional months to prepare for trial in this case by continuing the trial to March 2016. If the 10 Court grants this motion, Mr. Kelley’s trial counsel’s remaining two trials set for 2016 can go 11 forward after Mr. Kelley’s case is concluded. 12 4. 13 The need for a continuance in this matter arises primarily from the legal and factual Whether the delay is the defendant's fault 14 complexity of the government’s case, the government’s decision to return a Superseding 15 Indictment just last week, and the government’s action in obtaining an order seizing assets. 16 These factors are all beyond Mr. Kelley’s control. Although Mr. Kelley did choose to retain 17 new counsel, his decision to do so was not for the purpose of delay, and Mr. Kelley does not 18 anticipate changing counsel again. 19 5. 20 Without adequate time to review the evidence, research and brief the relevant case law, 21 22 Whether a denial would prejudice the defendant and prepare a defense, Mr. Kelley will be severely hampered in his ability to defend himself against the government’s charges. Denying Defendant’s motion for a continuance will thus 23 cause him substantial prejudice. 24 25 DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 7 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 8 of 9 1 B. A Scheduling Order Is Appropriate in this Case. In light of the complexity of this case, Mr. Kelley also requests that the Court enter a 2 case scheduling order addressing the timing of the production of government and defense 3 discovery, pretrial motions deadlines, exhibit lists, motions in limine and other critical dates. 4 As this Court is aware, it has broad discretion to manage complex criminal cases by providing 5 deadlines for evidentiary and other matters. See United States v. W.R. Grace, 526 F.3d 499, 6 513 (9th Cir. 2008) (holding that the district court did not abuse its discretion in requiring the 7 government to disclose its final witness list one year before trial). Indeed, the government has 8 routinely agreed to case schedules of this type in cases of involving any level of complexity. 9 Examples of schedules entered in other cases are attached as exhibits to the Declaration of 10 Angelo J. Calfo, filed herewith. Calfo Dec., ¶¶ 4, 6. 11 IV. CONCLUSION 12 For the foregoing reasons, Defendant respectfully requests that his trial be continued 13 until March 14, 2016, and that the scheduling order proposed be entered. 14 DATED this 9th day of September, 2015. 15 16 17 CALFO HARRIGAN LEYH & EAKES LLP By 18 19 20 s/Angelo J. Calfo Angelo J. Calfo, WSBA #27079 999 Third Avenue, Suite 4400 Seattle, WA 98104 Telephone: (206) 623-1700 Email: angeloc@calfoharrigan.com 21 22 23 24 25 DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 8 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717 Case 3:15-cr-05198-RBL Document 47 Filed 09/09/15 Page 9 of 9 CERTIFICATE OF SERVICE 1 2 I hereby certify that on September 9, 2015, I electronically filed the foregoing with the 3 Clerk of the Court using the CM/ECF system which will send notification of such filing to the 4 following: 5 Andrew C. Friedman andrew.friedman@usdoj.gov 6 Arlen R. Storm arlen.storm@usdoj.gov 7 Katheryn Kim Frierson katheryn.k.frierson@usdoj.gov 8 Richard E. Cohen richard.e.cohen@usdoj.gov 9 10 s/Susie Clifford 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DEFENDANT’S MOTION TO CONTINUE TRIAL DATE - 9 LAW OFFICES CALFO HARRIGAN LEYH & EAKES LLP 999 THIRD AVENUE, SUITE 4400 SEATTLE, WASHINGTON 98104 TEL, (206) 623-1700 FAX, (206) 623-8717