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United States v. Kesner

United States District Court, D. Massachusetts

March 21, 2017

UNITED STATES OF AMERICA,
v.
MARK KESNER, Defendant.

          ORDER

          INDIRA TALWANI UNITED STATES DISTRICT JUDGE.

         Pending before the court is a Motion by Defendant Mark Kesner to Dismiss Indictment Based on Vindictive Prosecution or, in the Alternative, for Discovery and Evidentiary Hearing [#33], the Magistrate Judge's Report and Recommendation [#112] recommending that the motion be denied, Kesner's Objection to the Report and Recommendation [#113], and a Motion by Defendant Mark Kesner to Strike Material in Support of Government's Response to Objection to Report and Recommendation [#121]. After de novo review, the court ALLOWS Kesner's motion to strike and strikes the Declaration of Cynthia A. Young [#119-1], ACCEPTS and ADOPTS the Report and Recommendation with further discussion set forth below, and DENIES Kesner's motion to dismiss.

         I. Motion to Strike

         The Declaration of Cynthia A. Young [#119-1], filed by the government in support of its response to Kesner's Objection, was not before the Magistrate Judge. Rule 3(c) of the Rules for United States Magistrate Judges in the United States District Court for the District of Massachusetts allows a district judge making a de novo determination of those portions of a magistrate judge's recommended disposition to which specific written objection has been made to consider “additional evidence.” But the Rule also explicitly provides that the district judge “may consider the record developed before the magistrate judge, making a determination on the basis of that record.” The court declines to consider evidence the government did not provide to the Magistrate Judge.

         II. Kesner's Disagreement with, and Additions to, the Magistrate Judge's Statement of Facts

         The relevant background is set forth in the Report and Recommendation and is adopted. The court adds the following discussion in response to Kesner's objections:

         A. The Investigation Prior to the Involvement of the United States Attorney's Office

         For purposes of the motion to dismiss, the Magistrate Judge reported that the IRS began an investigation in May 2012 and that Kesner's counsel was repeatedly advised that the investigation centered on Daniel Gibson's alleged criminal conduct, that Kesner was viewed only as a witness, and that the agent's practice was to provide an advice of rights to any individual suspected of having engaged in criminal activity. Kesner devotes several pages to these matters but does not disagree with, or add alternatives to, these findings.

         1. The Claimed Reaffirmation of Kesner's Status as a Witness in Spring 2015

         Kesner asserts that the actions and statements of the Assistant United States Attorney after the IRS presented the case to the U.S. Attorney's Office constituted a “reaffirm[ation]” of Kesner's status as a witness. The inferences that Kesner asks the court to draw to reach this conclusion are discussed below. As to the underlying facts, however, Kesner points to little disagreement with the Magistrate Judge's report but does include a few additional facts.

         Kesner asserts first that the March 2015 grand jury subpoena that required his appearance “was not accompanied by a target letter or any other warning that one would expect if Mr. Kesner were a target.” The subpoena served on Kesner does not identify any individual as the target of the investigation, though it does identify documents sought as those relating to Daniel Gibson's loans and Gibson and Behmann, P.C.'s tax returns. And while there was no target letter with the subpoena, there was an advice of rights, as the Magistrate Judge reported, that stated that the grand jury was conducting a criminal investigation into possible violations of criminal law in violation of 26 U.S.C. § 7206. The advice of rights specifically noted that anything said “may be used against you by the grand jury or in a subsequent legal proceeding.” Section 7206(2) includes willfully advising the preparation of false tax returns.

         Kesner asserts that the Assistant United States Attorney stated shortly thereafter that he did not see any conflict with Kesner's counsel jointly representing Kesner and two others. The Magistrate Judge accepted Kesner's counsel's representation concerning this conversation for purposes of this motion, as does this court.

         As the Magistrate Judge reported, when counsel stated in that same conversation that both Kesner and Jowder would invoke their Fifth Amendment rights against self-incrimination, the Assistant United States Attorney stated he saw no basis for Jowder to invoke the Fifth Amendment given his understanding of the facts. The court notes that the Assistant United States Attorney did not make a similar statement as to Kesner.

         Kesner's attorney's response included the following: “Your last [e-mail], while perhaps sent in a hasty manner, appears inconsistent with what I have been led to understand. The language in the email appears close to target language, but I assume deliberately used the phrase ‘open question' so as not to go quite that far.” The record includes no suggestion that the government responded one way or the other to counsel's e-mail or that the government ...


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