United States District Court, D. Massachusetts
MEMORANDUM & ORDER
Talwani United States District Judge
September 10, 2015, a federal grand jury returned a six-count
Indictment charging Defendant Edward W. Withrow III with one
count of Conspiracy to Commit Securities Fraud and Wire Fraud
in violation of 18 U.S.C. § 1349 (Count 1), one count of
Securities Fraud in violation of 18 U.S.C. § 1348 (Count
2), two counts of Wire Fraud in violation of 18 U.S.C. §
1343 (Counts 3-4), and two counts of False Statements in
violation of 18 U.S.C. § 1001 (Counts 5-6). Indictment
[#3]. Pending before this court is Defendant's Motion
to Sever Count 6 [#104]. For the reasons that follow,
Defendant's motion is ALLOWED.
1 through 4 of the Indictment allege that Defendant, along
with a co-defendant and another co-conspirator conspired,
between July 2012 and March 2013, to conceal control over
unrestricted stock in Endeavor Power Corporation
(“Endeavor”), and to profit therefrom.
Specifically, the Indictment charges that after a November
2012 reverse merger of Parallax Diagnostics into Endeavor,
Defendant engaged in a conspiracy to manipulate the trading
of shares of Endeavor. Count 5 concerns Defendant's
allegedly false statement during his SEC testimony regarding
the extent of his ownership of Endeavor's shares.
alleges that Defendant made another false statement during
his SEC testimony, this time regarding the extent of his
ownership in another company, Amazonas Florestal Ltd.
(“Amazonas”). The government asserts, but does
not charge in the Indictment, that Defendant was concealing
the extent of his control over Amazonas by using his brother
to hold, and then sell, Amazonas stock on Defendant's
has moved for separate trials under Fed. R. Crim. P. 8(a) and
14, arguing that Count 6 should never have been joined to
Counts 1 through 5, and should now be severed from the
upcoming trial on Counts 1 through 5. Defendant first argues
that joinder is improper under Fed. R. Crim. P. 8(a), because
the conduct relevant to Count 6 “concerns a separate
and distinct subject matter.” Further, even if joinder
is proper, Count 6 must still be severed pursuant to Fed. R.
Crim. P. 14, as its inclusion would “unfairly
prejudice” Defendant. The government disagrees, arguing
that joinder is indeed proper, as Count 6 is of the same or
similar character as Counts 1 through 5, and in any event,
the prejudice resulting from its inclusion is dwarfed by its
to Fed. R. Crim. P. 8(a), joinder of offenses in an
indictment is allowed “if the offenses charged . . .
are of the same or similar character, or are based on the
same act or transaction, or are connected with or constitute
parts of a common scheme or plan.” To consider whether
joinder of offenses is proper, courts generally look to
several factors: (1) “whether the charges are laid
under the same statute, ” (2) whether the conduct
“involves similar victims, locations, or modes of
operation, ” and (3) “the time frame in which the
charged conduct occurred.” United States v.
Taylor, 54 F.3d 967, 973 (1st Cir. 1995) (citing
United States v. Chambers, 965 F.2d 1250-51 (1st
Cir. 1992); United States v. Gray, 958 F.2d 9, 14
(1st Cir. 1992)).
arguing against joinder, Defendant contends that the charged
conduct in Counts 1 through 5 involved an alleged “pump
and dump” scheme to manipulate the market with respect
to prices for Endeavor stock, while Count 6-making a
materially false statement during the SEC examination
regarding ownership of Amazonas shares-does not involve
similar victims, locations, modes of operation, or time
frame. The government disagrees, framing the conduct with
respect to both Endeavor and Amazonas as Defendant's
alleged concealment of control of unrestricted shares of
stock, and subsequent false statements to cover up that
argument would hold some persuasive force in the absence of
Count 5. Despite the similarity of concealment of control of
unrestricted shares of Endeavor stock as charged in Counts 1
through 4 and the concealment of ownership of the Amazonas
shares during the SEC interview as alleged by the government,
but not charged in Count 6, the purported schemes have little
Defendant is also charged with Count 5, and the court finds
that Count 6 is properly joined with Count 5, as both are
charges under the same statute (False Statements in violation
of 18 U.S.C. § 1001), involving the same victim (the
government), location (SEC office), modes of operation
(statements made to the SEC), and time frame in which the
charged conduct occurred (the same interview in August 2013).
Count 5, in turn, involves alleged false statements relating
to the Endeavor stock and is properly joined with Counts 1
through 4, as Defendant concedes.
8(a) “is generously construed in favor of joinder, in
part because Fed. R. Crim. P. 14 provides a separate layer of
protection” for a defendant. See United States v.
Randazzo, 80 F.3d 623, 627 (1st Cir. 1996) (internal
citation omitted). Accordingly, finding joinder proper, the
court turns to the question of severance.
to Fed. R. Crim. P. 14, “[i]f the joinder of offenses .
. . in an indictment . . .appears to prejudice a defendant .
. ., the court may order separate trials of counts.”
“[W]hether joinder of offenses unduly prejudices a
defendant is addressed to the district court's sound
discretion.” United States v. Richardson, 515
F.3d 74, 80 (1st Cir. 2008). Because “[s]ome prejudice
results in almost every trial in which the court tries more
than one offense ...