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United States v. Jaunich

United States District Court, D. Minnesota

March 14, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
GREGORY JOSEPH JAUNICH, Defendant.

John E. Kokkinen and Kimberly A. Svendsen, Assistant United States Attorneys, UNITED STATES ATTORNEY'S OFFICE, 600 United States Courthouse, 300 South Fourth Street, Minneapolis, MN 55415, for plaintiff.

Andrew S. Birrell and Paul C. Dworak, GASKINS, BENNETT, BIRRELL, SCHUPP, LLP, 333 South Seventh Street, Suite 3000, Minneapolis, MN 55402, for defendant.

MEMORANDUM OPINION AND ORDER ADOPTING REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE

JOHN R. TUNHEIM, District Judge.

A United States grand jury returned an indictment against Defendant Gregory J. Jaunich, charging him with five counts of mail fraud in violation of 18 U.S.C. § 1341. Jaunich brought a motion to dismiss the indictment and a motion to suppress statements arguing, primarily, that the current prosecution breaches the term of a plea agreement he entered into in a previous federal criminal prosecution and violates double jeopardy. At a November 27, 2013 proceeding on Jaunich's motions, United States Magistrate Judge Leo I. Brisbois denied Jaunich's request for an evidentiary hearing. On January 8, 2014, the Magistrate Judge issued a Report and Recommendation ("R&R") recommending that the Court deny both motions. Jaunich filed timely objections arguing that the Magistrate Judge erred in denying Jaunich's request for an evidentiary hearing. Because Jaunich failed to demonstrate that he was entitled to an evidentiary hearing, the Court will overrule his objections and adopt the R&R in its entirety.

BACKGROUND

On July 16, 2013, Jaunich was charged with five counts of mail fraud in connection with an alleged scheme to defraud investors occurring between October 2006 and June 2008, in which Jaunich allegedly solicited funds from investors for the purposes of developing a wind energy project known as the Averill Project. (Indictment, July 16, 2013, Docket No. 1.) The indictment alleges that as part of the scheme Jaunich induced investments by making "false material representations" to investors concerning the status of the Averill Project and failed to disclose that at the time of solicitation he was under criminal investigation by federal law enforcement. ( Id. ¶¶ 3-5.) Jaunich also allegedly fraudulently represented to investors that the funds they invested "would be used solely to develop, operate, and maintain the Averill Project, " when in fact, it is alleged, Jaunich diverted most of the funds to his own personal use and prevented the discovery of this diversion by providing investors with false financial statements. ( Id. ¶¶ 6-8.) The five counts of mail fraud arise out of five letters mailed to Averill Project investors on or about June 30, 2008, that contained the claimed misrepresentations and omissions described above. ( Id. ¶ 11.)

I. PRIOR CRIMINAL PROCEEDINGS

Because Jaunich's motions to dismiss the indictment and suppress statements directly relate to Jaunich's previous criminal conviction for mail fraud, the Court recounts the nature of the earlier criminal proceedings to the extent necessary to rule on the present objections.

A. 2007 Indictment

On September 18, 2007, an indictment alleging thirty-three counts of mail fraud, three counts of making false statements on loan and credit applications, and six counts of money laundering was filed against Jaunich in the District of Minnesota. (Aff. of Paul C. Dworak, Ex. F ("2007 Indictment"), Oct. 23, 2013, Docket No. 33.) The charges in the 2007 Indictment specifically arose out of Jaunich's formation and operation of the wind-power businesses Northern Alternative Energy ("NAE") and NAE Shaokatan Power Partners, LLC ("NAE-SPP"). (2007 Indictment ¶ 3.) NAE-SPP entered into a wind generation purchase agreement with Xcel Energy and received renewable energy production incentives from the State of Minnesota. ( Id. ¶ 4.) The 2007 Indictment alleged that Jaunich fraudulently obtained funds from Xcel Energy and the State of Minnesota by submitting invoices to those entities that overstated the amount of electricity generated by NAE-SPP. ( Id. ¶¶ 6-9.)

The mail fraud counts were based upon thirty-three letters sent by Jaunich between September 2003 and January 2005 related to NAE-SPP's purported wind-power production. ( Id. ¶ 10.) The three counts for making false statements on loan and credit applications were related to loans NAE-SPP had obtained from Anchor Bank after falsely representing that it owned the two wind turbine generators collateralizing the loan, misrepresenting the amount of electricity produced by NAE-SPP, and misrepresenting the purpose for which the loan proceeds would be used. ( Id. ¶¶ 13-14.) Finally, the six money laundering charges alleged that Jaunich engaged in transactions with financial institutions involving criminally derived property with respect to the money obtained from the mail fraud and false loan applications. ( Id. ¶ 18.)

B. Guilty Plea

On July 1, 2008, Jaunich entered into a plea agreement, in which he pled guilty to one of the counts of mail fraud (Count 14) charged in the 2007 Indictment. (Dworak Aff., Ex. A ("2008 Plea Agreement") ¶ 1.) The United States agreed to "dismiss the remaining counts at time of sentencing." (2008 Plea Agreement ¶ 1.) The factual basis for Jaunich's guilty plea involved his work as manager of NAE-SPP, and Jaunich admitted that he caused false invoices to be mailed to Northern States Power ("NSP")[1] which billed NSP for more power than was produced by the NAE-SPP wind turbines. ( Id. ¶ 2.) The 2008 Plea Agreement also contained an integration clause stating "[t]his is the entire agreement and understanding between the United States and the defendant. There are no other agreements, promises, representations, or understandings." ( Id. ¶ 9.)

At the change of plea hearing, Jaunich confirmed that he agreed to plead guilty to Count 14 of the 2007 Indictment and that the United States would move to dismiss the remaining counts. (Government's Resp. to Def.'s Pretrial Mots., Ex. 1 at 2:21-25, Oct. 31, 2013, Docket No. 43.) Jaunich also agreed with the facts set forth in the 2008 Plea Agreement's factual basis. ( Id., Ex. 1 at 3:1-5.) With respect to the scope of the plea, Jaunich indicated that the 2008 Plea Agreement presented to the Court was "the complete agreement." ( Id., Ex. 1 at 7:1-3.) Jaunich responded "no" to the court's questions "aside from this plea agreement, have there been any other promises made as to what the Court would do at sentencing?" ( id., Ex. 1 at 8:15-18) and "aside from this plea agreement, has there been any force or threats or promises made apart from that agreement?" ( id., Ex. 1 at 13:1-4).

Based on the 2008 Plea Agreement, Jaunich was sentenced to twenty-one months in prison and three years of supervised release on November 6, 2008. (Dworak Aff., Ex. K.) Jaunich was also ordered to pay restitution to Xcel Energy in the amount of $355, 000. ( Id., Ex. K at 5.) Jaunich served the entirety of his sentence, including his term of supervised release, prior to the filing of the present indictment.

II. PRETRIAL MOTIONS

On October 23, 2013, Jaunich filed a motion to dismiss the indictment (Mot. to Dismiss the Indictment, Oct. 23, 2013, Docket No. 30) and a motion to suppress "any and all statements the government claims are [Jaunich's] together, with any derivative evidence" (Mot. to Suppress Statements, Oct. 23, 2013, Docket No. 31). Jaunich argued that dismissal of the indictment was warranted because the present indictment breaches the 2008 Plea Agreement, violates double jeopardy, violates the statute of limitations, and violates Jaunich's due process right to be free from preindictment delay. (Def.'s Mem. in Supp. of Mots. to Dismiss the Indictment and Suppress Statements at 1, Oct. 23, 2013, Docket No. 32.) Additionally, Jaunich argued that "dismissing the indictment would be a proper exercise of the Court's supervisory powers over the administration of justice as well as a correct application of the doctrine of equitable estoppel." ( Id. at 1-2.) Jaunich sought suppression of any statements made by him on the ground that use of those statements would also violate the 2008 Plea Agreement and that suppression would be a proper exercise of the Court's supervisory powers. ( Id. at 2.) In support of his motions Jaunich submitted a thirty-page brief and 250 pages of exhibits. ( See Def.'s Mem. in Supp. of Mots. to Dismiss the Indictment and Suppress Statements; Dworak Aff.)

Jaunich requested an evidentiary hearing with regard to both motions. (Mot. to Dismiss the Indictment at 1; Mot. to Suppress Statements at 1.) In support of this request, Jaunich stated only that "[i]n addition to the exhibits referenced in this memorandum of law, Mr. Jaunich is requesting an evidentiary hearing and will produce live witness testimony in support of his motion." (Def.'s Mem. in Supp. of Mots. to Dismiss the Indictment and Suppress Statements at 2.) In response, the United States argued that Jaunich had failed to show that an evidentiary hearing was warranted because he had not presented relevant facts that could entitle him to relief with respect to his motions. (Government's Resp. to Def.'s Pretrial Mots. at 15, 22.)

A. Supplemental Briefing

At some point after the parties filed their briefs related to the pretrial motions, the United States learned that Jaunich intended to present testimony from his attorney in the previous criminal case, Jon Hopeman, at the evidentiary hearing. The United States spoke with defense counsel and indicated to the defense that if Hopeman testified, Jaunich would have to waive "attorney-client privilege as to all communications related to the plea agreement in the prior case, including plea negotiations, and as to all communications related to the Averill project." (Government's Resp. to Def.'s Objections at 3, Jan. 28, 2013, Docket No. 64.) Shortly thereafter, counsel for Jaunich in the present case filed a letter to the Magistrate Judge indicating that at the hearing on his pretrial motions "we intend to call witnesses" and "[t]here will also be an issue for the Court to decide involving the nature and scope of an ...


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