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United States of America v. Charles Alan Pflueger

June 28, 2012


The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge


Before the Court is Plaintiff the United States of America's ("the Government") Appeal and Request to the District Court to Reconsider a Pretrial Matter Determined by the Magistrate Judge ("Magistrate Judge Appeal"), filed on April 4, 2012. [Dkt. no. 209.] Defendant James Henry Pflueger ("Pflueger") filed his opposition to the Magistrate Judge Appeal ("Opposition") on April 18, 2012.*fn1 [Dkt. no. 224.] On April 19, 2012, the Government filed its Reply. [Dkt. no. 228.] This matter was considered as a non-hearing motion. After careful consideration of the Magistrate Judge Appeal, Opposition and Reply, the Government's Magistrate Judge Appeal is HEREBY DENIED.


The parties and the Court are familiar with the factual and procedural background of this case. The Court will therefore only discuss the events that are relevant to the Magistrate Judge Appeal.

Pflueger filed his Motion for Severance Pursuant to Rule 14 of the Federal Rules of Criminal Procedure ("Motion") on February 17, 2012. [Dkt. no. 149.] The Motion asserted that Defendant Dennis Duban ("Duban") has unique knowledge about the preparation of Pflueger's tax returns, "is a critical witness in defending the charges against Jimmy Pflueger[,]" and that Pflueger will not be able to call Duban as a witness at a joint trial because they are co-defendants and alleged coconspirators. [Mem. in Supp. of Motion at 2.]

After briefing by the parties and a hearing on March 12, 2012, the magistrate judge took the matter under advisement. [Minutes, filed 3/12/12 (dkt. no. 192).] On March 27, 2012, the magistrate judge issued his Order Granting Defendant James Henry Pflueger's Motion for Severance Pursuant to Rule 14 of the Federal Rules of Criminal Procedure ("Order"). [Dkt. no. 205.] The Order notes that Pflueger's "attorney submitted a declaration stating that he 'would call Mr. Duban as a defense witness' if the trials were severed." [Order at 3 (quoting Motion, Decl. of Steven Toscher at ¶ 3).] The Order also noted that Duban submitted a declaration in camera stating that he would testify in Pflueger's defense if the trials were severed but would not do so if there was a joint trial because he would have to waive his rights under the Fifth Amendment, and setting forth the factual details to which he would testify if a separate trial was held as to Pflueger. [Id.] The magistrate judge concluded that Duban's "testimony is favorable for Pflueger and may be substantially exculpatory." [Id. at 4 (citing United States v. Bishop, 291 F.3d 1100, 1106 (9th Cir. 2002) ("Good faith reliance on a qualified accountant has long been a defense to willfulness in cases of tax fraud and evasion.")).] Accordingly, the magistrate judge granted the Motion and ordered that Duban's trial take place prior to Pflueger's trial. [Id. at 7.]

I. The Government's Magistrate Judge Appeal

The Government urges this Court to reconsider the magistrate judge's finding that severance is appropriate under Rule 14 of the Federal Rules of Criminal Procedure as to some or all counts. It argues that the magistrate judge committed clear error in granting the Motion because severance under Rule 14 can only be permitted where the defendant carries a very high burden to show that: the moving defendant has a good faith intention of calling the co-defendant to testify; the probability that the co-defendant will testify; the degree to which the proposed testimony is exculpatory; and the economy of a joint trial. [Mem. in Supp. of Magistrate Judge Appeal at 6 (citation omitted).]

The Government particularly challenges the magistrate judge's finding that Duban's testimony may be substantially exculpatory. While acknowledging that his proposed testimony was submitted in camera (and asserting that it should be unsealed so as to allow evaluation of its contents), the Government nevertheless asserts that it believes Duban's proposed testimony is not substantially exculpatory. In this regard, the Government provides a laundry list of the evidence that it apparently intends to produce at trial against Pflueger and which it characterizes as so "overwhelming" that Duban's proposed testimony to the contrary should be disregarded. [Id. at 14.] Should Duban's proposed testimony provide exculpatory evidence, however, the Government argues that other individuals assisted in preparing Pflueger's tax returns. Duban's testimony is therefore not necessary because these individuals can provide the same exculpatory information.

The Government's further arguments are: the economy of a joint trial outweighs any severance because Pflueger may choose to delay his trial indefinitely and this possible delay will double or triple the length and financial cost of trial; and the magistrate judge failed to determine whether Pflueger met his heavy burden as to each count because Duban's role in the counts involving the offshore account was not the same as his role in the counts involving personal expenses since the extent to which his proposed testimony may be exculpatory as to one tax scheme could be different, or even non-existent, as to the other.

Alternatively, the Government requests that the Court reverse the order of the trials and require Pflueger to proceed to trial first because there is no indication that Duban, in the event that he is convicted, is willing to testify on Pflueger's behalf after conviction but before sentencing or appeal.

II. Pflueger's Opposition

Pflueger, on the other hand, submits that the magistrate judge carefully reviewed the factors involved, that the Government cannot point to any error but rather merely disagrees with the conclusions reached by the magistrate judge, and that the magistrate judge was correct in finding that "'denying Pflueger of Duban's testimony would infringe on his constitutional right to present witnesses in his own defense.'" [Opp. at 5 (quoting Order at 4-5).] Further, he argues that Duban's testimony is substantially exculpatory as to all of the counts against him: the personal expenses conspiracy charges as well as the offshore account conspiracy charges. Pflueger counters the Government's contention that severance is unwarranted because others who assisted Duban in preparing Pflueger's tax returns may be able to provide similar exculpatory testimony by pointing out that the magistrate judge evaluated Duban's declaration and concluded that "'Duban was the person who directly communicated with Pflueger about his tax documents and is in the unique position of being able to provide testimony about Pflueger's knowledge, state of mind, and role in the preparation of his tax documents.'" [Id. at 12-13 (quoting Order at 3).]

As to the Government's request to unseal his declaration, Pflueger argues that the magistrate judge determined that Duban's proposed testimony was sufficiently credible to warrant severing his trial from Pflueger's, and thus the determination must be upheld unless shown to be clearly erroneous. He contends that unsealing the declaration is not the normal ...

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