There finally is a jury in the Mark Smith case despite repeated efforts to prevent the trial from moving forward. Mr. Smith’s lawyer, Mike Phillips, has spent several days now arguing without success with federal Judge Ramona Manglona. The judge, who often questioned Mr. Phillips’s knowledge of the law, has denied both attempts by the defense to end the case before a jury has even been selected. In his latest motion, Mr. Smith has alleged the government improperly applied the law to the charges against Mr. Smith.
Basically, Smith is alleging that when the government charged him, the prosecutors erroneously interpreted the law at the time, and the indictment was based on that error. The change of law pertaining to the definition of wire fraud, according to Smith’s motion, compels the government to prove that Mr. Smith intended to deceive and cheat someone rather than deceive or cheat someone.
Mr. Smith was indicted in 2017 for engaging “in a scheme to make illegal Section 8 housing payments” to himself and engaging “in the manipulation of the awarding of federal low-income housing tax credits,” according to supporting memoranda filed by the U.S. Attorney in federal court. “The direct involvement of GHURA’s former counsel, Mark Smith, who had conflicts of interest because he owned properties that directly benefited from the actions of GHURA. He subsequently attempted to cover his ownership… through a sham transfer to a relative. The relatives and employees of Mark Smith may have participated in an active cover up,” another statement attributed to the U.S. Attorney states.
Smith wants access to confidential Grand Jury proceedings
According to his motion, Mr. Smith did not cheat anyone through his deceit because he did not deprive anyone of money or property. Mr. Phillips further stated in the motion, “Based on United States v. Miller, 953 F.3d 1095 (9th Cir. 2020) and its application to the pending Indictment against Defendant Smith, the Court must dismiss this case without prejudice or, in the alternative, disclose the Grand Jury proceedings relating to the definitions provided by the prosecutor to the Grand Jury relating to Wire Fraud. The Court can then address and determine whether the prosecutor correctly defined Wire Fraud for the Grand Jury or utilized the definition contrary to the Supreme Court’s related determination in Shaw v. United States, 137 S. Ct. 462 (2016), now followed by the Ninth Circuit (“The parties agree, as do we, that the scheme must be one to deceive the bank and deprive it of something of value.”) Shaw, p. 469.”
Amid having to address ongoing covid-related concerns and narrowing down the list of potential jurors, Judge Manglona is fighting against time to move the case forward. By Monday, there remained three batches of jurors undergoing voir dire, when Mr. Phillips suggested, “Altering the procedure with regard to examination of the jurors in, I think, a slight way, but a meaningful way.” Judge Manglona responded tersely, “I am denying that,” but offered the alternative of utilizing hearing devices that will allow defense and prosecution to stay seated rather than gathering at sidebar. Jury selection went on briefly before she excused the juror pool again.
After the last potential juror exited the courtroom Monday, Judge Manglona continued the conversation on the motion to dismiss and said, “Let’s finalize the briefing schedule. I basically tried to buy us some time for myself to be able to do all of this as well. I trust but verify. One of the points that I raise is not just the legal issues but possibly evidentiary issue, which is the portion of the Grand Jury transcript that Mr. Phillips had identified.” She went on to say, “This is one of those difficult situations of not really knowing all the parameters of the law and what areas of facts would be necessary, as opposed to preferred. This is really an unfortunate ornery that we’re in here. We’ve spent three weeks attempting to do thorough voir dire and here we are facing a very crucial point, and this is an area that actually touches on the substance of the case, on the areas of law and not just areas of outside facts which apparently, according to Mr. Phillips’s initial analysis, according to one U.S. Supreme Court decision, should’ve been addressed even prior to the filing of the indictment. And then according to the Ninth Circuit decision that was issued back in 2020 and at a minimum even this year it was at least through the June 2021 amendment of the Model Jury instruction that’s also notice to both the government and the defense about that issue of what the elements are. So I would have appreciated this particular issue to have been raised prior to even our first attempt to empanel because obviously all the areas of issue of the law is what we need to resolve before we go forward and that is the reason why I’m taking basically a full day, this afternoon as well as tomorrow, to focus on this area because I have a big concern about how much more resource we’re all going to pour into all of this. And if it’s going to go forward, I want to also make sure that it’s going to be able to withstand any further challenges.”
She adjourned her court Monday evening.
“Mr. Phillips, that’s your five minutes.”
Tuesday was spent on Smith’s motion to dismiss, while the juror pool waited yet again. This time, Prosecutor William Doolittle addressed the court, saying the government can prove Mr. Smith committed wire fraud as it was defined in 2017. Mr. Doolittle said the phrase Mr. Phillips cited in the motion, ‘deceive or cheat’ is not the actual term used in the indictment from the Grand Jury. The term is actually ‘to defraud’ and it clearly did not apply to Mr. Smith’s case, once again, the prosecutor said.
Judge Manglona then gave Mr. Phillips the floor to counter the prosecution’s argument. From the start of his ramblings, the judge kept having to bring the conversation back to the actual motion and its basis. Mr. Phillips finished by saying, “My client’s indicted, I don’t know what more a Grand Jury can do to him. He’s indicted on the wrong definition of the major count that really controls everything and I think it overflows into the one count of theft of government property.” The judge finally cut in and told him, “Thank you Mr. Phillips, that’s your five minutes. You’ve been at it for longer than that, obviously. Let me now turn to the government for their response.” Mr. Doolittle stood up and countered with, “There has to be prosecutorial misconduct that is so flagrant it deceived the Grand Jury in a significant way. How could that possibly be, instructing the Grand Jury based on the law, as interpreted by the Ninth Circuit at the time? That’s not remotely misconduct. That is proper conduct for prosecutors to do. The other part of the standard is that the prosecutorial misconduct must cast grave doubt that the decision of the Grand Jury was free from the substantial influence of the violation.”
He continued by saying, “This disconnect, or this change in the interpretation of the definition of the intent to defraud in the third element, it can not seriously be argued that the Grand Jury was deprived of the opportunity to act as a grand jury.” Mr. Doolittle’s convincing argument only got stronger when he said, “In fact, it’s not just in the theft of government property count, your Honor. They had to find probable cause that he knowingly deprived the government of property. It’s also inherent in the wire fraud counts themselves because the wire fraud counts are based on HAP payments that were deposited in an account that was controlled by Mr. Smith and Mr. Wong so there is a deprivation of property inherent in the facts that are laid out in the indictment. So, you don’t have to use magic words, you don’t have to get in there and the Grand Jury isn’t required to go through and check every single word of the Model Jury instructions at the time. We don’t have to go back and supersede if there’s some minor change in there. They laid out and indicted, found probable cause, that obviously meets the definition of ‘cheat,’ obviously meets the definition of ‘deceive,’ and therefore the defense has not identified any possible defect or any possible prejudice. Their theory is that the Grand Jury might have indicted on one or the other. If the indictment shows that they found probable cause for both, as it does, then there can be no prejudice.”
Judge Manglona, having reviewed the indictment and listening intently to both parties said, “The facts of this case, as shown by the indictment, does support some finding, by the Grand Jury specifically, of intent to deceive and intent to cheat, as just referenced earlier in the paragraphs that were identified in the indictment as well as the fact that there is yet a separate count other than wire fraud that specifically talks about theft of government property so for the facts of this case, I do find that a dismissal is inappropriate and I’m therefore denying the motion to dismiss.”
Jury empaneled Wednesday with the defense’s motion to dismiss out of the way
The court was able to continue jury selection Wednesday, and a jury finally was selected. Opening statements begin Friday morning at 9 a.m.