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United States v. Prall

United States District Court, W.D. Texas, Austin Division

April 16, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
KYLE GERALD PRALL, Defendant.

          ORDER

          ROBERT PITMAN, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant Kyle Gerald Prall's Motion to Dismiss the Indictment, (Mot., Dkt. 19), or in the alternative, a Motion to Dismiss Counts 15 Through 20 of the Indictment, (2d Mot., Dkt. 20). The parties filed responsive briefing. (Resp., Dkt. 21; Reply, Dkt. 24). Having reviewed the briefing, the record, and the applicable law, the Court will deny both motions.

         I. BACKGROUND

         The indictment alleges that during the 2016 presidential election cycle, Kyle Gerald Prall (“Defendant” or “Prall”) solicited contributions from the general public for multiple political committees, including Feel Bern, HC4President, and Trump Victory, based on misrepresentations that the money contributed by donors would be used to support candidates for the Office of the President of the United States. (Indictment, Dkt. 3, ¶ 12). Instead, Prall transferred donors' contributions to his personal accounts and used the funds for purely personal expenditures unrelated to the political committees. (Id. ¶¶ 20-21). In furtherance of this scheme, the indictment alleges that Prall used HC4President committee funds for hotels in Austin and Miami, alcohol, hookah, bottle service, “club dances performed by entertainers, ” massage, and pet-cleaning fees, (id. ¶ 27); that he falsely informed the treasurer of Feel Bern that that these were legitimate political committee expenditures for “meals and entertainment, ” knowing they would be falsely reported to the Federal Election Commission (FEC), (id. ¶ 28); that he diverted over $40, 000 from HC4President to his personal account and used the committee debit card for personal travel to Jacksonville, Dallas, and Belize, (id. ¶ 32-33); that he falsely informed the bookkeeper of HC4President that some of these were legitimate “travel expenses, ” knowing they would be falsely reported to the FEC, (id. ¶ 34), that he transferred over $72, 000 from Trump Victory committee to his personal account, (id. ¶ 38); and that he used the committee debit card to withdraw $100 cash from a restaurant and bar ATM in Port Aransas, and then falsely informed the Trump Victory bookkeeper that the cash withdrawal was a legitimate expense for Google AdWords, knowing it would be falsely reported to the FEC, (id. ¶ 40). Finally, the indictment alleges that Prall wrote checks from Feel Bern to himself in the amounts of $130, 000 and $20, 000. (Id. ¶ 40).

         Based on these allegations, the indictment charges Prall with three counts of mail fraud in violation of 18 U.S.C. § 1341, three counts of wire fraud in violation of 18 U.S.C. § 1343, six counts of money laundering in violation of 18 U.S.C. § 1956, two counts of money laundering in violation of 18 U.S.C. § 1957, three counts of false statements in violation of 18 U.S.C. § 1001(a)(2), and three counts of falsification of records in violation of 18 U.S.C. § 1519. (Indictment, Dkt. 3, ¶¶ 46-65).

         Prall asks the Court to dismiss the indictment pending against him for two reasons. First, Prall contends that the Government charged him incorrectly. He asserts that for allegations of fraudulent solicitation and reporting of political campaign funds, the Federal Election Campaign Act (FEC)[1] preempts the Title 18 charges in the indictment. (Mot., Dkt. 19). Second and alternatively, Prall seeks dismissal of Counts 15 through 20 of in the Indictment, which charge him with submitting false statements under 18 U.S.C. § 1011(a)(2) and false records under 18 U.S.C. § 1519. (2d Mot., Dkt. 20). The Government counters that the indictment correctly and sufficiently charges Prall with “a straightforward fraud scheme.” (Resp., Dkt. 21, at 3).

         II. LEGAL STANDARD

         An indictment “must be a plain, concise, and definite written statement of the essential facts constituting the offense charged and must be signed by an attorney for the government.” Fed. R. Crim. P. 7(c)(1). The purpose of an indictment is “to allege each essential element of the offense charged so as to enable the accused to prepare his defense and to allow the accused to invoke the double jeopardy clause in any subsequent proceeding.” United States v. Lawrence, 727 F.3d 386, 397 (5th Cir. 2013) (citing United States v. Morrow, 177 F.3d 272, 296 (5th Cir. 1999)). An indictment is sufficient if it “contains the elements of the offense charged and fairly informs the defendant of the charge against which he must defend.” Id. (quoting United States v. Graves, 669 F.2d 964, 968 (5th Cir. 1982)). Considering the sufficiency of an indictment, a court must “take the allegations of the indictment as true and to determine whether an offense has been stated.” United States v. Kay, 359 F.3d 738, 742 (5th Cir. 2004) (quoting United States v. Hogue, 132 F.3d 1087, 1089 (5th Cir. 1998)).

         III. PREEMPTION

         “It is well settled that ‘when an act violates more than one criminal statute, the Government may prosecute under either so long as it does not discriminate against any class of defendants.'” United States v. Hopkins, 916 F.2d 207, 218 (5th Cir. 1990) (quoting United States v. Batchelder, 442 U.S. 114, 123-24 (1979)). “The only exception arises where Congress clearly intended that one statute supplant another.” Id.

         When two federal statutes conflict, “[t]he cardinal rule is that repeals by implication are not favored.” Posadas v. Nat'l City Bank of New York, 296 U.S. 497, 503 (1936). “Where there are two acts upon the same subject, effect should be given to both if possible.” Id. The Supreme Court has held that “[t]here are two well-settled categories of repeals by implication: (1) Where provisions in the two acts are in irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one; and (2) if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate similarly as a repeal of the earlier act.” Id. “In the absence of some affirmative showing of an intention to repeal, the only permissible justification for a repeal by implication is when the earlier and later statutes are irreconcilable.” Tenn. Valley Auth. v. Hill, 437 U.S. 153, 190 (1978) (quoting Morton v. Mancari, 417 U.S. 535, 550 (1974)).

         In his first motion, Prall argues that the indictment must be dismissed because FECA preempts Title 18 offenses for fraudulent solicitation or reporting of political funds. (Mot., Dkt. 19). His argument has two components. First, Prall contends that FECA governs “the precise alleged conduct”: “receiving, or reporting of any contribution, donation, or expenditure” under 52 U.S.C. § 30109 and the “fraudulent solicitation of [political] funds” under 52 U.S.C. § 30124. (Mot., Dkt. 19, at 1; see Id. at 17-20). Second, Prall asserts that Congress tailored the FECA to “govern the constitutionally sensitive area of political speech and disclosure” and preempt “broad, catch-all criminal statutes.” (Mot., Dkt. 19, at 10; see Id. at 11-17). Therefore, he argues, charging him under any statute other than FECA violates the First Amendment. (See Id. at 28-31). As he argues: “Laws as broad and amorphous as the wire and mail fraud statues, the false statement statute, and § 1519 are not sufficiently tailored to avoid chilling political speech.” (Id. at 28)

         Prall's preemption argument relies on a misreading of the Federal Election Campaign Act. He argues that the Government should have charged him under § 30109 and § 30124 of the Act, but neither provision governs his alleged conduct. § 30109 is a penalty provision that does not prohibit any specific criminal offense.[2] Likewise, § 30124 provides that (a) any “candidate for federal office, ” or their agent, shall not fraudulently misrepresent that they are acting on behalf of a different candidate or political party in a way that is damaging to the other candidate or party, and (b) any person shall not fraudulently misrepresent that they are acting “on behalf of any candidate or political party, ” or their agent, “for the purpose of soliciting contributions or donations.”[3] Prall is incorrect that § 30124 “specifically governs fraudulent misrepresentations and solicitations of funds.” (See Mot., Dkt. 19, at 15). The statute does not govern “fraudulent misrepresentations and solicitations of funds” generally; it governs fraudulent misrepresentation of campaign authority. The Government could not have charged Prall under § 30124 (or the penalty provision at § 30109) for his alleged conduct in this case.

         Further, the Court finds in the text of the FECA “no affirmative showing of an intention to repeal” any other criminal statute and no indication that the FECA is “irreconcilable” with any of the wire and mail fraud statutes charged. See 18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1343 (wire fraud); 18 U.S.C. § 1956 (money laundering); and 18 U.S.C. § 1957 (money laundering). Additionally, even if the Title 18 provisions governing false statements under 18 U.S.C. § 1001(a)(2) and falsification of records under 18 U.S.C. § 1519 overlap in part with FECA's reporting requirements under 52 U.S.C. § 30104(b), “[t]he offenses under Title 18 thus stand wholly apart and separate from any violation of the federal election laws.” Hopkins, 916 F.2d at 219 (rejecting argument that convictions under Title 18 for fraud, concealment, and ...


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