United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION & ORDER
J. BOYLE UNITED STATES DISTRICT JUDGE
the Court are: (1) Defendants Terence Carlyle Smith and Nancy
B. Parker's Joint Motion to Sever under Federal Rule of
Criminal Procedure 8(b) (Doc. 61); and (2) Defendant Nancy B.
Parker's Motion to Sever under Federal Rule of Criminal
Procedure 14 (Doc. 62). The Government has filed an Omnibus
Response opposing both Motions (Doc. 68) and Smith and Parker
have filed a Joint Reply in support of their Joint Motion to
Sever (Doc. 72). For the reasons stated below, the Court
DENIES both Motions (Docs. 61 & 62).
August 30, 2017, the Government filed a Twenty-Five-Count
Indictment against three named Defendants for their alleged
involvement in defrauding their employer, the Federal Home
Loan Bank of Dallas (FHLB-D). See Doc. 1,
Indictment. Defendants are Terrence Carlyle Smith, former
president and chief executive officer of FHLB-D; Nancy B.
Parker, former chief information officer of FHLB-D; and
Michael James Sims, former chief financial officer of FHLB-D.
Id. ¶¶ 8-10. The various charges in the
Indictment can be divided into two categories: (1) Counts One
through Twenty-One involve allegations that Defendants
submitted false travel and expense reports and cash out
requests to FHLB-D to obtain reimbursements for
travel-related costs and for unused vacation time that served
no legitimate business purpose (collectively the
“Travel Counts”), id. ¶¶
11-24; and (2) Counts Twenty-Two through Twenty-Five involve
Parker directing one or more individuals to purchase gifts
for Smith that served no business purpose and then to submit
false documents to FHLB-D for reimbursement for the cost of
these gifts (collectively the “Gift Counts”),
id. ¶¶ 25-35.
specifically, Count One of the Travel Counts charges all
three Defendants with Conspiracy to Make False Statements to
a Federal Home Loan Bank, 18 U.S.C. §§ 371, 1006,
and alleges over forty overt acts occurring from 2008 to 2013
in furtherance of the conspiracy. Id. ¶¶
11-22. These overt acts consisted of each Defendant
submitting various false travel and expense reports as well
as cash out requests for unused vacation hours. Id.
¶¶ 21-22. Counts Two through Twenty-One of the
Travel Counts charge each respective Defendant with making
False Statements to a Federal Home Loan Bank and Aiding and
Abetting False Statements to a Federal Home Loan Bank, 18
U.S.C. §§ 1006 and 2, through their false
submission of these travel reports. Id. ¶¶
Twenty-Two of the Gift Counts charges Parker with Conspiracy
to Commit Federal Home Loan Bank Theft, Embezzlement, and
Misapplication, 18 U.S.C. § 657, and alleges that from
2005 to 2012 she directed other individuals to purchase gifts
for Smith and to then make false statements to FHLB-D to
obtain reimbursement for those purchased items. Id.
¶¶ 25-33. Counts Twenty-Three through Twenty-Five
of the Gift Counts charge Parker with specific substantive
counts for Federal Home Loan Bank Theft, Embezzlement, and
Misapplication, and Aiding and Abetting Federal Home Loan
Bank Theft, Embezzlement, and Misapplication, 18 U.S.C.
§§ 657 and 2. Id. ¶¶ 34-35.
Smith and Sims are not charged with any of the Gift Counts.
20, 2019, Smith and Parker filed a Joint Motion to Sever
under Federal Rule of Criminal Procedure 8(b) arguing
inter alia that the Indictment fails to plead a
“substantial identity of facts or participants”
or an alleged “singular conspiratorial objective”
between the Travel and Gift Counts to satisfy joinder. Doc.
61, Joint Mot. to Sever, 1-2. Then, on May 21, 2019, Parker
filed her own separate Motion to Sever under Federal Rule of
Criminal Procedure 14 arguing that even if joinder is proper
under Rule 8(b), the Travel and Gift Counts should be severed
because a joint trial would cause her substantial prejudice.
Doc. 62, Parker's Mot. to Sever, 1. The Government has
filed an Omnibus Response opposing both Motions (Doc. 68),
and after being granted leave, Smith and Parker have filed a
Reply in support of their Joint Motion to Sever (Doc. 72).
Having been fully briefed, the Court addresses whether
severance is proper under the applicable legal standards.
Joint Motion to Sever Under Rule 8(b)
and Parker first move for severance of the Travel and Gift
Counts under Federal Rule of Criminal Procedure 8(b) arguing
that the Indictment fails to plead a “substantial
identity of facts or participants” or an alleged
“singular conspiratorial objective” between the
Travel and Gift Counts to satisfy joinder. Doc. 61, Joint
Mot. to Sever, 1-2.
cases involving “multiple defendants as well as
multiple counts, Rule 8(b) . . . provides the relevant
standard.” United States v. Kaufman, 858 F.2d
994, 1003 (5th Cir. 1988) (citation omitted). Rule 8(b)
provides that two or more defendants may be charged in a
single indictment “if they are alleged to have
participated in the same act or transaction, or in the same
series of acts or transactions, constituting an offense or
offenses.” Fed. R. Crim. P. 8(b). “All defendants
need not be charged in each count.” Id.
“As the plain language of Rule 8(b) provides, there is
no requirement ‘that each defendant have participated
in the same act or acts.'” United States v.
McRae, 702 F.3d 806, 820 (5th Cir. 2012) (quoting
United States v. Krenning, 93 F.3d 1257, 1266 (5th
joinder requires that the offenses charged ‘must be
shown to be part of a single plan or scheme,' and that
‘[p]roof of a common scheme is typically supplied by an
overarching conspiracy from which stems each of the
substantive counts.'” United States v. USPlabs,
LLC, 2018 WL 5831478, at *3 (N.D. Tex. Nov. 7, 2018)
(quoting United States v. Lane, 735 F.2d 799, 805
(5th Cir. 1984), rev'd on other grounds, 474
U.S. 438 (1986)). “The Government, however, is not
required to allege a conspiracy in order to join defendants
or counts.” Id. (citing McRae, 702
F.3d at 821 (citing United States v. Dennis, 645
F.2d 517, 520 (5th Cir. Unit B Aug. 1981), overruled on
other grounds, United States v. Lane, 476 U.S.
438 (1986))) (“Although multi-defendant and
multi-offense indictments often charge a conspiracy among
some or all defendants, we have repeatedly rejected the
contention that proper joinder of multiple defendants and
multiple offenses requires a conspiracy charge.”).
8(b) does not require that each defendant have actively
participated in each phase of the conspiracy; however,
“‘[a] single conspiracy can be found when the
indictment adequately shows a singular conspiratorial
objective.'” United States v. Moser, 123
F.3d 813, 827 (5th Cir. 1997) (quoting United States v.
Lindell, 881 F.2d 1313, 1318 (5th Cir. 1989)). In
determining whether one overarching conspiracy exists, courts
consider “(1) the time frame; (2) the locations of the
events charged as part of the conspiracy; (3) the persons
acting as co-conspirators; (4) the statutory offenses charged
in the indictment; and (5) the overt acts or other
description of the offense charged that indicate the nature
and scope of the activity that the government seeks to punish
in the case.” Potashnik, 2008 WL 5272807 at
*17 (citing United States v. Ellender, 947 F.2d 748,
759 (5th Cir.1991)).
the counts of an indictment fulfill the ‘same
series' requirement is determined by examining the
relatedness of the facts underlying each offense.”
United States v. Harrelson, 754 F.2d 1153, 1176 (5th
Cir. 1985) (internal quotation marks omitted); see also
USPlabs LLC, 2018 WL 5831475, at *3 (“Whether
joinder is proper is determined from the allegations in the
indictment, which, absent any suggestion of prosecutorial
misconduct, are accepted as true.”). “What is
required is a series of acts unified by some
‘substantial identity of facts or
participants.'” Dennis, 645 F.2d at 520
(quoting United States v. Nettles, 570 F.2d 547, 551
(5th Cir. 1978)). Lastly, the “Supreme Court has
instructed federal courts to interpret the requirements of
joinder under Rule 8 liberally” in favor of joint
trials of defendants who are indicted together.
Potashnik, 2008 WL 5272807 at *4 (citing Zafiro
v. United States, 506 U.S. 534, 537 (1993)); see
also United States v. Bullock, 71 F.3d 171, 174 (5th
Cir. 1995) (“Joinder of charges is the rule rather than
the exception[, ] and Rule 8 is construed liberally in favor
of initial joinder.”). With these Rule 8(b) principles
in mind, the Court now determines whether joinder of the
Travel and Gift Counts is appropriate.
and Parker argue that the Indictment improperly joins the
Travel and Gift Counts because they involve separate
conspiracies, different participants, and different overt
acts. Doc. 61, Joint Mot. to Sever, 3. Specifically, they
argue that the Travel Counts involve Smith, Parker, and Sims
taking over 30 trips in a five-year period (2008-2013), which
they requested reimbursement for by submitting travel and
expense reports for the stated reason of work trips, but
which served no legitimate business purpose. Id.
Because these trips are alleged to have had no legitimate
business purpose, the Indictment also ...