Nxivm Doc 528: Order On Russell Motion To Dismiss

Case 1:18-cr-00204-NGG-VMS Document 528 Filed 04/12/19 Page 1 of 20 PageID #: 5560
UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK
-X
UNITED STATES OF AMERICA,
TO BE FILED UNDER SEAL
-against-
MEMORANDUM & ORDER
KATHY RUSSELL,
18-CR-204-4(NGG)(VMS)
Defendant.
X
NICHOLAS G. GARAUFIS,United States District Judge.
Before the court is Defendant Kathy Russell's motion to dismiss the Second Superseding
Indictment, which charges her and four others with participation in a racketeering conspiracy
arising from their involvement in a self-help organization called Nxivm (Second Superseding
Indictment(Dkt. 430) 13-15). (Kathy Russell Mot. to Dismiss("Mot")(Dkt. 270).) Russell
alleges that the Government(i) made misleading statements to Russell that lulled her into
partially waiving her Fifth Amendment rights and testifying before the grand jury and (ii)
misrepresented the scope of her Fifth Amendment rights. (Kathy Russell Mem.in Supp. of Mot.
to Dismiss("Mem.")(Dkt. 283); Kathy Russell First Supplemental Mem.in Supp. of Mot. to
Dismiss ("First Suppl. Mem.")(Dkt. 463)); Kathy Russell Second Supplemental Mem. in Supp.
of Mot.to Dismiss("Second Suppl. Mem.")(Dkt. 498); Kathy Russell Third Supplemental
Mem.in Supp. of Mot. to Dismiss("Third Suppl. Mem.")(Dkt. 517).) In the altemative, she
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asks the court to (i) compel the Government to provide various discovery and (ii) conduct an
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evidentiary hearing regarding whether, at the time of Russell's grand jury testimony, the
Government had evidence making her chargeable with a crime. For the following reasons, the
court DENIES her motion without an evidentiary hearing.

I. BACKGROUIND
A. Russell's Grand Jury Testimony
On or about April 25,2018, six days after the Government indicted Keith Raniere and
Allison Mack,Kathy Russell received a grand jury subpoena summoning her to testify on May
10,2018. (May 10,2018 Subpoena(Dkt. 284-1).) The subpoena was slipped under her
apartment door and did not contain any attachments, such as a letter advising her that she was a
target or subject ofthe Government's investigation or an "advice ofrights" form. (Mem.at 2.)
Other grand jury witnesses in this matter were informed that they were a subject before they
testified.^ (Justine Harris Decl.("Harris DecL")(Dkt 284)^5.) Her counsel at the time,
William Fanciulloi, interpreted the absence of such a notice to mean that the Government viewed
Russell as a mere witness, not a target or a subject.^ (Reply at 5.) On April 30,2018, Fanciullo
advised the Government that he represented Russell. (May 10,2018 William Fanciullo Email
(Dkt. 284-2).) Within fifteen minutes, the Government offered to discuss Russell's upcoming
appearance with Fanciullo (id), but he did not follow up on that offer and did not communicate
with the Government about Russell's status in the investigation before she testified (Harris Decl.
If 7).
On May 10,2018, Russell testified before the grand jury. (May 10,2018 Grand Jury Tr.
("Tr.").) Fanciullo accompanied her to the grand jury chamber and waited outside because
attorneys are not permitted therein. (Id at 6:9-7:3.) Russell brought a piece ofpaper into the
'A "target" of an investigation is a "person as to whom the prosecutor or the grand jury has substantial evidence
linking him or her to the commission ofa crime and who,in the judgment ofthe prosecutor, is a putative
defendant." Justice Manual §9-11.151. A "subject" of an investigation is a person whose conduct is within the
scope ofthe grand jury's investigation. Id. It is the DOJ's policy to advise a grand jury witness oftheir rights ifthe
"witness is a target or subject. Id Ifsomeone appearing before a grand jury is neither a target nor a subject, they are
referred to as merely a "witness." (See, e.g.. Russell Reply in Supp. of Mot.("Reply")(Dkt.315)at 5.)
^ The Government never expressly indicated whether Russell was a subject ofthe investigation.
chamber with language for her to use when she invoked the Fifth Amendment. fSee Opp'n at
13.) At the start of Russell's testimony,the Government advised her that she was not being
called to the grand jury as a "target" ofthe investigation, which the Government defined as "a
person to whom the prosecutor or the grand jury has substantial evidence linking to a
commission of a crime and who,in the judgment ofthe prosecutor, is a [putative] defendant."
(Tr. at 5:16-21.) The Government also told Russell that she had the right to counsel and could
leave the chamber and consult Fanciullo before answering any questions. Qd. at 6:9-16.) The
Government did not say whether Russell was a "subject" ofthe investigation.
Before the Government advised Russell as to her Fifth Amendment rights, Russell
invoked the Fifth Amendment in response to two ofthe first questions asked of her, which were
about whether whether she was paying for Fanciullo's services and whether she had recently
destroyed any Nxiym-related documents. (Id. at 7:5-8,21-24.) Afterward,the Government

informed Russell that she had a Fifth Amendment right to not say anything that might
incriminate her; that if she did invoke the Fifth Amendment, it must be because she had a
reasonable fear that her answer to the question asked would lead to her prosecution; and that if
she were merely a witness to a crime,she could not invoke the Fifth Amendment. (See id. at
8:5-11, 9:12-21.) The Government also stated that Russell had been sworn to tell the truth and
could be charged with perjury if she did not. (Id. at 10:4-12.)
Following this advice from the Government, Russell testified for about an hour-and-a-
half. (Compare id. at 1:1, with id. at 63:13-14.) She answered the Government's questions on a
range oftopics, including: her experiences with Nxivm,including the courses she took and her
positions within Nxivm;the nature and philosophy ofNxivm and related entities; and certain
Nxivm rules, rituals, and ranking systems. (Id.; s^ Mem. at 3.) She also invoked the Fifth
Amendment roughly 50 times. (Tr.;^Gov't Opp'n to Russell Mot. to Dismiss("Opp'n")
(Dkt. 301)at 5.) She invoked on a wide variety oftopics, some ofthem seemingly mundane,
including her level of education (Tr. at 14:12-17); her decision to move to Albany to work for
Nxivm when her son was in Alaska(id at 29:10-12); her job as a Nxivm bookkeeper(id at 32:4-
19); Keith Raniere's sexual partners(id at 44:17-25); whether she was a member ofDOS or had
discussed it with Keith Raniere(id at 51:l-5); why she did not ask people whether they were
branded (id at 55:6-9); whether she knew anyone in Nxivm who had had an abortion(id at
58:12-18); cash stored at Nancy Salzman's house(id at 61:1-2); whether she had heard of
anybody staying confined to a room for a long period oftime(id at 61:7-10); and her weight(id
at 73:20).
The Goverriment also engaged Russell in an extended conversation about whether she
had ever asked Raniere about allegations that he had sexually abused minors or raped a particular
woman. (Id at 36:19-44:16.) The Government noted that it had evidence that Keith Raniere had
had sex with underage girls. (Id at 41:10-13.) Additionally, the Government asked her when
she was "last in Canada"(Tr. at 34:2), if she had "ever made false [identification] for anyone"
(id at 58:4), and ifshe was "aware of Nxivm ever paying to obtain passwords to somebody's
email account" or "to hack in somebody else's computer"(id at 59:15-16, 18-19). The
Government then called for a short break, which gave Russell an opportunity to consult with
Fanciullo. (Id at 63:7-9; see Third Suppl. Mem.at 3.)
After the break, Russell invoked in response to most questions she was asked—^32 times
in the span often minutes. (See Third Suppl. Mem. at 3.) She again invoked on a wide variety
oftopics, ranging from whether Keith Raniere has any children (Tr. at 64:7-8); whether she
knew certain individuals in Nxivm (id at 65:12-16, 69:6-11); whether she had any debts(id at
65:17-22); and whether she knew of cash being brought from outside the country(id at 65:23-
25). There were two more short breaks in which Russell may have spoken to Fanciullo. (Id at
70:10-71:5; 74:23-79:11.) After these breaks, Russell answered several questions and invoked as
to several others. (Tr. 71:1-80:25.) She confirmed that, every time she declined to answer a
question, it was because she was asserting her Fifth Amendment right against self-incrimination,
and that she understood the advice the Government gave regarding the Fifth Amendment at the
start of her testimony. (Id at 79:15-23.) In total, she testified for about two hours. (Compare id.
at 1:1, with id. at 80:24.)
Later that day,the Government spoke with Mr. Fanciullo in the presence of Russell and
FBI agents. (Opp'n at 6.) The Government explained that its investigation was ongoing and
offered to meet with Russell and her counsel pursuant to a proffer agreement. (Id) On May 14,
2018, upon Fanciullo's request, the Govemment gave him a copy ofthe proposed proffer
agreement.(^ May 14-22,2018 Email Exchange(Dkt. 301-2).) Eight days later, Fanciullo
declined the proposal. (Id)
B. Russell's Indictment
In the two-and-a-half months that followed Russell's testimony, the Govemment claims
to have "gathered many additional documents and conducted many additional witness
interviews, ultimately developing evidence making [Russell] chargeable with racketeering
conspiracy." (Opp'n at 15: see Apr. 8,2019 Conf. Tr. at 15:14-16.) On July 23,2018,the
Govemment indicted Russell and arrested her the following day. (Superseding Indictment(Dkt.
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50); Mem. at 6.) She was charged with participation in a racketeering conspiracy and alleged to
have committed two predicate acts("Act One" and "Act Two")related to identity theft.
(Superseding Indictment fTj 17-20.) For Act One,she is alleged to have committed "conspiracy
to commit identity theft and to unlawfully possess an identification document in connection with
her role in a conspiracy to illegally transport a woman across the Canadian border." (Gov't April
10, 2019 Letter(Dkt. 521)at 3.) For Act Two,she is alleged to have committed "conspiracy to
commit identity theft and identity theft in connection with her involvement in the installation of a
'keylogger' on a computer belonging to an accountant for Nxivm,so that his email address and
password could be obtained and his emails monitored.'" Qd.)
On August 9,2018, Justine Harris informed the Government that she was replacing
Fanciullo as Russell's lead counsel. (Opp'n at 6.) On November 5,2018,the Government gave
Harris a transcript bf Russell's gi-and jury testimony. (Harris Decl. H 11.) On November 14,
2018,the Government told Russell that it would not introduce Russell's grand jury testimony in
its "case-in-chief." (Nov. 14,2018 Email Exchange(Dkt. 284-6).) Per the Government, it made
this commitment because Russell invoked the Fifth Amendment repeatedly and the testimony
she did provide is largely not in dispute and admissible through other sources. (Opp'n at 7.)
On January 4,2019, Harris asked the Government to produce "all documents relating to
or reflecting when the government considered Ms. Russell a 'target,'" as well as "any
instructions given the grand jury with respect to her assertion ofthe Fifth Amendment." (Jan. 4,
2019 Email Exchange(Dkt. 284-8).) Four days later, the Government responded that, although
"Russell was not a putative defendant at the time of her grand jury testimony," the Government
later "developed evidence making her chargeable with racketeering conspiracy and only then did
she become a putative defendant." (IdJ The Government also stated that"the grand jury was
properly advised as to the law,including with regard to the invocation ofthe Fifth Amendment
by any witnesses." (Id) When asked, the Government declined to share the new evidence that
made Russell chargeable. (Id)
C. Russell's Motion to Dismiss the Indictment
The next day, Russell filed the instant motion. (Mot.) She argues that the Government's
failure to inform her that she was a target and its provision of allegedly misleading advice
regarding her Fifth Amendment rights "were ftmdamentally unfair and induced [] Russell to
selectively assert the Fifth and provide incriminating statements to the grand jury," thus violating
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the Fifth Amendment's due process clause. (Mem. at 16.) On February 12,2019, Russell
requested that the Government provide discovery relating to allegations it made in search-
warrant applications that predate Russell's grand jury testimony, including allegations related to
nonpayment oftaxes and cash smuggling. (Kathy Russell Feb. 12, 2019 Letter(Dkt. 376).)
Russell noted that the Government's representations in its October 2018 search-warrant
application indicate that devices seized in March 2018, prior to Russell's grand jury appearance,
contained "various emails and documents" that describe Russell "not filing tax retums for
various Nxivm entities." (Id. at 4.) Per Russell, this suggests that the Government had
substantial evidence linking her to the commission of a crime when she testified before the grand
jury, meaning that the Government falsely stated that she was not a target. (First Suppl. Mem.
at 2.) For example, one email from another individual, seized pursuant to a March 2018 warrant,
asserts that Russell was part of Raniere's "inner circle" and "knowingly participated, directly or
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indirectly, in criminal conduct ofthe most insane order." (Feb. 24, 2015 Discovery Email(Dkt.
463-1).)
On March 13,2019,the Government returned a second superseding indictment that
charged Russell and her four co-defendants^ with a racketeering conspiracy. (Second
^ Russell now has only two co-defendants because Lauren Salzman pleaded guilty on March 25, 2019, and Allison
Mack pleaded guilty on April 8,2019.
Superseding Indictment(Dkt. 391) 13-15.) Unlike in the first superseding indictment,the
Government did not allege the predicate acts ofthe conspiracy with particularity, instead citing
thirteen criminal statutes that Defendants allegedly conspired to violate. Qd.")
On March 22,2019, Russell renewed her motion to dismiss, incorporating her arguments
as to the earlier indictment. (First Suppl. Mem.) She claims those arguments remain applicable
because the grand jury that returned this new indictment had listened to Russell's May 10,2018
testimony. (First Suppl. Mem.at 1.) In her March 22 memorandum, Russell asserts that, since
filing her original motion, her counsel has identified additional documents that were in the
Government's possession at the time of her grand Jury testimony. (Id. at 2.) In Russell's view,
these documents indicate that the Government had evidence making her chargeable with a
criminal offense—î^,that she was a target at the time of her grand jury testimony. (Id at 2.)
On April 3,2019,Russell informed the court that,just the day before,the Government
produced FD-302 forms'^ reflecting three interviews with witnesses that were conducted before
Russell's grand jury testimony. (Second Suppl. Mem. at 1.) According to Russell, these notes
include witness statements directly linking her to the commission of a variety of crimes,
including tax evasion and visa fraud. (Id) Therefore, Russell requests a prompt evidentiary
hearing and asks the court to direct the Government to immediately produce the following:
(1)^302s reflecting any statements conceming Ms. Russell that

relate to interviews conducted before May 10, 2018; (2) [t]he
evidence that the government received after May 10, 2018 that
supposedly made Ms. Russell, in the view of the government,
chargeable with an offense; and (3) [a]ny communications,
including email correspondence, text messages and intemal
memoranda, reflecting statements by any DOJ employee, or other
^ An FD-302 form is used by FBI agents to report or summarize interviews they conduct. (Cf. Second Suppl. Mem.
at 1.)
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law enforcement officer, in the possession of the United States

Attorney's Office conceming Ms. Russell before May 10,2018.
(Id at 4-5.)
At an April 8, 2019 status conference in this case, the court shared its initial reaction to
the motion. (April 8, 2019 Conf. Tr.(undocketed) at 6:6-9:3.) The court stated (i)that Russell's
April 3,2019 letter suggests that Russell may have been a target at the time of her grand jury
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testimony, and (ii) if that were true, the Government's statement to Russell that she was not a
target was misleading, at the very least. (Id. at 6:20-7:5.) The court then noted several issues it
found with Russell's motion. (Id at 7:5-9:3.) The parties made brief oral arguments in response.
(Id at 9:4-17:13.) The Government asserted that it did not view Russell as chargeable based on
evidence available at the time of her grand jury testimony, in part because the FD-302 forms
cited by Russell may not have been corrobotated at that time and do not form the basis for the
racketeering acts with which Russell was ultimately charged. (Apr. 8,2019 Conf. Tr. at 15:14-
23;Ôpp'n at 15.) The Government did ask Russell about conduct that formed the basis for
Act One during her grand jury testimony.^ (See, e.g.. Tr. at 34:23-35:6.) But the Government
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argues that she was not chargeable for Act One at that time because the applicable statute of
limitations precluded charging her with a standalone offense, and the Government lacked
evidence to establish Russell's participation in a racketeering conspiracy.^ (Opp'n at 15 n.6.)

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On April 9,2019,Russell filed a letter in response to the court's statements at the
previous day's conference. (Third Suppl. Mem.) She states that, at any evidentiary hearing, she
would submit a swom declaration or testify that, based on conversations with her counsel, she
® Russell invoked the Fifth Amendment in response to these questions. (See, e.g.. Tr. at 34:23-35:6.)
® Supposedly,the Government only obtained such evidence after Russell's testimony. (Opp'n at 15; Apr. 8,2019
Conf. Tr. at 15:14-16.)
believed that the Government viewed her onlv to be a witness. (Id at 2.) The next day,the
Government filed its own letter that, among other things, provides further details to explain why,
in its judgment, Russell was not a target and likely not a subject at the time of her testimony.
(Gov't April 10,2019 Letter at 2-4.) The Government also represented that, to the extent it
failed to properly inform Russell that she was a subject, any such failure was inadvertent. (Id
at 3-4.) Further, the Government explains that it offered to meet with Fanciullo before and after
her testimony to discuss her status, but he declined all attempts at engagement. (Td at 4.) On
April 11,2019,Kathy Russell filed a short response to the Government's letter, reiterating her
discovery requests and newly asking for any evidence relating Russell that was presented to the
grand jury. (Kathy Russell Fourth Suppl. Mem.in Supp. of Mot. to Dismiss("Fourth Suppl.
Mem.")(Dkt. 527).)
n. DISCUSSION
A. RusselFs Motion to Dismiss
The court need not decide whether Russell was a target, or even whether she was a
subject, because the court cannot dismiss the indictment pursuant to its supervisory powers, as
the Government violated no constitutional or congressional rules.Ûnited States v. Russell,
916 F. Supp. 2d 305,312(E.D.N.Y. 2013)("[T]he Court fmds it unnecessary to determine

whether Defendant was a target at the time of his testimony because Defendant has ojffered no
basis for the court to exercise its supervisory powers."). The court can use its supervisory power
to dismiss an indictment because of misconduct before the grand jury only where that
'The Government argues persuasively that Russell was not a target at the time of her testimony. (Id. at 2-4.) See.
e.g.. United States v. Peterson. 544 F. Supp. 2d 1363,1367-68(M.D. Ga.2008)(finding that the government
properly told someone that he was a subject, not a target, where the government possessed incriminating evidence);
United States v. Three Juveniles. 886 F. Supp. 934,940(D. Mass. 1995)(concluding that a person was not a target
where the FBI had information that he participated in a related crime).
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misconduct violated a constitutional rule or "one ofthose few, clear rules which were carefully
drafted and approved by [the Supreme Court] and by Congress to ensure the integrity ofthe
grand jury's functions." United States v. Williams. 504 U.S. 36,46(1992)(citing, inter alia.
Bank of Nova Scotia v. United States. 487 U.S. 250(1988))(quotation marks omitted). The
court cannot use its supervisory power to impose new standards of prosecutorial conduct before
the grand jury. Id. at 46-47. In other words, using supervisory authority over grand jury
proceedings requires a "constitutional or congressional imperative." United States v. Gillespie.
974 F.2d 796,800(7th Cir. 1992)(discussing the implications of Williams and Bank ofNova
Scotia). To dismiss an indictment,the court must also find that the Government's misconduct
"substantially influenced the grand jury's decision to indict," Bank of Nova Scotia. 487 U.S. at
256 (citations omitted), or that the indictment was "procured on the basis oftainted evidence,"
United States v. Allen. 864 F.3d 63,98(2d Cir. 2017).^
Russell asserts that the Government's conduct violated the Fifth Amendment's Due
Process Clause, requiring dismissal ofthe indictment. (Mem. at 10-16.) She is mistaken.
1. Russell's Due Process Argument
Russell concedes that she had no right to be informed of her status as a target or subject.^
She instead argues that the Government violated her right to due process by making affirmative
® Allen held that "ifthe government has presented immunized testimony to the grand jury, the indictment should be
dismissed unless the government establishes that the grand jury would have indicted even absent that testimony."
864 F.3d at 99-100(citations omitted).
'Targets and subjects ofan investigation have no constitutional or statutory right to be informed oftheir status
before testifying. See United States v. Washington.431 U.S. 181,189(1977); United States v. Goodwin,57 F.3d
815,818(9th Cir. 1995)); Russell. 916 F. Supp.2d at 312(finding that a defendant's reliance on purported
violations ofthe DOJ's manual was unavailing (citing United States v. Valentine. 820 F.2d 565,572(2d Cir. 1987));
see also Justice Manual § 9-11.151 ("The Justice Manual... is not intended to, does not, and may not be relied upon
to create any rights, substantive or procedural, enforceable at law by any party in any matter, civil or criminal.").
Such wamings are only required in the context ofcustodial interrogation; in fact, the Government exceeded
constitutional requirements by advising Russell of her right against self-incrimination and her right to speak with
counsel before or during her testimony. (Id at 8:5-11, 9:12-21; 6:9-16.) See Russell. 916 F.Supp.2d at311
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misrepresentations to her— by (i)telling her that she was not a target,(ii) not giving her a
subject letter or advice-of-rights form, leading her to believe she was a mere witness, and (iii)
imprecisely describing the scope of her right against self-incrimination. (Mem.at 10-16; Reply
at 5; Apr. 8,2019 Conf. Tr. at 9:15-23.)
According to Russell, her mistaken beliefthat she was not a target or subject led her to
testify on certain topics rather than invoke the Fifth Amendment. (Mem.at 10-16; Reply at 1-5;
Third Suppl. Mem.at 2-3.) Russell submits that it "is common sense that a witness who has
been reassured that they are not in the government's sights would agree to waive her Fifth
Amendment rights." (Third Suppl. Mem.at 2.) She also contends that the Government further
!
misled her by providing imprecise advice about the Fifth Amendment,in that the Government
told her that she could only invoke it if the question asked had a reasonable probability of
leading to her prosecution, when in reality a witness may invoke ifthere is merely a "reasonable
possibility that her own testimony will incriminate her." (Reply at 5 (alterations adopted)
("quoting Estate ofFisher v. C.I.R.. 905 F.2d 645,650(2d Cir. 1990)).) To show that her choice
not to invoke was a result of her mistaken belief as to her status and the Government's Fifth
Amendment advice, Russell notes that she answered many questions during the first part of her
testimony. (Third Suppl. Mem.at 2.) Only after the Government called for a break, and Russell
consulted with counsel, did she begin to invoke in response to nearly every question that she was
asked. (Id at 2-3.)
Russell maintains that this series ofevents rendered the grand jury proceedings
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"fundamentally unfair," violating her right to due process. (Mem.at 10.) To support this theory.
(finding no Fifth Amendment violation where a prosecutor did not advise a grand jury witness of his right to speak
with counsel before or during his testimony).
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she points to United States v. Drake. 310 F. Supp. 3d 607(M.D.N.C. 2018). (Mem. at 12-14.)
There, the court considered, but did not decide, an unsettled question oflaw:"whether an
inaccurate and misleading representation as to an individual's status on which that individual
relies and allows to induce her into waiving her Fifth Amendment right and testify before the
grand jury amounts to a violation ofthe PDue Process Clause]."^® Drake. 310 F. Supp. 3d at 632;
id. at 635 (explaining that this question relates to the "concepts offundamental fairness ensured
by the Fifth Amendment's due process clause"!: see also United States v. Babb. 807 F.2d 272,
277(1st Cir. 1986)(noting that the Supreme Court case law does "not address the distinct
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question of whether misleading wamings" to a grand jury witness can violate the Constitution).
Russell seems to ask this court to decide that question here. (See Mem. at 10-16(repeatedly
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analogizing to Drake!.)
2. The Government's Representations Did Not Actuallv Induce Russell to

Testify
The question that Drake considered is not properly presented here because the transcript
of Russell's testimony shows that the Government's alleged misrepresentations did not induce
her to testify. See United States v. Winter. 663 F.2d 1120,1151-52(1st Cir. 1981)(denying a
defendant's due process claim on comparable facts primarily because the Government's
misrepresentations did not actually cause the witness to waive his right against self-
incrimination!. abrogated on other grounds bv Salinas v. United States. 522 U.S. 52(1997);
Drake. 310 F. Supp. 3d at 636(same). She brought a piece of paper into the grand jury chamber
In Drake,the court found that prosecutors had affirmatively and intentionally misled the defendant by telling her
that she was not a target or subject when she testified to the grand jury while one prosecutor was simultaneously
sending emails about"whether to require [the defendant]to either cooperate in exchange for a break or 'eat a guilty
plea' to a low level recordkeeping violation.'" 310 F. Supp. 3d at 629. The court noted that the Government's
conduct"approach[ed] contravention ofconcepts offundamental fairness ensured by the Fifth Amendment's due
process clause," but denied the defendant's motion to dismiss the indictment because, inter alia, the Government's
misrepresentations did hot actually cause the witness to waive his right against self-incrimination. Id at 635.
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containing language for her to use when she invoked the Fifth Amendment. CSee Opp'n at 13.)
She invoked in response to one of the very first questions she was asked—even before the
Government had instructed her on her Fifth Amendment rights. (Tr. at 7:5-8,21-24.) Before the
break in which she consulted with counsel, she invoked 50 times with regard to a wide variety of
topics, some of which were facially mundane and unthreatening. fSee. e.g.. Tr. at 7:5-8,21-24,
14:12-17,29:10-12,32:4-19,44:23-25, 51:1-5; see also Third Suppl. Mem. at 2-3 (stating that
she invoked 50 times before the first break).) This belies Russell's suggestions that she felt she
was "not in the Government's sights"(Third Suppl. Mem. at 2)and that the Government's
imprecise advice gave her an overly narrow understanding of her right to invoke (see Mem. at
10). Indeed, each time she invoked, she stated that it was because her answer to the question
may tend to incriminate her. (See, e.g., id,at 7:5-9.) Despite what she says now,the transcript
makes clear that she knew how to invoke and believed that she had criminal exposure.
Russell also had a lawyer and was advised at the start of her testimony that she could
consult him before answering any question. (Id at 6:9-16.) She now emphasizes that she
invoked much more frequently after a break enabled her to speak to Fanciullo. (Third Suppl.
Mem. at 2-3.) But she could have consulted Fanciullo at any time. The record does not indicate,
and it is hard to understand, why she chose to answer certain questions but not others. But the
Fifth Amendment does not protect against voluntary waivers ofthe right against self-
incrimination, evert when inadvisable; it protects against coerced waivers, see, e.g.. Washington,
431 U.S. at 188("The constitutional guarantee is only that the witness be not compelled to give
self-incriminating testimony. The test is whether, considering the totality ofthe circumstances.
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the free will ofthe witness was overborne."); United States v. Haak,884 F.3d 400,409(2d Cir.
2018)(same).'^
It makes no difference that Russell's argument is based on her right to due process, not
her right against self-incrimination. (See Mem,at 10-16; Apr. 8,2019 Conf. Tr. at 11:17-22
(suggesting that the court's supervisory power over the grand jury process is not limited to the
"traditional concept of...compelled testimony").) The requirement that Fifth Amendment
waivers be voluntary, not coerced, is rooted in both rights. Haak. 884 F.3d at 409(stating that
coercive law enforcement activity that induces someone to incriminate herself violates both the
right against self-incrimination and the right to due process); Allen, 864 F.3d at 80(stating that
the "Supreme Court has 'recognized two constitutional bases for the requirement that a
confession be voluntary to be admitted into evidence:the Fifth Amendment right against self-
incrimination and the Due Process Clause ofthe Fourteenth Amendment'"(quoting Dickerson v.
United States, 530 U.S. 428,433 (2000)). Russell offers no support for the proposition that,
when a defendant makes a due-process-based argument that she was misled into testifying, she
can prove causation more easily than a defendant arguing that her right against self-incrimination
was violated. Therefore, in assessing whether Government conduct "induce[d] her into waiving
her Fifth Amendment right" in violation of due process, Drake, 310 F. Supp. 3d at 632,the court
looks to the standard set forth in Washington, Haak, and other cases about compelled testimony.
"As Russell notes(Third Suppl. Mem. at 3 n.3), Haak was not about grand juiy misconduct, but rather a confession
during a non-custodial police interview. 884 F.3d at 402. The court cites it because it is a recent, controlling case
that sets forth two generally applicable points oflaw relevant to Russell's argument. First, the key question in
assessing whether a defendant voluntarily waived her Fifth Amendment rights is whether coercive law enforcement
conduct overbore the defendant's will. Id. at 409. Second,false or misleading statements by law enforcement do
not necessarily render a Fifth Amendment waiver involuntary. Id.(citing United States v. Anderson.929 F.2d 96,
99(2d Cir. 1991)). Accordingly,to show that her rights to due process and against self-incrimination were violated,
Russell would need to show that the Government's conduct overbore her will. She has not done that.
15
In sum,even without an evidentiary hearing, the transcript of her testimony makes clear
that Russell did not choose to testify because she was misled into believing that she did not have
criminal exposures because she misunderstood her Fifth Amendment rights, or because her "will
was overbome by [coercive law enforcement] conduct," Haak.884 F.3d at 409. If Russell
was a subject when she was subpoenaed,the Government should have sent Her a subject letter or
an advice-of-rights form. And the Government's advice to her about the Fifth Amendment may
have been imprecise. But these errors did not violate her right to due process because they did
not induce her to testify.
B. Russell's Discovery Requests
In the alternative, Russell asks the court to compel the Government to produce the
following:(1)Any documents reflecting when Russell became a "target," as that term is defined
by the DOJ Manual;(2)the legal instructions given to the grand jury conceming Russell's
assertion ofthe Fifth Amendment;(3)the grand jury minutes, either to counsel or to the court in
camera, relating to the Fifth Amendment warnings provided to every witness, as well as any
legal instructions given on the same topic;(4)any evidence related to Russell that was presented
to the grand jury;(5)all 302s reflecting any statements conceming Russell that relate to
interviews conducted before May 10,2018;(6)the evidence that the government received after
May 10,2018 that supposedly made Russell, in the view ofthe government, chargeable with an
offense; and (7)any communications, including email correspondence,text messages and
intemal memoranda, reflecting statements by any DOJ employee,or other law enforcement
officer, in the possession ofthe United States Attorney's Office conceming Russell before May
10,2018. (Mem. at 16-17; Second Suppl. Mem. at 4-5; Fourth Suppl. Mem. at 2.)
16
The items Russell requests can be put in two categories:(1) grand jury materials and (2)
materials regarding Russell's target status.
1. Grand Jury Materials
Federal Rule of Criminal Procedure 6(e) provides a presumption ofsecrecy regarding
matters before the grand jury. Fed. R. Grim. P. 6(e)(2)(B). A defendant may overcome this
presumption by showing a "particularized need"for disclosure. See Douglas Oil Co. of Cal. V.
Petrol Stops Nw..441 U.S. 211,223(1979).
A party makes a showing ofparticularized need by proving "that the

material they seek is needed to avoid a possible injustice in another
judicial proceeding, that the need for disclosure is greater than the
need for continued secrecy, and that their request is structured to
cover only material so needed."
In re Grand Jury Subpoena. 103 F.3d 234,239(2d Cir. 1996)(quoting Douglas Oik 441 U.S. at
222). But disclosure of grand jury minutes "should not be permitted without concrete allegations
of Government misconduct." United States v. Leung.40 F.3d 577,582(2d Cir. 1994). "[A]
defendant's mere speculation as to what occurred in front ofthe Grand Jury does not warrant
inspection ofthe minutes by defense counsel." United States v. Henrv,861 F. Supp. 1190, 1194
!
(S.D.N.Y. 1994)(collecting cases).
Here, Russell has not made concrete allegations of Government misconduct that would
demonstrate a particularized need for disclosure; indeed, her allegations are purely speculative.
First she has not shown a need for the legal instructions given to the grand jury conceming
Russell's assertion ofthe Fifth Amendment because she has no basis for challenging the
Government's representation that the grand jury was properly instructed (Jan. 4,2019 Email
Exchange; Apr. 8,2019 Conf. Tr. at 16:1-3)). Contrary to Russell's argument(Mem. at 20-21),
the Government's Mlegedly imprecise articulation ofthe standard for invoking the Fifth
Amendment at the beginning of Russell's testimony (Tr. at 9:12-16) does not call into question
17
the Government's representation that it instructed the grand jury not to hold a witness's
invocation ofthe Fifth Amendment against them. In essence, Russell argues that because the
Government made one error with regard to Fifth Amendment instructions—imprecisely
articulating the standard for invoking it—^the Government may also have made another error.
(Mem. at 20-21.) As the Government states, such speculative allegations could be made in any
criminal case. (Opp'n at 20.) Granting Russell's request, absent a showing of a particularized
need, would violate the general rule of grand jury secrecy. (Id.(citing Application ofExecutive
Securities Corp.. 702 F.2d 406,409(2d Cir. 1983)).) .
Second,the court fails to understand how Russell could have a particularized need for
"the grand jury miiiutes ... relating to the Fifth Amendment wamings provided to every
witness, as well as any legal instructions given on the same topic"(Mem. at 16-17). She
provides the following explanation for this request:
If other witnesses were misinformed of the scope of their Fifth

Amendment privilege, the potential unfair prejudice - as to all
defendants - is twofold. First, like Ms. Russell, such witnesses
could have been induced by the prosecutor's incorrect advice to
waive their rights and provide the grand jury with testimony they
would not otherwise have given. Second, incorrect advice to
witnesses about the scope of the Fifth Amendment privilege risks
misleading the grand jury as to the meaning and significance of
"pleading the Fifth"- a misimpression that would be compounded
were the accompanying legal instructions inaccurate or incomplete.
(Mem. at 20.) Russell has made no concrete allegations about any other witness's testimony or
how such testimony led to Russell's indictment. Her allegations are "mere speculation as to
what occurred in front ofthe Grand Jury," which "does not warrant inspection ofthe minutes by
defense counsel." Henrv. 861 F. Supp. at 1194(citing, inter alia. United States v. Wilson.565 F.
Supp. 1416,1436(S.D.N.Y. 1983); United States v. Abrams.539 F. Supp. 378, 389(S.D.N.Y.
1982); United States v. McGrath.459 F. Supp. 1271,1273(S.D.N.Y. 1978)).
18
Third. Russell has no particularized need to review the evidence that was presented to the
I
grand jury. Presumably, she wants these materials so that she can assess whether her testimony
"substantially influenced the grand jury's decision to indict" her. Bank ofNova Scotia. 487 U.S.
at 256. But as explained above, her testimony was not unlawfully coerced, so even if her
testimony had influenced the grand jury, that would not support dismissal ofthe indictment.
2. Materials Regarding Russell's Target Status

j
The court has already directed the Government to produce all 18 U.S.C. § 3500 materials
it possessed as of April 4,2019 by no later than April 12,2019. (See April 4,2019 Min. Entry.)
To the court's knowledge, this requires the Government to turn over much of its evidence as to
her target status. Indeed, the Government's initial production on April 2,2019 included 302s
reflecting interviews conducted before Russell's appearance, which is one ofthe item categories
she requests. (See Second Suppl. Mem. at 1.) A further order to produce these documents
appears unnecessary. Russell should inform the court if she believes otherwise.
In any event, this request for materials as to her target status is irrelevant to Russell's
motion to dismiss the indictment. As explained above, even if Russell was a target when she
I
testified, the court Would not dismiss the indictment because there is no basis to do so. See
Russell. 916 F. Supp. 2d at 312(E.D.N.Y. 2013)("[T]he Court finds it unnecessary to determine
whether Defendant was a target at the time of his testimony because Defendant has offered no
basis for the court to exercise its supervisory powers."). Therefore, the court need not inquire
further into the timing of when Russell became a target ofthe Government's investigation.
19
m. CONCLUSION
/
Russell's(Dkts. 270,463) motion to dismiss the indictment and compel the Government
to produce certain materials is DENIED without an evidentiary hearing. Out ofan abundance of
caution, the court initially files this order under seal because it includes discussion of sealed
grand jury testimony, some of which may need to be redacted. By April 19,2019,the
Government shall submit a proposal as to the portions ofthis order, if any,that it believes should
be redacted and remain sealed.
SO ORDERED.
s/Nicholas G. Garaufis
Dated: Brooklyn, New York NICHOLAS G. GARAUFIS

April 12,2019 United States District Judge
20

Nxivm Doc 528: Order On Russell Motion To Dismiss

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Case 1:18-cr-00204-NGG-VMS Document 528 Filed 04/12/19 Page 1 of 20 PageID #: 5560

UNITED STATES DISTRICT COURT

Indictment(Dkt. 430) 13-15). (Kathy Russell Mot. to Dismiss("Mot")(Dkt. 270).) Russell

to Dismiss("Mem.")(Dkt. 283); Kathy Russell First Supplemental Mem.in Supp. of Mot. to

of Mot.to Dismiss("Second Suppl. Mem.")(Dkt. 498); Kathy Russell Third Supplemental

court DENIES her motion without an evidentiary hearing.

A. Russell's Grand Jury Testimony

destroyed any Nxiym-related documents. (Id. at 7:5-8,21-24.) Afterward,the Government

could be charged with perjury if she did not. (Id. at 10:4-12.)

Amendment roughly 50 times. (Tr.;^Gov't Opp'n to Russell Mot. to Dismiss("Opp'n")

Fanciullo. (Id at 63:7-9; see Third Suppl. Mem.at 3.)

at 1:1, with id. at 80:24.)

declined the proposal. (Id)

interviews, ultimately developing evidence making [Russell] chargeable with racketeering

password could be obtained and his emails monitored.'" Qd.)

C. Russell's Motion to Dismiss the Indictment

On March 13,2019,the Government returned a second superseding indictment that

Superseding Indictment(Dkt. 391) 13-15.) Unlike in the first superseding indictment,the

thirteen criminal statutes that Defendants allegedly conspired to violate. Qd.")

(1)^302s reflecting any statements conceming Ms. Russell that

law enforcement officer, in the possession of the United States

evidence to establish Russell's participation in a racketeering conspiracy.^ (Opp'n at 15 n.6.)

On April 9,2019,Russell filed a letter in response to the court's statements at the

A. RusselFs Motion to Dismiss

916 F. Supp. 2d 305,312(E.D.N.Y. 2013)("[T]he Court fmds it unnecessary to determine

proceedings requires a "constitutional or congressional imperative." United States v. Gillespie.

United States v. Allen. 864 F.3d 63,98(2d Cir. 2017).^

1. Russell's Due Process Argument

at 5; Apr. 8,2019 Conf. Tr. at 9:15-23.)

asked. (Id at 2-3.)

inaccurate and misleading representation as to an individual's status on which that individual

2. The Government's Representations Did Not Actuallv Induce Russell to

not induce her to testify.

B. Russell's Discovery Requests

offense; and (7)any communications, including email correspondence,text messages and

materials regarding Russell's target status.

1. Grand Jury Materials

Federal Rule of Criminal Procedure 6(e) provides a presumption ofsecrecy regarding

Petrol Stops Nw..441 U.S. 211,223(1979).

A party makes a showing ofparticularized need by proving "that the

(S.D.N.Y. 1994)(collecting cases).

Government made one error with regard to Fifth Amendment instructions—imprecisely

Securities Corp.. 702 F.2d 406,409(2d Cir. 1983)).) .

provides the following explanation for this request:

If other witnesses were misinformed of the scope of their Fifth

Supp. 1416,1436(S.D.N.Y. 1983); United States v. Abrams.539 F. Supp. 378, 389(S.D.N.Y.

1982); United States v. McGrath.459 F. Supp. 1271,1273(S.D.N.Y. 1978)).

2. Materials Regarding Russell's Target Status

Russell. 916 F. Supp. 2d at 312(E.D.N.Y. 2013)("[T]he Court finds it unnecessary to determine

be redacted and remain sealed.

Dated: Brooklyn, New York NICHOLAS G. GARAUFIS

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