UNITED STATES OF AMERICA v. ADELLE DUCHARME (2024)

ORDER GRANTING GOVERNMENT'S MOTION TO TOLL RUNNING OF THE SPEEDY TRIAL ACT UNDER 18 U.S.C. § 3161(h)(2)

Friv·o·lous. /'frivələs/ adjective

According to the Oxford English Dictionary, this word refers to something that is “of little or no weight, value, or importance; paltry, trumpery; not worthy of serious attention; having no reasonable ground or purpose.” Oxford English Dictionary, https://www.oed.com/search/dictionary/?scope=Entries&q=frivolous (last visited Mar. 4, 2024).

The Government has filed a motion asking the Court to exclude time – i.e., to toll the running of the Speedy Trial Act clock in this case. Yet no Speedy Trial Act deadlines are involved because the Government has decided not to pursue prosecution of the defendant. Instead, Government prosecutors and Adelle DuCharme have entered into a so-called Deferred Prosecution Agreement (“DPA”), i.e., an agreement to forgo prosecution. Under the terms of the agreement, there will be no prosecution of Ms. DuCharme unless, during the next two years, she commits a new criminal offense; changes her address without advising the Government; or takes on work as a fiduciary, officer, or director of a public company (an unlikely prospect if any prospective employer performs a background check). None of these possibilities appears remotely likely. Just the opposite, Government prosecutors are on record before this Court vouching for Ms. DuCharme and disclaiming any risk that a breach of the DPA conditions may occur. (Dkt. 12 at 10–11).

Ms. DuCharme is implicated in the notorious Gina Champion-Cain Ponzi fraud scam. Quoting from the Government's Sentencing Memorandum in that case, “Gina Champion-Cain ran the largest known Ponzi scheme in the history of [the Southern District of California].” United States v. Champion-Cain, 20-cr-2115-LAB, ECF No. 33. The scheme centered on Champion-Cain's false promises to finance the purchase of California liquor licenses. Investors were told she would use their money to fund loans to acquire the liquor licenses while their money would be safely held in escrow accounts maintained by Chicago Title Insurance Company, a reputable and nationally known title and escrow company. Champion-Cain guaranteed investors high rates of return on their invested funds. Not surprisingly with these incentives, she took in almost $400,000,000 in investment funds from 2012–2019.

In truth, there were no escrow accounts. During the seven-year period Champion-Cain ran the Ponzi scheme, she diverted investor funds to make sham interest payments while embezzling hundreds of thousands of dollars to support her opulent personal lifestyle.¹ She was assisted in her scheme by corrupt employees of Chicago Title who falsely verified the safety and solvency of the escrow accounts when queried by investors and auditors. (Dkt. 5 at 13-14). In exchange for their corrupt assistance, Champion-Cain paid the dishonest employees tens of thousands of dollars in bribes.

According to a “Statement of Facts” addendum to the DPA, Ms. DuCharme worked as a Senior Escrow Officer at Chicago Title between 2008 and 2019, before she was fired by the company. Ms. DuCharme admits she aided and abetted Champion-Cain's fraud scheme by falsely verifying the solvency of the supposed escrow accounts and attesting to other false representations. (Id.). In exchange for assisting in the scheme, Ms. DuCharme received secret payments of at least $23,000 from Champion-Cain. Champion-Cain also paid several thousand dollars of travel expenses for Ms. DuCharme and her family. The DPA euphemistically refers to these illegal emoluments as “gifts.”

Although Government prosecutors have known of Ms. DuCharme's involvement in the fraud scheme since at least 2019,² they took no action against her until November 2, 2023. On that day, appearing at a hearing before Magistrate Judge Daniel E. Butcher, the lead U.S. prosecutor filed an Information charging Ms. DuCharme with a single count of Securities Fraud. (Dkt. 1). At the same time, he filed the DPA. (Dkt. 5). Judge Butcher was understandably perplexed by the simultaneous filing—a criminal charge, but also an agreement not to prosecute. This led him to inquire about the need for Court involvement:

THE COURT: I have in front of me an [I]nformation and a deferred prosecution agreement. I have some questions about exactly what's going on and the role you ․ all anticipate the Court playing in this. I've reviewed the deferred prosecution agreement, and I don't see a role for the Court to play in the implementation, enforcement, or supervision under the agreement.

Am I missing something?

(Dkt. 12 at 2:20–3:2).

He was not – although Judge Butcher's bewilderment was understandable. Under the DuCharme DPA, the Court has no judicial function to perform: nothing to adjudicate, nothing to consider, nothing to supervise, nothing to enforce, and no role in securing restitution for those who were harmed by the fraud scheme. This point was made clear by the prosecutor:

MR. ARNZEN: I didn't want to get ahead of ourself (sic). I sat there in my office this morning and thought, gosh, what if Judge Butcher asks why we need him to be involved in this. And I was trying to come up with ways to answer the question. It's a light role for the Court.

(Id. at 4:12–17).

Light indeed. Helpfully assisting the befuddled prosecutor answer the judge's question, defense counsel for Ms. DuCharme explained: “She has known about this investigation since late 2019 when the FBI came to her house to interview her ․ [S]he doesn't need supervision. That's the bottom line. There's no drug history. There's no criminal history. I think – I think she would be well suited to no pretrial supervision.” (Id. at 10:11–17).

The prosecutor immediately agreed, parroting defense counsel's proposal to release Ms. DuCharme on her own recognizance – meaning no bond or bail needed to be posted – and stipulating that she wouldn't need to be supervised by United States Pretrial Services:

MR. ARNZEN: The background and history of Ms. DuCharme is exactly as we understand it ․ Ms. DuCharme is indeed low risk and doesn't have – does not present a risk of recurring criminal conduct, no flight ․ Ms. DuCharme [is] in a certain category, and that includes very light supervision.3

(Id. at 10:20–11:7).

****

The Speedy Trial Act, 18 U.S.C. § 3161(c)(1), requires that the trial of a defendant charged in an information or indictment in federal court shall commence within seventy days from the date charges are filed or from when the defendant first appears in court, whichever is later. But there are exceptions permitting delay of the seventy-day period. The Government raises one of them here. Under subsection (h)(2) of § 3161, delay is authorized for any period “during which prosecution is deferred by the attorney for the Government pursuant to written agreement with the defendant, with the approval of the court, for the purpose of allowing the defendant to demonstrate his good conduct.” Id. § 3161(h)(2) (emphasis added).

A fair reading of the subsection (h)(2) exception implies that a district court has discretion whether to go along with a request to put a criminal case in park for two years, as the Government has requested here. Specifically, the phrase “with the approval of the court” suggests the Court must exercise judgment in deciding whether the interests of justice will be served by granting a long delay in this case when there is little or no purpose for it. The Speedy Trial Act exists to protect the interests of the public as well as the defendant.⁴ Necessarily, such a subjective determination requires a judge to consider not just the interests of the parties, but also the community's interest in achieving timely resolution of notorious criminal cases, the cause of fairness, and the general good. Judges generally enjoy broad discretion to perform this function.

The Government reads subsection (h)(2) more ungenerously. According to the Government, district courts lack “free-ranging authority ․ to scrutinize the prosecution's discretionary charging decision.” (Dkt. 10, Gov't Mot. at 3 (quoting United States v. Fokker Servs. B.V., 818 F.3d 733, 738 (D.C. Cir. 2016))). To the contrary, says the Government, DPA's are designed to “give prosecutors the flexibility to structure arrangements that, in their view, best account for the defendant's culpability and yield the most desirable long-term outcomes.” Fokker Servs., 818 F.3d at 750 (emphasis added). This remains so “even when a court has potentially ‘meritorious’ criticisms of the prosecutors' exercise of discretion.” (Gov't Mot. at 2 (quoting Fokker Servs., 818 F.3d at 747)). Summing up its position, the Government reminds the Court that its role is not to be a “superprosecutor[ ] second-guessing the legitimate exercise of core elements of prosecutorial discretion ․” (Id. at 5 (quoting United State v. HSBC Bank USA, N.A., 863 F.3d 125, 138 (2d Cir. 2017))). Instead, the Court should stay in its lane, and act as “a neutral arbiter[ ] of the law.” (Id.).

The Government relies on non-binding, out-of-circuit authorities to support its position. Nevertheless, the authorities appear to be consistent with analogous Ninth Circuit precedent discussing prosecutorial discretion. In Vasquez-Ramirez v. United States Dist. Court (In re Vasquez-Ramirez), 443 F.3d 692 (9th Cir. 2006), the Ninth Circuit held that a district court has no discretion to reject a tendered guilty plea that otherwise complies with Fed. R. Crim. P. 11(b), i.e., a guilty plea that is knowing, voluntary, and intelligent. Id. at 698. Vasquez-Ramirez declared that a district court's obligation to accept a guilty plea is non-discretionary once the Rule 11(b) requirements are met. Id. Thus, according to the appellate court, even when it appears that the prosecutor is “too chicken or lazy to go to trial,” Ellis v. United States Dist. Court (In re Ellis), 356 F.3d 1198, 1215 (9th Cir. 2004) (Kozinski, concurring), the district court's discretion is “cabined only by the prosecutor's decision regarding which charges to pursue,” In re Vasquez-Ramirez, 443 F.3d at 698. The prosecutor's choice of how to proceed, said the appellate court, is “none of [ ] the district court's business.” Id. at 697.⁵

Vasquez-Ramirez dealt with acceptance of guilty pleas, not acceptance of DPA's. But it seems to follow that if a district court must accept a guilty plea, though disagreeing with the prosecutor's plea-bargaining choices, then approval of a DPA agreement must also be a mandatory, if only ministerial, act—one that involves no discretion, no decision-making, and no consideration of the interests of justice by the Court.

No one reading this Order should therefore be confused or mistaken regarding the Court's role. This Court has exercised no discretion in considering the Government's motion. Nor does the Court confirm, countenance, endorse, or lend its imprimatur in any way to the U.S. prosecutor's handling of this matter. Observant of the Ninth Circuit's admonition, the Court deems the Government's unilateral decision to enter into a DPA with Ms. DuCharme as “none of the district court's business.” The Court acts here only as a scrivener—a rubber stamp.

The Government's motion to extend time under 18 U.S.C. § 3161(h)(2) is GRANTED.

IT IS SO ORDERED.

FOOTNOTES

1.   Just how much money was lost by investors remains uncertain. Champion-Cain's plea agreement states that all parties agree that the total loss was between $65 million and $150 million. An addendum to the agreement states the amount was “up to or exceeding $160 million.” Subsequent civil suits related to the fraud were settled for an amount exceeding $300 million. Lori Weisberg, Judge signs off on final settlement with victims of Champion-Cain's $400M Ponzi scheme, THE SAN DIEGO UNION-TRIBUNE (Nov. 28, 2022), https://www.sandiegouniontribune.com/business/story/2022-11-28/judge-signs-off-on-final-settlement-with-victims-of-champion-cains-400m-ponzi-scheme.

2.   Referring to Champion-Cain's plea agreement, the lead U.S. prosecutor told news media in 2020: “The plea agreement mentions co-conspirators at least 10 times, she did not complete that fraud alone․ That leaves other co-conspirators out there.” Lori Weisberg and Greg Moran, Gina Champion-Cain pleads guilty to criminal charges of securities fraud, conspiracy in $400M Ponzi scheme, THE SAN DIEGO UNION-TRIBUNE (July 22, 2020), https://www.sandiegouniontribune.com/business/story/2020-07-22/gina-champion-cain-pleads-guilty-to-securities-fraud-conspiracy-obstruction-of-justice.

3.   Adding to the apparent futility and superfluousness of the Government's quest to involve the Court in the deal prosecutors made with Ms. DuCharme, the DPA includes a tolling agreement. The tolling agreement was signed by Ms. DuCharme and provides: “[t]he statute of limitations for any criminal conduct shall be deemed tolled between the date Defendant signs this Agreement and the term [of the Agreement] – including any extension of the term – plus one year.” (Dkt. 5 at 5). Under 18 U.S.C. § 3282, the statute of limitations for criminal Securities Fraud is five years. What this means, then, is independently, and devoid of any involvement of the Court, Ms. DuCharme has agreed that the Government retains the right to prosecute her on the Securities Fraud charge for at least three years after October 31, 2023—the date she signed the DPA.

4.   In general, the public has an important interest in the prompt resolution of criminal cases. See Flanagan v. United States, 465 U.S. 259, 265 (1984) (“[W]hen a crime is committed against a community, the community has a strong collective psychological and moral interest in swiftly bringing the person responsible to justice․ Crime inflicts a wound on the community, and that wound may not begin to heal until criminal proceedings have come to an end.”).On the day Champion-Cain pled guilty, then U.S. Attorney Robert Brewer described her fraud scheme as “by far the largest Ponzi scheme discovered in this district․ Gina Champion-Cain constructed and maintained a house of cards that has come crashing down around her and all of her victims. The scheme deprived many investors of their retirement savings, and cost at least one investor tens of millions of dollars and forced him into bankruptcy.” See n.2, supra, Gina Champion-Cain pleads guilty to criminal charges of securities fraud, conspiracy in $400M Ponzi scheme.

5.   Vasquez-Ramirez also rejected the argument that Fed. R. Crim. P. 48(a), which requires the Government to obtain “leave of court” before dismissing an indictment, vests district courts with discretion to reject a tendered guilty plea that otherwise complies with Rule 11(b). The “with approval of the court” language in § 3161(h)(2) is the virtual equivalent of the “with leave of the court” language in Rule 48(b).

Hon. Larry Alan Burns United States District Judge