U.S. v. Aronov

MEMORANDUM & ORDER On September 6, 2019, a grand jury returned an indictment against Defendants Iskyo Aronov, Michael Konstantinovskiy, Tomer Dafna, Avraham Tarshish, and Michael Herskowitz, charging them with conspiracy to commit wire and bank fraud in violation of 18 U.S.C. §§1349 and 3551 et seq. (“Counts One and Two”), and substantive counts of wire fraud related to specific transactions in violation of 18 U.S.C. §§1343, 2, and 3551 et seq. (“Counts Three through Seven”).¹ (Indictment (“Ind.”)

36-42, Docket Entry No. 1; Grand Jury Investigations Covering Mem., annexed to Ind. as Ex. 3, Docket Entry No. 1-3.) The Indictment alleges that Defendants engaged in conspiracies to defraud lenders and certain borrowers (collectively, the “Short Sale Victims”) “by providing them with false, misleading and incomplete information to induce them to execute short sales at fraudulently depressed prices, thereby causing losses to the lenders and, at times, the borrowers” (the “Short Sale Schemes”). (Ind. 18.) On October 16, 2023, Defendants² jointly moved to dismiss the Indictment pursuant to Rule 12(b)(3)(B)(v) of the Federal Rules of Criminal Procedure, arguing that the Indictment alleged a theory of wire fraud recently abrogated by the Supreme Court’s decision in Ciminelli v. United States, 598 U.S. 306 (2023).³ (Defs.’ Mem. 6-13.) Defendants also moved in the alternative pursuant to Rule 6(e)(3)(E)(ii) of the Federal Rules of Criminal Procedure for the Court to conduct an in camera review of the grand jury minutes and the grand jury instructions “to ensure that Defendants were not indicted based on the now invalid ‘right-to-control’ theory of wire fraud.” (Id. 14.) The Government opposes the motion. (Gov’t Opp’n.) For the reasons set forth below, the Court denies Defendants’ motion to dismiss the Indictment. I. Background a. The Indictment According to the thirty-three-page Indictment, from in or about December of 2012 to January of 2019, Defendants “worked both together and separately to purchase hundreds of properties at fraudulently depressed prices and then resell or ‘flip’ the properties for large profits.” (Ind. 18.) The Short Sale Schemes “originated at [My Ideal Property ("MIP")] under the direction of [Aronov] with the assistance of [Konstantinovskiy and Tarshish], Short-Sale Co-Conspirators 1, 2 and 3, and others” (the “MIP Scheme”) and the scheme was later replicated by Tarshish and Dafna “at Exclusive Homes with the assistance of Short-Sale Co-Conspirator 2 and others” (the “Exclusive Homes Scheme”). (Id. 19.) The Indictment provides a detailed overview of the MIP and Exclusive Homes Schemes, (see id.