USA v. Lytle et al

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
vs.
ROBERT LARRY LYTLE,
a/k/a Larry Lytle,
IRINA KOSSOVSKAIA, and
FREDRETTA L. EASON,
Defendants.
5:17-CR-50020-KES
ORDER DENYING MOTION TO
DISMISS INDICTMENT AND
MOTION TO STAY JURY TRIAL
Defendant Robert Larry Lytle moves to dismiss the indictment with
prejudice because this matter was instituted by an attorney not authorized to
practice before this court. Docket 103. Lytle also moves for the court to stay
the jury trial for this case until such time as the United States Court of Appeals
for the Eighth Circuit decides the appeal currently pending in the civil matter
captioned: United States of America v. 2035, Inc., a corporation, and Robert L.
Lytle, an individual, d/b/a/2035 PMA and QLASERS PMA, No. 17-2421 (8th
Cir. appeal docketed June 28, 2017).1 Docket 106. Plaintiff, the United States,
opposes Lytle’s motions. Dockets 108, 109. For the reasons stated below, the
court denies both Lytle’s motion to dismiss the indictment and his motion to
stay the jury trial for this matter.
1 Lytle’s pending appeal before the Eighth Circuit appeals a decision of this
court in a related civil case. See United States v. 2035, Inc., 5:14-CV-5075-KES,
Docket 193, (D.S.D. May 4, 2017) (order denying various motions filed by Lytle
that sought relief from the permanent injunction entered against him).
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BACKGROUND
On January 26, 2017, an 18 count indictment was filed naming Lytle,
Irina Kossovskaia, and Fredretta L. Eason as defendants.2 Docket 2. The
indictment is signed by the grand jury foreperson; by Ted L. McBride, an
Assistant United States Attorney in the District of South Dakota; and by Ross
S. Goldstein, a trial attorney from the Consumer Protection Branch of the
United States Department of Justice. Id. The indictment was returned to
United States Magistrate Judge Daneta Wollman in open court by the grand
jury foreperson, attorney McBride, and attorney Goldstein on the same day.3
See Docket 101-1 at 2-3.
On January 31, 2017, the court issued a scheduling and case
management order for this matter as to Lytle and Eason. Docket 22. On
March 21, 2017, following the initial appearance of Kossovskaia, the court
issued a scheduling and case management order as to all three defendants.
Docket 61. This order set the trial date for May 30, 2017. Id. Since March 21,
2 The instant criminal case is closely related to the civil case involving Lytle
referenced above in note one. For example, counts one through four of the
indictment, charge Lytle and his co-defendants with either criminal contempt
resulting from their alleged failure to obey the preliminary and permanent
injunctions entered by Chief Judge Jeffrey L. Viken or with conspiracy to
violate the injunctions ordered by Chief Judge Viken. See Docket 2 at 6-14
(counts one through four of the indictment); see also United States v. 2035,
Inc., 5:14-CV-5075-JLV, Docket 48, (D.S.D. January 14, 2015) (Preliminary
Injunction entered by Chief Judge Viken); United States v. 2035, Inc., 5:14-CV-
5075-JLV, Docket 138, (D.S.D. October 13, 2015) (Amended Permanent
Injunction entered by Chief Judge Viken).
3 This transcript of the grand jury return was filed with the court in response to
Lytle’s previous motion to dismiss the indictment. See Docket 98 (motion to
dismiss); Docket 102 (order denying Lytle’s motion to dismiss).
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2017, the court has granted three additional continuances requested by the
parties. See Dockets 69, 90, 97. The most recent continuance order set
Monday, January 22, 2018, as the trial date for this case.4 Docket 97.
January 22, 2018, remains the currently scheduled trial date. See id.
On September 28, 2017, Lytle filed his first motion to dismiss the
indictment in this case. Docket 98. In that motion, Lytle argued that Rule 6(f)
of the Federal Rules of Criminal Procedure required dismissal of the indictment
because the docket for this case did not reflect that the grand jury foreperson
or deputy foreperson returned the indictment to a magistrate judge in open
court. Id. at 2. In response to Lytle’s motion, the United States submitted the
transcript from the January 26, 2017, return of indictment hearing that
showed that the indictment was returned to Magistrate Judge Wollman in open
court by the grand jury foreperson, attorney McBride, and attorney Goldstein.
Docket 101-1 at 2-3. Thus, because the United States fully complied with the
requirements of Federal Rule of Criminal Procedure 6(f), the court denied
Lytle’s motion to dismiss the indictment. Docket 102 at 3.
On November 30, 2017, in Lytle’s related civil case, the court entered an
order denying various motions filed by Lytle.5 See United States v. 2035, Inc.,
5:14-CV-5075-KES, Docket 210 (D.S.D. November 30, 2017). One of the
motions denied by the court was Lytle’s motion to alter or amend the court’s
May 4, 2017 order under Rule 59(e) of the Federal Rules of Civil Procedure.
4 This continuance was requested by Lytle on September 12, 2017. Docket 93.
5 Lytle represents himself pro se in the related civil action.
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See id., Docket 210 at 6-9. Lytle filed his Rule 59(e) motion on May 17, 2017.
Id., Docket 210 at 6. On June 26, 2017—after Lytle had already filed his Rule
59(e) motion—Lytle filed a notice of appeal with the Eighth Circuit Court of
Appeals, appealing this court’s May 4, 2017 order.6 See id., Docket 198.
DISCUSSION
I. 	Motion to Dismiss the Indictment
Lytle moves to dismiss the indictment in this case for a second time.
In the present motion to dismiss, Lytle first argues that this action is void
because the action was instituted by attorney Goldstein, a lawyer who was not
admitted to practice before this court when he appeared before the grand jury.
Docket 103 at 1-5. Lytle’s second argument is that attorney Goldstein’s
presence before the grand jury, while not admitted to practice before this court,
is either a prejudicial error under Federal Rule of Criminal Procedure 6(d) or a
violation of Lytle’s Fifth Amendment due process rights.7 Id. at 6-7. In
response, the United States argues that attorney Goldstein’s participation in
this matter is proper under the relevant statutory authority and Eighth Circuit
case law. See Docket 108.
6 Lytle’s appeal, which is still pending before the Eighth Circuit, is the basis for
his motion to stay. See Docket 106.
7 Lytle concedes in his brief in support of his motion to dismiss that there is no
federal case law to support his due process claim. See Docket 103 at 7 (citing
Hamilton v. Roehrich, 628 F. Supp. 2d 1033 (D. Minn. 2009)). Because the
court’s own review also failed to identify any federal case finding that
defendants have a constitutional right to be prosecuted by a licensed attorney,
the court denies Lytle’s motion to dismiss under the Fifth Amendment’s due
process protections.
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A. Relevant Law
Under the Federal Rules of Criminal Procedure, only the following
persons “may be present while the grand jury is in session: attorneys for the
government, the witness being questioned, interpreters when needed, and a
court reporter or an operator of a recording device.” Fed. R. Crim. P. 6(d)(1).
The term “Attorney for the government” is defined by the Federal Rules of
Criminal Procedure to include “(A) the Attorney General or an authorized
assistant; (B) a United States attorney or an authorized assistant; . . . and
(D) any other attorney authorized by law to conduct proceedings under these
rules as a prosecutor.” Fed. R. Crim. P. 1(b)(1).
One of the duties of the Department of Justice, under the direction of the
Attorney General, is the duty to conduct all litigation in which the United
States is a party. 28 U.S.C. § 516. To help the Attorney General meet this duty,
Congress has provided that
[t]he Attorney General or any other officer of the Department of
Justice, 	or 	any 	attorney 	specially 	appointed 	by 	the 	Attorney
General under law, may, when specifically directed by the Attorney
General, conduct any kind of legal proceeding, civil or criminal,
including 	grand 	jury 	proceedings 	and 	proceedings 	before
committing magistrate judges, which United States attorneys are
authorized by law to conduct, whether or not he is a resident of the
district in which the proceeding is brought.
28 U.S.C. § 515(a). Among the responsibilities assigned to United States
Attorneys by Congress is the responsibility to prosecute “all offenses against
the United States . . .” that occur within the United States Attorney’s district.
28 U.S.C. § 547(1).
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Given the broad responsibility of the Attorney General and the
Department of Justice, Congress also empowered the Attorney General with the
authority to “make such provisions as he considers appropriate authorizing the
performance by any other officer, employee, or agency of the Department of
Justice of any function of the Attorney General.” 28 U.S.C. § 510. And in
28 C.F.R. § 0.13, the Attorney General has utilized 28 U.S.C. § 510 so that
Assistant and Deputy Assistant Attorney Generals can appoint Department of
Justice attorneys to represent the United States in legal proceedings where the
United States is a party. 28 C.F.R. § 0.13 (authorizing Assistant and Deputy
Assistant Attorney Generals with the ability “to exercise the authority of the
Attorney General under 28 U.S.C. [§] 515(a) . . . to designate Department
attorneys to conduct any legal proceeding . . . which United States attorneys
are authorized by law to conduct,” regardless of whether the appointed
attorney is a resident of the district where the legal proceeding was brought).
In a trio of companion cases, the Eighth Circuit has recognized the
statutory scheme put in place by Congress to allow the Attorney General to
delegate his responsibility to his subordinates within the Department of Justice
to conduct litigation in cases where the United States is a party. First, in
United States v. Wrigley, 520 F.2d 362 (8th Cir. 1975), the Eighth Circuit
recognized that “[t]he purpose of [28 U.S.C. §] 515(a) is to aid the effective
enforcement of the criminal laws, to center the responsibility therefor in the
Attorney General, and to insure that the United States is represented by
persons with authority.” Id. at 369 (citations omitted). The Wrigley court also
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remarked that 28 U.S.C. § 515(a) creates “a broad grant of authority that
empowers ‘the Attorney General to clothe his subordinates with authority to
make any appropriate investigation or prosecution, having to do with any
alleged offense under any laws of the United States.’ ” Id. at 368 n.10 (quoting
United States v. Amazon Indus. Chem. Corp., 55 F.2d 254, 257 (D. Md. 1931)).
Thus, given the purpose and broad authority provided to the Attorney General
under 28 U.S.C. § 515(a), the Wrigley court concluded that the letter of
appointment, which specifically directed a Department of Justice Attorney to
conduct grand jury proceedings in the Western District of Missouri, was proper
under 28 U.S.C. § 515(a) and provided the special attorney with authority to
conduct the designated litigation. Id. at 367-68.
Second, in United States v. Agrusa, 520 F.2d 370 (8th Cir. 1975), the
issue before the court was whether the Attorney General could “delegate his
authority under [§] 515(a) to subordinate officers.” Id. at 371. Before addressing
the issue, the court recognized its holding from the companion case Wrigley
“that letters of appointment which specifically direct the special attorneys to
conduct grand jury proceedings . . . satisfy 28 U.S.C. [§] 515(a).” Id. (citing
Wrigley, 520 F.2d 362 at 367). Then, after also reviewing the legislative history
of 28 U.S.C. § 515(a), the Agrusa court concluded that 28 U.S.C. § 510
provided sufficient statutory authority to conclude that “[n]othing in 28 U.S.C.
[§] 515(a) or its legislative history evidences a congressional intent to limit the
delegation authority of the Attorney General under 28 U.S.C. [§] 510.” Id. at
372. Thus the court again held that the appointment of a Department of
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Justice attorney to conduct litigation in the Western District of Missouri by
letter of appointment was proper. Id.
Third, in DiGirlomo v. United States, 520 F.2d 372 (8th Cir. 1975), the
defendant argued that the participation of a Department of Justice attorney—
who was appointed via a letter of appointment—was improper and required
dismissal of the defendant’s indictment. Id. at 374. The Eighth Circuit rejected
DiGirlomo’s arguments and recognized that the arguments were foreclosed by
the court’s recent decisions in the companion cases of Wrigley and Agrusa. Id.
B. Whether attorney Goldstein’s appearance in this case is
proper?
Lytle argues that because attorney Goldstein was not admitted to
practice before this court when he signed the indictment and when he
participated in the return of indictment hearing before Magistrate Judge
Wollman, the indictment in this case is void. See Docket 103 at 2. In support of
his argument, Lytle cites numerous decisions from various state Supreme
Courts recognizing “the legal maxim that legal proceedings instituted by a
person not licensed to practice law are a nullity.” Id. at 3 (citing McKenzie v.
Burris, 500 S.W.2d 357, 359-60 (Ark. 1973); Russell v. Dopp, 42 Cal. Rptr. 2d
768, 775 (Cal. Ct. App. 1995); People v. Dunson, 737 N.E.2d 699, 706 (Ill.
2000); People v. Munson, 150 N.E. 280, 283 (Ill. 1925); Stevens v. Jas. A. Smith
Lumber Co., 222 N.W. 665, 666 (S.D. 1929)). Lytle also argues that because
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attorney Goldstein’s appearance violated Local Rule 44.1, dismissal of the
indictment with prejudice is warranted.8 Docket 103 at 4-5.
The United States disagrees with Lytle’s contention and instead argues
that attorney Goldstein’s participation in this case is proper under the
mechanism established by Congress and approved by the Eighth Circuit.
Docket 108 at 4. In support of this point, the United States cites a
March 17, 2016 letter of appointment from then-Deputy Assistant Attorney
General Jonathan F. Olin. See Docket 108-1. That letter states:
Dear Mr. Goldstein:
As an attorney for the government employed full time by the
Department of Justice and assigned to the Consumer Protection
Branch, 	you 	are 	hereby 	authorized 	and 	directed 	to 	file
informations and to conduct in the District of South Dakota and in
any other judicial district, any kind of legal proceedings, civil or
criminal, including grand jury proceedings and proceedings before
United 	States 	Magistrates, 	which 	United 	States 	Attorneys 	are
authorized to conduct.
You 	may 	file 	a 	copy 	of 	this 	letter 	with 	the 	Clerk 	of 	the
District Court to evidence this authorization.
Sincerely yours,
Jonathan F. Olin
Deputy Assistant Attorney General
Id. The United States argues that this letter alone is sufficient to verify that
attorney Goldstein was “an authorized attorney for the government within the
meaning of [Federal Rule of Criminal Procedure] 1(b)(1) and permitted under
8 Local Rule 44.1 is the local rule governing the admission of non-licensed
attorneys to practice within this district. D.S.D. Crim. LR 44.1. Local Rule
44.1(F) is the subsection that applies to attorneys employed by the United
States.
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Rule 6(d) [of the Federal Rules of Criminal Procedure] to be present while the
grand jury was in session.” Docket 108 at 4.
Having reviewed the relevant law and attorney Goldstein’s letter of
appointment, the court agrees with the United States that attorney Goldstein’s
participation in this case is proper. As the Eighth Circuit’s decisions in Wrigley,
Agrusa, and DiGirlomo make clear, the requirement for satisfying 28 U.S.C.
§ 515(a) is not onerous because as long as a letter of appointment mirrors the
statutory language of section 515(a), the appointment will be upheld as valid.
See, e.g., Wrigley, 520 F.2d at 367-68. Thus, because the letter of appointment
from Deputy Assistant Attorney General Olin authorizing attorney Goldstein to
participate in this matter is valid, Lytle’s motion to dismiss must be denied.
Even if Lytle’s argument had some basis in federal law,9 his motion to
dismiss would still be subject to a harmless error analysis. See Bank of Nova
Scotia v. United States, 487 U.S. 250, 254-56 (1988). Under a harmless error
analysis, “dismissal of the indictment is appropriate only ‘if it is established
that the violation substantially influenced the grand jury's decision to indict,’
or if there is ‘grave doubt’ that the decision to indict was free from the
substantial influence of such violations.” Id. at 256 (quoting United States v.
Mechanik, 475 U.S. 66, 78 (1986) (O’Connor, J., concurring)). Here, Lytle has
not engaged in a harmless error analysis, and instead relies solely on his
argument that the initiation of a criminal case by a non-licensed attorney
9 As a review of Lytle’s brief in support of his motion to dismiss makes clear,
his argument that an indictment is void if a suit is initiated by a non-licensed
lawyer relies exclusively on decisions from state courts. See Docket 103 at 3-5.
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either voids the indictment or is prejudicial error sufficient to warrant
dismissing the case. Docket 103 at 3-6. But, as noted above, supra at 4 n.7,
the court has not found a federal case that holds that the Constitution requires
criminal cases to be initiated by licensed lawyers. Cf. Hamilton, 628 F. Supp.
2d at 1054 (concluding that a defendant has no constitutional right to be
prosecuted by a licensed attorney). Further, even assuming that Lytle was
harmed by attorney Goldstein’s participation before the grand jury, the
participation of attorney McBride—who Lytle concedes is properly licensed to
practice before this court—throughout the duration of the grand jury
proceedings would be sufficient to cure the error. Thus, Lytle’s failure to
demonstrate that attorney Goldstein’s participation before the grand jury casts
grave doubts regarding the grand jury’s decision to indict him serves as an
additional independent basis for denying Lytle’s motion to dismiss.10
10 Lytle is correct, however, in his argument that the United States failed to
comply with the requirements of Criminal Local Rule 44.1(F). While the failure
to comply with a local rule can lead to the dismissal of a case, the Eighth
Circuit has recognized “that ‘the application of local rules is a matter peculiarly
within the district court’s province.’ ” Yannacopoulos v. Gen. Dynamics Corp.,
75 F.3d 1298, 1035 (8th Cir. 1996) (quoting Chrysler Credit Corp. v. Cathey,
977 F.2d 447, 449 (8th Cir. 1992) (per curiam)); see also Silberstein v. I.R.S., 16
F.3d 858, 860 (8th Cir. 1994) (“[T]he district court has considerable leeway in
the application of its local rules” (citation omitted)). “Indeed, ‘[i]t is for the
district court to determine what departures from its rules may be overlooked.’ ”
Silberstein, 16 F.3d at 860 (alteration in original) (quoting Braxton v. Bi-State
Dev. Agency, 728 F.2d 1105, 1107 (8th Cir. 1984)). Here, the interests of
justice weigh heavily in favor of overlooking the noncompliance with Local Rule
44.1(F).
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II. 	Motion to Stay
Lytle also moves the court to stay the jury trial for this case until such
time as the Eighth Circuit decides Lytle’s pending civil appeal. See United
States of America v. 2035, Inc., No. 17-2421 (8th Cir. appeal docketed June 28,
2017). Docket 106. The decision of whether to issue a stay is generally a matter
within a district court’s discretion. See Rhines v. Weber, 544 U.S. 269, 276
(2005) (citations omitted).
Lytle bases his request for a stay on his often-repeated argument that
this court lacked jurisdiction over him to issue the preliminary and permanent
injunctions in his related civil case. See United States v. 2035, Inc., 5:14-CV-
5075-JLV, Docket 48, (D.S.D. January 14, 2015) (Preliminary Injunction
entered by Chief Judge Viken); United States v. 2035, Inc., 5:14-CV-5075-JLV,
Docket 138, (D.S.D. October 13, 2015) (Amended Permanent Injunction
entered by Chief Judge Viken). Not only has this court rejected Lytle’s
jurisdictional arguments in his related civil case, see, e.g., id., Docket 193
(D.S.D. May 4, 2017), but the Eighth Circuit has twice concluded that the
court had jurisdiction over Lytle and his case. See United States v. 2035, Inc.,
668 F. App’x 679, 680 (8th Cir. 2016) (per curiam); Lytle v. U.S. Dep’t of Health
& Human Servs., 612 F. App’x 861, 861-62 (8th Cir. 2015) (per curiam). Thus,
given that the Eighth Circuit has twice concluded that the court had
jurisdiction to enter the preliminary and permanent injunctions against Lytle,
the court finds it highly unlikely that the Eighth Circuit will change its mind
during Lytle’s third appeal.
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Further, even if the Eighth Circuit did conclude that the court lacked
jurisdiction to enter the preliminary and permanent injunctions against Lytle,
the decision would not automatically absolve Lytle for his alleged refusal to
comply with those injunctions. See United States v. United Mine Workers of Am.,
330 U.S. 258, 293 (1947) (“[A]n order issued by a court with jurisdiction over
the subject matter and person must be obeyed by the parties until it is
reversed by orderly and proper proceedings.”). “It is hornbook law that the mere
fact that an order is erroneous does not mean that a party may violate it with
impunity.” In re Ragar, 3 F.3d 1174, 1180 (8th Cir. 1993). Thus, even if this
court was wrong to exercise jurisdiction over Lytle, the law requires Lytle to
comply with the preliminary and permanent injunctions. See id. (observing that
where a party fails to comply with a court order, “the party in violation may be
held in contempt, even if he or she later succeeds in getting the order
overturned on appeal”). Thus, the court concludes that Lytle’s pending civil
appeal fails to provide a sufficient basis for staying his criminal proceedings.
CONCLUSION
Attorney Goldstein’s participation before the grand jury in this case was
proper under the relevant statutory authority and Eighth Circuit case law.
Further, even if Lytle was able to show that attorney Goldstein’s participation
before the grand jury was improper, Lytle has failed to show that the improper
participation before the grand jury would amount to more than a harmless
error. Lytle also has failed to demonstrate a basis for staying this trial given
this court’s and the Eighth Circuit’s previous decisions in the related civil
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matter concluding that the court had jurisdiction to enter the preliminary and
permanent injunctions against Lytle. Thus, it is
ORDERED that Lytle’s motion to dismiss the indictment with prejudice
(Docket 103) and Lytle’s motion to stay (Docket 106) are denied.
DATED December 27, 2017.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE
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