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United States v. Smith

United States District Court, N.D. Iowa, Cedar Rapids Division

May 3, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
DARRELL SMITH, Defendant.

          ORDER

          LINDA R. READER JUDGE

         I. INTRODUCTION

         The matter before the court is the pretrial detention of Defendant Darrell Smith in the above-captioned matter.

         II. RELEVANT PROCEDURAL HISTORY

         On March 31, 2017, a criminal complaint (docket no. 2) was filed against Defendant alleging: (1) mail fraud in violation of 18 U.S.C. § 1341; (2) wire fraud in violation of 18 U.S.C. § 1343; (3) aggravated identity theft in violation of 18 U.S.C. § 1028A; and (4) money laundering in violation of 18 U.S.C. §§ 1956(a)(1) and 1957. See Complaint at 1. On April 26, 2017, Defendant appeared before the undersigned for an initial appearance, following which Defendant was temporarily detained pending a detention hearing. See April 26, 2017 Minute Entry (docket no. 9); Order of Temporary Detention (docket no. 8). On May 1, 2017, the United States Probation Office filed the Pretrial Services Report (docket no. 11). On that same date, the court held a preliminary hearing and detention hearing. See May 1, 2017 Minute Entry (docket no. 12). At the hearing, the government was represented by Assistant United States Attorney Timothy Vavricek. Defendant appeared personally with his attorney, Michael Lahammer. At the conclusion of the hearing, Defendant conceded that the government had met its burden for purposes of the preliminary hearing. No further written order from the court shall issue on that matter.

          III. RELEVANT FACTUAL BACKGROUND

          A. Evidence

         At the detention hearing, the government introduced Exhibits 1-8, which are materials associated with Defendant's prior criminal case in United States v. Darrell Smith, 16-CR-2002-LTS (“2016 proceedings”). The government also offered the previously filed Pretrial Services Report and the Affidavit of Special Agent Scott Irwin of the Federal Bureau of Investigation in Support of the Complaint (“Irwin Affidavit”) (docket no. 2). The government also introduced the testimony of Special Agent Scott Irwin. The court took judicial notice of the underlying criminal file in the 2016 proceedings. See United States v. Morris, 451 F.2d 969, 972 (8th Cir. 1971) (“[T]he district court may take judicial notice of its own records.”) (citing Chandler v. United States, 378 F.2d 906, 909 (9th Cir. 1967)). The evidence supports the following facts regarding the instant matter.

         Defendant “was a broker and investment adviser for several investment firms.” Irwin Affidavit at 4. “On a number of occasions, [Defendant] . . . caused money to be transferred or checks to be issued via wire and/or mail from his clients' investment accounts without their knowledge or authorization.” Id. at 5. Defendant subsequently “deposited the funds in accounts he controlled . . . and then used those funds for the operation of Permeate, ” a biofuel company owned by Defendant, “and for other purposes.” Id. Defendant “effectuate[d] the unauthorized transfer of funds via wire or issuance of checks via mail from his clients' investment accounts by providing the company with an authorization purportedly signed by the client authorizing the withdrawal of funds from the investment account.” Id. He “either used pre-signed, blank authorization forms or forged his clients' signatures without their authority.” Id.

         At the hearing, Special Agent Irwin testified extensively about misrepresentations Defendant made to the court when seeking pretrial release in the 2016 proceedings. He also testified that Defendant attempted to contact individuals whom he was prohibited from contacting, in violation of the court's order. He also testified that Defendant contributed to a report for prospective investors, which contained several misrepresentations. The report was distributed to prospective investors while Defendant was on pretrial release in the 2016 proceedings.

          B. Pretrial Services Report

         Except for Defendant's recent period of incarceration, he has resided with his wife in Forest City, Iowa for twenty-three years. If released, Defendant intends to reside with his wife at their home in Forest City. Defendant reports that he is in “poor” health, evidenced by significant weight loss, back pain and dental problems. Defendant has no history of alcohol abuse and denied the illegal use of controlled substances. Defendant has significant financial resources.

         Defendant's criminal history consists of a 2016 conviction for failure to account for and pay over employment tax. See 2016 Proceedings. While that charge was pending, Defendant was initially released on pretrial supervision. The government filed a motion to revoke pretrial release, which the court denied. The government then filed a second motion ...


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