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United States v. Shahadey

United States District Court, S.D. Indiana, Terre Haute Division

November 10, 2016

United States of America, Plaintiff,
v.
Frank Shahadey, Defendant.

          ORDER

          Jane Magnus-Stinson, Judge

         On November 1, 2016, Defendant Frank Shahadey was charged by Complaint with theft or bribery concerning programs receiving federal funds, in violation of 18 U.S.C. § 666. [Filing No. 1.] At Mr. Shahadey's initial appearance, the Government moved for pretrial detention, and Magistrate Judge Mark Dinsmore set a hearing on the Government's motion. [Filing No. 16.] Magistrate Judge Dinsmore held a detention hearing on November 4, 2016, denied the Government's motion for pretrial detention, and entered an Order Setting Conditions of Release. [See Filing No. 19; Filing No. 20.] Presently pending before the Court is the Government's Motion for Revocation of Release Order. [Filing No. 22.]

         The Court held a hearing on the Government's motion on November 9, 2016. [Filing No. 33.] The parties did not call any witnesses, but stipulated to proceed by proffer. After considering the evidence in this case and the parties' arguments, the Court GRANTS the Government's Motion for Revocation of Release Order, [Filing No. 22], REVERSES the Magistrate Judge's decision, and ORDERS Mr. Shahadey detained pending further Court order. The following is the Court's rationale for doing so.

         I.

         Findings of Fact and Conclusions of Law[1]

         18 U.S.C. § 3145(a) provides:

If a person is ordered released by a magistrate judge, or by a person other than a judge of a court having original jurisdiction over the offense and other than a Federal appellate court- (1) the attorney for the Government may file, with the court having original jurisdiction over the offense, a motion for revocation of the order or amendment of the conditions of release[.] The motion shall be determined promptly.

         The district court may review the magistrate judge's findings de novo, and may hold a new detention hearing. United States v. Torres, 929 F.2d 291, 292 (7th Cir. 1991). The Court notes at the outset that it has listened to the recording of the detention hearing held by the Magistrate Judge and reviewed the evidence introduced, the parties' briefs, and the Complaint. The Court also notes that its findings regarding the weight of the evidence are mandated by 18 U.S.C. § 3142(i), and are made for purposes of this Order only, and not for purposes of proving Mr. Shahadey's guilt at trial.

         The Court's inquiry into whether Mr. Shahadey should remain detained prior to trial is guided by the following factors: (1) the nature and circumstances of the offense charged, including whether the offense is a crime of violence; (2) the weight of the evidence against the person; (3) the history and characteristics of the person, including the person's character, physical and mental condition, family ties, employment, financial resources, length of residence in the community, community ties, past conduct, history relating to drug or alcohol abuse, criminal history, record concerning appearance at court proceedings, and whether at the time of the instant offense the defendant was subject to court supervision; and (4) the nature and seriousness of the danger to any person in the community. See 18 U.S.C. § 3142(g). These factors help the Court determine whether “there are conditions of release that will reasonably assure the appearance of the person as required and the safety of any other person and the community….” Id.

         The Government did not argue in support of its motion for pretrial detention that Mr. Sha-hadey poses a risk of flight, [Filing No. 26 at 2], and did not make that argument in the pending motion. It also did not present evidence regarding any drug or alcohol use by Mr. Shahadey. Accordingly, the Court will consider the remaining § 3142(g) factors to determine whether conditions of release could reasonably ensure the safety of any person and the community. The Government bears the burden of proof and must prove that there is a danger to any other person or to the community by clear and convincing evidence. 18 U.S.C. §3142(f)(2)(B) (“The facts the judicial officer uses to support a finding . . . that no condition or combination of conditions will reasonably assure the safety of any other person and the community shall be supported by clear and convincing evidence”).[2]

         Nature and circumstances of the offense.

         Mr. Shahadey was a sworn deputy with the Vigo County Sheriff's Department (“VCSD”), and was assigned to the Vigo County School Corporation (“VCSC”) as a School Security Officer until he was placed on administrative leave as a result of his November 2, 2016 arrest.[3] Frank Fennell, Mr. Shahadey's co-defendant, was the Facilities Director for VCSC. Mr. Fennell was responsible for maintenance and servicing of all VCSC facilities, and routinely submitted requisitions to the VCSC Business Office which would then create Purchase Orders that were sent to vendors authorizing them to perform work. Once work was completed, the Business Office used VCSC funds to pay the vendors for supplies or services rendered.

         Business A, owned by Individual A, is a vendor for VCSC and performs services such as tree trimming and tree and stump removal. In connection with Business A's work for VCSC, Mr. Shahadey and Mr. Fennell demanded kickbacks resulting in at least $80, 500 in inflated costs to VCSC. The kickback scheme took place from early 2014 to October 2016, and entailed Individual A - at the direction of Mr. Shahadey and Mr. Fennell - submitting inflated and false estimates and invoices for work at VCSC locations to Mr. Fennell. Mr. Fennell then awarded the work contracts on VCSC's behalf to Business A. When the work was completed, Mr. Fennell submitted the inflated invoices to the VCSC Business Office. The VCSC Business Office then paid Business A with VCSC funds, and Individual A then deposited checks, withdrew cash, and paid cash back to Mr. Shahadey and Mr. Fennell. This occurred with the majority of the 58 jobs that Business A performed for VCSC from early 2014 to October 2016. There were also occasions when Business A did not perform any services, and fake invoices were submitted for payment to VCSC. From January 2014 to June 2016, VCSC paid Business A more than $440, 000, and Individual A estimates that only approximately $37, 520 related to legitimate contracts that did not involve kickback payments.

         On June 8, 2016, the Federal Bureau of Investigation (“FBI”) publicly executed search warrants at several VCSC buildings and interviewed Mr. Fennell regarding receiving kickbacks. Even after the FBI raid and interviews, Mr. Shahadey and Mr. Fennell continued to engage in the kickback scheme.

         Weight of the evidence.

         The Court finds, for the purposes of the issue of detention only, that the weight of the evidence against Mr. Shahadey - as discussed above and as found by the Magistrate Judge - is strong.

         History and characteristics.

         As to Mr. Shahadey's history and characteristics, 18 U.S.C. § 3142(g)(3) instructs the Court to consider Mr. Shahadey's character, physical and mental condition, family ties, employment, financial resources, length of residence in the community, community ties, past conduct, history relating to drug or alcohol abuse, criminal history, and record concerning appearance at court proceedings, as well as whether he was subject to any other criminal justice supervision at the time of the charged offense.

         The Government presented clear and convincing evidence related to Mr. Shahadey's history and characteristics, which indicates a pattern of dishonesty, deceit and disregard for the law, and thus weighs in favor of detention. This evidence includes the following:

• Mr. Shahadey filed a police report stating that he injured his knee while chasing an individual in the line of duty, but Individual A was with Mr. Shahadey during the incident and stated that Mr. Shahadey complained of his knee injury immediately prior to the incident, and that Individual A - not Mr. Shahadey - was actually the one who chased the individual. Mr. Shahadey has filed a workers' compensation claim, and has relied on the apparently false police report to show that his injury occurred in the line of duty. Mr. Shahadey represented to the Magistrate Judge (by proffer) ...

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