United States District Court, D. Maryland, Southern Division
J. HAZEL UNITED STATES DISTRICT JUDGE
Katrin Verclas has been charged by grand jury indictment with
one count of Major Fraud under 18 U.S.C. § 1031
(“Major Fraud Act” or “the Act”).
Presently pending before the Court is Defendant’s
Motion to Dismiss the Indictment. ECF No. 29. A hearing was
held on July 23, 2018. ECF No. 38. Because the Indictment
does not allege that Verclas committed an essential conduct
element of Major Fraud in the District of Maryland, venue is
improper, and Defendants’ Motion to Dismiss is granted
December 2009, a Bureau within the State Department issued a
Request for Proposal (“RFP”) inviting applicants
to submit grant proposals to “support and promote
global internet freedom.” ECF No. 1 ¶ 3. The RFP
specified that only U.S. non-profit organizations with status
under 26 U.S.C. § 501(c)(3), comparable international
organizations, and universities were eligible to apply.
Id. ¶ 4.
Indictment asserts that Verclas defrauded the United States
by submitting a grant application that falsely represented
that her Delaware-based corporation MobileActive Corp
(“MobileActive”) was a New York non-profit
organization with the legal authority to apply for the grant.
Id. ¶ 5–6, 11. Verclas also claimed
falsely that MobileActive “had the financial capability
to ensure proper planning, management, and completion of the
proposed project.” Id. ¶ 12. When she
submitted the grant application on January 22, 2010, she
falsely certified to the “truth and accuracy of the
[application’s] information.” Id. ¶
6. Verclas operated MobileActive from offices in New York.
Id. ¶ 5.
on Verclas’s fraudulent application, the State
Department awarded MobileActive a grant of $1,411,000 on
September 20, 2010. ECF No. 1 ¶ 7. After the State
Department awarded the grant, Verclas falsely certified that
MobileActive would perform work under the grant and
“adhere to certain terms, conditions, and
regulations.” Id. ¶ 14. These terms
required Verclas to submit quarterly financial and progress
reports as well as final financial and progress reports.
Id. ¶ 9. After withdrawing $560,000 of the
awarded funds, Verclas sought an extension to complete work
under the grant, which the State Department approved.
Id. ¶ 16. Ultimately, Verclas failed to perform
work under the grant: she did not use the services of
companies to which the grant allocated money, transferred
grant funds to her personal account, “fil[ed] false and
misleading quarterly reports,” and did not submit a
required audit. Id. ¶¶ 18–21.
distribute the awarded funds to MobileActive, the State
Department used a Payment Management System located in
Rockville, Maryland. Id. ¶ 8. Despite failing
to perform work under the grant, Verclas withdrew a total of
$1,222,000 using the Payment Management System between
October 2010 and August 2012. Id. ¶ 17.
Defendant used much of the withdrawn funds for
“personal expenses and expenses unrelated” to the
grant. Id. ¶ 19.
March 26, 2018, over seven years after Verclas submitted the
grant application, the United States obtained a grand jury
indictment charging Defendant with a violation of 18 U.S.C.
§ 1031, the Major Fraud Act. The Act criminalizes:
“knowingly execut[ing], or attempt[ing] to execute, any
scheme or artifice with the intent – (1) to defraud the
United States; or (2) to obtain money or property by means of
false or fraudulent pretenses, representations, or
promises” related to a federal grant or contract with a
value of $1 million or more. 18 U.S.C. § 1031(a).
Government alleges that Defendant “knowingly execut[ed]
a scheme and artifice with the intent to defraud the United
States and to obtain money and property by means of material
false and fraudulent pretenses, representations, and
promises, in connection with a grant, contract, subcontract,
and other form of Federal assistance valued at $1,000,000 or
more.” ECF No. 1 ¶ 10. The Defendant committed the
alleged crime during the pendency of the non-declared
Afghanistan war, and the Government returned its indictment
before the formal termination of those hostilities. ECF No.
36 at 5, n. 2; Authorization for Use of Military Force
resolution, Pub. L. 107-40 (Sept. 18, 2001).
filed a Motion to Dismiss the Indictment, ECF No. 29, arguing
that the Indictment does not properly allege that Defendant
committed Major Fraud in the District of Maryland and venue
is therefore improper; that the Government failed to return
its Indictment within the Major Fraud Act’s seven-year
statute of limitations; and that the Indictment fails to
state an offense. Each of these arguments will be addressed
argues that the Indictment should be dismissed for improper
venue because it does not allege facts showing that Verclas
committed the charged offense in the District of Maryland.
The Constitution requires that “[t]he trial of all
crimes . . . shall be held in the state where the said crimes
shall have been committed.” U.S. Const. art. III,
§ 2, cl. 3. The Sixth Amendment similarly requires that
with “all criminal prosecutions, the accused shall
enjoy the right to a speedy and public trial, by an impartial
jury of the State and district wherein the crime shall have
been committed.” U.S. Const. amend. VI. The Federal
Rules of Criminal Procedure likewise prescribe that
“[u]nless a statute or these rules permit otherwise,
the government must prosecute an offense in a district where
the offense was committed.” Fed. R. Crim. P. 18.
as here, Congress has not prescribed specific venue
requirements for the offense charged, venue is
“determined from the nature of the crime alleged and
the location of the act or acts constituting it.”
United States v. Ebersole, 411 F.3d 517, 524 (4th
Cir. 2005) (quoting United States v. Cabrales, 524
U.S. 1, 6–7 (1998)). The inquiry into the place of the
crime may yield more than one appropriate venue, including a
venue in which the defendant has never set foot. United
States v. Bowens, 224 F.3d 302, 309 (4th Cir. 2000).
“[A]ny offense against the United States begun in one
district and completed in another, or ...