Articles Posted in White Collar Crime

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Defendant, a professional sports gambler, appealed his conviction of securities fraud and related crimes. The Second Circuit held that, although it was undisputed that a special agent's leaks to reporters violated the grand jury secrecy provision of Federal Rule of Criminal Procedure 6(e), dismissal of the indictment was not appropriate in these circumstances where defendant failed to demonstrate prejudice by the agent's actions. Furthermore, the court noted that there was no due process violation where the violations were not so systematic and pervasive as to raise a substantial and serious question about the fundamental fairness of the process resulting in the indictment, nor were they so outrageous that they violated common notions of fairness and decency. The court also held that the district court did not clearly err in its factual determinations or abuse its discretion in denying the Rule 33 motion, and the evidence was insufficient to support defendant's counts of conviction related to Darden. Finally, the court vacated and remanded the restitution order, and affirmed the forfeiture order. View "United States v. Walters" on Justia Law

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The Second Circuit vacated defendant's conviction of charges related to his involvement in an insider trading scheme where he provided material, nonpublic information to his father. At issue was the so-called "silver platter statement," where defendant purportedly told his father that he expected his father to invest based upon information to which defendant had access through his work as an investment banker. The court held that excluding the father's post-arrest FBI interview was not harmless. In this case, defendant should not have been precluded from impeaching the silver platter statement. The court held that, because the impeachment material might have undermined the silver platter statement in the eyes of the jury, it risked leaving the government with a substantially weaker case as to defendant's intent such that a guilty verdict would be far from assured. View "United States v. Stewart" on Justia Law

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The Second Circuit affirmed defendant's conviction for conspiring to engage in racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). The court held that the government was not precluded from using acquitted substantive offenses as racketeering predicates in the second RICO conspiracy charge; the government was not precluded from using acquitted non-RICO conspiracy offenses as racketeering predicates in the second RICO conspiracy charge; and the district court properly admitted evidence from the first trial because the evidence was used for different, non-precluded purposes in the second trial. The court also held that the district court did not err by allowing a transcript that identified defendant as the speaker to serve as a jury aid with respect to the properly-admitted recording, and in allowing the transcript to be reviewed by the jury during its deliberations. Finally, the court rejected defendant's claim of cumulative error. View "United States v. Zemlyansky" on Justia Law

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The Second Circuit vacated the district court's grant of defendant's motion to dismiss two counts of an indictment charging him with federal-program embezzlement. Defendant, a former New York State Senator, allegedly embezzled funds from escrow accounts that he oversaw in his capacity as a referee for foreclosure actions. The court agreed with the government that the district court erred by concluding pretrial, as a matter of law, that defendant necessarily formed the fraudulent intent required for the charged embezzlements -- and thus completed those embezzlements -- once he failed to remit the funds. Therefore, the court held that the district court made a premature factual determination regarding the time at which defendant, if guilty, formed the requisite fraudulent intent. The court reinstated the two federal-program embezzlement counts and remanded for further proceedings. View "United States v. Sampson" on Justia Law

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The Second Circuit affirmed defendant's conviction for obstruction of justice and making false statements to federal agents. Defendant, a former New York State Senator, was convicted of crimes related to his efforts to use his position in the Senate to provide a local businessman with special favors. Defendant provided the businessman with these favors in exchange for a loan that was given to defendant to reimburse funds that he had embezzled, but that he could not repay. The court held that United States v. Hernandez, 730 F.2d 895 (2d Cir. 1984), and United States v. Masterpol, 940 F.2d 760 (2d Cir. 1991), barred the government from prosecuting an individual under 18 U.S.C. 1503(a) for intimidating and threatening witnesses or corruptly persuading witnesses to recant their testimony. However, these cases did not bar the government from prosecuting an individual under section 1503(a) for an inchoate endeavor to witness tamper. The court also held that the district court did effectively instruct the jury on whether defendant willfully caused an obstruction of justice under 18 U.S.C. 2; the evidence was sufficient to convict defendant for making a false statement; the district court district court did not abuse its discretion—or violate the Confrontation Clause—in either of defendant's challenged evidentiary rulings; and defendant's sentence was reasonable. View "United States v. Sampson" on Justia Law

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The Second Circuit affirmed the district court's judgment after defendant pleaded guilty to tax evasion and to corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws. Defendant, the founder of an investment management firm, was sentenced to pay restitution of $37 million, serve a 70‐month term of imprisonment, and pay a $10 million fine. The Second Circuit held that the district court did not err in calculating the fine range recommended by the Sentencing Guidelines; defendant was given adequate opportunity to inform the district court of his financial condition and ability to pay a fine; and imposing a $10 million fine was within the district court’s discretion. Defendant's motion to stay his sentence pending this appeal was moot. View "United States v. Zukerman" on Justia Law

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The Second Circuit denied a petition for a writ of error coram nobis where petitioner sought vacatur of his prior conviction and sentence for conspiracy to commit mail and wire fraud, as well as 21 counts of mail fraud, based on his conduct in the rare-coins business. Petitioner contended that newly discovered evidence would undermine the reliability of expert testimony submitted against him at trial. The court held that, given the strength of evidence of defendant's fraudulent activity in support of his sale of coins, the issue he raised as to the government expert's method of valuation did not show circumstances compelling grant of the writ to achieve justice. View "Du Purton v. United States" on Justia Law

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The Second Circuit vacated defendant's conviction for securities fraud. The court held that although defendant's misstatements could be found by a jury to be material, the district court materially erred in admitting evidence that the counter-party representative in the sole transaction underlying the count of conviction mistakenly believed that defendant was his agent. Therefore, the evidence was prejudicial and the court could not conclude with fair assurance that the jury would have convicted defendant absent such evidence. Accordingly, the court remanded the judgment of conviction, ordering defendant be released on appropriate bond pending further proceedings. View "United States v. Litvak" on Justia Law

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The Second Circuit vacated defendant's conviction for securities fraud. The court held that although defendant's misstatements could be found by a jury to be material, the district court materially erred in admitting evidence that the counter-party representative in the sole transaction underlying the count of conviction mistakenly believed that defendant was his agent. Therefore, the evidence was prejudicial and the court could not conclude with fair assurance that the jury would have convicted defendant absent such evidence. Accordingly, the court remanded the judgment of conviction, ordering defendant be released on appropriate bond pending further proceedings. View "United States v. Litvak" on Justia Law

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The Second Circuit held that the district court lawfully denied defendant's motion for attorney's fees and other litigation expenses under the Hyde Amendment of 1997. The court joined its sister circuits in holding that the standard of review applicable to the appeal of a district court's denial of a defendant's application for attorney's fees and other litigation expenses pursuant to the Hyde Amendment was abuse of discretion. The court adopted the reasoning by the Fifth Circuit in United States v. Truesdale, 211 F.3d 898, 905–06 (5th Cir. 2000). In this case, the district court did not abuse its discretion by denying defendant's application and concluding that the position of the United States was not vexatious, frivolous, or in bad faith, since no controlling precedent foreclosed the government's theory of prosecution and some language in the court's case law arguably supported it, and since defendant's other arguments against the government's case, including those not expressly addressed above were meritless. View "United States v. Larson" on Justia Law