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Tuesday, November 19th, 2024

Second Circuit affirms wire fraud convictions post-Ciminelli

In United States v. Tamaz Pasternak, No. 23-6316-cr, the Second Circuit (Parker, Robinson, Oliver (D. Conn.)) affirmed the defendant’s wire fraud convictions despite a concededly erroneous jury instruction.

The charges arose from a purported scheme to conceal the “salvage” histories of used cars—histories of purchase by insurance companies after they’ve been damaged. Pasternak, a used-car dealer, often sold these cars at a significant discount—so one of the government’s theories of wire fraud centered on depriving customers of information about the cars, not depriving them of money. After a jury convicted Pasternak of wire fraud and conspiracy to commit the same, Pasternak alleged two instructional errors on appeal.  First, Pasternak challenged a right-to-control instruction that was held invalid in Ciminelli v. United States, 598 U.S. 306 (2023). Second, Pasternak argued that the district court should have required the jury to find that the fraudulent scheme contemplated inflicting tangible economic harm. …

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Categories: guideline, jury charge, jury instructions, wire fraud

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Wednesday, December 14th, 2022

Under 18 U.S.C. § 1591, the term “commercial sex act” — defined as “any sex act, on account of which anything of value is given to or received by any person,” id. § 1591(e)(3) — doesn’t require that the “[]thing of value” have a monetary value; it can be something “intangible” that has a subjective value to the person receiving it. United States v. Raniere, Nos. 20-3520-cr(L), 20-3789-cr(Con), __ F.4th ____, 2022 WL 17543156 (2d Cir. Dec. 9, 2022) (C.J.J.’s Calabresi, Cabranes, and Sullivan).

This case concerns the meaning of “commercial sex act,” in subdivision (e)(3) of 18 U.S.C. § 1591, titled “Sex trafficking of children or by force, fraud, or coercion.”  A “commercial sex act” is defined as “any sex act, on account of which anything of value is given to or received by any person.” 18 U.S.C. § 1591(e)(3).

The Appellant argued that the phrase “anything of value” must mean “‘economic benefit[ ].’” The Circuit holds, however, that the phrase isn’t restricted to monetary or financial benefits but can include “intangibles,” such as maintaining or improving a person’s position within the hierarchy of a group. Raniere, 2022 WL 17543156 at *4-*8. The focus is on the value that the recipient “subjectively attaches to what is sought to be received.” Id. at *5.

Background

Appellant Keith Raniere was the leader of an executive coaching and self-help organization called NXIVM that he started …

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Categories: jury instructions, sex trafficking, statutory interpretation, sufficiency

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Tuesday, April 20th, 2021

Second Circuit upholds conviction for insider trading. United States v.  Chow, No. 19-0325, __F.3d__, 2021 WL 1256649 (2d Cir. Apr. 6, 2021) (C.J.J. Kearse, Carney, Bianco).

Benjamin Chow was a high ranking corporate officer at a couple of Chinese State-owned firms that, in 2016, tried to acquire Lattice Semiconductor Corporation, a manufacturer of a type of semi-conductor used in smart-phones. Op. 4, 5. Mr. Chow was alleged to have tipped off someone he knew, named Michael Yin, about the progress of the negotiations to acquire Lattice. Op. at 4-9 . During a 4-month period from July to November 2016, Yin traded on Lattice stock, purportedly based on this information, and made $5 million. Id. at 15.

A jury convicted Benjamin Chow of one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371; one count of securities fraud, in violation of 18 U.S.C. §§ 1348 and 2; and six counts of insider trading, in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5 and 10b5-2, and 18 U.S.C. § …

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Categories: insider trading, jury instructions, sufficiency, venue

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Wednesday, July 22nd, 2020

Flawed “Interested Witness” Instruction Requires New Trial

In United States v. Solano, the Circuit (Kearse, joined by Calabresi and Carney) held that the district court’s interested witness instruction—namely, that “any” witness with “an interest in the outcome” of the trial had “a motive to testify falsely”—was plain error requiring vacatur of the conviction, because the defendant had testified and the instruction violated the presumption of innocence. Mr. Solano was represented on appeal by our own Daniel Habib.

Solano, a commercial truck driver, was arrested after picking up and delivering a sealed shipping container that had held cocaine and was now under surveillance. He was charged with attempting to distribute a controlled substance. At trial, the sole disputed issue was knowledge. The government’s principal proof came from three law enforcement officers who testified that, in a post-arrest interview, Solano had confessed knowledge. Solano, for his part, testified that he did not know that the container had held …

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Wednesday, June 3rd, 2020

Circuit affirms convictions arising from usurious and fraudulent lending scheme.

In United States v. Tucker, No. 18-181(L) (2d Cir. June 2, 2020) (Leval, Pooler, and Parker), the Second Circuit unanimously affirmed Muir’s and Tucker’s convictions arising from their operation of an illegal payday lending scheme.

The central issue on appeal concerned the jury instructions regarding “willfulness.” The trial judge instructed the jury with respect to several counts that the defendants acted willfully if they knew of the high interest rates being charged to borrowers, even if the defendants believed the lending was lawful. The defendants, however, failed to object to the jury instructions after they were given, as generally required by Fed. R. Crim. P. 30. Thus, the Circuit held, the defendants’ had to satisfy the demanding “plain error” standard to prevail on appeal.

The Circuit ruled that, even if the challenged “willfulness” instruction was erroneous—an issue it did not resolve—any error was not reversible plain error. The Court …

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Wednesday, July 11th, 2018

Judge Kavanaugh on Criminal Law: Bad News Except…

Bloomberg News has an article (behind a paywall) that surveys Judge (and presumptive Justice) Kavanaugh’s criminal law jurisprudence.  The short story is that Judge Kavanaugh has been very bad for criminal defendants; one former SDNY prosecutor predicts that “he will be a reliable vote for the government in criminal cases, along the lines of Justice Alito.”

There are, however, a few glimmers of hope:

  • Concurring in an opinion reversing a murder conviction for faulty jury instructions, Judge Kavanaugh explained that, notwithstanding the defendant’s “heinous crime,” he was “unwilling to sweep under the rug” that the instructions left the jury with an incorrect understanding of the mens rea requirements governing second-degree murder and manslaughter. United States v. Williams, 836 F.3d 1, 20 (D.C. Cir. 2016).
  • In a concurring opinion affirming false statements conviction under 18 U.S.C. § 1001, Judge Kavanaugh cautioned that “§ 1001 prosecutions can pose a risk of
…
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Categories: 924(c), acquitted conduct, false statements, jury instructions

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Thursday, December 14th, 2017

Second Circuit on the Exclusion Non-Hearsay Evidence Concerning the Advice of Counsel Defense

Yesterday, in a published opinion, the Second Circuit reversed the convictions in an off-label drug importing case because the district court erroneously excluded evidence concerning the advice of counsel defense. The opinion in United States v. Scully, No. 16-3073 (Pooler, Lynch, Cogan (by designation) (appeal from Spatt, J., EDNY) is available here. The opinion touches on hearsay issues that arise beyond the fraud context.

The defendants in Scully were charged with fraud, conspiracy, and drug importation counts resulting from a “parallel importing” scheme: that is, the defendants’ company would import foreign versions of FDA-approved drugs and sell them at a reduced rate. One of the defendants cooperated and, at trial, the other defendant (Scully) advanced an advice-of-counsel defense. The defense sought to introduce evidence of an attorney’s legal advice through Scully’s own testimony, and elicited the following exchange during its direct examination of Scully:

Q. Did Mr.

…
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Categories: evidence, fraud, hearsay, jury instructions, Uncategorized

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Friday, October 27th, 2017

A Bizarre Entrapment-by-Estoppel Case

Today in United States v. Georgescu—a case with truly peculiar facts—the Second Circuit upheld a somewhat unorthodox jury instruction on the entrapment-by-estoppel defense. This defense is available when “a government agent authorizes a defendant to engage in otherwise criminal conduct and the defendant, relying thereon, commits forbidden acts in the mistaken but reasonable, good faith believe that he has in fact been authorized to do so.” United States v. Gil, 297 F.3d 93, 107 (2d Cir. 2002) (internal quotation marks and alterations omitted). In Georgescu, the Circuit decided by summary order that the district court did not err by additionally instructing that “the defendant must prove that affirmative conduct or statements of a government official caused him in good faith to believe that he was authorized to engage in the charged conduct.” Opening Brief at 15. This instruction, though understandable in the context of Georgescu, may …

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Friday, September 29th, 2017

Abu Ghayth and the Material Support Statute

In a summary order, the Second Circuit upheld the convictions of Sulaiman Abu Ghayth (a son-in-law of Osama Bin Laden) for offenses including conspiracy to murder Americans and providing material support for terrorist activities.  The outcome is unsurprising, but the decision nevertheless offers some hope for differently situated defendants charged under the material support statute, 18 U.S.C. § 2339A.

The order, available here, serves as a troubling reminder of the potential breadth of the material support statute. Abu Ghayth’s material support conviction was based on his speeches in the wake of September 11 urging Muslims to fight for Al Qaeda and threatening attacks on “new American targets.” Slip op. at 8. The Circuit rejected a sufficiency-of-the-evidence challenge to this conviction, and observed that “speech alone” can serve to establish a material support violation. Id. at 7 (quoting United States v. Rahman, 189 F.3d 88, 116-17 (2d Cir. 1999)). …

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Categories: aiding and abetting, conspiracy, jury charge, jury instructions, material support statute, plain error, prejudice, sufficiency, summary order, terrorism

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Friday, August 25th, 2017

Second Circuit Relaxes “Personal Benefit” Requirement for Insider Trading Offenses

This week, in United States v. Martoma, the Circuit held that a “meaningfully close personal relationship” does not need to exist between an insider and a tippee in order to establish an insider trading violation under a “gift theory” of liability. The Circuit reached this conclusion on the ground that the Supreme Court abrogated the holding of United States v. Newman, 773 F.3d 438 (2d Cir. 2014), and thereby relaxed the “personal benefit” requirement necessary to support an insider trading conviction. You can access the Martoma opinion here.

Martoma was convicted of insider trading in violation of 15 U.S.C. §§ 78(b) & 78ff for trading on material, nonpublic information that he received from a neurologist concerning the results of a clinical drug trial. To establish an insider trading violation in this context, the government must prove that the insider stood to personally benefit, “directly or indirectly, from his …

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Friday, May 20th, 2016

Second Circuit Updates – May 20, 2016

There were three summary orders from the Second Circuit. Of particular interest is the Court’s order in United States v. Choudhry, No. 15-1737-cr. There a panel of the Second Circuit (Newman, Cabranes, Lohier, Jr.) addressed, among other issues, whether jury instructions regarding the charge of transmission of a threat to injure were erroneous in light of the Supreme Court’s decision in Elonis v. United States, 135 S. Ct. 2001 (2015). As I’ve written about here before, and as this case demonstrates, courts are still struggling with the boundaries of Elonis.

The District Court in Choudhry gave the following instruction:

“[a] statement is a threat if it was made under such circumstances that a reasonable person hearing or reading the statement [who] was familiar with the context of the threat would interpret it as a threat of injury.”

But, as the Second Circuit noted, in Elonis, …

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