Opinion
20-cr-613 (JSR)
07-16-2024
UNITED STATES OF AMERICA, v. MICHAEL COLELLO, Defendant.
MEMORANDUM ORDER
JED S. RAKOFF, U.S.D.J.
On May 26, 2023, a jury found Michael Colello guilty of conspiracy to commit wire fraud and aggravated identity theft. Colello now moves for a new trial, alleging that the Government withheld information it should have discovered and disclosed under Brady v. Maryland, 373 U.S. 83 (1963), and its progeny. Specifically, he argues that the Government should have disclosed that shortly before trial one of Colello's co-conspirators, Tommy Watts, pleaded guilty to a similar fraud scheme in federal court in California, and that one of the Government's key witnesses at Colello's trial, Floyd Smith, was sued for civil fraud in state court in Wisconsin.
After carefully reviewing the parties' written submissions and oral arguments, the Court denies the motion.
I. Background
The Government's trial evidence of Colello's guilt, familiarity with which is here assumed, was little short of overwhelming. In brief, it proved that Colello, posing variously as "Mike Greene" and "Stan Greene," defrauded Smith and his company, Petron Energy, Inc. ("Petron"), of nearly two million dollars. Specifically, Colello and his chief accomplice, Charles Sayegh, falsely pretended to have obtained financing for Petron (which was badly in need of financing) through phony letters of credit and surety bonds, for the supposed obtaining of which Petron paid Colello and his co-conspirators approximately $1.9 million. The Government's case, consisting of 15 witnesses and numerous documentary exhibits, was so strong that the jury returned a guilty verdict on both counts after only about two hours of deliberation.
Sentencing was repeatedly postponed at Colello's request to enable him to try to obtain new counsel. When he proved unable to do so, the Court, after determining that he now qualified for CJA counsel, appointed his current counsel, who then filed the instant motion.
II. Legal Standard
Rule 33 of the Federal Rules of Criminal Procedure provides that "[u]pon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires." "On such a motion, the defendant bears the burden of proving that he is entitled to a new trial, and in order to grant a new trial, a district court must find that there is a real concern that an innocent person may have been convicted." United States v. Hunter, 32 F.4th 22, 30 (2d Cir. 2022).
Unless otherwise indicated, case quotations omit all internal quotation marks, alterations, footnotes, and citations.
A failure by the prosecution to satisfy its disclosure obligations under Brady provides a possible ground for a district court to grant a new trial. See id. ("If [the Brady] obligation is violated, the district court may grant a new trial."). But not all instances of government nondisclosure violate Brady or warrant a new trial. Id. "There are three components of a true Brady violation: The evidence at issue must be favorable to the accused, either because it is exculpatory, or because it is impeaching; that evidence must have been suppressed by the State, either willfully or inadvertently; and prejudice must have ensued." Strickler v. Greene, 527 U.S. 263, 281-82 (1999).
III. Discussion
To support his Brady claim and motion for a new trial, Colello alleges that two pieces of information were suppressed. First is the guilty plea of one Tommy Watts. Although not a witness at Colello's trial, Watts was a co-conspirator in the Petron fraud. He joined Colello in several calls to Smith, and he owned SourceOne Capital LLC, to which Colello and Sayegh directed Smith to send some of Petron's payments. In February 2023, several months before Colello's trial began, Watts pleaded guilty in the Central District of California to a similar surety-bond fraud scheme, which he undertook in Los Angeles from 2016 to 2019, but the Government did not apprise Colello's then-counsel of this plea prior to Colello's trial. Colello claims that knowledge of Watts's criminal conviction for a similar scam would have supported a defense that "Watts was indeed the mastermind of the scheme alleged here." Def.'s Mem. Supp. Mot. Under Fed. R. Crim. P. 33 at 15.
Second is a civil suit filed against Floyd Smith, who, as noted, was not only Petron's founder but also a key Government witness at trial. On April 28, 2023, several weeks before Colello's trial began, a company sued Smith, Petron, and five co-defendants in Wisconsin state court, alleging that carbon credits and a surety bond involved in a transaction between the parties were fraudulent. Colello argues that if the Government had disclosed this information prior to his trial, he "would have used this information to attack Smith's credibility." Id. at 20.
Neither of these non-disclosures remotely constitutes a Brady violation entitling Colello to a new trial. As to Watts's plea to an unrelated (though arguably similar) scheme, the Government never contended that Watts, whom it never called as a witness, was anything but a minor player in the Petron conspiracy, and Colello offers no proof to the contrary. Indeed, Smith testified that he never spoke to Watts without Colello on the phone posing as Mr. Greene and making false statements. See Trial Tr. at 74:3-24. Moreover, Watts pleaded guilty, not to anything having to do with this case, but to an entirely separate and unrelated fraud. Accordingly, Colello's argument - that if his counsel had known of Watts's public guilty plea in an unrelated case to a similar fraud, Colello, who did not call any witnesses at his trial, could have somehow argued that Watts was the "mastermind" of the entire fraud and that Colello's innumerable false statements to Smith were somehow innocent -- is speculative in the extreme. To the contrary, the information does not appear to be exculpatory in any material respect.
As for the civil suit brought against Smith and Petron in Wisconsin shortly before trial, the Government denies it had any knowledge of this suit prior to Colello's trial, and Colello's counsel, at oral argument on the instant motion, conceded as much. See Tr. of Oral Arg. at 3("[W]e don't have any evidence that the government knew of this and suppressed it.").
To be sure, the Government avers that it did ask Smith whether any legal actions were pending against him, but that it did so earlier in trial preparation before the civil suit had been filed. Id. at 4. While it might be a better practice for the Government to repeat such an inquiry just before a witness testifies, it has no obligation to do so. Indeed, the Second Circuit has observed that "[a] prosecutor is not constitutionally obligated to obtain information dehors his files for the purpose of discovering
information which defense counsel can use in impeaching the credibility of a prosecution witness." Morgan v. Salamack, 735 F.2d 354, 358 (2d Cir. 1984).
Other circuits have similarly concluded that the Government's Brady obligation covers information only in its possession or control. See United States v. Graham, 484 F.3d 413, 417 (6th Cir. 2007) ("But Brady clearly does not impose an affirmative duty upon the government to take action to discover information which it does not possess." (quoting United States v. Beaver, 524 F.2d 963, 966 (5th Cir. 1975))); McLaughlin v. Corsini, 577 F.3d 15, 21 (1st Cir. 2009) ("Under Brady, the allegedly exculpatory information must be possessed or controlled by the prosecution team or its agents in order to give rise to a duty to disclose."); see also Polzin v. Mutter, 503 Fed.Appx. 474, 476 (7th Cir. 2013) (per curiam) ("The Due Process Clause, whether generally or as interpreted in Brady, does not impose a constitutional duty on the state to search for, or assist a defendant in developing, mitigating evidence.").
In short, the fact that Smith was sued in this civil lawsuit was not suppressed by the Government. Furthermore, it is impossible to see how the fact that Smith and Petron had been named in an unrelated, unresolved civil lawsuit in Wisconsin could have materially affected the jury's evaluation of Smith's credibility at trial or was in any material way exculpatory.
More generally, in addition to their other limitations, both of the non-disclosures of which Colello complains wholly fail to satisfy the "prejudice" requirement of Brady. Colello must "convince [the Court] that 'there is a reasonable probability' that the result of the trial would have been different if the suppressed documents had been disclosed to the defense." Strickler, 527 U.S. at 289. Against the Government's overwhelming case that led the jury to convict in very short order, the Government's alleged non-disclosures were of little, if any, probative value.
IV. Conclusion
For the foregoing reasons, Colello's motion for a new trial is hereby denied. Colello's sentence, so long delayed at his request, will now go forward, without any further delay, on July 24, 2024, at 4:00 p.m.
SO ORDERED.