Opinion
06 Cr. 357 (KMW).
May 5, 2010
OPINION AND ORDER
The defendants, Mark Alan Shapiro, Irving Stitsky, and William B. Foster, move, pursuant to Rule 29 of the Federal Rules of Criminal Procedure, for a judgment of acquittal following convictions of securities fraud, mail fraud, and wire fraud, and of conspiracy to commit these crimes. Defendant Foster also moves, pursuant to Rule 33 of the Federal Rules of Criminal Procedure, for a new trial on the ground that certain statements made by the Government during its rebuttal summation were inflammatory and prejudicial. For the reasons set forth below, the Court DENIES the defendants' Rule 29 motions for a judgment of acquittal, and DENIES defendant Foster's Rule 33 motion for a new trial.
Defendant Stitsky joins in the Rule 33 motion filed by Mr. Foster.
I. Rule 29 Motions for a Judgment of Acquittal
The defendants move for a judgment of acquittal on all counts of conviction on the ground that the evidence was insufficient to sustain the jury's verdict. They do so without any reference to or discussion of the evidentiary record at trial.
The defendants made Rule 29 motions at the close of the Governmen's case and at the close of all the evidence. (Tr. 2138-39.) The Court denied the motions. (Tr. 2139.)
Rule 29 permits a district court to enter a judgment of acquittal on any count of conviction if it finds that the evidence on that count is "insufficient to sustain a conviction." Fed.R.Crim.P. 29. In deciding a motion for a judgment of acquittal under Rule 29, a district court must "view the evidence presented in the light most favorable to the government, and . . . draw all reasonable inferences in its favor." United States v. Autuori, 212 F.3d 105, 114 (2d Cir. 2000). Thus, a jury verdict must be upheld if "`any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'" Id. (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original)).
The evidence at trial was sufficient to sustain convictions as to each of the defendants, on each of the five counts charged in the indictment. The Government presented extensive testimonial evidence, including from Cobalt employees, associated professionals, and individual investors, detailing (1) the various material misrepresentations that the defendants made to Cobalt's investors, and (2) defendants' improper use of investor funds. The Government also presented extensive documentary evidence, including emails from and between the defendants, that demonstrated the defendants' willing participation in a scheme to defraud Cobalt's investors. (See Gov. Opp. 6-11.) The defendants' motion for a judgment of acquittal pursuant to Rule 29 is denied.
II. Rule 33 Motion for a New Trial
Defendants Foster and Stitsky move for a new trial, pursuant to Rule 33 of the Federal Rules of Criminal Procedure, on the ground that certain of the Government's comments during its rebuttal summation were inflammatory and prejudicial. Specifically, Foster and Stitsky argue that the Government (1) wrongly implied that they previously agreed that the content of Agent Mazzella's testimony (which was presented by way of stipulation) regarding her preparation of certain summary charts was "accurate"; and (2) wrongly implied that Foster and his defense counsel reneged on the terms of that agreement by challenging the accuracy of Agent Mazzella's work during summation. As set forth below, the Court concludes that the Government's comments during its rebuttal summation were not improper, and, in any event, that there is no basis for overturning the defendants' convictions.
A. Overview
Among the Government's important pieces of evidence at trial were summary charts purporting to demonstrate the flow of investor monies into and out of the various Cobalt entities. These charts summarized data contained in Excel spreadsheets that were prepared by the Government. The spreadsheets, in turn, contained financial information that was pulled from bank records of the Cobalt entities and other entities controlled by the defendants.
1. Stipulation as to Agent Mazzella's Testimony
Prior to the start of trial, the Government informed the defendants that Special Agent Joan Mazzella, a financial analyst at the FBI who reviewed the bank records, compiled the data, and prepared the summary charts, would be unavailable to testify. The Government stated that it intended to call Special Agent Robert Lauria in her stead. Defense counsel submitted a letter, dated October 30, 2009, opposing the Government's substitution of Agent Lauria, arguing that it would deprive defendants of the opportunity to cross-examine Agent Mazzella regarding the methodology she used in making the calculations and in preparing the summary exhibits to be introduced at trial.
On November 2, 2010, the Court addressed the issue of Agent Mazzella's testimony at a pre-trial conference. The Government explained to the Court ex parte the reason Agent Mazzella would be unavailable. The Government then explained, in open court, that Agent Lauria was in the process of "verifying the accuracy" of Agent Mazzella's calculations — "essentially double checking Ms. Mazzella's work" — but that it was not clear how far through the records Agent Lauria would be able to get without delaying trial. The Government proposed that Agent Lauria could go through some percentage of the data to lay an appropriate foundation for the summary charts, and that if the defense "wants to claim that that is not accurate they can argue weight to the jury." (Tr. 7-8.) The Court responded "[w]hy don't we wait and see how much check[ing]" Agent Lauria has been able to complete "by the time the issues becomes ripe." (Tr. 10.) The Government and defense counsel agreed.
On November 5, 2010, the Government provided the Court ex parte with an update on Agent Mazzella's status. The Court then informed the defendants that Agent Mazzella was scheduled to have serious surgery on November 11, that she was going through "an extremely difficult time in her life," and that although she might not be available to testify after her surgery, she would be available on November 9 and 10 to testify and to be cross-examined. The Court asked counsel to consult with one another as to whether the matter "could be handled by way of stipulation," or whether Agent Mazzella's presence would be required for purposes of cross-examination. (Tr. 430-32.)
On November 6, 2010, the parties informed the Court that they had agreed to a stipulation regarding Agent Mazzella's testimony. The stipulation (to be read to the jury) stated that if called as a witness, Agent Mazzella would testify that:
(1) she reviewed bank records for various Cobalt accounts;
(2) she accurately inputted the information from the records in order to create a series of charts (creating a separate chart for each bank account);
(3) she used the Microsoft Excel program to create a series of "sub-charts," grouping the information according to the name of the person or entity "that put money into the particular bank account" or the person or entity "that received money from the account"; and
(4) she used the Excel program to tally "the amount of money for each of these [sub]groups."
(GX 1910.) The stipulation also stated that these charts were admissible in evidence as Government Exhibits at trial. (Id.) The parties proposed an instruction (to be read by the Court to the jury) stating that the defendants consented to having Agent Mazzella's testimony received in the form of stipulation, because she is unavailable to testify (due to illness); that, as with all witnesses, it was for the jury to decide what weight, if any, to give her testimony; and that they could consider the fact that her testimony was not subject to "cross-examination." (Court Ex. 11; Dkt. No. 235.) The defendants agreed that they would not "base arguments about the reliability or accuracy of Agent Mazzella's work during summations on not having the opportunity to cross-examine [Agent Mazzella]." (Foster's Letter Br., Jan. 31, 2010; see Tr. 523-24.)
This was a "testimonial stipulation" in the sense that the defendants were stipulating to what Agent Mazzella would testify to if called as a witness at trial. The defendants were not stipulating that Agent Mazzella had, in fact, done her work accurately or that the spreadsheets and charts she prepared accurately represented the flow of money into and out of the Cobalt entities. (See Tr. 2319-20.)
The Court expressed concern about that last portion of the instruction dealing with cross-examination. The Court questioned how the parties expected "the jury [to] consider the fact that her testimony is not being subjected to cross-examination." The Court stated that "it sounds as if I am undercutting [Agent Mazzella]" by giving this instruction. (Tr. 523-24.) The Government informed the Court that it had initially objected to the language, but in order to resolve the issue "reach[ed] this compromise by agreeing that there would be no argument to that effect." (Tr. 524.) The Court stated that it believed it "can deliver it in a tone of voice that will not unduly emphasize [the point]." Defense counsel stated that they had no objection, and the Court agreed to deliver the instruction. (Tr. 524.)
Counsels' distinction between a court instruction and counsel's argument appeared to relate to how much emphasis should be given to the fact that Agent Mazzella's testimony had not been tested by cross-examination.
Thus, it appeared from the record that all parties had agreed on a "compromise" that:
(1) allowed Agent Mazzella's summary charts into evidence (along with her testimony that they were accurate), but with the caveat, to be delivered by oral instruction, that her testimony had not been tested by cross-examination. Because the stipulation would not be deemed an admission to the accuracy of Agent Mazzella's work, it
(2) left defense counsel free to cross-examine Agent Lauria regarding the fact that his review of the bank records was only partial, and regarding any purported inaccuracies in the spreadsheets prepared by Agent Mazzella;
(3) left defense counsel free to present their own evidence of what was, or was not, shown by the records (through their own expert, or otherwise); but
(4) precluded defense counsel from arguing to the jury that inaccuracies in Agent Mazzella's charts could be inferred from the fact that her testimony had not been tested by cross-examination.
2. Summation by Foster's Counsel
In his summation, counsel for Foster (Mr. Siegel) stated that the Government's summary exhibits purporting to demonstrate the flow and distribution of investor money, including the total amount of "excess fees" taken by the defendants, were unreliable. First, Foster's counsel stated that the stipulation regarding Agent Mazzella's testimony was not an admission by the defendants to the accuracy of her analysis. Foster's counsel then stated that Agent Mazzella was "not available to testify . . . because of her health reasons," and "these gentlemen graciously consent[ed] to have her testimony appear by stipulation." (Tr. 2207-08.) Second, Foster's counsel turned to Agent Lauria's testimony. Foster's counsel pointed out that Agent Lauria testified that he had confirmed that the numbers contained in the spreadsheets were accurately placed in the summary charts; but that, as to the underlying bank records, he had reviewed only a small sample of the accounts to confirm the accuracy of the data (the amounts) contained in the spreadsheets, in which he found two "errors." Foster's counsel then stated: "[W]ho knows what other errors are littered among the numbers that are on that chart[?] Who knows what other mistakes there might be[?]" (Tr. 2208-09.) This portion of Foster's counsel's summation could reasonably be interpreted as arguing that the accuracy of the charts was suspect because Agent Mazzella was unavailable to be cross-examined; although Foster's counsel did not use the word "cross-examination," it was implied by the statement that Agent Mazzella was "not available to testify." (Id.)
These alleged "errors" were, as Agent Lauria testified at trial, two adjustments Agent Lauria made to Agent Mazzella's summary charts to reflect two previously unidentified deposits (the source of which Agent Mazzella had been unable to determine based on her review of the bank records). Upon further review of Cobalt's internal accounting records, Agent Lauria was able to determine that the two deposits came from Cobalt investors. (Tr. 1260-67.) Thus, Agent Mazzella's charts — which did not incorporate these two investor deposits — were actually more favorable to the defendants.
3. The Government's Rebuttal Summation
Prior to its rebuttal summation, the Government, outside the presence of the jury, previewed for the Court what it intended to say in response to Mr. Siegel's argument as to the reliability of the summary charts:
Mr. Siegel said to the jury, out of the graciousness of our hearts we didn't cross-examine her, but as a result, you shouldn't rely on anything because it could be totally inaccurate. That's ridiculous, and at the very least, I intend to say to the jury, they did not have to enter into this stipulation, and if they wanted to cross-examine her on potential inaccuracies, they could have not signed the stipulation. That was their choice. . . .
(Tr. 2234-35.) Foster's counsel argued that he believed that he had been very careful in what he said in his summation, and that his argument did not violate the parties' prior agreement, because he made no "reference . . . to [his] inability to cross-examine Agent Mazzella." (Tr. 2235.) The Court understood Foster's counsel as stating that he had agreed not to use specific words ("inability to cross-examine") in summation, but that he had not agreed not to allude to the fact that Agent Mazella was unavailable to testify (in connection with an argument questioning the reliability of Agent Mazzella's summary charts). The Court interpreted the agreement as precluding both types of reference, and therefore, agreed with the Government that a response would be appropriate. (Tr. 2234-36.)
Foster's counsel stated that: "I was very aware of the issues and was pretty careful in what I said about it. . . . I didn't make any reference whatsoever to our inability to cross-examine Agent Mazzella." (Tr. 2235.)
Foster's Rule 29 motion is directed to the portion of the Government's rebuttal summation concerning Agent Mazzella's testimony and the summary charts. The Government told the jury in its rebuttal summation:
The other thing Mr. Siegel said about this chart was that the information in this chart was based on was from Joan Mazzella, the FBI analyst, and she made a bunch of Excel charts. And he said, we gave up our chance to cross-examine her about whether the charts were accurate.
(Tr. 2310 (emphasis added).) Mr. Siegel objected, and the following exchange ensued:
THE COURT: Just a moment. He didn't actually say that in his summation.
THE GOVERNMENT: Could you remind me what he said?
THE COURT: He didn't mention cross-examination. Is that your point,
Mr. Siegel?
DEFENSE COUNSEL: That is. Thank you, Judge.
(Id.) The Government continued:
Anyway, Mr. Siegel said they stipulated about Joan Mazzella's testimony, and as a result, you don't know whether the work she did was accurate or not. Ladies and gentlemen, a stipulation is an agreement between us and Mr. Siegel. He didn't have to sign the stipulation.
(Id.) Defense counsel again objected, and the Court overruled the objection, having previously ruled that a response from the Government on this point was permissible. The Government then continued:
If he wanted to ask Joan Mazzella about whether her charts were inaeeurate, he could just have chosen not to sign the thing and she'd be here to answer the questions.
(Id.) After the Government concluded its rebuttal summation, defense counsel moved for a mistrial. (Tr. 2318.) Defense counsel argued that the clear impression left by the Government's comments was that counsel (and, by extension, the defendant) violated the terms of the stipulation (had reneged on their agreement) by now contesting the accuracy of Agent Mazzella's work. The Court indicated that it planned to deny the motion, explaining that it did not "believe that [the Government's] words . . . [were] subject to the dire interpretation that Mr. Siegel is giving them." The Court, nonetheless, invited counsel to submit a proposed curative instruction. (Tr. 2327-28.) On November 23, 2009, counsel submitted a proposed instruction that stated, inter alia, that "the arguments made by Mr. Siegel on Mr. Foster's behalf were permitted by the stipulation, and he did not violate any agreement with the government." (Dkt. No. 268.) The Court, after reviewing the transcript, told the parties that it did not believe that a curative instruction was appropriate. The Court concluded that the Government's statements in its summation were accurate, and that they did not require clarification. (Tr. 2341.)
B. Discussion
Rule 33 of the Federal Rules of Criminal Procedure provides that a court may "vacate any judgment and grant a new trial if the interest of justice so requires." Fed.R.Crim.P. 33. The Supreme Court has explained that "[i]nappropriate prosecutorial comments, standing alone, would not justify a reviewing court to reverse a criminal conviction obtained in otherwise fair proceeding," United States v. Young, 470 U.S. 1, 11 (1985), and that such remarks "must be examined within the context of the trial to determine whether the prosecutor's behavior amounted to prejudicial error," id. at 12. The Second Circuit has focused on three factors relevant to this inquiry: (1) the severity of the misconduct; (2) the measures adopted to cure the misconduct; and (3) the certainty of conviction absent the misconduct. United States v. Friedman, 909 F.2d 705, 709 (2d Cir. 1990).
In this case, there was no misconduct in the comments made by the Government during its rebuttal summation. In his summation, Mr. Siegel (1) noted that Agent Mazzella's testimony was received by stipulation; (2) highlighted the two adjustments by Agent Lauria to Agent Mazzella's summary charts; and then (3) speculated as to the number of inaccuracies in the summary exhibits: "[W]ho knows what other errors are littered among the numbers that are on that chart[?] Who knows what other mistakes there might be[?]." In this situation, it was entirely appropriate for the Government to respond to Mr. Siegel's argument by noting that defense counsel could have insisted that Agent Mazzella testify at trial as to the accuracy of the charts she created.
Government counsel's rebuttal summation was accurate in stating that defense counsel had not been required to sign the stipulation, and that if Mr. Siegel wished to cross-examine Agent Mazzella about any inaccuracies, he could have done so. The Government did not suggest or imply to the jury that Mr. Siegel or his client violated the terms of the stipulation (reneged on their agreement) by later questioning the accuracy of the summary charts. Therefore, as the Court found during trial, the Government's response did not require any clarifying instruction.
Defendant's reliance on United States v. Friedman, 909 F.2d 705 (2d Cir. 1990) is misplaced. In Friedman, the Second Circuit reversed the defendant's conviction and granted the defendant a new trial based on improper remarks by the Government during summation. The Government acknowledged on appeal that the prosecutor's remarks were improper: first, the prosecutor repeatedly characterized defense counsel as a "witness" and counsel's opening statement as "unsworn testimony"; and second, the prosecutor inappropriately attacked the integrity of defense counsel, telling the jury that: "[W]hile some people, ladies and gentlemen, go out and investigate drug dealers and prosecute drug dealers and try to see them brought to justice, there are others who defend them, try to get them off, perhaps even for high fees." Id. at 708. The prosecutor also made the "grossly improper accusation" that defense counsel would "make any argument he can to get that guy off." Id. Here, the Government made no comments attacking the integrity of counsel; the Government did not suggest or imply that Mr. Siegel or his client reneged on the terms of the stipulation regarding Agent Mazzella's testimony. The Government was entitled to, and did, make the rebuttal argument that defense counsel could have insisted that Agent Mazzella testify about the accuracy of her summary charts, and could have presented other evidence tending to show that the charts were unreliable or were otherwise irrelevant.
In fact, right after responding to Mr. Siegel's argument about Agent Mazzella's testimony, the Government referred to Mr. Siegel's examination of Harry Steinmetz, the defendants' accounting expert. The Government pointed out that defense counsel also did not ask Mr. Steinmetz "anything about whether Joan Mazzella's charts were accurate or not, not a single question." (Tr. 2311.)
Finally, in any event, there is no basis for granting Mr. Foster's motion for a new trial. The Government presented, as noted above, extensive testimonial and documentary evidence of Foster's and Stitsky's participation in the scheme to defraud investors in Cobalt. The Court can "confidently say" that, absent the alleged misconduct in this case (the Government's allegedly improper comments in rebuttal on the issue of Agent Mazzella's testimony), "a conviction would surely have been obtained" on all counts of conviction. See Friedman, 909 F.2d at 709.
Thus, the Court concludes that there is no prejudicial error that would justify a reversal of the jury's convictions.
III. Conclusion
For the reasons stated above, Defendants' motions for a judgment of acquittal pursuant to Rule 29 are DENIED, and the motions by Defendants Foster and Stitsky for a new trial pursuant to Rule 33 are DENIED.
SO ORDERED.