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Category: Trials and Evidentiary Rulings

Convictions Affirmed in Drug Robbery Conspiracy

In United States v. Martinez, Nos. 14-2759, 15-511, 15-836, 15-1001, 15-3699 (Kearse, Jacobs, Pooler), issued on July 7, the Second Circuit affirmed the convictions of several co-conspirators in a decade-long scheme where at least two dozen individuals allegedly committed over 200 drug robberies by impersonating police officers who “arrested” drug traffickers and “seized” cash and drugs. 

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Second Circuit Rejects Novel Due Process Challenge to Rule Permitting Evidence of Prior Sexual Assaults

The Second Circuit joined its sister circuits and upheld the constitutionality Federal Rule of Evidence 413, which renders admissible propensity evidence about the defendant in sexual assault cases.  In United States v. Schaffer, 15-2516-cr (Walker, Cabranes, Berman[1]) the Circuit rejected as a matter of first impression the defendant’s argument that Rule 413 violates the Due Process Clause of the Fifth Amendment.  The Court also reviewed its jurisprudence on “custodial” interrogation in the course of affirming the admissibility of incriminating statements the defendant made to law enforcement agents prior to his arrest.

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Court Upholds Murder-for-Hire Conviction, Rejects Fourth Amendment Challenges

The murder-for-hire statute makes it a crime to agree to commit murder in exchange for “anything of pecuniary value.” 18 U.S.C. § 1958. The Second Circuit has understood this language to require that, at the time of the agreement, there was a quid pro quo or at least the promise of some pecuniary consideration. In United States v. Babilonia, No. 14-3739, the Court (Chin, Carney, and Cogan, sitting by designation) reaffirmed this “pecuniary consideration” requirement, but then suggested it presents a minimal hurdle where there was payment after the fact.[1]

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Court Affirms Conviction In Case Involving $126 Million Loan For Shopping Mall Transaction, Rejecting Argument That Sentence Should Be Lowered Because Of The Financial Crisis

In a summary order on March 8, 2017, the Second Circuit (Katzmann, C.J. and Pooler and Lynch, J.) affirmed the conviction and sentence for wire fraud in United States v. Frenkel. The case attracted some public attention because Frenkel’s co-conspirator, Mark Stern, was a cooperating witness in a number of public corruption cases brought by the U.S. Attorney for the Southern District of New York. The underlying facts involved Frenkel’s fraudulent inducement of Citigroup to lend $126 million to finance the purchase of shopping malls. Although the decision has no precedential value, it presented four interesting issues.

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Divided Panel Debates a Jury’s Ability to Resist the Persuasive Power of Hollywood

In United States v. Monsalvatge (Nos. 14-1113, 14-1139, and 14-1206), a divided panel of the Second Circuit explored the contentious topic of introducing blockbuster films as evidence in a criminal prosecution.  Defendants Akeem Monsalvatge, Edward Byam, and Derrick Dunkley were tried and convicted of committing (and conspiring to commit) two armed robberies of Pay-O-Matic check-cashing stores in Queens.  The robberies occurred nearly two years apart—in 2010 and 2012—and there were significant differences in the manner in which each crime was carried out.  The government believed that these differences were attributable to the fact that the defendants admired and were inspired by the 2010 Hollywood crime thriller, The Town, and altered their modus operandi to carry out the 2012 robbery in a manner resembling the crimes committed in the film.  At trial, the district court permitted the government to play for the jury several brief clips from The Town, in order to highlight the similarities between the film and the 2012 robbery.  On appeal, the Second Circuit concluded that the district court did not abuse its discretion in admitting these clips into evidence.  Judge Livingston authored an opinion joined by Judge Droney; District Judge Analisa Torres, sitting by designation, found the introduction of the clips inappropriate but ultimately concurred in the judgment based on a finding of harmless error.[1]

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Return to Sender: Aéropostale Employee’s Fraud Convictions Affirmed, But Restitution Order Sent Back for Recalculation

Aéropostale is known by many as a staple of adolescent wardrobes and shopping-mall standard.  But as a patsy for kickback schemes?  In United States v. Finazzo, 14-3213-cr, 14-3330-cr (Droney, J., joined by Judges Sack and Chin), issued March 7, 2017, the Circuit affirmed the mail and wire fraud convictions of an Aéropostale executive who, over the course of a decade, steered hundreds of millions of dollars in business to a vendor that cut him in on the profits.  In affirming his convictions, the Court held that the defendant’s deprivation of Aéropostale’s right to control its assets was injury sufficient under the mail and wire fraud statutes, and that the district court had adequately instructed the jury that such deprivation must be able to cause tangible economic harm.  However, the panel vacated and remanded the district court’s restitution order on the grounds that the calculations presumed that any financial gain to defendant through the scheme was a loss to Aéropostale.  With little more direction than to “try again,” the court instructed the district court to develop a new methodology for computing a restitutionary award that subtracts any legitimate value that Aéropostale derived through its dealing with the vendor.  The Circuit has long stressed the need for precision in restitution calculations, and it can be difficult to make such calculations in a kickback case prosecuted under a theory based on the deprivation of the right to control assets.

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If It Looks Like a Bomb, and Explodes Like a Bomb . . . : The Court Finds Model Pipe Bomb Is a Destructive Device

Is a pipe bomb that exploded a “destructive device”?   Though it may seem like a trick question, in United States v. Sheehan, 15-2028-cr (Lynch, J., joined by Judges Winter and Wesley), issued September 23, 2016, the Court spends most of its 44-page decision grappling with whether a bomb built and planted by the defendant was an “explosive bomb” (or a “combination of parts” from an explosive bomb could readily be assembled) such that it qualifies as a destructive device under Section 924.  The Government (and common sense) prevailed:  the Court concluded that, indeed, this exploding bomb was an explosive bomb.

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Gimme Shelter, But One With Economic Substance

The line that separates lawful tax shelters from unlawful ones is notoriously hazy, particularly at the margins.  There is little question, however, that a transaction that serves no meaningful business purpose other than to reduce one’s tax liability will be treated as an illegitimate tax shelter.

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Defining the Terms: What Constitutes a “Federally Insured Financial Institution” Under 18 U.S.C. § 1344 or a “Bank” Under 18 U.S.C. § 1014?

In United States v. Bouchard, 14-4156, the Court (Parker, J., Lynch, J., and Lohier, J.) reversed the conviction of defendant Michael Bouchard after finding that the Government’s evidence only showed that Bouchard had made false statements in order to defraud BNC Mortgage (“BNC”), a mortgage lender that did not fall within the Title 18 definition of a “federally insured financial institution” or “bank” as would be required by statute for a conviction. 

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The Second Circuit Affirms the Convictions of the “Madoff Five” in a 29-page Summary Order

In United States v. Bonventre, 14-4714-cr (April. 20, 2016) (JMW, RR, CFD), the Court affirmed by summary order the convictions of five former employees of Bernard L. Madoff Investment Securities (the “Appellants”) convicted in the Southern District of New York (Swain, J.)  for multiple counts of conspiratorial and substantive securities fraud, bank fraud, and records falsification; making false SEC and IRS filings; obstructing enforcement of tax laws; and tax evasion. 

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