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United States District Court, S.D. New York

July 6, 2004.


The opinion of the court was delivered by: BARBARA JONES, District Judge


Defendant moves for a new trial, for a declaration of a mistrial on Count II, and for reconsideration of this Court's opinion denying the existence of a joint defense privilege shielding certain communications from use at trial. For the reasons to follow, Defendant's motions are DENIED.

1. Motion for a New Trial

  Defendant moves for a new trial, pursuant to Federal Rule of Criminal Procedure 33, on the grounds that the Court's submission of special interrogatories to the jury was inherently suggestive and coerced the jury by providing a roadmap to a finding of guilt. Although special interrogatories were used only for Counts I and II, Defendant also argues that the allegedly improper interrogatories "tainted" the verdicts on Counts III and IV.

  As an initial matter, the Court notes that the Second Circuit has approved the use of special verdict forms. In fact, the Second Circuit has upheld convictions in cases where the trial court employed special verdict forms in a variety of criminal cases, including for RICO violations, continuing criminal enterprise violations, securities fraud, money laundering, mail fraud, wire fraud, and conspiracies.*fn1 See, e.g., United States v. Pimentel 346 F.3d 285, 305 (2d Cir. 2003) ("[W]e also strongly encourage the use of special verdict forms in cases alleging multiple racketeering acts to facilitate appellate review."); United States v. Coriaty, 300 F.3d 244 (2d Cir. 2002) (wire fraud); United States v. Zichetello 208 F.3d 72 (2d Cir. 1991) (RICO).

  In United States v. Ruggiero, 726 F.2d 913 (2d Cir. 1984), the Second Circuit approved of the form in a RICO case, reasoning that,

if . . . a defect effecting a single predicate act is later discovered, an automatic retrial can be avoided whenever the jury's additional determinations indicate that the defendant has been found beyond a reasonable doubt to have committed at least two other of the alleged predicate crimes.
Ruggiero, 726 F.2d at 922.

  This logic is applicable here. Specifically, the verdict form in this case "secur[ed] particularized fact-finding," see Ruggiero, 726 F.2d at 927, and was used to avoid the possibility of a retrial of a complex case in the event that certain objects of the conspiracy or certain prongs of the security fraud count were subsequently found defective.

  Moreover, the Defendant suffered no prejudice from the use of the special verdict form. The form first asked whether the jury reached a general verdict of guilty or not guilty, and then instructed the jury to answer the special interrogatories only if they answered guilty to that first question. Cf. id. ("[I]t might be worth considering an instruction to the jury, reflected on the interrogatory form, that the interrogatory . . . is to be answered only in the event that the jury has agreed upon a general verdict.").

  The structure of the special verdict form also refutes Defendant's contention that the form influenced the jury or provided a roadmap to a finding of guilty. In fact, the Second Circuit approved a similar form in United States v. Handakas, 286 F.3d 92 (2d Cir. 2002). In that case, the Court affirmed a conviction in which the special verdict form "supplied by the district court, [] separately asked whether" the Defendant committed either of two predicate acts. Handakas, 286 F.3d at 100-101. The Court found that "[t]he district court thus carefully assured that each theory of the prosecution would be separately considered and decided." Id.

  Defendant also contends that it was improper not to include the standard for the burden of proof and the requirement of unanimity in the form. There is no requirement, however, that verdict forms include this information, and it is not disputed in this case that the Court properly instructed the jury during the charge that the burden of proof was on the Government to prove guilt on each of the elements beyond a reasonable doubt. Cf. United States v. Gallishaw, 428 F.2d 760, 766 (2d Cir. 1970) ("Th[e] omission [of the burden of proof] does not require us to reverse so long as the oral charge on these matters was adequate."). Likewise, not only did the Court instruct the jury on the requirement of unanimity, the jury clearly indicated its understanding of that requirement when it sent out its note regarding the questions relating to the objects of the conspiracy, stating: "regarding question 4(a)(ii), in 4(a) it says you may select more than one. If we do not have unanimous agreement on (ii) but have unanimous agreement on (i) and (iii), can we leave (ii) open (blank)?" (Tr. at 4087).

  Accordingly, the Court finds that the special verdict form was proper for Counts I and II.

  Defendant also claims that any flaws in Counts I and II tainted the guilty verdicts on Counts III and IV. (Def's Reply at 3). Even if this Court found Counts I and II flawed, which it does not, the Defendant has made no showing that "there is a substantial risk of prejudicial spillover," as is required. See United States v. Scotti, 47 F.3d 1237, 1247 (2d Cir. 1995). 2. Motion for a Mistrial as to Count II

  The defendant moves for a mistrial "at least as to Count 2" claiming that the verdict was incomplete and that the Court should have instructed the jury to continue their deliberations. (Def's Br. at 18). These claims are without merit.

  Question 3 on the verdict form asked the jury whether they found Defendant guilty or not guilty of Count Two (securities fraud). Question 4 states, "If you answered `guilty' in Question 3, answer the following questions for the defendant." The subparts in Question 4(a) then asked whether the jury found that the Defendant (i) employed a device, scheme or artifice to defraud, or (ii) obtained money or property by means of making an untrue statement of material fact, or (iii) engaged in an act, practice or course of business that operated as fraud upon a purchaser.

  When the jury advised the Court that they had a unanimous verdict the Court noticed, upon examination of the verdict form, that it was unclear as to what the jury had answered in the space provided for question 4(a)(ii). (Tr. 4085). Without objection from counsel, the Court sent the jury back to the jury room to indicate whether they had in fact reached a unanimous verdict with respect to question 4(a)(ii), and if they had, to mark their verdict clearly. The jury subsequently sent back a note asking "If we do not have unanimous agreement on (ii) but have unanimous agreement on (i) and (iii), can we leave (ii) open (blank)?" (Tr. at 4087). The Court stated to the Government and Defendant's counsel:

I think they obviously have to be told if they cannot agree unanimously, then they have to leave it blank. They certainly can't answer it, because they can only answer these questions unanimously. It seems to me the only issue is whether you want me to ask them to try to reach agreement or whether we should simply take this verdict.
(Tr. at 4089). (Emphasis added.)

  The Court then asked "What do you want, Mr. Obermaier?" (Tr. at 4090). Instead of asking the Court to have the jury continue to deliberate on question 4(a)(ii) or proposing an instruction, defense counsel responded "well, what I want is for them to clear up the ambiguity." (Tr. at 4090).

  The Court asserted that "[t]here is no ambiguity about anything in the verdict form, so I am unclear as to what ambiguity you think exists." (Id.). Mr. Obermaier responded, "It indicates that they have ambiguity with respect to finding the defendant guilty on Count Two. That's my position." (Id.). Defendant's counsel said nothing more.

  The Court brought the jury back in and told them, "If you cannot agree unanimously, then you must leave (ii), that section of question 4(a), blank." (Tr. at 4091). The jury subsequently returned the verdict sheet leaving question 4(a)(ii) blank, and noting on the verdict form that "We wish to leave this question (ii) blank." The jury unambiguously answered yes to the other subparts of question 4. First, it is quite clear that the verdict was complete. The jury unambiguously reached a verdict on this Count by indicating in question 3 that they found the Defendant "guilty" of Count II. In addition, the jury indicated, by answering "yes" to questions 4(a)(i) and 4(a)(iii), that they found unanimously that Defendant had both employed a device or scheme to defraud, as well as engaged in an act, practice or course of business that operated as fraud or deceit upon a purchaser. Either of these findings alone would have been sufficient to convict the Defendant of Count II. There is no requirement that the jury unanimously answer every special interrogatory.

  As to the Court's failure to instruct the jury to continue to deliberate, it was unnecessary and in any event, at no time did the Defendant suggest any instruction to be given to the jury or move for a mistrial.

  Since the Defendant has not shown that it would be manifestly unjust to let his guilty verdict on Count II stand, his motion with respect to this issue is denied.

  3. Court Erred in Deciding that there was No Joint Defense Privilege

  Defendant also moves the Court to reconsider its August 11, 2003 Opinion, which was issued after review of the parties' written submissions, as well as 2 days of hearings. The Court declines to do so. The August 11 Opinion held that the Joint Defense Agreement ("JDA") did not apply to the interviews conducted by corporate counsel on February 11, 12, September 9 and December 18, 1999 for several reasons. First, the Court found that the plain language of the JDA did not cover the interviews, in part because the language refers only to the sharing of information "between counsel and not between a party and another party's counsel." (Op. at 6-10). Second, the Court stated that, even assuming the language of the JDA was ambiguous, the extrinsic evidence showed that the parties to the JDA did not intend for it to apply to the interviews. (Id. at 6-7). Last, the Court held that no joint defense privilege existed outside of the JDA because the parties were not "participating in a common enterprise" when they conducted the interviews, and because the interviews did not further any alleged common enterprise but rather were being conducted "as part of the ongoing internal investigations by the [] corporations." (Id. at 10-19). The Court specifically found that the interviews were clearly fact-gathering, rather than strategic, sessions.*fn2 (Id. at 17). Defendant's motion for reargument is based upon his claim that "he had a reasonable basis to believe that the conversation he was about to have with the attorneys who were signators to the Joint Defense Agreement was in fact privileged." (Def's Br. at 24). This argument fails because the Second Circuit has flatly rejected the "reasonable belief" standard as a basis for determining the existence of a personal attorney-client privilege in discussions between employees and corporate counsel.

  In United States v. International Brotherhood of Teamsters, 119 F.3d 210, 216-17, 216 n. 2 (2d Cir. 1997), the Second Circuit "decline[d] [Defendant's] invitation to adopt a `reasonable belief' standard," and instead held that the "`reasonable belief' standard is not only not supported by the case law, but . . . it is also unwise."

  Defendant unsuccessfully attempts to distinguish this case from International Brotherhood of Teamsters. He argues that because there was no joint defense agreement in that case, the employee could not have held a reasonable belief that his communications with corporate counsel about corporate matters would create a personal privilege. This is a distinction without legal significance because the reasoning of International Brotherhood of Teamsters was not based on an analysis of whether the defendant's belief was reasonable under the circumstances. Rather, the Second Circuit wholly rejected the reasonable belief standard.

  In further support of his contention that a joint defense privilege applies, Defendant reiterates a point made in this Court's August 11 Opinion, "Only those communications made in the course of an ongoing common enterprise and intended to further the enterprise are protected." (Def's Br. at 26). This requirement, however, defeats Defendant's argument. As the Court found previously, "The evidence demonstrates that the interviews were not part and parcel of a defense strategy," but rather were "conducted as part of the ongoing internal investigations by the ABN and ABNH corporations." (Op. at 12). The Opinion also clearly holds that there was no common enterprise. Therefore, applying these factual findings to the law as the Court, and even the Defendant, sets out, results in the conclusion that the communications were not privileged.*fn3 Accordingly, Defendant's motion for a new trial is denied.


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