The opinion of the court was delivered by: MIRIAM CEDARBAUM, Senior District Judge
Defendants Martha Stewart and Peter Bacanovic have moved for a
new trial pursuant to Fed.R.Cr.P. 33 on the ground that an expert
witness for the Government has been charged with committing
perjury in his testimony. Because there is no reasonable
likelihood that this perjury could have affected the jury's
verdict, and because overwhelming independent evidence supports
the verdict, the motions are denied.
Stewart and Bacanovic were indicted on criminal charges arising
from Martha Stewart's December 27, 2001 sale of 3,928 shares of stock in ImClone Systems, Inc. ("ImClone"). ImClone is
a biotechnology company whose then-chief executive officer,
Samuel Waksal, was a friend of Stewart's and a client of
Stewart's stockbroker at Merrill Lynch, defendant Bacanovic. On
December 25, 2001, ImClone learned that the Food and Drug
Administration had rejected the company's application for
approval of Erbitux, a cancer-fighting drug. On December 28, the
day after Stewart sold her shares, ImClone publicly announced
that the Erbitux application had been rejected. Shortly after
ImClone's announcement, the Securities and Exchange Commission
("SEC") and the United States Attorney's Office for the Southern
District of New York launched investigations into trading in
ImClone stock in advance of the announcement to the public of the
news about Erbitux.
Each defendant was questioned twice in the course of these
investigations. Stewart was interviewed at the office of the
United States Attorney on February 4, 2002 and by telephone on
April 10, 2002. Among those present during Stewart's interviews
were Special Agent Catherine Farmer of the FBI and Helene
Glotzer, a lawyer with the SEC's Enforcement Division. Bacanovic
was interviewed by telephone on January 7, 2002. Present at that
interview were Glotzer and another SEC attorney, Jill Slansky, as
well as David Marcus, a Merrill Lynch attorney. On February 13,
2002, Bacanovic testified under oath before the SEC. He was questioned by three SEC attorneys: Glotzer, Slansky, and Laurent
Sacharoff. His testimony was tape recorded.
The jury convicted Stewart of making false statements to
investigators during her February 4 interview, in violation of
18 U.S.C. § 1001. The jury found Stewart guilty of making the
following false statements, each of which was a specification in
Count Three of the Indictment.*fn1 Stewart told the
Government investigators that she spoke to Bacanovic on December
27 and instructed him to sell her ImClone shares after he
informed her that ImClone was trading below $60 per share.
Stewart also stated that during the same telephone call, she and
Bacanovic discussed the performance of the stock of her own
company, Martha Stewart Living Omnimedia ("MSLO"), and discussed
K-Mart. She told investigators that she had decided to sell her
ImClone shares at that time because she did not want to be
bothered during her vacation. Stewart stated that she did not
know if there was any record of a telephone message left by
Bacanovic on December 27 in her assistant's message log. She also
said that since December 28, she had only spoken with Bacanovic
once regarding ImClone, and they had only discussed matters in
the public arena. Finally, Stewart told investigators that since
December 28, Bacanovic had told her that Merrill Lynch had been
questioned by the SEC regarding ImClone, but that he did not tell
her that he had been questioned by the SEC or that he had been
questioned about her account.
The jury acquitted Stewart of one specification charged in
Count Three: her statement that she and Bacanovic had agreed, at
a time when ImClone was trading at $74 per share, that she would
sell her shares when ImClone started trading at $60 per share.
The jury found Stewart guilty of making the following false
statements to investigators during her April 10 interview. Each
of these statements was a specification in Count Four of the
Indictment. Stewart said that she did not recall if she and
Bacanovic had spoken about Waksal on December 27 and that she did
not recall being informed that any of the Waksals were selling
their ImClone stock. Stewart also reiterated that she spoke to
Bacanovic on December 27, that he told her the price of ImClone
shares, and that he suggested that she sell her holdings.
The jury did not find Stewart guilty of one false statement
specification charged in Count Four: her statement that sometime
in November or December of 2001, after she sold ImClone shares
held in the Martha Stewart Defined Pension Trust, she and
Bacanovic decided she would sell her remaining ImClone shares
when they started trading at $60 per share. The jury found Bacanovic guilty of making one false statement
during his January 7 interview with the SEC, in violation of
18 U.S.C. § 1001. This was a specification in Count Two of the
Indictment, which charged Bacanovic with falsely stating that he
had spoken to Stewart on December 27, that he told Stewart during
that conversation that ImClone's share price had dropped, and
that Stewart had instructed him to sell her shares.
The jury found Bacanovic not guilty of the other false
statement charged in Count Two: his statement that on December
20, 2001, he had a conversation with Stewart in which she decided
to sell her ImClone stock at $60 per share.
The jury also convicted Bacanovic of perjury in violation of
18 U.S.C. § 1621, for one statement he made during his February 13
testimony before the SEC. Perjury was the charge in Count Six of
the Indictment. Bacanovic stated that on the morning of December
27, he had left a message for Stewart with her assistant, Ann
Armstrong. He said that the message requested that Stewart return
his call, and advised her of the price at which ImClone was then
The jury acquitted Bacanovic of five other perjury
specifications charged in Count Six. These specifications related
to conversations Bacanovic had had with Stewart subsequent to her
December 27 trade, the circumstances of her decision on December 20 to sell ImClone at $60 per share, and a
worksheet he had used during their December 20 conversation.
The jury acquitted Bacanovic of a charge of making and using a
false document, which was charged as a violation of
18 U.S.C. § 1001 in Count Five of the Indictment. This count was based on a
worksheet that Bacanovic gave the SEC in the course of their
investigation. Bacanovic claimed that he had used the worksheet
during his December 20 conversation with Stewart. The worksheet
listed Stewart's holdings and contained numerous handwritten
notations in blue ink. The bullet point before ImClone's entry on
the worksheet was circled in blue ink, as were the bullet points
preceding several other entries on the page. Beside ImClone's
name was a notation, "@60," also in blue ink. The "@60"
notation was the basis of the charge.
The jury also convicted defendants of conspiracy and
obstruction of an agency proceeding in violation of
18 U.S.C. § 1505. With respect to the conspiracy charge, the jury found that
the defendants conspired to carry out all three objects of the
conspiracy: making false statements, perjury, and obstruction of
an agency proceeding.
The prosecution's key witness against both defendants was
Bacanovic's former assistant, Douglas Faneuil, who testified
pursuant to a cooperation agreement with the Government. Faneuil
testified that on the morning of December 27, 2001, he learned that Sam Waksal and several members of Waksal's family were
attempting to sell their ImClone holdings. Bacanovic, who was on
vacation and out of the office that day, learned of the Waksals'
trading activity when he telephoned Faneuil. Faneuil testified
that when he told Bacanovic that Sam Waksal and his daughters
wanted to sell their ImClone stock, Bacanovic said: "Oh, my God,
get Martha on the phone." Faneuil dialed the telephone number of
Stewart's New York office and transferred Bacanovic to Stewart's
assistant, Ann Armstrong. Faneuil testified that he did not
listen to their ensuing conversation. Later that morning,
Bacanovic called Faneuil again. Bacanovic told Faneuil that
Stewart would be calling and instructed Faneuil to "tell her
what's going on." When Faneuil asked whether that meant that he
should tell Stewart "about Sam," Bacanovic replied, "Of course.
You must. You've got to. That's the whole point." Faneuil
testified that when Stewart called that afternoon, she
immediately said: "Hi, this is Martha, what's going on with Sam?"
Faneuil responded: "well, we have no news on the company, but
Peter thought you might like to act on the information that Sam
Waksal was trying to sell all of his shares." Stewart said: "all
his shares?" When Faneuil responded that Waksal was attempting to
sell all of the shares he held at Merrill Lynch, Stewart asked
Faneuil the price of the stock and then instructed him to sell
all of her shares. She also asked him whether she held any additional shares of ImClone in her pension accounts, and he told
her that she did not. Faneuil offered to e-mail Stewart's
assistant, Ann Armstrong, to confirm the sale, which caused
Stewart to become angry and inform him that he had no right to
tell her assistant about her personal transactions. They then
agreed that Faneuil would send an e-mail to Stewart's private
e-mail address when her stock was sold. He subsequently placed
the order for the sale and e-mailed Stewart when it was
completed. Faneuil testified that Bacanovic called later that
day, eager to know whether Martha had called and what Faneuil had
told her. Faneuil informed Bacanovic that he had told Stewart
that Waksal was trying to sell all his shares, and that Stewart
had sold hers. Documents in evidence demonstrated that Stewart's
ImClone stock had been sold shortly before 2 p.m. on December 27,
Faneuil also testified that within a few days after the Erbitux
announcement, one of his supervisors at Merrill Lynch approached
him with questions about the events of December 27. Faneuil
called Bacanovic, who was still on vacation at that time.
Bacanovic told him that Stewart sold her ImClone shares pursuant
to a tax-loss selling plan which Bacanovic and Stewart had
developed earlier in December. When Faneuil later learned that
the sale actually disrupted Stewart's tax-loss selling because
Stewart sold the shares at a significant profit, Faneuil again turned to Bacanovic, who informed him that Stewart sold her
ImClone stock pursuant to an agreement they had reached that she
would sell if the share price fell to $60. Faneuil testified that
this was the first time that he had heard of such a $60
Faneuil admitted that he initially lied to investigators about
his conversation with Stewart. He testified that in the months
following the sale, he felt increasing pressure from Bacanovic
not to reveal the truth about the events of December 27. In
mid-January, Bacanovic told him: "I've spoken to Martha. I've met
with her. And everyone's telling the same story. Everyone's
telling the same story. This was a $60 stop-loss order. That was
the reason for her sale. We're all on the same page, and it's the
truth. It's the true story. Everyone's telling the same story."
Faneuil testified that he had similar conversations with
Bacanovic at least five times before June 2002, when he decided
to correct the statements he had made to investigators and
cooperate with the Government.
Faneuil's direct examination lasted approximately four hours.
Defense counsel cross-examined him for more than nine hours over
a period of three days, and sought to impeach his credibility
through evidence of his prior experiences with Stewart, former
drug use, and his cooperation agreement with the Government. The Government's evidence also included the testimony of Emily
Perret, Sam Waksal's assistant. Perret testified that Stewart
called ImClone's New York office on December 27. According to
Perret, Stewart immediately said "get Sam, or where is Sam. This
is Martha. There is something going on with ImClone. Do you know
what it is? I need you to go find him." Perret informed Stewart
that she did not know Waksal's whereabouts and had no information
about ImClone. Perret recorded the following message in her
telephone log: "1:43 Martha Stewart, something is going on with
ImClone and she wants to know what She is on her way to Mexico
and is staying at Los Ventanos [sic]." Telephone records admitted
at trial showed that Stewart placed this call after speaking with
Stewart's assistant, Ann Armstrong, also testified during the
Government's case. Armstrong testified that Bacanovic called on
the morning of December 27 and asked to speak to Stewart.
Armstrong informed him that Stewart was on an airplane en route
to Mexico, and typed the following message into her computer
message log: "Peter Bacanovic thinks ImClone is going to start
trading downward." Armstrong testified that Bacanovic did not say
what the price of ImClone was. When Stewart called later that
day, Armstrong relayed the message to her, and then transferred
her call to Peter Bacanovic's office.
Telephone records corroborated the testimony of Faneuil and Armstrong with respect to the timing and sequence of the
telephone conversations which occurred on December 27.
Armstrong also testified that on January 31, 2002, Stewart
spoke with her attorney on the telephone, then approached
Armstrong and asked to see the message log for December 26
through January 7. After Armstrong opened the document on her
computer screen, Stewart seated herself at Armstrong's desk and
began scrolling through the messages. When she came to the
messages listed for December 27, Stewart deleted the message from
Bacanovic, changing it to: "Peter Bacanovic re imclone."
Armstrong testified that Stewart then stood up and told Armstrong
to "put it back the way it was." This occurred five days before
Stewart's interview at the United States Attorney's Office. The
Government introduced into evidence the original message log as
well as a copy of the altered version which Armstrong had kept.
The Government also presented the testimony of Mariana
Pasternak, Stewart's best friend. Pasternak traveled with Stewart
to Mexico on December 27, 2001, and testified about a
conversation she had with Stewart in Mexico. The two were talking
about mutual friends, and the conversation turned to Sam Waksal.
Pasternak testified that Stewart said Waksal "was selling or
trying to sell his stock, that his daughter was selling or trying
to sell her stock, and Merrill Lynch didn't sell." Stewart also
stated: "His stock is going down, or went down, and I sold mine." Pasternak also testified that at some
point while she and Stewart were still in Mexico, Stewart said:
"Isn't it nice to have brokers who tell you those things." On
cross-examination, Pasternak stated that she could not recall
whether Stewart said this or whether Pasternak herself had merely
thought it. On redirect examination, Pasternak testified that it
was her best belief that Stewart had made the statement.
Pasternak's testimony was admitted only against Stewart.
The Government also presented the testimony of Lawrence F.
Stewart (hereinafter "Lawrence"), Director of the Forensic
Services Division of the United States Secret Service. Lawrence's
specialty is ink analysis he testified that he has been
designated the "National Expert for Ink Analysis." At trial,
Lawrence introduced the jury to the forensic tests which were
performed on the worksheet to determine whether there was any
variation in the pens used to make the handwritten notations. His
laboratory tested the document twice: in July and August 2002 and
January 2004. Lawrence stated that the tests revealed that all
but one of the tested notations on the document including the
circle around the ImClone bullet point were made with an
inexpensive type of Paper Mate pen. The exception was the "@60"
notation, which was made with a pen Lawrence could not identify.
Lawrence testified that while there are scientific tests which
can measure the age of ink on a document, they could not be used on the "@60" notation because they require multiple samples of
the same ink placed on a document over a span of time. The
Government argued, on the basis of the use of different pens,
that Bacanovic did not make the "@60" notation at the same time
that he made the other notation on the same line.
Lawrence was extensively cross-examined regarding the wording
of his laboratory's reports on the worksheet and regarding a mark
that his laboratory did not fully test: a small dash beside an
entry for "Apple Computer Inc." Lawrence testified that he had
not tested this mark because the process of testing necessarily
destroys the sample, and he was concerned that by testing the
dash he would not leave enough of the sample for the defense to
analyze. However, Lawrence did conclude that the dash was not
made with a Paper Mate pen, and that it was possible that it was
made by the same pen that made the "@60" notation.
Throughout his testimony, Lawrence indicated that he had
performed much of the work involved in testing the ink on the
worksheet. Lawrence also testified that although another ink
examiner, Susan Fortunato, had written the laboratory report on
the July 2002 tests, he had participated in those tests, reviewed
her work and assisted in the creation of the exhibits prepared
for the trial. He also stated that he had participated in the
January 2004 testing. In his defense case, Bacanovic presented the expert testimony
of another ink examiner, Dr. Albert Lyter. Lyter used one of the
same forensic tests the Secret Service laboratory had used to
analyze the worksheet, and agreed with Lawrence's conclusion that
the ink used to create the "@60" notation was different from
the ink used to create all of the other notations tested by the
Government, including the circle around the bullet point
preceding the ImClone entry. Lyter did not dispute Lawrence's
statement that the comparative age of the entries could not be
scientifically determined. Lyter's analysis for the worksheet
varied from Lawrence's in only two respects. First, Lyter
analyzed the dash beside the Apple Computer entry, and concluded
that it was made with the same pen that had made the "@60"
entry. Second, Lyter testified that densitometry, a method of
statistical analysis based on measurements of ink density,
demonstrated that Bacanovic used at least two different Paper
Mate pens to make all of the remaining marks on the page. That
is, while the pens used to make those notations contained ink of
the same recipe, minor variations in the composition of the inks
revealed that they were from different batches, and therefore
must have been contained in different pens. This testimony was
offered to support the defense's contention that Bacanovic used
multiple pens during his conversation with Stewart.
Lawrence returned to the stand during the Government's rebuttal case to explain that densitometry lacks scientific
validity. During cross-examination, he was asked whether he was
familiar with a proposal for a forensic science textbook by
several of his colleagues at the Forensic Services Division,
which includes a chapter about the use of densitometry to detect
batch variations in inks of the same recipe. Lawrence stated that
he had seen the textbook proposal.
Bacanovic's lawyer spent the majority of his time during
summation attacking Faneuil's credibility and pointing out
inconsistencies in his testimony. With respect to the worksheet,
Bacanovic's lawyer stated, among other things: "We had a lot of
expert testimony about this document. But our expert and their
expert really agreed on almost everything about the main
important points." (Tr. at 4657) Stewart's lawyer conceded during
his closing argument that Faneuil's testimony concerning what he
told Stewart on December 27 was accurate: "Nobody is disputing
whether or not Ms. Stewart was told that the Waksals were selling
on December 27th. What we are disputing is that it made a
difference to her." (Tr. at 4762)
After a five-week trial, the jury returned the verdict
described above. Two conclusions relevant to the current motions
can be drawn from the jury's verdict: first, that the jury found
that the Government had not proved beyond a reasonable doubt that
defendants had fabricated the $60 agreement; and second, that the jury found beyond a reasonable doubt that Stewart and Bacanovic
agreed to lie and did lie to Government investigators to conceal
the fact that when Stewart sold her ImClone stock on December 27,
2001, she had been tipped by Bacanovic's assistant that the CEO
of ImClone was trying to sell his ImClone shares held at Merrill
On May 21, 2004, the Government announced that it had filed a
criminal complaint against Lawrence Stewart after an
investigation revealed that he had made false statements in his
trial testimony. On June 9, Lawrence was indicted on two counts
of perjury. Lawrence is not accused of lying about the results of
the forensic tests performed on the worksheet, but rather about
two other matters: his claim that he had personally participated
in the tests and his statement that he had seen the textbook
proposal drafted by his colleagues.
After the Government's announcement, defendants made these
motions for a new trial. Defendants' primary claim is that
Lawrence's perjury constitutes newly-discovered evidence which
justifies a new trial. Defendants also contend that the
Government's failure to turn over materials which revealed that
Lawrence was committing perjury constituted a violation of Brady
v. Maryland, 373 U.S. 83 (1963), and that defendants' inability
to cross-examine the examiner who tested the ink, Susan
Fortunato, was a violation of their Confrontation Clause rights. Each of these arguments is considered in turn.
I. Perjury by a Government Witness
Rule 33 provides: "Upon the defendant's motion, the court may
vacate any judgment and grant a new trial if the interest of
justice so requires." Fed.R.Cr.P. 33(a). However, "in the
interest of according finality to a jury's verdict, a motion for
a new trial based on previously-undiscovered evidence is
ordinarily `not favored and should be granted only with great
caution.'" United States v. Stofsky, 527 F.2d 237, 243 (2d Cir.
1975) (quoting United States v. Costello, 255 F.2d 876, 879 (2d
Cir. 1958)). In most situations, therefore, "relief is justified
under Rule 33 only if the newly-discovered evidence could not
have been discovered, exercising due diligence, before or during
trial, and that evidence `is so material and non-cumulative that
its admission would probably lead to an acquittal.'" United
States v. Gallego, 191 F.3d 156, 161 (2d Cir. 1999) (quoting
United States v. Siddigui, 959 F.2d 1167, 1173 (2d Cir. 1992)).
When the newly-discovered evidence is offered to show that a
witness has committed perjury, the second half of the
Rule 33 analysis is slightly different. The threshold inquiry is whether
the witness actually committed perjury. See United States v.
White, 972 F.2d 16, 20 (2d Cir. 1992). Although Lawrence has only been indicted, not convicted, it is assumed for the purpose
of these motions that he did perjure himself.
But the mere fact that a witness committed perjury is
insufficient, standing alone, to warrant relief under Rule 33.
"Whether the introduction of perjured testimony requires a new
trial initially depends on the extent to which the prosecution
was aware of the alleged perjury. To prevent prosecutorial
misconduct, a conviction obtained when the prosecution's case
includes testimony that was known or should have been known to be
perjured must be reversed if there is any reasonable likelihood
that the perjured testimony influenced the jury." United States
v. Damblu, 134 F.3d 490, 493 (2d Cir. 1998) (citing United
States v. Agurs, 427 U.S. 97, 103 (1976)). When the Government
is unaware of the perjury at the time of trial, "a new trial is
warranted only if the testimony was material and `the court [is
left] with a firm belief that but for the perjured testimony, the
defendant would most likely not have been convicted.'" United
States v. Wallach, 935 F.2d 445, 456 (2d Cir. 1991) (quoting
Sanders v. Sullivan, 863 F.2d 218, 226 (2d Cir. 1988))
(alteration in original).
Wallach is one of the few Second Circuit cases to hold that
witness perjury required a new trial. In that case, the Court
determined that the Government knew or should have known that a
cooperating witness, who had testified that he had conquered a compulsive gambling habit, lied when confronted on
cross-examination with evidence that contradicted his claim.
See id. at 457. The Court held that a new trial was required
because the witness was "the centerpiece of the government's
case" who "tied all the pieces together." Id. at 457, 458. The
Court further held that "[h]ad it been brought to the attention
of the jury that [the witness] was lying after he had purportedly
undergone a moral transformation and decided to change his ways,
his entire testimony may have been rejected by the jury." Id.
The Wallach Court also observed that "if it is established
that the government knowingly permitted the introduction of false
testimony reversal is `virtually automatic.'" Id. at 456
(citing Stofsky, 527 F.2d at 243). But this broad language does
not relieve courts of the duty to determine whether the false
testimony was prejudicial. Courts in this Circuit have continued
to scrutinize the potential effect of witness perjury on a jury's
judgment, often assuming, for the purpose of the analysis, that
the prosecution knew or should have known of the perjury. See,
e.g., Gallego, 191 F.3d at 166 n. 4; United States v. Wong,
78 F.3d 73, 82 (2d Cir. 1996). Since Wallach, the Second
Circuit has noted that even when the prosecution knew a witness
was committing perjury, "where independent evidence supports a
defendant's conviction, the subsequent discovery that a witness's testimony at trial was perjured will not warrant a new trial."
Wong, 78 F.3d at 82.
A. The Prosecution's Awareness of Lawrence's Perjury
Defendants argue that Lawrence and several of his laboratory
colleagues were members of the prosecution team, and that their
knowledge of Lawrence's perjury should be imputed to the
prosecution. Defendants also argue that a number of "red flags"
in Lawrence's testimony should have alerted the prosecution that
Lawrence was committing perjury. For these reasons, defendants
contend, the "reasonable likelihood" standard applies in this
case and requires that they receive a new trial.
The following facts, drawn from materials submitted by
defendants and by the Government, demonstrate that Lawrence
participated in the prosecution of this case as an ordinary
expert witness. His colleagues at the Secret Service laboratory
were even less involved. None of them was a member of the
In July 2002, the FBI sent the worksheet to the Secret Service
laboratory with a request for analysis. Fortunato received the
worksheet and performed the tests. Lawrence's first involvement
with the case came in the fall and winter of 2003, when he
accompanied FBI agents who were supervising defense experts'
collection of ink samples from the worksheet. Lawrence's role, according to affidavits submitted by the agents,
was to advise them concerning proper collection techniques to
ensure that the defense experts would not damage the worksheet.
On January 9, 2004, Lawrence, Fortunato, and Benjamin Moore,
another civilian employee of the Secret Service laboratory, met
the prosecuting attorneys for the first time. At that meeting,
Lawrence and Fortunato explained the ink tests performed on the
worksheet and the results. They also discussed their credentials.
Lawrence explained age testing to the prosecutors and why it was
not possible to use such tests on the worksheet. The participants
in this meeting also discussed why the dash beside the Apple
Computer entry was not tested. The prosecutors requested that
Lawrence and Fortunato attempt to test the dash as well as
identify the actual inks used on the document. According to
affidavits submitted by the prosecutors, Moore did not
participate in the meeting in a substantive way.
After the prosecutors decided to call Lawrence as an expert
witness, they met with him two more times before trial. Moore was
also in attendance, but again did not participate substantively.
In the first meeting, which the prosecutors had organized as an
initial trial preparation session, Lawrence again discussed the
tests performed on the worksheet and age testing. He also
discussed past testimony by Bacanovic's likely expert witnesses.
The second meeting was devoted to trial preparation, including mock direct and cross-examinations. In addition to
these meetings, FBI agents spoke with Lawrence several times by
telephone, primarily to arrange his attendance at the meetings.
The prosecutor in charge of Lawrence's direct testimony also
spoke with him by telephone concerning exhibits and documents
produced in discovery.
Lawrence testified in the Government's case in chief on
February 19. Subsequently, the prosecutors consulted him about
scientific articles that Bacanovic had submitted in response to a
Daubert challenge and about the formulation of technical
questions for Lyter's cross-examination. Lawrence sat in the
courtroom on February 23 when the defense expert, Lyter,
testified. The prosecutor who conducted the cross-examination
affirmed that notes containing possible cross-examination
questions were passed to him during his cross-examination of
Lyter, and that he later learned that the notes came from
Lawrence. The prosecutor did not request such assistance and did
not recall whether he asked the suggested questions. Lawrence
also met with prosecutors to prepare for his rebuttal testimony.
Lawrence testified in the Government's rebuttal case on February
Lawrence did not assist the FBI, the SEC, or the United States
Attorney's Office in investigating Stewart's stock sale. He did
not participate in the interviews of the defendants, or in any of the hundreds of other interviews conducted in the course
of the Government's investigations. Other than the worksheet and
reports related to it, he reviewed no documents in this case. He
did not assist the Government in preparing the case for
submission to the grand jury. Indeed, he had no contact with the
case until several months after the Indictment had been returned,
while the parties were preparing for trial. His contribution to
trial strategy was limited to helping the prosecution understand
the forensic tests which had been performed on the document and
assisting the attorneys in formulating cross-examination
questions on technical subjects. It is not unusual for expert
witnesses to perform such duties. Nor is it unusual for them to
prepare for trial by undergoing mock examinations, or to observe
the testimony of adverse witnesses. See Malek v. Fed'l Ins.
Co., 994 F.2d 49, 53-54 (2d Cir. 1993) (discussing the
applicability to expert witnesses of a provision of the Federal
Rules of Evidence which permits exceptions from the rule that
witnesses should be sequestered during trial).
The numerous documents defendants have submitted, including
text messages which Lawrence sent to other Secret Service
employees from his mobile telephone prior to and during the
trial, do not reveal any greater level of participation by
Lawrence in the prosecution of this case than what has been
described above. Stripped of defendants' rhetoric, the facts advanced by both sides demonstrate that Lawrence was an expert
witness who was also a Government employee. He was not a member
of the Government "team" which investigated and prosecuted
defendants. Defendants cite numerous cases which consider whether
a Government agent should be deemed an arm of the prosecution,
such that his knowledge should be imputed to the prosecuting
attorneys. Those cases do not support the broad theory of
imputation which defendants advocate. They involve individuals
who either worked in the same office as the prosecutor or were
law enforcement officers who were actually involved in the
investigation of the defendant. In United States v. Morell,
524 F.2d 550 (2d Cir. 1975), for example, a case on which defendants
rely heavily, the Second Circuit imputed to the prosecution a law
enforcement agent's knowledge of a confidential file concerning
the Government's principal witness, because the agent "not only
supervised [the principal Government witness] and participated
actively in this investigation, but also was present at counsel's
table throughout all or most of the trial, indicating that he was
intimately involved in the prosecution," id. at 555. See
also United States v. Sanchez, 813 F. Supp. 241, 247
(S.D.N.Y. 1993), aff'd on other grounds, 35 F.3d 673 (2d Cir.
1994) (imputing to the prosecutor knowledge of the perjury of
local police officers who had been deputized as federal agents
and worked as part of a joint task force investigating a narcotics conspiracy of which the defendant was charged as a
member); Pina v. Henderson, 752 F.2d 47, 49 (2d Cir. 1985)
(distinguishing Morell and refusing to impute to the prosecutor
knowledge possessed by a parole officer "who did not work in
conjunction with either the police or the prosecutor").
Defendants have cited two state court cases for the proposition
that expert witnesses can be considered members of the
prosecution team. See People v. Cornille, 448 N.E.2d 857
(Ill. 1983); State v. DeFronzo, 394 N.E.2d 1027 (Ohio Ct. C.P.
1978). All of these cases establish that the inquiry into whether
knowledge of witness perjury should be imputed to a prosecuting
attorney is a highly fact-specific one. The question is not
whether any expert witness can be treated as "an arm of the
prosecution," but whether Lawrence played such a role. The facts
of this case demonstrate that he did not. Accordingly, his
knowledge of his own perjury cannot be imputed to the
prosecution.*fn2 Defendants argue, alternatively, that the prosecutors should
have been aware that Lawrence was committing perjury. They point
to a number of "red flags" which, they claim, should have alerted
prosecutors before trial to the possibility that Lawrence was
misrepresenting his participation in the testing of the
worksheet. These include the absence of Lawrence's name on any
Secret Service records pertaining to the laboratory's testing of
the worksheet, and what defendants characterize as an absence of
any coherent explanation for the failure to test the dash.
Defendants also contend that Fortunato informed the prosecutors
at their first meeting that she had performed the analysis of the
worksheet and that Lawrence informed them of the limits of his
participation in the first round of testing.
Defendants have failed to point to anything in the voluminous
documents they have submitted which should have alerted the
prosecutors that the director of the Secret Service laboratory
was lying about his participation in the testing of the
worksheet. Neither have defendants shown that the prosecutors
were negligent in failing to investigate the extent of his
participation. The fact that Lawrence's name appeared nowhere on
the laboratory's reports and tests is not inconsistent with his
representation that he worked in conjunction with Fortunato; it
is also information that was equally available to the defense
during trial. Documents offered by the Government demonstrate that nothing which Fortunato and Lawrence said before
trial concerning the laboratory's failure to test the dash should
have caused the prosecutors to question Lawrence's role; that
defendants believe their explanations are not coherent does not
establish that the Government should have viewed them the same
way. Fortunato's description of the initial meeting, gleaned from
a statement she made during the Secret Service investigation into
Lawrence's perjury, does not demonstrate, as defendants suggest,
that she informed the prosecution that she alone performed the
initial round of tests. And finally, defendants rely heavily on
Lawrence's own statements regarding what he said to the
prosecutors about his role in the testing. Lawrence made these
statements in response to questioning by Secret Service agents
who were investigating him for perjury. Defendants fail to
explain why such statements are entitled to any credence.
Accordingly, defendants have not shown that the Government failed
to "properly utilize  the available information" regarding
Lawrence's participation in the testing of the worksheet.
Wallach, 935 F.2d at 457.
With respect to Lawrence's perjury regarding his awareness of
his colleagues' book proposal, defendants do not contend that any
"red flags" should have warned the Government that Lawrence was
lying. Bacanovic's attorney elicited the statement on
cross-examination. "Where the challenged false testimony was
elicited by the defense, rather than the prosecution, that circumstance
tends to establish the government's unawareness of the perjury."
Damblu, 134 F.3d at 493. Accordingly, it is clear that the
Government had no reason to be aware of this perjury.
B. The Effect of Lawrence Stewart's Perjury on the Jury's
Defendants have failed to demonstrate that the prosecution knew
or should have known of Lawrence's perjury. However, even under
the stricter prejudice standard applicable when the Government is
aware of a witness's perjury, defendants' motions fail. There is
no reasonable likelihood that knowledge by the jury that Lawrence
lied about his participation in the ink tests and whether he was
aware of a book proposal could have affected the verdict.
1. The Jury Did Not Rely on Lawrence Stewart's Testimony To
The verdict, the nature of Lawrence's perjury, and the
corroboration that Lawrence's substantive testimony received from
the defense's expert demonstrate that Lawrence's
misrepresentations could have had no effect on defendants'
First, the jury found that the Government did not satisfy its
burden of proof on the charges to which Lawrence's testimony was
relevant. Defendants do not dispute that Bacanovic was acquitted of the charge of making and using a false document, and
that none of the false statement and perjury specifications
concerning the existence of the $60 agreement were found by the
jury to have been proved beyond a reasonable doubt. Instead, the
jury found that Stewart lied when she told investigators that she
spoke to Bacanovic on December 27 and instructed him to sell her
shares after he informed her that ImClone was trading below $60
per share, that she could not remember whether she had been told
about Waksal's attempted sale, that she sold her stock because
she did not want to be bothered during her vacation, that she
discussed MSLO and K-Mart with Bacanovic on December 27, and that
she did not discuss the ImClone investigations with Bacanovic.
The jury found that Bacanovic lied when he said he spoke to
Stewart on December 27 and when he said that the message he left
with Armstrong only quoted the market price of ImClone shares. In
other words, the jury convicted defendants of lies that had
nothing to do with the $60 agreement. The outcome would have been
no different had Lawrence's entire testimony been rejected by the
jury, or had Lawrence not testified at all.
This situation is similar to White, where the defendant
claimed that one of the Government's principal witnesses had lied
when he testified that he did not abuse drugs. The Second Circuit
determined that under either prejudice standard, the allegedly
perjured testimony would not have affected the verdict, because the jury had acquitted the defendant of all of the
charges for which the only evidence was the testimony of the
challenged witness. See White, 972 F.2d at 22.
Defendants argue that acquittal on some charges does not
establish that the jury completely disregarded Lawrence's
testimony. They contend that the $60 agreement constituted
Stewart and Bacanovic's core defense and that the "@60"
notation was evidence which supported that defense; thus, to the
extent that awareness of Lawrence's perjury could have caused the
jury to discredit his testimony and have greater confidence in
the existence of the agreement ...