The opinion of the court was delivered by: HAROLD BAER, JR., District Judge
On December 21, 2004, Defendant Isaac Dayan ("Dayan") was
convicted of one count of conspiracy to commit bank fraud in
violation of 18 U.S.C. § 371, and two counts of bank fraud in
violation of 18 U.S.C. § 1344. Dayan now moves for judgment of
acquittal pursuant to Fed.R.Crim.P. 29, or in the alternative
for a new trial pursuant to Fed.R.Crim.P. 33. For the reasons
stated herein, the motion is DENIED.
On July 12, 2004, Dayan was charged with conspiracy to commit
bank fraud (Count I) and three counts of bank fraud (Counts II,
III, & IV) for his involvement in what the Government claimed was
a check-kiting scheme between diamond dealers. A jury trial
commenced on December 13, 2004 and extended to December 21, 2004.
The Government produced testimony from bank officers, Dayan's
accountant, and a co-conspirator, Jacob Haas, who had cooperated
with the Government. The Government also introduced Dayan's bank
records and identified checks made to and from Dayan's companies
as well as diagrams to demonstrate his part in the direct and
triangular transfers illustrating the conspiracy. Prior to the
close of the Government's case, and to expedite the jury trial,
the Court deemed Dayan's counsel to have moved for a judgment of
acquittal and the Court reserved decision. Dayan was found guilty
by the jury of Count I (Conspiracy) and Counts II and IV (Bank
Fraud). Through his own testimony, Dayan admitted exchanging
checks with other diamond dealers that did not represent business
transactions and explained that the exchanges were done, in part,
to cover overdrafts in the conspirators' accounts or checks that
had been issued by the conspirators and were soon to be presented
to the conspirators' banks for payment. Dayan claimed that the
practice, which he called "loans and exchanges," was common in
the diamond industry and known and accepted by the banks. II. APPLICABLE LEGAL STANDARD
When a defendant moves pursuant to Fed.R.Crim.P. 29, the
district court must determine, based on all of the relevant
evidence, whether a rational juror "might fairly conclude guilt
beyond a reasonable doubt." United States v. Mariani,
725 F.2d 862, 865 (2d Cir. 1984) (internal quotations omitted). The
district court is required to (i) draw all reasonable inferences
in favor of the Government, and (ii) resolve all issues of
credibility in favor of the jury's verdict. United States v.
Weiss, 930 F.2d 185, 191 (2d Cir. 1991). Or put another way, to
succeed on the motion, a defendant must persuade the court that,
"viewing the evidence in the light most favorable to the
Government, . . . no rational trier of fact could have found the
essential elements of the crime charged beyond a reasonable
doubt." United States v. Leslie, 103 F.3d 1093, 1100 (2d Cir.
1997). A defendant challenging the sufficiency of evidence "bears
a heavy burden." United States v. Autori, 212 F.3d 105, 114 (2d
Cir. 2000); United States v. Tillem, 906 F.2d 814, 821 (2d Cir.
1990) (stating that motions challenging the sufficiency of the
evidence for a conviction "rarely carry the day").
Fed.R.Crim.P. 33 provides that "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.Crim.P. 33(a). It
confers broad discretion upon a trial court to set aside a jury
verdict and order a new trial in order to avert a perceived
miscarriage of justice. United States v. Sanchez,
969 F.2d 1409, 1413 (2d Cir. 1992). A defendant seeking a new trial bears
the burden of demonstrating the "essential unfairness of the
[first] trial." United States ex rel. Darcy v. Handy,
351 U.S. 454, 462 (1956). In adjudicating a Rule 33 motion, a court is
entitled to weigh the evidence and, in so doing, to evaluate the
credibility of the witnesses. Sanchez, 969 F.2d at 1413.
However, courts should only grant new trials in exceptional
circumstances. Id. at 1414. "[M]otions for a new trial are
disfavored in this Circuit." United States v. Gambino,
59 F.3d 353, 364 (2d Cir. 1995).
a. Counts I and II (Conspiracy and Bank Fraud)
Dayan moves the Court to set aside the jury's verdict and enter
a judgment of acquittal or alternatively, order a new trial on
Counts I and II, conspiracy to commit bank fraud and bank fraud
respectively. Dayan urges that there was insufficient evidence at
trial to establish that he (1) made false representations to bank
officers concerning checks in his accounts, (2) knew that a
purpose of the check exchanges was and did cause or permit others to seek
and maintain lines of credit based on false representations, or
(3) knowingly deposited worthless checks. The motions must be
The Bank Fraud statute, 18 U.S.C. § 1344, criminalizes
participation in "a scheme or artifice 1) to defraud a financial
institution; or 2) to obtain any of the money . . . owned by . . .
or under the . . . control of a financial institution by means
of false or fraudulent pretenses, representations, or promises."
Because the statute is phrased in the disjunctive the Government
need not satisfy both prongs. Under the first prong, courts have
held that "a check-kiting scheme, regardless of its scale or
complexity, constitutes a `scheme or artifice to defraud.'"
United States v. Burnett, 10 F.3d 74, 78 (2d Cir. 1993) (citing
United States v. Stone, 954 F.2d 1187, 1190 (6th Cir. 1992).
The second prong requires something more than a simple
check-kiting scheme, where the only falsehoods or
misrepresentations are the overdraft checks themselves. Id.
When the defendant's conduct exceeds the simple check-kiting
scheme, or is an "embellished" check-kiting scheme, the false or
fraudulent pretenses requirement of the second prong must be
satisfied. While this conduct could include false statements to
bank managers, it could also be the concealment of control over
an account or the careful coordination of deposits to conceal the
amount of money in an account during the clearing period, or the
float. Id. at 79.
First, Dayan contends the Government failed to establish that
he made false representations to banks. However, the government
produced evidence that Dayan's bank accounts showed checks
exchanged back and forth in substantially similar amounts without
the funds to cover them so as to create a "wash." In addition
co-conspirator, Jacob Haas, testified in detail about the
check-kiting activity and that he provided checks to Dayan that
Haas did not have funds in his account to cover. For purposes of
Rule 29, once the jury has rendered its verdict, the Court must
construe issues of credibility in favor of the Government.
United States v. Abelis, 146 F.3d 73, 80, (2d Cir. 1998).
Applying this standard, as I must, there is ample evidence to
support a jury's finding of guilt under either prong of § 1344.
Second, Dayan claims there was insufficient proof at trial to
establish that he knew the purpose of the check-kiting scheme was
to inflate sales and to increase his line or lines of credit, yet
Haas testified that the check exchanges were intended to obtain
credit for the conspirators and that he told Dayan, among other
things, that if he wanted to obtain increased lines of credit, he
should get an accountant to prepare financial statements with
inflated sales figures, and Dayan did just that. Thus, it would
be reasonable for the jury to find that Dayan knew the purpose of