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United States v. Mahaffy

April 24, 2007


The opinion of the court was delivered by: Glasser, United States Senior District Judge


Trial in this criminal action alleging conspiracy, securities fraud, and false statements has been ongoing since March 19, 2007. On April 20, 2007, the Government moved to preclude defendants Mahaffy, Ghysels, and Nwaigwe from offering the testimony of certain expert witnesses they intend to call based on defendants' failure to abide by the disclosure requirements of Federal Rule of Criminal Procedure 16(b)(1)(C) ("Rule 16(b)(1)(C)") and the Court's Order, dated February 28, 2007 (Docket No. 204) (the "Pre-trial Order").*fn1

Specifically, the Government argued that the defendants offered no more than the experts' curricula vitae and broad generalizations of the topics on which the experts would testify. See Letter from S. Satwalekar to the Court, dated April 20, 2007, at 3-4. The Government further maintained that, based on defendants' disclosures, all testimony from the experts would be cumulative of testimony already received by the Court, and any attempt to elicit testimony regarding "industry practice" with regards to squawk boxes would be irrelevant and prejudicial. Id. at 5. The Government also moved to preclude defendant Mahaffy from offering the testimony of his expert because his submission was untimely.*fn2 Id. at 4.

Defendant Mahaffy stated in a letter addressed to the Government, dated March 19, 2007, the date on which the trial commenced, that expert Ronald S. Cohen's testimony would relate to "the mechanics of trading on the New York Stock Exchange. Such testimony may include information regarding how buyers and sellers are matched, the role of the specialist in executing an order and other applicable rules and regulations relating to trading on the NYSE." Defendant Mahaffy proffered that Mr. Cohen would "likely discuss the meanings of relevant terms, concepts and practices within the securities industry, including, but not limited to, day trading, trading volume, order flow, institutional trading, short selling, wash sales, and front-running. He may also testify about the purpose of 'squawk boxes' within the industry." Additionally the letter stated Mr. Cohen would also supply rebuttal testimony as to any expert witness called by the Government.

In a letter addressed to the Government on March 5, 2007, defendant Ghysels stated that expert Robert Hayden's testimony, offered on behalf of both defendants Ghysels and Mahaffy, would relate to "the nature and manner in which information is disseminated through 'squawk box' technology in connection with trading practices in the United States securities markets" and "information regarding trading activity of various securities markets disseminated both in these markets and outside those markets and the levels of access to information by various levels of customers." Additionally, the letter detailed that Mr. Hayden would "discuss the meaning of relevant terms, concepts, and practices in the use of 'squawk boxes' within the securities industry, including day trading, trading volume, liquidity, order flow, institutional trading, short selling, wash trades and front running. He may also testify about the effects of certain types of trading activity in connection with the use of 'squawk boxes,' as described in the Indictment on the market prices of securities, including the effects of trades as charged in the Indictment." Defendant Ghysels added that Mr. Hayden would also supply rebuttal testimony as to any expert witness called by the Government.

The Court ruled from the bench. This Memorandum and Order explains the Court's ruling.


Rule 16(b)(1)(C) provides in pertinent part, "The defendant must, at the government's request, give to the government a written summary of any testimony that the defendant intends to use under Rules 702, 703, or 705 of the Federal Rules of Evidence as evidence at trial, if - (1) the defendant requests disclosure under subdivision (a)(1)(G) and the government complies . . . ."*fn3 Rule 16(b)(1)(C) mandates that the summary describe the "witness's opinions, the bases and reasons for those opinions, and the witness's qualifications."

The purpose of Rule 16(b)(1)(C) is to "minimize surprise that often results from unexpected expert testimony, reduce the need for continuances, and to provide the opponent with a fair opportunity to test the merit of the expert's testimony through focused cross-examination." United States v. Wilson, No. 04-CR-1016 (NGG), 2006 WL 3694550, at *2 (E.D.N.Y. Dec. 13, 2006) (quoting Fed. R. Crim. P. 16, Advisory Committee Notes, 1993 Amendment). The Advisory Committee Notes to the 1993 Amendment explain that the Rule is integral in distinguishing between lay and expert opinion that will be offered during trial. For instance, Rule 16(b)(1)(C) does not apply to witnesses who may offer only lay opinion testimony under Federal Rule of Evidence 701, or who may serve only as a summary witness under Federal Rule of Evidence 1006. See Fed. R. Crim. P. 16 Advisory Committee Notes, 1993 Amendment. The Rule is intended to "inform the requesting party whether the expert will be providing only background information on a particular issue or whether the witness will actually offer an opinion." Id.

It is well-settled that a court may in its discretion preclude expert examination pursuant to Rule 16(d)(2)(C) of the Federal Rules of Criminal Procedure regarding any topics or opinions not properly disclosed.*fn4 See, e.g., United States v. Barile, 286 F.3d 749, 758-59 (4th Cir. 2002) ("Upon finding a violation of Rule 16, the district court has discretion under the Federal Rules of Criminal Procedure to determine the proper remedy. . . . Rule 16(d)(2) specifically allows the district court to prohibit the party [who does not comply with the discovery rules] from introducing evidence not disclosed." (quotation omitted) (alteration in original)); United States v. Jasper, No. 00 CR 825 (PKL), 2003 WL 223212, at *5 (S.D.N.Y. Jan. 31, 2003) (ordering defendant to produce a written summary of proposed expert testimony one week before trial because "defendant should be aware that the failure or delay in producing the written summary of an expert's testimony that defendant intends to use at trial has resulted in the preclusion of such evidence at trial."). A court may preclude the testimony as a whole, or any part that it determines was not properly disclosed to the Government. See Barile, 286 F.3d at 759 (allowing expert witness to testify on the "procedure, practice, and history of 510(k) submissions but not give his opinion regarding the materiality of the misrepresentations . . . [b]ecause [defendant] did not give a proper summary of [the expert's] opinion on materiality . . . [or] the bases and reasons for his opinions . . . ."). Even if the disclosure provides a sufficient summary of any opinions to be offered by the witness, it may be excluded if the defendant "has made no attempt at all to describe the bases and reasons for those opinions as required by [Rule 16(b)(1)(C)]." United States v. Wilson, 2006 WL 3694550, at *3 (quotation omitted).

Disclosure Statement Offered by Defendant Mahaffy

Pursuant to the Pre-trial Order, defendants were required to provide the names of any expert witnesses they intended to call, as well as a summary of their testimony, at least ten days before trial. Additionally, defendants were required to provide any Rule 16(b) disclosure material within ten days of any such disclosure by the Government. The Order noticed that "[f]ailure to comply . . . shall result in preclusion from introducing evidence not disclosed." Pre-trial Order ¶ 3. All defendants complied with the deadline except for defendant Mahaffy, who waited until the day the trial commenced to produce the summary statement.

The Court will preclude defendant Mahaffy from presenting Mr. Cohen' s expert testimony at trial due to his late submission. Failure to comply with deadlines set forth by a court is a "separate and independent basis for precluding [expert] testimony." Wilson, 2006 WL 3694550, at *3. Defendant Mahaffy's late submission is particularly egregious because he has been in possession of the Superseding Indictment for over a year, ample time to determine the topics upon which his expert would testify. See United States v. Petrie, 302 F.3d 1280, 1288 (11th Cir. 2002) (finding that district court properly excluded expert testimony "[a]s a sanction for . . . untimely disclosure" because defendant "waited until Friday afternoon prior to the commencement of trial on Monday . . . to disclose his expert to the government."); United States v. Foley, 111 Fed. Appx. 840, 840-41 (6th Cir. 2004) (finding that district court did not abuse its discretion in precluding expert testimony due to untimely and insufficient disclosure of summary statement pursuant to Rule 16(b)(1)(C)).

The lateness of the submission notwithstanding, the proposed testimony of Mr. Cohen would, in any event, be excluded by the Court for the reason that it provides neither "scientific, technical, or other specialized knowledge [which] will assist the trier of fact to understand the evidence or to determine a fact in issue . . . ." Fed. R. Evid 702. The testimony would also be excluded because the disclosure statement only proffered general topics and did not describe any opinions that would be offered by the witness on these topics. See United States v. Concessi, 38 Fed. Appx. 866, 868 (4th Cir. 2002) (finding no abuse of discretion where the district court precluded expert testimony where "[t]he expert designations . . . included only the general ...

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