The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge:
On December 8, 2010, Defendants Louis Tomasetta and Eugene Hovanec ("Defendants") were charged in a seven count indictment with (1) conspiracy to commit securities fraud, to make false statements to auditors, to make false statements in Securities and Exchange Commission ("SEC") filings, and to falsify the books and records of a public company (Count One); (2) securities fraud (Count Two); (3) making false entries in the books and records of an issuer of securities (Count Three); (4) two counts of making false filings with the SEC (Counts Four and Five); and Tomasetta only was charged with (5) false certification of financial statements (Count Six); and (6) making false statements to auditors (Count Seven). On March 21, 2012, the Defendants proceeded to trial. At the close of the Government's case, the Defendants moved, pursuant to Fed.R.Crim.P. 29, for a judgment of acquittal. The Court reserved ruling on the motion, pursuant to Fed.R.Crim.P. 29(b). On April 24, 2012, the Court declared a mistrial due to the jury's inability to reach a unanimous verdict on any of the Counts.
On May 8, 2012, Defendants renewed their Rule 29 motion for a judgment of acquittal on all Counts, arguing: (1) that all Counts should be dismissed for lack of venue; (2) Count One should be dismissed for lack of proof of a single, overarching conspiracy; (3) Counts Two, Four, and Five should be dismissed for lack of proof that the misstatements in the SEC filings were material; (4) Counts Two, Four, and Seven should be dismissed for lack of proof that Tomasetta acted knowingly and willfully; and (5) all Counts against Mr. Hovanec should be dismissed for insufficient evidence. On May 23, 2012, the Government filed its opposition brief, and conceded that it failed to prove venue with respect to Counts Three through Seven. (Opp. 21 n.11.) The Government opposes the Defendants' motion as to Counts One and Two.
For the following reasons, Defendants' Rule 29 motion for a judgment of acquittal is GRANTED with respect to Counts Two through Seven, and DENIED with respect to Count One.
The facts sufficient to understand the disputed Counts are set forth below.
Dr. Tomasetta was the Chief Executive Officer of Vitesse Semiconductor Corporation ("Vitesse") from 1987 through May 2006; Mr. Hovanec was Vitesse's Chief Financial Officer from December 1993 through April 2005, and Executive Vice President from April 2005 through May 2006. Vitesse is a semiconductor technology company located in California. Defendants were charged with deceiving Vitesse's investors and auditors about Vitesse's true financial condition by making materially misleading disclosures about Vitesse's revenue recognition and backdating stock options practices.
With respect to Vitesse's revenue recognition practices, the Government introduced evidence at trial that from September 2001 through early 2006, Defendants and others arranged to send large quarterly shipments of product-"quarterly stocking packages"-to a major distributor, Nu Horizons Electronics Corp. ("Nu Horizons"). Vitesse's 10-K stated: "Certain of our production revenues are made to a major distributor under an agreement allowing for pricing credits and rights of return on products unsold. Accordingly, we defer recognition of revenue on such products until the products are sold by the customer to the end user." (GX 68 at 33.) The Government introduced evidence that, contrary to this disclosure, Vitesse recorded the quarterly stocking packages as revenue when they were shipped to Nu Horizons, even though Defendants knew that Nu Horizons could and did frequently return large amounts of product. In addition, the Government introduced evidence that showed Vitesse would not record credits, or reductions, to revenue in a timely fashion for the product returned by Nu Horizons, which was also contrary to its public disclosures. Such practices artificially inflated Vitesse's revenue and hid Vitesse's true financial condition from investors.
With respect to Vitesse's stock options grants, the Government introduced evidence that showed on at least two occasions-April 12, 2001 and October 25, 2001-Vitesse's Compensation Committee minutes reflected, on their face, that the stock options were granted at an exercise price as of a prior date; a date when the stock price was lower. If the options were granted on the date of the Compensation Committee meetings-i.e., assuming that these options were not officially granted on prior dates-then the options would be "in-the-money" grants, which was not consistent with Vitesse's public disclosure that it "had no options granted to employees in which the market price of the underlying stock exceeded the exercise price on the date of grant." (GX 68.) According to the Government, if these options were in-the-money, Vitesse should have recorded a non-cash compensation charge of approximately $100 Million, but it did not do so.
Under Fed.R.Crim.P. 29, a court is permitted to "enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction." Fed.R.Crim.P. 29(a). In considering a Rule 29 motion, the Court "views the evidence presented in the light most favorable to the government, and . . . draw[s] all reasonable inferences in its favor." United States v. Autuori, 212 F.3d 105, 114 (2d Cir. 2000). The Court "must determine whether upon the evidence, giving full play to the right of the jury to determine credibility, weigh the evidence, and draw justifiable inferences of fact, a reasonable mind might fairly conclude guilt beyond a reasonable doubt." Id. (quoting United States v. Mariani, 725 F.2d 862, 865 (2d Cir.1984).) "[I]f the court 'concludes that either of the two results, a reasonable doubt or no reasonable doubt, is fairly possible, [the court] must let the jury decide the matter.' " Id. (quoting United States v. Guadagna, 183 F.3d 122, 129 (2d Cir.1999)).
Article III, section 2, of the Constitution mandates that criminal trials "be held in the state where the said crimes shall have been committed." The Sixth Amendment is more restrictive: a defendant must be tried in the "State and district wherein the crime shall have been committed." When a defendant is charged in more than one count, as the Defendants are here, venue must be proper with respect to each count. See United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1188 (2d Cir. ...