U.S. v. Moskowitz and Kirk

• Decision Date: 01 August 1999
• Docket Number: Docket Nos. 99-1745
• Parties: (2nd Cir. 2000) UNITED STATES OF AMERICA, Appellee, v. RONALD MOSKOWITZ and JAN R. KIRK, Defendants-Appellants. (L), 99-1769(CON)
• Court: U.S. Court of Appeals — Second Circuit

Page 265

215 F.3d 265 (2nd Cir. 2000)

UNITED STATES OF AMERICA, Appellee, v. RONALD MOSKOWITZ and JAN R. KIRK, Defendants-Appellants.

Docket Nos. 99-1745(L), 99-1769(CON)

August Term, 1999

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: May 1, 2000

Decided: May 25, 2000

Appeal from a judgment entered in the United States District Court for the Southern District of New York (Michael B. Mukasey, Chief Judge) convicting and sentencing Moskowitz after a jury trial and sentencing Kirk pursuant to a guilty plea for, inter alia, securities fraud and conspiracy to commit securities fraud. We affirm. [Copyrighted Material Omitted] ALAN M. DERSHOWITZ, Cambridge, Massachusetts (Amy Adelson and Nathan Z. Dershowitz, Dershowitz, Eiger & Adelson, P.C., New York, New York, of counsel), for Defendant-Appellant Ronald Moskowitz.

JESS FARDELLA, Lankler Siffert & Wohl LLP (Lisa A. Baroni, of counsel), New York, New York, for Defendant-Appellant Jan R. Kirk.

DAVID RAYMOND LEWIS, Assistant U.S. Attorney (Mary Jo White, United States Attorney for the Southern District of New York, George S. Cancellous, Assistant United States Attorney, of counsel), New York, New York, for Appellee.

Before: : WINTER, Chief Judge, FEINBERG, and CABRANES, Circuit Judges.

PER CURIAM:

Ronald Moskowitz appeals from his conviction by a jury and his sentence entered by Chief Judge Mukasey. Jan Kirk appeals from his sentence entered pursuant to his guilty plea. Moskowitz was convicted of one count of securities fraud and one count of conspiracy to commit various securities fraud offenses. Kirk pleaded guilty to the same conspiracy; to causing false filings to be made with the Securities and Exchange Commission ("SEC"); to a conspiracy to obstruct justice, suborn perjury, and make false statements to the SEC and United States Attorney's Office; and to making false statements and representations to the United States Attorney's Office. The district court sentenced Moskowitz to 97 months' imprisonment, three years' supervised release, and a fine and special assessment; and Kirk to 63 months' imprisonment, three years' supervised release, and a fine and special assessment. We affirm.

We view the evidence in the light most favorable to the government. See Jackson v. Virginia, 443 U.S. 307, 318-19 (1979). Moskowitz was Chief Executive Officer and Kirk Chief Financial Officer of Ferrofluidics Corporation ("Ferro"). In the late 1980s, Moskowitz got into financial trouble and needed to sell off a sizable portion of his equity stake in Ferro. To that end, he parked his holdings in a "family trust," subdivided these trust holdings among his grandchildren to avoid SEC reporting requirements, and sold millions of shares of stock, a fact unknown to the Ferro's public shareholders or to the market generally.

During this time, Moskowitz and Kirk executed a series of frauds designed to artificially inflate share prices, a fraud from which Moskowitz -- as a seller of Ferro's stock -- reaped the primary gains. Among these frauds were paying off an investment reporter and stock analyst to talk up the company; executing a sham private placement in which Moskowitz and Kirk found complicit or unknowing buyers who actually invested no capital in the corporation; executing a sham $12 million purchase order to inflate expectations; and falsifying public accounts to further these and other scams. Kirk also obstructed the ultimate SEC investigation into the wrongdoings, in part by sending anonymous letters to the SEC that falsely accused Moskowitz of various offenses for which Kirk was primarily responsible.

On appeal, Moskowitz argues principally that the district court's decision to admit Kirk's plea allocution was improper under the Federal Rules of Evidence, see Fed. R. Evid. 804(b)(3) (permitting exception to hearsay rule for statement against interest that "so far tended to subject the declarant to . . . criminal liability . . . that a reasonable person in the declarant's position would not have made the statement unless believing it to be true"), and the Confrontation Clause, see U.S. Const. Amend. VI ("In all criminal prosecutions, the accused shall enjoy the right . . . to be confronted with the witnesses against him."). We review the court's evidentiary decision for abuse of discretion and its application of constitutional standards de novo. See, e.g., United States v. Naiman, 211 F.3d 40, 51 (2d Cir.2000) ("Evidentiary rulings are reviewable only for abuse of discretion."); United States v. Cruz-Flores, 56 F.3d 461, 463 (2d Cir. 1995) ("We review the district court's application of constitutional . . . standards de novo.").

In his plea allocution, Kirk admitted to being involved in a conspiracy and participating with "another employee" in each of the predicate acts of the conspiracy. The government consented to redacting the only portion of the allocution in which Kirk had shifted blame, i.e., when he had stated that he had acted "with the agreement and at the direction of another employee at Ferrofluidics." Immediately after admitting the Kirk allocution, the district court gave a clear limiting instruction:

Please understand . . . that you may consider [Kirk's allocution] only on the following two issues: (1) whether there was a conspiracy or scheme to commit securities fraud, to make false statements and submit false documents to the [SEC], to lie to the auditors, and to create false entries in Ferrofluidics' books and records; and (2) what if anything Jan Kirk did in order to further the objects of that conspiracy if you find that it existed.

However, the question of whether the defendant on trial, Dr. Moskowitz, was also a member of that conspiracy or the scheme alleged in the indictment is an issue for which you will have to rely on other evidence. There is no evidence in these statements naming any other defendant or co-conspirator.

If you find, based in part on these statements, that a conspiracy or a scheme as charged in the indictment existed, you must decide as a separate question whether the defendant on trial, Dr. Moskowitz, was a part of the alleged conspiracy or scheme, based entirely on the other evidence in the case. There is nothing in these statements that answers that question one way or the other.

Given that the allocution was clearly against Kirk's penal interest, that the only blame-shifting portion of the allocution was redacted, and that the court gave a limiting instruction that we must presume the jury followed, see, e.g., United States v. Ebner, 782 F.2d 1120, 1126 (2d Cir.1986) (upholding admission of evidence against Fed. R. Evid. 403 challenge in light of limiting instructions and "presumption that juries will follow [them]") (quoting Watkins v. Sowders, 449 U.S. 341, 347 (1981)), the admission of Kirk's plea allocution under Rule 804(b)(3) was within the district court's discretion.

We also see no error to the admission of the plea allocution under the Confrontation Clause. The Supreme Court's plurality opinion in Lilly v. Virginia, 527 U.S. 116 (1999), did not change the established rule that "when a declarant is unavailable to testify at trial, his or her hearsay statement is sufficiently dependable to allow its untested admission against an accused when (1) the evidence falls within a firmly rooted hearsay exception or (2) it contains particularized guarantees of trustworthiness such that adversarial testing would be expected to add little, if anything, to the statements' reliability," United States v. Gallego, 191 F.3d 156, 167 (2d Cir. 1999) (internal alterations and quotation marks omitted), cert. denied, 120 S. Ct. 961 (2000). See Lilly, 527 U.S. at 122-24 (plurality opinion of Stevens, Souter, Ginsberg, and Breyer, JJ.); id. at 144-48, 119 S.Ct. 1887 (concurring opinion of Rehnquist, C.J., and O'Connor and Kennedy, JJ.). Although we have declined to decide whether a declaration against interest admitted under Rule 804(b)(3) is a "firmly rooted" exception to the hearsay rule, we have found "particularized guarantees of trustworthiness" where, inter alia, (1) the plea allocution "undeniably subjected [the defendant] to the risk of a lengthy term of imprisonment, even if it was also made in the hope of obtaining a more lenient sentence"; (2) "the allocution was given under oath"; and (3) "the district court instructed the jurors that they could consider [the defendant's] allocution only as evidence that a conspiracy existed and not as direct evidence that defendants were members of that alleged conspiracy or that they were otherwise guilty of the crimes charged against them." Gallego, 191 F.3d at 167 (internal alterations and quotation marks omitted). The instant case having the same "particularized guarantees of trustworthiness" found sufficient in Gallego, there was no Confrontation Clause violation in the admission of the plea allocution.

Moskowitz contends that even if the plea allocution was properly admitted into evidence, his Confrontation Clause rights were violated by the admission of an addendum to Kirk's main allocution in which he clarified: "In response to the area concerning the private placement, my statement was that I had worked in conjunction with another employee. The addition is that other employee was an officer of the company." However, Moskowitz was offered the opportunity to redact this portion of the allocution and for strategic reasons specifically requested that the statement be included with the main allocution.

Consequently, Moskowitz cannot now argue that this statement unfairly implicated him. Cf. Strickland v. Washington, 466 U.S. 688, 690 (1984) (noting that trial counsel's "strategic choices made after thorough investigation of law and facts relevant to plausible options are virtually unchallengeable"). Moreover, any harm from admission of the addendum was mitigated by the district court's limiting instruction.

Similarly, Moskowitz's contention that his...