U.S. v. Feyrer

• Decision Date: 18 June 2003
• Docket Number: Docket No. 01-1543.
• Citation: 333 F.3d 110
• Parties: UNITED STATES of America, Appellee, v. Clyde FEYRER, Murray Goldenberg, Defendants, Cameron Yost, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

Page 110

333 F.3d 110

UNITED STATES of America, Appellee, v. Clyde FEYRER, Murray Goldenberg, Defendants Cameron Yost, Defendant-Appellant.

Docket No. 01-1543.

United States Court of Appeals, Second Circuit.

Argued November 1, 2002.

Decided June 18, 2003.

COPYRIGHT MATERIAL OMITTED

Robert M. Simels, Robert M. Simels, P.C., New York, New York, for Defendant-Appellant.

Rosemary Nidiry, Assistant United States Attorney, New York, New York (James B. Comey, United States Attorney, Christine H. Chung, Assistant United States Attorney, Southern District of New York, New York, New York, of counsel), for Appellee.

Before: FEINBERG, CARDAMONE, and SACK, Circuit Judges.

CARDAMONE, Circuit Judge.

Cameron Yost (defendant or appellant) was convicted of securities and wire fraud after an 11-day jury trial. He appeals from his judgment of conviction entered on November 20, 2001 in the United States District Court for the Southern District of New York before Chief Judge Michael B. Mukasey.

Yost's appeal presents us with two issues to resolve. One arises from the denial of his motion for severance of his trial from that of a co-defendant; the other and more complex issue arises out of the denial of his motion for a new trial based on a claim of his counsel's actual conflict of interest. Because a lawyer owes to a client a duty of undivided loyalty, it follows that no lawyer can serve two masters, where to do so places the lawyer under inconsistent duties — that is, a duty to argue for one client that which his duty to another client requires him to oppose.

BACKGROUND

Yost had been indicted and charged with conspiracy to commit securities fraud and wire fraud and to violate the Travel Act through commercial bribery in violation of 18 U.S.C. § 371. He was also charged with a substantive count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, and with three substantive counts of wire fraud in violation of 18 U.S.C. § 1343. Defendant was convicted on all counts charged, and sentenced to five years probation, restitution in the amount of $269,858.63 and a $500 special assessment.

The charges against defendant were based on his participation in a 1996 scheme designed to create artificial demand for the common stock of Banyan Corporation (Banyan), a company which he controlled and of which he was also president. The scheme envisioned inducing stock brokers employed by the Symons Financial Group to recommend Banyan stock to their customers by offering them bribes. A co-defendant, Murray Goldenberg, not a party to this appeal, was convicted at the same trial of participating in a parallel scheme to manipulate demand for the stock of First Colonial Ventures, Ltd. (First Colonial), a company he controlled.

The indictment that charged Yost and Goldenberg also implicated Clyde Feyrer who, it was alleged, was a middleman in both schemes between Yost and Goldenberg, on the one hand, and the principals of the Symons Group, on the other. Feyrer did not stand trial because, pursuant to a cooperation agreement, he pled guilty and subsequently was sentenced to five years probation.

In its case against Yost, the government presented evidence that from April to December 1996 he successfully defrauded purchasers of Banyan stock. The principal proof against him consisted of the testimony of Feyrer and Richard Wolff, an associate of the Symons Group. Both men attended a meeting at Caesar's Palace Hotel in Las Vegas, Nevada, with Yost, Goldenberg, and Scott Symons, the Symons Group's owner. They testified that at the meeting the conferees discussed bribing brokers to buy stock for their customers in the corporations that Yost and Goldenberg controlled. Wolff and Feyrer suggested that their brokers would recommend Banyan and First Colonial to their clients. The evidence further showed that Feyrer, Wolff, Yost and Goldenberg arranged to transfer shares of Banyan and First Colonial to Feyrer's control so that he could use those shares to pay the brokers at the Symons Group as an inducement to them to promote the Banyan and First Colonial stock. The testimony of Feyrer and Wolff was corroborated by the testimony of a Symons Group broker who explained that he and others at his firm received secret payments for selling stock, and that they withheld from prospective customers the fact that they were being paid to recommend those stocks.

Extensive documentary proof further supported Feyrer's and Wolff's accounts of the manner in which bribes in the form of Banyan and First Colonial stock were routed to the brokers at the Symons Group. For example, brokerage and bank records reflected that beginning in April and continuing through December 1996, large blocks of Banyan stock were delivered into Wolff's Canadian brokerage accounts from accounts controlled by Feyrer. When the stock was sold from Wolff's accounts, the proceeds were transferred by wire to bank accounts in Florida controlled by Wolff, Feyrer, and their nominees. The government also presented evidence demonstrating that the vast majority of the retail buying in Banyan stock during the span of the stock manipulation conspiracy was generated by the clearing agent for the Symons Financial Group brokers.

On appeal, Yost contends principally that the district court erred by denying his motions for severance and his motion for a new trial. He asserts he should have been tried separately from co-defendant Goldenberg. Defendant also urges that he should have been granted a new trial premised on an allegation that his counsel had a conflict of interest and was, in addition, ineffective in providing him assistance. Because we find no error in the trial court's dispositions of these issues, we affirm.

DISCUSSION

I Severance Motions

Defendant's motions for severance were made both before and after Feyrer's guilty plea, pursuant to Federal Rules of Criminal Procedure 8(b) and 14. Yost challenges his and co-defendant Goldenberg's joint trial as prejudicial because the indictment, in his estimation, charged them with involvement in two separate conspiracies.

Rule 8(b), which governs the joinder of two or more defendants in the same indictment, permits such joinder if the joined defendants "are alleged to have participated in the same act or transaction or in the same series of acts or transactions constituting an offense or offenses." Fed.R.Crim.P. 8(b). The propriety of Rule 8 joinder raises a question of law subject to de novo review. Unless the standards set out in Rule 8(b) are met, a motion for severance should be granted even absent a showing of prejudice. See United States v. Lane, 474 U.S. 438, 449 n. 12, 106 S.Ct. 725, 88 L.Ed.2d 814 (1986); United States v. Turoff, 853 F.2d 1037, 1042 (2d Cir.1988).

In support of his contention that he and Goldenberg were improperly joined, Yost asserts that they were actually accused of two separate and distinct conspiracies. He maintains that the Banyan and First Colonial conspiracies did not involve a common object and that they were neither factually nor temporally related. Appellant also points out that neither he nor Goldenberg was charged in the conspiracy counts of the other, and that Feyrer, the only defendant charged with participating in both conspiracies, pled guilty prior to trial.

In United States v. Attanasio, 870 F.2d 809 (2d Cir.1989), we read the language of Rule 8(b) to mean that the joinder of defendants is proper when the alleged acts are "unified by some substantial identity of facts or participants, or arise out of a common plan or scheme." Id. at 815. There can be no doubt that the charges against Yost and Goldenberg were united by overlapping facts and participants and a common plan. For instance, Feyrer, Wolff and the brokers at the Symons Group were common and central participants in both stock manipulation plans. The fact that neither Feyrer nor Wolff was tried alongside Yost and Goldenberg does not alter the significance of their participation. Moreover, the two conspiracies shared a common plan, namely, to generate income for Feyrer, Wolff and the Symons Group brokers through fraudulent stock transactions.

It is also true that the schemes were run at the same time and that — after participating in the Las Vegas meeting with Feyrer and Wolff — Yost and Goldenberg were aware of each other's participation in fraud. Indeed, even if the district court had tried these two defendants separately, the evidence at one trial would essentially duplicate the evidence at the other, as the district court found. We use a common sense approach when considering the propriety of joinder under Rule 8(b) and, in the instant case, we think "a reasonable person would easily recognize the common factual elements that permit joinder." Turoff, 853 F.2d at 1044. In consequence, the joinder did not violate Rule 8(b).

Even with proper joinder under Rule 8, Rule 14 provides that a district court may nonetheless grant a severance of defendants' joint trial "[i]f it appears that a defendant or the government is prejudiced by a joinder." Fed.R.Crim.P. 14(a). Rule 14 severance does not raise a question of law for our review; rather, its application is tested under the abuse of discretion standard. The Supreme Court has instructed that a district court should grant a Rule 14 severance motion only when "there is a serious risk that a joint trial would compromise a specific trial right of one of the defendants, or prevent the jury from making a reliable judgment about guilt or innocence." Zafiro v. United States, 506 U.S. 534, 539, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993). The risk of prejudice associated with joinder varies with the facts of each case. A trial court is most likely to grant a severance under Rule 14 in situations where the risk of prejudice is high. Id. Even in those situations, less drastic measures — such as limiting instructions — often suffice as an alternative to granting a Rule 14 severance motion. Id.

For reasons...