U.S. v. Rittweger
| Decision Date | 23 April 2008 |
| Docket Number | Docket No. 05-3769-cr(CON).,Docket No. 05-3600-cr(L).,Docket No. 05-3766-cr(CON). |
| Citation | 524 F.3d 171 |
| Parties | UNITED STATES of America, Appellee, v. Thomas Michael RITTWEGER, Victor M. Wexler, also known as "Fat Boy," also known as "Screw," Douglas C. Brandon, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Second Circuit |
Frank Handelman, New York, NY, for defendant-appellant Thomas Michael Rittweger.
Peter E. Fleming, Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, NY, for defendant-appellant Victor M. Wexler.
Thomas E. Engel, Engel, McCarney & Kenney LLP, New York, NY, for defendant-appellant Douglas C. Brandon.
Andrew L. Fish, Assistant United States Attorney (Katherine Polk Failla, of counsel), for Michael J. Garcia, United States Attorney for the Southern District of New York, New York, NY, for appellee.
Before: SOTOMAYOR, B.D. PARKER and HALL, Circuit Judges.
This appeal addresses whether the joinder of defendants under Federal Rule of Criminal Procedure 8(b) ("Rule 8(b)") is proper when the overwhelming evidence presented at trial concerned proof of a conspiracy that involved some, but not all, of the named defendants. Because the indictment alleged the existence of two conspiracies that shared a common plan or scheme and a substantial identity of facts or participants, we hold that joinder was permissible under Rule 8(b). We further hold that, in light of the relatively straightforward nature of the evidence at issue and the district court's careful limiting instructions to the jury, defendants Victor M. Wexler and Douglas C. Brandon failed to meet the heavy burden of persuasion to reverse a trial court's decision not to grant severance under Federal Rule of Criminal Procedure 14 ("Rule 14").
This appeal also raises an issue of whether the government violated Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), when it failed to produce arguably exculpatory evidence with respect to Brandon until the week of trial. Although the government should have disclosed this evidence sooner, there is no reasonable probability that the delay affected the outcome of the case so as to require reversal of Brandon's conviction. We therefore AFFIRM the defendants' convictions.1
The facts of this case as they relate to each defendant are set forth more fully in the district court opinion, familiarity with which is presumed. See United States v. Rittweger, 259 F.Supp.2d 275, 279-83 (S.D.N.Y.2003).
Defendants Thomas M. Rittweger ("Rittweger"), Douglas C. Brandon ("Brandon") and Victor M. Wexler ("Wexler"), together with Richard J. Blech ("Blech") and Robert S. DeHaven ("DeHaven"), were charged in a thirteen-count indictment returned on January 31, 2002. On April 9, 2003, the Grand Jury returned a superseding indictment (the "Indictment") against the defendants. Blech, however, pled guilty to the original indictment and was named only as a co-conspirator in the superseding indictment.
The Indictment sets forth two schemes. Counts One through Eight allege the "First Scheme," which includes charges of: conspiracy to commit securities fraud and wire fraud in violation of 18 U.S.C. § 371; securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5, and 18 U.S.C. § 2; and wire fraud in violation of 18 U.S.C. §§ 1343, 1346, and 2. Counts Nine through Thirteen allege the "Second Scheme," which includes charges of: conspiracy to commit securities fraud, wire fraud, and commercial bribery in violation of 18 U.S.C. § 371; and using facilities of interstate commerce to carry on and facilitate commercial bribery in violation of 18 U.S.C. §§ 1952(a)(3) and 2.
As part of the First Scheme, the Indictment alleges that from about 1996 through about 1999, Rittweger and Brandon, together with Blech and other co-conspirators, participated in a scheme to defraud customers of Credit Bancorp, Ltd. ("CBL")—a group of related United States and foreign business organizations that purported to provide "financial engineering" and investment services—of at least $210,000,000 by fraudulently inducing them to invest cash, securities, and other assets in two CBL investment programs: the "CBL Insured Credit Facility" and the "CBL Insured Securities Strategy." The customers did so in the expectation of receiving dividend payments and loans with favorable terms. The Indictment asserts that CBL was actually a Ponzi scheme, in which the proceeds from investments in the programs were paid to earlier investors to create the false appearance that the investments were profitable, thereby inducing additional customers to invest assets with CBL.
The Indictment charges that in furtherance of the First Scheme, Rittweger and Brandon, together with Blech and other co-conspirators, made and caused others to make false and misleading representations to prospective customers. It further alleges that Rittweger, Brandon, and Blech falsely represented that Brandon would serve as a trustee on behalf of those customers who invested in the CBL Insured Credit Facility and would hold the invested assets in custodial accounts under his control. According to the Indictment, Rittweger, Brandon, and Blech knew that Brandon had neither control over the accounts into which the CBL customer assets were invested, nor the ability to fulfill his duties as trustee. Rittweger and Blech also allegedly misrepresented that assets invested in the CBL Insured Securities Strategy would be placed in mutual funds and other financial instruments, when they knew that a substantial portion of the assets were used to pay for unauthorized business and personal expenses instead.
The Second Scheme involves Rittweger, Wexler, and co-conspirator DeHaven, who was an officer of Mitsui Trust Company ("Mitsui"), a Japanese financial institution. DeHaven worked in Mitsui's New York office and was responsible for Mitsui's participation in securities lending transactions. The Indictment alleges that DeHaven owed fiduciary and other duties of trust and honest services to Mitsui. The Indictment asserts that Wexler, a personal friend of DeHaven, referred potential customers to CBL in return for payments from CBL, and also managed a foreign exchange trading business affiliated with CBL.
With respect to the Second Scheme, the Indictment further alleges that from about 1997 through 1999, Rittweger, DeHaven, and Wexler, together with Blech and other co-conspirators, participated in a scheme to defraud customers by inducing them to invest cash, securities, and other assets in the CBL Insured Credit Facility. In furtherance of this scheme, the conspirators allegedly made and caused others to make numerous false and misleading representations, including the claim that Mitsui had invested securities worth approximately $50,000,000 or more with CBL, when they knew that Mitsui had made no such investment.
After a seven-week trial before the United States District Court for the Southern District of New York (Koeltl, J.) that ended on June 26, 2003, the jury returned the following verdicts: Rittweger was found guilty of Counts One through Thirteen (relating to both the First and the Second Schemes); Brandon was found guilty of Counts One and Three through Eight (relating to the First Scheme); Wexler was found guilty of Counts Nine through Thirteen (relating to the Second Scheme); and DeHaven was found guilty of Counts Nine through Thirteen (relating to the Second Scheme).2 The jury was unable to reach a verdict with respect to Count Two against Brandon, and the jury could not agree whether securities fraud was an object of the conspiracy charged in Count Nine.
This timely appeal followed.
This appeal presents two issues: first, whether the district court erred by denying defendants' motions to sever under Rules 8(b) and 14; second, whether a Brady violation occurred when the government failed to produce certain allegedly exculpatory evidence relating to Brandon until the week of trial. We reject defendants' challenges as to both issues.
Brandon and Wexler argue that the district court erred by failing to grant their motions for misjoinder and/or severance under Rules 8(b) and 14 on the grounds that the indictment alleged unrelated conspiracies and that they suffered undue prejudice as a result. We disagree.
We review the propriety of joinder de novo. United States v. Shellef, 507 F.3d 82, 96 (2d Cir.2007). "[T]he propriety of Rule 8 joinder is subject to full appellate review, and where joinder should not have been permitted, a conviction must be reversed, unless failure to sever was harmless error." United States v. Attanasio, 870 F.2d 809, 815 (2d Cir.1989) (internal quotation marks and citations omitted).
Rule 8(b) allows joinder of two or more defendants "if they 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). We have interpreted the "same series of acts or transactions" language of Rule 8(b) to mean that "joinder is proper where two or more persons' criminal acts are `unified by some substantial identity of facts or participants,' or `arise out of a common plan or scheme.'" United States v. Cervone, 907 F.2d 332, 341 (2d Cir.1990) (quoting Attanasio, 870 F.2d at 815). In this context, we also "apply a `commonsense rule' to decide whether, in light of the factual overlap among charges, joint proceedings would produce sufficient efficiencies such that joinder is proper notwithstanding the possibility of prejudice to either or both of the defendants resulting from the joinder." Shellef, 507 F.3d at 98 (citing United States v. Turoff, 853 F.2d 1037, 1044 (2d Cir. 1988)).
Here, the indictment alleges that both the First Scheme and the...
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