U.S. v. Lay

• Decision Date: 13 May 2008
• Docket Number: No. 1:07 CR 339.,1:07 CR 339.
• Citation: 566 F.Supp.2d 652
• Parties: UNITED STATES of America, Plaintiff, v. Mark D. LAY, Defendant.
• Court: U.S. District Court — Northern District of Ohio

Page 652

566 F.Supp.2d 652

UNITED STATES of America, Plaintiff, v. Mark D. LAY, Defendant.

No. 1:07 CR 339.

United States District Court, N.D. Ohio, Eastern Division.

May 13, 2008.

Andrew Friedman, Washington, DC, Percy Squire, The Law Offices of Squire & Pierre-Louis, LLC, Columbus, OH, Richard M. Kerger, Kerger & Associates, Toledo, OH, for Defendant.

Antoinette T. Bacon, Benita Y. Pearson, Office of the U.S. Attorney, Cleveland, OH, for Plaintiff.

MEMORANDUM OPINION AND ORDER

DOWD, District Judge.

                                                TABLE OF CONTENTS
                  I. Introduction....................................................................... 652
                 II. A Time Line of Events in this Case................................................. 652
                III. Applicable Law—Standard of Review for Rule 29 and Rule 33 Motions............ 652
                     A. Rule 29 of the Federal Rules of Criminal Procedure—Motion for
                          Judgment of Acquittal......................................................... 652
                

                     B. Rule 33 of the Federal Rules of Criminal Procedure—New Trial.............. 655
                 IV. Superseding Indictment............................................................. 655
                    A. General Allegations.............................................................. 655
                    B. Count 1: Charging Investment Adviser Fraud (15 U.S.C. § 80b-6).............. 658
                    C. Count 2: Conspiracy to Commit or Attempt Mail and Wire Fraud (18
                        U.S.C. §§ 1341 & 1343; 18 U.S.C. § 1349) ........................ 659
                    D. Counts 3 and 4: Mail Fraud/Aiding and Abetting (18 U.S.C. §§ 1341
                        and 2).......................................................................... 659
                    E. Counts 2, 3 and 4 allege a violation of 18 U.S.C. §§ 1341, 1343, 1349
                        and 2........................................................................... 659
                  V. A Summary of the Testimony of Three Major Witnesses for the Government
                     i.e., T.C. Gasper, James McLean and Jeremy Durgin.................................. 660
                   A. Introduction ..................................................................... 660
                   B. A Summary of the Testimony of T.C. Gasper and James McLean........................ 661
                   C. Summary of the Testimony of FBI Agent Jeremy Durgin............................... 667
                 VI. Defendant's Rule 29 Motion for Acquittal........................................... 668
                VII. Defendant's Rule 33 Motion for New Trial........................................... 672
                     1. Failure to instruct the jury as a matter of law concerning the client
                         investor and fiduciary duty.................................................... 672
                        a. The defendant's first preserved objection with respect to
                            instructions regarding client investor and fiduciary duty................... 672
                        b. The defendant's second preserved objection with respect to
                            instructions regarding client investor and fiduciary duty................... 673
                        c. The defendant's third preserved objection with respect to
                            instructions regarding client investor and fiduciary duty................... 674
                        d. The defendant's fourth preserved objection with respect to
                            instructions regarding client investor and fiduciary duty................... 674
                     2. Refusal of the Court to allow impeachment of Messrs. Gasper and
                         McLean concerning unlawful and negligent actions of the OBWC................... 676
                     3. Refusal to allow use of documents related to Mr. McLean's appeal to
                         the State Personnel Board of Review to impeach him............................. 676
                     4. Permitting the government to constantly refer to the OBWC as a
                         victim and to its role in helping injured workers, but preventing
                         defendant from referring to the OBWC's unlawful actions, such as
                         investing in hedge funds and crimes by its employees........................... 676
                     5. Refusal to admit minutes of the August 14, 2004 meeting of the OBWC
                         oversight committee where Mr. McLean stated the OBWC had no
                         hedge fund investments ........................................................ 676
                     6. Refusal to admit the 2004 version of the OBWC investment policies and
                         guidelines authorizing hedge fund investments for the first time............... 677
                     7. Upon reading Mark Lay's civil deposition testimony to the jury after
                         deliberations began, refusal to give limiting instructions required by
                         United States v. Marwin Smith, 419 F.3d 521 (6th Cir.2005) cautioning
                         the jury not to place too much emphasis on the testimony or take
                         it out of context ............................................................. 677
                     8. Failure to rule on objections in Mark Lay's deposition prior to reading
                         it to the jury ................................................................ 678
                     9. Failure to advise the jury as a matter of law that the PPM guidelines
                         were revised on May 18, 2004................................................... 678
                     9a. The defendant's cumulative error claim......................................... 678
                VIII. Conclusion........................................................................ 679
                

APPENDICES

                Description                                              Appendix No
                ---------------------------------------------------------------------
                Superseding Indictment............................................. 1
                Government's Exhibit 3011.......................................... 2
                Court's Jury Instructions 13-26.................................... 3
                Defendant's Proposed Jury Instructions (Docket No. 94)............. 4
                Trial Witness Log*............................................ 5
                

I. Introduction

The defendant, convicted of the four counts in the superseding indictment, has filed a motion pursuant to Rule 29 of the Criminal Rules of Procedure seeking an acquittal, or in the alternative, a new trial. The defendant awaits sentencing now scheduled for May 27, 2008.

II. A Time Line of Events in this Case

The indictment was returned against the defendant on June 14, 2007, setting forth four counts. The defendant was eventually arraigned on July 2, 2007, entered pleas of not guilty and trial was scheduled for September 4, 2007.

On September 7, 2007, a superseding indictment was filed, again setting forth four counts.¹ The earlier trial date of September 4, 2007, was vacated.

Earlier, on July 30, 2007, the defendant filed a motion to dismiss (Docket No. 31) and then filed an amended motion to dismiss on July 31, 2007 (Docket No. 32). The government filed its response in opposition on August 13, 2007 (Docket No. 40). The Court entertained oral argument on the defendant's motion to dismiss. A transcript of the argument regarding the motion to dismiss was subsequently filed on September 10, 2007. (Docket No. 56). The Court filed its memorandum opinion denying the amended motion to dismiss on September 27, 2007. (Docket No. 68).

The trial began on October 12, 2007, with the selection of a jury. The trial commenced on October 15, 2007, and concluded with guilty verdicts returned by the jury on October 30, 2007. In addition, the jury returned a verdict regarding the issue of forfeiture, finding that the proceeds obtained and subject to forfeiture constituted the sum of $590,526.23.

III. Applicable Law—Standard of Review for Rule 29 and Rule 33 Motions

A. Rule 29 of the Federal Rules of Criminal Procedure—Motion for Judgment of Acquittal

A motion for judgment of acquittal should be denied if the Court determines that, "after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Mackey, 265 F.3d 457, 460 (6th Cir.2001)(quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979))(emphasis in original). When viewing the evidence by this standard, the Court may not make independent determinations regarding witness credibility or the weight that should be accorded to the evidence. United States v. Abdullah, 162 F.3d 897, 902-903 (6th Cir.1998)("we do not weigh the evidence presented, consider the credibility of witnesses, or substitute our judgment for that of the jury") (citing United States v. Hilliard, 11 F.3d 618, 620 (6th Cir.1993)). Instead, the Court must assume the truth of the evidence offered by the prosecution and give the government the benefit of all inferences that can be reasonably drawn therefrom. United States v. Overmyer, 867 F.2d 937, 939 (6th Cir.1989)("the court assumes the truth of the evidence offered by the prosecution") (quoting United States v. Martinez, 763 F.2d 1297, 1312 (11th Cir.1985)); United States v. Abdullah, at 903 ("[give] the government the benefit of all inferences that could be reasonably drawn from the testimony" (citing Jackson v. Virginia at 319, 99 S.Ct. 2781)).

B. Rule 33 of the Federal Rules of Criminal Procedure—New Trial

Rule 33 provides that "[u]pon defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires." Lay's motion for a new trial is based on insufficiency of the evidence and a series of errors that cumulatively warrant a new trial. Defendant contends the Court that the cumulative effect of nine errors produced a trial that was fundamentally unfair.

"Errors that might not be so prejudicial as to amount to a deprivation of due process when considered alone, may cumulatively produce a trial setting that is fundamentally unfair." United States v. Ashworth 836 F.2d 260, 267 (6th Cir.1988) (quoting Walker v. Engle, 703 F.2d 959, 963 (6th Cir.1983), cert, denied 464 U.S. 951, 962, 104 S.Ct. 367, 396, 78 L.Ed.2d 327, 338 (1983)). However, when considering the cumulative effect of errors, the Court must guard against the "magnification" of errors...