People v. Downey

• Decision Date: 24 February 2004
• Docket Number: 2415.,2414.
• Citation: 4 A.D.3d 233,2004 NY Slip Op 01212,772 N.Y.S.2d 307
• Parties: THE PEOPLE OF THE STATE OF NEW YORK, Respondent, v. THOMAS DOWNEY, Appellant. THE PEOPLE OF THE STATE OF NEW YORK, Respondent, v. GEOFFREY HORN, Appellant.
• Court: New York Supreme Court — Appellate Division

4 A.D.3d 233

772 N.Y.S.2d 307

2004 NY Slip Op 01212

THE PEOPLE OF THE STATE OF NEW YORK, Respondent, v. THOMAS DOWNEY, Appellant THE PEOPLE OF THE STATE OF NEW

YORK, Respondent, v. GEOFFREY HORN, Appellant.

2414.

2415.

Appellate Division of the Supreme Court of the State of New York, First Department.

February 24, 2004.

Judgments, Supreme Court, New York County (John Bradley, J.), rendered March 18, 2002, convicting defendant Downey, after a jury trial, of six counts of violation of General Business Law § 352-c (5) and four counts of violation of General Business Law § 352-c (6), and convicting defendant Horn, after a jury trial, of five counts of violation of General Business Law § 352-c (5) and three counts of violation of General Business Law § 352-c (6), and sentencing Downey to an aggregate term of 6 to 18 years and Horn to an aggregate term of 5 to 15 years, unanimously reversed, as a matter of discretion in the interest of justice, and the matter remanded for a new trial.

Defendants are former partners and brokers of Duke & Company, an investment banking and retail brokerage firm that went out of business in 1998. Defendants and more than 20 other former Duke employees were charged with perpetrating various crimes in the course of Duke's business. Among other things, the People contend that Duke was a "boiler room" operation, which used fraudulent and manipulative devices to artificially inflate the prices of stocks underwritten by the firm. After defendants' first trial ended in a mistrial, defendants were convicted at their second trial of violations of General Business Law § 352-c (5) and (6).

Although the verdict was supported by legally sufficient evidence, we find reversal warranted by the trial court's decision, in October 2001, to preclude the introduction of certain defense exhibits at trial. This sanction was imposed on defendants on the ground that they delivered such exhibits to the prosecutors 26 minutes after a court-imposed deadline had passed, on a day that the trial was not in session. It appears that the 26-minute delay was caused in part by the difficult traffic conditions that prevailed in Lower Manhattan at the time due to the terrorist attack on the World Trade Center less than a month before. The exhibits in question, which were based on the Duke trading data that formed much of the basis of the prosecution, bore directly on the question of guilt or innocence. Specifically, the exhibits were intended to demonstrate that defendants' allegedly fraudulent trading activity had actually resulted in profits to defendants' clients. The exhibits also sought to show that defendants in particular, and the Duke firm as a whole, had not systematically refused to execute clients' orders to sell house stocks unless there were corresponding buy orders for the same stocks. Given the materiality of these matters, and the voluminous and technical nature of the proof at trial, the prejudice to defendants from the preclusion of the exhibits substantially outweighed any prejudice to the People from the 26-minute delay in their receipt of the material. It is...