U.S. v. Autuori
Citation | 212 F.3d 105 |
Decision Date | 01 August 1998 |
Docket Number | D,No. 98-1547,No. 1603,1603,98-1547 |
Parties | (2nd Cir. 2000) UNITED STATES OF AMERICA, Appellant, v. EDMUND M. AUTUORI, Defendant Appellee. ocket |
Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
NORA R. DANNEHY, Assistant United States Attorney, Hartford, CT (Stephen C. Robinson, United States Attorney for the District of Connecticut, Peter A. Clark, Assistant United States Attorney, on the brief), for Appellant.
WILLIAM M. BLOSS, Jacobs, Grudberg, Belt & Don, P.C., New Haven, CT (Ira B. Grudberg, Jacobs, Grudberg, Belt & Don, P.C., New Haven, CT, Robert M. Romano, Morgan, Lewis & Bockius LLP, New York, NY, Peter Buscemi, Morgan, Lewis & Bockius LLP, Washington, DC, on the brief), for Defendant-Appellee.
Before: MINER, JACOBS, and PARKER, Circuit Judges.
This case is one of several fraud prosecutions arising out of the failure of Colonial Realty Company ("Colonial"), a Connecticut real estate development and syndication company. Defendant Edmund M. Autuori, an accountant with Arthur Andersen & Co. ("Andersen"), helped market one of Colonial's ventures. The indictment alleged that from December 1989 to September 1990, Autuori participated in a scheme to defraud by making materially misleading representations to potential investors.
After an eighteen-day trial in the United States District Court for the District of Connecticut (Burns, J.), a jury convicted Autuori on ten counts of mail fraud in violation of 18 U.S.C. § 1341 and six counts of wire fraud in violation of 18 U.S.C. § 1343. The judge, however, granted Autuori's motion for judgment of acquittal pursuant to Fed. R. Crim. P. 29(c), and granted conditionally his motion for a new trial pursuant to Fed. R. Crim. P. 29(d).1. See United States v. Autuori, No. 96-CR-161, 1998 WL 774232, at *32 (D. Conn. Aug. 28, 1998). The government appeals.
After a thorough review of the record, we affirm the judgment of acquittal as to some counts; as to the remaining counts, we conclude that there was evidence sufficient for a rational juror to find Autuori guilty beyond a reasonable doubt, but that the district court did not abuse its discretion in granting a new trial, for which purpose we remand.
Our review of the district court's ruling on sufficiency of the evidence requires us to view the evidence in the light most favorable to the government and draw all reasonable inferences in its favor. See United States v. Guadagna, 183 F.3d 122, 125 (2d Cir. 1999). Because Autuori first moved for judgment of acquittal at the close of the prosecution's case-in-chief, the district court evaluated sufficiency on the basis only of the evidence presented by the government. See Autuori, 1998 WL 774232, at *15 n.5 (citing Fed. R. Crim. P. 29(b)). We do likewise on appeal. See 2 Charles Alan Wright, Federal Practice and Procedure § 462 n.10.2 (2d ed. Supp. 1999). In the fact exposition that follows, we first set out the essential background chronology, and then set out the facts concerning the conduct charged in the indictment.
Before it was forced into bankruptcy, Colonial was a large real estate development and syndication company. Its three principals were Jonathan Googel, Benjamin Sisti and Frank Shuch; the course of proceedings against those individuals is set forth in the margin. 2. Colonial acted as general partner in numerous limited partnerships formed to own and operate commercial real estate properties, mostly in Connecticut.
On behalf of one such partnership, Colonial purchased in 1988 the multi-building development in downtown Hartford known as Constitution Plaza. Colonial syndicated the development and marketed the participations under the name Colonial Constitution Limited Partnership (the "Partnership"). Colonial planned to raise $60 million by marketing Partnership shares, and to raise $22 million by marketing zero coupon bonds ("Constitution Zeros"), issued by the Partnership and secured by subordinated mortgages on its property. Other anticipated sources of financing included an $87 million permanent first mortgage, and short-term borrowing from a group of banks.
Autuori was a manager in the Andersen tax department. He started working with Colonial in 1984, and was Andersen's main "relationship guy" with the company. Beginning in September 1989, Autuori worked with Colonial on the Partnership project.
Colonial began selling Partnership shares in September 1989. All potential investors were given a copy of a Private Placement Memorandum ("PPM") prepared by Colonial and its counsel at Tarlow, Levy, Harding & Droney ("Tarlow Levy"). The PPM forecast the project's income and expenses over a ten year period beginning November 1, 1989, and identified such risk factors as fluctuations in the real estate market. The PPM used forecasts based on assumptions made by Colonial, and advised that the Partnership's success was wholly dependent on meeting these projections.
A letter signed by Andersen auditor Jack Krichavsky opined that there was a reasonable basis for the assumptions underlying the projected figures in the PPM. One of those assumptions was that Colonial would be able to pursue the same cost-effective management strategies employed in several of its previous projects--chiefly, raising parking revenues while lowering cleaning costs.
Krichavsky also audited Constitution Plaza's actual revenues and expenses for the first eight months of 1989--immediately before the period covered by the PPM predictions ("the eight-month audit"). The eight-month audit projected that the Partnership's net operating income would fall $3 million short of the $10 million predicted in the PPM for the year 1989. Krichavsky told Autuori and Shuch about the results of the audit.
One of the assumptions driving the PPM projections was Colonial's belief that the Partnership shares would be fully sold by November 1, 1989. But the Connecticut real estate market became sluggish, Partnership sales slowed, and shares were left unsold on the projected sell-out date. Colonial still had unsold shares on its hands when it entered bankruptcy on September 14, 1990. The slow sales impaired Colonial's ability to meet the PPM projections because (i) interest expense rose, (ii) interest income declined, and (iii) cash flow eroded.
In January 1990, Colonial dropped Andersen as auditor and hired Joseph Cohan & Co. ("Cohan"). According to Googel, Autuori suggested the change because the audit results were making it hard for Andersen to assist with sales efforts that employed the projections. Googel testified that Autuori told him to hire new auditors because "the numbers weren't matching up well and [Autuori] didn't want to have to make representations on the projections for the offering memorandum based on the knowledge that he had that the numbers weren't coming in the way they should."
On February 13, 1990, as marketing of the Constitution Zeros was beginning, Autuori, Googel, Sisti and Shuch traveled to Florida to market the Zeros to the National Laborers' Union. Googel testified that on the plane to Florida he admitted to Autuori that Colonial was paying a bribe (or "finder's fee") to Dominic Lopreato of the Connecticut Laborer's Union, for Zeros bought by his union.3 At the conference, Googel made an enthusiastic sales pitch, seconded by Autuori. Autuori characterized the Zeros as a sound investment, said that he had reviewed the forecasts, and assured the audience that Andersen stood behind them.
On March 1, 1990, Krichavsky received a copy of a Constitution Plaza budget prepared by its management company, Constitution Management Company (the "Management Company budget"), and later showed it to Autuori. The Management Company budget reflected that the 1990 net operating income for the project would be $3 million below the PPM projection; in effect, there had been no improvement in the conditions cited in Krichavsky's eight-month audit the prior October. Colonial was unable to lower costs and raise revenue, measures that were critical to the success of the Partnership project. Krichavsky's alarm was heightened by a concurrent "dramatic downturn" in the banking and real estate industries in New England.
Krichavsky and Autuori debated what to do. Autuori wanted to say nothing, and rely on the wording in Andersen's opinion letter that disclaimed any responsibility to update the opinion. They decided to bring their concerns to Colonial's lawyers at Tarlow Levy.
Autuori continued to meet with investors in aid of Colonial's sales efforts throughout March, following his receipt of the Management Company budget. These meetings form the basis for eight of the counts charged in the indictment (Counts 1-2 and 11-16). These meetings and Autuori's role in them are discussed in detail below.
Before Krichavsky and Autuori met with the lawyers, the new auditor (Cohan) wrote to Tarlow Levy attorney Dane Kostin, reporting its audit findings and concluding that there were...
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