U.S. v. Szur

Decision Date01 May 2002
Docket NumberDocket No. 99-1556(CON).,Docket No. 99-1517(L).,Docket No. 99-1578(CON).,Docket No. 00-1142.,Docket No. 00-1141(CON).
Citation289 F.3d 200
PartiesUNITED STATES of America, Appellee, v. Jeffrey SZUR, Elaine Szur, Cary Weinstein, Vadim Kaplun, Defendants-Appellants, David M. Gold, Ronald D. Gray, Bertram Slutsky, Defendants.
CourtU.S. Court of Appeals — Second Circuit

John L. Pollok, Hoffman Pollok & Pickholz LLP, (Susan C. Wolfe, on the brief), New York, NY, for Defendant-Appellant Jeffrey Szur.

Gail E. Laser, New York, NY, for Defendant-Appellant Elaine Szur.

Susan R. Necheles, Goldman & Hafetz, New York, NY, for Defendant-Appellant Cary Weinstein.

Michael F. Bachner, New York, NY, for Defendant-Appellant Vadim Kaplun.

Katherine M. Choo, Assistant United States Attorney, (Mary Jo White, United

States Attorney for the Southern District of New York, Baruch Weiss, Jamie L. Kogan, and George S. Canellos, Assistant United States Attorneys, on the brief), New York, NY, for Appellee.

Before: WALKER, Chief Judge, F.I. PARKER and KATZMANN, Circuit Judges.

JOHN M. WALKER, JR., Chief Judge.

After being found guilty by a jury of various offenses arising out of their involvement in an extensive securities fraud scheme, defendants-appellants Jeffrey Szur, Elaine Szur, Cary Weinstein, and Vadim Kaplun appeal from the judgments of conviction entered against them by the United States District Court for the Southern District of New York (John G. Koeltl, District Judge). For the following reasons, the district court's judgments are affirmed.

BACKGROUND
I. The Conspiracy

At the time the securities fraud conspiracy charged in the indictment began, appellant Jeffrey Szur ("Szur") was the owner and president of J.S. Securities ("JSS"), a securities brokerage firm headquartered in Bay Head, New Jersey. In the late spring of 1995, defendant Bertram Slutsky, the president and majority shareholder of U.S. Asset,1 a publicly held corporation, proposed to Szur that JSS sell the U.S. Asset stock in Slutsky's control to JSS's retail customers and take fifty percent of the proceeds as the commission. Slutsky testified for the prosecution that it was his understanding that the amount of the commission would not be disclosed to the customers because, in his view, "an investor would not invest in a security if they knew that half the funds for that investment was going to the broker's compensation."

JSS began selling the U.S. Asset stock in August or September of 1995. Szur's mother, appellant Elaine Szur, worked as the firm's compliance officer. Her responsibilities included supervising and executing trades, ensuring compliance with regulations imposed by the Securities and Exchange Commission ("SEC") and the National Association of Securities Dealers ("NASD"), and other administrative tasks. Assisted by Diane Lakin, who was Slutsky's girlfriend, Elaine Szur also confirmed sales of U.S. Asset stock.

Slutsky and Szur recruited several operators to open and run four JSS branch offices to solicit customers for U.S. Asset stock: an office at 63 Wall Street ("the Wall Street office"); an office in Westbury, Long Island ("the Westbury office"); and two unlicensed offices, one in a lower Manhattan loft and one in Brooklyn. Slutsky arranged to compensate each branch office manager with commissions that ranged from forty- to fifty-percent of the proceeds from that branch's sales of U.S. Asset stock. These commissions were paid from Szur's share of the proceeds to the branch office managers directly. Szur agreed to the arrangement because the new branch offices would increase JSS's customer base.

Slutsky and Szur recruited appellant Vadim Kaplun to manage the Wall Street office in return for a fifty-percent commission on sales of U.S. Asset stock. The Wall Street office salespeople did not disclose to customers the amount of commissions that the office was receiving. Instead, they frequently told their customers that they were charging only a minimal commission, such as one or two-and-a-half percent. Trade confirmations sent to customers represented that only a nominal commission had been charged, typically no more than five percent.

Upon completion of U.S. Asset sales, the Wall Street office would fax trade tickets to JSS headquarters in Bay Head, where Szur, Elaine Szur, and others would prepare the necessary documentation to effect the trades. To obtain his fifty-percent commission, Kaplun sent trade blotters to Slutsky's home each week. After cross-checking the Wall Street office trade blotters against the records maintained at JSS headquarters, Slutsky paid Kaplun, normally using checks with the payee line left blank. Kaplun, in turn, paid his salespeople fifteen- to twenty-percent commissions on the U.S. Asset sales made by each salesperson. From February to August 1996, Slutsky paid Kaplun more than $775,000 based on sales in excess of 1.38 million shares of U.S. Asset.

Appellant Cary Weinstein, together with co-defendant David Gold, managed the Westbury office. Slutsky agreed to pay Weinstein and Gold forty-five percent of any U.S. Asset stock sales made through the Westbury office. Because neither Weinstein nor Gold was a registered brokerage branch manager, they hired Paul McGlynn, a registered branch manager, to create the appearance of legitimacy. To compensate McGlynn for agreeing to sign the branch office agreement, new account forms, trade tickets, and other paperwork, Weinstein and Gold paid him twenty-five percent of the proceeds of his sales of U.S. Asset stock and a percentage of the sales of another broker.

To facilitate Westbury office sales, Weinstein and Gold arranged to place a portion of Slutsky's U.S. Asset stock in a brokerage account in the name of Optimum Trading, Inc., from which they sold the U.S. Asset stock to customers. Weinstein and Gold kept forty-five percent of the proceeds from those sales and remitted the balance to Slutsky. The Westbury office salespeople did not disclose to customers the amount of commissions paid to the brokers and trade tickets prepared by the office often reflected that the brokers were receiving only nominal commissions for the stock sales. In total, Weinstein and Gold received at least $350,000 for sales of at least 450,000 shares of U.S. Asset stock.

In addition to payments to the branch office managers, Slutsky periodically provided funds to Szur to cover JSS's operating expenses. On at least two occasions, Slutsky paid Szur through an account in the name of NuFocus Enterprises, Inc. ("NuFocus"), a company owned by Elaine Szur. Elaine Szur subsequently transmitted the funds from the NuFocus account to Szur, who in turn transferred the funds to JSS. When Szur was asked about the source of these funds during an NASD investigation in May or June of 1996, he falsely claimed that the funds represented fees for consulting services he had rendered to NuFocus.

Over time, for a number of reasons not relevant to this appeal, the price of U.S. Asset stock declined. In an effort to continue making money on the scheme, Slutsky began selling his shares through brokers other than Szur and JSS. By August 1996, Slutsky had ceased paying Szur or his branch office managers for sales of U.S. Asset stock and the conspiracy was at an end.

II. Proceedings in the District Court

On February 24, 1998, the grand jury returned a twenty-eight count fifth superseding indictment (the "Indictment") against appellants Szur, Elaine Szur, Kaplun Weinstein, and others, charging them with devising and executing a scheme to defraud JSS customers by selling U.S. Asset stock without disclosing that up to fifty percent of the sale price of the stock went toward brokerage commissions.

Specifically, the Indictment charged conspiracy to commit securities fraud, wire fraud, and commercial bribery in violation of 18 U.S.C. § 371 (Count One)2; wire fraud in violation of 18 U.S.C. §§ 1343 and 1346 (Counts Two through Eleven); commercial bribery under the Travel Act in violation of 18 U.S.C. § 1952(a)(3) (Counts Twelve through Sixteen); falsifying the books and records of JSS in violation of 15 U.S.C. §§ 78q(a)(1) and 78ff, 17 C.F.R. § 240.17a-4 (Counts Seventeen through Twenty-two); money laundering in violation of 18 U.S.C. § 1956(a)(1)(B)(i) (Counts Twenty-three through Twenty-eight); and aiding and abetting all of the foregoing crimes in violation of 18 U.S.C. § 2.

At trial, all four appellants were convicted of conspiracy (Count One). Szur was also convicted of wire fraud (Counts Three through Five); commercial bribery in violation of the Travel Act (Count Twelve); falsifying the books and records of JSS (Counts Seventeen, Nineteen, and Twenty); and money laundering (Counts Twenty-three and Twenty-four). Szur was sentenced to a prison term of 70 months, a three-year term of supervised release, restitution in the amount of $3,709,829.50, and mandatory special assessments totaling $850.

In addition to the conspiracy count (Count One), appellant Elaine Szur was convicted of wire fraud (Counts Ten and Eleven); falsifying the books and records of JSS (Counts Seventeen, Nineteen, and Twenty); and money laundering (Counts Twenty-three and Twenty-four). She was sentenced to 46 months of imprisonment, a three-year term of supervised release, restitution in the amount of $3,709,829.50, and mandatory special assessments totaling $550.

Appellant Kaplun was convicted of conspiracy (Count One); wire fraud (Counts Six and Seven); commercial bribery under the Travel Act (Counts Thirteen through Fifteen); and money laundering (Counts Twenty-five and Twenty-six). Prior to his sentencing, Kaplun pled guilty to another fraud charged in a separate indictment and the two cases were consolidated for sentencing purposes. The district court sentenced Kaplun to concurrent terms of 56 months of...

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