Opinion
No. 4800–2009.
2010-07-2
The PEOPLE of the State of New York, v. William GILMAN and Edward McNenney, Defendants.
Andrew Cuomo, NYS Attorney General's Office, New York City (Hannah Stith Long of counsel), for the People. Proskauer Rose, LLP, New York City (Richard L. Spinogatti and Robert J. Cleary of counsel), for defendant William Gilman.
Andrew Cuomo, NYS Attorney General's Office, New York City (Hannah Stith Long of counsel), for the People. Proskauer Rose, LLP, New York City (Richard L. Spinogatti and Robert J. Cleary of counsel), for defendant William Gilman.
Cooley Godward Kronish, LLP, New York City (Scott D. Devereaux of counsel), for defendant Edward McNenney.
JAMES A. YATES, J.
William Gilman and Edward J. McNenney, two former executives of Marsh & McLennan Cos., have filed a motion, pursuant to CPL § 440.10, to vacate their February 20, 2008 judgments of conviction on a Donnelly Act violation (GBL §§ 340, 341). In their motion, defendants assert that the People failed to comply with the mandates of Rosario
People v. Rosario, 9 N.Y.2d 286 (1961).
Giglio v. United States, 405 U.S. 150 (1972).
Brady v. Maryland, 373 U.S. 83 (1963)
I. Factual and Procedural History
A. Case Overview
Defendants were executives and employees attached to the Excess Casualty Unit of Marsh Global Broking, a subsidiary of Marsh, Inc., a leading insurance broker. William Gilman was the executive marketing director and Edward J. McNenney was the global placement director for the company. Following a 2004 investigation by the New York State Attorney General (“NYAG”), defendants and six other Marsh Global Broking, Inc. brokers were indicted.
The indictment charged the defendants with four counts of Grand Larceny in the First Degree (PL § 155.42, class B felonies), thirty counts of Grand Larceny in the Second Degree (PL § 155.40[1], class C felonies), one count of Grand Larceny in the Third Degree (PL § 155.35, a class D felony), one count of Scheme to Defraud in the First Degree (PL § 190.65[1][b], a class E felony)and one count of violating the Donnelly Act ( Gen. Bus. Law §§ 340, 341).
In January 2005, Marsh settled a civil complaint, in a parallel proceeding involving the same allegations, brought by the Investor Protection Bureau of the Attorney General's office by providing $850 million in restitution to its customers, apologizing publically and agreeing to implement corporate changes and to cooperate in the on-going investigation ( Spitzer v. Marsh & McLennan Companies, Index No. 04/403342 [Sup Ct, New York County, Jan. 30, 2005). Twenty-one Marsh executives and insurance carrier executives pleaded guilty to violating the Donnelly Act, committing Scheme to Defraud in the First Degree or lesser included offenses and agreed to cooperate with the Attorney General as well.
The Donnelly Act count charged:
McNenney was the leader of the AIG Local Broking Coordinators (LBCs) from 1998 until he was promoted in early 2003 to the position of Placement Director, supervising all LBCs. Gilman was the head of Marsh Global Broking Excess Casualty during the mid–1990s. He remained a senior executive at Marsh during the entire period covered by the indictment. His role was to negotiate revenue-sharing agreements between Marsh and excess casualty insurance carriers.
“The defendants, during a period from about November 1998 to about September 2004, in the County of New York and elsewhere, acting with others unknown to the Grand Jury, knowingly and intentionally entered into and engaged in a contract, agreement, arrangement and combination in unreasonable restraint of trade and competition, to wit, to restrain competition in the sale of excess casualty insurance by means of bid rigging, price fixing and customer allocation.”
The People alleged that defendants devised and implemented an illegal anti-trust conspiracy to fraudulently obtain millions of dollars for Marsh and its accomplice insurance companies by rigging the market for excess casualty insurance. Marsh employees were alleged to have falsely represented to their corporate customers, including IBM, Cisco Systems, Fortune Brands, Intel, Merle Norman Cosmetics, Signature Fruit Company and Vivendi Universal, that they had solicited bids in an open and competitive bidding process. The defendants, according to the prosecution, however: identified which insurance company would win the business; set a target for the pre-determined winner to submit as its bid and; obtained losing bids from accomplice insurance companies. The losing bids were referred to as “B quotes,” “back up quotes,” “Bs,” “fake quotes,” “protective quotes” or “alternatives.”
B. The People's Case
It was the People's theory that competing insurance carriers engaged in a horizontal conspiracy to restrain trade purportedly facilitated by Gilman and McNenney. The defendants allegedly protected chosen insurance carriers from competition, guaranteed them a profit, and charged them a contingency fee based on how much business the carriers received from Marsh.
As part of the discovery in this case, more than 20 million pages of files, records and emails were exchanged. The defendants proceeded to a non-jury trial. The trial lasted from April 10, 2007 through February 20, 2008. At trial, the People elected to prosecute twenty-two of the thirty-five indicted grand larceny counts. The People's direct evidence included twelve Marsh Global Broking brokers and seven underwriters from American International Group (AIG), Zurich Insurance (Zurich), ACE USA (Ace) and Liberty International Insurance Company (Liberty) who confessed to and described their participation in the scheme, emails, meeting notes and the testimony of three outsiders unsuccessfully solicited to join the alleged scheme. Other witnesses, representing Marsh clients, also testified at trial
On February 20, 2008, the defendants were convicted of the Donnelly Act violation, a class E felony. Other charges were dismissed or resulted in an acquittal. The defendants jointly appealed to the Appellate Division, where the appeal is currently pending. As grounds for reversal, defense counsel argued there was no proof of a horizontal conspiracy to restrain trade. Defendants have remained at liberty during the pendency of the appeal.
C.The CPL §§ 440.10(1)(f), (g), and (h) Motion: Undisclosed Material
The defendants allege that in May 2009, during a later trial of three previously severed defendants
, they discovered that NYAG failed to produce, or disclose, multiple forms of material exculpatory and impeaching evidence. On June 11, 2009, defense attorneys requested all non-disclosed materials (Spinogatti affirmation, exhibit 25). On August 4, 2009, the defendants submitted and filed a CPL § 440.10 motion. Supplemental defense motion papers were submitted on October 21, 2009 and November 4, 2009, and reply papers were submitted January 11, 2010. Oral argument was heard on January 20,2010. Supplemental materials were filed by defendants on February 2, 2010 and by the People on March 31, 2010.
In view of the co-defendants' full acquittal on all charges, they will not be identified (CPL § 160.50).
The alleged undisclosed material falls in six categories: (1) approximately 700,000 pages of documents from the files of Liberty which, allegedly, belie the People's theory of the case and the testimony of two key witness for the prosecution; (2) prior testimony at four depositions by three cooperating witnesses in related proceedings; (3) prior deposition testimony in a related proceeding, of which the People were aware, by a non-testifying witness which is allegedly exculpatory; (4) testimony by two cooperators in related proceedings given while the criminal trial was underway, but subsequent to the witness testifying at the criminal trial; (5) a prior conviction, known to the People, for driving while impaired by a witness whose sobriety was at issue; and finally (6) alleged hidden promises of leniency for cooperators beyond those contained in their written cooperation agreements.
1.Insurance Company Files: 700,000 Pages of Documents Turned Over to NYAG by Liberty Mutual
At the heart of the prosecution's case was the theory that Liberty, along with other insurance companies, entered into a horizontal conspiracy to fix prices, bid rig and allocate customers. Marsh, while not an insurance carrier, facilitated this illegal arrangement at the instruction of, and through the actions of, the defendants. At the direction of the Court, and voluntarily in the interest of proceeding in an orderly fashion, NYAG agreed to make available documents from the files of the insurers relevant to the transactions which became the subject of the People's proof at trial. Simultaneous with the criminal investigation in this case, NYAG also brought actions for civil enforcement, disgorgement and penalties against Marsh, AIG, Liberty and others. In October, 2007, midway through the trial, the Investment Protection Bureau of NYAG, in State of N.Y. v. Liberty Mutual Insurance Co., (Sup Ct, N.Y. County, index No. 06–401726), obtained over 700,000 pages of discovery from the files of Liberty Mutual. This action for civil penalties under the Martin Act charged the same conduct as the criminal case. The files contained information directly relevant to the testimony of two cooperators in the criminal trial, Jason Monteforte and Kevin Bott. The existence of these files surfaced at the second trial in 2009. In particular, the defense claims that the files directly refute claims by Bott and Monteforte regarding pricing plans, efforts to prepare complete bids and carrier appetite. As well, the defense had maintained that the bidding process used by Marsh was standard in the industry, used by other brokers, and known to clients, challenging the allegations of a fraudulent scheme. Defendants point to documents within the undisclosed files which support that thesis.
There was some level of coordination between the sections of the Attorney General's office as evidenced, for example, when Elizabeth Nochlin (one of the lead prosecutors) personally filed a request for a protective order in the civil action on October 17, 2007, approximately the same time the Liberty files were produced to IPB. The prosecution contends it took no steps to review the files, although the People acknowledge that nothing prevented access to the documents and that “the IPB team would have been permitted to disclose the documents to the CPB” ( Long affirmation, March 31, 2010, at 8).
The materials were not turned over or disclosed to the defense at trial by the prosecution. Almost eighteen months later, the following materials were turned over to defense counsel:
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These documents were potentially favorable to defendants. While the parties disagree about the exculpatory weight of the documents, the words of the Court of Appeals in People v. Banch, 80 N.Y.2d 610 (1992), while discussing Rosario, ring as true here: “[T]he potential impeachment value of a witness' prior statement [is] best ... determined by the “single-minded counsel for the accused” [citing Rosario ] and ... the trial court's evaluation [is] an inadequate substitute” ( Id., at 613).
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Defendants argue that these documents contradict NYAG's central premise that the horizontal agreement was an incumbent protection scheme that inflated premium prices. Under the alleged scheme, the insurance carriers should have had a significantly higher premium retention with Marsh. Bott and Jason Monteforte also testified about specific transactions in which they provided allegedly fraudulent quotes. Defendants point out that the withheld Liberty production contained
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The only documents available to defendants at trial regarding Liberty's underwriting guidelines were Marsh “Fact Sheets” which contained a brief summary of Liberty's risk appetite.
NYAG also argued that the close relationships between Marsh brokers and underwriters evidenced an anti-competitive conspiracy between AIG, Liberty and other carriers to horizontally restrain trade. However, defendants contend that the Liberty documents demonstrate that
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Additionally, NYAG maintained that target pricing evidenced a scheme to restrain trade.
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In any event, while there is no direct evidence that Gilman had the Liberty documents, there is direct evidence that McNenney did not and that the NYAG received the complete set in October, 2007 without mentioning the documents to the defense or the Court.
The prosecution contends that the documents were not in their possession or control. They cite People v. Washington,
“Where the material sought is in the possession of a person or agency other than a law enforcement agency, the test of the People's obligation to produce is whether the items sought are in the “control” of the People (see, People v. Flynn, 79 N.Y.2d 879, 882 [material in possession of Department of Motor Vehicles, a State administrative agency, were not in control of prosecutor]; People v. Tissois, 72 N.Y.2d 75, 78 [statements of victims of sexual abuse made to a social worker were not in control of the prosecutor]; People v. Reedy, 70 N.Y.2d 826, 827 [a personal account of a sexual attack written by the victim, a free-lance writer, was not Rosario material which was in the control of the prosecutor]; see also, People v. Fishman, 72 N.Y.2d 884 [untranscribed plea minutes were not Rosario material which the People were required to produce]”
(Id., 86 N.Y.2d 189, 191–192 [1993] ).
The defense argues that suppression of evidence may occur where the state prosecutor has actual or constructive possession or knowledge of the evidence and fails to disclose it to defense counsel ( see e.g. United States v. Pena, 227 F3d 23, 27, n3 [2d Cir2000] [stating that the obligation to produce Brady material in a pre-sentence report comes from the government's possession of the report] ). “[C]ourts, including the Supreme Court, have imputed knowledge of Brady material to prosecutors when the evidence is known only to prosecutorial personnel (including fellow prosecutors in the same office) or government agents investigating the particular case.” Chandras, 2002 U.S. Dist LEXIS 25188, 2002 WL 31946711, at *7 (citing Kyles, 514 U.S. at 438 (police investigator); Giglio, 405 U.S. at 154 (fellow prosecutor); Pennsylvania v. Ritchie, 480 U.S. 39, 57(1987) (assuming, sub silentio, that a state prosecutor had constructive knowledge of information in state child services division's investigative files; assuming without discussion that state prosecutor's office had imputed knowledge of information available to state child services division's investigative officers, even though prosecutor had no actual knowledge of information).
First, the Court does not accept the theoretical argument that, in the abstract, the two arms of the Attorney General's Office (the Investor Protection Bureau and the Criminal Prosecution Bureau) are separate and distinct entities operating in disconnected spheres. Unlike the situations cited in Washington, here, one office, under the control of one prosecutor, is authorized to prosecute Martin Act violations by civil and/or criminal prosecution. Nowhere in the statutory authority conferred upon the Attorney General in either the Executive Law or the General Business Law is there a division of authority.
Further, even if one were to accept the claim that the two offices, as organized, are separate and distinct, the exception to Rosario described in the quote, above, from Washington applies only to agencies “other than law enforcement” agencies ( supra ). A prosecutor may not claim exemption from its Rosario and Brady obligation on the grounds of inaccessibility when the agency in possession of the documents or information is a law enforcement agency within the State working on the very same investigation. Both branches of the Office of the Attorney General, particularly in prosecuting Donnelly Act violations, are law enforcement agencies. See, e.g., An Inside Look at Current Trends in State Antitrust Enforcement, Lloyd Constantine, 1–WTR Antitrust 6, American Bar Association (1987) (“Our basic orientation is that of law enforcement officials.”) (discussing antitrust enforcement efforts by NYAG).
The People contend that NYAG's IPB was not working with the prosecution in the criminal case. However, civil cases against Marsh and other corporate entities were pursued by the Attorney General for the same alleged wrongdoing and at the same time as the criminal investigation and prosecution. The cases were highly publicized. Corporations which settled their civil cases and avoided criminal charges entered into cooperation agreements with NYAG, facilitating NYAG's access to materials. For example, in the January 30,2005 settlement, signed personally by Attorney General Eliot Spitzer, not an assistant from one of the bureaus, Marsh, aside from agreeing to pay $850 million, also agreed to cooperate fully with the ongoing investigations, to supply documents upon request to NYAG without subpoena and was prohibited from “sharing or disclosing evidence, documents, or other information with others during the course of the investigation, without the consent of the Attorney General” (§§ 24, 25 of Agreement Between the Attorney General of the State of New York and the Superintendent of Insurance of the State of New York, and Marsh & McLennan Companies, Inc., Marsh Inc. and their subsidiaries and affiliates, dated January 30, 2005, Spinagotti affirmation, Aug.4, 2009, exhibit 30). AIG, Ace, Chubb and Zurich had similar agreements, promising full disclosure to NYAG without requiring a subpoena but banning access by the others, including the defendants, to the insurance carrier files without NYAG consent. (¶ 60, Agreement Between the Attorney General of the State of New York and American International Group, Inc. and its subsidiaries, dated January 18, 2006, Spinagotti affirmation, Aug. 4, 2009, exhibit 31); (¶ 38, In the Matter of Zurich Holding Company of America, Inc. and Zurich American Insurance Company, dated March 24, 2006,; Spinagotti affirmation, Aug.4, 2009, exhibit 32); (¶ 37, In the Matter of ACE Limited and ACE Group Holdings, Inc, dated April 25, 2006, Spinagotti affirmation, Aug.4, 2009, Exhibit 33); (¶ 38, In the Matter of The Chubb Corporation, December 20, 2006, Spinagotti affirmation, Aug.4, 2009, exhibit 34). Thus, NYAG made certain that it had free access to information from Marsh and the carriers, but controlled defense access to the same materials. De facto, during the course of the Marsh/Insurance investigations NYAG was a unitary entity for Brady purposes. See People v. Steadman, 82 N.Y.2d 1, 8 (1983) (holding that for Brady purposes “the office of the District Attorney is an entity and the individual knowledge of a case possessed by [one member] must ... be ascribed to the prosecutorial authority.”); accord People v. Simmons, 36 N.Y.2d 126, 132 (1975)(holding that a prosecutor's obligation to disclose Brady materials is a duty “shared by the prosecutor's office as a whole); People v. Pressley, 234 A.D.2d 954, 954 (4th Dept 1996) (finding Brady obligation is shared by whole prosecutorial office).
Most disturbing to the Court is the fact that the very issue arose and was decided during the trial. The prosecution was told to search for files obtained on the civil side and agreed to do so. On May 15, 2007 the following exchanges occurred in open court: (“THE COURT: Whether it's in the file by the Civil Division or by the Criminal Division anything that is of arguable relevance to the subject matter of the testimony has been turned over? MS. NOCHLIN: Right”) ( Trial Tr.. 3638); also (“THE COURT: If someone on the civil side asked ... what happened back in 1999 and that investigator wrote something down, even though it's a civil attorney, that would be turned over. There's no question about that .”).
The Court finds that knowledge of the 700,000 Liberty documents should be imputed to the CPB. Accordingly, “the individual prosecutor ha[d] a duty to learn of any favorable evidence known to others acting on the government's behalf in the case ( Kyles v. Whitley, at 437).” The documents were accessible to CPB and they were potentially of value to the defense.
2.Prior Testimony Given by Cooperators in Related Proceedings
(a). Regina Hatton, a Marsh broker who testified as a cooperator, was deposed prior to trial,
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In their papers, defendants state that it is “unclear whether Hatton's deposition was designated as subject to the protective order in that matter. However, they argue, “even if it were, the governing protective order provides that confidential materials may be disclosed to federal and state regulatory agencies (Spinogatti affirmation, exhibit 5 at ¶ V(a)(6)).”
Ms. Hatton's deposition testimony is favorable evidence insofar as it could have been used to impeach her at trial. Her undisclosed deposition testimony contradicted her trial testimony and was favorable to defendants. During the trial, NYAG asserted that the structure of Marsh Global Broking and the division of responsibility between indicated an anti-competitive scheme between Marsh and the insurance carriers. There was also testimony from cooperating witnesses that Marsh brokers were focused on securing coverage at the “highest bindable number” and that “target pricing” was a means to rig bids or raise prices. In her deposition, however,
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Because these statements may have been used to impeach Hatton's testimony, they qualify as favorable evidence.
The People argue that they were not aware that Hatton had been deposed. Nor were they a party to this action, or possessed any transcript or recording of her deposition prior to or during defendants' trial. CPB first came into possession of the transcript on May 15, 2009.
In this instance, the People argue that an exercise of reasonable diligence by the defense would have revealed Hatton's deposition which was a matter of public record. (Long Supplemental Affirmation in Opposition, March 31, 2010, at 23). The claim of defense access is just not correct in light of a settlement agreement ( In the Matter of Zurich Holding Company of America, Inc. and Zurich American Insurance Company, March 24, 2006, ¶ 38, Spinagotti affirmation) which specifically gave NYAG open access to Zurich documents while explicitly prohibiting any sharing of documents or information with others, including defendants, without NYAG consent. NYAG had agreements with Zurich and with Hatton; the defense had neither. Additionally, the prosecution contends that defendants had a wealth of prior statements to impeach Hatton at trial, although they do not make the claim, which they could not in good conscience, that the material is the duplicate equivalent of previously disclosed material. In this case, whether or not defendants had other prior statements to impeach Hatton at trial is irrelevant. At the same time, the People are not obliged “to attempt to locate and gain possession of the material for the purpose of turning [it] over to the defense (People v. Howard, 87 N.Y.2d 940, 941 [1996] ).See also People v. Stern, 226 A.D.2d 238, 240 (1st Dept 1996) (holding that the prosecution had no duty to discover and obtain a recorded discussion of the crime by an informant/accomplice witness who made the recording outside the scope of the existing agency relationship).
Ultimately, here, the question is one of due diligence. One would expect that a prosecutor preparing an important, cooperating, fact witness for trial, knowing that there were related ancillary civil proceedings ongoing, and knowing that other witnesses had been deposed in those proceedings, when preparing a Rosario/Brady filing, would ask the witness if she had testified at one of those proceedings. A recent deposition, such as Ms. Hatton's would not easily slip her mind. While there is no direct proof, in the absence of a hearing, that one or more of the many investigators and attorneys working for NYAG personally knew of Hatton's deposition, they should have. The People are not under an obligation to subpoena material to meet the requirements of Article 240, but, at the same time, they are required to act reasonably in determining if they have met their Rosario and Brady obligations. While the Court is not prepared to presume that the People had actual knowledge of the exculpatory content of Hatton's deposition, they did have reason to know that she had recently given testimony about the subject matter in controversy and should have so inquired and advised the defense.
(b). James Spiegel, an underwriter at both AIG and Zurich who testified as a cooperator in October and November, 2007, gave testimony at two separate investigatory proceedings:
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It is alleged that NYAG was aware of this prior testimony but took no steps to obtain the transcripts, which were accessible either directly or through Spiegel, and that, in his deposition, Spiegel contradicts his trial testimony regarding knowledge of fake quotes being offered by AIG.
Defendants contend that Spiegel's prior undisclosed testimony in the
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depositions undercuts the prosecutor's theory of a horizontal conspiracy. Defense counsel argue that his undisclosed deposition testimony was “flatly contrary” to his trial testimony. During his deposition, Spiegel testified
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At trial, however, Spiegel testified that he and others protected other carriers by providing Marsh with “quotes that were less desirable than what the incumbent carrier was quoting.” Trial Tr. [dated Oct. 23, 2007] at 13833:21–13834:8. He further testified that “alternative quote” or “B quote” were synonymous terms for an anti-competitive quote. He reaffirmed his testimony upon cross-examination. To the extent that Speigel's deposition statements were inconsistent with his trial testimony, they would have been used to impeach Spiegel on the most important issue in the case had they been in the possession of the defense.
The People did not participate in the
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investigation. Additionally, the People assert that they were advised that Spiegel had been examined prior to trial and that the transcript was confidential and sealed, and that Spiegel did not have a copy. The depositions were available to the People upon application but in their response, the People also contend that they were informed, either prior to or during his trial testimony, that Spiegel's statements to the
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investigators were consistent with his anticipated or actual trial testimony. The source of this assurance is unknown. CPB first obtained possession of the deposition testimony on May 26, 2009. It was not turned over to defendants until October 22, 2009.
This deposition and several others involved in this case were alleged to be confidential and thereby unobtainable. However, each of the documents became available for use at the second trial upon consent of the cooperator/witness along with a court-approved stipulation of continued confidentiality. Since the documents were available with minimal effort, the Court does not consider the confidentiality agreements to have presented a bar to their availability nor a proscription against, at the very least, disclosure of the fact of the deposition to defense counsel or the Court.
Here, as with Regina Hatton's deposition, the People with due diligence would have been aware of the nature of the nature of Spiegel's testimony. Further, in the case of Spiegel's depositions, the People were on actual notice that the depositions had taken place. Merely relying upon some as yet unidentified source that the testimony was not exculpatory does not constitute due diligence. It is the opinion of the Court that reliance upon some unspecified assurance that a critical witness' prior deposition is “consistent” as an excuse for failing to even make further inquiry demonstrates a want of due diligence bordering on willful blindness.
3. Deposition Testimony of a Non-testifying Witness
Richard Shine was deposed on September 7, 2005, five days before the defendants were indicted, by the
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He was not called as a witness in the Gillman/McNenney trial. The analysis here rests solely upon Brady and not Rosario obligations. NYAG did not participate in the
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regarding the events alleged in the indictment. Defendants, nonetheless, allege that during the trial of previously severed co-defendants, one defense counsel represented that Stephen Best of Dewey & LeBoef LLP, counsel to Zurich American Insurance Company, had informed NYAG of Shine's exculpatory testimony.
Shine testified in his undisclosed deposition that Zurich was not involved in a conspiracy or engaged in illegal activity. His deposition was in conflict with testimony given later by Spiegel at the trial about the bidding process at Zurich. Shine was the Executive Vice President of Excess Casualty for Zurich. He held that position since 1999, and oversaw the work of Zurich's underwriters, including James Spiegel, a cooperating witness. Shine was also allegedly responsible for approving exceptions to underwriting guidelines or attachment points, and was in frequent contact with his underwriters.
Defendants argue that upon being given actual notice of the exculpatory nature of Shine's testimony, the prosecutor had a duty to disclose its existence to the defense (People v. Wright, 86 N.Y.2d 591, 598 [1995] ). However, NYAG did not request a copy of the deposition or disclose the existence of that deposition to defense counsel.
Defendants maintain that “[h]ad NYAG timely disclosed the Shine deposition,” they would have called Shine as a witness (Devereaux affirmation, [January 11, 2010, ¶ 7).. Since Spiegel was an important witness for the prosecution (he testified for six days at the trial) whose memory and credibility were severely tested during the trial, the defendants contend that Shine's contrary testimony, coupled with Spiegel's inconsistent deposition ( discussed, supra, point 2[b] ), would have been critical in assessing the alleged horizontal arrangement described by Spiegel, earlier, at the criminal trial. The People, however, characterize Shine as an underwriter who did not work in Zurich's Marsh Global Broking Unit during the time of the conspiracy; he merely served as Spiegel's supervisor
NYAG informed the Court that they received a copy of the deposition transcript on October 21, 2009, when defendant Gilman served it on them as part of his CPL § 440 motion papers.
In some cases, a prosecutor's obligation under Brady may be extended. Under certain circumstances, evidence possessed by another state's agents may be constructively possessed by a federal prosecutor's office such that the prosecutor has a duty to disclose that evidence to the defense. See United States v. Risha, 445 F3d 298, 303–306 (3d Cir2006); see also United States v. Antone, 603 F.2d 566, 569–570 (5th Cir1979). In Risha, the court called it “cross-jurisdiction constructive knowledge ( Risha, at 299).”
In this case, it is argued that the prosecution had constructive knowledge of Shine's statements. Shine's deposition was under the control of the
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state authorities. However, the allegedly exculpatory information was made known, second hand, to NYAG by a defense attorney. As a matter of due diligence, the People should have requested a copy of the deposition transcript. Having said that, however, in this case, Shine's correspondence with Spiegel (who did testify and was actively involved in the alleged transactions), as well as Shine's calendar entries, were turned over to the defense before trial. The defense was aware of his position as Spiegel's supervisor and had equal access to him as a witness. The Court finds that the People's failure to interview a potential witness simply upon a private attorney's representation that he might have denied Zurich's role in illegal activity, in and of itself, does not constitute a Brady violation, especially in light of the disclosures regarding Shine which were made to the defense.
4. Testimony of Cooperators at Related Proceedings While the Criminal Trial Was Still in Progress
(a) Karen Radke Jacobson an AIG underwriter who testified as a cooperator in May, 2007, gave later testimony at a deposition, while the criminal trial was still under way, on
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It is alleged that her testimony in the civil proceeding was directly contrary to her testimony at the criminal trial as to the critical issue of the existence of a horizontal conspiracy among insurers. There was a confidentiality agreement in the case, but the protective order allowed for disclosure of confidential materials to “any requesting governmental or regulatory authority.”
At trial, Jacobson testified that Marsh “protected” AIG's book of business, and she described the different forms of that protection ( Trial Tr. at 19960:19–19961:16 [Feb. 19, 2008] ). At her undisclosed deposition, however, she testified that when AIG was the incumbent on an account, she did not know whether Marsh had solicited
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NYAG hypothesized that the contingent commissions paid by insurance companies to Marsh under the Placement Service Agreements (PSAs) increased the amount of insurance premiums and were motivation for engaging in uncompetitive behavior ( Trial Tr. 19938:5–9 [Feb. 19, 2008] ). Nonetheless, Jacobson testified at the deposition that
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At trial, she gave detailed testimony about alleged discussions she had with defendant Gilman prior to assuming her position at AIG. He allegedly described the scheme to her, discussed the A, B, C terminology and instructed her to cooperate with him ( Trial Tr. 3322:21–3324:23 [May 11, 2007] ). She also testified that after she began working at AIG, Gilman and her would “frequently” talk about “this system” and “how [AIG] should provide B-quotes and how Marsh was protecting [AIG] ( Trial Tr. 3347:20–3348:11 [May 11, 2007] ).” Then nine months later at her deposition,
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Defendants allege that the deposition testimony undermines the finding of a horizontal agreement to restrain trade because it evidences that the carriers or co-conspirators were unaware of what the other carriers were doing. Defendants assert that, at best, these memory failures indicate Jacobson had difficulty recalling events. At worst, they contend that the witness “stretched” the trial during her trial testimony to please NYAG and satisfy the terms of her cooperation agreement. Regardless, her inconsistent statements go directly to her credibility as a witness.
Defendants cite People v. DaGata (86 N.Y.2d 40 [1995] ) for support. The prosecutor's conduct here is dissimilar to that of the DaGata prosecutor. After unsuccessful attempts to obtain FBI notes, the DaGata trial court directed the People to subpoena documents from the FBI and then conducted an in-camera review. Here, there is no indication that the prosecutor, the trial court or defense counsel were aware of Jacobson's deposition testimony until after the trial. While there is a continuing obligation to turn over statements of witnesses throughout the course of the trial, the Court, here is not prepared to make a finding that the People had either actual or constructive knowledge of the testimony and, therefore, does not find a Rosario or Brady violation. However, the Court will take this exculpatory material into account in the application regarding newly discovered evidence, infra.
(b) Jean–Baptist Tateossian, an AIG underwriter who testified as a cooperator in July, 2007, gave later testimony at a deposition, while the criminal trial was still under way, in
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It is alleged that his deposition contradicts trial testimony of protection for incumbents and pricing arrangements.
The protective order in the matter provided for disclosure of any confidential materials to “any requesting governmental or regulatory authority.”
The undisclosed testimony contradicts his trial testimony and the People's trial theories. For example, Tateossian testified during trial that Marsh protected AIG by “either not solicit[ing] bids from other carriers or solicit [ing] bids from other carriers that would be higher than [AIG's].” Trial Tr. 7206:16–7207:22 (July 2, 2007). In his deposition, his testimony allegedly reveals that he never saw another carrier's B quote and had no idea of how many times
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The People contend that they were not a party to this particular action. The People argue that Tateossian was a named defendant in an associated case, a matter of public record, and that an exercise of reasonable diligence would have revealed these facts. The prosecution, however, admits that they were aware Tateossian would be deposed by the
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litigants at some point after his trial testimony. It was not aware of the deposition schedule and came into possession of the transcript on May 5, 2009. Since the anticipated deposition was clearly relevant and potentially exculpatory the People, as an exercise of due diligence should have made further inquiry. However, as with Jacobson's deposition, the Court makes no finding that the People had either actual or constructive knowledge of the timing or contents of the deposition and finds no Rosario or Brady violation. Again, the Court will take this exculpatory material into account in the application regarding newly discovered evidence, infra Point III.
5. James Spiegel Conviction: July 20, 1984 Traffic Infraction (VTL 1192[1] “Operating a Motor Vehicle Impaired by Alcohol”)
James Spiegel was an underwriter in Zurich Insurance's Marsh Global Broking Unit at the height of the alleged conspiracy. Before working at Zurich, he worked at AIG from 1996 to 2001. He testified for the People for six days in October and November 2007. Defendants argue that the People violated their Brady obligation when they failed to disclose James Spiegel's 1984 conviction for drunk driving, a traffic infraction. Defendants allege that they learned of the traffic infraction in May or June 2009. Among other arguments, defendants claim that the People acted improperly by unduly limiting their cross-examination of James Spiegel as to his drinking problem. The People counter that the conviction was remote in time, not a criminal conviction for which disclosure is required by 240.20, and otherwise protected from use for purposes of impeachment by the Vehicle and Traffic Law.
At first glance, evidence establishing that the witness had a drinking problem appears to satisfy the “favorable to the accused” prong. Defendants claim that this evidence undermines Spiegel's not just the character trait for truth-telling but the accuracy and reliability of his testimony. Significantly, given the parties' previous relationship, this is not a case where the witness' history of alcohol use is unknown to the defendants at trial. Here, there was other evidence of Spiegel's alcohol use raised at defendants' trial. See People v. Mandel, 48 N.Y.2d 952, 954 (1979), cert denied446 U.S. 949 (1980) (no error to exclude hospital records for mental illness treatment where materiality not shown and other evidence of witness' mental illness was admitted); People v. Cesar G., 154 Misc.2d 17 (Crim Ct, N Y County 1991) (psychiatric medical records did not contain material evidence tending to exculpate and thus, were not subject to discovery). In fact, defendants attacked Spiegel's credibility at trial by attempting to show the deleterious effects of his drinking on his job performance and credibility.
Cross-examination is the principal means for testing the credibility of a witness and the truth of his testimony. When the character trait of credibility is in issue, a witness may be cross-examined on any criminal conviction whether it be felony or misdemeanor. Generally speaking a witness may be asked about any “bad act” as well, and this would include the facts surrounding an incident which resulted in a conviction for a violation, in which case the conviction would be inadmissible and the inquiring party would have to “take the answer” without the further introduction of extrinsic evidence (People v. Schwartzman, 24 N.Y.2d 241[1969],People v. Sorge, 301 N.Y.198 [1950] ).
Spiegel was convicted of VTL § 1192(1)(Driving While Ability is Impaired), which is defined as a traffic infraction according to VTL § 1193(1)(a) (Criminal Penalties). See also PL § 55.10(4) (Designation of Offenses) (“an offense which is defined as a traffic infraction shall not be deemed a violation or a misdemeanor by virtue of the sentence prescribed therefor”; People v. Homero, 172 Misc.2d 99, 103 (Sup Ct, Nassau County 1997). Section 155 of the Vehicle and Traffic Law states:
“The violation of any provision of this chapter, except title eleven, or of any law, ordinance, rule or regulation regulating traffic which is not declared by this chapter or other law of this state to be a misdemeanor or a felony. A traffic infraction is nota crime and the punishment therefor shall not be deemed for any purpose a penal or criminal punishment and shall not affect or impair the credibility as a witness or otherwise of any person convicted thereof.”
This section prohibits the use of traffic infractions to undermine the credibility of a witness. Accordingly, the prosecutors were not required to disclose Spiegel's traffic infraction to defendants as part of their pre-trial discovery obligations.
As well, as a general rule, it is not proper to cross-examine a witness as to chronic alcoholism. Standing alone, substance abuse is not relevant to truthfulness and may not be used to attack a witness's credibility. The issue of a witness's substance abuse is only relevant if the witness is under the influence of alcohol “at the time of observation of events in dispute ... or at the time the witness is testifying (United States v. DiPaolo, 804 F.2d 225, 229 [2d Cir1986] [citations omitted].” “[A] general habit of intemperance tells us nothing of the witness's testimonial incapacity [unless it involves] actual intoxication at the time of the event observed or at the time of testifying ( Id. at 230 quoting 3A J.Wigmore, Evidence, §§ 933–934 [Chadbourne rev 1970] [emphasis in original] ).” See also People v. Fappiano, 134 Misc.2d 693 (Sup Ct, Kings County 1987), affd139 A.D.2d 524 (2d Dept 1988), app denied72 N.Y.2d 918 (1988) (evidence of complainant's chronic alcoholism not material or favorable to defendant absent evidence that the condition caused some degree of mental impairment of the witness' sensory capacity, such as hallucinations and blackouts, at the time of the events in question).
Notwithstanding, in exploring the credibility of a cooperating witness, defense counsel may within reasonable limits inquire about that witness' “interests, motives, his prejudices or hostilities, his means of obtaining knowledge of the facts, his power of memory, his way of life, his associations” and other similar matters. See United States v. Fried, 486 F.2d 201, 203 (1973), cert denied416 U.S. 983 (1974). As well, the statute may not be used as a shield to prevent cross-examination when the prior bad act is material to the case (Davis v. Alaska, 415 U.S. 308 [1974] ); ( See e.g. People v. Suh, ––– Misc.2d –––– [App Term 2d Dept, 9th and 10th Jud Dists], 2010 N.Y. Slip Op 51068[U] [granting a CPL § 440 motion “in a sharply contested case” where the prosecution failed to disclose a conviction to the violation of disorderly conduct and marijuanna possession] [“[T]he record amounted to Brady material in that the facts underlying the charges and the nature of the ultimate dispositions were matters that the defense could have used to impeach the witness”] ).
Here, under the unique facts of this case, the situation goes beyond simple discovery obligations. The inquiry was not for the purpose of challenging the character trait of truth-telling. Spiegel was an important witness for the prosecution who testified for six days. His claims were vigorously challenged. It was a central and repeated line of attack by the defense that his memory and recount of events were shaped by a drinking problem. The People, just as vigorously, disputed that contention, frequently arguing that there was no support for the suggestions that he had liquid lunches and could not be relied upon. The argument cannot be viewed in a vacuum. In light of Shine's testimony contradicting Spiegel and Spiegel's own inconsistent deposition testimony, the People's suppression of the prior conviction while objecting to the entire line of inquiry, claiming lack of support for the attack, at the very least, demonstrates a regrettable lack of candor to the tribunal.
6. Alleged Undisclosed Promises of Leniency
Todd Murphy testified for the People in September 2007. He was a Marsh Global Broking Coordinator during part of the time of the alleged conspiracy. During the trial, NYAG elicited testimony regarding Murphy's cooperation agreement and the fact that his only expectation from NYAG in return for his testimony related to his sentence ( Trial Tr. 10217:17–20 [Sept. 10, 2007] ). Defendants argue that the testimony was “patently false.” They allege that Murphy testified before the New York State Department of Insurance on June 25, 2008, and again in the pending trial that NYAG had offered to “look to reduce the charge for the people that have cooperated in the investigation ... [reducing] misdemeanors to violations, which are no charge” and stated that an NYAG representative told him this inducement must be “off the record” and could not “be put ... in writing (Spinogatti affirmation, exhibit 7 at 23:23–24:1). Defendants note that the off the record inducements were never disclosed, and Murphy's misstatement was never corrected.
If believed, the statement would be of serious dimension. Inducements to a witness must be disclosed, whether they are made by the prosecutor or by the police (Giglio, 405 U.S. at 154–155). NYAG denies that before or during defendants' trial, they had another agreement other than the one set forth in his cooperation agreement. Moreover, NYAG asserts that the alleged statement to the Insurance Department was made after defendants' trial. As such, it is not Brady material. This second argument begs the question, since the juncture at which a concern would arise would be the time of promise, not the time of disclosure. Nevertheless, the Court had an opportunity to hear Murphy's claim tested. It is too vague and amorphous as to specifics, such as time, place, participants and content to be credited. The Court does not consider Mr. Murphy's self-serving assertions as a serious challenge to the People's blanket denial of any side deal
II. Discussion
A. Governing Law
1. Legal Standards Governing Defendants' Motion
CPL § 440.10(1)(f) provides that a judgment may be vacated if the People's conduct was improper or prejudicial. Additionally, CPL § 440.10(1)(g) permits a judge to vacate a trial conviction on the basis of new evidence discovered after entry of judgment if the new evidence “could not have been produced by the defendant at the trial even with due diligence,” and the evidence creates a probability that the verdict would have been more favorable if the evidence had been received at trial.
2. Rosario Violation
The Rosario rule, codified at CPL § 240.45, requires the People to provide defense counsel with all pre-trial statements of prosecution witnesses.. The “principal consideration for determining whether prosecutors have a fairness obligation under Rosario to turn over various materials focuses on whether these items actually are in or subject to the possession or control of the particular prosecution office” (People v. Kelly, 88 N.Y.2d 248, 252 [1996];see also People v. Washington, 86 N.Y.2d 189, 191 [1993];People v. Flynn, 79 N.Y.2d 879, 882 [1992]; Preiser, Practice Commentaries, McKinney's Cons Laws of NY, Book 11A, CPL § 240.45, at 289).
As well, CPL § 240.75, regarding Rosario material (by cross reference to CPL § 240.45[1] ) proscribes vacatur unless “there is a reasonable possibility that the non-disclosure materially contributed to the result of the trial” ( Id.)(Emphasis added). Here, a body of the material, with some exception, claimed to have been withheld consists of statements by testifying witnesses. Whether considered exculpatory or not, where Rosario material is found to have been wrongfully withheld, the reasonable possibility standard of CPL § 240.75 applies.
3. Brady and its Progeny
Brady v. Maryland (373 U.S. 83, 87 [1963] ) recognizes a criminal defendant's due process right, under the Fourteenth Amendment, to discover favorable evidence that is “material to guilt or punishment” and “in the People's possession (People v. Fuentes, 12 NY3d 259, 263 [2009].” A Brady violation has three components: “The evidence at issue must be favorable to the accused, either because it is exculpatory, or because it is impeaching; that evidence must have been suppressed by the State, either willfully or inadvertently; and prejudice must have ensued.” Id. at 281–282. Moreover, the Brady rule requires the prosecution to disclose evidence favorable to the defendant even though there has been no request by defendant. See e.g. Strickler v. Greene, 527 U.S. 263, 280–281 (1999).
Nine years after Brady, the Supreme Court in Giglio v. United States (405 U.S. 150 [1972] ) enlarged its construction of “exculpatory” evidence to encompass impeachment evidence, including evidence which would demonstrate a witness's bias. Impeachment evidence falls under Brady when the reliability of a witness may be determinative of defendant's guilt or innocence. Id. at 154. In Giglio v. United States, the Supreme Court held that the government's failure to disclose a promise made to a key witness in exchange for that person's trial testimony violated the defendant's due process rights. To establish a Brady/Giglio violation, a defendant must show that (1) the prosecution suppressed evidence, either willfully or inadvertently; (2) the evidence was favorable to the accused, either because it was exculpatory or because it was impeaching; and (3) the evidence was material. Evidence is material if “the suppressed evidence is favorable to the accused and ... he was prejudiced by its suppression (United States v. Douglas, 525 F3d 225, 244 [2d Cir2008] citing Kyles v. Whitley, 514 U.S. 419, 434 [1995] ).”
Under United States v. Bagley (473 U.S. 667 [1985] ), a single test of materiality was imposed in all instances. That test relied on the “reasonable probability” standard. However, the Court of Appeals in People v. Vilardi (76 N.Y.2d 67 [1990] ), rejected that sole test for materiality. See also People v. Ennis, 11 NY3d 403, 414 (2008); People v. Mickel, 274 A.D.2d 325, 325–326 (1st Dept 2000). In Vilardi, the Court of Appeals adopted a two-tier approach in determining what standard of materiality applied to cases in which Brady violations were found to have occurred. The Court determined that undisclosed evidence which has been specifically requested by the defense is material if there is a “reasonable possibility” that, had the evidence been disclosed, the result would have been different (People v. Vilardi, 76 N.Y.2d at 77). If there is no demand or a general demand for exculpatory material, however, the test is one of “reasonable probability ( Id . at 73–74, 77).”
And, finally, the Supreme Court, in Kyles, eschewing an item by item analysis, declared that “the state's obligation under Brady v. Maryland, to disclose evidence favorable to the defense, turns on the cumulative effect of all such evidence suppressed by the government....” ( Kyles v. Whitley, supra., at 421).
4. Attempts made to Obtain Production Prior to and During the Course of Trial
Discovery provided to the Defendants in this case exceeded 20 million pages. On November 15, 2005, Gilman's attorney submitted a letter to NYAG specifically requesting the internal investigation documents for cooperating entities such as Liberty, ACE and AIG (Spinogatti affirmation, exhibit 21). On August 2, 2006, defense counsel jointly submitted a letter to NYAG requesting the production of “all exculpatory evidence, leads, and evidence favorable to all defendants” and “all exculpatory evidentiary material, including testimony before the grand jury or elsewhere, notes, statements and documents relating to or concerning the” cooperating witnesses and others (providing a list of named witnesses and others) (Spinogatti affirmation, exhibit 22). On November 21, 2006, the Court ordered that all Rosario material be disclosed to defendants by December 18, 2006 ( Trial Tr.] [Nov. 21, 2006] at 48–66). This was followed by a formal demand on December 19, 2006 for all Liberty and Zurich documents and any documents related to transactions specified as part of the prosecution. Then, on January 23, 2007, the Court again instructed the People to turn over any remaining Rosario material to defense counsel by February 6, 2007. At that time, NYAG represented that they “would like to give [the defendants] everything whether we are calling the witnesses or not. We don't want to be accused of hiding anything ( Trial Tr. [Jan. 23, 2007] at 37:2–21).”
On March 15, 2007, upon a renewed complaint that the People had failed to produce certain Rosario and Brady material, McNenney's attorney wrote a letter to NYAG reaffirming his discovery demands and asked the office to produce “any statements made by witnesses, whether to the Attorney General's Office or otherwise (Spinogatti affirmation, exhibit 24).” Then again on May 15, 2007 the Court directed the prosecution to get statements of any interviews of witnesses. Repeatedly throughout the trial, NYAG represented that it had disclosed all Rosario and Brady materials in response to defendants' discovery request.
Defendants argue that the People failed to disclose specifically requested materials. The People counter that Brady requests by defense counsel were not sufficiently specific to mandate the application of the “reasonable possibility” standard. The Court finds that the repeated requests and court orders which specified at various times witness names and transactions discussed was sufficiently specific to alert the People to their obligation to exercise due diligence in their review of the materials available to them in a search for exculpatory or impeaching matter. The People were on notice that “the defense considered the material important” (People v. Daly 57 AD3d 914, 915 [2d Dept.2008] ), and it was clear that the material sought was prior statements and testimony given by the listed witnesses about the specified transactions. This was not some vague or sweeping general request. Rather it was narrowed to particular subjects and sources. ( See People v. Mickel, 274 A.D.2d 325, 325–26 [1st Dept 2000]; accord People v. Sibadan, 240 A.D.2d 30, 33–34 [1st Dept.1998] [applying the “reasonable possibility” standard where the defense's “broadly worded request” included “any and all records, memorandum and correspondence” which might reflect on a witness's motives and relationship with the prosecution, and the People failed to disclose the witness's prior history as a cooperating informant for the District Attorney). Accordingly, under Vilardi, the “reasonable possibility” standard is the correct standard for review in this case.
5. Statutory Obligation to Search for Brady, Giglio and Rosario Material Outside the People's Custody or Control
CPL § 240.20(2) requires the People to “make a diligent, good faith effort to ascertain the existence of demanded property and to cause such property to be made available for discovery where it exists but is not within the prosecutor's possession, custody or control; provided, that the prosecutor shall not be required to obtain by subpoena duces tecum demanded material which the defendant may thereby obtain.”
III. Newly Disclosed Evidence
Defendants have made a proffer of newly discovered evidence of their innocence. In addition to the materials NYAG allegedly failed to produce before the end of defendants' trial, NYAG recently disclosed Todd Murphy's statement regarding an exhibit and two sworn cooperator statements taken after trial.
1. The Legal Standard
To qualify as newly discovered evidence, the asserted facts must have been unknown by the trial court, the defendant or his attorney, and it must appear that the facts could not have been known even with due diligence. Second, to prompt a new trial, the newly discovered evidence must be of such a nature that it would probably produce an acquittal on re-trial. The evidence must be more than contrary or impeaching of the testimony at trial.
In People v. Salemi (309 N.Y.208, 216 [1955] ), the Court of Appeals set forth six requirements which must be met in order for a defendant to be entitled to a new trial based on newly discovered evidence. The evidence must be such that it (1) would probably change the result if a new trial were granted; (2) must have been discovered since the trial; (3) could not have been discovered before the defendant's trial by the exercise of due diligence; (4) must be material to the issue; (5) must not be cumulative; and (6) must not be merely impeachment evidence ( see also People v. Reyes, 255 A.D.2d 261 [1st Dept 1998]. Consequently, defendants must establish each of the six requirements enunciated in Salemi. As well, defendants bear the burden of proof in challenging their conviction (CPL § 440.30[6]; People v. Session, 34 N.Y.2d 254, 255–256 [1974] ).
2. The Newly Discovered Evidence
In support of the newly discovered evidence claim, defendants cite to three inconsistent statements made by three trial witnesses. All this evidence was discovered after the trial and could not have been discovered prior to the trial. Defendants argue that further doubt about the prosecution's key witnesses has been created. The People contend that this new evidence is not material under the Brady standard, and that even if the Court considers the evidence impeachment material, it is cumulative and does not require a new trial.
a. Confidential Deposition of John Mohs.
REDACTED MATERIAL
Mr. Mohs was an AIG underwriter who testified for the People in December 2007. Cooperator John Mohs was deposed after defendants' trial,
REDACTED MATERIAL
NYAG recently produced a copy of that deposition. At trial, Mohs defined protection as “purposely quot[ing] at a higher premium or worse terms ... put [ting] out a non-competitive quote.” Trial Tr. 17277:24–17278:6 (Dec. 10, 2007). Mohs also testified about an exchange via email with Marsh broker and cooperator MaryAnn Brainard–Baret regarding accounts on which AIG allegedly received protection. During the deposition, however, he testified
REDACTED MATERIAL
b. Confidential Deposition of Karen Radke Jacobsen.
REDACTED MATERIAL
Jacobsen was deposed on
REDACTED MATERIAL
in the related action. NYAG recently disclosed that transcript.
REDACTED MATERIAL
This statement relates to the critical question in the Donnelly Act charge: whether the insurance carriers entered into an agreement with one another to restrain competition. In addition to contradicting NYAG's trial theories, it raises questions about her credibility as a witness. For example, contrary to her trial testimony, Jacobson testified
REDACTED MATERIAL
(c) Todd Murphy's disavowal of having solicited a fake bid from AIG on the Intel account. Murphy was a broker at Marsh. He testified at the first trial about a number of transactions, but was not asked about the Intel account. Later in the trial, Josh Bewlay, an AIG underwriter testified that Murphy had asked Bewlay to submit a fake bid in order to protect another carrier. Correspondence between Murphy and Bewlay was introduced to bolster that contention. However, in early 2009 in an interview with one of the lead prosecutors in the second trial, Murphy refuted Bewlay's testimony and explained the bid on Intel was genuine. In the interview he said “that he did not believe he procured a B quote”.
3. Analysis
Defendants argue that they should be given a new trial because of contradictory statements given by cooperating witnesses. They argue that this radical revision of critical facts undermines any claim that their testimony against Gilman and McNenney was credible or reliable. The People argue that this and other statements are relevant only to those witnesses' “intent to defraud,” and not to the Donnelly Act conviction. See Opposing Affirmation ¶ 39. The Court disagrees with this latter contention since the solicitation of fake bids is the essence of the price fixing, bid rigging and customer allocation charges.
A new trial under based upon newly-discovered evidence is “not favored and should be granted only with great caution.” United States v. Stofsky, 527 F.2d 237, 243 (2d Cir1975) (quoting United States v. Costello, 255 F.2d 876, 879 (2d Cir), cert denied357 U.S. 937 (1958), cert denied,429 U.S. 819 (1976); see also United States v. DiPaolo, 835 F.2d 46, 49 (2d Cir1987). Accord Sanders v. Sullivan, 863 F.2d 218, 226 (2d Cir1988) (“perjured testimony which will trigger a due process violation must be of an extraordinary nature”). In the Second Circuit, newly discovered evidence will not require a new trial unless “it would probably produce a different verdict.” United States v. Stofsky, 527 F.2d at 243;see also Sanders v. Sullivan, supra, 863 F.2d at 226 (court must be left with “firm belief that but for the perjured testimony, the defendant would most likely not have been convicted.”). The newly discovered evidence must also be material to the issue of guilt and not simply to impeach other testimony. See United States v. Gilbert, 668 F.2d 94, 96 (2d Cir1981), cert denied456 U.S. 946 (1982). The only exception to these holdings is when the failure to discover new evidence results from deliberate prosecutorial misconduct. United States v. Stofsky, 527 F.2d at 243.
At the onset, on the question of whether recantation testimony will constitute newly discovered evidence, the Court notes that “a presumption of regularity attaches to judicial proceedings and the burden is upon [the] defendant to overcome such presumption by substantial evidence” (People v. Williams, 11 AD3d 810, 812 [3d Dept 2004], lv denied4 NY3d 769 [2005];see People v. Barber, 280 A.D.2d 691, 693 [3d Dept 2001], lv denied96 N.Y.2d 825 [2001] ). Moreover, recantation testimony has been deemed an extremely unreliable form of evidence (Sanders v. Sullivan, 863 F.2d 218, 225 [2d Cir1988]; see also People v. Cintron, 306 A.D.2d 151, 152 [1st Dept 2003], lv denied100 N.Y.2d 641 [2003];People v. Donald, 107 A.D.2d 818 [2d Dept 1985][“There is no form of proof so unreliable as recanting testimony.”]; People v. Rodriguez, 88 A.D.2d 890, 890–891 [1982] ). Here, although there are significant inconsistencies, the witnesses never directly recanted their trial testimony and, in any event, recantation by itself is never sufficient enough to justify a new trial.
CPL §§ 440.30(1) and (6) require that this motion be based upon sworn allegations and that defendants prove “every fact essential to support the motion” by a preponderance of the evidence. The newly discovered evidence, standing alone, does not require a new trial for defendants. The three witnesses, while contributing significantly to the People's case were not the sine qua non of the People's proof. Without their testimony at trial, the result may have been the same. Had their later exculpatory testimony been available at trial, it would have raised serious questions about the strength of the prosecution. However, put in context, they were but three witnesses out of more than twenty who had knowledge of some, but not all, aspects of the conspiracy. Having said this, the Court, as discussed below, cannot ignore the fact that the newly discovered evidence is material and significant enough to justify consideration in the overall calculus of the motion before the Court.
Conclusion
The Court is required to measure the prejudice to the defendants by the violations, if any, and weigh the effect that the disclosures, old and new, had upon the outcome. Something greater than pertinence must be shown to warrant a new trial. There must be a “significant chance” that the evidence would have affected the verdict. Regardless, the “touchstone of the [Court's] enquiry must remain whether the evidence suppressed undermines our confidence' that the fact-finder would have reached the same result ( Strickler v. Greene, at 301).”
This Court conducted two lengthy trials, back to back, in connection with the charges in the present indictment. They were both bench trials, conducted without a jury. The bulk of the unavailable evidence was not disclosed at the first trial, but was turned over at the second trial. The first trial resulted in felony convictions. The second trial resulted in an acquittal as to all charges against all defendants. The Court appreciates that there were differences in the trials unrelated to the alleged non-disclosures. There were some variations in the proof and some variance in the theory of prosecution, since the defendants at the second trial did not occupy the same positions at Marsh as the defendants in the first trial. Nonetheless, there was also a significant overlap of witnesses presented and documents introduced at the two trials.
As well, the Court understands that the prejudicial impact or likely effect upon outcome must be measured objectively, not subjectively. In other words, what was the reasonably likely impact of the missing evidence? The law calls for an objective assessment, not second thoughts. Accordingly, the Court has not and will not attempt to ask whether, in the Court's mind, the verdict would have been different if the new disclosures had been presented.
Kyles finds in favor of defendants' motion based on Brady, as expanded by Bagley. A cumulative evaluation of the suppressed evidence is necessary rather than a series of independent materiality evaluations. While each item of evidence taken individually may present a reasonable possibility that the verdict would have been different, taken as a whole, the evidence raises a not only a possibility, but a probability that its disclosure would have produced a different result. The defendants have met their burden under Bagley and Vilardi.
While it would be convenient to separate the Rosario claims from the Brady claims and, again, from the newly discovered evidence claims, common sense tells us that the three sets of complaints cannot be isolated into separate airtight columns. Ultimately, the Courts are charged with safeguarding the integrity of the adjudicative process and the public's confidence that verdicts are rationally based and achieved by means fair not foul. As in People v. Banch, the “conclusion [must] be based upon notions of fundamental fairness or ... ‘right sense of justice’ (80 N.Y.2d 610, 613 [1992] [quoting Rosario ] ).
Objectively viewed, the verdict here rested firmly upon the testimony of Spiegel, Jacobson, Tateossian, Hatton, Mohs and Murphy, and yet each one of them, after testifying with very favorable cooperation agreements, has, at times before, during or shortly after the trial, given sworn testimony discrediting, even contradicting, their trial testimony. Spiegel, especially, has proven to be unreliable and yet the defendants were prevented from properly impeaching him. The case was, from the outset, a circumstantial case with no direct proof of insurance company collaboration and the Court, necessarily, in its verdict drew inferences favorable to the People in order to conclude that insurance companies combined to control the market. But, the Liberty documents would have been invaluable to the defense effort to challenge the circumstantial inference of a horizontal agreement and to question Bott and Monteforte's testimony to the contrary. In this case, the suppressed evidence, viewed collectively for Brady purposes, along with the Rosario failures and the newly discovered contradictory evidence, undermines the Court's confidence in the verdict.
Accordingly, the application to vacate the judgments of conviction entered against William Gilman and Edward McNenney pursuant to CPL §§ 440.10(1)(f), (g) and (h) is granted.