Opinion
S5 00 Crim. 1267 (LAK)
June 26, 2002
ORDER
The Court will hear oral argument on defendant's motion for a judgment of acquittal or, in the alternative, for a new trial on July 1, 2002 at 11:00 a.m., the date previously scheduled for sentencing. In order to maximize the utility of the oral argument, the parties should be prepared to address the following matters:
1. The sales on or after May 8, 1996 of Thermo-Mizer warrants in the Stephanie Feehan account raise the most fertile grounds for debate.
The portion of the account summary (GX 500) relating to that account shows the following:
a. Prior to the transfer into the account, on or about March 26, 1996, of the 58,285 Thermo-Mizer warrants originally purchased in the aftermarket through the Rum United account, the Feehan account held 2,250 Thermo-Mizer warrants originally stripped from the IPO (i.e., they were allocated to Pascuito at $0.10 a warrant on the effective date of the Thermo-Mizer IPO).
b. Assuming that the settlement date controls, all 60,535 Thermo-Mizer warrants in the account as of March 26, 1996 — including both warrants that were stripped from the IPO and those transferred from the Rum United account — were sold within the limitations period.
c. Assuming that the trade date controls, 12,500 Thermo-Mizer warrants were sold between the date of the Rum United transfer and the close of business on May 7, 1996 and the balance of 48,035 warrants were sold within the limitations period.
These circumstances raise a number of questions:
i. To the extent that the government relies upon the sales of Thermo-Mizer warrants in the Stephanie Feehan account as overt acts within the limitations period, were the overt acts committed on the trade dates, the settlement dates, or both? Is this a question of law and, if so, to be decided on what basis? Or was it a question of fact for the jury? If the latter, what evidence, if any, supports the view that those sales were overt acts in furtherance of the conspiracy on the settlement dates?
ii. Assuming that the trade dates control, was there sufficient evidence to permit the conclusion that the sales of warrants transferred from the Rum United account was in furtherance of the conspiracy? At least one of the questions to be considered is this: It appears that the last of the Thermo-Mizer warrants stripped from the IPO to be sold by any of the alleged conspirators (apart from any that remained in the Stephanie Feehan account) were sold no later than April 11, 1996. See GX 500 B.12762 (Lavender nominee selling Thermo-Mizer warrants for last time on April 11, 1996); id. B. 12793 (Frank Piscitelli account selling Thermo-Mizer warrants for last time on April 10, 1996). It therefore perhaps is conceivable that the aftermarket purchases of Thermo-Mizer warrants in the Rum United account on March 7 and 12, 1996 were in furtherance of the conspiracy on the theory that they were motivated by the desire to prop up the market to enable the conspirators to dispose of their stripped warrants at inflated prices, albeit prices inflated by the theft of Benussi's funds. Even assuming that to be so, however (and the parties should be prepared to address that question), it does not necessarily follow that the subsequent transfer of the Thermo-Mizer warrants purchased in the Rum United account into the Feehan accounts and sales thereof were in furtherance of the conspiracy. See, e.g., United States v. Roshko, 969 F.2d 1, 6-9 (2d Cir. 1992).
For the reasons indicated in the text, the Court is dubious of the government's contention that the theft from the Rum United account and the subsequent sale of the securities taken therefrom represent among co-conspirators regarding how to allocate the stripped warrants, the sale of which arguably was the "payoff" contemplated by the Indictment and the proof at trial. Defendant inflexible insistence that the conspiracy contemplated no more than the receipt of the stripped warrants, as opposed to their sale, likewise is doubtful.
iii. Assuming that the trade dates control and that the sale of the warrants originally purchased in the Rum United account were not in furtherance of the conspiracy, were any of the 2,250 Thermo-Mizer warrants in the Stephanie Feehan account prior to its receipt of the Rum United transfer sold during the limitations period in view of the fact that 12,500 warrants were sold from March 26 through May 7, 1996? Is this a question of law or of fact? If a question of law, what is the legal basis for resolving it in favor of the government? If a question of fact, was there sufficient evidence to permit the jury to resolve it in the government's favor beyond a reasonable doubt?
2. The record appears to indicate that all Gaylord warrants stripped from the IPO and allocated to the conspirators were sold on or before March 13, 1996, and that the warrants sold by Pascuito through the Stephanie Feehan account during the limitations period were purchased by him in the aftermarket on March 13, 1996. Is this correct? If so, what basis, if any, is there for concluding that the jury was entitled to conclude that those sales were in furtherance of the conspiracy, given the wording of the Indictment and the proof at trial? See United States v. Menutti, 679 F.2d 1032, 1035 (2d Cir. 1982) (overt acts relied upon to establish timeliness must occur during the existence of the conspiracy and be within "the scope of the conspiratorial agreement"); see also id. (concluding that a conspiracy continues until the conspirators receive their anticipated economic benefits (emphasis added)).
SO ORDERED.