No. 90-7338

   EUGENE LAFF, PETITIONER V. UNITED STATES OF AMERICA

   In The Supreme Court Of The United States

   October Term, 1990

   On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Second Circuit

   Brief For The United States In Opposition

                             OPINION BELOW

   The opinion of the court of appeals (Pet. App. 1-4) is unreported.

                             JURISDICTION

   The judgment of the court of appeals was entered on November 28,
1990, and a petition for rehearing was denied on January 8, 1991.  The
petition for a writ of certiorari was filed on February 27, 1991.  The
jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

                          QUESTIONS PRESENTED

   1. Whether the district court erred in admitting similar act
evidence.

   2. Whether the government's closing argument denied petitioner a
fair trial.

                               STATEMENT

   After a jury trial in the United States District Court for the
Southern District of New York, petitioner was convicted of conspiracy
to violate the federal securities and anti-fraud laws, in violation of
18 U.S.C. 371;  security price manipulation, in violation of 15 U.S.C.
78j(b) and 78ff;  mail fraud, in violation of 18 U.S.C. 1341;  and
obstruction of a Securities and Exchange Commission investigation by
giving false and evasive testimony, in violation of 18 U.S.C. 1505.
He was sentenced to five years' imprisonment.  The court of appeals
affirmed.  Pet. App. 1-4.

   1. The evidence at trial showed that petitioner, chairman and
controlling shareholder of Haas, a 75-year old Wall Street brokerage
firm, was a key participant in a sprawling stock manipulation
conspiracy tht spanned more than two years, encompassed numerous
securities, and involved hundreds of millions of dollars.  Petitioner
-- together with Henry Lorin, Stanley Aslanian, Jr., and others --
planned and carried out sophisticated schemes to manipulate the common
stock prices of three corportions:  Flores, Big O Tires, and TS
Industries.  Petitioner also sought to cover up the stock manipulation
conspiracy by backdating certain trading documents that were material
to an SEC investigation and by testifying untruthfully before the SEC
on March 10, 1988.  Gov't C.A. Br. 2-3.

   2. On appeal, petitioner challenged the district court's admission,
over petitioner's objection, of evidence showing that on a prior
occasion petitioner lied to his brother-in-law to induce him to hold a
large block of Rancho Ventures stock while petitioner was attempting
artificially to inflate the stock's price.  Gov't C.A. Br. 39.
Petitioner also challenged the district court's refusal to grant a
mistrial on the ground that the government's closing argument unfairly
prejudiced him.

   The court of appeals rejected both of petitioner's challenges and
affirmed the judgment of conviction.  The court first concluded that
the district court properly admitted the similar act evidence under
Rules 402 and 404(b), Fed. R. Evid., because the evidence of
"(petitioner's) involvement in the manipulation of Rancho Ventures was
admitted for the proper purpose of establishing (petitioner's)
knowledge and intent in the charged price manipulation conspiracy."
Pet. App. 2.  Petitioner's "defense focused on his knowledge and
intent, placing these elements squarely in issue at trial." Ibid.
Thus, "(e)vidence of his participation in another fraudulent scheme
involving securities was relevant to the government's refutation of
(petitoner's) defense." Ibid.

   The court of appeals also concluded that "the district court made a
'conscientious assessment'" under Rule 403 "of whether the evidence's
probative value was substantially outweighed by its potential to
create unfair prejudice against (petitioner)." Pet. App. 2.  As the
court of appeals noted, the district court based its conclusion, in
part, on an in camera review of the proposed testimony, and the
district court "provided an appropriate limiting instruction to the
jury in order to ensure its proper consideration of the Rancho
Ventures evidence." Ibid.

   The court also rejected petitioner's contention that the
government's closing argument unfairly prejudiced him, stating that
"(n)one of the summation statements about which (petitioner) complains
rise to the egregious level at which reversal is required." Pet. App.
3.  "The prosecutor's statements concerning (petitioner's) wealth were
a narrowly tailored response to (petitioner's) argument that, due to
his great wealth, he lacked any motive to participate in the stock
manipulation." Ibid.  Moreover, "the district court instructed the
jury that 'every party in a court of law is * * * an equal,'
regardless of differences in wealth." Ibid.

   The court of appeals also concluded that "the prosecutor's
challenges to (petitioner's) credibility, while strongly-worded, were
not accompanied by 'intemperate statements evincing either the purpose
or the likelihood of appealing to the jury's emotions rather than to
its reason.'" Pet. App. 3 (citation omitted).  "Rather, these
statements appear to have been measured responses to the defense's
attacks upon the integrity of the prosecution." Ibid.

   Finally, the court of appeals concluded that "the prosecutor's
statement that (petitioner) had withheld incriminating pages from his
'posting book,' despite a subpoena for these records, did not deprive
(petitioner) of a fair trial." Pet. App. 3.  Rather, "this statement
was properly inferred from the evidence previously presented," and,
"when viewed in the context of a seven-week trial, this statement
cannot be said to have caused (petitioner) substantial prejudice." Id.
at 3-4.

                               ARGUMENT

   Petitioner renews his claims that the district court erred in
admitting extrinsic act evidence and in denying his motion for a
mistrial based on the prosecutor's closing argument.  His claims turn
wholly on the application of settled law to the particular
circumstances of his trial and raise no significant legal issue.
Further review accordingly is unwarranted.

   1. Petitioner first claims (Pet. 18-26) that the district court
abused its discretion by allowing the introduction of evidence
concerning the Rancho Ventures scheme.  That contention is without
merit.  The Federal Rules of Evidence permit the admission of evidence
of "other crimes, wrongs, or acts" if the evidence is relevant to some
issue at trial other than the defendant's character and if its
probative value is not substantially outweighted by its unfair
prejudicial effect.  Fed. R. Evid. 402, 403, 404(b).  See Huddleston
v. United States, 485 U.S. 681, 687 (1988).  As Rule 404(b) states,
such evidence may be introduced at trial to prove "opportunity,
intent, preparation, plan, knowledge, identity or absence of mistake
or accident." The similar act evidence in this case was admitted
specifically to demonstrate petitioner's knowledge and intent in the
security manipulation scheme.

   Petitioner largely conceded that the manipulations charged in the
indictment had taken place and that his brokerage firm had been the
hub of the unlawful activity;  his primary defense was that he lacked
any knowledge of the conspiracy and that his actions were taken
without any intent to deceive customers or to manipulate stocks.  See
Gov't C.A. Br. 49-50.  As the district court observed (see id. at
42-43), petitioner's participation in another fraudulent scheme during
the time frame of the indictment -- one in which he lied to another
for the very same reason he lied to his customers regarding the three
charged stocks -- was plainly relevant to rebut his claim that his
actions with regard to the charged stocks were undertaken without
fraudulent intent or knowledge of the criminality of his actions.
See, e.g., United States v. Greenwood, 796 F.2d 49, 53 (4th Cir. 1986)
(evidence of prior false statements on a bank loan application
admissible on issue of intent in case involving charges of submitting
false leases to employer in order to obtain excess reimbursements);
United States v. O'Brien, 618 F.2d 1234, 1237-1238 (7th Cir.)
(evidence of prior misbranding of food products and obtaining
kickbacks through the use of false invoices admissible in case
involving charges of credit fraud), cert. denied, 449 U.S. 858 (1980).
 /1/

   Petitioner also complains (Br. 21) that the district court failed
to undertake an explicit balancing of the evidence's probative value
against its potential for unfair prejudice.  A trial court, however,
need not engage in a "mechanical recitation of Rule 403's formula as a
prerequisite to admitting (similar act) evidence," particularly where
"(t)he issues of both the probative value and possible prejudicial
effect of admitting this evidence were presented to the judge when he
made the decision to admit it." United States v. Sliker, 751 F.2d 477,
487 (2d Cir. 1984), cert. denied, 470 U.S. 1058 (1985).  There was no
abuse of discretion here:  The evidence bore directly upon the most
hotly contested issue in the case -- petitioner's state of mind -- and
proof that petitioner was involved in the illegal manipulation of a
fourth stock was not likely to inflame the jury in an unfair way.

   Moreover, the district court's instruction ensured against any jury
misunderstanding by underscoring that the Rancho Ventures evidence was
relevant only to show petitioner's knowledge of the overall stock
fraud and his fraudulent intent.  The judge cautioned that this
evidence could not be used "to show that (petitioner) is simply a bad
man, and if he was bad in one way he would be bad in another way."
Gov't C.A. Br. 47-48 n.**.  And the government reiterated to the jury
that the similar act evidence was introduced solely to show
petitioner's knowledge and intent with respect to the charged
offenses.  /2/

   2. Petitioner is also incorrect in asserting (Pet. 26-43) that the
government's statements in closing argument denied him a fair trial.
We note at the outset that inappropriate prosecutorial comments,
standing alone, do not justify reversal of a criminal conviction
obtained in an otherwise fair proceeding.  United States v. Young, 470
U.S. 1, 11-12 (1985).  Moreover, a court of appeals should give
deference to the conclusions of the district judge, who heard and
assessed the closing remarks, as to whether those arguments were in
fact prejudicial or inflammatory.  See, e.g., United States v.
Lowenberg, 853 F.2d 295, 304 (5th Cir. 1988), cert. denied, 489 U.S.
1032 (1989).  In this case, the district judge observed that the
prosecutor's closing argument was "a very thorough and very fine
summation." Gov't C.A. Br. 61.

   Contrary to petitioner's contentions (Pet. 31-32), the government
did not impermissibly attack petitioner based on his wealth.  As the
court of appeals noted, the "prosecutor's statements concerning
(petitioner's) wealth were a narrowly tailored response to
(petitioner's) argument that, due to his great wealth, he lacked any
motive to participate in the stock manipulation." Pet. App. 3.  /3/
Moreover, the district court instructed the jury that "every party in
a court of law is * * * an equal," regardless of differences in
wealth.  That instruction, together "with the government's own
statement to the jury that it should only consider (petitioner's)
wealth in regard to his motive, eliminated any potential of prejudice
to (petitioner)." Pet. App. 3.

   Petitioner is also mistaken in asserting (Pet. 32-35), that the
government improperly attacked petitioner's credibility.  The court of
appeals correctly found (Pet. App. 3) that "the prosecutor's
challenges to (petitioner's) credibility, while strongly-worded, were
not accompanied by intemperate statements evincing either the purpose
or the likelihood of appealing to the jury's emotions rather than to
its reason." Pet. App. 3.  Rather, they were a reasonable response to
petitioner's closing arguments.  Petitioner's counsel had argued that
the government's claims were "a cluster of lies," and he mocked the
government's assertion in its opening summation that a trial is a
search for the truth.  Gov't C.A. Br. 67.  Because defense counsel had
accused the prosecutors of distorting the truth and of lacking the
judgment to tell the difference between truthful and untruthful
witnesses, strong rebutting language was proper.  Finally, the jury
was properly instructed that it was the sole judge of the witnesses'
credibility, so that, even if any remarks in the government's
summation were in any way excessive, petitioner was not deprived of a
fair trial.  See Gov't C.A. Br. 68.

   Finally, the prosecutor's statement that petitioner had withheld
incriminating pages from his "posting book," despite a subpoena for
those records, did not deprive him of a fair trial.  See Pet. 35.  The
court of appeals found (Pet. App. 3-4) that "this statement was
properly inferred from the evidence previously presented." See Gov't
C.A. Br. 80.  Moreover, as the court noted, "when viewed in the
context of a seven-week trial, this statement cannot be said to have
caused (petitioner) substantial prejudice." Pet. App. 4.  /4/

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   ROBERT S. MUELLER, III

      Assistant Attorney General

   GEOFFREY R. BRIGHAM

      Attorney

   JUNE 1991

   /1/ Petitioner is also incorrect in asserting (Pet. 20) that his
participation in the Rancho Ventures "pump and dump" scheme was
insufficiently shown to allow admission of the evidence.  Similar act
evidence may be admitted if the jury could reasonably find from all
the evidence in the case (including evidence of the charged crimes)
the facts that would make the similar act evidence relevant.
Huddleston, 485 U.S. at 687-692.  The government satisfied that burden
in this case.  See Gov't C.A. Br. 41 n.*.

   /2/ The prosecutor explained:

      Now, it is important to note that we did not introduce this
      Rancho Ventures evidence for anything other than one reason.  We
      introduced this evidence because it goes to (petitioner's)
      intent.  This is not a manipulation which itself is charged in
      this indictment.  It is simply something which we have
      introduced because we submit that the Rancho Ventures evidence
      goes to (petitioner's) motive and intent to commit the crimes in
      this case * * *.

Gov't C.A. Br. 47 n.**.

   /3/ A court "should not lightly infer that a prosecutor intends an
ambiguous remark to have its most damaging meaning or that a jury,
sitting through lengthy exhortation, will draw that meaning from the
plethora of less damaging interpretations." Donnelly v. DeChristoforo,
416 U.S. 637, 647 (1974).

   /4/ Petitioner did not object to that statement until the jury had
already begun to deliberate.  His objection was therefore untimely and
waived in the absence of plain error.  Gov't C.A. Br. 80.
Additionally, the isolated remarks occurred in the course of almost
300 pages of government summation following a seven-week trial.  Id.
at 83.  Any possible danger of prejudice was further minimized by the
district court's thorough general instructions to the jury about how
to evaluate the arguments of counsel.  Id. at 82.