2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-20-2015

USA v. George Georgiou

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Recommended Citation

"USA v. George Georgiou" (2015). 2015 Decisions. Paper 53.

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

Nos. 10-4774, 11-4587, 12-2077

____________

UNITED STATES OF AMERICA

 

v.

GEORGE GEORGIOU,

Appellant

______________

Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Crim. No. 2-09-cr-00088-001)

District Judge: Honorable Robert F. Kelly

______________

Argued March 19, 2014

______________

Before: CHAGARES, GREENAWAY, JR., and 

VANASKIE, Circuit Judges.

(Opinion Filed: January 20, 2015)
2

Louis D. Lappen, Esq. [ARGUED]

Office of United States Attorney

615 Chestnut Street

Suite 1250

Philadelphia, PA 19106

Counsel for Appellee

Scott J. Splittgerber, Esq. [ARGUED]

Bachner & Associates

39 Broadway

Suite 1610

New York, NY 10006

Hope C. Lefeber, Esq.

1500 John F. Kennedy Boulevard

Two Penn Center Plaza, Suite 1205

Philadelphia, PA 19102

Counsel for Appellant

______________

OPINION

______________

GREENAWAY, JR., Circuit Judge.

A federal jury convicted Appellant George Georgiou

(“Appellant” or “Georgiou”) of conspiracy, securities fraud, 

and wire fraud for his participation in planned manipulation 

of the markets of four publicly traded stocks, resulting in 
3

more than $55,000,000 in actual losses. The District Court

sentenced him to 300 months’ imprisonment, ordered him to 

pay restitution of $55,823,398 and ordered that he pay a 

special assessment of $900. The Court also subjected 

Georgiou to forfeiture of $26,000,000. 

For the first time on appeal, Georgiou argues that 

under Morrison v. National Australia Bank Ltd., 561 U.S. 247 

(2010), his securities and wire fraud convictions were 

improperly based upon the extraterritorial application of 

United States law. Thus, we must determine as a matter of 

first impression whether the purchases and sales of securities 

issued by U.S. companies through U.S. market makers acting 

as intermediaries for foreign entities constitute “domestic 

transactions” under Morrison. For the reasons set forth 

below, we find that these transactions are “domestic 

transactions,” and that his conviction was not based upon the 

improper extraterritorial application of United States law. 

Georgiou also argues that the District Court erred in denying 

his motion for a new trial based on purported Brady and 

Jencks Act violations. He also asserts that the District Court 

erred on several evidentiary and sentencing issues. We find 

no error. Thus, we will affirm the District Court’s Judgment 

of Conviction. 

I.

A. Factual Background

From 2004 through 2008, Georgiou and his 

co-conspirators engaged in a stock fraud scheme resulting in 

more than $55 million in actual losses. The scheme centered 

on manipulating the markets of four stocks: Neutron 

Enterprises, Inc. (“Neutron”), Avicena Group, Inc. 
4

(“Avicena”), Hydrogen Hybrid Technologies, Inc. 

(“HYHY”), and Northern Ethanol, Inc. (“Northern Ethanol”) 

(collectively, “Target Stocks”). At all relevant times, the 

Target Stocks were quoted on the OTC Bulletin Board 

(“OTCBB”)1 or the Pink OTC Markets Inc. (“Pink Sheets”).2

In order to facilitate their scheme, Georgiou and his 

co-conspirators opened brokerage accounts in Canada, the 

Bahamas, and Turks and Caicos. Once opened, the 

co-conspirators used these accounts to engage in manipulative 

trading in the Target Stocks. Specifically, by trading stocks 

between the various accounts they controlled, the 

co-conspirators artificially inflated the stock prices and 

 

1 The OTCBB is “[a]n interdealer quotation system for 

unlisted, over-the-counter securities. The OTC Bulletin Board 

or ‘OTCBB’ allows Market Makers to display firm prices for 

domestic securities, foreign securities, and [American 

Depository Receipts] that can be updated on a real-time 

basis.” OTCBB Glossary, Financial Industry Regulatory 

Authority (“FINRA”),

http://www.finra.org/Industry/Compliance/MarketTransparen

cy/OTCBB/Glossary/P126264 (last visited Jan. 5, 2015). 

2 The Pink Sheets, now known as OTC Market Group Inc., is

“an electronic inter-dealer quotation system that displays 

quotes from broker-dealers for many over-the-counter (OTC) 

securities.” OTC Link LLC, SEC, 

http://www.sec.gov/answers/pink.htm (last visited Jan. 5, 

2015).
5

created the false impression that there was an active market in 

each Target Stock. 

As a result of this manipulation, Georgiou and his 

co-conspirators were able to sell their shares at inflated 

prices. In addition, these artificially inflated shares would be 

used as collateral to fraudulently borrow funds on margin and 

obtain millions of dollars in loans from Caledonia Corporate 

Management Group Limited (“Caledonia”) and Accuvest

Limited (“Accuvest”), both brokerage firms based in the 

Bahamas. Eventually, these accounts experienced severe 

trading losses since the assets purportedly serving as 

collateral proved to be worthless.3

In June 2006, unbeknownst to Georgiou, Kevin 

Waltzer,4 one of his co-conspirators, began cooperating in an

FBI sting operation. Through Waltzer’s cooperation, the FBI 

monitored Georgiou’s activities, including many of his 

emails, phone calls and wire transfers.

 

3

Indeed, Caledonia was forced to liquidate its business, 

resulting in approximately $25 million in losses. These losses 

were sustained by the firm’s clients, many of whom lost their 

entire retirement savings. 

4 Waltzer pled guilty to one count of wire fraud, one count of 

mail fraud, and one count of money laundering, pursuant to a 

written plea agreement. He was sentenced to a term of 

imprisonment of 132 months, followed by a term of 

supervised release, and ordered to pay $40,675,241.55 in 

restitution. 
6

1. Georgiou’s Four Manipulation 

Schemes: Neutron, Avicena, 

HYHY, and Northern Ethanol

Georgiou and his co-conspirators manipulated the 

prices of the Target Stocks by creating matched trades,5 wash 

sales,6and misleading email blasts. They used various alias 

accounts, nominees, and offshore brokerage accounts to 

conceal both their ownership of the Target Stocks and their 

involvement in the fraudulent scheme. 

At least some of the manipulative trades were 

transacted through market makers7located in the United 

 

5

“A ‘matched trade’ is an order to buy or sell securities that 

is entered with knowledge that a matching order on the 

opposite side of the transaction has been or will be entered for 

the purpose of: (1) creating a false or misleading appearance 

of active trading in any publicly traded security; or (2) 

creating a false or misleading appearance with respect to the 

market for any such security.” (Indictment ¶ 9.)

6

“A ‘wash sale’ is an order to buy or sell securities resulting 

in no change of beneficial ownership for the purpose of: (1) 

creating a false or misleading appearance of active trading in 

any publicly traded security; or (2) creating a false or 

misleading appearance with respect to the market for any 

such security.” (Indictment ¶ 10.)

7

“A market maker is a firm that facilitates trading in a stock,

provides quotes [for] both a buy and sell price for a stock, and 

potentially profits from the price spread.” (Indictment ¶ 33.); 

see also 15 U.S.C. § 78c(38) (A “market maker means any 

specialist permitted to act as a dealer . . . and any dealer who,
7

States. Georgiou communicated via phone and e-mail with 

Waltzer about their plans, and also had occasional in-person 

meetings with Waltzer and others in the United States about 

these schemes. In these communications, Georgiou provided 

direction on how to implement the manipulative schemes, and 

demonstrated his role and culpability in orchestrating and 

perpetrating the fraud. After fourteen months, Georgiou 

wired $5,000 to the account of an undercover FBI agent as 

part of a test transaction. Six days later, Georgiou was 

arrested. 

2. The Caledonia Fraud

In December 2006, Georgiou opened a margin-eligible 

account in his wife’s name at Caledonia. As a result,

Georgiou was able to obtain loans and purchase stock without 

using his own funds. Georgiou represented to the principals 

at Caledonia that the margin in his account would be 

collateralized by approximately $15 million worth of Avicena 

and Neutron stock, but did not disclose that the value of these 

securities had been artificially inflated. 

In March 2007, Georgiou borrowed approximately 

$3,394,000 from Caledonia to purchase 1,697,000 shares of 

Avicena from Waltzer. That loan was secured by Avicena 

and Neutron stock held in the name of Georgiou’s wife at 

another brokerage firm, and was never repaid. 

 

with respect to a security, holds himself out (by entering 

quotations in an inter-dealer communications system or 

otherwise) as being willing to buy and sell such security for 

his own account on a regular or continuous basis.”) 
8

During the same month, Georgiou borrowed 

approximately $2.8 million from Caledonia to purchase 

Neutron stock and to provide financing to Neutron. The loan 

was ostensibly secured by Avicena and Neutron stock held in 

a different name at another brokerage firm. This loan was 

also never repaid. Caledonia was unable to cover the 

substantial deficits incurred as a result of Georgiou’s 

activities. Ultimately, Caledonia suffered approximately $25 

million in losses. The firm was later dissolved and liquidated.

3. The Accuvest Fraud 

In June 2007, Georgiou met with representatives of 

Accuvest in the Bahamas to discuss opening a brokerage

account. In September 2007, Georgiou opened an account at 

Accuvest in a different name. The trading in the account was 

handled through William Wright Associates (“Wright”), an 

Accuvest affiliate based in California. From October 2007 

through February 2008, Georgiou deposited HYHY and 

Northern Ethanol stock into this account, and in return, 

Accuvest provided a margin loan of ten percent of the value 

of the account. Georgiou did not disclose that the value of 

these securities had been artificially inflated. On several 

occasions in 2008, Georgiou directed Wright, via email, to 

wire cash from this account to Avicena, or Team One 

Marketing, a Canadian company associated with Georgiou.

In August 2008, Georgiou instructed Wright to open a 

second Accuvest account, which was funded with 10 million 

shares of Northern Ethanol. As had happened before, 

Georgiou did not disclose that the value of these securities 

had been artificially inflated. Georgiou failed to repay the 

money that he had borrowed on margin and in cash loans 
9

from Accuvest. The artificially inflated stock did not cover 

the loans and Accuvest lost at least $4 million. 

B. Procedural History 

Following a three-week trial, a jury found Georgiou 

guilty of one count of conspiracy, in violation of 18 U.S.C. § 

371, four counts of securities fraud, in violation of Section 

10(b) of the Securities Exchange Act of 1934 (the “Act”), 15 

U.S.C. §§ 78j(b) and 78ff, and four counts of wire fraud, in 

violation of 18 U.S.C. §§ 1343 and 1349. 

Georgiou was sentenced to 300 months’ imprisonment, 

and ordered to pay over $55 million in restitution. 

II.

The District Court had jurisdiction under 15 U.S.C. § 

78aa and 18 U.S.C. § 3231. We have jurisdiction under 28 

U.S.C. § 1291 and 18 U.S.C. § 3742(a).

III.

A. Extraterritorial Effect of United States Securities 

Law

1. Standard of Review 

For the first time on appeal, Georgiou argues that his 

securities fraud convictions are improperly based on an 

exterritorial application of United States law. He asserts that 

without proof that any securities transactions occurred in the 

United States, the jury lacked sufficient evidence upon which 

to convict him. He further asserts that the District Court erred 

in failing to require that the jury base it verdicts solely on 
10

domestic transactions. Georgiou relies on Morrison, which 

held that Section 10(b) of the Act only proscribes “deceptive 

conduct [made] ‘in connection with the purchase or sale of 

any security registered on a national securities exchange or 

any security not so registered.’” 561 U.S. at 266 (quoting 15 

U.S.C. § 78j(b)). 

Because Georgiou raised neither argument below, we 

review for plain error. Fed. R. Crim. P. 52(b); Henderson v. 

United States, 133 S. Ct. 1121, 1124-25 (2013); United States 

v. Riley, 621 F.3d 312, 321-22 (3d Cir. 2010).8 A finding of 

“plain error” is warranted if: “(1) there is an ‘error’; (2) the 

error is ‘clear or obvious, rather than subject to reasonable 

dispute’; (3) the error ‘affected the appellant’s substantial 

rights, which in the ordinary case means’ it affected the 

outcome of the district court proceedings’; and (4) ‘the error 

seriously affect[s] the fairness, integrity or public reputation 

of judicial proceedings.’” United States v. Marcus, 560 U.S. 

 

8 Although Morrison was decided after Georgiou’s trial, the 

standard of review remains the same. See Griffith v. 

Kentucky, 479 U.S. 314, 328 (1987) (“[A] new rule for the 

conduct of criminal prosecutions is to be applied retroactively 

to all cases, state or federal, pending on direct review or not 

yet final, with no exception for cases in which the new rule 

constitutes a ‘clear break’ with the past.”); see also United 

States v. Vilar, 729 F.3d 62, 70 (2d Cir. 2013) (“Plain error 

review applies equally where the defendant did not object 

before the trial court because he failed to recognize an error,

and where the defendant did not object because the trial 

court’s decision was correct at the time but assertedly became 

erroneous due to a supervening legal decision.”); United 

States v. Asher, 854 F.2d 1483, 1487 (3d Cir. 1988).
11

258, 262 (2010) (quoting Puckett v. United States, 556 U.S. 129, 

135 (2009)); see also United States v. Andrews, 681 F.3d 509, 

517 (3d Cir. 2012). Georgiou bears the burden of showing 

that the error affected his substantial rights. Andrews, 681 

F.3d at 517.

2. Morrison and Extraterritoriality 

Georgiou was convicted of securities fraud pursuant to 

Section 10(b) of the Act and Section 10(b)’s implementing 

regulation, SEC Rule 10b-5 (“Rule 10b-5”). 15 U.S.C. § 

78j(b); 17 C.F.R. § 240.10b-5; see also 15 U.S.C. § 78ff 

(prescribing penalties for willful violations of the Act). 

Section 10(b) makes it unlawful:

[t]o use or employ, in connection with the 

purchase or sale of any security registered on a 

national securities exchange or any security not 

so registered . . . any manipulative or deceptive 

device or contrivance in contravention of such 

rules and regulations as the Commission may 

prescribe as necessary or appropriate in the 

public interest or for the protection of investors.

15 U.S.C. § 78j(b).9

 

9 Rule 10b-5, promulgated pursuant to Section 10(b), makes it 

unlawful “for any person . . . (a) [t]o employ any device, 

scheme, or artifice to defraud . . . or (c) [t]o engage in any act, 

practice, or course of business which operates or would 

operate as a fraud or deceit upon any person, in connection 

with the purchase or sale of any security.” 17 C.F.R. 

§ 240.10b–5. “Rule 10b-5 . . . was promulgated under 
12

The Supreme Court has limited the application of 

Section 10(b) to actors who employ “manipulative or 

deceptive device[s]” in two contexts: (1) transactions

involving “the purchase or sale of a security listed on an 

American stock exchange,” and (2) transactions involving

“the purchase or sale of any other security in the United 

States.” Morrison, 561 U.S. at 273. Indeed, Section 10(b) 

has no extraterritorial reach. Id. at 262, 266-67 (determining 

that Section 10(b) and Rule 10b-5 had no extraterritorial

effect in civil context); see also Vilar, 729 F.3d at 74 (making 

the same determination in the criminal context, reasoning that 

“[a] statute either applies extraterritorially or it does not”). 

Thus, we consider here whether any of the relevant 

transactions Georgiou is charged with have the requisite 

nexus to the United States under Morrison to subject him to 

liability under Section 10(b).

It is undisputed that the Target Stocks were listed or 

traded on the OTCBB or Pink Sheets. However, whether the 

OTCBB or the Pink Sheets constitute “national securities 

exchange[s]” under Morrison, and whether the securities at 

issue were purchased or sold in the United States, are both

disputed.

10

 The Supreme Court has not addressed either issue

 

§ 10(b), and ‘does not extend beyond conduct encompassed 

by § 10(b)’s prohibition.’” Morrison, 561 U.S. at 261-62 

(quoting United States v. O’Hagan, 521 U.S. 642, 651

(1997)).

10 The Indictment defines the Pink Sheets as “an inter-dealer 

electronic quotation and trading system in the over-thecounter (‘OTC’) securities market,” (Indictment ¶ 2) and 

provides no definition of the OTCBB. The Indictment further 

states that “[t]he United States Securities and Exchange 
13

in this context, i.e., whether a foreign entity’s purchase of 

securities listed on the OTCBB or Pink Sheets through 

American market makers ought be considered a “domestic 

transaction” for the purposes of Section 10(b).

a. “National Securities Exchange”

Under the first prong of Morrison, Section 10(b) 

applies to “the purchase or sale of a security listed on an 

American stock exchange.” Morrison, 561 U.S. at 273. 

Securities listed on the OTCBB and the Pink Sheets are not 

within these parameters. According to the SEC, there are 

eighteen registered national security exchanges; the Pink 

Sheets and the OTCBB are not among them.11 See SEC 

 

Commission (the ‘SEC’) was an independent agency of the 

United States which was charged by law with protecting 

investors by regulating and monitoring, among other things, 

the purchase and sale of publicly traded securities, including 

securities traded on the Pink Sheets and the OTCBB. Federal 

securities laws prohibited fraud in connection with the 

purchase and sale of securities . . .” (Indictment ¶ 8.)

11 Indeed, the OTCBB is, by definition, a quotation service for 

“securities which are not listed or traded on NASDAQ or any 

other national securities exchange.” OTCBB Frequently 

Asked Questions, FINRA, 

http://www.finra.org/Industry/Compliance/MarketTransparency/O

TCBB/FAQ/index.htm (“OTCBB FAQ”) (emphasis added) 

(last visited Jan. 5, 2015). Likewise, the Pink Sheets may 

include securities that “[have] been delisted from an 

exchange.” Frequently Asked Questions,

http://www.otcmarkets.com/learn/otc101-faq (last visited Jan. 

5, 2015). Unlike companies listed on a national securities 
14

Website,

http://www.sec.gov/divisions/marketreg/mrexchanges.shtml 

(hereinafter “SEC Webpage on National Securities 

Exchanges”) (last visited Jan. 5, 2015); see also 15 U.S.C. 

§ 78f(b) (requiring that exchanges register with the SEC and 

comply with various requirements to constitute a “national 

securities exchange”).

Further, the stated purpose of the Act refers to

“securities exchanges” and “over-the-counter markets”

separately, which suggests that one is not inclusive of the 

other. See Securities Exchange Act of 1934, 48 Stat. 881, as 

amended, 15 U.S.C. § 78a et seq., (described as “[a]n Act [t]o 

provide for the regulation of securities exchanges and of 

over-the-counter markets . . . [and] to prevent inequitable and 

unfair practices on such exchanges and markets”) (emphasis 

added). 

Given that a “national securities exchange” is 

explicitly listed in Section 10(b)—to the exclusion of the 

OTC markets—and coupled with the absence of the Pink 

Sheets and the OTCBB on the list of registered national 

security exchanges on the SEC Webpage on Exchanges, we 

 

exchange, those quoted on the OTCBB and the Pink Sheets 

are not subject to “listing and maintenance standards, which 

are stringently monitored and enforced . . . . [and do not] have 

reporting obligations to the market.” OTCBB FAQ. 
15

are persuaded that those exchanges are not national securities

exchanges within the scope of Morrison.

12

 

b. Domestic Transactions in Securities 

not Listed on Domestic Exchanges

In this case, foreign entities purchased and sold 

securities quoted on the OTCBB and the Pink Sheets. Several 

of these purchases were executed by market makers operating 

within the United States. In contrast, the Court in Morrison

considered a “foreign cubed action . . . in which (1) foreign

plaintiffs [were] suing (2) a foreign issuer in an American 

court for violations of American securities laws based on 

securities transactions in (3) foreign countries.” Morrison, 

561 U.S. at 283 n.11 (Stevens, J., concurring in the judgment)

(internal quotation marks omitted).13 In that case, all aspects 

 

12 But see SEC v. Ficeto, 839 F. Supp. 2d 1101, 1108 (C.D. 

Cal. 2011) (“hold[ing] that Morrison does not bar the 

territorial application of § 10(b) to manipulative trading on 

the domestic over-the-counter market”); see also United 

States v. Isaacson, 752 F.3d 1291, 1299 (11th Cir. 2013)

(securities traded on the OTCBB or Pink Sheets “meet[]

Morrison’s requirement for a U.S. nexus”). 

13 In Morrison, Australian investors purchased shares of an 

Australian bank whose stock shares were listed on the 

Australian Stock Exchange Limited. 561 U.S. at 251-52. In 

1998, the Australian bank purchased an American mortgage 

servicing company and for three years touted the success of 

the American company’s business in its annual reports and 

public documents and statements. Id. at 251-52. But in 2001, 

the Australian bank wrote down the value of the American 

company’s assets by more than $2 billion, which resulted in a 
16

of the trades at issue occurred abroad, and thus, it was 

determined that Section 10(b) did not apply. There are two 

key distinctions between Morrison and the instant case: (1) 

the transactions in this case involve stocks of U.S. companies, 

(2) that were executed through American market makers.

To determine whether the transactions at issue were 

“domestic transactions,” under Morrison, id. at 267, we 

consider “not . . . the place where the deception originated, 

but [the place where] purchases and sales of securities”

occurred. Id. at 266. It is the “location of the transaction that 

establishes (or reflects the presumption of) the [Security

Exchange] Act’s inapplicability.” Id. at 268.

Several of our sister circuits interpret this to mean that 

“a securities transaction is domestic when the parties incur 

irrevocable liability to carry out the transaction within the 

United States or when title is passed within the United 

States.” Absolute Activist Value Master Fund Ltd v. Ficeto,

677 F.3d 60, 69 (2d Cir. 2012); see also Quail Cruise Ship 

Mgmt Ltd. v. Agencia de Viagens, 645 F.3d 1307, 1310-11

(11th Cir. 2011) (allegation that closing in Florida 

precipitated transfer of title sufficient to satisfy Morrison at 

motion to dismiss); SEC v. Levine, 462 Fed. App’x 717, 719 

(9th Cir. 2011) (“[T]he Securities Act governs the [] sales 

because the actual sales closed in Nevada when [a defendant] 

received completed stock purchase agreements and 

payments.”); United States v. Isaacson, 752 F.3d 1291, 1300 

 

drop in the value of the Australian bank’s stock. Id. at 252. 

The Australian investors sued the bank in the Southern 

District of New York alleging violations of the Securities 

Exchange Act, 15 U.S.C. §§ 78j(b) and 78t(a). Id. at 253-54. 
17

(11th Cir. 2013) (fund at issue “was ‘run out of New York 

City’ and [] [defendant’s] office was located in Florida, which 

support[] the inference that the [] [f]und purchased the 

securities in the United States.”) 

We agree that “‘[c]ommitment’ is a simple and direct 

way of designating the point at which . . . the parties obligated 

themselves to perform what they had agreed to perform even 

if the formal performance of their agreement is to be after a 

lapse of time.’” Absolute Activist, 677 F.3d at 68 (quoting 

Radiation Dynamics, Inc. v. Goldmuntz, 464 F.2d 876, 891

(2d Cir. 1972)) (internal quotation marks omitted). Thus,

“the point of irrevocable liability can be used to determine the 

locus of a securities purchase or sale.” Id. Accordingly, 

territoriality under Morrison turns on “where, physically, the 

purchaser or seller committed him or herself” to pay for or 

deliver a security. Vilar, 729 F.3d at 77 n.11. 

Facts that demonstrate “irrevocable liability” include 

the “formation of the contracts, the placement of purchase 

orders, the passing of title, or the exchange of money.” 

Absolute Activist, 677 F.3d at 69, 70; see also Vilar, 729 F.3d 

at 78.

14

 In Vilar, the Second Circuit concluded that Section 

10(b) applied where: (1) some victims entered into 

investment agreements in the United States; (2) another 

 

14 On the other hand, heavy marketing in the United States, a 

party’s residency or citizenship, and the fact that the 

deception may have originated in the United States were 

insufficient to support a Section 10(b) claim. Absolute 

Activist, 677 F.3d at 70. 
18

victim “executed the documents necessary to invest . . . in her 

own New York apartment and handed those documents to a 

New York messenger”; and (3) one victim sent the money 

required for opening her account from New York. 729 F.3d 

at 76-78 (internal quotation marks and citation omitted). 

Here, at least one of the fraudulent transactions in each 

of the Target Stocks was bought and sold through U.S.-based 

market makers. Government witness and SEC employee 

Daniel Koster testified that all of the manipulative trades were 

“facilitate[d]” by U.S.-based market makers, i.e., an 

American market maker bought the stock from the seller and 

sold it to the buyer. (App. 1890-96, 1904-05, 1968); see also

15 U.S.C. § 78c(38). Therefore, some of the relevant

transactions required the involvement of a purchaser or seller

working with a market maker and committing to a transaction 

in the United States, incurring irrevocable liability in the 

United States, or passing title in the United States. The 

record also contains evidence of specific instances in which

the Target Stocks were bought or sold at Georgiou’s direction

from entities located in the United States.15 

 

15 For instance: (1) on November 3, 2005, Waltzer, who was 

located in Pennsylvania, sold 69,150 shares of Neutron stock

from one of his accounts to another of his accounts; (2) on 

May 9, 2006, from within the United States, Waltzer sold 

100,000 shares of Avicena stock from one of his accounts to 

another of his; (3) Georgiou deposited 2.5 million HYHY 

shares into an account in California; (4) on September 3, 

2008, an undercover FBI agent purchased 16,000 shares of 

Northern Ethanol stock from within the United States; and (5) 

Georgiou wired $5,000 to a bank account in Philadelphia for 
19

We now hold that irrevocable liability establishes the 

location of a securities transaction. Here, the evidence is 

sufficient to demonstrate that Georgiou engaged in “domestic 

transactions” under the second prong of Morrison, i.e., 

transactions involving “the purchase or sale of any [] security 

in the United States.” See Morrison, 561 U.S. at 273. Thus, 

the District Court’s application of Section 10(b) to 

Georgiou’s transactions was proper.

c. Jury Instructions

Georgiou argues that under the District Court’s 

instructions, all four of the securities fraud counts may have 

been based exclusively on foreign margin loan transactions.

However, Georgiou fails to demonstrate that the jury relied

on a legally insufficient theory. The District Court’s jury 

instructions track the statutory language of Rule 10b-5. See 

United States v. Syme, 276 F.3d 131, 146-47 (3d Cir. 2002).

“[T]he longstanding rule [is] that general verdicts will stand 

even if one of the possible grounds for conviction was 

unsupported by the evidence.” Id. at 145. The “‘invalid legal 

theory’ exception” to this rule applies “if the indictment or 

the district court’s jury instructions are based on an erroneous 

interpretation of law or contain a mistaken description of the 

law.” Id. Here, there was no such deficiency in the 

instruction.

 

the undercover FBI agent, in furtherance of the manipulative 

trading scheme. 
20

Further, the District Court properly instructed the jury 

on the elements of securities fraud pursuant to Section 10(b) 

and Rule 10b-5, including the jurisdictional elements relating 

to conduct in the United States. (App. 2972-73) (requiring 

the jury to find beyond a reasonable doubt that “the defendant 

used or caused to be used the facilities of a national securities 

exchange or any means or instrumentality of interstate 

commerce in furtherance of the fraudulent conduct”). The 

District Court was not required to preclude the jury from 

considering foreign activity in evaluating the evidence. 

Furthermore, Georgiou’s fraudulent activity in the United 

States is not rendered lawful because some transactions 

occurred outside of the United States or because some victims 

are located in foreign countries.

B. Extraterritoriality of United States Wire Fraud 

Statute 

Appellant also argues that his wire fraud convictions 

are improperly based on the extraterritorial application of 

United States law, and that these convictions are legally 

insufficient because the Government failed to demonstrate 

that his conduct violated foreign law. As Georgiou raises this 

argument for the first time on appeal, we apply plain error 

review. Henderson, 133 S.Ct. at 1124. 

Unlike securities fraud, the statute governing wire 

fraud “prohibits ‘any scheme or artifice to defraud,’—fraud 

simpliciter, without any requirement that it be ‘in connection 

with’ any particular transaction or event.” Morrison, 561 

U.S. at 271-72 (quoting 18 U.S.C. § 1343). Thus, a wire 

fraud offense is “complete the moment [a party] executed the 

scheme inside the United States. . . .” Pasquantino v. United 

States, 544 U.S. 349, 371 (2005). Moreover, unlike the 
21

Securities Exchange Act, Section 1343 applies 

extraterritorially. Id. at 371-72. Indeed, the explicit statutory 

language indicates that “it punishes frauds executed in 

‘interstate or foreign commerce,’” and “is surely not a statute 

in which Congress had only domestic concerns in mind.” Id. 

(quoting 18 U.S.C. § 1343).

Here, the record contains ample evidence that 

Georgiou used interstate wires to effect a “scheme or artifice 

to defraud.” 18 U.S.C. §1343. Georgiou regularly used email to direct Waltzer’s participation in the fraud and wired 

money from a Canadian bank to an undercover FBI agent’s 

account in Pennsylvania. (See, e.g., App. 3800-04, 3778-82, 

3930-34, 4019.) 

In addition, Appellant’s argument that Pasquantino

requires the Government to prove that Georgiou’s conduct 

was illegal in the Bahamas fails. The footnote that Georgiou 

relies on in Pasquantino references foreign tax law for the 

sole purpose of determining whether the victim had “valuable 

property interests as defined by foreign law.” 544 U.S. at 371 

n.13. Here, it is undisputed that the foreign victims had a 

property interest in the money and property that Georgiou 

fraudulently obtained from them. Hence, the wire fraud 

statute is properly applied.

Finally, Georgiou’s arguments that the District Court 

erred because it did not require the jury to limit its 

consideration to domestic transactions only and permitted the 

jury to consider invalid legal theories, also fail with respect to 

wire fraud. As discussed, the text of the relevant statute, 18 

U.S.C. § 1343, does not expressly require that a verdict be 

based on entirely domestic transactions. Pasquantino, 544 

U.S. at 372-73 (Ginsburg, J., dissenting). Instead, the 
22

statute’s only jurisdictional requirement is that a 

communication be transmitted through interstate or foreign 

commerce for the purpose of executing a scheme to defraud. 

18 U.S.C. § 1343. 

The District Court properly instructed the jury on this 

issue, explaining that interstate or foreign commerce is “to 

send from one state to another, or to or from the United 

States . . . .” (App. 2985.) This instruction did not 

impermissibly allow the jury to convict Georgiou based 

solely on foreign activity. Thus, the District Court did not err 

with respect to its jury instruction on wire fraud.

Georgiou’s argument that the jury may have relied on 

a legally invalid theory also fails. Here, the District Court’s 

instructions on the elements of wire fraud were proper, and 

the evidence was sufficient to convict on the market 

manipulation theory. Thus, the jury was not presented with a 

legally invalid theory of guilt, and the District Court did not 

err.

C. Violations of Brady and Jencks Act Disclosure 

Requirements

Georgiou contends that the Government suppressed

evidence concerning cooperating witness Kevin Waltzer’s 

history of mental illness and substance abuse, as well as 

statements Waltzer made to the SEC, in violation of Brady v. 

Maryland, 373 U.S. 83 (1963), and the Jencks Act, 18 U.S.C. 

§ 3500. 
23

1. Brady Violations

“Our review of the denial of a motion for new trial on 

the basis of a Brady argument is de novo with respect to the 

district court’s conclusions of law and is based on the ‘clearly 

erroneous’ standard with respect to its findings of fact.” 

United States v. Milan, 304 F.3d 273, 286 (3d Cir. 2002)

(citing United States v. Perdomo, 929 F.2d 967, 969 (3d Cir.

1991)). Under Brady, the Government is required, upon 

request, to produce “evidence favorable to an accused.” 373 

U.S. at 87. The failure to do so will result in a due process

violation if the suppressed evidence “is material either to guilt 

or to punishment, irrespective of the good faith or bad faith of 

the prosecution.” Id. To establish a Brady violation, a 

defendant must demonstrate that: “‘(1) evidence was 

suppressed; (2) the suppressed evidence was favorable to the 

defense; and (3) the suppressed evidence was material either 

to guilt or to punishment.’” United States v. Pelullo, 399 F.3d 

197, 209 (3d Cir. 2005) (quoting United States v. Dixon, 132 

F.3d 192, 199 (5th Cir.1997)). 

Evidence is favorable if it is impeaching or 

exculpatory. Banks v. Dretke, 540 U.S. 668, 691 (2004); 

Johnson v. Folino, 705 F.3d 117, 128 (3d Cir. 2013). “The 

evidence is material only if there is a reasonable probability 

that, had the evidence been disclosed to the defense, the result 

of the proceeding would have been different. A ‘reasonable 

probability’ is a probability sufficient to undermine 

confidence in the outcome” of the trial. United States v. 

Bagley, 473 U.S. 667, 682 (1985); see also Kyles v. Whitley, 

514 U.S. 419, 441-54 (1995). Thus, 

“[t]he materiality of Brady material depends 

almost entirely on the value of the evidence 
24

relative to the other evidence mustered by the 

state.” Suppressed evidence that would be 

cumulative of other evidence or would be used 

to impeach testimony of a witness whose 

account is strongly corroborated is generally not 

considered material for Brady purposes. 

Conversely, however, undisclosed evidence that 

would seriously undermine the testimony of a 

key witness may be considered material when it 

relates to an essential issue or the testimony 

lacks strong corroboration.

Johnson, 705 F.3d at 129 (quoting Rocha v. Thaler, 619 F.3d 

387, 396-97 (5th Cir. 2010)). 

Georgiou argues that the Government suppressed

Waltzer’s bail report (“Bail Report”) and the minutes from 

Waltzer’s arraignment and guilty plea (“Minutes”). Both the 

Bail Report and the Minutes contain evidence of Waltzer’s 

cocaine use and mental health history. Specifically, the Bail 

Report references Waltzer’s history of treatment for 

psychiatric disorders and substance abuse. The Minutes 

include Waltzer’s statements about his treatment for 

depression and anxiety and his use of Paxil, a prescription 

medication, to treat those conditions. 

a. Waltzer’s Substance Abuse

Georgiou argues that the Government failed to disclose

evidence of Waltzer’s substance abuse in the Minutes and the 

Bail Report in violation of its Brady obligations. However,

Appellant received statements concerning Waltzer’s drug use 

in the Government’s pretrial production, including notes 

showing a statement from Waltzer that he “did drugs and 
25

drank alcohol . . . and developed an addiction to cocaine . . . 

[and] last used cocaine six months ago.” (Supp. App. 1338.)

Indeed, Waltzer testified on direct and cross-examination

about his cocaine use. (App. 502-04, 848-49.) Thus, 

additional evidence of his substance abuse would have been 

cumulative. Johnson, 705 F.3d at 129; see also United States 

v. Barraza Cazares, 465 F.3d 327, 335 (8th Cir. 2006) (no 

Brady violation where “all that was unknown to the defendant 

and his attorney was the fact of Lopez’s statement, not the 

content of that statement”). Because evidence of Waltzer’s 

substance abuse was provided to Appellant prior to trial, this 

material was not suppressed, and the first prong of Brady is 

not satisfied. 

Moreover, assuming arguendo that evidence of 

Waltzer’s former drug use had been suppressed, such 

evidence is not favorable to the Appellant for purposes of our 

Brady analysis. At trial, Waltzer testified that his cocaine use

did not impact his ability to understand, remember or testify 

about his interactions with Appellant. (App. 503.) Appellant 

chose not to probe this issue more fully on cross-examination. 

(App. 848-49.) There is no evidence—in the pretrial 

discovery, trial testimony, Minutes, or Bail Report—to 

suggest that Waltzer’s former substance abuse impacted the 

reliability of his testimony. Thus, because this evidence

neither constitutes impeachment nor exculpatory material, it

is not favorable to the Appellant.

Finally, evidence of Waltzer’s substance abuse cannot 

be deemed material because there is not a “reasonable 

probability” that this evidence would have changed the 

outcome of the trial. Bagley, 473 U.S. at 682; see also Kyles, 

514 U.S. at 454. Indeed, evidence of Waltzer’s substance 

abuse was considered at trial on both direct and cross-
26

examination. To the extent Appellant argues that additional

information about the intensity or duration of Waltzer’s 

substance abuse may have impacted the trial’s outcome, he

explains neither why he did not probe these issues more fully

on cross examination, nor why such new information would 

have changed the trial’s outcome when the substance abuse 

evidence that was set out at trial did not. Thus, it cannot be 

deemed material. 

Because evidence of Waltzer’s substance abuse in the 

Minutes and the Bail Report was neither suppressed, 

favorable nor material, Appellant’s Brady arguments

concerning this evidence must fail.

b. Waltzer’s Mental Health History and 

 Treatment

Georgiou also argues that information regarding 

Waltzer’s mental health was suppressed in both the Bail 

Report and the Minutes. In the Minutes, Waltzer stated that 

he had seen a mental health provider for depression and 

anxiety, and was taking Paxil for depression. However, in 

response to questioning from the court, he agreed that his 

“head [has] always been clear,” and that his medication did 

not affect “how [he] think[s].” (App. 4249-50, 4245, 4355.)

The Bail Report also includes information that Waltzer had 

“been diagnosed in the past with Anxiety Disorder, Panic 

Disorder and Substance Abuse Disorder.” (App. 4187.)

The Minutes and Bail Report were not suppressed

under the first prong of Brady because they were accessible to

Appellant. “Brady does not oblige the [G]overnment to 

provide defendants with evidence that they could obtain from 

other sources by exercising reasonable diligence.” Perdomo, 
27

929 F.2d at 973. Indeed, Appellant “was in a position of 

parity with the government as far as access to this material,” 

United States v. Jones, 34 F.3d 596, 600 (8th Cir. 1994), and 

thus, “the transcript [] was as available to [the defendant] as it 

was to the Government.” United States v. Ladoucer, 573 

F.3d 628, 636 (8th Cir. 2009) (finding no Brady violation 

from the government’s failure to produce the transcript of its 

witness’s state court testimony in an unrelated matter because 

the defendant “could have obtained a copy of the transcript 

himself”). 

Here, as the District Court observed, “it is apparent 

that with just minimal due diligence on the part of Georgiou, 

he could have obtained a copy of [Waltzer’s] guilty plea 

transcript because he certainly was aware that the main 

witness against him had pled guilty before Judge Dalzell.” 

(App. 58.) Likewise, the existence of the Bail Report was not 

hidden from Appellant, and it could have been accessed 

through his exercise of reasonable diligence. Accordingly, 

the Minutes and the Bail Report cannot be deemed to have 

been suppressed.

Further, evidence concerning Waltzer’s mental health

is neither favorable to the Appellant nor material. In this 

case, this evidence neither undermines Waltzer’s reliability

nor calls into question his “‘ability to perceive, remember and 

narrate perceptions accurately,’” and thus is not “clearly

relevant to his credibility.” Wilson v. Beard, 589 F.3d 651, 

666 (3d Cir. 2009) (quoting Cohen v. Albert Einstein Med. 

Ctr., 592 A.2d 720, 726 (Pa. Super. Ct. 1991)); see also 4 

Jack B. Weinstein & Margaret A. Berger, Weinstein’s Federal 

Evidence § 607.05[1] (Joseph M. McLaughlin ed., 2d ed. 

2014) (“A witness’s credibility may always be attacked by 

showing that his or her capacity to observe, remember, or 
28

narrate is impaired. Consequently, the witness’s capacity at 

the time of the event, as well as at the time of trial, is 

significant.”). 

The evidence at issue here shows that Waltzer had

been seeking medical attention for anxiety and depression for 

several years, and had been taking medication to treat those 

conditions. (App. 4187.) In the Minutes, Waltzer stated that 

his medication did not affect his mental capacity, and the 

District Judge, the Government, and Waltzer’s attorney all 

agreed he was competent to plead guilty. (App. 4250.) Cf. 

Wilson, 589 F. 3d at 666 (suppressing mental health evidence

found material under Brady where it showed that witness had 

“an inability to form adequate perceptions, that he is easily 

confused, has dissociative tendencies, blackouts, motor visual 

problems, weak long and short term memory, poor judgment, 

and distorted perceptions of reality.”) (internal quotation 

marks omitted). Furthermore, evidence of Waltzer’s mental 

illness was not material because, relative to the strength of the 

evidence against Appellant, there is not a “reasonable 

probability that, had the evidence been disclosed to the 

defense, the result of the proceeding would have been 

different.” Bagley, 473 U.S. at 682.

c. Documents from SEC Meetings with 

 Waltzer

Georgiou also argues that the Government violated 

Brady in failing to produce documents from meetings 

between the SEC and Waltzer. The Government produced 

pretrial discovery from the SEC, including trading and 

financial records of the Target Stocks. Subsequent to this 

production, Georgiou withdrew his discovery motion as moot.

(Supp. App. 1228.) However, the Government had not 
29

produced notes taken during two SEC interviews of Waltzer, 

at which members of the prosecution team were present. 

Subsequent to Appellant’s posttrial challenge, the 

Government reviewed these notes and determined that they 

did not contain any Brady material. 

We agree with the District Court’s assessment that 

there is no basis in the record to suggest that these notes

contained Brady material. Pure speculation that exculpatory 

information might exist is insufficient to sustain a Brady 

claim. See United States v. Andrus, 775 F.2d 825, 843 (7th

Cir. 1985) (“‘Mere speculation that a government file may 

contain Brady material is not sufficient to require a remand 

for in camera inspection, much less reversal for a new 

trial.’”) (quoting United States v. Navarro, 737 F.2d 625 (7th 

Cir. 1984), cert. denied, 469 U.S. 1020 (1984)). Thus, 

Appellant has not set out a viable Brady claim based on these 

documents.

***

In light of the extensive evidence in the trial record, 

including recordings of Appellant discussing fraudulent 

activities, emails between Appellant and co-conspirators

regarding manipulative trades, voluminous records of the 

trades themselves, bank accounts and wire transfers,

Appellant’s argument that the evidence of Walter’s substance 

abuse and mental illness, or his meetings with the SEC, is 

material for our Brady analysis cannot stand. Waltzer’s 

testimony is “strongly corroborated” by recordings of phone 

calls and meetings, and records of actual trades. See Johnson, 

705 F.3d at 129 (citing Rocha, 619 F.3d at 396-97). Thus, 

this evidence would “generally not [be] considered material 

for Brady purposes” because when considered “‘relative to 
30

the other evidence mustered by the state,’” the allegedly 

suppressed evidence is insignificant. Id. (quoting Rocha, 619 

F.3d at 396). Moreover, for the foregoing reasons, the 

evidence at issue had not been suppressed, nor is it favorable 

to the Appellant. As such, Appellant’s Brady arguments must 

fail. 

2. Jencks Act Disclosures

The Jencks Act obliges the Government to disclose 

any witness statement “in the possession of the United States 

which relates to the subject matter as to which the witness has 

testified.” 18 U.S.C. § 3500(b). This requirement is limited 

to production of statements “possessed by the prosecutorial

arm of the federal government.” United States v. Reyeros, 

537 F.3d 270, 285 (3d Cir. 2008) (quoting United States v. 

Merlino, 349 F.3d 144, 154 (3d Cir. 2003)). However, unlike 

Brady, “[t]he Jencks Act requires that any statement in the 

possession of the government—exculpatory or not—that is 

made by a government witness must be produced by the 

government during trial.” United States v. Starusko, 729 F.2d 

256, 263 (3d Cir. 1984).

Here, Appellant has failed to identify any statements 

that were withheld in violation of the Jencks Act. Indeed, 

Appellant does not dispute that the Government produced 

boxes of impeachment evidence concerning Waltzer, 

including records of Waltzer’s numerous prior frauds, 

evidence of his plea and cooperation, trading and financial 

records, and prior statements to law enforcement. The 

additional statements Appellant seeks either were not within 

the possession of the prosecutorial arm of the government, 

i.e., those held by the SEC, or do not exist. Likewise, the 

Government did not have possession of the Bail Report, and 
31

thus was not obligated to provide it. (See App. 108-09.) (the 

Government explained that it neither examined nor took

possession of the Bail Report, and the Report included 

language indicating that it should not be removed from the 

courtroom.) 

D. Evidentiary Rulings

1. Koster’s Testimony and Summary Charts

After the jury returned its verdict, Georgiou moved for 

a new trial, arguing, inter alia, that Government witness 

Daniel Koster, an SEC employee, should not have been 

permitted to testify as a lay witness under Federal Rule of 

Evidence 701. The District Court denied this motion on the 

grounds that Koster’s testimony was permissible under Rule 

701. 

On appeal, Georgiou again argues that the District 

Court erred by allowing Koster to testify as an undeclared 

expert and to offer opinions and legal conclusions that 

usurped the role of the jury. He also argues that the District 

Court admitted prejudicial charts into evidence without 

providing cautionary instructions to the jury. The 

Government responds that these arguments have been 

waived,16 and lack merit. 

 

16 The Government submitted a trial memorandum, including 

the following stipulations reached by the parties: (1) 

“[v]arious trading records and financial evidence relating to 

the scheme will be introduced in the form of summary charts 

and testimony pursuant to Rule 1006”; (2) Koster would 

“present testimony and accompanying charts concerning the 
32

We review the denial of a motion for a new trial for 

abuse of discretion. United States v. Brennan, 326 F.3d 176, 

189 (3d Cir. 2003). “‘An abuse of discretion arises when the 

District Court’s decision rests upon a clearly erroneous 

finding of fact, an errant conclusion of law[,] or an improper 

application of law to fact.’” Pineda v. Ford Motor Co., 520 

F.3d 237, 243 (3d Cir. 2008) (quoting In re TMI Litig., 193 

F.3d 613, 666 (3d Cir. 1999)). 

 

manipulative trading activity charged in the indictment”; and 

(3) Koster may further testify as a “summary fact witness to 

explain the relevance of his trading analysis to the other 

evidence presented in the case.” (App. 5593-94.) Georgiou 

objected generally to the use of a summary witness, and to the 

use of witnesses and charts to summarize anything other than 

voluminous writings, recordings, or photographs, specifically 

objecting to summary of oral testimony. 

However, Georgiou did not dispute that the “charts and 

the underlying records have been produced to defendant” and 

that “defendant has stipulated that [they] are authentic and 

qualify as business records under Rule 803(6).” (Id. at 5594.) 

Before trial, Georgiou’s counsel indicated that he had 

concerns about the proposed testimony of the Government’s 

SEC witnesses and would be objecting if they “stray[ed] from 

within [] legal limits,” specifically identifying “the issue of 

opinion testimony or improper summary of things not 

admissible in evidence.” Id. at 1520. However, counsel also 

stated his concerns with the charts had been “resolved.” Id. 

Furthermore, at trial, no objections were lodged by Appellant 

with respect to Koster’s testimony, or the admission of charts. 
33

“A new trial should be ordered only when substantial 

prejudice has occurred,” United States v. Armocida, 515 F.2d 

29, 49 (3d Cir. 1975), and “if the interest of justice so 

requires.” Fed. R. Crim. P. 33. To grant a new trial, a court 

must determine that “the allegedly improper statements or 

conduct make it ‘reasonably probable’ that the verdict was 

influenced by the resulting prejudice.” Forrest v. Beloit 

Corp., 424 F.3d 344, 351 (3d Cir. 2005) (quoting Greenleaf v. 

Garlock, Inc., 174 F.3d 352, 363-64 (3d Cir. 1999)). 

“We review the District Court’s decisions as to the 

admissibility of evidence for abuse of discretion. To the 

extent that these rulings were based on an interpretation of the 

Federal Rules of Evidence, however, our review is plenary.” 

United States v. Serafini, 233 F.3d 758, 768 n. 14 (3d Cir. 

2000) (citing United States v. Pelullo, 964 F.2d 193, 199 (3d 

Cir.1992)).

Under Federal Rule of Evidence 701, if a witness does 

not testify as an expert, opinion testimony must be: “(a)

rationally based on the witness’s perception; (b) helpful to 

clearly understanding the witness’s testimony or to 

determining a fact in issue; and (c) not based on scientific, 

technical, or other specialized knowledge within the scope of 

Rule 702.” Fed. R. Evid. 701. 

Under Federal Rule of Evidence 1006, a party may 

“use a summary, chart, or calculation to prove the content of 

voluminous writings [or] recordings . . . that cannot be 

conveniently examined in court,” as long as the originals or 

duplicates are made available for examination or copying by 

other parties. Fed. R. Evid. 1006. 
34

Georgiou argues that Koster’s testimony was based on 

specialized knowledge and thus inadmissible from a lay 

witness. We agree with the District Court’s assessment that 

Koster’s testimony, including comparisons of stock quantities 

and prices did not require prohibited “scientific, technical, or 

other specialized knowledge,” and thus was squarely within 

the scope of Rule 701. (App. 40.) Koster’s testimony 

provided factual information and summaries of voluminous 

trading records that he had personally reviewed in his 

capacity as an SEC employee and as part of the SEC’s 

investigation of Georgiou. See SEC v. Treadway, 430 F. 

Supp. 2d 293, 321-22 (S.D.N.Y. 2006) (rejecting challenge to 

admissibility of testimony of SEC witness under Rule 701 

because witness was “simply an SEC employee providing his 

view of the facts as a summary of certain evidence and as an 

aid to the Court,” and that witness’s declaration “was more 

akin to a summary document than an expert analysis”). 

Because Koster “present[ed] testimony and accompanying 

charts concerning the manipulative trading activity charged in 

the indictment . . . [and] explain[ed] the relevance of his 

trading analysis to the other evidence presented in the case,”

within the scope of Rule 701 and the parties’ pretrial 

stipulation, the District Court did not abuse its discretion in 

admitting his testimony as a lay witness. (Gov’t Trial Mem., 

App. 5594.) 

The District Court also did not abuse its discretion in 

allowing Koster’s remaining testimony on re-direct because 

Georgiou’s counsel first elicited Koster’s opinion on crossexamination. Under the doctrine of curative admissibility, 

i.e., “opening the door,” “when one party introduces 

inadmissible evidence, the opposing party thereafter may 

introduce otherwise inadmissible evidence to rebut or explain 
35

the prior evidence.” Gov’t of the Virgin Islands v. Archibald, 

987 F.2d 180, 187 (3d Cir. 1993) (citing C. McCormick, On 

Evidence § 57 (4th ed. 1992)).

2. Exclusion of evidence pursuant to FRE 

608(b)

Georgiou also argues that the District Court erred in 

prohibiting testimony and extrinsic evidence regarding

allegations of a post-cooperation fraud perpetrated by 

Waltzer.

17 The District Court excluded this evidence as 

collateral and cumulative under Federal Rules of Evidence 

608(b) and 403. The District Court’s decisions regarding the 

admissibility of evidence are reviewed for abuse of discretion. 

Serafini, 233 F.3d at 768 n. 14 (citing Pelullo, 964 F.2d at 

199). 

Under Rule 608(b) of the Federal Rules of Evidence, 

“extrinsic evidence is not admissible to prove specific 

instances of a witness’s conduct in order to attack or support 

the witness’s character for truthfulness.” Fed. R. Evid. 

608(b). Further, Federal Rule of Evidence 403 authorizes a 

district court to “exclude collateral matters that are likely to 

confuse the issues.” United States v. Casoni, 950 F.2d 893, 

919 (3d Cir. 1991); see also Fed. R. Evid. 403 (“The court 

may exclude relevant evidence if its probative value is 

substantially outweighed by a danger of . . . confusing the 

 

17 Appellant sought to call a law enforcement agent to testify 

about his investigation of Waltzer on unrelated crimes, and 

seven lay witnesses to testify that they were victims of an 

unrelated fraud perpetrated by Waltzer. He argued that this 

testimony would show Waltzer’s bias and pattern of fraud. 
36

issues . . . or needlessly presenting cumulative evidence.”). A 

matter is collateral if it is “factually unrelated to [the] case”

such as an “unrelated criminal investigation.” Casoni, 950 

F.2d at 919. Moreover, given the District Court’s “wide 

discretion in limiting cross-examination[,] [a] restriction will 

not constitute reversible error unless it is so severe as to 

constitute a denial of the defendant’s right to confront 

witnesses against him and it is prejudicial to substantial rights 

of the defendant.” Id. (quoting United States v. Adams, 759 

F.2d 1099, 1100 (3d Cir. 1985)).

Georgiou’s rights under the Confrontation Clause were

not implicated here, as the record reflects that the District 

Court allowed Appellant to cross-examine Waltzer about his

alleged criminal acts, and limited further questioning only 

after Waltzer denied engaging in misconduct. (App. 803-819; 

835-846; 867-872.) See Casoni, 950 F.2d at 919 (“The 

Supreme Court has said the Constitution’s Confrontation 

Clause guarantees an opportunity for effective crossexamination, not cross-examination that is effective in 

whatever way and to whatever extent, the defense might 

wish.”) (quoting Delaware v. Van Arsdall, 475 U.S. 673, 679 

(1986)).

The District Court’s imposition of a reasonable limit 

on the scope of cross-examination was permissible in order to 

“strike a balance between the constitutionally required 

opportunity to cross-examine and the need to prevent 

repetitive or abusive cross-examination.” Casoni, 950 F.2d at 

919. By the time Appellant sought to cross-examine Waltzer 

on his involvement in post-cooperation fraudulent activities, 

the record already contained evidence of Waltzer’s past 

illegal conduct and his cooperation with the Government, all 

of which is directly relevant to Appellant’s theory that 
37

Waltzer was biased in favor of the government. (App. 835-

846; 867-872.) Indeed, Appellant directly questioned Waltzer 

on whether he was untrustworthy and biased for the 

Government. Id. Because “[t]he jury was in possession of 

sufficient information to make a discriminating appraisal of 

[the witness’s] possible motives for testifying falsely in favor 

of the [G]overnment,” the District Court did not abuse its

discretion in excluding certain extrinsic evidence and limiting

the cross-examination of Waltzer. See U.S. v. McNeill, 887 

F.2d 448, 454 (3d Cir. 1989).

3. Motion to unseal 

We reject Georgiou’s argument that the District Court 

erred in denying his motion to unseal. Georgiou filed the 

motion after filing a notice of appeal with this Court, 

appealing the District Court’s denial of his Motion for 

Reconsideration and New Trial. “The filing of a notice of 

appeal . . . confers jurisdiction on the court of appeals and 

divests the district court of its control over those aspects of 

the case involved in the appeal.” Griggs v. Provident 

Consumer Discount Co., 459 U.S. 56, 58 (1982). Because the

District Court lacked jurisdiction at the time Appellant filed

his motion to unseal, there was no error in denying this 

motion.

E. Sentencing 

The District Court sentenced Georgiou to 300 months’ 

imprisonment, followed by a three-year term of supervised 

release, and ordered restitution of $55,832,398, a special

assessment of $900, and forfeiture of $26,000,000. Georgiou 

challenges this sentence as procedurally and substantively 

unreasonable, arguing that the District Court erred 
38

procedurally in failing to apply Dura Pharmaceuticals, Inc. v. 

Broudo, 544 U.S. 336 (2005), to the Guidelines loss 

calculation, resulting in substantive error.

Georgiou also challenges the sentence enhancements 

on the grounds that the District Court did not require the 

Government to properly establish the number of victims for a 

six-point enhancement under U.S.S.G. § 2B1.1 (b)(2)(C). 

Georgiou further argues that the District Court erred in adding

six levels to the Guidelines range due to the dissolution of 

Caledonia and the sophisticated nature of the fraud. Finally, 

Georgiou asserts that the District Court erred in basing

restitution on the Guidelines loss calculation, and in its 

imposition of the forfeiture order. 

The District Court determined that the total actual 

losses amounted to $55,832,398. This calculation accounted 

for the losses suffered by: (1) the three institutions Georgiou 

defrauded through his use of manipulated stocks, namely, 

Accuvest ($3,613,856), Alliance ($5,890,748), and Caledonia 

($22,000,000) (see App. 5489); (2) Alex Barrotti 

($16,000,000), to whom Georgiou made a false promise to 

cover trading losses for trades made at Georgiou’s direction 

(see App. 5488); and (3) numerous victim shareholders who 

bought HYHY stock during Georgiou’s “pump and dump”

scheme ($8,327,794). (See App. 5491, Supp. App. 996.) 

Based on these figures, Georgiou received a 24-level 

increase to the base offense level of seven pursuant to 

U.S.S.G. § 2B1.1(b)(1)(M) (providing for a 24 point 

enhancement where the loss exceeds $50,000,000). (App. 

5516-24; App. 5308.)
39

Our “review of a district court’s decision regarding the 

interpretation of the Sentencing Guidelines, including what 

constitutes ‘loss,’ is plenary.” United States v. Napier,

273 F.3d 276, 278 (3d Cir. 2001) (quoting United States v. 

Sharma, 190 F.3d 220, 226 (3d Cir. 1999). We review 

factual findings for clear error. Id. (citing Sharma, 190 F.3d at 

229).

1. Loss Calculation

Georgiou argues that the District Court incorrectly 

calculated the total loss attributable to his offense, resulting in 

a higher total offense level. He contends that the loss 

calculation contained in the Presentence Investigation Report 

(“PSR”) was grossly overstated because it ignored the impact 

of market forces on the values of the Target Stocks. 

Georgiou asserts that such an assessment is required under 

Dura Pharmaceuticals, 544 U.S. 336. 

Although it is undisputed that the District Court did

not consider the impact of market forces in its loss 

calculation, it was not required to do so. Dura

Pharmaceuticals was decided in the context of a civil

securities fraud class action. Id. at 341. While some of our 

sister circuits have applied the Dura Pharmaceuticals loss 

calculation in the criminal sentencing context, we have not. 

Thus, there is no basis on which to find the District Court’s 

loss calculation clearly erroneous. Indeed, the record here 

indicates that the accounts responsible for the losses in the 

Target Stocks were controlled by the Appellant and his 

co-conspirators. Appellant conceded as much in recorded 

conversations. (See, e.g., App. 702-05, 725-32, Supp. App. 

1101-11.)
40

Moreover, assuming arguendo that an error had 

occurred in failing to assess the impact of market forces on 

the Target Stocks, any such error would be harmless. In 

applying Section 2B1.1(b), courts must use “the greater of the 

actual or intended loss.” U.S.G.G. § 2B1.1 cmt. n.3(A). 

During sentencing, the District Court found that Georgiou 

was responsible for intended losses that “far exceeded a 

hundred million [dollars]” based on his scheme involving 

Northern Ethanol. (App. 5485-86, 5490.) However, the 

District Court did not consider intended losses in its 

calculation because Georgiou’s total offense level, 45, already 

exceeded the guideline maximum of 43. (App. 5308.)

Therefore, under either calculation, Georgiou’s total offense 

level would have been in excess of 43. Thus, his sentence was 

not impacted by the District Court’s alleged error. 

2. Victim Enhancements

Georgiou’s challenge to the six-level upward 

adjustment for 250 or more victims under U.S.S.G 

§2B1.1(b)(2)(C) also fails. The jury found that Appellant 

participated in a “pump and dump” scheme with HYHY, and 

had paid for a mailer on the stock to be sent to seven million 

people. (Supp. App. 987.) Koster, the SEC witness, 

identified 1,918 investor accounts that purchased the stock 

during the period of the scheme, each of which lost over 

$1,000. (App. 5427-29.) Thus, there were well over 250 

victims, and the District Court’s upward adjustment based on 

number of victims was not clearly erroneous.

3. Forfeiture

Georgiou did not object—though he had several 

opportunities to do so—to the Court’s imposition of the 
41

forfeiture order, which had been submitted to the Court prior 

to sentencing. Thus, any claims on the basis of this forfeiture

have been waived. Furthermore, even absent the waiver, the 

forfeiture is proper under 18 U.S.C. § 981(a)(1)(C) and 28 

U.S.C. § 2461(c) because the $26,000,000 subject to 

forfeiture “constitutes, or is derived from proceeds traceable 

to the offenses of which the defendant was convicted.” (See 

App. 1355, 1378-79, 1392-1402, 1415, 1482-96, 1836-38, 

5488-89, Supp. App. 995-96.) Because Appellant waived his 

objections and because the order was, in fact, proper, there is 

no basis for a finding of clear error with respect to the 

forfeiture. 

V.

For the reasons stated above, we will affirm 

Georgiou’s Judgment of Conviction.