11

- 3756 (L)

United States v. Cuti

UNITED STATES COURT OF APPEALS 

### 1

FOR THE SECOND CIRCUIT 

### 2
August Term 2012 

### 3
(Argued: October 25, 2012 Decided: June 2 6 , 2013) 

### 4

Docket Nos. 11

- 3756, 11

- 3831 

### 5

---------------------------------------- x 

### 6

UNITED STATES OF AMERICA , 

### 7
Appellee , 

### 8

-- v. -- 

### 9

ANTHONY CUTI, WILLIAM TENNANT, 

### 10

Defendants

- Appellants

. 

### 11

----------------------------------------- x 

### 12

B e f o r e : JACOBS, Chief Judge , WALKER, Circuit Judge , and 

### 13 O ’ CONNOR, A ssociate Justice (retired)

. * 

### 14 15 Defendants

- Appellants Anthony Cuti and William Tennant , former 

### 16

execu tives of the retail drugstore chain Duane Reade, appeal their 

### 17

convictions for securities fraud in the District Court for the 

### 18

Southern District of New York (Batts, J. ). Cuti and Tennant 

### 19
arranged fraudulent transactions to inflate Duane Reade’s reported 

### 20

ear nings in SEC filings. Among the issues raised on appeal by Cuti 

### 21

is the admission of non - expert witness testimony as to what the 

### 22
accounting treatment of the transactions would have been absent the 

### 23

fraud. Tennant asserts primarily that the jury lacked suff icient 

### 24

evidence to convict him and that the district court had no basis to 

### 25

* The Honorable Sandra Day O ’ Connor, Associate Justice (retired) of the United States Supreme Court, sitting by designa tion

.

### 2

give a conscious avoidance instruction. We conclude that the 

### 1

district court did not abuse its discretion in admitting the lay 

### 2

witness testimony and that Tennant’s claims are withou t merit

. 

### 3

A ffirm ed. 

### 4

BRIAN C. BROOK , Clinton Brook & Peed 

### 5 ( Matthew J. Peed, Clinton Brook & 

### 6 Peed , and Brian D. Waller, Simon & 

### 7 Partners, LLP , on the brief ), New 

### 8 York, NY , for Defendant

- Appellant 

### 9 Anthony Cuti. 

### 10 11 JOHN J. KENNEY (Laura B. Hoguet, 

### 12 Tai

- Heng Cheng , Caitlin N. Bush, 

### 13 Damian R. Cavaleri, on the brief ), 

### 14 Hoguet Newman Regal & Kenn e y, LLP, 

### 15 New York, NY, for Defe ndant



### 16 Appellant William Tennant. 

### 17 18 SARAH E. MCCALLUM ( Rebecca Monck 

### 19 Ricigliano , Katherine Polk Failla, 

### 20 on the brief ), Assistant United 

### 21 States Atto rneys, for Preet Bharara, 

### 22 United States Attorney for the 

### 23 Southern District of New York, New 

### 24 York, NY , for Appellee. 

### 25 26 JOHN M. WALKER, JR., Circuit Judge : 

### 27

D efendants

- Appellants Anthony Cuti and William Tennant appea l 

### 28
from judgments of conviction following a jury trial in the District 

### 29

Court for the Southern District of New York (Deborah A. Batts, 

### 30
Judge ). 1 This opinion addresses Cuti ’ s claim that the district 

### 31

1 Cuti was convicted of conspiracy under 18 U.S.C. § 371 (Count One) and substantive offenses of securities fraud in violation of 15 U.S.C. §§ 78j(b) & 78ff, 17 C.F.R. § 240.10b

- 5 and 18 U.S.C. § 2 (Count 2), making false statements in two SEC filin gs in violation of 15 U.S.C. §§ 78m(a) & 78ff, 17 C.F.R. § 240.13a

- 1 and 18 U.S.C. § 2 (Counts 3 and 4) , and making false statements in another SEC filing in violation of 15 U.S.C. §§ 78o(d) & 78ff, 17 C.F.R.

### 3

court erred in admitting testimon y from two lay witnesses as to 

### 1
what the accounting treatment of cert ain fraudulent transactions 

### 2

would have been absent the fraud, and Tennant ’ s claim s that his 

### 3

conviction should be overturned for insufficient evidence to prove 

### 4
his knowledge of the fraud and that it was error for the district 

### 5

court to give a conscious avoid ance jury instruction. We conclude 

### 6

that the district court did not abuse its discretion in admitting 

### 7
the testimony of the non

- expert witnesses and that Tennant’s claims 

### 8

are without merit

. 2 AFFIRMED. 

### 9

BACKGROUND 

### 10

Cuti was the former president , chief execu tive officer , and 

### 11

board chairman of Duane Reade, a retail drugstore chain in the New 

### 12
York City metropolitan area. Tennant was Duane Reade ’ s former 

### 13

chief financial officer or CFO and senior vice

- president, who 

### 14
continued to consult for the company on real e state matters after 

### 15

his formal retirement. 

### 16

The trial evidence, which we take as credited by the jury, 

### 17

showed that f rom 2000 to 2004 , Cuti and Tennant (collectively, 

### 18

“ defendants ” ) executed a number of schemes to inflate the company ’ s 

### 19

§§ 240.15d

- 1 & d

- 13 (Count 5). Tennant was acq uitted on Count 1 and convicted on Count 2. The district court sentenced Cuti and Tennant principally to imprisonment for three years and time served, respectively, and imposed fines of $5 million on Cuti and $10,000 on Tennant.

2 The appellants’ other a rguments on appeal are addressed in a summary order issued simultaneously with this opinion.

### 4

earnings in quarterly and annual financial statements filed with 

### 1

the Securities and Exchange Commission ( “ SEC ” )

. 

### 2

The principal scheme consisted of the fraudulent sale of real 

### 3

estate concessions and other rights that Duane Reade held in its 

### 4

store front leases. W hen Duane Reade vacate d a storefront with an 

### 5
unexpired lease, the right to the remainder of the lease term could 

### 6

have residual value and be sold back to the landlord or to a 

### 7

broker , especially when rental rates had risen . Cuti and Tennant, 

### 8

however, inflated earnings by f raudulently selling real estate 

### 9

concessions that were virtually worthless and surreptitiously 

### 10

repa ying the purchasers through payments disguised as expense s . 

### 11

Cuti and Tennant ’ s primary counterparty to the transactions in 

### 12

this scheme was the Winick Realty Group ( “ Winick Realty ” ) , a 

### 13

commercial real estate b rokerage firm and its subsidiaries 

### 14
(collectively, the “ WRG entities ” ). At trial, Cory Zelnik, a 

### 15
partner at Winick Realty, testified that in 2000, the WRG entities 

### 16
paid $806,000 for concessions in eight le ases that Duane Reade had 

### 17
already sold, assigned away or planned to abandon and another 

### 18
$890,000 for options to buy out Duane Reade from three leases that 

### 19
were of minimal value to Winick Realty. The defendants repaid the 

### 20

WRG entities for these outlays usi ng a sham consulting agreement 

### 21
and padded brokerage fees. The revenue immediately recognized from 

### 22
these transactions helped Duane Reade bridge a gap between its true 

### 23
earnings and analysts ’ expectations for the fourth quarter of 2000

. 

### 24

### 5

In subsequent quarte rs, the defendants continued to arrange other 

### 1

sham transactio ns to inflate company earnings and to repay the 

### 2

counter parties. 

### 3

B e cause Duane Reade recognized s uch significant income from 

### 4

the se activities , its external auditor , PricewaterhouseCoopers 

### 5

( “ PwC ” ) , required the company to include in its financial 

### 6

statements filed with the SEC, a note stating that the company had 

### 7
no side agreements with or other obligations to the transaction 

### 8
counterparties

. At trial, the government produced evidence of side 

### 9

agreem ents and demonstrated , through witness testimony and 

### 10

voluminous documentation , how the defendants executed and concealed 

### 11

their fraudulent conduct from the company ’ s internal accountants, 

### 12

PwC , the SEC , and the investing public. 

### 13
As part of its case, t he g o vernment called Kevin Hallinan, the 

### 14
PwC partner who was Duane Reade ’ s lead outside auditor, and John 

### 15

Henry, Tennant ’ s successor as CFO and the company ’ s chief in

- house 

### 16

accountant , to testify as to how they had accounted for the 

### 17
proceeds from the fra u dulent transactions ; how they would have 

### 18

accounted for the transactions had they been aware of the full 

### 19

facts; and how the material information that was withheld from them 

### 20

led to misstatements in the company ’ s financial statements. 

### 21

The ru les governing the accoun ting of real estate concession 

### 22

transactions, as Hallinan and Henry explained, are set forth under 

### 23
generally accepted accounting principles ( “ GAAP ” ) including 

### 24

### 6

Financial Accounting Standard s Board Statement No. 13 and SEC Staff 

### 1
Accounting Bulletin No. 104. In order for revenue generated from 

### 2

such a transaction to be recognized immediately , (1) Duane Reade 

### 3
had to have negotiated with the counterparty at arms ’ length, (2) 

### 4

the transaction must have had value, (3) to the extent the 

### 5

transaction relieve d Duane Rea de of its obligations under a lease 

### 6

agreement , the company could not be committed to enter into another 

### 7

lease with the same landlord, and (4) the transaction could not 

### 8

create any further obligations for Duane Reade to perform

. If any 

### 9
of the foregoing crit eria were not satisfied , immediate revenue 

### 10
recognition would have been inappropriate. Both the company ’ s 

### 11

internal accountants and outside auditor s adhered to these rules in 

### 12
booking revenue from real estate concession transactions

. At 

### 13

trial, the defendant s did not dispute that these rules were 

### 14
appropriately and consistently applied

. 

### 15
To demonstrate the impact of the defendants ’ deception on the 

### 16
preparation and review of the c ompany ’ s financial statements, the 

### 17

government presented Hallinan and Henry with inf ormation that Cuti 

### 18

and Tennant had withheld, such as side letters to the transactions, 

### 19

and asked how the withheld information would have affected their 

### 20
accounting. In each instance, Hallinan and Henry replied that if 

### 21
they had been aware of the withheld in formation, they would not 

### 22

have recognized the full amount of the transaction proceeds as 

### 23

immediate revenue. Defense counsel objected to the use of “ what

- 

### 24

### 7

if

- you - had

- known ” questions as eliciting inadmissible expert 

### 1
opinion testimony from fact witnesses. 

### 2

In his defense, Tennant asserted that , like Hallinan and 

### 3
Henry, he too was deceived by Cuti’s fraudulent scheme and signed 

### 4

transaction documents without knowing that fraud was afoot so there 

### 5

was insufficient evidence of his criminal intent to support a 

### 6

convi ction. He also objected to the district court’s inclusion of 

### 7
a conscious avoidance instruction in the jury charge , which he 

### 8
claimed was unwarranted and prejudicial. 

### 9
These arguments are again raised on appeal and we consider 

### 10

them in turn. 

### 11

DISCUSSION 

### 12

I. Cuti’s claim as to the non

- expert testimony 

### 13
Cuti argues on appeal, as he did below , that the “ what

- if

- you 

### 14

had

- known ” questions posed to Hallinan and Henry improperly 

### 15

elicited expert opinion testimony from non

- expert witnesses. 

### 16
Because both Hallinan and Henry , w hile professional accountants, 

### 17
were not qualified as experts , Cuti insists that their testimony as 

### 18
lay witnesses was inadmissible. 

### 19

We accord a distr ict court ’ s evidentiary rulings deference , 

### 20

and reverse only for abuse of discretion. United States v. 

### 21

Robin son , 702 F.3d 22, 36 (2d Cir. 2012). A district court has 

### 22
abused its discretion if its ruling is based on an erroneous view 

### 23
of the law or on a clearly erroneous assessment of the evidence, or 

### 24

### 8

if its decision cannot be located within the range of permissib le 

### 1

decisions. In re Sims , 534 F.3d 117, 132 (2d Cir. 2008). 

### 2

The Federal Rules of Evidence allow the admission of fact 

### 3
testimony so long as the witness has personal knowledge, see Fed. R. 

### 4

Evid. 602, 3 while opinion testimony can be presented by either a lay 

### 5
or expert witness, see Fed. R. Evid. 701 4 & 702. 5 The initial 

### 6
question is therefore whether the contested testimony should be 

### 7

characterized as fact or opinion. “ [ T ] he distinction between 

### 8

statements of fact and opinion is, at best, one of degree. ” Beech 

### 9

3 

### Rule 602 provides in relevant part:

A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has person al knowledge of the matter. Evidence to prove personal knowledge may consist of the witness’s own testimony.

4 

### Rule 701 states : If a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is: (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.

5 Rule 702 states : A witn ess who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert ’ s scientific, technical, or other specialized knowledge will help the trier of fact to understan d the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

### 9

Aircraft Corp. v. Rainey , 488 U.S. 153, 168 (1988). We need not 

### 1
adopt verbatim Judge Posner ’ s observation that “ [a]ll knowledge is 

### 2

inferential, and the combined effect of [Federal] Rules [of 

### 3
Evidence] 602 and 701 is to recognize this epistemological verit y 

### 4
but at the same time to prevent the piling of inference upon 

### 5
inference to the point where testimony ceases to be reliable ” to 

### 6
acknowledge its essential truth

. United States v. Giovannetti , 919 

### 7

F.2d 1223, 1226 (7th Cir. 1990). 

### 8

In this case, the inference that Hallinan and Henry were asked 

### 9
to make in answering the hypothetical question s was limited by the 

### 10

factual foundation laid in earlier admitted testimony and exhibits , 

### 11
the factual nature of the hypothetical s , and the witness es ’ 

### 12
reasoning , which was base d on undisputed accounting rules . These 

### 13

limitations left little room for the witness es to engage in 

### 14
speculation and ensure d that their testi mony fell near the fact end 

### 15

of the fact

- opinion spectrum. 

### 16

Moreover, t he witnesses , although not qualified as expert s, 

### 17

were fact witnesses of a unique sort. Each was a certified and 

### 18
experienced accountant personally familiar with the accounting of 

### 19

the transactions at issue. The hypothetical questions utilized 

### 20

facts that had been independently established in the record

. If 

### 21

the facts as the witnesses had understood them were A and the true 

### 22

facts were B , it was not inappropriate to ascertain , from the very 

### 23
witnesses responsible for their accounting, whether B would have 

### 24

### 10

affected that accounting under the same, undisputed accounting 

### 1

rules. And , s ince the applicable accounting rules were explained 

### 2

in detail , the reasoning process that the witnesses employed in 

### 3
answering the hypothetical s was straightforward and transparent to 

### 4

the jurors, who could readily discern whether t he response s given 

### 5

were reliable

. 

### 6

Cuti also contests whether the witnesses had sufficient 

### 7
personal knowledge, as required by Rule 602, to provide factual 

### 8
testimony. See Fed. R. Evid. 602

. This rule makes personal 

### 9
knowledge a foundation al requirement for fa ct witness testimony and 

### 10
is premised on the common law belief that “ a witness who testifies 

### 11
to a fact which can be perceived by the senses must have had an 

### 12
opportunity to observe, and must have actually observed the fact. ” 

### 13

Fed. R. Evid. 602 advisory commi ttee ’s note. 

### 14

However, p ersonal k nowledge of a fact “ is not an absolute ” to 

### 15

Rule 602 ’ s foundation al requirement, which “ may consist of what the 

### 16
witness thinks he knows from personal perception. ” Id

. Similarly, 

### 17
a witness may testify to the fact of what he did not know and how, 

### 18
if he had known that independently established fact, it would have 

### 19

affected his conduct or behavior. As this case illustrates, “ w hat



### 20

if

- you - had

- known ” questions that present withheld facts to a 

### 21

witness are especially useful to elicit testimony about the impact 

### 22

of fraud. Although we have not address ed the issue squarely, other 

### 23
circuits have permitted the use of hypothetical questions to 

### 24

### 11

inquire into the effect of a fraud

. See , e.g. , United States v. 

### 1

Orr , 692 F.3d 1079, 10 96

- 97 (10th Cir. 2012); United States v. 

### 2

Laurienti , 611 F.3d 530, 549 (9th Cir. 2010) ; United States v. 

### 3
Jennings , 487 F.3d 564, 582 (8th Cir. 2007); United States v. 

### 4

Ranney , 719 F .2d 1183, 1187

- 88 (1st Cir. 1983); United States v. 

### 5

Bush , 522 F.2d 641, 649

- 50 (7 th Cir. 1975)

. 

### 6
It also bears noting that t he re was nothing in the 

### 7
prosecution ’ s questions or in the answers they elicited that 

### 8
prevented the defense from challenging the factual accuracy of the 

### 9
disputed testimony . Indeed, Cuti pointed out at trial that at 

### 10

least o ne document Hallinan claim ed not to have seen was actually 

### 11
recorded in a log of documents covered by PwC ’ s audit, and thus 

### 12

Cuti was able to argue that the auditor could not have been 

### 13
deceived about the accounting for that transaction. Cuti also 

### 14
questioned the materiality of the accounting distortions to the 

### 15

company ’ s overall financial statement by extracting an admission 

### 16

from Hallinan that the fair comparison for the proceeds generated 

### 17

from the real estate concession transactions was to the company ’ s 

### 18

pre - t ax income and not to the considerably smaller after

- tax net 

### 19
income figure. 

### 20

While we hold that the challenged testimony was properly 

### 21
admitted as factual testimony, we alternatively hold that it is 

### 22
admissible as lay opinion under Federal Rule of Evidence 701 , which 

### 23
permits a lay witness to give an opinion if it is limited to “ one 

### 24

### 12

that is: (a) rationally based on the witness ’ s perception; (b) 

### 1
helpful to clearly understanding the witness ’ s testimony or to 

### 2
determining a fact in issue; and (c) not based on scient ific, 

### 3
technical, or other specialized knowledge within the scope of Rule 

### 4

702. 

### 5
Cuti argues that the hypothetical questions posed to the 

### 6

witnesses violated each subsection of Rule 701 because Hallinan and 

### 7
Henry were asked to comment on facts that they had no t personally 

### 8
perceived; because their interpretation of evidence already 

### 9

admitted was not “ helpful ” to the j ury ; and because the witnesses 

### 10
used specialized expertise and were not properly qualified as 

### 11
experts in accordance with Rule 702. 

### 12

Cuti ’ s Rule 701(a ) objection is unpersuasive because, as 

### 13

discussed earlier , the witnesses were not testifying to the 

### 14
existence of facts, but simply acknowledging that knowledge of such 

### 15
facts, already admitted into evidence, would have caused them to 

### 16
alter their accounting treatment. Their testimony was plainly 

### 17
helpful to the jury with in the meaning of Rule 701(b). 

### 18

Cuti ’ s Rule 701(c) contention also fails but requires a bit 

### 19

more elaboration

. The Advisory Committee ’ s Note on Rule 701 

### 20

instruct s that “ a witness ’ testimony mus t be scrutinized under the 

### 21
rules regulating expert opinion to the extent that the witness is 

### 22
providing testimony based on scientific, technical, or other 

### 23
specialized knowledge within the scope of Rule 702. ” Fed. R. Evid. 

### 24

### 13

701 a dv isory c omm ittee’s n ote, 200 0 a mend. Lay opinion under Rule 

### 1
701 must be limited to opinions that “ result [] from a process of 

### 2
reasoning familiar in everyday life. ” Id

. 

### 3
Cuti insists that if Hallinan and Henry ’ s answers to the 

### 4
hypotheticals are characterized as opinion, they are neces sarily 

### 5
expert opinion and must satisfy the qualification requirements of 

### 6

Rule 702 because the testimony involved the technical and 

### 7
specialized knowledge of the accounting profession. At first blush, 

### 8
the accounting rules involved in the recognition of reve nue from 

### 9
real estate concession transactions appear technical and unfamiliar 

### 10
to everyday life, but those rules or their interpretation were not 

### 11
in question in this case. The only issue was whether the withheld 

### 12

facts would have altered the rule s ’ applicati on. 

### 13

We held in Bank of China , N.Y. Branch v. NBM LLC that a 

### 14

witness ’ s specialized knowledge, or the fact that he was chosen to 

### 15
carry out an investigation because of this knowledge, does not 

### 16
render his testimony “ expert ” as long as the testimony was based o n 

### 17

his “ investigation and reflected his investigatory findings and 

### 18
conclusions, and was not rooted exclusively in his expertise. ” 359 

### 19

F.3d 171, 181 (2d Cir. 2004 ). However, if the testimony was “ not a 

### 20
product of his investigation, but rather reflected [hi s] 

### 21
specialized knowledge [of the banking industry] , ” then it was 

### 22
impermissible expert testimony. Id

. at 182. 

### 23
A similar question arose in United States v. Rigas , 490 F.3d 

### 24

### 14

208 (2d Cir. 2007). There, an accountant with personal knowledge 

### 1
of a company ’ s book s testified to the accounting impact of debt 

### 2

reclassifications, which the government had already established as 

### 3

fraudulent. We held that the accountant ’ s testimony was lay 

### 4
opinion because it did not address what the appropriate accounting 

### 5
technique should have been, but was instead simply offered to show 

### 6

what the amount of the debt would have been had the fraud not 

### 7

occurred. Id

. at 225. 

### 8
The testimony in this case was not “ rooted exclusively [in the 

### 9

witness ’ s] expertise ” and did not address the soundness o f the 

### 10
accounting rules. When the issue for the fact

- finder ’s 

### 11

determination is reduced to impact

-- whether a witness would have 

### 12
acted differently if he had been aware of additional information

-- 

### 13
the witness so testifying is engaged in “ a process of reaso ning 

### 14
familiar in everyday life. ” See Fed. R. Evid. 701 a dv isory 

### 15

c omm ittee’s n ote, 2000 a mend

. The testimony of Hallinan and Henry 

### 16
in response to the hypothetical questions was therefore also 

### 17

admissible as lay opinion. 

### 18

United States v. Garcia , 413 F.3d 20 1, 216 (2d Cir. 2005) , is 

### 19

not to the contrary. In that case, we held that an undercover law 

### 20
enforcement agent could not testify as lay opinion that, based on 

### 21
his knowledge gleaned from other drug interdiction cases, the 

### 22
defendant was a partner in the narc otics distribution conspiracy. 

### 23

Such testimony was inadmissible because the opinion was based on 

### 24

### 15

specialized experience that the agent had accumulated from other 

### 1
cases and involved a specialized reasoning process not readily 

### 2
understandable to the average j uror. Nothing similar occurred 

### 3
here. These witnesses testified based only on the ir experiences 

### 4
with matters pertinent to this case , and their reasoning was 

### 5
evident to the jury. 

### 6
Cuti also challenges the admission of the contested testimony 

### 7
as undermining the presumption of innocence by assuming his guilt

. 

### 8
In support of this argument, Cuti highlights Second Circuit case 

### 9

law that forbid s such questions in the cross

- examin ation of defense 

### 10

character witnesses. See , e .g. , United States v. Russo , 110 F.3d 

### 11

948, 952 (2d Cir. 1997) ; United States v. Oshatz , 912 F.2d 534, 539 

### 12

(2d Cir. 1990)

. 

### 13

This argument fails because t he challenged questions here were 

### 14

not directed at character witnesses and made no assumption of guilt

. 

### 15
Hallinan and Henry were asked, for the most part, narrow question s 

### 16
on direct examination designed to assess the impact of the 

### 17

fraudulent omissions on their accounting treatment

. The district 

### 18

court took pains to limit the hypotheticals to the impact of the 

### 19

withheld information and barred the witness es from speaking to the 

### 20
wrongfulness of the defendants ’ ac tions, leaving that analysis to 

### 21
the jury

. And, as noted, Cuti had ample opportunity to challenge 

### 22
the factual accuracy of the disputed testimony. 

### 23
Finally, Cuti argues that the manner in which the go vernment 

### 24

### 16

presented the withheld information to the witnesses was flawed 

### 1
because some questions were open

- ended, some were phrased in terms 

### 2
of opinion , and some were based on material not in the record. The 

### 3
district court reasonably required the government to reformulate 

### 4
its questions in some instances , but it did not always do so. We 

### 5
have examined the record and find any missteps in this regard to be 

### 6

minor relative to the witness es ’ entire testimony and harmless to 

### 7

the outcome of the trial

. When a court, upon review of the entire 

### 8

record, “ is sure that the [evidentiary] error did not influence the 

### 9
jury, or had but very slight effect, the verdict and the judgment 

### 10

should stand. ” Kotteakos v. United States , 328 U.S. 750, 764 (1946). 

### 11

In sum , we hold that under these circumstances the contested 

### 12
testimony was admissible fact testimony that was relevant , 

### 13
probative , and

— for the most part

— carefully controlled so as not to 

### 14
be unfairly prejudicial. See Fed. R. Evid. 401 , 403 & 602. 

### 15
Alternatively, it was admissible a s lay opinion testimony. See Fed. 

### 16

R. Evid. 701. T he district court did not abuse its discretion in 

### 17
admitting the challenged testimony

. 

### 18

II. Tennant’s claims 

### 19

A. Sufficiency of evidence 

### 20

Tennant argues that , even though he signed the various 

### 21

documents used to effec tuate the fraudulent real estate concession 

### 22

transactions and return

- trip payments disguised as commissions and 

### 23
consulting fees and engaged in other related activities , there was 

### 24

### 17

insufficient evidence that he knew or should have known that fraud 

### 1

was afoot t o allow the case to go to the jury

. 

### 2

We review a claim of insufficient evidence de novo , United 

### 3

States v. Geibel , 369 F.3d 682, 689 (2d Cir. 2004), but must uphold 

### 4
the jury verdict if “drawing all inferences in favor of the 

### 5
prosecution and viewing the evid ence in the light most favorable to 

### 6
the prosecution, any rational trier of fact could have found the 

### 7
essential elements of the crime beyond a reasonable doubt.” United 

### 8

States v. Santos , 449 F.3d 93, 102 (2d Cir. 2005) ( quotation marks 

### 9

omitted ). A defendan t challenging a conviction on sufficiency 

### 10
grounds undertakes a “heavy burden.” United States v. Kozeny , 667 

### 11

F.3d 1 22, 139 (2d Cir. 2011). A judgment of acquittal can be 

### 12

entered “ only if the evidence that the defendant committed the 

### 13
crime alleged is nonex istent or so meager that no reasonable jury 

### 14
could find guilt beyond a reasonable doubt.” United States v. 

### 15
Espaillet , 380 F.3d 713, 718 (2d Cir. 2004). In a close case, 

### 16
where “either of the two results, a reasonable doubt or no 

### 17
reasonable doubt, is fairly possible, the court must let the jury 

### 18

decide the matter.” United States v. Temple , 447 F.3d 130, 137 (2d 

### 19

Cir. 2006) (quotation marks and alteration omitted)

. 

### 20
In considering the sufficiency of the evidence supporting a 

### 21
guilty verdict, the evidence must be viewed in the light most 

### 22

favorable to the Government. Id

. at 136

- 37. T o “ avoid usurping 

### 23
the role of the jury,” United States v. Guadagna , 183 F.3d 122, 129 

### 24

### 18

(2d. Cir. 1999) , the C ourt must resolve all issues of credibility 

### 1
in favor of the jury’s verdict , Kozeny , 667 F.3d at 139. The Court 

### 2
must also “credit[] every inference that the jury might have drawn 

### 3
in favor of the government,” Temple , 447 F.3d at 136

- 37, because 

### 4
“the task of choosing among competing, permissible inferences is 

### 5
for the [jury], not fo r the reviewing court.” United States v. 

### 6

McDermott , 245 F.3d 1 3 3, 137 (2d Cir. 2001). 

### 7

Tennant argues that evidence of his knowledge of the fraud is 

### 8

insufficient because Zelnik could not definitively place him at a 

### 9
particular meeting where Cuti discussed this conspiracy with the 

### 10
principals of the WRG entities , who were in on the scheme . On that 

### 11

basis alone, Tennant reasons that his conviction was based on 

### 12

evidence that was “ ‘ at least a s consistent with innocence as with 

### 13
guilt , ’ ” and must be reversed . (Ten nant Brief at 45 (quoting United 

### 14

States v. Mulheren , 938 F.2d 364, 372 (2d Cir. 1991) ) . This 

### 15
approach is flawed because not only must the evidence be viewed in 

### 16
the light most favorable to the government, Santos , 449 F.3d at 102 , 

### 17

it must also be analyzed “ in conjunction [with all of the evidence 

### 18

and ] not in isolation,” United States v. Persico , 645 F.3d 85, 10 4 

### 19

(2d Cir. 2011) . This is so because the sufficiency test “ must be 

### 20
applied to the totality of the government’s case and not to each 

### 21

element, as each fact may gain color from others. ” Guadagna , 183 

### 22

F.3d at 130. 

### 23

### 19

We have little difficulty rejecting Tennant’s argument that 

### 1
the evidence was insufficient to support the jury’s finding that he 

### 2

was aware of the fraudulent character of the transactions at issue

. 

### 3

He either knew or had to know that the so

- called real estate 

### 4

concession rights that Duane Reade was selling to the WRG entities 

### 5

in 2000 were valueless because he had personally signed or approved 

### 6

transactions that had rendered those very rights worthles s in the 

### 7
first place or was otherwise privy to information that revealed 

### 8

their sham character. One conspicuous example of this is the lease 

### 9

remainder in the storefront at 19 Park Place, which Duane Reade 

### 10

sold, pursuant to a document that Tennant personall y signed, for 

### 11
$12,500 back to the landlord of that property. The very next day, 

### 12

Tennant personally signed the $806,000 deal with the WRG entities 

### 13

into which the same concessionary right was bundled for $75,000. 

### 14
The jury was entitled to infer guilty knowl edge on the part of 

### 15

Tennant, the company’s former CFO and senior vice

- president who was 

### 16

exp erienced in real estate matters, from his signing two contracts 

### 17

on back

- to

- back days to sell the same leasehold interest to two 

### 18
different buyers . Against this and s imilar evidence, his plea that 

### 19

other company personnel failed to tell him of the fraud could 

### 20
reasonably be rejected by the jury. 

### 21
Moreover, Zelnik testified at trial that not only was Tennant 

### 22
aware that the concessions being sold were worthless, Tennant and 

### 23

Cuti also determined the arbitrary values that the WRG entities 

### 24

### 20

would pay for them, and that it was Tennant who devised the 

### 1

vehicles used to ma ke return payments to the WRG entities . The 

### 2
totality of the government’s evidence was more than sufficient for 

### 3
the jury to conclude that Tennant was aware of the fraud that he 

### 4
was helping to perpetrate. 

### 5

B. Conscious a voidance c harge 

### 6
Tennant faults the district court for including a conscious 

### 7
avoidance charge in its instructions to the jury, which he says 

### 8

caused him pr ejudice and warrants reversal of his conviction. The 

### 9

d istrict c ourt instructed the jury that Tennant “knowingly” 

### 10
committed fraud if he was “actually aware he was making or causing 

### 11
a false statement to be made,” or if he “(a) was aware of a high 

### 12
probabilit y that, because of the [real estate concession ] 

### 13
transactions at issue, Duane Reade’s reported financial results 

### 14
were false or misleading but (b) that he deliberately and 

### 15
consciously avoided confirming these facts.” (Tr. 5004

- 05). The 

### 16

Court cautioned, howe ver, that the “knowingly” element would not be 

### 17
satisfied if “Tennant actually believed that the transactions were 

### 18
legitimate and not improper.” (Tr. 5005). 

### 19

Tennant takes no issue with the form of the conscious 

### 20
avoidance instruction, but rather argues that the charge should not 

### 21
have been given at all because there was an insufficient factual 

### 22
predicate to support it. This argument is without merit. 

### 23

### 21

We review a claim of error in jury instructions de novo , 

### 1
reversing only where there was prejudicial error in th e charge as a 

### 2

whole. United States v. Ebbers , 458 F.3d 110, 124 (2d Cir. 2006). 

### 3

“ A conscious

- avoidance charge is appropriate when (a) the element 

### 4
of knowledge is in dispute, and (b) the evidence would permit a 

### 5
rational juror to conclude beyond a reasonab le doubt that the 

### 6
defendant was aware of a high probability of the fact in dispute 

### 7

and consciousl y avoided confirming that fact. ” Id

. ( quotation marks 

### 8

omitted) ; see also United States v. Ferguson , 676 F.3d 260, 277

- 78 

### 9

(2d Cir. 2011). For example, in a sec urities fraud case, if a 

### 10
defendant attended meetings that were part of the charged scheme, 

### 11
yet argues that he lacked the requisite scienter because, for 

### 12
example, he “didn’t bother to read in full ” the documents he signed, 

### 13
the charge is appropriate. Ebbers , 458 F.3d at 124

- 25. 

### 14
The Government “need not choose between an ‘actual knowledge’ 

### 15
and a ‘conscious avoidance’ theory.” Ferguson , 676 F.3d at 278. 

### 16
To the contrary, in many cases, the evidence supporting each theory 

### 17

will be the same : 

### 18

[T]he same evidence that will raise an inference that the 

### 19 defendant had actual knowledge of the illegal conduct 

### 20 ordinarily will also raise the inference that the 

### 21 defendant was subjectively aware of a high probability of 

### 22 the existence of illegal conduct. Moreover, [conscious 

### 23 avoidance] may be established where a defendant’s 

### 24 involvement in the criminal offense may have been so 

### 25 overwhelmingly suspicious that the defendant’s failure to 

### 26 question the suspicious circumstances established the 

### 27 defendant’s purposeful contriv ance to avo id guilty 

### 28 knowledge. 

### 29

### 22

Kozeny , 667 F.3d at 133

- 34 ( quotation marks omitted) (first 

### 1

alteration added ). 

### 2
District courts should pay heed , however, to circumstances in 

### 3
which a conscious avoidance charge may be inappropriate . This is 

### 4
so when the only evidence th at alerts the defendant to the high 

### 5
probability of the criminal activity is direct evidence of the 

### 6

il legality such that the question for the jury is whether “the 

### 7
defendant had either actual knowledge or no knowledge at all of the 

### 8
facts in question. ” Unite d States v . Nektalo v , 46 1 F.3d 309, 316 

### 9

(2d Cir. 2006) (quotation marks omitted) . Similarly, if the 

### 10
defendant denies ever having access to the facts that the 

### 11
government claims should have alerted him to the fraud, the issue 

### 12

is not whether the facts he knew should have alerted him but 

### 13

whether he could even have known those facts. See , e .g. , United 

### 14
States v. Adeniji , 31 F.3d 58, 6 3 (2d Cir. 1994). 

### 15
In this case, the district court did not err in giving the 

### 16
conscious avoidance charge. The government’s theory was that, 

### 17
because Tennant was immersed in sham concession agreements that he 

### 18
personally signed or approved , determined phony values for the 

### 19

contracts, figured out how to get money back to the WRG entities 

### 20
through overpayments and sham consulting services, and met with the 

### 21
principals of the WRG entities to these ends, Tennant had actual 

### 22
knowledge of the fraud. 

### 23

### 23

In response, Tennant argued both that the evidence was lacking 

### 1

that he knew of the fraud and that the facts of which he was aware 

### 2

were insufficient to alert him to a high probability of fraud. 6 

### 3

Th is purported lack of knowledge defense, despite Tennant’s deep 

### 4

involvement in the transactions that effectuated the fraud, all but 

### 5
invited the conscious avoidance charge

. The same evidentiary facts 

### 6
that suppo rted the government’s theory of actual knowledge also 

### 7

raised the inference that he was subjectively aware of a high 

### 8
probability of the existence of illegal conduct and thus properly 

### 9

served as the factual predicate for the conscious avoidance charge, 

### 10

K ozeny , 667 F.3d at 133

- 34 . Finally, the government did not have 

### 11

to c ho ose between an “actual knowledge” theory or a “conscious 

### 12
avoidance” theory, Ferguson , 676 F

. 3d at 278 , and the district 

### 13
court did not err in giving both to the jury. Of course, it is 

### 14
plausi ble that the semi

- retired Tennant, attending part

- time to 

### 15
complex transactions, might have been sufficiently disengaged or 

### 16
trusting that in fact he lacked knowledge on any culpable level; 

### 17
but the jury was empowered to find otherwise, and did. 

### 18

19

6 

### For example, Tennant’s able counsel argued in summation,

There is no evidence that [Tennant] knew anything about improper sales of leases or lease rights [to the WRG entities]. Then and now he believed them to be entirely proper, arm’s

- length transactions. (Tr. 4850).

### 24 CONCLUSION 

### 1

F or the above reason s , and for those set forth in the 

### 2
accompanying s ummary o rder, the judgments of conviction and 

### 3

sentence are A FFIRMED

. 

### 4