10-4819-cr 

United States v. Lewis

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED

ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE

PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A

DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN

ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST

SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1 At a stated term of the United States Court of Appeals

2 for the Second Circuit, held at the Daniel Patrick Moynihan

3 United States Courthouse, 500 Pearl Street, in the City of

4 New York, on the 18 day of July, two thousand twelve. th

5

6 PRESENT:

7 DENNIS JACOBS,

8 Chief Judge,

9 DENNY CHIN,

10 CHRISTOPHER F. DRONEY

11 Circuit Judges.

12

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14 UNITED STATES,

15 Appellee,

16

17 -v.- 10-4819-cr

18

19 MARIO S. LEVIS,

20 Defendant-Appellant.

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22

23 FOR DEFENDANT-APPELLANT: Elliot H. Scherker (Jeffrey B.

24 Sklaroff and Brigid F. Cech

25 Samole, on the brief), Greenberg

26 Traurig, P.A., Miami, FL.

27

28 FOR APPELLEE: Brent S. Wible (Katherine Polk

29 Failla, on the brief), Assistant

30 United States Attorneys, for

31 Preet Bharara, United States

32 Attorney for the Southern

33 District of New York, New York,

34 NY.

1
1 Appeal from a judgment of the United States District

2 Court for the Southern District of New York (Griesa, J.).

3 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

4 AND DECREED that the judgment of the district court is

5 AFFIRMED in part, VACATED in part, AND REMANDED.

6 Defendant-Appellant Mario S. Levis appeals his

7 conviction and sentence for one count of securities fraud,

8 15 U.S.C. § 78j(b), and two counts of wire fraud, 18 U.S.C.

9 § 1343. He raises six issues on appeal. We assume the

10 parties’ familiarity with the underlying facts, the

11 procedural history of the case, and the issues on appeal.

12 [1] Levis was the Senior Executive Vice President and

13 Treasurer of Doral Financial Corporation (“Doral”) at the

14 time he assured investors that certain risks were capped. 

15 Although not all contracts had embedded caps, he sought to

16 defend against these charges on the ground that transactions

17 involving hedging afforded the same assurance, or (at least)

18 he reasonably thought so. On appeal he argues that the

19 district court erroneously barred him from presenting his

20 hedging defense.

21 “A district court abuses its discretion when . . . its

22 evidentiary rulings are arbitrary, irrational, or simply

23 erroneous as a matter of law.” United States v. Cadet, 664

24 F.3d 27, 32 (2d Cir. 2011).

25 The district court erred in barring Levis from

26 presenting a hedging defense as to Count Three: the wire

27 fraud count predicated on Levis’s misstatements regarding

28 contractual caps on the pass-through rates of the mortgage

29 pools. Doral’s hedges took various forms, such as

30 derivative financial instruments, futures and options,

31 forward sale commitments, interest rate swaps, interest rate

32 collars, and options to repurchase the mortgage pools. 

33 These measures were not contractual caps, which would have

34 guaranteed a minimum pass-through rate for Doral, and

35 therefore would have been the safest measure. But these

36 hedges might have functioned as effective caps that

37 minimized the overall financial risk to Doral in the event

38 that a rise in interest rates impaired Doral’s income from

39 the mortgage sales.

2
1 One element of wire fraud is “a scheme to defraud.” 

2 United States v. Pierce, 224 F.3d 158, 165 (2d Cir. 2000);

3 accord 18 U.S.C. § 1343. “To establish [that] . . .

4 element, the government must prove (i) the existence of a

5 scheme to defraud, (ii) the requisite scienter (or

6 fraudulent intent) on the part of the defendant, and (iii)

7 the materiality of the misrepresentations.” Pierce, 224

8 F.3d at 165 (internal citations omitted). Evidence that the

9 hedges functioned as a cap could have raised doubts as to

10 materiality. The district court therefore erred in

11 excluding Levis from presenting such evidence, including lay

12 and expert testimony involving the existence of hedges and

13 their effectiveness. Accordingly, Levis’s conviction as to

14 the third count must be vacated and the matter remanded for

15 re-trial.

16 However, the district court did not abuse its

17 discretion in barring testimony and evidence involving

18 hedges with regard to Count Five (wire fraud) and Count One

19 (securities fraud), which are based on Levis’s

20 misrepresentation that Doral had been the subject of two

21 independent evaluations. As to each of those counts, the

22 Government presented substantial evidence that neither of

23 the two valuations was independent. Although the

24 Government’s evidence that hedging was ineffective may have

25 been used to corroborate the impact of Levis’s

26 misrepresentations, the existence and effectiveness of

27 hedging is irrelevant to whether there were, in fact, two

28 independent evaluations. Because hedging was legally

29 irrelevant to whether Levis committed securities and wire

30 fraud on that basis, the district court did not err in

31 excluding Levis’s hedging defense as to those counts.1

32 There is also no danger that the now-vacated wire-fraud

33 conviction involving contractual caps spilled over to

 The jury convicted Levis as to Count One based on 1

misrepresentations regarding caps and misrepresentations

regarding the two independent valuations. A-1785 (jury

verdict form). Even if the verdict as to caps must be

vacated due to the exclusion of Levis’s hedging defense, his

misrepresentation involving the valuations is an independent

basis that supports the verdict of conviction on Count One. 

Our decision with regard to Count Three therefore does not

require us to vacate Levis’s conviction as to Count One

(securities fraud). 

3
1 Levis’s convictions for misrepresentations involving

2 independent valuations. “A defendant bears an extremely

3 heavy burden when claiming prejudicial spillover.” United

4 States v. Griffith, 284 F.3d 338, 351 (2d Cir. 2002). 

5 Prejudicial spillover requires, inter alia, an evaluation of

6 “the strength of the government’s case” as to the counts in

7 question. Id. The evidence that Levis misrepresented that

8 Doral had been subject to two independent evaluations is so

9 overwhelming that there is no danger of spillover and no

10 “‘prejudice so substantial as to amount to a miscarriage of

11 justice.’” Id. (quoting United States v. Friedman, 854 F.2d

12 535, 563 (2d Cir. 1988)). In any event, Levis has forfeited

13 any such argument by failing to raise it on appeal. See

14 United States v. Pereira, 465 F.3d 515, 520 n.5 (2d Cir.

15 2006).

16 [2] Levis contends that his trial did not commence within

17 70 days of the public filing of his indictment, as required

18 by the Speedy Trial Act, and that no exception to the Speedy

19 Trial Act was satisfied. See 18 U.S.C. § 3161(h)(1)-(7).

20 In May 2009, the district court granted Levis’s

21 unopposed motion for a lengthy adjournment of the September

22 2009 trial date because Levis anticipated receiving

23 substantial discovery from the Government. In March 2010,

24 just prior to trial, Levis moved to dismiss the indictment

25 because the district court had not made the findings

26 necessary to satisfy the ends-of-justice exception to the

27 Speedy Trial Act when it granted Levis’s motion for

28 adjournment. See 18 U.S.C. § 3161(h)(7)(A).

29 The Speedy Trial Act requires that the findings

30 necessary for the ends-of-justice exception “be made, if

31 only in the judge’s mind, before granting the continuance,”

32 and that those findings need only “be put on the record by

33 the time a district court rules on a defendant’s motion to

34 dismiss.” Zedner v. United States, 547 U.S. 489, 506-07

35 (2006).

36 There was no violation of the Speedy Trial Act because,

37 before the district court formally denied Levis’s motion to

38 dismiss, it ratified a letter lodged by the Government,

39 confirming that the district court “ha[d] made the requisite

40 finding that the ends of justice warranted the continuance

41 . . . for the reasons stated in” Levis’s motion for

42 adjournment. A-130-31.

4
1 [3] Levis contends that venue in the Southern District of

2 New York was improper as to Count Five because there was no

3 direct evidence that he caused Doral’s 10-K report

4 (containing the misrepresentation regarding the independent

5 valuations) to be transmitted to that district. The

6 Government bears the burden of proving venue by a

7 preponderance of the evidence. United States v. Magassouba,

8 619 F.3d 202, 204 (2d Cir. 2010). We review de novo the

9 sufficiency of the evidence supporting the jury’s finding

10 that venue was proper. United States v. Tzolov, 642 F.3d

11 314, 318 (2d Cir. 2011).

12 “[V]enue is proper in a district where (1) the

13 defendant intentionally or knowingly causes an act in

14 furtherance of the charged offense to occur . . . or (2) it

15 is foreseeable that such an act would occur in the district

16 of venue [and it does].” United States v. Royer, 549 F.3d

17 886, 894 (2d Cir. 2008) (second alteration in original)

18 (internal quotation marks omitted). When the case involves

19 publication on the internet, venue is proper in any district

20 where it is reasonably foreseeable that the material will be

21 accessed. See id. at 895; United States v. Rowe, 414 F.3d

22 271, 279 (2d Cir. 2005). 

23 It was reasonably foreseeable that Doral’s 10-K, which

24 is available on the internet through the Securities and

25 Exchange Commission’s website, would be accessed by someone

26 in the Southern District of New York. Levis knew that at

27 least one of the analysts reporting on Doral (Omotayo

28 Okusanya, a research analyst at UBS) was based in New York

29 and would review the report. Levis informed Okusanya that

30 the 10-K would be released soon and that soon afterward

31 there would be a conference call with Doral’s management--a

32 call in which Okusanya participated from his office in

33 Manhattan. Venue in the Southern District of New York was

34 proper.

35 [4] Levis contends that he is entitled to a new trial based

36 on improper jury instructions. The propriety of a jury

37 instruction is a question of law that we review de novo.

38 United States v. George, 386 F.3d 383, 397 (2d Cir. 2004). 

39 “To secure reversal based on a flawed jury instruction, a

40 defendant must demonstrate both error and ensuing

41 prejudice.” United States v. White, 552 F.3d 240, 246 (2d

42 Cir. 2009). “A jury instruction is erroneous if it misleads

43 the jury as to the correct legal standard or does not

5
1 adequately inform the jury on the law.” United States v.

2 Walsh, 194 F.3d 37, 52 (2d Cir.1999) (internal quotation

3 marks omitted).

4 A defendant engages in wire fraud when he intentionally

5 deprives a victim of “potentially valuable economic

6 information . . . that could impact on economic decisions”

7 made by the victim. United States v. Wallach, 935 F.2d 445,

8 463 (2d Cir. 1991); accord United States v. Dinome, 86 F.3d

9 277, 283 (2d Cir. 1996); United States v. D’Amato, 39 F.3d

10 1249, 1257 (2d Cir. 1994). Levis deprived investors of

11 information that could impact their investment decisions by

12 falsely claiming that Doral had been subject to two

13 independent evaluations that confirmed Doral’s own internal

14 valuations.

15 Levis argues that the district court erred by failing

16 to instruct the jury that the information withheld from

17 investors must have some independent value or must bear on

18 the ultimate value of the transaction. See United States v.

19 Mittelstaedt, 31 F.3d 1208, 1217 (2d Cir. 1994). Even if

20 this was an appropriate statement of the law, Levis cannot 2

21 show prejudice. By misrepresenting that Doral had been

22 valued by two independent evaluators, Levis deprived Doral’s

23 actual and potential investors of information that had

24 independent value and that had bearing on the ultimate value

25 of Doral stock. Even if Doral’s internal evaluations were

26 correct, independent valuations would be of far greater

27 significance to possible investors and would substantially

28 affect the market value of Doral’s stock.

29 [5] Levis also contends that the district court erred by

30 failing to properly instruct the jury that he is not guilty

31 of wire fraud if he acted with a good faith belief that no

32 harm would befall Doral’s investors.

 Mittelstaedt involved the failure of a government 2

employee to reveal a conflict of interest and fulfill one’s

fiduciary obligation to the local government. 31 F.3d at

1217. Because the mail and wire fraud statutes do not

criminalize government ethics law, we concluded there was no

fraud. Id. The cases since Mittelstaedt, have limited it

to its compelling factual setting. See, e.g., Dinome, 86

F.3d at 284.

6
1 The district court charged the jury that

2 [G]ood faith is a defense to a charge of

3 fraud. . . . An honest belief in the truth of a

4 representation is a good defense no matter how

5 inaccurate the statement may turn out to be. In

6 considering whether or not the defendant acted in

7 good faith, you are instructed that a belief by

8 the defendant, if such a belief existed, that

9 ultimately everything would work out favorably for

10 investors does not require a finding by you that

11 the person acted in good faith.

12 T:3719-20. The district court also instructed the jury that

13 the Government must prove that Levis “intended to deceive

14 and to thereby cause harm to the victims of this scheme,”

15 T:3727, and that Levis “would be guilty of intending to

16 inflict harm on investors if he intended to put false

17 information before them which would deprive them of the

18 ability to make investment decisions based on actual facts,”

19 T:3728.

20 A jury instruction is considered in combination with

21 other instructions to determine whether the instructions, as

22 a whole, correctly describe the law in this Circuit. See

23 United States v. Mitchell, 328 F.3d 77, 82 (2d Cir. 2003). 

24 Taken together, these instructions accurately state the law

25 of this Circuit: even if Levis meant to cause no ultimate

26 harm to investors because he honestly believed Doral to be

27 properly valuated, he intended to cause them “immediate

28 harm” by denying them the “right ‘to control [their] assets

29 by depriving [them] of the information necessary to make

30 discretionary economic decisions.’” See United States v.

31 Ferguson, 676 F.3d 260, 280 (2d Cir. 2011) (as amended)

32 (quoting United States v. Rossomando, 144 F.3d 197, 201 n.5

33 (2d Cir. 1998)); accord United States v. Leonard, 529 F.3d

34 83, 91-92 (2d Cir. 2008).3

 Levis’s reliance on Rossomando is misplaced. In 3

Rossomando, the defendant believed that he was causing no

harm (immediate or otherwise), whereas Levis intentionally

deprived Doral’s investors of important information even if

he may have believed that his misrepresentation would cause

no ultimate harm because he thought Doral was a wise

investment. See Ferguson, 676 F.3d at 280 (discussing

7
1 The district court did not err in its instruction to

2 the jury regarding Levis’s good-faith defense.

3 [6] Levis argues that this is one of the “rare case[s]” in

4 which an improper statement in the Government’s summation

5 was so prejudicial as to warrant a new trial. See United

6 States v. Rodriguez, 968 F.2d 130, 142 (2d Cir. 1992). A

7 defendant who seeks to overturn a conviction based on a

8 prosecutor’s comment in summation must sustain the “heavy

9 burden” of showing that “the comment, when viewed against

10 the entire argument to the jury, and in the context of the

11 entire trial, was so severe and significant as to have

12 substantially prejudiced [the defendant], depriving him of a

13 fair trial.” United States v. Farhane, 634 F.3d 127, 167

14 (2d Cir. 2011) (internal citation and quotation marks

15 omitted).

16 The Government’s summation seemed to intimate that the

17 defense’s strategy was dishonest. When alerted, the

18 Government apologized to the jury and disavowed any such

19 inference. In that light, it cannot be said that the

20 statement was so severe and significant as to prejudice

21 Levis at all--much less deprive him of his right to a fair

22 trial.

23 Levis also claims that the Government unfairly

24 exploited the exclusion of the hedging defense. This

25 argument is obviated by our ruling that it was not error to

26 exclude the hedging defense (as to the surviving counts).

27 We have considered all of Levis’s additional arguments

28 and find them to be without merit. Accordingly, the

29 judgment of the district court is AFFIRMED in part, and

30 VACATED in part. The matter is REMANDED for further

31 proceedings consistent with this decision.

32 FOR THE COURT: 

33 Catherine O’Hagan Wolfe, Clerk

Rossomando, 144 F.3d at 200-03 & n.5). Rossomando has been

“limited to the quite peculiar facts that compelled [its]

result.” Ferguson, 676 F.3d at 280 (alteration in original)

(internal quotation marks omitted).

8