Source: http://openjurist.org/433/f3d/273/united-states-v-stewart
Timestamp: 2014-04-17 08:16:06
Document Index: 491902207

Matched Legal Cases: ['art\n433', 'art 433', '§ 371', '§ 1001', '§ 1001', '§ 1621', '§ 1505', '§ 78', '§ 240', 'art, 2005', 'art, 305', 'art, 323']

433 F3d 273 United States v. Stewart | OpenJurist
433 F. 3d 273 - United States v. Stewart	Home433 f3d 273 united states v. stewart
433 F3d 273 United States v. Stewart 433 F.3d 273
UNITED STATES of America, Appellee,v.Martha STEWART and Peter Bacanovic, Defendants-Appellants.
Docket No. 04-3953(L)-CR.
Docket No. 04-4081(CON)-CR.
Last papers submitted: August 16, 2005.
Decided: January 6, 2006.
Walter E. Dellinger, O'Melveny & Myers, LLP (Pamela A. Harris, Jeremy Maltby, Matthew M. Shors, Toby Heytens, Maritza U.B. Okata, on the brief), Washington, DC, Martin G. Weinberg, Boston, MA, David Z. Chesnoff, Las Vegas, NV for Defendant-Appellant Martha Stewart.
Defendants Martha Stewart and Peter Bacanovic appeal from the final judgments of conviction entered July 20, 2004 in the United States District Court for the Southern District of New York. Following trial before the Honorable Miriam Goldman Cedarbaum, the jury found Stewart and Bacanovic guilty of conspiracy, concealing material information from and making false statements to government officials, and obstructing an agency proceeding; the jury also found Bacanovic guilty of perjury. On March 17, 2004, this Court granted Stewart's request for an expedited partial remand to permit the District Court to reconsider her sentence in light of United States v. Crosby, 397 F.3d 103 (2d Cir.2005). On remand, the District Court decided not to modify the sentence that was imposed on July 16, 2004. United States v. Stewart, No. 03 CR 717(MGC), 2005 WL 831272 (S.D.N.Y. Apr.11, 2005). Bacanovic requests remand of his sentence under Crosby at this time.
Defendants Martha Stewart and Peter Bacanovic were charged in Superseding Indictment S1 03 Cr. 717 with offenses that arose from their communications to government investigators who were probing trading activity of ImClone Systems, Inc. ("ImClone") stock on December 27, 2001, just ahead of the company's public announcement that its lead pharmaceutical product would not receive government approval. Count One charged that Defendants conspired to obstruct justice, make false statements and commit perjury in violation of 18 U.S.C. § 371; Count Two charged Bacanovic with making false statements in violation of 18 U.S.C. § 1001(a)(1) and (2), and Counts Three and Four charged Stewart with the same offense; Count Five charged Bacanovic with making and using a false document in violation of 18 U.S.C. § 1001(a)(3); Count Six charged Bacanovic with perjury in violation of 18 U.S.C. § 1621; Counts Seven and Eight charged Bacanovic and Stewart, respectively, with obstructing an agency proceeding in violation of 18 U.S.C. § 1505; and Count Nine charged Stewart with securities fraud in violation of 15 U.S.C. §§ 78j(b), 78ff and 17 C.F.R. § 240.10b-5.1
The trial lasted five weeks. At the close of evidence, pursuant to Fed.R.Crim.P. 29, the District Court granted Stewart's motion for judgment of acquittal as to Count Nine. The jury deliberated for three days and returned a verdict convicting Stewart on specifications in Counts One, Three, Four and Eight and convicting Bacanovic on specifications in Counts One, Two, Six and Seven. The jury acquitted Stewart of one specification in Count Three and one specification in Count Four and acquitted Bacanovic of falsifying a worksheet document as charged in Count Five, as well as one specification in Count Two and several specifications in Count Six. The District Court denied Defendants' post-trial motions for a new trial.
In this appeal, Stewart, who had already served the period of incarceration, requested immediate remand of the supervised release portion of the judgment, pursuant to Crosby, to give the District Court an opportunity to consider whether to modify the sentence in light of the Supreme Court's intervening decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). This Court granted Stewart's application and, on remand, the District Court declined to modify the original sentence, concluding that it would have imposed the same sentence even if the Sentencing Guidelines had not been mandatory at the time of sentencing. See Stewart, 2005 WL 831272 at *1. Bacanovic, who completed the incarceration portion of his sentence in June 2005, now requests that his sentence be remanded to the District Court for consideration of whether to modify under Crosby. His application is granted.
1. The events of December 27th, as told by Faneuil, Armstrong, Pasternak and Perret
a. the investigation begins
b. Faneuil's January 3rd interview
c. Bacanovic's January 7th interview
d. Stewart's February 4th interview
e. Bacanovic's February 13th testimony
Bacanovic explained that no order was entered into Merrill Lynch's computer system to trigger the sale of ImClone because Stewart, like most of his clients, eschewed automatic execution in favor of having him track a stock and give notice if and when it reached the target price. Bacanovic told investigators that on December 27th he left a message with Stewart's assistant, advising her of ImClone's price and asking that Stewart "[c]all my office." He stated that Faneuil later reported to him that Stewart called Bacanovic's line on the 27th and directed him to sell her shares. Bacanovic denied speaking with Stewart on that day. He also represented that in conversations since December 27th he and Stewart had discussed ImClone in general terms and that he had informed her of an internal Merrill Lynch review. He denied speaking with Stewart about her own ImClone trades, the government investigation, or the fact that he had been questioned about the events of December 27th.
f. Faneuil's March 7th interview
g. Stewart's April 10th interview
h. Faneuil's decision to contact the government
3. Stewart's June 2002 public statements
C. Judgment of acquittal on Count Nine
Following the close of evidence and before summations, the District Court granted Stewart's motion for judgment of acquittal, pursuant to Fed.R.Crim.P. 29, on Count Nine, which charged Stewart with defrauding MSLO investors by making false public statements in June 2002 (see Point B.3, supra) for the purpose of deceiving investors and thwarting the decline in the value of her own MSLO stock. See United States v. Stewart, 305 F.Supp.2d 368 (S.D.N.Y.2004). The District Court found that the evidence was insufficient to establish that Stewart intended to defraud investors when she issued the statements, holding that "a reasonable juror could not, without resorting to speculation and surmise, find beyond a reasonable doubt that Stewart's purpose was to influence the market in MSLO securities." Id. at 376.
United States v. Stewart, 323 F.Supp.2d 606, 609-10 (S.D.N.Y.2004) (footnote identifying appendices omitted). We agree with the District Court's overview of the jury's findings:
The Government called SEC enforcement attorney Helene Glotzer and FBI agent Catherine Farmer to introduce the statements that Stewart made to investigators in interviews on February 4th and April 10th and the statements that Bacanovic made in the January 7th interview. The jury heard the tape recording of Bacanovic's February 13th testimony answering questions about Stewart, her ImClone trade and their communications regarding the trade and the investigation. Each Defendant now complains that admitting into evidence certain portions of those statements for the truth of the matters asserted by one of them to prove facts used to convict the other violated their respective rights under the Confrontation Clause2 as articulated by the Supreme Court in Crawford v. Washington, 541 U.S. 36, 124 S.Ct. 1354, 158 L.Ed.2d 177 (2004). Those errors, they assert, mandate reversal of the judgments of conviction.
Crawford, which was issued just days after the verdict in this case, announced a per se bar on the admission of a class of out-of-court statements, denominated "testimonial," against an accused who had no prior opportunity to cross-examine the declarant. Crawford, 541 U.S. at 68-69, 124 S.Ct. 1354. While declining to "spell out a comprehensive definition of `testimonial,'" id. at 68, 124 S.Ct. 1354, the Supreme Court identified certain examples at the "core" of the definition, id. at 51-52, 124 S.Ct. 1354. "[T]he types of statements cited by the Court as testimonial share certain characteristics; all involve a declarant's knowing responses to structured questioning in an investigative environment or a courtroom setting where the declarant would reasonably expect that his or her responses might be used in future judicial proceedings." United States v. Saget, 377 F.3d 223, 228 (2d Cir.2004).
Neither Defendant objected at trial to admission of these challenged statements. Accordingly, we review their Sixth Amendment Crawford claims for plain error. See United States v. Bruno, 383 F.3d 65, 78 (2d Cir.2004). We find none.
Unpreserved Confrontation Clause claims are reviewed for plain error. Id. Under Fed.R.Crim.P. 52(b), an error that was not raised at trial may not be considered unless it is (1) an "error," meaning an unwaived deviation from a legal rule, that is (2) "plain," which means clear and obvious under the law at the time of appellate review, and (3) "affect[s] substantial rights" by influencing the outcome of the trial. Johnson v. United States, 520 U.S. 461, 466-67, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997) (internal quotation marks omitted; alteration in original); United States v. Olano, 507 U.S. 725, 732-35, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993) (internal quotation marks omitted). Even if such an error is noted, the discretion to correct it under Rule 52(b) is to be exercised only if the error "seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings." Johnson, 520 U.S. at 467, 117 S.Ct. 1544 (internal quotation marks omitted; alteration in original); Olano, 507 U.S. at 735-37, 113 S.Ct. 1770.
1. The District Court did not err in admitting the challenged statements
Turning to the first prong of plain error analysis, we find that there was no error in the admission of each of these co-defendant's statements against the other. Although the statements at issue, having been made during interviews with government officials in the course of an investigation, do have characteristics of Crawford's "core class of `testimonial' statements," Crawford, 541 U.S. at 51-52, 124 S.Ct. 1354; Saget, 377 F.3d at 229, in the context of the crimes for which Defendants were convicted, the challenged statements are part and parcel of co-conspirators' statements made in the course of and in furtherance of Defendants' conspiratorial plan to mislead investigators. See Fed.R.Evid. 801(d)(2)(E). But for the fact that they