Opinion ID: 8414535
Heading Depth: 2
Heading Rank: 2

Heading: Sufficiency of the Evidence: Right to Control

Text: Finazzo also challenges the sufficiency of the evidence supporting his mail and wire fraud convictions under the “right to control” theory. “We review de novo a challenge to the sufficiency of the evidence supporting a criminal conviction by viewing the evidence in the light most favorable to the government, drawing all inferences in the government’s favor and deferring to the jury’s assessments of the witnesses’ credibility.” United States v. Daugerdas, 837 F.3d 212, 221 (2d Cir. 2016) (internal quotation marks and alterations omitted). <cWe will sustain the jury’s verdict if any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” Id. (internal quotation marks omitted). There was ample evidence to support the jury’s conclusion that Finazzo intended to cause, (and did cause) tangible economic harm to Aéropostale. Through his fraudulent scheme to deprive Aéropos-tale of information regarding his related-party transactions, Finazzo used his control over Aéropostale’s vendor selection and pricing to steer Aéropostale’s business towards South Bay, which provided inferi- or products and charged higher prices than other vendors. As described more fully above, the Government presented many witnesses who testified that Finazzo had control over Aé-ropostale’s vendor selection and pricing in the graphic T-shirt and fleece businesses. For example, Julian Geiger — Aéropostale’s CEO — testified that Finazzo was primarily responsible for Aéropostale’s vendor selection and vendor pricing. CFO Michael Cunningham similarly stated that the quantities of goods bought from vendors needed to be approved by Finazzo and that Finazzo negotiated the final price with vendors. Other Aéropostale personnel testified similarly. For example, General Counsel Slezak testified that Finazzo “decided what type of product we would buy, how much of it, [and] which vendors would manufacture the product.” Dey App’x at 829. Meanwhile, John DiBarto, a merchandising manager, explained that. Finazzo was responsible for negotiating prices for graphic T-shirts with South Bay. He stated that asking for a reduction in price from South Bay would have been futile because Finazzo was “in charge of that.” Id. at 1128-29. Megan Lauritano; a product manager, testified that Finazzo determined the price and quantity of fleece orders from South Bay. In discussing vendor structure, Finazzo himself said “I guess I can make that decision.” Id. at 1175. The evidence also indicated that Fi-nazzo would not have been able to achieve this control without misrepresenting his interest in South Bay: Peter Conefry testified that Finazzo decided not to disclose his interest in South Bay to Aéropostale because Finazzo “didn’t think Aéropostale would go for it.” Id. at 1229. The evidence was certainly sufficient for the jury to conclude that Finazzo exercised his control to steer business to South Bay and to set the prices Aéropostale paid South Bay. Moreover, he actively discouraged — and rejected — use of other vendors. For example, Jennifer Heiser, an employee who reported to Finazzo, testified that she placed 97-99% of her graphic T-shirt orders with South Bay, as a result of pressure from Finazzo. She also stated that Finazzo fired an employee who challenged him regarding the use of South Bay as a graphic T-shirt vendor. DiBarto recalled that Finazzo yelled at him when he suggested comparing South Bay’s prices with another vendor. DiBarto also testified to an email in which Finazzo said he would “be swift in [his] actions” against an employee who had questioned South Bay’s costing structure. Id. at 1144-45. Jill Kro-nenberg, the head of the Women’s Division, testified that she shifted Aéropos-tale’s women’s graphic T-shirt business from Mias to South Bay because she “had no choice.” Id. at 994-95. Furthermore, Geiger and Cunningham both testified that Finazzo became angry and would end the conversation when scrutiny was placed on South Bay at executive meetings. There was also ample evidence that, in steering business towards South Bay, Fi-nazzo tangibly harmed Aéropostale. Slezak and Geiger both testified that Finazzo’s scheme directly prevented Aéropostale from receiving the best possible bargain. Indeed, Geiger and Heiser testified that Aéropostale’s profit margins on graphic T-shirts were less than their profit margins on other similar products. Furthermore, Kronenberg and Jinah Jung, a product manager, stated that South Bay’s women’s graphic T-shirts and fleeces were inferior in quality to other vendors’ products, and Heiser testified that the near-exclusive use of South Bay for men’s graphic T-shirts prevented Aéropostale from receiving the best quality products. This provided sufficient evidence from which a jury could reasonably conclude that Aéropos-tale was harmed by its dealings with South Bay. 21 The Government also presented multiple specific instances of harm. Geiger and Cunningham both testified that Finazzo refused to shift 25% of South Bay’s graphic T-shirt business overseas, despite estimates that it would save Aéropostale $5-6 million. Jung testified to an email Finazzo sent rejecting Jung’s proposal to save $300,000 on a fleece order by using a different vendor. Lauritano and George Justin Meno, also a product manager, both explained that South Bay had significant delivery delays on fleece products- that Aé-ropostale did not experience with other fleece vendors. Meno estimated that the delays that occurred in 2005 and 2006 cost Aéropostale approximately $1.8 million. Thus, there was sufficient evidence that, by depriving Aéropostale of information regarding his interest in South Bay, Finaz-zo was able to steer a significant amount of business to South Bay in a manner that inflicted tangible economic harm on Aéro-postale. The jury could reasonably con-elude that Aéropostale “could have negotiated a better deal for itself if it had not been deceived” by Finazzo, Mittelstaedt, 31 F.3d at 1217, and that Finazzo’s participation in the scheme evinced fraudulent intent, see D’Amato, 39 F.3d at 1257 (“When the necessary result of the actor’s scheme is to injure others, fraudulent intent may be inferred from the scheme itself.” (internal quotation marks omitted)). Finazzo’s reliance on United States v. Starr, 816 F.2d 94 (2d Cir. 1987) is misplaced. In Starr, the defendants operated a bulk mail service. Id. at 95.. Customers calculated postage for their mail themselves and paid the defendants. Id. at 96. The defendants hid mail subject to higher postage rates among lower-priced mail, allowing the defendants to pay lower postage than the customers had paid them. Id. We concluded that there was insufficient evidence of intent to inflict harm on the customers. Id. at 99. We reasoned that the customers “received exactly what they paid for,” because the defendants “did in fact mail their customers’ brochures promptly as promised and caused them to arrive at the correct destination.” Id. at 98-99. Finazzo argues that Aéropostale also received the value of its bargain with South Bay, which he claims was unaffected by his interest in South Bay. This argument misses a crucial distinction. In Starr, the customers freely bargained for a service and received that service. In contrast, Aéropostale did not freely bargain with South Bay. Instead, Finazzo exercised his control to steer business towards South Bay and to commit Aéropostale to paying excessive prices. By inducing Aéropostale to enter into disadvantageous bargains, Fi-nazzo harmed Aéropostale because it could have negotiated a better deal absent Fi-nazzo’s fraudulent scheme. Finally, Finazzo argues that the jury’s special verdict foreclosed a finding of intended harm. He claims that the Government only attempted to prove that Finazzo harmed Aéropostale by depriving it of money. He then points to the jury’s finding that Finazzo was not guilty on the basis of the intent to deprive Aéropostale of money for each substantive mail and wire fraud count 22 and suggests that no other intended harm could sustain the “right to control” convictions. Even if this conclusion by the jury could be interpreted as precluding consideration of the undisclosed kickbacks Finazzo received, Finazzo’s argument ignores the substantial evidence that he harmed Aéropostale in more ways than simply • depriving it of money through his receipt of kickbacks. For instance, as noted above, the jury heard testimony that the products South Bay provided were of inferior quality. It also heard substantial testimony regarding South Bay’s delivery delays for fleece products. Thus, the jury’s findings regarding Finazzo’s intent to deprive Aéropostale of money do not foreclose the “right to control” convictions. We therefore hold that there was sufficient evidence to support Finazzo’s convictions for depriving Aéropostale of its right to control its assets. 23