Court Opinion

ID: 4156348
Source: CourtListenerOpinion
Date Created: 2017-03-29 15:00:31.253523+00
Date Added: 2024-06-11T14:29:51.783099
License: Public Domain

16-1341-cr
United States v. Newkirk

                            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.

       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 29th day of March, two thousand seventeen.

PRESENT: REENA RAGGI,
                 DENNY CHIN,
                 SUSAN L. CARNEY,
                                 Circuit Judges.
----------------------------------------------------------------------
UNITED STATES OF AMERICA,
                                                   Appellee,

                           v.                                             No. 16-1341-cr

HARVEY NEWKIRK,
                                     Defendant-Appellant,

CALVIN R. DARDEN, JR.,
                                                  Defendant.
----------------------------------------------------------------------
APPEARING FOR APPELLEE:                           SARAH E. PAUL (Andrew C. Adams, Micah
                                                  W.J. Smith, Assistant United States Attorneys,
                                                  on the brief), for Preet Bharara, United States
                                                  Attorney for the Southern District of New York,
                                                  New York, New York.

APPEARING FOR APPELLANT:                         BETH M. FARBER (Andrew Mark St. Laurent,
                                                 on the brief), Harris, St. Laurent & Chaudhry
                                                 LLP, New York, New York.

                                                     1
       Appeal from a judgment of the United States District Court for the Southern

District of New York (Jed S. Rakoff, Judge).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment entered on April 28, 2016, and order of restitution

entered on May 16, 2016,1 are AFFIRMED.

       Defendant Harvey Newkirk was convicted after a jury trial of wire fraud, see 18

U.S.C. §§ 1343 and 2; sentenced to six months’ imprisonment and three years of

supervised release; and ordered to pay $3.1 million in restitution. Newkirk has served

his prison term, but here challenges (1) the exclusion of defense expert testimony at trial,

and (2) the giving of a conscious avoidance charge on the knowledge element of the

fraud. We assume the parties’ familiarity with the facts and record of prior proceedings,

which we reference only as necessary to explain our decision to affirm.

1.     Exclusion of Defense Expert

       Newkirk argues that the district court erred in precluding expert witness testimony

on the role and duties of a transactional lawyer and the financial terms relevant to the

defendants’ attempted acquisition of Maxim magazine. Specifically, Newkirk contends

that his expert should have been permitted to explain to the jury that counterparties were

responsible for verifying the accuracy of proffered financial statements, the encumbrance

of collateral, or status of certain restricted stock, thereby negating any inference that

Newkirk’s misrepresentations were material or that he consciously avoided knowledge of

1
  Newkirk does not independently challenge the restitutionary component of his
sentence.

                                             2
their falsity. We “apply abuse-of-discretion review” to evidentiary rulings, “including

those as to the admissibility of expert testimony,” over which the district court exercises

“broad discretion.” Kogut v. Cty. of Nassau, 789 F.3d 36, 47 (2d Cir. 2015) (internal

quotation marks omitted). We identify no such abuse here.

       At the outset, we note that Newkirk’s defense in the district court was not that his

misrepresentations were immaterial.     Rather, he maintained that he was unwittingly

manipulated by Calvin Ramarro Darden, Jr. (“Junior”) and, therefore, was not a knowing

or intentional participant in the charged fraud. See Trial Tr. 2096 (“[Defense Counsel:]

[T]he only issue in this case is what did Harvey intend? What did he believe? Did he

knowingly and intentionally join in Junior’s fraud?”). Thus, the case is distinguishable

from United States v. Litvak, 808 F.3d 160 (2d Cir. 2015), on which Newkirk relies. See

id. at 181–82 (identifying abuse of discretion in district court’s exclusion of residential

mortgage-backed securities expert on minimal importance assigned to price

representations by securities traders where materiality of such representations was

“central issue” in case). In any event, Newkirk fails to show that, on the facts of this

case—which involved misrepresentations about the very identity of the person he was

representing—the district court was compelled to admit expert testimony regarding

customary industry practices in the absence of such misrepresentations. The fact that

attorneys do not generally check every fact communicated by a client before conveying

the fact to third parties has little if any bearing on attorney obligations not to convey

information they actually know, or consciously avoid knowing, is false—the only two

theories on which the jury was instructed that it could convict. Much less did such

                                            3
expert testimony speak to communications conveyed with intent to defraud, a further

requirement for conviction. See United States v. Rivernider, 828 F.3d 91, 104 (2d Cir.

2016).

         In these circumstances, the district court acted well within its discretion in

concluding that other witnesses with financial backgrounds were competent to explain

the transactions and related terminology presented by the case.    See, e.g., United States

v. Nouri, 711 F.3d 129, 145 (2d Cir. 2013) (deeming district court “well within its

discretion” to preclude testimony on customary commissions by brokerage firms where

cumulative of other evidence at trial); United States v. Collins, 581 F. App’x 59, 60 (2d

Cir. 2014) (summary order) (same, where court excluded testimony by two lawyers on

materiality of corporate agreement, and “the work of transactional lawyers” generally,

where “fact witnesses proved sufficient” to explain defense to jury); see also United

States v. Long, 917 F.2d 691, 702 (2d Cir. 1990) (deeming expert testimony about

structure and jargon of organized crime families unnecessary because “[w]e do not

believe that a New York jury needs expert testimony to understand . . . kickback

schemes”).     Indeed, Newkirk voiced no objection to such testimony when it was

presented by lay witnesses.

         Accordingly, Newkirk’s evidentiary challenge to the exclusion of expert testimony

fails on the merits.

2.       Conscious Avoidance Charge

         Newkirk argues that there was an insufficient factual basis for the conscious

avoidance charge given because the government’s proof focused on a theory of direct

                                             4
knowledge. See United States v. Lange, 834 F.3d 58, 76 (2d Cir. 2016) (explaining that

charge requires sufficient evidence for jury to conclude that defendant was “aware of a

high probability of the fact in dispute and consciously avoided confirming that fact”

(internal quotation marks omitted)). He does not challenge either the district court’s

instructions as to his direct knowledge of the charged fraud or the sufficiency of the

evidence to prove such knowledge. Nor does he challenge the substance of the district

court’s conscious avoidance instruction. On de novo review, see United States v. Cuti,

720 F.3d 453, 463 (2d Cir. 2013), we conclude that Newkirk’s sufficiency challenge to the

conscious avoidance charge is defeated by our precedent, see United States v. Hopkins, 53
F.3d 533, 542 (2d Cir. 1995) (holding conscious avoidance charge “not inappropriate

merely because the government has primarily attempted to prove that the defendant had

actual knowledge”); accord United States v. Ferguson, 676 F.3d 260, 278 (2d Cir. 2011);

see also United States v. Kozeny, 667 F.3d 122, 133–34 (2d Cir. 2011) (“[T]he same

evidence that will raise an inference that the defendant had actual knowledge of the illegal

conduct ordinarily will also raise the inference that the defendant was subjectively aware of

a high probability of the existence of illegal conduct.” (internal quotation marks omitted)).

       Here, Newkirk concedes that “the conscious avoidance charge would have been

justified” by facts such as (1) the release of $5 million from an investor’s escrow account as

authorized by a fraudulently generated e-mail from his confederate, Junior; and (2) the fact

that two different monthly account statements distributed to investors, which purportedly

represented the stock holdings of Calvin Darden Sr. (“Senior”), were implausibly identical.

Appellant’s Br. 37. Newkirk argues only that this basis for the instruction was vitiated by

                                              5
his “good faith” in disclosing the information to his law firm, which authorized him to

continue working on the transaction and reported the information to the authorities.

          We are not persuaded. First, Newkirk provides no support for the proposition that

a conscious avoidance instruction becomes inappropriate simply because the defendant has

disclosed information regarding the fraud to someone other than the victims. To the

extent disclosure of fraud may be a defense to criminal liability, it is so only as to future

conspiratorial acts—not completed substantive crimes—and requires the defendant to

cease his participation and so notify the government or his confederates. See, e.g., United

States v. James, 712 F.3d 79, 106 (2d Cir. 2013). That is not this case. Thus, even if

Newkirk’s good faith argument provided some basis for the jury to question his culpable

mens rea, see United States v. Dupre, 462 F.3d 131, 136, 139 (2d Cir. 2006), it did not

preclude the district court from instructing the jury that guilty knowledge of a fraud scheme

could be inferred from facts that “support a finding of conscious avoidance,” Appellant’s

Br. 37.

          Second, the two cited facts were hardly the only record support for the high

probability prerequisite for a conscious avoidance charge. For example, even before the

fraudulent release of funds, a Merrill Lynch broker had forwarded to Newkirk an investor

e-mail complaining of the financial disclosures, “I have a B of A statement for September

2013 and one for October 2013 and they are identical!!!” and asking “[w]hat is going on?”

Gov’t Add. 1. Newkirk acknowledged having twice received this e-mail, but claimed that

he did not open it because the subject line—“Very Strange”—did not catch his attention.

Further, the jury heard testimony that Senior had not agreed to participate financially in the

                                              6
corporate transaction at issue, and so instructed Newkirk. The government presented

evidence that Newkirk nonetheless (1) conducted himself as if he were representing Senior

during settlement negotiations over a loan, a matter he claimed was being handled by—but

which he initially avoided disclosing to—his law firm; and (2) continued to advise

potential lenders that Senior was willing personally to guarantee millions of dollars in

collateral. Finally, the jury heard a recording of Newkirk representing that approximately

$12 million was available for the transaction through a firm escrow account, more than

twice the amount that was being held in trust by the firm. On this record, the district court

did not err in charging conscious avoidance.

       Accordingly, Newkirk’s charging challenge fails on the merits.

3.     Conclusion

       We have considered Newkirk’s remaining arguments and conclude that they are

without merit. Accordingly, the judgment of the district court is AFFIRMED.

                                   FOR THE COURT:
                                   CATHERINE O’HAGAN WOLFE, Clerk of Court

                                               7