Court Opinion

ID: 2744525
Source: CourtListenerOpinion
Date Created: 2014-10-22 15:02:38.431964+00
Date Added: 2024-06-11T10:08:33.845805
License: Public Domain

13-2902
     United States v. Collins

                          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 Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 22nd day of October, two thousand fourteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                GUIDO CALABRESI,
 8                CHRISTOPHER F. DRONEY,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12       UNITED STATES OF AMERICA,
13                Appellee,
14
15                    -v.-                                               13-2902
16
17       JOSEPH COLLINS,
18                Defendant-Appellant.
19       - - - - - - - - - - - - - - - - - - - -X
20
21       FOR APPELLANT:                        WILLIAM J. SCHWARTZ (with
22                                             Jonathan P. Bach, Reed A. Smith,
23                                             Annika M. Goldman, on the
24                                             brief), Cooley LLP, New York,
25                                             New York.
26
27       FOR APPELLEE:                         MICHAEL A. LEVY (with Harry A.
28                                             Chernoff, Edward A. Imperatore,

                                                  1
 1                              on the brief), for Preet
 2                              Bharara, United States Attorney
 3                              for the Southern District of New
 4                              York, New York, New York.
 5
 6        Appeal from a judgment of the United States District
 7   Court for the Southern District of New York (Preska, Ch.J.).
 8
 9        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
10   AND DECREED that the judgment of the district court be
11   AFFIRMED.
12
13        Joseph Collins appeals from a judgment of the United
14   States District Court for the Southern District of New York
15   (Preska, Ch.J.), sentencing Collins principally to one year
16   and one day imprisonment after a jury convicted him of
17   conspiracy, securities fraud, false filings with the
18   Securities and Exchange Commission, and wire fraud. We
19   assume the parties’ familiarity with the underlying facts,
20   the procedural history, and the issues presented for review.
21
22        Collins was outside counsel for Refco, Inc., from as
23   early as 1997 until revelations of accounting fraud in 2005
24   forced the corporation into bankruptcy. The government
25   eventually charged Collins with supporting Refco executives’
26   scheme to conceal large amounts of intercompany debt. The
27   scheme was based on a series of artfully timed loans,
28   euphemistically called “short-term financings,” which
29   bounced the debt back and forth between a Refco subsidiary
30   and Refco’s parent company immediately before and after
31   audits. The short-term financings kept the growing
32   intercompany debt hidden from auditors, banks, customers,
33   and regulators throughout a 2004 leveraged buyout of Refco
34   and throughout a 2005 initial public offering.
35
36        Collins prepared documents for many of the individual
37   transactions that, in aggregate, effected the short-term
38   financings. However, Collins claimed in his defense that he
39   did not know of the fraud scheme motivating these
40   transactions. The government’s showing that Collins was
41   aware (or consciously avoided awareness) of the fraud
42   included: Collins’ work in drafting a Proceeds Participation
43   Agreement (“PPA”) in 2002, which revealed Refco’s desperate
44   capital shortage and buried the intercompany debt in a side
45   letter; Collins’ failure to disclose the PPA in the 2004
46   leveraged buyout, when the terms of the PPA might have
47   raised the buyers’ suspicions; Collins’ ready willingness to

                                  2
 1   opine in 2002 that Refco’s $700 million in intercompany debt
 2   was enforceable and collectable; and conversations with
 3   another attorney in 2004, negotiating a sale of Refco stock,
 4   in which Collins was explicitly confronted about the
 5   existence of $1.1 billion of debt.
 6
 7        In 2013, after a five-week trial, a jury convicted
 8   Collins of seven counts related to the fraud. Collins now
 9   appeals his conviction, challenging the district court’s
10   exclusion of opinion testimony and the delivery of a jury
11   instruction on conscious avoidance. Neither decision
12   represents prejudicial error.
13
14        1. The district court excluded the opinion testimony
15   of two lawyers. This Court “review[s] a district court’s
16   evidentiary rulings for manifest error.” Raskin v. Wyatt
17   Co., 125 F.3d 55, 65-66 (2d Cir. 1997). Opinion testimony
18   is inadmissible if it is not “helpful to . . . determining a
19   fact in issue.” Fed. R. Evid. 701(b); see id. R. 702(a).
20   An opinion is unhelpful and therefore may not be received in
21   evidence if, for example, the testimony would merely
22   recapitulate aspects of the evidence that the jury can
23   already perceive on its own, see Cameron v. City of New
24   York, 598 F.3d 50, 62 (2d Cir. 2010); the testimony “would
25   merely tell the jury what result to reach,” United States v.
26   Rea, 958 F.2d 1206, 1215 (2d Cir. 1992) (quoting Fed. R.
27   Evid. 704 Advisory Committee Note); or an expert’s testimony
28   would deal with matters within “the ken of the average
29   juror,” United States v. Castillo, 924 F.2d 1227, 1232 (2d
30   Cir. 1991).
31
32        Collins’ counsel sought to elicit opinions from one lay
33   witness and one expert regarding the materiality of the PPA
34   during the 2004 leveraged buyout. According to Collins’
35   proffer, both witnesses would have testified that the PPA
36   would have appeared immaterial to the leveraged buyout in
37   the eyes of a lawyer unaware of Refco’s fraud. The expert,
38   a mergers and acquisitions lawyer, would also have testified
39   generally about the work of transactional lawyers. The
40   district court rejected both proffers on the grounds that
41   the testimony would not be helpful to the jury, that the
42   opinions depicting the PPA as immaterial would be
43   conclusory, that Collins could alternatively establish
44   immateriality through cross-examination of government
45   witnesses, that a “war of experts” should be avoided, and
46   that the materiality vel non of the PPA was within the
47   competence of a jury unassisted by opinion testimony. As it

                                  3
 1   transpired, fact witnesses proved sufficient for Collins’
 2   counsel to present the defense view of the PPA’s
 3   materiality, including testimony that rights under the PPA
 4   were “extinguished” before the leveraged buyout closed. The
 5   district court’s evidentiary rulings were valid exercises of
 6   its discretion.
 7
 8        2. The district court delivered a conscious avoidance
 9   charge over Collins’ objection. When the parties in a trial
10   dispute the element of knowledge, a conscious avoidance
11   charge is appropriate if “the evidence would permit a
12   rational juror to conclude beyond a reasonable doubt that
13   the defendant was aware of a high probability of the fact in
14   dispute and consciously avoided confirming that fact.”
15   United States v. Cuti, 720 F.3d 453, 463 (2d Cir. 2013)
16   (quotation marks omitted). This test is satisfied “where[]
17   a defendant’s involvement in the criminal offense may have
18   been so overwhelmingly suspicious that the defendant’s
19   failure to question the suspicious circumstances establishes
20   the defendant’s purposeful contrivance to avoid guilty
21   knowledge.” United States v. Svoboda, 347 F.3d 471, 480 (2d
22   Cir. 2003) (internal quotation marks and alteration
23   omitted); see United States v. Goffer, 721 F.3d 113, 127-28
24   (2d Cir. 2013). The evidence supporting that overwhelming
25   suspiciousness is often the same evidence used to
26   demonstrate actual knowledge. See Svoboda, 347 F.3d at 480.
27
28        Collins argues on appeal that the government introduced
29   insufficient evidence to support a conscious avoidance
30   charge.1 This argument is untenable in view of the
31   government’s evidence that Collins provided a 2002 legal
32   opinion regarding $700 million in intercompany debt, at a
33   time when Refco’s public filings reported only $179 million
34   in intercompany debt. Further undercutting Collins’
35   argument is the trial evidence that another lawyer told him
36   in 2004 that Refco’s CEO had revealed the existence of a
37   $1.1 billion debt while negotiating the price of an equity
38   sale. This evidence was sufficient to support the district
39   court’s conscious avoidance charge.

         1
          Collins further argues that the district court’s
     instruction misstated the legal standard for conscious
     avoidance, but he concedes that controlling precedent of
     this Court supports the district court’s instruction. See
     Goffer, 721 F.3d at 128. Given that precedent, we see no
     fault in the content of the conscious avoidance instruction.
                                  4
1        For the foregoing reasons, and finding no merit in
2   Collins’ other arguments, we hereby AFFIRM the judgment of
3   the district court.
4
5                              FOR THE COURT:
6                              CATHERINE O’HAGAN WOLFE, CLERK
7

                                 5