Court Opinion

ID: 3195875
Source: CourtListenerOpinion
Date Created: 2016-04-20 15:00:31.436466+00
Date Added: 2024-06-11T07:39:10.498211
License: Public Domain

14-4714-cr(L)
United States v. Bonventre

                              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 20th day of April, two thousand sixteen.

PRESENT: JOHN M. WALKER, JR.,
                 REENA RAGGI,
                 CHRISTOPHER F. DRONEY,
                                 Circuit Judges.
----------------------------------------------------------------------
UNITED STATES OF AMERICA,
                                 Appellee,                               Nos. 14-4714-cr(L),
                                                                              14-4715-cr(Con),
                             v.                                               14-4716-cr(Con),
                                                                              14-4719-cr(Con),
DANIEL BONVENTRE, ANNETTE BONGIORNO,                                          15-50-cr(Con)
JOANN CRUPI, AKA “Jodi,” JEROME O’HARA,
and GEORGE PEREZ,
                                 Defendants-Appellants.*
----------------------------------------------------------------------
APPEARING FOR APPELLANTS:                         ANDREW J. FRISCH (Jeremy B. Sporn,
                                                  Amanda L. Bassen, on the brief), Law Offices
                                                  of Andrew J. Frisch, New York, New York, for
                                                  Daniel Bonventre.

                                                 ROLAND G. RIOPELLE, Sercarz & Riopelle,
                                                 LLP, New York, New York, for Annette
                                                 Bongiorno.

*
    The Clerk of Court is directed to amend the caption as set forth above.

                                                     1
                                         ERIC R. BRESLIN (Melissa S. Geller, on the
                                         brief), Duane Morris LLP, Newark, New Jersey,
                                         for Joann Crupi.

                                         GORDON MEHLER (Sarah Lum, Rebecca
                                         Stack Campbell, on the brief), Mehler Law
                                         PLLC, New York, New York, for Jerome
                                         O’Hara.

                                         LARRY H. KRANTZ (Kimberly A. Yuhas, on
                                         the brief), Krantz & Berman LLP, New York,
                                         New York, for George Perez.

APPEARING FOR APPELLEE:                  AIMEE HECTOR, ANDREA GRISWOLD,
                                         Assistant United States Attorneys (David
                                         Abramowicz, Matthew Laroche, Karl Metzner,
                                         Assistant United States Attorneys, on the brief),
                                         for Preet Bharara, United States Attorney for
                                         the Southern District of New York, New York,
                                         New York.

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

District of New York (Laura Taylor Swain, Judge).

      UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgments entered on December 16, 2014 (Daniel Bonventre),

December 17, 2014 (Annette Bongiorno), December 19, 2014 (Jerome O’Hara),

December 22, 2014 (George Perez), and December 31, 2014 (Joann Crupi), are

AFFIRMED.

      Defendants, all former employees of Bernard L. Madoff Investment Securities

(“BLMIS” or the “Firm”), stand convicted after trial of multiple counts of conspiratorial

and substantive securities fraud, bank fraud, and records falsification; making false SEC

and IRS filings; obstructing enforcement of tax laws; and tax evasion for their

                                           2
participation in a massive scheme to defraud thousands of investors of tens of billions of

dollars. On appeal, defendants challenge various trial court rulings, the sufficiency of

the evidence, the government’s trial conduct, and the judgments of forfeiture.        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.     Bill of Particulars

       Bonventre argues that, as to Counts Nine through Fourteen of the Eighth

Superseding Indictment, charging falsification of investment adviser and broker-dealer

records, see 15 U.S.C. §§ 78q(a), 78ff, 80b-4, 80b-17; 17 C.F.R. §§ 240.17a-3,

275.204-2, he was entitled to particulars as to the records alleged to be false, why they

were false, and how Bonventre knew of their falsity. See Fed. R. Crim. P. 7(f). The

challenge fails because such “evidentiary detail is not the function of the bill of

particulars.”   United States v. Torres, 901 F.2d 205, 234 (2d Cir. 1990) (internal

quotation marks omitted). Particulars are necessary only where indictment charges are

“so general that they do not advise the defendant of the specific acts of which he is

accused.” United States v. Chen, 378 F.3d 151, 163 (2d Cir. 2004) (internal quotation

marks omitted). That is not this case.

       As to the 1992 receivership of investor fund Avellino & Bienes, Count Eleven

charged Bonventre with knowingly causing the Firm’s general ledger falsely to reflect

payment to the receiver from Firm assets instead of proceeds from loans collateralized by

its clients’ securities.     Counts Ten and Thirteen alleged that Bonventre not only

knowingly created documents falsely showing that BLMIS had executed trades with

                                             3
European counterparties to frustrate SEC reviews, but also that Bonventre caused those

documents to reflect the same trades with American counterparties, thereby frustrating

reviews by European accountants during the same period. Regarding the Firm’s 2005–

06 liquidity crisis, Counts Nine and Twelve charged Bonventre with knowingly causing

the Firm’s general ledger falsely to reflect that four specific wire transfers were used to

purchase assets, when, in fact, they were used to satisfy clients’ requests for withdrawals.

Finally, Count Fourteen alleged that Bonventre knowingly underreported $299 million of

BLMIS liabilities in a FOCUS report filed with the SEC on May 22, 2006.

       These pleadings present none of the concerns identified in United States v.

Davidoff, 845 F.2d 1151, 1154 (2d Cir. 1988) (noting indictment alleged extortion aimed

at one company while trial evidence showed extortion aimed at different companies), and

United States v. Bortnovsky, 820 F.2d 572, 574–75 (2d Cir. 1987) (noting indictment

alleged merely that defendants submitted false claims for burglary and fire loss, without

specifying dates of staged burglaries or which of “some 4,000 documents” were

fraudulent), on which Bonventre relies.

       Nor did the volume of discovery warrant particulars.    To the contrary, the district

court adequately addressed that concern by ordering early identification of prosecution

exhibits and the defendants to whom they pertained. See United States v. Rigas, 490
F.3d 208, 237 (2d Cir. 2007) (recognizing that bill of particulars enables trial preparation

and prevents surprise); United States v. Chen, 378 F.3d at 163 (explaining that particulars

are unnecessary where government has made sufficient disclosures of evidence and

witnesses by other means).

                                             4
      Bonventre also was not prejudiced by the government’s failure to particularize

whether he was charged with knowingly participating in Bernard Madoff’s Ponzi

scheme—as opposed to securities fraud generally—because such knowledge was not a

required element of the charged crimes.

      Accordingly, the denial of particulars manifests no abuse of discretion.        See

United States v. Chen, 378 F.3d at 163 (stating standard of review).

2.    Joinder of Charges and Defendants

      a.     Joinder of Tax Fraud Charges

      Crupi and Bonventre argue that certain tax fraud charges should have been severed

as insufficiently related to the securities fraud perpetrated at the Firm. See Fed. R.

Crim. P. 14(a). Under Fed. R. Crim. P. 8, which governs joinder of offenses and

defendants in criminal trials, tax counts can properly be joined with non-tax counts where

the revenue at issue “arose directly” from the latter crimes, or when one scheme

“stemmed” from the other, such that proof of one is “indispensable for a full

understanding of the other,” United States v. Turoff, 853 F.2d 1037, 1043–44 (2d Cir.

1988).1 Applying these standards de novo, we identify no joinder error compelling

severance. See United States v. Rittweger, 524 F.3d 171, 177 (2d Cir. 2008).

      According to the indictment, Crupi’s misuse of a corporate credit card was one of

the means by which Madoff financially rewarded her participation in the securities fraud.

1
  Although the parties appear to agree that Rule 8(b)—and not Rule 8(a)—governs
joinder of offenses in multi-defendant trials, we have yet to resolve the matter. See
United States v. Shellef, 507 F.3d 82, 97 n.12 (2d Cir. 2007). Nor must we do so here,
insofar as joinder was proper under either standard.

                                            5
Moreover, insofar as the Firm’s legitimate operations did not generate sufficient revenue

to meet its expenses by 2002, Crupi’s use of a BLMIS card to pay personal charges from

2004–08 resulted in her receipt of unreported income representing “funds derived from

non-tax violations.”    United States v. Turoff, 853 F.2d at 1043.           United States v.

Halper, on which Crupi relies, is distinguishable because the government there conceded

that sums charged in an income-tax evasion indictment were not the same as those at

issue in a Medicaid fraud. See 590 F.2d 422, 429 (2d Cir. 1978).

       Insofar as Bonventre argues that “neither the evidence accessible to the district

court before trial, nor the proof at trial itself, established that the two categories of crimes

[he committed] were somehow interdependent,” Bonventre Br. 100, the argument fails

because the propriety of joinder turns on what is alleged in the indictment, not on

evidence later adduced. See United States v. Rittweger, 524 F.3d at 178 & n.3. The

indictment here alleged that, in carrying out tax offenses, Bonventre utilized the same

methods—backdated trades and fictitious records to generate “profits” and “losses” in

investment accounts—that were central to the Firm’s securities fraud. Joinder was,

therefore, proper because Bonventre’s tax fraud “hinged on” the same activities taken to

advance the securities fraud. United States v. Turoff, 853 F.2d at 1044; cf. United

States v. Litwok, 678 F.3d 208, 217 (2d Cir. 2012) (identifying “no evidentiary overlap”

between alleged tax violation and fraudulent insurance claim); United States v. Shellef,

507 F.3d 82, 99 (2d Cir. 2007) (noting that alleged tax violations predated alleged wire

fraud conspiracy).

                                               6
      Nor has Bonventre carried the “heavy burden” of showing that the failure to sever

the tax counts caused prejudice so severe as to result in “a miscarriage of justice.”

United States v. Rittweger, 524 F.3d at 179. Bonventre’s argument—that his knowing

involvement in the securities counts was rendered more plausible by unrelated conduct

alleged in the tax counts—is undermined by indictment allegations that he engaged in

identical fraudulent conduct to commit both crimes. Accordingly, the district court did

not abuse its “virtually unreviewable” discretion by denying severance, id. (internal

quotation marks omitted), particularly in light of its repeated limiting instructions, see

J.A. 10850, 11930.

      b.     Pre-Trial Motion To Sever O’Hara and Perez

      O’Hara and Perez argue that the failure to grant them severance precluded a

reliable jury determination of guilt because they were “mid-level technical workers with

narrow roles,” and other defendants had worked at BLMIS for “much longer periods,”

exercised management roles, had direct client contact, used corporate charge cards, and

received “significantly higher” compensation.      O’Hara Br. 92–93.       Yet “differing

levels of culpability and proof are inevitable in any multi-defendant trial and, standing

alone, are insufficient grounds for separate trials.” United States v. Spinelli, 352 F.3d
48, 55 (2d Cir. 2003) (alteration and internal quotation marks omitted). In any event,

the indictment alleged—and trial record established—that O’Hara and Perez, who were

each employed by the Firm for approximately two decades, were integral members of the

securities fraud conspiracy insofar as they created multiple computer programs falsely

documenting nonexistent transactions, thereby deceiving regulators and auditors and

                                            7
enabling Madoff to perpetuate the fraud without discovery. See also id. at 55 (deeming

joint trials particularly appropriate where defendants are charged with participation in

same criminal conspiracy). O’Hara’s claim that separate trials would have avoided

prejudicial spillover fails because he and Perez collaborated with co-conspirators Crupi,

Bonventre, Enrica Cotellessa-Pitz, and Frank DiPascali, requiring much the same

evidence whether their trials were severed or not.        See id. at 55–56.    Under these

circumstances, and in light of the federal preference for joint trials of co-conspirators and

the district court’s careful limiting instructions, see, e.g., United States v. O’Connor, 650
F.3d 839, 858 (2d Cir. 2011), we identify no abuse of discretion in the denial of pre-trial

severance.

       c.     O’Hara’s Mid-Trial Severance Motion

       O’Hara asserts that a mid-trial severance motion should have been granted

because of the admission of a modified version of Perez’s inculpatory statement.2 We

2
  The statement originally indicated that Perez told Matthew Cohen that Madoff “had
asked the programmers to create certain computer programs that made them
uncomfortable, and had paid them $100,000” for doing so. J.A. 12732 (emphasis
added). At trial, it was modified so that Cohen testified as follows:
              I asked Mr. Perez what led to him opening and then
              subsequently closing this account. He told me that Mr.
              Madoff had asked him to make some changes to one of the
              AS/400 programs in order to modify statements that had
              already been printed and sent to a customer. He told me that
              he was uncomfortable doing this and that he had told Mr.
              Madoff that, and Mr. Madoff had said, I’ll give you some
              money, just do it, and he did.
Id. at 1089 (emphasis added).

                                             8
review challenged evidentiary rulings for abuse of discretion, see United States v.

Kaplan, 490 F.3d 110, 120 (2d Cir. 2007), which we do not identify here.

       Not only did Perez’s modified statement not reference O’Hara, but the district

court also instructed the jury that the statement was admitted only against Perez. See

J.A. 1060.3 O’Hara’s assertion that these factors should not be determinative is at odds

with the very case on which he relies. See United States v. Gomez, 617 F.3d 88, 92 (2d

Cir. 2010) (observing that main import of challenged hearsay was its impermissible

inculpatory identification of defendant).

       Accordingly, O’Hara’s argument for mid-trial severance also fails on the merits.4

3.     Brady/Giglio Claim

       Perez argues that the government violated Brady v. Maryland, 373 U.S. 83 (1963),

and Giglio v. United States, 405 U.S. 150 (1972), by failing to disclose a summary of its

3
  O’Hara’s assertion that the government “used Cohen’s testimony to argue that there
was a direct bearing on [his] guilt,” O’Hara Reply 36–37 (citing J.A. 11760–61, 11772,
11827–28), is betrayed by the record O’Hara cites, which reflects the prosecutor’s
discussion of the letter O’Hara wrote to his brother. See id. at 12286.
4
   Insofar as O’Hara asserts a Confrontation Clause challenge to Perez’s modified
statement, we decline to consider an argument advanced only in a footnote or reply brief.
See O’Hara Br. 89 n.7; O’Hara Reply 29–34; see, e.g., United States v. Svoboda, 347
F.3d 471, 480 (2d Cir. 2003) (regarding footnote); United States v. Yousef, 327 F.3d 56,
115 (2d Cir. 2003) (regarding reply brief). In any event, the challenge is meritless
because Perez’s statement was modified, consistent with Bruton and its progeny, to
remove any reference to another programmer. Cf. United States v. Jass, 569 F.3d 47, 60
(2d Cir. 2009) (“[T]he Supreme Court’s Confrontation Clause concern has been with
juries learning that a declarant defendant specifically identified a co-defendant as an
accomplice in the charged crime.”). It is therefore irrelevant that other trial evidence
implicated O’Hara in Perez’s conduct. See id. at 61. Further, while O’Hara asserts
that the jurors could not follow the district court’s limiting instruction, his failure to
demonstrate an “overwhelming probability of their inability to do so” defeats his
challenge. Id. at 60 (emphasis in original) (internal quotation marks omitted).

                                            9
interview with retired FBI Agent Keith Kelly, in which Kelly described a prior statement

by Matthew Cohen.5      To prevail on this claim, Perez must demonstrate the undisclosed

statement’s materiality. See Kyles v. Whitley, 514 U.S. 419, 434 (1995) (stating that

withheld evidence is “material” if there is “reasonable probability” that disclosure would

have resulted in different outcome (internal quotation marks omitted)); see also Wearry v.

Cain, 136 S. Ct. 1002, 1006 (2016). On de novo review, see United States v. Mahaffy,

693 F.3d 113, 127 (2d Cir. 2012) (according trial judge’s factual conclusions as to effect

of nondisclosure great weight, but determining materiality de novo), we conclude that

Perez fails to carry his burden.

       Perez argues that Kelly’s statement is both exculpatory and impeaching because

Cohen does not therein state that Perez accepted compensation notwithstanding his

discomfort in doing so. Perez contends that the absence of this detail suggests that he

was comfortable writing the programs at issue, which is consistent with the defense

theory that he was duped by Madoff and DiPascali and, therefore, lacked criminal intent.

5
  Kelly’s statement indicated, in relevant part, that “COHEN told KELLY about a
conversation COHEN had with GEORGE PEREZ, in which PEREZ indicated to
COHEN that PEREZ had received compensation, whether in the form of cash or a
deposit to PEREZ’s investment advisory account, in exchange for writing certain
computer programs.” Suppl. App. 145. Meanwhile, Cohen testified:
              I asked Mr. Perez what led to him opening and then
              subsequently closing this account. He told me that Mr.
              Madoff had asked him to make some changes to one of the
              AS/400 programs in order to modify statements that had
              already been printed and sent to a customer. He told me that
              he was uncomfortable doing this and that he had told Mr.
              Madoff that, and Mr. Madoff had said, I’ll give you some
              money, just do it, and he did.
J.A. 1089.

                                           10
This possibility, which is hardly the only interpretation of the undisclosed statement, is

not enough “‘to put the whole case in such a different light as to undermine confidence in

the verdict.’” Id. (quoting Youngblood v. West Virginia, 547 U.S. 867, 870 (2006)).

This is particularly so given other more significant impeachment of Cohen’s credibility,

such as FBI Agent Paul Takla’s testimony that Cohen himself had earlier relayed a

version of events somewhat different from that testified to at trial.6 Cf. United States v.

Spinelli, 551 F.3d 159, 165 (2d Cir. 2008) (“[I]f the information withheld is merely

cumulative of equally impeaching evidence introduced at trial, so that it would not have

materially increased the jury’s likelihood of discrediting the witness, it is not material.”).

       More importantly, Cohen’s trial testimony was corroborated by other evidence of

Perez’s guilty knowledge, notably, the September 13, 2006 handwritten letter that Perez

himself produced to the government, in which he acknowledged telling DiPascali of “my

unwillingness to work on projects which I am uncomfortable with.” J.A. 12288; see id.

at 10830. DiPascali, a cooperating witness, also testified that, in 2006, Perez—along

with O’Hara—confronted Madoff and expressed their discomfort working on computer

programming for the investment advisory (“IA”) business, but ultimately accepted

compensation for continuing to do certain aspects of this work. See id. at 5519–28.

       Under these circumstances, we identify no error in the denial of Rule 33 relief on

Brady/Giglio grounds.

6
  According to Takla’s notes, in April 2011 Cohen told the FBI that Perez had reported
Madoff asking for changes to the system, which Perez declined to make “because he felt
uncomfortable,” whereupon Madoff responded that “if Perez was not comfortable with
making changes, then Perez should not do it.” J.A. 10745.

                                              11
4.       Sufficiency of the Evidence

         O’Hara, Perez, Bongiorno, and Crupi each challenge the sufficiency of the

evidence supporting certain of their convictions. Although we review such claims de

novo, defendants bear “a very heavy burden,” United States v. Abu-Jihaad, 630 F.3d 102,

135 (2d Cir. 2010) (internal quotation marks omitted), because the standard of review is

“exceedingly deferential,” United States v. Brock, 789 F.3d 60, 63 (2d Cir. 2015)

(internal quotation marks omitted). We must affirm if, viewing the evidence in the light

most favorable to the government, “any rational trier of fact could have found the essential

elements of the crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319

(1979) (emphasis in original); accord United States v. Binday, 804 F.3d 558, 572 (2d Cir.

2015).

         a.    Securities Fraud Convictions of O’Hara and Perez

         O’Hara, joined by Perez, argues that, notwithstanding their extensive and

undisputed involvement in the work of the fraudulent IA business, evidence of their

criminal intent was in equipoise and, thus, legally insufficient to sustain any of their

convictions. See O’Hara Br. 53–54 (citing, inter alia, United States v. Glenn, 312 F.3d
58, 70 (2d Cir. 2002)). The argument fails because trial evidence was not in equipoise

but tilted decidedly in favor of a finding of culpable mens rea.

         O’Hara and Perez (1) designed computer programs that created books and records

filled with randomly generated numbers in order to deceive regulators and clients;

(2) became so uncomfortable with their work that, by 2006, they feared for their jobs,

families, and lives, see J.A. 12286, 12288; see also id. at 10830; (3) unsuccessfully urged

                                             12
Madoff to shut down the IA business, see id. at 5519–23; (4) accepted additional

compensation and continued programming for the IA business, even after expressing

their discomfort, see id. at 5527–29; (5) deleted from the server “special programs” they

had created to produce fictitious material for SEC and KPMG audits, see id. at 5528–29,

8209–10; and (6) implicitly advised a colleague to close his IA account, see id. at 7374–

76.7 This was sufficient to allow a reasonable juror to infer both defendants’ awareness

of the fraud and their intent that it succeed. See, e.g., United States v. Singh, 390 F.3d
168, 188 (2d Cir. 2004) (recognizing that proof of fraudulent intent is often

circumstantial rather than direct); United States v. Panza, 750 F.2d 1141, 1150 (2d Cir.

1984) (holding that jury reasonably could infer from number of “red flags” to which

defendant was exposed that he knew he was participating in fraudulent scheme, even

though he may not have known all details).

      To the extent O’Hara invites this court to re-weigh evidence, draw inferences in

his favor, or re-assess credibility, see O’Hara Br. 57–58, the jury verdict precludes such

undertakings. See United States v. Binday, 804 F.3d at 572.

7
  The jury also heard evidence that, after the Firm’s collapse, (1) O’Hara told a colleague
to delay responding to investigators’ requests, and seemed upset to learn that the
colleague had discussed with investigators a program that had helped perpetrate the
fraud, see id. at 8706–07; and (2) Perez told Matthew Cohen, an attorney responsible for
the BLMIS Trustee’s discovery and data preservation efforts, that Madoff had paid Perez
to continue programming for the IA business after Perez told Madoff that he was
uncomfortable doing so, see id. at 1089.

                                             13
       b.     Tax Evasion Convictions of Crupi and Bongiorno

       Crupi and Bongiorno challenge the sufficiency of their tax evasion convictions,

see 26 U.S.C. § 7201, insofar as they were found liable for a “substantial tax debt.”

United States v. Coplan, 703 F.3d 46, 66 (2d Cir. 2012). Their challenges fail.

       The government adduced evidence that, between 2003 and 2008, Crupi used a

BLMIS credit card to pay over $288,000 in personal expenses, which—for tax years

2004, 2007, and 2008—resulted in more than $134,000 in unreported income and a

$38,000 tax deficiency.      Crupi argues that the American Express statements were

insufficient to prove that the charges were, in fact, personal. But assuming, as we must,

that the jury credited DiPascali’s testimony that it was not Crupi’s job to entertain clients,

the personal nature of her charges could reasonably be inferred from: (1) the amount,

vendor, and purchase location (often near Crupi’s home, as opposed to the Firm’s

Manhattan office) of the non-travel expenses;8 and (2) the names of Crupi’s family

members on many of the travel expenses. Nor, as Crupi insists without supporting

authority, was the government required to prove a negative, i.e., that Crupi had not

reimbursed BLMIS for her personal expenses. See United States v. Downing, 297 F.3d
52, 56–57 (2d Cir. 2002) (refusing to overturn jury verdict merely because exculpatory

account is “plausible,” because “the government need not disprove every possible

hypothesis of innocence” (alteration and internal quotation marks omitted)).

8
  These included approximately $40,000 on wine purchases in New Jersey and $5,000 on
pet care.

                                             14
        Bongiorno’s challenge is equally meritless.     The government presented the jury

with evidence that she failed to report as taxable income $813,727 withdrawn, between

1994 and 2008, from the Firm’s “Special 1” and “Special 2” accounts via the Chase ‘703

account, resulting in a $239,334 tax deficiency.         Bongiorno’s contention that the

withdrawals were non-taxable capital and not taxable income fails because the jury, in

convicting her of securities fraud, necessarily concluded that Bongiorno knew these

accounts held no capital.9 Rather, every withdrawal was taxable income because it was

effectively a theft of client funds from the Chase account. No different conclusion is

warranted by the fact that the district court, for purposes of Guidelines calculation,

assumed that Bongiorno had been convicted on a “conscious avoidance” theory. That

theory “permits a finding of knowledge even where there is no evidence that the

defendant possessed actual knowledge.” United States v. Svoboda, 347 F.3d 471, 477–

78 (2d Cir. 2003) (internal quotation marks omitted).

        c.     Crupi’s Bank Fraud Conviction

        Crupi argues that she could not have intended to commit bank fraud, or conspired

to do so, see 18 U.S.C. §§ 1344, 1349, because she lacked access to full information

about the value of David Kugel’s accounts and merely relied on Kugel’s own analysis.

The argument fails because, even if Crupi lacked such access, the trial evidence showed

that she independently fabricated information that she reported to lenders on the Kugel

family’s behalf. Specifically, Crupi (1) reported account values that did not conform

even to Kugel’s requested amounts; and, on one occasion, (2) provided Kugel with an

9
    Bongiorno does not assert a sufficiency challenge to those convictions.

                                             15
entirely fictitious account statement. Moreover, to the extent Crupi relied on Kugel’s

representations notwithstanding the verification documents’ warnings of “severe

penalties” for any fraud or misrepresentation, J.A. 12295, 12301, 12302, the jury was

entitled to consider this as consistent with fraudulent intent. Similarly, the jury could

reasonably infer Crupi’s intent to defraud banks from her misrepresentation that Kugel’s

account values had been verified independently by a depository, when she knew the

information was supplied by Kugel, the mortgage applicant.

       As for the materiality of her misrepresentations, Crupi provides no support for the

counterintuitive proposition that a depository’s overstatement of a loan applicant’s assets

by a multiple of 15 to facilitate a mortgage application is immaterial to the financial

institution.10 In any event, the government adduced sufficient evidence for a reasonable

jury to infer that Crupi’s misrepresentations had “a natural tendency to influence, or

[were] capable of influencing,” the banks’ decisions. Neder v. United States, 527 U.S.
1, 16 (1999).     This included evidence of Crupi’s communications with mortgage

company employees seeking verification and Kugel’s testimony about conversations with

Crupi explaining that he “needed [the] letter” to obtain mortgages. J.A. 2330. United

States v. Rigas, 490 F.3d 208 (2d Cir. 2007), on which Crupi relies, is not to the contrary.

In that “rather unusual bank fraud case,” id. at 234, we concluded that misstatements of a

bank’s leverage ratios were not material because they were incapable of affecting the

victim depository’s decision, which was limited by the terms of a specific loan

10
  For example, on one occasion Crupi swore that the value of Kugel’s IA account was
nearly $6 million, when Firm “records” indicated it was approximately $300,000 to
$400,000. See J.A. 2332.

                                            16
agreement, see id. at 235 (noting that bank could only determine amount of interest to be

charged, an objective decision cabined by ranges set in Co-Borrowing Agreements). By

contrast, the evidence here demonstrated that Crupi’s misrepresentations were

“reasonably likely to influence” the lenders’ subjective decisions regarding whether to

extend a loan.

         Accordingly, defendants’ sufficiency challenges fail on the merits.

5.       Conscious Avoidance Instruction

         Bonventre and Bongiorno challenge their securities fraud convictions, see 18

U.S.C. §§ 2, 78j(b), 78ff; 17 C.F.R. § 240.10b-5, arguing that trial evidence did not

provide a sufficient factual basis for a “conscious avoidance” instruction.11 A sufficient

basis exists when the evidence “would permit a rational juror to conclude beyond a

reasonable doubt that the defendant was aware of a high probability of the fact in dispute

and consciously avoided confirming that fact.” United States v. Cuti, 720 F.3d 453, 463

(2d Cir. 2013) (internal quotation marks omitted); see also id. (reviewing this question de

novo).

         Bonventre argues that no such conclusion was possible here because the “red

flags” identified by the government are suspicious only in hindsight. The argument is

defeated by Bonventre’s own statement to AlixPartners employee Meghan Schmidt, who

testified that Bonventre told her in December 2008 that he closed his IA account in 2006

11
   Neither defendant takes issue with the substance of the instruction. Thus, insofar as
Bonventre contends that the jury could have convicted him on the basis of negligence or
recklessness, there is no reason to suspect that the jury ignored the district court’s explicit
instruction to the contrary. See J.A. 10934.

                                              17
because he had awoken “with a sick feeling in his stomach” and “had always questioned

the consistent high returns that he earned on that account.” J.A. 1244. Nor are we

persuaded by Bonventre’s insistence that his lack of actual knowledge resulted not from

any “deliberate steps,” Bonventre Reply 8 (emphasis in original), but, rather, from

DiPascali’s and Madoff’s lies about the legitimacy of their work. “[A] defendant’s

‘purposeful contrivance’ to avoid knowledge may not manifest in an affirmative act

because ‘the very nature of conscious avoidance makes it unlikely that the record will

contain directly incriminating statements.’” United States v. Whitman, 555 F. App’x

98, 105–06 (2d Cir. 2014) (quoting United States v. Svoboda, 347 F.3d at 480, and

United States v. Kozeny, 667 F.3d 122, 134 (2d Cir. 2011)).

      While Bongiorno argues that her (1) lack of formal education or training in

securities, (2) transparent record-keeping, and (3) failure to liquidate her investment

account before the Firm’s collapse manifest her ignorance of the fraud, these arguments

were properly made to the jury in arguing that the government failed to prove knowledge

even through conscious avoidance.        They are not grounds for disallowing the

instruction. Indeed, Bongiorno’s “purported lack of knowledge defense, despite [her]

deep involvement in the transactions that effectuated the fraud, all but invited the

conscious avoidance charge.”     United States v. Cuti, 720 F.3d at 464.       Notably,

Bongiorno re-wrote three years’ worth of account statements for Avellino & Bienes in

connection with the SEC’s 1992 investigation, replacing a transfer from another customer

account with a purported dividend from General Motors. She also played a significant

role in managing and organizing backdated trading in clients’ accounts and in her own,

                                          18
including retroactively selling Lehman Brothers stock after that firm declared

bankruptcy. In light of this “overwhelmingly suspicious” behavior, a reasonable jury

could have found that her professed ignorance was a “purposeful contrivance to avoid

guilty knowledge.”    United States v. Kozeny, 667 F.3d at 134 (internal quotation marks

omitted).

       Accordingly, defendants’ challenge to the conscious avoidance instruction is

meritless.

6.     Government Misconduct

       Defendants assert that prosecutorial misconduct in addressing the jury warrants a

new trial. 12   To secure such relief, they must show misconduct “so severe and

significant” as to deny a “fair trial.” United States v. Coplan, 703 F.3d 46, 86 (2d Cir.

2012) (internal quotation marks omitted).        Such cases are “rare,” United States v.

Caracappa, 614 F.3d 30, 41 (2d Cir. 2010), and arise only when improper comments so

infect the trial as a whole as to result in conviction violative of due process, see United

States v. Truman, 688 F.3d 129, 144 (2d Cir. 2012); United States v. Ferguson, 676 F.3d
260, 283 (2d Cir. 2011) (stating that improper comments do not deny due process “unless

they constitute egregious misconduct” (internal quotation marks omitted)).              In

evaluating whether defendants have carried this burden, we consider (1) the severity of

the misconduct, (2) the measures adopted to cure it, and (3) the certainty of conviction in

the absence of the misconduct.   See United States v. Coplan, 703 F.3d at 86. Applying

12
  None of the Assistant United States Attorneys representing the government on this
appeal are the prosecutors whose remarks are at issue.

                                            19
these principles here, we conclude that they have not, substantially for the reasons stated

by the able trial judge. See United States v. Bonventre, No. 10CR228-LTS, 2014 WL
3673550, at *12–17 (S.D.N.Y. July 24, 2014).

        a.      Opening Statement

        O’Hara argues that the government’s opening statement misrepresented the

evidence, inappropriately referred to defendants collectively, and bolstered the credibility

of cooperating witnesses. In fact, the prosecution statements anticipating evidence fell

within the “broad latitude” of reasonable inferences, United States v. Salameh, 152 F.3d
88, 138 (2d Cir. 1998), and collective references, as defense counsel later acknowledged,

were “inevitable and . . . probably appropriate” in the context of the charged conspiracy,

J.A. 11041.13

        As to bolstering, the government concedes that a prosecutor cannot reference the

bolstering aspects of witnesses’ cooperation agreements during opening argument. See

United States v. Certified Envtl. Servs., Inc., 753 F.3d 72, 86 (2d Cir. 2014). However,

any such error here, viewed in the context of the entire trial, was not so severe as to deny

due process because not only did defense openings attack the credibility of prosecution

witnesses, but also district court instructions ameliorated any prejudice.

        b.      Rebuttal Summation

        Defendants advance a litany of objections to the prosecution’s rebuttal summation.

In reviewing these objections, we are mindful both of the trial court’s criticism, see, e.g.,

United States v. Bonventre, 2014 WL 3673550, at *16 (characterizing many remarks in

13
     Indeed, O’Hara did not object on these grounds below.

                                             20
rebuttal summation as “ill-conceived and unworthy of the institutional stature of the

United States Attorney’s Office”), and its ultimate rejection of defendants’ due process

challenge in the context of (1) the “meticulous presentation” of incriminating evidence;

(2) the totality of arguments made at trial; and (3) contemporaneous curative instructions,

id. Having carefully reviewed the record, we identify no abuse of discretion in this

conclusion. See United States v. Banki, 685 F.3d 99, 119–20 (2d Cir. 2012) (identifying

standard of review).

             1.        Severity of Misconduct

      The prosecution’s repeated characterization of defense arguments as “ridiculous”

or “absurd,” e.g., J.A. 11750, 11751, was not improper. See United States v. Rivera,

971 F.2d 876, 884 (2d Cir. 1992) (rejecting challenge to prosecution’s characterization of

defense arguments as “ridiculous” because “prosecutor is not precluded from vigorous

advocacy, or the use of colorful adjectives, in summation”); accord United States v.

Farhane, 634 F.3d 127, 168 (2d Cir. 2011).          The disputed characterizations were

directed to particular defense arguments and supported by specific record evidence.

Thus, this case is not analogous to Floyd v. Meachum, 907 F.2d 347, 353–55 (2d Cir.

1990) (faulting prosecutor for characterizing non-testifying defendant as “liar” more than

40 times, improperly referencing Fifth Amendment, and inviting jury to assess her own

personal integrity and professional ethics), or to United States v. Drummond, 481 F.2d
62, 63–64 (2d Cir. 1973) (faulting prosecutor who dismissed defense arguments as

“preposterous” for improperly interjecting his beliefs and his own credibility into case

and misrepresenting trial testimony).

                                            21
       While defendants assert that the prosecution here repeatedly mischaracterized the

record, the district court reasonably concluded that, in most instances, the challenged

arguments represented fair—if aggressive—inferences that the jury was entitled to draw

from the evidence. See, e.g., United States v. Salameh, 152 F.3d at 138 (concluding that

government had not misrepresented evidence by arguing for inference that, even if not

grounded in direct evidence, did not exceed its “broad latitude to suggest reasonable

inferences”).   Defendants were entitled to—and, in fact, did—argue for opposing

inferences on the basis of the same evidence. See, e.g., J.A. 11435. That defendants

disagree with the strength of the government’s inferences does not establish prosecutorial

misconduct. See generally United States v. Wilner, 523 F.2d 68, 74 (2d Cir. 1975) (“A

prosecuting attorney is not an automaton whose role on summation is limited to parroting

fact already before the jury.”).

       To the extent some of the prosecution’s rebuttal arguments created unnecessary

evidentiary ambiguity, we make some allowance for the fact that rebuttal summations are

“not detached expositions . . . carefully constructed before the event.” United States v.

Farhane, 634 F.3d at 167 (alterations, citation, and internal quotation marks omitted).14

14
   The government’s claim that O’Hara’s counsel characterized a 2006 letter as an “act[]
of courage” misstated the record, J.A. 11828; the act of courage referenced was O’Hara’s
confrontation with his supervisors. See id. at 11232. In the same breath, however,
O’Hara’s counsel asserted that deleting “special programs” in 2006 “was even more
courageous,” id., and the government was entitled to challenge that characterization.
Insofar as the government’s rebuttal—which followed several days of defense
arguments—misidentified the precise conduct to which counsel had referred, this error
was hardly severe given the district court’s immediate correction.

                                           22
In any event, the concern was adequately addressed by the district court’s instructions

that only the jury’s own recollection of the evidence controlled.

         Defendants’ claims of improper vouching fail because prosecutors are permitted

vigorously to argue for their witnesses’ credibility so long as they do not interject their

own credibility into the case, see United States v. Rivera, 971 F.2d at 884, or imply the

existence of extraneous proof, see United States v. Bagaric, 706 F.2d 42, 61 (2d Cir.

1983).     As the district court reasonably concluded, neither occurred here.      Defense

counsel not only repeatedly characterized DiPascali’s testimony as “lies,” but also

accused prosecutors of orchestrating perjury among the cooperating witnesses. The law

is clear: “the government is allowed to respond to an argument that impugns its integrity

or the integrity of its case, and when the defense counsel have attacked the prosecutor’s

credibility or the credibility of the government agents, the prosecutor is entitled to reply

with rebutting language suitable to the occasion.” United States v. Carr, 424 F.3d 213,

227 (2d Cir. 2005) (internal quotation marks omitted).

         The same reasoning applies to defendants’ claim that the prosecutor impermissibly

“cast himself as an expert witness on crime and criminals.” Crupi Br. 39. Viewed in

context, most of the comments were permissible appeals to jurors’ common sense in

response to defense arguments. See United States v. Huezo, 546 F.3d 174, 182 (2d Cir.

2008) (“[J]urors are entitled, and routinely encouraged, to rely on their common sense

and experience in drawing inferences.”); see also United States v. Anderson, 747 F.3d 51,

70 (2d Cir. 2014). To the extent the prosecution went further, the district court’s actions

                                            23
sustaining objections and giving curative instructions adequately safeguarded against

prejudice.

       The government’s use of analogies to enable jurors unfamiliar with securities

trading to evaluate evidence in the context of “more accessible” crimes was not a model

of advocacy. J.A. 11849. But the government is not barred from using such rhetorical

devices so as to require a new trial here. See United States v. LaMorte, 950 F.2d 80, 85

(2d Cir. 1991) (concluding that reference to bomb exploding on airplane, in context of

prosecution for marijuana distribution, did not deny defendant fair trial).

       The same conclusion obtains for prosecution references to fictional works. These

remarks, made only briefly and in passing, encouraged the jury to apply its common

sense in determining whether participants in criminal conspiracies were likely to lie to

one another.    See J.A. 11820–21.      Indeed, defense counsel also referenced popular

culture in appealing to jurors’ experience. In any event, the district court’s prompt and

appropriate curative instruction adequately ensured against prejudice. See id. at 11821.

       Finally, the prosecutor’s reference to Constance Baker Motley was, as the district

court observed, “at best ambiguous and at worst unfathomable.”                United States v.

Bonventre, 2014 WL 3673550, at *16; see J.A. 11917. Nevertheless, the record does

not admit the inference urged by defendants, that is, that the prosecution was appealing to

racial bias. Rather, the government appears to have attempted to respond—somewhat

opaquely—to defendants’ own curious historical analogies.           While the prosecutor’s

choice of subject was peculiar, and his rhetoric needlessly grandiose, it did not constitute

severe misconduct. See United States v. Farhane, 634 F.3d at 167.

                                             24
              2.       Substantial Prejudice

       Defendants maintain that even if no individual prosecution argument manifested

severe misconduct, the cumulative effect of the challenged remarks was so prejudicial as

to deny due process.      We identify no abuse of discretion in the district court’s rejection

of this argument in light of (1) the trial judge’s prompt, frequent, and apt jury

instructions; and (2) compelling trial evidence of each defendant’s guilt, which included

(a) testimony from five cooperating witnesses who directly inculpated defendants in the

securities fraud, (b) defendants’ own verbal and written statements manifesting their

guilty knowledge, and (c) voluminous financial and computer records demonstrating the

brazen nature of the fraud in which defendants had engaged. Accordingly, the strength

of the evidence here indicates that the same result would have obtained, even without the

purported government misconduct.

       In sum, while it properly faulted aspects of the government’s rebuttal summation,

the district court acted within its discretion in concluding that this is not one of the “rare

cases” in which defendants have demonstrated that they were denied due process so as to

require a new trial.

7.     Forfeiture Order

       O’Hara and Perez challenge the $19,707,987,337.00 forfeiture order, an amount

representing the total client investment in the Firm’s IA business after January 1,

2006—the point at which the district court found these defendants to have joined the

securities fraud conspiracy. See 18 U.S.C. §§ 981(a)(1)(C), 1956(c)(7)(A), 1961(1); 28

                                               25
U.S.C. § 2461(c).15 In evaluating this challenge, we review the district court’s legal

conclusions de novo and its factual findings for clear error.         See United States v.

Sabhnani, 599 F.3d 215, 261 (2d Cir. 2010).

       O’Hara faults the district court for imposing forfeiture of gross, as opposed to

“net,” proceeds under 18 U.S.C. § 981(a)(2). The argument fails because the evidence

showed that the criminal conspiracy at issue did not sell or provide “lawful services . . . in

an illegal manner” so as to require deduction of direct costs. Id. § 981(a)(2)(B); see also

In re Rothstein, Rosenfeldt, Adler, P.A., 717 F.3d 1205, 1212 (11th Cir. 2013) (observing

that, under § 981(a)(2)(A), “whatever money” defendant obtained through Ponzi scheme

was forfeitable as “proceeds” of offense).16       Even if the Firm had provided lawful

services, there were no direct costs to deduct because BLMIS never purchased any

securities on behalf of its IA clients in exchange for their investments, and the forfeiture

statute excludes “any part of the overhead expenses of the entity” from the meaning of

“direct costs.” 18 U.S.C. § 981(a)(2)(B); see also id. (stating that defendant has burden

15
   Forfeiture judgments of varying amounts were imposed jointly and severally against
all defendants on the basis of convictions on Counts One through Three (securities and
accounting fraud), and Counts Six through Eleven (falsifying records of broker-dealer
and investment adviser).
16
   To the extent O’Hara challenges the forfeiture of gross proceeds because neither he
nor Perez had any contact with BLMIS clients, or because his participation was limited to
writing computer programs, he misunderstands the district court’s preponderance finding.
See United States v. Contorinis, 692 F.3d 136, 147 (2d Cir. 2012) (holding that court may
order defendant to forfeit proceeds received by others who participated jointly in crime
“provided the actions generating those proceeds were reasonably foreseeable to the
defendant”). We identify no clear error in the district court’s determination that clients’
investments were reasonably foreseeable to O’Hara.

                                             26
of proof of direct costs).   Accordingly, the district court correctly ordered forfeiture

based on the gross proceeds generated by defendants’ fraudulent scheme.

       O’Hara also faults the district court for failing to exclude “massive” deposits from

what he contends was a separate check-kiting scheme that was the basis for a deferred

prosecution agreement (“DPA”) between the government and JPMorgan Chase

(“JPMorgan”) in a related action. O’Hara Br. 100. The argument fails because the

district court limited O’Hara’s forfeiture order to client investments in the IA business

after January 1, 2006, and, as O’Hara has acknowledged, the purported check-kiting

scheme ceased operating in 2003. See also DPA, Ex. C ¶ 27, United States v. JPMorgan

Chase Bank, N.A., No. 14 Cr. 007 (PKC). In any event, the DPA states only that the

transactions in question “appeared to be a ‘check-kiting’ scheme” to the bank. Id. ¶ 25.

The government adduced evidence, however, that these deposits facilitated the charged

securities fraud, as they were reflected in Crupi’s records of the Firm’s IA account

activity, recordkeeping in which O’Hara was also involved. See Appellee Br. 235.

       O’Hara argues that the challenged forfeiture also violates the Eighth Amendment’s

proscription of excessive fines. See United States v. George, 779 F.3d 113, 122 (2d Cir.

2015) (stating that criminal forfeiture is unconstitutionally excessive if it is “grossly

disproportional” to gravity of defendant’s offense (internal quotation marks omitted)).

To assess gross disproportionality, we consider all relevant factors, including (1) the

essence of defendant’s crime and its relation to other criminal activity, (2) whether

defendant fits into the class of persons for whom the statute of conviction was principally

designed, (3) the maximum sentence and fine that could have been imposed, and (4) the

                                            27
nature of harm caused by defendant’s conduct.         See id.; see also United States v.

Viloski, 814 F.3d 104, 110–11 (2d Cir. 2016) (holding that four-factor test is not

exhaustive).   We conclude that the ordered forfeiture, while monumental, was not

“grossly disproportional” to the gravity of the crimes of conviction.17

       While O’Hara contends that he was “several steps removed from the heart of the

fraud,” O’Hara Br. 102, the district court did not clearly err in finding to the contrary

because O’Hara’s “special programming” work was “the essential backbone of the

infrastructure through which the IA fraud was perpetrated,” J.A. 13350, and O’Hara

himself altered general ledger and securities records and knowingly and deliberately

prepared falsified documents for SEC and client audits, see id. at 13351.             As for

O’Hara’s claim that the securities fraud statute does not target “computer programmers or

other technical workers whose specialized services [are] needed to carry out the core

fraud,” O’Hara Br. 102, the district court reasonably concluded that O’Hara was no mere

“technical worker,” but a vital member of the conspiracy. Moreover, insofar as the

statute focuses on knowing misrepresentation of material facts to defraud investors, see,

e.g., United States v. Nouri, 711 F.3d 129, 141–42 & n.3 (2d Cir. 2013), O’Hara’s

special-programming work falls squarely within its reach because the only purpose of

that programming was to effect misrepresentations efficiently.            Indeed, without the

programming, the fraudulent scheme could not have been sustained.

17
   Consequently, we need not address the government’s argument that the Excessive
Fines Clause does not apply to forfeiture of the gross proceeds of crimes. Cf. United
States v. Viloski, 814 F.3d at 109 n.7 (casting doubt on this argument).

                                            28
       Because O’Hara faced a maximum prison sentence of 100 years—effectively a life

sentence—the challenged forfeiture cannot be deemed disproportional notwithstanding

the statutory maximum fine of $10 million. See United States v. Varrone, 554 F.3d 327,

333 n.4 (2d Cir. 2009) (stating that forfeiture in excess of maximum fine “is not

necessarily constitutionally excessive”; ultimate question is how forfeiture amount

compares to “gravity of the defendant’s offense” (internal quotation marks omitted)).18

Where, as here, forfeiture ordered is in an amount equivalent to the undisputed, actual

proceeds of the fraud (from the point O’Hara understood the criminal nature of his

actions), we cannot conclude that the order was grossly disproportional to the gravity of

his offense.

       As to the fourth factor, the nature of the harm caused by defendants’ conduct, as

the district court observed, was “financial devastation of unprecedented magnitude”

resulting in confidence in securities institutions and regulatory agencies being eroded and

thousands of “innocent lives [being] irreversibly upended.” J.A. 13204, 13352. This

assessment was not erroneous, much less clearly so. Further, although the district court

recognized that O’Hara’s participation in the fraud was “more limited” and “less

enthusiastic” than that of certain confederates, id. at 13351, it found his role essential to a

scheme that even defense counsel described as “the greatest fraud in American history,”

id. at 11388.    For that reason, O’Hara’s comparison to the $1.7 billion forfeiture

18
   None of the defendants requested that the amount of forfeiture be submitted to the
jury, see J.A. 12129, and, therefore, the district court was limited to a $10 million fine.
See United States v. Pfaff, 619 F.3d 172, 175 (2d Cir. 2010). In any event, defendants
do not dispute the forfeiture calculation as a factual matter.

                                              29
judgment paid by JPMorgan under its DPA is inapt. JPMorgan agreed to pay that

amount in exchange for a deferral of prosecution in connection with its failure to detect

the fraud. By contrast, O’Hara was convicted at trial of actively perpetrating the fraud

by creating the deceitful records that effectively concealed it from detection for so long.

       Accordingly, we reject O’Hara’s Eighth Amendment challenge.

8.     Conclusion

       We have considered defendants’ remaining arguments and conclude that they are

without merit. Accordingly, the district court’s judgments are AFFIRMED.

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

                                             30