United States v. Amato

06-5600-cr(L)
U.S.A. v. Amato

1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 _______________
5
6 August Term, 2007
7
8 (Argued May 15, 2008 Decided August 21, 2008)
9
10 Docket Nos. 06-5600-cr(L), 06-5741-cr, 07-2152-cr, 07-2311-cr
11
12 _______________
13
14 United States of America,
15
16 Appellee,
17
18 v.
19
20 Joseph Amato and John Fasciana,
21
22 Defendants-Appellants.
23
24 _______________
25
26 Before:
27 CARDAMONE, MINER, and POOLER,
28 Circuit Judges.
29
30 _______________
31
32 Defendants appeal judgments of the United States District
33 Court for the Southern District of New York (Swain, J.)
34 convicting them of mail and wire fraud and imposing, among other
35 things, a $12.8 million restitution order that included attorney
36 fees and accounting costs incurred by the corporate victim of the
37 fraud.
38
39 Affirmed.
40
41 _______________
42
43 JOSHUA L. DRATEL, New York, New York (Renita K. Thukral, Erik B.
44 Levin, Aaron Mysliwiec, Law Office of Joshua L. Dratel,
45 P.C., New York, New York, of counsel), for Defendant-
46 Appellant Joseph Amato.
47
48 BRIAN C. WILLE, New York, New York (Usman Mohammad, Kostelanetz &
49 Fink, LLP, New York, New York, of counsel), for Defendant-
50 Appellant John Fasciana.
1 MARCUS A. ASNER, Assistant United States Attorney, New York, New
2 York (Michael J. Garcia, United States Attorney, Katherine
3 Polk Failla, Assistant United States Attorney, Southern
4 District of New York, New York, New York, of counsel), for
5 Appellee.
6
7 _______________
1 CARDAMONE, Circuit Judge:

2 Defendants Joseph Amato and John Fasciana appeal from

3 judgments of conviction entered December 5, 2006, and December

4 12, 2006, respectively (both amended May 22, 2007), in the United

5 States District Court for the Southern District of New York

6 (Swain, J.) following an 11-week jury trial. On this appeal we

7 write primarily on the subject of restitution.

8 Three individuals -- a business executive, his lawyer, and

9 an officer in the business from which the criminal activity in

10 this case originated -- conspired together and perpetrated a

11 series of frauds against several states and a corporation that

12 had purchased the small company which employed the three

13 individuals. Before trial the executive died. The lawyer --

14 Fasciana -- and the officer -- Amato -- were convicted for the

15 frauds, and the trial court ordered them to make restitution.

16 Restitution is a complex subject because civil and criminal

17 restitution are somewhat different. The civil rule is often

18 stated under the rubric of unjust enrichment: "A person who has

19 been unjustly enriched at the expense of another is required to

20 make restitution to the other." Restatement (First) of

21 Restitution § 1 (1937). In the criminal law, victims' rights are

22 generally the focus of restitution provisions, including those

23 contained in the Mandatory Victims Restitution Act of 1996

24 (MVRA), Pub. L. No. 104-132, Title II, Subtitle A, 110 Stat.

25 1227, the criminal statute with which we deal on this appeal.

26 Its purpose is primarily to restore the victim to his or her

2
1 prior state of well-being, and to that end to require federal

2 "criminal defendants to pay full restitution to the identifiable

3 victims of their crimes." S. Rep. No. 104-179, at 12-13 (1995),

4 as reprinted in 1996 U.S.C.C.A.N. 924, 925-26.

5 Under the MVRA, restitution must be ordered without

6 consideration of the defendant's economic circumstances. See 18

7 U.S.C. § 3664(f)(1)(A). Consequently, while going down the road

8 to committing a crime may be as easy as the "descent to Avernus,"

9 the payment of restitution under the MVRA can be as hard as the

10 return to view "etherial light."1 The question we must address

11 is not whether the defendants are capable of making this payment

12 but merely whether the items included in the restitution order

13 fall within the scope of the MVRA, as well as whether the order

14 was otherwise properly calculated.

15 BACKGROUND

16 A. Facts

17 FCI, Inc. (FCI), a small Manhattan consulting firm, was

18 purchased in 1995 by Electronic Data Systems Corporation (EDS),

19 headquartered in Plano, Texas, and became part of EDS's Global

20 Securities Industry Group (GSIG). At the time of the purchase,

1
In Virgil's Aeneid, the Cumaean Sibyl warns:

The way is easie to the Avernian Flood,
Black Pluto's Gates stand open Day and Night:
But to return, and view Etherial Light,
That is a work, a labour . . . .

The Works of Publius Virgilius Maro 324 (John Ogilby trans., 2d
ed., London, Thomas Roycroft 1668) (translating Aeneid, bk. 6,
II. 126-29).

3
1 Michael Reddy was FCI's Chief Executive Officer, John Fasciana

2 was its legal counsel as well as Reddy's personal attorney, and

3 Joseph Amato was a shareholder and officer of FCI. Each of these

4 individuals assumed similar positions within GSIG after the

5 purchase.

6 The purchase agreement included an incentive plan under

7 which EDS would pay large bonuses to Reddy and other GSIG

8 employees if GSIG met certain performance targets. These

9 performance targets were linked to GSIG's work helping client

10 banks and brokerage firms minimize their losses due to

11 escheatment. The work entailed reviewing escheated funds, such

12 as unclaimed dividends or interest payments, and assisting

13 clients in reclaiming from states those funds that were not

14 properly subject to escheatment. It also entailed reviewing

15 accounts in which clients placed funds marked for escheatment

16 before turning them over to states, and identifying those funds

17 that could be removed from these accounts to avoid escheatment in

18 the first place. This work was typically performed on a

19 contingency fee basis, which meant that GSIG's compensation --

20 and thus its progress towards meeting its performance targets --

21 was tied to the amount of funds its clients were able to recover

22 or save from escheatment.

23 GSIG never met its performance targets. But Reddy,

24 Fasciana, Amato, and other FCI employees conspired to deceive EDS

25 into believing it had so that EDS would pay out the incentive

26 plan bonuses. They did this by: (1) urging clients to retain

4
1 pre-escheatment funds to which these clients had no right, (2)

2 creating and submitting to various states fraudulent claims for

3 the return of clients' escheated funds, (3) recording income from

4 non-existent fees, (4) stealing EDS checks and laundering them

5 through Fasciana's attorney trust accounts to make it look as

6 though the checks were payments for GSIG's work, and (5)

7 misleading EDS auditors in an attempt to conceal all of this

8 fraudulent activity.

9 B. Criminal Charges Against Defendants

10 As a result of this criminal activity the defendants were

11 charged as follows: Count One of a 13-count superseding

12 indictment filed on December 4, 2001 charged Amato, Fasciana, and

13 Reddy with conspiracy to commit mail and wire fraud, in violation

14 of 18 U.S.C. § 371. Count Two charged Fasciana and Reddy, and

15 Count Three charged Fasciana, Amato, and Reddy, with the

16 substantive offense of mail fraud, in violation of 18 U.S.C.

17 §§ 1341, 1346, and 2. Count Four charged Fasciana, Amato, and

18 Reddy, and Counts Five through 13 charged Fasciana and Reddy,

19 with additional substantive mail and wire fraud offenses, in

20 violation of 18 U.S.C. §§ 1341, 1343, 1346, and 2.

21 Reddy died before trial. Amato and Fasciana's first trial

22 in 2002 ended with a hung jury. Following that first trial,

23 Judge Swain granted Fasciana's motion for acquittal on Count Two

24 of the indictment. Trial on the remaining 12 counts commenced on

25 April 25, 2005 and ended on July 7, 2005, when the jury convicted

26 both defendants on all counts remaining against them.

5
1 C. Sentences

2 On November 20, 2006 Judge Swain sentenced Fasciana to 48

3 months of imprisonment, followed by three years of supervised

4 release, and a mandatory special assessment of $1,100. Judge

5 Swain sentenced Amato on November 21, 2006 to a term of

6 imprisonment of one year and one day, followed by three years of

7 supervised release, and a mandatory $300 special assessment. On

8 May 18, 2007 Judge Swain held a restitution hearing, at which

9 time she ordered the defendants to pay restitution of $12,799,795

10 to EDS as the victim of the offenses. This figure included

11 $3,088,466 in attorney fees and accounting costs that the

12 district court found EDS to have incurred as a result of its

13 participation in the investigation and prosecution of defendants'

14 offenses. From their convictions and sentences both defendants

15 appeal.

16 DISCUSSION

17 On their consolidated appeal, Amato and Fasciana's strongest

18 challenge is to the district court's restitution order. That is

19 the principal subject of this opinion, and we address it in Part

20 I below. Defendants also raise additional issues that we dispose

21 of in Part II. Those issues are, principally: whether the

22 district court erred by (1) refusing to grant a new trial based

23 on the government's alleged withholding of impeachment material

24 and newly discovered exculpatory evidence, (2) refusing to sever

25 Amato's trial from Fasciana's, (3) improperly instructing the

26 jury as to the meaning of "false statements" and "fraudulent

6
1 omissions," (4) preventing the defense from fully cross-examining

2 prosecution witnesses, or (5) allowing the prosecution to display

3 photographs of the conspirators during closing arguments, and (6)

4 whether these purported errors require reversal when considered

5 cumulatively.

6 We turn first to the restitution issue.

7 I Restitution

8 Defendants primarily challenge the $3,088,466 of EDS's

9 attorney fees and accounting costs included in the restitution

10 order. They argue such expenses are not authorized under the

11 Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, and, even

12 if they are, the expenses were not sufficiently documented to

13 support the restitution ordered in this case. These arguments

14 implicate the district court's conclusions of law, which we

15 review de novo, as well as its findings of fact, which we review

16 for clear error. See United States v. Boccagna, 450 F.3d 107,

17 113 (2d Cir. 2006). Overall, we review the district court's

18 restitution order deferentially, reversing only if in our view

19 the trial court abused its discretion. See id.

20 A. The MVRA in Context

21 When Congress enacted the MVRA, it was adding to a statutory

22 sentencing structure in which restitution had only recently begun

23 to play a prominent role. See S. Rep. No. 104-179, at 12-14,

24 1996 U.S.C.C.A.N. at 925-27. Restitution has deep roots in the

25 common law, but it was not until the Victim and Witness

26 Protection Act of 1982 (VWPA), Pub. L. No. 97-291, 96 Stat. 1248

7
1 (1982), that Congress first gave the federal district courts

2 general statutory authority to order restitution as part of a

3 criminal sentence outside of the probation context. See S. Rep.

4 No. 97-532, at 30 (1982), as reprinted in 1982 U.S.C.C.A.N. 2515,

5 2536; see also United States v. Brown, 744 F.2d 905, 910 (2d Cir.

6 1984) (discussing restitution's common law roots).

7 The exercise of this authority under the VWPA is

8 discretionary, and the act lists the particular types of

9 restitution that may be considered. See VWPA § 5, 96 Stat. at

10 1253-55 (currently codified, as amended, at 18 U.S.C. § 3663).

11 In 1994 Congress added to the list 18 U.S.C. § 3663(b)(4), which

12 provides that restitution orders may be used to "reimburse the

13 victim for lost income and necessary child care, transportation,

14 and other expenses related to participation in the investigation

15 or prosecution of the offense or attendance at proceedings

16 related to the offense." Violence Against Women Act of 1994,

17 Pub. L. No. 103-322, Title IV, § 40504, 108 Stat. 1796, 1947

18 (1994).

19 The MVRA built on this structure by making restitution a

20 mandatory part of the sentences imposed for certain categories of

21 offenses. See MVRA § 202, 110 Stat. at 1227 (codified at 18

22 U.S.C. § 3556). The VWPA's discretionary restitution provisions

23 (as amended over the years) remain in 18 U.S.C. § 3663, but the

24 MVRA added, among other things, a set of mandatory provisions in

25 18 U.S.C. § 3663A. See MVRA § 204, 110 Stat. at 1227-29. One of

26 these mandatory provisions, 18 U.S.C. § 3663A(b)(4), parallels

8
1 nearly verbatim the discretionary provision quoted above. It

2 requires district courts to "reimburse the victim for lost income

3 and necessary child care, transportation, and other expenses

4 incurred during participation in the investigation or prosecution

5 of the offense or attendance at proceedings related to the

6 offense." 18 U.S.C. § 3663A(b)(4).

7 B. Legal Fees and Accounting Costs Under the MVRA

8 It is undisputed that § 3663A(b)(4) applies to the fraud

9 offenses committed by the defendants in the present case. See 18

10 U.S.C. § 3663A(c)(1)(A)(ii). The district court relied on this

11 provision to include in its restitution order as "other expenses"

12 certain attorney fees and accounting costs the court found EDS to

13 have incurred during its participation in the investigation and

14 prosecution of the defendants' fraud.

15 Defendants' first contention is that the term "other

16 expenses" in § 3663A(b)(4), as a matter of law, cannot be read to

17 include attorney fees and accounting costs. This question is one

18 of first impression in our Circuit. We hold that "other

19 expenses" incurred during the victim's participation in the

20 investigation or prosecution of the offense or attendance at

21 proceedings related to the offense may include attorney fees and

22 accounting costs. Accord United States v. Gordon, 393 F.3d 1044,

23 1057 (9th Cir. 2004); cf. United States v. Phillips, 477 F.3d

24 215, 224-25 (5th Cir. 2007) (allowing restitution of costs

25 incurred by victim university in conducting computer damage and

9
1 systems evaluation and contacting individuals whose information

2 had been stolen as a result of defendant's computer hacking).

3 Our conclusion follows from the plain language of the

4 statute. That language gives the district courts broad authority

5 to determine which of the victim's expenses may be appropriately

6 included in a restitution order. See Gordon, 393 F.3d at 1056-

7 57. The statute requires that the included expenses be

8 "necessary," and that they be "incurred during participation in

9 the investigation or prosecution of the offense or attendance at

10 proceedings related to the offense." 18 U.S.C. § 3663A(b)(4).

11 It also requires, as discussed further below, that these expenses

12 be incurred by a "victim" within the meaning of 18 U.S.C.

13 § 3663A(a)(2) and that they not require unduly complicated

14 determinations of fact, see 18 U.S.C. § 3663A(c)(3). The statute

15 does not otherwise limit the type of expenses that may be

16 included.

17 C. Defendants' Arguments Against Including Attorney Fees
18 and Accounting Costs in Restitution Order
19
20 1. Ejusdem Generis
21
22 Defendants invoke the principle of ejusdem generis in urging

23 us to exclude attorney fees and accounting costs from the

24 definition of "other expenses" under § 3663A(b)(4). They

25 maintain the term "other expenses" should be read to include only

26 those expenses similar in nature to the ones specifically listed

27 in this provision: lost income, child care expenses, and travel

28 expenses.

10
1 Ejusdem generis is a canon of statutory construction that

2 dates back in Anglo-American law at least as far as the

3 Archbishop of Canterbury's Case, 76 Eng. Rep. 519, 520-21 (K.B.

4 1596). It literally means "of the same kind or class." Black's

5 Law Dictionary 535 (7th ed. 1999). Under this canon, general

6 terms that follow specific ones are interpreted to embrace only

7 objects of the same kind or class as the specific ones. See,

8 e.g., Hall St. Assocs. v. Mattel, Inc., 128 S. Ct. 1396, 1404

9 (2008); Wash. State Dep't of Soc. and Health Servs. v.

10 Guardianship Estate of Keffeler, 537 U.S. 371, 384-85 (2003).

11 Ejusdem generis has its limits. Like other canons of

12 statutory construction, it is simply a helpful guide to

13 legislative intent, not a dispositive one, and it does not

14 require a court to give it unthinking reliance. See Ali v. Fed.

15 Bureau of Prisons, 128 S. Ct. 831, 839-40 (2008). Moreover, it

16 has long been recognized that ejusdem generis cannot be called

17 into play when the specific terms preceding the general one do

18 not themselves have a common attribute from which a "kind or

19 class" may be defined. See Darius v. Apostolos, 190 P. 510, 511

20 (Colo. 1920); State v. Eckhardt, 133 S.W. 321, 322 (Mo. 1910).

21 In Ali v. Federal Bureau of Prisons, the Supreme Court relied on

22 this reasoning, in part, to reject ejusdem generis as a guide for

23 interpreting the meaning of "any other law enforcement officer"

24 in 28 U.S.C. § 2680. See 128 S. Ct. at 839. While that general

25 term is preceded in § 2680 by the phrase "officer of customs or

26 excise," the Supreme Court found no relevant common attribute

11
1 linking customs officers to excise officers. Id. In other

2 words, the specific terms did not define any generis within which

3 the meaning of the general term could be circumscribed.

4 Similarly, we find no relevant common attribute linking lost

5 income, child care expenses, and transportation expenses in 18

6 U.S.C. § 3663A(b)(4). Certainly, these are all expenses that one

7 might conceivably incur while participating in an investigation

8 or prosecution or attending proceedings. But we do not need

9 ejusdem generis to limit "other expenses" to such activities

10 since § 3663A(b)(4) already does so expressly.

11 It is true that our interpretation of the statute renders

12 Congress' reference to child care and transportation expenses

13 somewhat superfluous. But the Supreme Court confronted the same

14 dilemma in Ali and did not find it to be a sufficient reason,

15 standing alone, to invoke ejusdem generis. See 128 S. Ct. at

16 840. The Court reasoned that Congress might sometimes use

17 specific terms not to limit the succeeding general ones, but

18 instead simply to remove any doubt that the specific terms are

19 included under the statute. Id. This reasoning is especially

20 appropriate to § 3663A(b)(4), the drafters of which may have

21 feared that courts would overlook child care and transportation

22 expenses unless these items were specifically named. Such fears

23 would not likely have extended to attorney fees and accounting

24 costs because these expenses are so obviously associated with

25 investigation and prosecution, particularly in the case of fraud

26 offenses.

12
1 2. Causation

2 Defendants maintain in addition that "other expenses" cannot

3 encompass attorney fees and accounting costs because such

4 expenses amount only to indirect or consequential damages,

5 whereas restitution is limited to direct harm. To support this

6 assertion, defendants point to a number of cases in other

7 circuits in which courts have rejected the inclusion of attorney

8 fees in restitution orders on this basis: United States v.

9 Radziszewski, 474 F.3d 480, 487 n.3 (7th Cir. 2007) (as amended),

10 Government of Virgin Islands v. Davis, 43 F.3d 41, 46 (3d Cir.

11 1994), United States v. Mullins, 971 F.2d 1138, 1146-47 (4th Cir.

12 1992), and United States v. Arvanitis, 902 F.2d 489, 497 (7th

13 Cir. 1990).

14 But none of these cases clearly address the language of

15 § 3663A(b)(4). Davis, Mullins, and Arvanitis were all decided

16 pre-MVRA when the courts were interpreting the language of the

17 VWPA codified at 18 U.S.C. § 3663(b)(1). That language deals

18 with the restitution of lost or damaged property, not

19 investigation or prosecution expenses. Whether or not attorney

20 fees or auditing costs may be included in the calculation of lost

21 or damaged property says nothing about whether they may be

22 included in the calculation of expenses incurred during

23 investigation or prosecution of an offense.

24 It is not entirely clear whether the Seventh Circuit in

25 Radziszewski was addressing restitution of property or of

26 investigation and prosecution expenses. The cases cited in that

13
1 opinion suggest the former. In any event, to the extent the

2 Seventh Circuit held that attorney fees and auditing costs may

3 not be included in a restitution order under § 3663A(b)(4), we

4 respectfully disagree. We also observe the Seventh Circuit has

5 allowed the inclusion of auditing costs in a restitution order

6 under 18 U.S.C. § 3663A(b)(1) on the theory that such expenses

7 constituted damage to the victim's property. See United States

8 v. Scott, 405 F.3d 615, 620 (7th Cir. 2005).

9 This is not to say defendants' concern over the link between

10 an offense and the resulting restitution award may be ignored.

11 As we have said, attorney fees and accounting costs may be

12 included under § 3663A(b)(4) only if they were "necessary" and

13 "incurred during participation in the investigation or

14 prosecution of the offense or attendance at proceedings related

15 to the offense." Further, a restitution award under the MVRA may

16 be based only on victims who were "directly and proximately

17 harmed as a result of the commission" of the offense, 18 U.S.C.

18 § 3663A(a)(2), and restitution may not be imposed if the

19 determination of complex issues of fact relating to causation

20 would unduly complicate or prolong the sentencing process, 18

21 U.S.C. § 3663A(c)(3)(B).

22 In allowing the inclusion of attorney fees and accounting

23 costs under § 3663A(b)(4), the Ninth Circuit has specified that

24 such expenses must be the "direct and foreseeable result" of the

25 defendant's wrongful conduct. Gordon, 393 F.3d at 1057. We have

26 noted similar causation requirements in our analysis of victims'

14
1 losses generally under the MVRA but have not yet fully addressed

2 these requirements. See United States v. Reifler, 446 F.3d 65,

3 135-39 (2d Cir. 2006); see also Boccagna, 450 F.3d at 120-21.

4 We question whether the Ninth Circuit's formulation is

5 appropriate when analyzing investigation and prosecution expenses

6 under § 3663A(b)(4). Subsection (b)(4) seems to focus more on

7 the link between these expenses and the victim's participation in

8 the investigation and prosecution than on the offense itself.

9 Recently we upheld the inclusion of lost income under

10 § 3663A(b)(4) without considering whether this loss was a direct

11 and foreseeable result of the defendant's offense. See United

12 States v. Douglas, 525 F.3d 225, 254 (2d Cir. 2008). And the

13 Fifth Circuit has upheld investigation expenses based, in part,

14 on its conclusion that the preclusion of "consequential damages"

15 from other types of restitution does not apply to § 3663A(b)(4).

16 See Phillips, 477 F.3d at 224-25.

17 We need not formulate a precise test in the present case

18 because -- even assuming attorney fees and auditing costs must be

19 a direct and foreseeable result of the offense -- such a

20 requirement was clearly met here. Defendants perpetrated a

21 complicated fraud against a large corporation and a number of its

22 clients, as well as the states to which those clients were

23 required to turn over escheated funds. That this fraud would

24 force the corporation to expend large sums of money on its own

25 internal investigation as well as its participation in the

26 government's investigation and prosecution of defendants'

15
1 offenses is not surprising. There is no doubt that EDS's

2 attorney fees and auditing costs were a direct and foreseeable

3 result of defendants' offenses.

4 D. The District Court's Findings

5 Nor are we persuaded that the district court erred in

6 finding these expenses were sufficiently documented. EDS's

7 claimed attorney fees and accounting costs were supported by a

8 declaration made under penalty of perjury by a member of the law

9 firm EDS retained to provide legal advice once it uncovered

10 evidence of defendants' fraud. The memorandum lays out the work

11 done by the law firm and by the forensic accounting firms hired

12 to carry out various audits involved in EDS's resulting

13 investigation. The memorandum relates how the law firm assisted

14 EDS in completing its internal investigation of the fraud and

15 then reporting the fraud to the government. It goes on to

16 explain how the law firm represented EDS at meetings with the

17 government and assisted in gathering and producing evidence

18 necessary to the government's prosecution, as well as responding

19 to document requests made by the defendants. It also explains

20 how the law firm worked with the EDS clients and the states

21 impacted by defendants' escheatment fraud and brought in the

22 forensic accounting firms to perform the analysis necessary to

23 uncover the extent of this fraud and ensure that the clients and

24 states were made whole. This memorandum is supported by 228

25 pages of invoices and other documents detailing the costs

26 involved. Viewing this evidence as a whole, we see no clear

16
1 error in the district court's determination that EDS expended

2 $3,088,466 on its attorney fees and accounting costs.

3 E. Amato's Additional Restitution Arguments

4 Amato also contends the district court erred by including in

5 its restitution order certain losses not attributable to him and

6 imposing a total restitution amount that is out of line with the

7 amounts imposed on his co-conspirators. These contentions both

8 hinge on a view of Amato's role in the conspiracy that is at odds

9 with the district court's findings. There is no error in the

10 district court's finding that the evidence established Amato's

11 participation in each of the aspects of the conspiracy he now

12 challenges. As the court explained, even where he was not a

13 contemporaneous participant, he later engaged in cover-up

14 activities. Moreover, it was well within the district court's

15 discretion to make Amato jointly and severally liable for the

16 entire loss EDS suffered as a result of the conspiracy even while

17 apportioning the liability of some of his co-conspirators. See

18 United States v. Nucci, 364 F.3d 419, 422 (2d Cir. 2004).

19 II Other Issues

20 Apart from the restitution issue, each of the defendants

21 raise additional arguments. These arguments are all squarely

22 controlled by existing precedent, and none of them have merit.

23 We address them briefly below.

24 1. New Trial Motion

25 Amato avers he should have been granted a new trial because

26 the government withheld evidence that could have been used to

17
1 impeach one of its witnesses and because new exculpatory evidence

2 came to light after the trial.

3 It is well-settled that the government must turn over

4 evidence in its possession which is both favorable to the

5 defendant and material to his guilt, Pennsylvania v. Ritchie, 480

6 U.S. 39, 57 (1987), including information that could be used to

7 impeach government witnesses. See Giglio v. United States, 405

8 U.S. 150, 154-55 (1972). While a new trial may be required when

9 the government fails to do so, it is required only when the

10 district court finds, among other things, a reasonable

11 probability that the result of the proceeding would have been

12 different had the evidence been disclosed. See United States v.

13 Madori, 419 F.3d 159, 169 (2d Cir. 2005). A reasonable

14 probability is a probability sufficient to undermine confidence

15 in the outcome. Id. We give great weight to the district

16 court's factual findings in this regard, while reviewing the

17 overall issue de novo. Id.

18 Here the only non-disclosed evidence to which Amato points

19 is a statement of one of the government witnesses that he did not

20 "recall" whether he had written a fraudulent invoice prior to

21 November 1996. This alleged lack of recollection, Amato

22 maintains, stood in contrast to the government's representation

23 that the witness did not "know" anything about this invoice.

24 While the recall statement might have been used to some extent to

25 impeach this witness's testimony, it would have been, at best, a

26 very minor issue at trial. Amato asserts the government's case

18
1 hinged on there being no fraudulent activity prior to November

2 1996, but this assertion is not supported by the record.

3 Consequently, the probability of the non-disclosed statement

4 affecting the jury's decision is insufficient to undermine our

5 confidence in the outcome of Amato's trial.

6 Similarly, we are unpersuaded by Amato's proffered new

7 evidence. District courts have discretion to grant a new trial

8 based on newly discovered evidence if, among other things, the

9 evidence is so material and non-cumulative that its admission

10 would probably lead to an acquittal. See United States v.

11 Parkes, 497 F.3d 220, 233 (2d Cir. 2007). We cannot conclude the

12 district court abused its discretion in denying Amato's motion

13 for a new trial because the new evidence merely suggests the

14 existence of fraudulent activity prior to November 1996. We do

15 not think this sufficient to have undermined the government's

16 case.

17 2. Severance Motion

18 Amato next declares the district court erred in refusing to

19 sever his trial from Fasciana's. To overturn this decision we

20 would need to find an abuse of discretion so prejudicial to Amato

21 as to constitute a miscarriage of justice. See United States v.

22 Yousef, 327 F.3d 56, 150 (2d Cir. 2003). To the contrary, we

23 think the trial court acted well within its discretion in holding

24 a joint trial while reducing the risk of prejudice through

25 limiting instructions. See Zafiro v. United States, 506 U.S.

26 534, 539 (1993). This is particularly so because much of the

19
1 evidence in this case could have been introduced against Amato

2 even had he been tried alone, since it was probative of the

3 extent to which he was involved in the conspiracy.

4 3. Jury Instructions

5 Fasciana declares the district court improperly instructed

6 the jury as to the meaning of "false statements" and "fraudulent

7 omissions" under the mail and wire fraud statutes. We review

8 jury instructions de novo, and reverse only when the charge,

9 viewed as a whole, constitutes prejudicial error. See United

10 States v. Tropeano, 252 F.3d 653, 657-58 (2d Cir. 2001).

11 Fasciana is unable to show that in this case.

12 His challenge fails, first, because it distorts the

13 instructions actually given to the jury. For example, Fasciana

14 suggests the jury was instructed that a "false statement" for

15 mail and wire fraud purposes is one that the defendant had "no

16 reasonable basis for believing." In fact, the district court

17 instructed the jury that a statement about a future prediction is

18 false if the defendant "either knew that the prediction would not

19 come true or knew that he had no reasonable basis for believing

20 that the prediction would come true." Moreover, this was part of

21 a much longer passage of the judge's charge that began with an

22 explanation: "[T]o satisfy the first element of mail fraud, the

23 government must prove that the scheme to defraud involved the

24 intent to deprive EDS of money or property."

25 The second problem with Fasciana's point is that it

26 misapprehends the law by suggesting the only way in which

20
1 omissions can constitute mail fraud is under the "honest

2 services" theory, a theory on which he was not indicted. He

3 comes to this proposition based on a misreading of McNally v.

4 United States, 483 U.S. 350 (1987), which he maintains displaced

5 all omissions-based fraud theories. In fact, McNally hinged not

6 on the question of omissions versus misrepresentations, but on

7 the question of what was being deprived. See id. at 356-61. In

8 McNally, the Supreme Court held that wire fraud does not include

9 deprivations of intangible rights like honest services, but

10 instead includes only deprivations of money or property. See id.

11 Congress subsequently enacted 18 U.S.C. § 1346 to criminalize

12 fraudulent deprivations of the intangible right to honest

13 services. There is nothing in this turn of events to suggest

14 that only omissions leading to a deprivation of honest services

15 may constitute mail fraud. That would turn McNally on its head.

16 4. Cross-Examination of Witnesses

17 Fasciana next complains he was improperly prevented from

18 fully cross-examining two of the witnesses against him. In one

19 of the alleged instances, the district court simply held he could

20 not use cross-examination to inform the jury about the prior

21 mistrial or about the identity of the government attorneys

22 involved in the witness's cooperation agreement. In the other,

23 the court restricted questioning about the witness's solicitation

24 of prostitutes and his discussions with his wife about marital

25 infidelity -- events that had occurred long in the past -- while

26 still allowing questions about more recent adultery and false tax

21
1 returns. In both cases, the district court acted well within its

2 discretion after weighing the risk of prejudice against the

3 probative value of the testimony. See Fed. R. Evid. 403; United

4 States v. Crowley, 318 F.3d 401, 417 (2d Cir. 2003).

5 5. Photographic Line-up

6 Fasciana also asserts the district court improperly allowed

7 the government, during its summation, to display for the jury

8 photographs of Fasciana and his co-conspirators that it had

9 prohibited the government from displaying during trial. This was

10 not, as Fasciana suggests, a photographic line-up, nor was there

11 any inconsistency in the court's rulings as to when the

12 photographs could be displayed. Instead, the court acted

13 reasonably here in exercising its discretion while ruling on

14 these evidentiary questions. See, e.g., United States v.

15 Taubman, 297 F.3d 161, 164 (2d Cir. 2002).

16 6. Cumulative Effect and Remaining Arguments

17 Finally, just as we find no merit to any of Fasciana's

18 arguments above, we also find no merit to his contention that

19 reversal is required based on the cumulative effect of the

20 purported errors. We have considered all of the defendants'

21 remaining arguments and find them to lack merit as well.

22 CONCLUSION

23 Accordingly, for the foregoing reasons, we affirm the

24 district court's judgments of conviction and the sentences it

25 imposed on each defendant. We also affirm the district court's

26 restitution order.

27 Judgments affirmed.

22