Re: 3/30/2007 - [US v Elgindy] Brief and Special Index for Defendant-Appellant Amr I Elgindy
06-4081-CR(L)
06-5165(CON), 06-4087-CR(CON)
IN THE
United States Court of Appeals
FOR THE SECOND CIRCUIT
UNITED STATES OF AMERICA,
Appellee,
v.
ANTHONY ELGINDY, JEFFREY ROYER, AMR I ELGINDY, also known as Anthony Pacific, also known as Anthony Elgindy, also known as Herbert Manny Velasco, also known as Heriberto Manny Velazco, also known as Tony Elgindy, Defendants-Appellants.
BRIEF AND SPECIAL APPENDIX FOR DEFENDANT-APPELLANT AMR I ELGINDY
JOSHUA L. DRATEL, ESQ.
LAW OFFICE OF JOSHUA L. DRATEL
Attorneys for Defendant-Appellant Anthony Elgindy
Two Wall Street, 3rd Floor
New York, New York 10005
212-732-0707
Of Counsel:
Joshua L. Dratel
Meredith Heller
On Appeal from the United States District Court for the Eastern District of New York
TABLE OF CONTENTS
Table of Contents ................................................... i
Table of Authorities ............................................... viii
STATEMENT OF SUBJECT MATTER AND APPELLATE JURISDICTION ................................... 1
STATEMENT OF THE ISSUES ...................................... 1
Preliminary Statement and Introduction ................................. 4
STATEMENT OF THE FACTS ...................................... 11
A. Mr. Elgindy’s Background ..................................... 11
B. Mr. Elgindy’s Initial Interaction With Derrick Cleveland and Jeffrey Royer ............................. 12
C. The Charged Offenses and The “Target Companies” ................ 14
D. The Individual Allegations ..................................... 15
1. Securities Fraud ........................................ 15
a. Group Trading and Market Manipulation ............... 16
b. Insider Trading .................................... 16
c. Frontrunning and Trading Against Advice .............. 17
2. Extortion Conspiracy and Extortion ......................... 17
3. Obstruction of Justice .................................... 18
4. Wire Fraud ............................................ 19
E. The Trial ................................................... 19
1. Government Witnesses ................................... 19
2. Defense Witnesses ....................................... 21
F. Mr. Elgindy’s Travel While Under Supervision ..................... 23
G. The Verdict and Sentencing ..................................... 23
ARGUMENT
POINT I
THE DISTRICT COURT ERRED IN (A) PERMITTING THE GOVERNMENT TO INUNDATE THE RECORD WITH UNCHARGED AND UNSUBSTANTIATED – AND INCURABLY PREJUDICIAL – INNUENDO AND ACCUSATION LINKING MR. ELGINDY TO 9/11 AND TERRORISM AND (B) NOT PERMITTING VOIR DIRE ON THE SUBJECTS OF 9/11 AND TERRORISM ................. 25
A. The Overwhelming Prejudice Flowing From Introduction of Uncharged Accusations Linking Mr. Elgindy to 9/11 and Terrorism Denied Him Due Process and a Fair Trial ............. 26
1. The Multiple and Gratuitous References to 9/11 and Terrorism Permeated the Trial ................... 27
B. The District Court’s Refusal to Permit Voir Dire On the Subjects of 9/11 and Terrorism Denied Mr. Elgindy Due Process and the Right to An Impartial Jury .................... 49
1. The District Court’s Refusal to Permit Voir Dire on the Issues of 9/11 and Terrorism ..................... 49
2. The District Court’s Refusal to Permit Voir Dire on 9/11 and Terrorism Denied Mr. Elgindy Due Process and a Fair Trial .................................. 50
a. The Applicable Legal Standards for Voir Dire ........... 50
POINT II
MR. ELGINDY’S CONVICTIONS MUST BE REVERSED AND THE CHARGES DISMISSED BECAUSE VENUE WAS NOT PROPER IN THE EASTERN DISTRICT OF NEW YORK .................................................. 56
A. The Constitutional and Statutory Requirement of Venue .............. 58
B. Venue Was Not Proper In the Eastern District of New York ........... 60
1. The Government Failed to Establish Venue for the Securities Fraud Counts ....................... 61
2. The Government Failed to Establish Venue for the Extortion Counts ............................. 66
3. The Government Failed to Establish Venue for the RICO Conspiracy ............................ 71
a. The Saavedra Standards for Venue Based on the Activities of the Racketeering “Enterprise” ........... 71
b. The Government’s Allegations Regarding Venue for the RICO Conspiracy Charge ................ 73
c. Adopting the Government’s Construction of Venue for the RICO Conspiracy Herein Would Open the “Floodgates” ............................. 75
C. The District Court Erred In Refusing to Charge the Jury That Venue Must Be Proved Beyond A Reasonable Doubt ............. 78
1. Venue Constitutes A Fact “Essential to Punishment,” Which Therefore Must Be Proved Beyond A Reasonable Doubt ....................................... 79
2. There Is Not Any Basis for Using the Preponderance Standard for Proving Venue .................. 86
POINT III
MR. ELGINDY’S CONVICTIONS MUST BE REVERSED AND THE CHARGES DISMISSED BECAUSE THE GOVERNMENT’S THEORIES OF CRIMINAL LIABILITY FOR THE SECURITIES AND WIRE FRAUD CHARGES WERE INVALID ...................... 88
A. The Manipulation Counts Require That Released Information Be False ......................... 89
B. The Government’s “Group Trading” Theory of Manipulation Is Without Any Legal Foundation ................... 100
C. The Wire Fraud Counts of “Trading Against Advice” and Frontrunning Require Breach of a Fiduciary Duty, Which Mr. Elgindy Did Not Owe His Subscribers .................. 104
D. The Securities and Wire Fraud Counts of “Trading Against Advice”Frontrunning Also Require Proof of Some Detriment ............................... 107
POINT IV
MR. ELGINDY’S CONVICTIONS ON THE INSIDER TRADING CHARGES SHOULD BE REVERSED AND DISMISSED BECAUSE THE PROOF WAS INSUFFICIENT AS A MATTER OF LAW, AND/OR BECAUSE THE JURY INSTRUCTIONS WERE ERRONEOUS ........................ 109
A. The Relevant Law With Respect to Insider Trading ................. 110
B. The Evidence On the Insider Trading Counts Was Insufficient ........ 112
1. The Government Failed to Prove That the Information Was Non-Public .......................... 112
a. PLMD .......................................... 113
b. SEVU ........................................... 114
c. VLPI ........................................... 115
d. OSIN ........................................... 116
2. Mr. Elgindy Disclosed Both the Information and Its Source ......................................... 117
C. Due to the Facts of This Case, This Court Should Adopt the “Use” Standard With Respect to the Connection Between the Non-Public Information and the Defendant’s Trades ................................... 119
POINT V
THE DISTRICT COURT ABUSED ITS DISCRETION BY ADMITTING UNDULY PREJUDICIAL EVIDENCE BASED ON FATALLY FLAWED REASONING ................................. 121
A. The District Court Abused Its Discretion by Admitting Evidence of Flight as “Consciousness of Guilt,” and Then Compounded the Error by Failing to Provide the Appropriate Jury Instruction ................................... 122
1. Standard of Review ..................................... 123
2. Mr. Elgindy’s Actions Did Not Permit An Inference of Flight ............................. 123
3. While Evidence of Flight Is Generally Considered Probative, It Is Also Extremely and Unduly Prejudicial ........ 125
4. The District Court Further Abused Its Discretion By Failing to Instruct the Jury Regarding Consciousness of Guilt ......................... 128
B. The District Court Erred In Admitting Propensity Evidence .......... 128
1. Evidence of Modus Operandi Is Permissible Only to Prove Identity ................................... 131
2. The Probative Value of the Evidence Was Greatly Outweighed by Prejudice .......................... 131
3. The District Court Further Erred by Failing to Give the Requested Jury Instruction as Required Under Huddleston ...................................... 132
POINT VI
MR. ELGINDY’S SENTENCE MUST BE VACATED AND REMANDED FOR RE-SENTENCING BECAUSE THE SENTENCE IMPOSED BY THE DISTRICT COURT WAS UNREASONABLE, AND BECAUSE THE FORFEITURE JUDGMENT IMPOSED UPON HIM WAS ERRONEOUS ............... 133
A. Mr. Elgindy’s Sentence On the “False Statements” Case Was Unreasonable Because the District Court Failed to Articulate Any Reason for Imposing a Sentence Over Ten Times Greater Than That Prescribed By the Advisory Sentencing Guidelines ................................ 134
B. The District Court’s Sentence on the RICO, Securities Fraud, Extortion, and Wire Fraud Counts Was Unreasonable and Wire Fraud Counts Was Unreasonable Because the District Court Failed to Utilize and/or Reveal Any Methodology for Determining the Gain Amount Attributable to Mr. Elgindy, Gain Amount Attributable to Mr. Elgindy, and Failed to Correct An Unwarranted Disparity Between Mr. Elgindy and His Co-Defendants ............................. 139
1. The District Court Failed to Account for the Gain Figure It Chose .............................. 141
2. The District Court Failed to Correct the Unwarranted Disparity Between Mr. Elgindy’s Sentence and That of His Co-Defendants .................... 147
a. Mr. Daws’s Plea Agreement and Sentence ............. 147
b. The Treatment of Others Involved
In the Offense Conduct ............................. 150
C. The Forfeiture Judgment Against Mr. Elgindy Was Erroneous Because the District Court Failed to Perform Any Reviewable Analysis to Determine the Amount ................. 151
POINT VII
MR. ELGINDY JOINS IN THE BRIEF FILED BY HIS CO-DEFENDANT-APPELLANT TO THE EXTENT IT BENEFITS HIM .............................. 153
Conclusion ...................................................... 154
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