Day 45: 1/21/05
9050
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA : CR-02-589 (RJD)
-against- U.S. Courthouse
:
Brooklyn, New York
AHR ELGINDY
and
:
JEFFREY ROYER
Defendants :
January 21, 2005
- - - - - - - - - - - - - - - X 9:00 a.m.
BEFORE:
HONORABLE RAYMOND J. DEARIE
United States District Judge
and a jury
APPEARANCES:
For the Government: ROSLYNN R. MAUSKOPF, ESQUIRE
United States Attorney
One Pierrepont Plaza
Brooklyn, New York 11201
BY: KENNETH BREEN, ESQUIRE
SETH LEVINE, ESQUIRE
VALERIE SZCZEPANIK, ESQUIRE
Assistant U.S. Attorneys
9051
For the Defendant: KRAMER LEVIN NAFTALIS
Ahr Elgindy & FRANKEL
919 Third Avenue
New York, New York 10022
BY: BARRY BERKE, ESQUIRE
ERIC TIRSCHWELL, ESQUIRE
For the Defendant: LAWRENCE D. GERZOG, ESQUIRE
Jeffrey Royer ILISSA BROWNSTEIN, ESQUIRE
251 East 61st Street
New York, New York 10021
Court Reporter: RONALD E. TOLKIN, RMR
Official Court Reporter
225 Cadman Plaza East
Brooklyn, New York 11201
Minutes Taken Stenographically. Transcript Produced
By Computer Aided Transcription.
9052
1 (Time noted: 10:30.)
2 MR. BREEN: Your Honor, just to start, by just
3 telling you what has gone back to the jury and the agreement
4 that was reached in that regard.
5 And that was that with regard to the allegations
6 that the chat log references that were on the day, to put in
7 context the broadcasts, with the front running and the trading
8 against the site, the other discussion, those have gone back.
9 The defense also had a chat that worked on those
10 particular days that they felt put it into context as they
11 described for the Court. We agreed to all of those.
12 What we didn't agree to was a series of snippets
13 dealing with Mr. Elgindy's claim that he didn't give financial
14 advice, which we think is not something that even comes close
15 to the charges of what we are talking about. And we think
16 that it is completely separate. It is not what the jury has
17 asked for. And we don't think that they should get it. It's
18 confusing. It will be another additional 30 or so chat logs.
19 They already have a lot to go through. And if they don't ask
20 for it, we don't think that they should get it
21 THE COURT: Is that a fair characterization of what
22 you are seeking to put before them?
23 MR. TIRSCHWELL: Judge, these are chats where
24 Mr. Elgindy says repeatedly over and over that he doesn't give
25 national advice. He specifically declines to answer specific
9053
1 questions, site members' specific questions.
2 The allegation as the government alleges on their
3 chart that is in evidence is trading against the advice.
4 Advice is the word they used.
5 As we argued in summation, that claim of fraudulent
6 advice and fraudulently telling people as they claim that he
7 doesn't trade against his own advice, we think is absolutely
8 related to the background of him repeatedly telling his site
9 members that what he is doing is not giving advice. And we
10 would argue and did argue that that can vitiate the entire
11 claim. Because if the site members understood that what he
12 was doing was just telling them what he was doing and not
13 giving them advice. I mean, it is directly responsive. It is
14 chat, which is what they asked for.
15 MR. BERKE: Could I add one fact, Judge? The
16 government put in their audio broadcast, broadcasts that does
17 not specifically relate to front running and trading against
18 advice, but simply says when I tell you something, I tell the
19 truth. You should listen to when I tell you things. And I
20 think that that one audio broadcast, surely this chat about
21 that he doesn't give financial advice goes in as well. It is
22 all part of the same category.
23 MR. TIRSCHWELL: Here are a couple of examples,
24 Judge. They were all very short excerpts. Compared to the
25 other chat we put in, which if the jury actually reads it,
9054
1 could take hours and hours, if not days and days. They could
2 look at this in 10 or 15 minutes.
3 THE COURT: These are examples?
4 MR. TIRSCHWELL: Just --
5 THE COURT: Why don't you give me the log.
6 MR. TIRSCHWELL: Sure, Judge.
7 THE COURT: Let me know when you are ready and I
8 will be right back.
9 (Recess taken.)
10 (Matter continued on the next page.)
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9055
1 MR. BREEN: The problem, Your Honor, that we are
2 concerned with is that we agreed wholesale to a whole series
3 of these things going in. And to not present that has such
4 marginal relevance to the request, over emphasizes the
5 importance of it. And I think that is something that is of
6 concern. If you read it, I mean, you can see it. It just has
7 -- even by the creative argument that the defense is
8 suggesting here, it is so remote.
9 THE COURT: So perhaps we have created it, it may
10 elude the jury. But if it was an oversight. This jury is
11 obviously quite focused. They obviously have their eye on the
12 ball and are working very hard. I can't imagine that six
13 lines of chat -- particularly these six or seven lines that I
14 have just read have much independent significance to them. If
15 they are part of the body of chat that you intended to go, we
16 will send them into them.
17 MR. TIRSCHWELL: Just so that I understand -- I
18 wasn't here. That on the advice chat --
19 THE COURT: I read through them all. They all said
20 the same thing. I just think it is too attenuated. Again,
21 the jury made a specific request. I understand your interest
22 in it and I understand your argument in the global sense it
23 has some bearing, but I don't think it is responsive to their
24 request and you can certainly note your objection.
25 All right, folks.
9056
1 (Recess taken.)
2 (Matter continued on the next page.)
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9057
1 THE CLERK: Mr. Berke, agreed.
2 MR. BERKE: Yes.
3 THE CLERK: Mr. Gerzog, agreed?
4 MR. GERZOG: Yes, ma'am.
5 I am agreed.
6 THE CLERK: Fine.
7 (Documents brought into the jurors.)
8 MR. GERZOG: We need Judge Dearie for one moment.
9 THE CLERK: Right.
10 That is it, right?
11 (The Judge enters the Courtroom.)
12 THE COURT: I saw this note. I said, well, even
13 these guys can't find something to disagree about on this
14 note.
15 MR. TIRSCHWELL: Judge, you know us better than
16 that.
17 MR. BERKE: It is all Mr. Breen's fault.
18 THE COURT: What is the problem?
19 MR. BREEN: This is something that says Cleveland
20 trading records. It is something that does have some records
21 that relate to Teranova and some other accounts. I think that
22 it is true that the trades that are essentially part of the
23 case are probably already included in what they have, but we
24 think this should go back as well.
25 THE COURT: Are these Cleveland trading records?
9058
1 MR. BREEN: Yes.
2 MR. GERZOG: Because the reason they were admitted,
3 Judge, is for the things that are on the reverse. They were
4 never admitted, and we made this point on the record, for the
5 trades themselves, which are not relevant.
6 MR. BREEN: These are the notes.
7 MR. GERZOG: They were admitted because Mr. Breen
8 would say, these notes and we concur they were made on such
9 and such a date because on the reverse it has the date. Which
10 was fine, and we had no problem.
11 THE COURT: Well, do the trading records themselves
12 have any great relevance to anything?
13 MR. BERKE: Judge, those trading records are
14 actually already in. We gave binders of all of the trading
15 records. The only trading records relevant to this case the
16 jury now has. The only additional information that it has is
17 on the back of the trading records, which is not anything that
18 they asked for. And that is what the document was admitted
19 for. It was not admitted as trading records, but as merely
20 the note pad with the trading records and the date.
21 THE COURT: So what do you suggest I do?
22 MR. BREEN: I think because they are trading records
23 they are included in the note and they should go back.
24 THE COURT: Well, they already have it, so what
25 difference does it make?
9059
1 MR. BERKE: They don't have that copy to know what
2 is on the back. They have different records that reflect the
3 trade that would be relevant in that.
4 THE COURT: I understand your point. Give them to
5 the jury. They are going home in 15 minutes.
6 MS. SZCZEPANIK: This is another account that we
7 just located.
8 MR. BREEN: There is no dispute on that.
9 THE COURT: Did you have all see the note that one
10 of them has to leave at 4:45 p.m.?
11 MR. GERZOG: Yes.
12 MR. BERKE: The good news is you might get to see us
13 again next week.
14 THE COURT: I am really looking forward to it.
15 (Whereupon a recess was taken.)
16 (Matter continued on the next page.)
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9060
1 THE CLERK: 10:00 Monday morning.
2 (Whereupon Court was adjourned until January 24,
3 2005 at 10:00 a.m.)
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