United States v. David Sklena
692 F.3d 725
| 7th Cir. | 2012Background
- Sklena and Sarvey were Chicago CBOT floor traders; Sarvey was a broker, Sklena a local.
- On April 2, 2004, a series of trades occurred within minutes amid extreme market volatility, forming the conduct charged as fraud.
- The government charged Sklena with seven counts of wire/commodity fraud and two counts of noncompetitive futures trading; Sarvey was charged similarly but died before trial.
- Sklena was convicted after a bench trial on seven counts; he appealed challenging sufficiency of evidence and the exclusion of Sarvey’s deposition evidence.
- During civil discovery, Sarvey and Sklena gave CFTC depositions; the civil action was stayed and Sarvey later died.
- The district court excluded Sarvey’s deposition as hearsay; the Seventh Circuit reversed and remanded for new trial considerations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence suffices to prove Sklena’s knowledge of customer contracts | Sklena’s knowledge of customer ownership is required for fraud | Government need not prove actual knowledge; Pinkerton may apply | Sklena's knowledge was not necessary for Pinkerton liability; conspiracy supports conviction |
| Whether Sarvey’s deposition testimony was admissible under Rule 804(b)(1) | Deposition testimony should be admissible against the United States entity that pursued the civil action | Agency separation and motive prevent applicability | Deposition admissible under 804(b)(1) as the United States and CFTC shared a party and motive to develop testimony |
| Whether the Rule 403 exclusion was appropriate or prejudicial | Exclusion was not appropriate; deposition would add important perspective | Deposition is cumulative and unduly prejudicial | Exclusion under Rule 403 was improper and not harmless error; reversal warranted |
Key Cases Cited
- Pinkerton v. United States, 328 U.S. 640 (Supreme Court 1946) (conspiracy liability for foreseeable crimes of co-conspirators)
- Old Chief v. United States, 519 U.S. 172 (Supreme Court 1997) (probative value of prior evidence and reasonable reliance on stipulations)
- Hudson v. United States, 522 U.S. 93 (Supreme Court 1997) (civil penalties and deterrence share criminal-law implications; admissibility considerations)
- United States v. Reed, 227 F.3d 763 (7th Cir. 2000) (abuse-of-discretion standard for Rule 804(b)(1) rulings)
- United States v. McClellan, 868 F.2d 210 (7th Cir. 1989) (similar-motive analysis for agency and department cooperation)
- United States v. Speed, 656 F.3d 714 (7th Cir. 2011) (de novo review of sufficiency, favorable inferences for prosecution)
- United States v. North, 910 F.2d 843 (D.C. Cir. 1990) (agency-entity interplay for party status in complex actions)