United States v. Ferguson
676 F.3d 260
2d Cir.2011Background
- Finite reinsurance Loss Portfolio Transfer between AIG and Gen Re to shore up AIG reserves; government alleged no-risk fraud; two cooperating Gen Re witnesses and stock-price data key to proving scheme; district court admitted stock-price charts over objections; convictions on conspiracy, mail and securities fraud, and false SEC statements; case focused on whether deal could be booked as reinsurance or deposit accounting and whether perpetrators intended deception.
- Greenberg (AIG) and Ferguson (Gen Re) initiated discussions Oct 31, 2000 seeking reserves improvement; Napier and Houldsworth testified about no-risk structure and deposit accounting; draft slip contract omitted key terms including fees and side arrangements; later internal memos and emails showed concealment and confidentiality; AIG booked reserves accordingly and regulators later scrutinized the deal.
- Gen Re sought deposit accounting to shelter itself from risk; a side arrangement allegedly funded by Gen Re; there were undisclosed fees and a scheme to disguise terms; investigation by SEC and NYAG followed with stock price decline.
- Graham, Monrad, Garand, Milton, and Ferguson were charged; Napier and Houldsworth provided pivotal testimony; recordings and emails corroborated that the LPT was manipulated for accounting purposes; verdicts were vacated due to evidentiary error surrounding stock-price data.
- On remand, retrial ordered due to abused evidentiary standards regarding stock-price data and related trial doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Stock-price data admissibility and materiality | Stock data essential to materiality; charts supported fraud theory | Charts were prejudicial and mischaracterized causation | Abuse of discretion; stock data improperly admitted and prejudicial |
| Willfully caused instruction error on causation | Evidence supports causation to book as no-risk; proper instruction unnecessary | Causation element omitted; plain error | Plain error; trial tainted, warranting vacatur |
| Conscious avoidance instruction proper | Evidence showed high probability of knowledge; instruction appropriate | No need for conscious-avoidance given record | Instruction not error; properly given |
| Specific unanimity requirement | Jury need not agree on theory due to Pinkerton/Schad doctrine | Unanimity required on each theory | General unanimity sufficient; no error in lack of specific unanimity |
| Admission of December 2000 Graham email as co-conspirator statement; severance impact | Email relevant to conspiratorial state of mind; admissible | Double-hearsay risk; severance not warranted | Email admissible as nonhearsay co-conspirator statement; severance not required |
Key Cases Cited
- Old Chief v. United States, 519 U.S. 172 (1997) (stipulations and materiality considerations in evidentiary rulings)
- Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005) (requires plausible causal connection for materiality evidence)
- Hedgpeth v. Pulido, 555 U.S. 57 (2008) (plain-error review for defective jury instructions when multiple theories exist)
- N Neder v. United States, 527 U.S. 1 (1999) (standard for plain-error review on causation elements)
- Skilling v. United States, 561 U.S. 358 (2010) (multiplicity of theories and unanimity considerations in complex cases)
- Marcic v. Reinauer Transp. Cos., 397 F.3d 120 (2d Cir. 2005) (prejudice and evidentiary balancing in trial rulings)
- United States v. Riggi, 541 F.3d 94 (2d Cir. 2008) (co-conspirator statements and admissibility considerations)