United States v. Ferguson
653 F.3d 61
2d Cir.2011Background
- Finite reinsurance Loss Portfolio Transfer (LPT) between AIG and Gen Re to shore up reserves amid stock-price concerns; government relied on Napier and Houldsworth as cooperating witnesses and on contemporaneous recordings and stock-price data; district court admitted stock-price charts over objection contributing to materiality analysis; defendants convicted of conspiracy, mail and securities fraud, and false SEC statements; appeal alleges evidentiary and prosecutorial-misconduct errors warrant reversal; convictions vacated for abuse of discretion in admitting stock-price data and for a flawed causation-related jury instruction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Stock-price data admissibility and materiality, error review | Prosecution used stock-price data to prove materiality. | Admission was prejudicial and not properly tied to materiality. | Abuse of discretion; stock-price charts improperly admitted affecting materiality analysis. |
| Willfully caused jury instruction and causation | Willfully caused theory supported liability. | Causation element insufficiently incorporated; misinstruction. | Vacated due to plain error in causation framework. |
| Conscious avoidance instruction validity | Conscious avoidance evidenced knowledge and intent. | Instruction improper or unnecessary. | Conscious avoidance instruction deemed proper and not error. |
| Co-conspirator statement and severance issues (Graham email) | Email reflects conspiratorial awareness and supports scienter. | Double-hearsay and severance concerns; potential prejudice. | No reversible error; severance not required; admissibility sustained with limiting considerations. |
| Prosecutorial misconduct and admissibility of recordings | Opening/summation framing created improper inferences. | Misstatements were minor and cured; not reversible. | No due-process violation; overall misconduct not egregious. |
Key Cases Cited
- Old Chief v. United States, 519 U.S. 172 (U.S. 1997) (stipulation limits but does not cure evidentiary issues; proper use in materiality context)
- Basic Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (materiality requires substantial likelihood misstatements influence investors)
- Dura Pharms., Inc. v. Broudo, 544 U.S. 336 (U.S. 2005) (causation in securities fraud not necessary for all materiality proofs)
- Quattrone, 441 F.3d 153 (2d Cir. 2006) (conscious-avoidance theory framework and proof requirements)
- Gurary, 860 F.2d 521 (2d Cir. 1988) (conscious avoidance appropriate when knowledge exists about nefarious ends)
- Schad v. Arizona, 501 U.S. 624 (U.S. 1991) (unanimity principles across theories of liability; no absolute unanimity on mental-state theories required)
- Peterson, 768 F.2d 64 (2d Cir. 1985) (illustrates unanimity reach for multiple liability theories)
- Rossomando, 144 F.3d 197 (2d Cir. 1998) (no ultimate harm instruction; immediate harm analysis relevant)
- Geaney, 417 F.2d 1116 (2d Cir. 1969) (co-conspirator statements admissibility framework)
- Pinkerton v. United States, 328 U.S. 597 (U.S. 1946) (vicarious liability within conspiracy context)