United States v. Ferguson
676 F.3d 260
2d Cir.2011Background
- This criminal appeal stems from a finite reinsurance Loss Portfolio Transfer between AIG and Gen Re, alleged to be a no‑risk scheme to manipulate AIG's loss reserves and stock price.
- Defendants Ferguson, Garand, Monrad, Graham, Milton were convicted of conspiracy, mail fraud, securities fraud, and false statements; Milton was the only AIG employee charged.
- Key government proof relied on two cooperating witnesses, Napier and Houldsworth, plus contemporaneous recordings and stock-price data illustrating market impact.
- The district court admitted stock-price data reflecting alleged materiality and used an instruction on causation that the defendants challenge as improper.
- The court also addressed multiple theories of liability (principal, aiding and abetting, willfully causing, Pinkerton) and issues of prosecutorial conduct and severance.
- On appeal, the Second Circuit vacated the judgments, remanding for a new trial due to abuse of discretion in admitting stock-price data and an erroneous causation instruction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Stock-price data admissibility and materiality | Government asserts data show materiality and loss causation | Data were prejudicial and misused to imply causation | Abuse of discretion; vacate due to prejudicial materiality evidence |
| Willfully caused causation instruction | Instruction properly directed liability under willfully caused theory | Causation element not properly instructed; ground for reversal | Plain error; vacate due to improper causation framework |
| Severance and use of co‑conspirator evidence (Graham v. Ferguson email) | Co‑conspirator statements support guilt and shared scienter | Potential prejudice from severance issues and conflict of defenses | District court's handling within discretion; severance not required |
| Defense jury instructions on professional responsibility and handshake deals | Jury should be guided by broad professional-responsibility concepts | Instructions requested were improper or irrelevant given record | Requests properly denied; no reversible error on professional-responsibility instructions |
Key Cases Cited
- Old Chief v. United States, 519 U.S. 172 (1997) (stipulation of element absence; coherent narrative not required)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (2005) (loss causation requirement in securities cases)
- Schad v. Arizona, 501 U.S. 624 (1991) (unanimity and multiple theories of liability)
- Pinkerton v. United States, 328 U.S. 645 (1946) (vicarious liability for conspirators)
- United States v. Wallach, 935 F.2d 445 (1991) (perjury test factors for reversal)
- United States v. Zichettello, 208 F.3d 72 (2000) (perjury test factors; four-part framework)
- United States v. Gurary, 860 F.2d 521 (1988) (conscious avoidance doctrine applicability)
- United States v. Quattrone, 441 F.3d 153 (2006) (conscious avoidance standard guidance)
- United States v. Reid, Not provided (Not provided) (Not provided)