United States v. Goffer
531 F. App'x 8
| 2d Cir. | 2013Background
- Goffer, Kimelman, and Drimal ran a double‑blind, high‑volume insider‑trading network (using prepaid phones and cover stories) that generated over $10 million in illicit profits; Goffer recruited tippers and distributed inside tips obtained from Ropes & Gray attorneys via an intermediary (Goldfarb).
- Goffer and co‑conspirators traded on material nonpublic information about multiple acquisitions (notably 3Com, Axcan, Clear Channel, Hilton, Kronos), with recorded communications, emails, IMs, phone records, and trading records presented at trial.
- Kimelman (a former law‑firm associate turned trader) traded large blocks of 3Com shortly after an unrecorded August 7 phone call with Goffer and after later communications; the jury convicted him of conspiracy and two substantive securities‑fraud counts. Drimal pled guilty; Goffer was convicted after trial.
- The government used court‑authorized wiretaps obtained in a wire‑fraud/money‑laundering investigation; the wiretap applications disclosed that securities‑fraud communications were likely to be intercepted.
- District court sentences: Goffer 120 months, Kimelman 30 months, Drimal 66 months; forfeiture orders totaling millions. Defendants appealed convictions, evidentiary rulings, instructions, and sentences.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of wiretap evidence | Government: wiretaps lawfully obtained for wire fraud/money laundering and disclosed possible interception of securities‑fraud communications | Defendants: securities fraud is not a Title III predicate and intercepts relating to it were inadmissible unless incidental | Wiretaps were lawful; courts approved wiretap applications that disclosed likely securities‑fraud intercepts and there was no subterfuge; evidence admissible |
| Sufficiency of evidence for Kimelman’s 3Com trades | Government: trading pattern change, August 7 call, email exchanges, parallel trades, and signature‑pages discussion supported tippee knowledge or willful blindness | Kimelman: no proof he was tipped or that he knew information was illegally disclosed; post‑trade evidence irrelevant | Viewing all inferences for government, evidence was sufficient to support conviction beyond reasonable doubt |
| Conscious‑avoidance jury instruction | Government: instruction appropriate because evidence supported that defendant deliberately avoided confirming illicit source | Kimelman: instruction improper and should reflect Global‑Tech limitations; reckless mental state insufficient | Instruction was proper; Global‑Tech did not change conscious‑avoidance doctrine and district charge tracked the two required elements (belief of high probability + deliberate steps to avoid confirming it) |
| Exclusion of evidence that Kimelman rejected a plea offer | Government: excluding the rejected plea avoided unfair prejudice and collateral‑consequences confusion | Kimelman: rejecting plea was probative of consciousness of innocence (Biaggi) | Exclusion affirmed under Rule 403; unlike Biaggi (immunity offer), rejecting a plea that still entailed conviction had little probative value and posed unfair prejudice/confusion |
| Sentencing reasonableness (Goffer, Drimal) | Defendants: sentences procedurally/substantively unreasonable and disparate for white‑collar offenders | Government: sentences within Guidelines and district court properly considered §3553(a) factors, role, losses, and need for deterrence | Sentences were procedurally and substantively reasonable and within the district court’s broad discretion |
Key Cases Cited
- United States v. Smith, 726 F.2d 852 (1st Cir. 1984) (explains §2517(5) limits and subterfuge concerns for Title III use of intercepts)
- In re Grand Jury Subpoena Served on Doe, 889 F.2d 384 (2d Cir. 1989) (other offenses may be shown where no bad‑faith subterfuge occurred)
- United States v. Marion, 535 F.2d 697 (2d Cir. 1976) (use/disclosure of incidental interceptions permissible with good‑faith showing to court)
- United States v. McKinnon, 721 F.2d 19 (1st Cir. 1983) (investigation of one crime may permissibly uncover evidence of another when not a subterfuge)
- SEC v. Obus, 693 F.3d 276 (2d Cir. 2012) (elements for tippee liability: material, nonpublic information and knowledge of breach)
- United States v. Svoboda, 347 F.3d 471 (2d Cir. 2003) (requirements for conscious‑avoidance instruction)
- United States v. Ferrarini, 219 F.3d 145 (2d Cir. 2000) (conscious‑avoidance factual predicate and instruction limits)
- Global‑Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011) (describes willful blindness elements: subjective belief of high probability plus deliberate avoidance)
- United States v. Biaggi, 909 F.2d 662 (2d Cir. 1990) (distinguishes probative value of rejecting immunity vs. plea offers)
- United States v. Cavera, 550 F.3d 180 (2d Cir. 2008) (abuse‑of‑discretion standard for sentencing review)