477 F. App'x 818
2d Cir.2012Background
- Defendants Graham, Reisman, Scarlato, and Kahale were charged in a seven-count Superseding Indictment with conspiracy to commit mail and wire fraud and related counts (2003–2008) involving B.I.M. Mining Corp., falsely signaling asset abundance to attract investments.
- Defendants allegedly used fraudulent Gold Delivery Certificates and misleading representations about B.I.M.’s assets and finances.
- Investors’ funds were used to pay earlier investors and for personal expenses, rather than to recover assets.
- All four defendants were convicted on all counts after a nearly three-week trial, and each moved for acquittal or severance.
- On appeal, defendants challenge severance, evidentiary rulings, jury instructions, sufficiency of the evidence, sentencing, and ineffective assistance, with the district court’s rulings reviewed for abuse of discretion or substantial justification.
- Court affirms the district court’s judgments in full.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Severance of Scarlato from Reisman | Scarlato argues prejudice from joint trial; evidence of Reisman’s unrelated ventures is nonexculpatory. | Joint trial prejudicial; severance required to separate mutually antagonistic defenses. | No abuse of discretion; no substantial prejudice from joinder. |
| Admission of co-conspirator statements | Statements by Reisman/Scarlato admissible to prove conspiracy. | Statements were not in furtherance of conspiracy or properly admitted. | Admissions proper under Rule 801(d)(2)(E); not plain error. |
| Admission of FBI agent’s testimony about subpoena responses | Agent’s testimony clarifies B.I.M.’s asset status. | Testimony may be hearsay/double hearsay and violate Confrontation Clause. | Harmless error; testimony cumulative and supported by other evidence. |
| Jury instruction on justifiable reliance | Reliance element required under state civil law should apply. | Justifiable reliance not required for federal mail/wire fraud. | No error; federal fraud statutes do not require justifiable reliance. |
| Sufficiency of the evidence | Evidence shows intent to defraud beyond reasonable doubt. | Insufficient proof of fraudulent intent for Scarlato/Reisman. | Evidence sufficient; rational juror could find intent beyond a reasonable doubt. |
Key Cases Cited
- United States v. Diaz, 176 F.3d 52 (2d Cir. 1999) (severance rulings are highly deferential; virtually unreviewable discretion)
- United States v. Spinelli, 352 F.3d 48 (2d Cir. 2003) (co-conspirator evidence admissibility in conspiracy cases)
- United States v. Gigante, 166 F.3d 75 (2d Cir. 1999) (establishes two-factor test for conspiracy statements admissibility)
- United States v. Rivera, 22 F.3d 430 (2d Cir. 1994) (definitions of statements in furtherance of conspiracy)
- Neder v. United States, 527 U.S. 1 (Supreme Court 1999) (no justifiable reliance requirement in federal fraud statutes)
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (Supreme Court 2008) (fraud statutes criminalize scheme to defraud regardless of reliance)
- United States v. Naiman, 211 F.3d 40 (2d Cir. 2000) (de novo review of jury instruction errors; prejudice standard)
- United States v. Reifler, 446 F.3d 65 (2d Cir. 2006) (harmless error framework for evidentiary errors)