30 F. Supp. 3d 143
D. Conn.2014Background
- Defendant Jesse C. Litvak, a former Jeffries trader, was indicted on 16 counts for securities fraud (10 counts), TARP/major-fraud (1 count), and false statements (4 counts) arising from alleged misrepresentations about RMBS purchase prices and counterparties in trades with PPIFs and other buyers.
- Government's trial evidence included time‑stamped Bloomberg chat logs, trade tickets, testimony from Jeffries custodians and FINRA examiner, victims (PPIF and private fund managers), Treasury/SIG‑TARP witnesses, and FINRA/industry evidence about market practice.
- The jury convicted Litvak of ten securities‑fraud counts, one TARP fraud count, and four false‑statement counts; the court granted the government's request to dismiss one count pretrial.
- Post‑verdict, Litvak moved under Fed. R. Crim. P. 29 for judgment of acquittal and, alternatively, under Rule 33 for a new trial, chiefly challenging sufficiency of evidence on materiality, scienter, and whether transactions involved federal assistance/jurisdiction.
- The district court reviewed the record under the Jackson standard (viewing evidence in government’s favor, deferring to the jury on credibility) and denied both the Rule 29 and Rule 33 motions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Materiality for securities fraud | Government: misrepresentations about price/compensation were capable of significantly altering the mix of information for investors | Litvak: counterparties were sophisticated RMBS managers who lacked access to such price data, so alleged lies were immaterial | Court: evidence (victim testimony, chats, negotiation conduct) supported materiality; jury could find lies affected price and negotiations; conviction stands |
| Scienter for securities fraud | Government: chats, motive, and effect on trade profitability show willful intent to deceive | Litvak: no proof he intended to cause financial loss; at most negligent or non‑fraudulent bargaining | Court: intent to deceive (to induce action) proven circumstantially; no requirement to prove intent to cause loss; conviction stands |
| TARP/major fraud — federal assistance & mens rea | Government: PPIFs were Treasury‑created/overseen vehicles; evidence showed trades involved PPIF money and oversight, and defendant knew he dealt with PPIFs | Litvak: PPIFs functioned like private funds; Treasury’s involvement was limited and managers made day‑to‑day allocations; defendant may not have known a given trade would be charged to PPIFs | Court: record (Treasury setup/oversight testimony, chats, victim statements) permitted jury to find transactions were within a form of federal assistance and that Litvak knowingly and intentionally executed the scheme in that context; conviction stands |
| False statements (18 U.S.C. § 1001) — jurisdictional element | Government: misrepresentations to PPIF counterparties affected a matter within Treasury/SIG‑TARP jurisdiction because Treasury funded/oversaw PPIFs and had authority to monitor use of funds | Litvak: PPIFs were private; Treasury had no direct control over individual bond purchases so §1001 jurisdiction is lacking | Court: statutory framework and testimony supported that the statements concerned authorized Treasury functions and affected federal interest; jury could find §1001 jurisdiction satisfied; convictions stand |
Key Cases Cited
- United States v. Vilar, 729 F.3d 62 (2d Cir.) (materiality and scienter standards under Rule 10b‑5 in government securities cases)
- United States v. Mi Sun Cho, 713 F.3d 716 (2d Cir.) (standard for reviewing sufficiency of evidence post‑verdict)
- Jackson v. Virginia, 443 U.S. 307 (standard: verdict must be upheld if any rational trier of fact could find guilt beyond reasonable doubt)
- TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438 (materiality is a mixed question of law and fact; affects the total mix of information)
- United States v. Yermian, 468 U.S. 63 (§1001 does not require proof of knowledge of federal agency jurisdiction)
- United States v. Carlo, 507 F.3d 799 (2d Cir.) ("property" in fraud statutes can include information necessary for discretionary economic decisions)
- United States v. O'Connor, 650 F.3d 839 (2d Cir.) (deference to jury credibility determinations despite inconsistencies)
- Loughrin v. United States, 573 U.S. 351 (interpreting statutory scope in fraud contexts and supporting broader readings where appropriate)