United States v. Lumiere
249 F. Supp. 3d 748
| S.D.N.Y. | 2017Background
- Defendant Stefan Lumiere, a former senior analyst/portfolio manager at Visium, was convicted after a six-day trial of wire fraud, securities fraud, and conspiracy for his role in a two-year scheme to inflate the Visium Credit Opportunities Fund’s NAV and conceal illiquid (Level 3) holdings from investors.
- Scheme mechanics: Lumiere and senior portfolio manager Christopher Plaford devised inflated month-end in-house prices, then obtained sham broker "verifications" from small brokers (Vandersnow, Brook, O’Callaghan) or executed trades/"painted the tape" to provide backup for overrides to Operations, which relied on such backup to calculate NAV.
- Co-conspirators: Plaford pleaded guilty and cooperated; trader Jason Thorell testified under immunity. Recordings, emails, broker communications, and witness testimony showed repeated, coordinated mismarking across many securities from 2011–2013.
- Defense theory at trial: Lumiere acted in good faith — he believed the prices were fair and only learned of any wrongdoing later; his recordings of discussions were offered as proof of good-faith contemporaneous belief.
- Trial evidence against that theory: tapes where Lumiere discussed using recordings for leverage/extortion, his steering of broker business, avoidance of written trails (phone calls/flash drives), professional certifications and knowledge of pricing rules, and other corroborating documents.
- Post-trial: Lumiere moved under Fed. R. Crim. P. 33 for a new trial asserting evidentiary errors, prosecutorial misconduct (rebuttal statements), and flawed jury instructions; the court denied the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admission of Thorell's interpretive testimony about a recorded conversation | Govt: Thorell had firsthand perception and conspiracy participation permitting lay interpretation | Lumiere: Testimony was improper lay opinion and unfairly prejudicial; lacked personal basis | Court: Proper under Rule 701 — Thorell had first-hand perceptual and conspiratorial knowledge; not unfairly prejudicial |
| Exclusion of additional portions / full recording (Rule 106 completeness) | Lumiere: Excluded tape portions showed contemporaneous good-faith belief and were necessary context | Govt: Admitted excerpts sufficed to show scheme; excluded portions were post-hoc, self-serving, hearsay | Court: Exclusion proper — defendant sought to admit post-hoc justifications; completeness not triggered for such material |
| Admissibility of recording about extortion | Govt: Relevant to rebut defense inference that recordings showed innocence; shows recordings could be used for blackmail, indicating guilty knowledge | Lumiere: Irrelevant propensity evidence; unduly prejudicial | Court: Admissible under Rule 404(b) to show intent/knowledge and to rebut defense theory; limited and not unduly prejudicial |
| Prosecutorial comments in rebuttal summation | Lumiere: Govt repeatedly asserted "no evidence" of good faith despite excluded tape content, amounting to misconduct | Govt: Comments were proper rebuttal to defense summation; excluded portions offered by defense were weak/self-serving | Court: No misconduct — comments were fair response to defense; any repetition harmless given overwhelming evidence of guilt |
| Conscious-avoidance jury instruction | Lumiere: Instruction improper — no factual predicate and hypotheticals shifted burden/objectified knowledge | Govt: Charge appropriate because knowledge disputed and evidence could support deliberate avoidance | Court: Instruction appropriate and properly phrased; did not shift burden or convert knowledge to objective standard |
Key Cases Cited
- United States v. Guang, 511 F.3d 110 (2d Cir. 2007) (Rule 33 standard: new trial only if manifest injustice would result)
- United States v. Parkes, 497 F.3d 220 (2d Cir. 2007) (new-trial standard requires real concern that an innocent person was convicted)
- Olano v. United States, 507 U.S. 725 (1993) (plain-error standard and criteria for addressing unpreserved errors)
- United States v. Urlacher, 979 F.2d 935 (2d Cir. 1992) (lay interpretive testimony admissible when witness has first-hand perception)
- United States v. Yannotti, 541 F.3d 112 (2d Cir. 2008) (upholding admission of conspirator’s interpretive testimony about ambiguous tape references)
- Bourjaily v. United States, 483 U.S. 171 (1987) (court may consider challenged statements in determining co-conspirator rule under Fed. R. Evid. 801(d)(2)(E))
- United States v. Marin, 669 F.2d 73 (2d Cir. 1982) (Rule of completeness / Rule 106 scope)
- United States v. Rea, 958 F.2d 1206 (2d Cir. 1992) (curative admissibility; properly admitted evidence does not "open the door" to inadmissible material)
- United States v. Ebbers, 458 F.3d 110 (2d Cir. 2006) (conscious-avoidance instruction standards)
- United States v. Cuti, 720 F.3d 453 (2d Cir. 2013) (conscious avoidance charge appropriate where defendant’s deep involvement made lack-of-knowledge defense implausible)