United States v. Treacy
639 F.3d 32
| 2d Cir. | 2011Background
- Treacy was convicted of conspiracy to commit securities fraud and substantive securities fraud stemming from backdating stock options at Monster Worldwide.
- Monster used backdating to assign favorable strike prices and conceal this as fair market value, contradicting APB 25 accounting rules.
- The government sought forfeiture under 18 U.S.C. § 981(a)(1)(C) based on proceeds from backdating; charted gains of $6,332,995.
- Forelle of the Wall Street Journal testified about Treacy's statements; the district court limited cross-examination due to journalist’s privilege and balancing press interests.
- Treacy challenged (1) Confrontation Clause limitations on cross-examining Forelle, (2) voir dire with/without a questionnaire, and (3) the forfeiture calculation; the district court’s rulings are under review.
- Court affirmed Treacy’s conviction but remanded for recalculation of forfeiture based on the December 9, 1998 grant under APB 25
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Confrontation Clause cross-examination limits | Treacy argues limits violated Confrontation Clause | Forelle privilege applied; limits were necessary | Limitations violated Gonzales standard; error harmless beyond reasonable doubt |
| Voir dire methodology and use of questionnaire | Treacy contends questionnaire should have been used to elicit biases | Judge acted within discretion; questionnaire not mandatory | No abuse; district court's voir dire within discretion |
| Forfeiture calculation under APB 25 | Measurement date tied to backdating dates; correct. | Measurement date misapplied; APB 25 requires date of actual authorization | District court erred; remand for recalculation based on December 9, 1998 grant |
| Overcoming journalist’s privilege in criminal case | Nonconfidential materials should be compelled if relevant | Privilege governs absent confidentiality; Gonzales standard applies | Gonzales standard applied; privilege overcome for nonconfidential material; cross-exam limits were improper but harmless |
| sufficiency of evidence notwithstanding Forelle issue | Forelle testimony essential to show guilt | Other documentary and witness evidence supported guilt | Harmless error; evidence sufficient to sustain conviction |
Key Cases Cited
- Gonzales v. NBC, 194 F.3d 29 (2d Cir.1999) (journalist's privilege nonconfidential materials; Gonzales test governs nonconfidential discovery)
- Chevron Corp. v. Berlinger, 629 F.3d 297 (2d Cir.2011) (journalist privilege balancing framework; public-interest considerations)
- United States v. Cutler, 6 F.3d 67 (2d Cir.1993) (journalist's privilege; confidentiality considerations)
- United States v. Burke, 700 F.2d 70 (2d Cir.1983) (earlier guidance on journalist's privilege)
- Davis v. Alaska, 415 U.S. 308 (1984) (Confrontation Clause right to test witness credibility)
- Van Arsdall, 475 U.S. 673 (1986) (harmless-error factors in confrontation claims)