UNITED STATES OF AMERICA, Plаintiff-Appellee, v. MICHAEL COSCIA, Defendant-Appellant. MICHAEL COSCIA, Petitioner-Appellant, v. UNITED STATES OF AMERICA, Respondent-Appellee.
Nos. 19-2010 & 20-1032
United States Court of Appeals For the Seventh Circuit
ARGUED DECEMBER 2, 2020 — DECIDED JULY 12, 2021
Harry D. Leinenweber, Judge.
Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 14-cr-00551-1 & 19-cv-05003
Before EASTERBROOK, RIPPLE, and ROVNER, Circuit Judges.
The district court denied both motions, and Mr. Coscia now appeals.3 He submits that the district court abused its discretion when it denied his new trial motion. In his view, the newly discovered evidence demonstrated that key evidence relied on by the Government to establish his intent to spoof was false and inaccurate. As for his habeas motion, he contends that the district court correctly found that counsel had a conflict of interest, but incorrectly concluded that there was no adverse effect on counsel‘s performance. He further submits that the district court erred in rejecting
We now affirm the district court‘s judgments on both the new trial and
I
BACKGROUND
A.
Mr. Coscia‘s Trading Activity
Michael Coscia was the principal of a futures trading firm, Panther Trading LLC. He traded commodity futures contracts on electronic exchanges operated by CME Group, Inc. (“CME“) and the Intercontinental Exchange, Inc. (“ICE“). Trading firms such as Mr. Coscia‘s use computer programs to execute trades that are carried out in fractions of a second. In our opinion affirming Mr. Coscia‘s conviction, we described the basic process of high-frequency trading:
The simplest approaches take advantage of the minor discrepancies in the price of a security or commodity that often emerge across national exchanges. These price discrepancies allow traders to arbitrage between exchanges by buying low on one and selling high on another. Because any such price fluctuations are often very small, significant profit can be made only on a high volume of transactions. Moreover, the discrepancies often last a very short period of time (i.e., fractions of a second); speed in execution is therefore an essential attribute for firms engaged in this business.
United States v. Coscia, 866 F.3d 782, 786 (7th Cir. 2017).
High-frequency trading can also be used “to artificially move the market price of a stock or commodity up and down, instead of taking advantage of natural market events.” Id. at 787. This artificial movement can be accomplished “by placing large and small orders on opposite sides of the market.” Id. For example, if an unscrupulous trader wanted to buy, he would place a small order below the current market price. He would simultaneously place large orders to sell on the opposite side of the market. He would place these large sell orders at progressively lower prices until the purchase price matched the price at which the small buy order had been placed. The small order then would be executed, and the large orders would be cancelled. “Importantly, the large, market-shifting orders that he places to create this illusion are ones that he never intends to execute; if they were executed, our unscrupulous trader would risk extremely large amounts of money by selling at suboptimal prices.” Id.
Congress criminalized this practice, called “spoofing,” in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010). It became unlawful “to engage in any trading, practice, or conduct on or subject to the rules of a registered entity that ... is, is of the character of, or is commonly known to the trade as, ‘spoofing’ (bidding or offering
B.
Mr. Coscia‘s Trial
In August 2011, Mr. Coscia implemented two high-frequency trading programs that followed a specific pattern:
When he wanted to purchase, Mr. Coscia would begin by placing a small order requesting to trade at a price below the current market price. He then would place large-volume orders, known as “quote orders,” on the other side of the market. A small order could be as small as five futures contracts, whereas a large order would represent as many as fifty or more futures contracts. At times, his large orders risked up to $50 million. The large orders were generally placed in increments that quickly approached the price of the small orders.
Coscia, 866 F.3d at 788 (footnotes omitted).
A grand jury indicted Mr. Coscia for six counts of spoofing and six counts of commodities fraud based on his 2011 trading activity. Trial began on October 26, 2015. The Government set forth Mr. Coscia‘s pattern of trading: placing small orders and large orders on opposite sides of the market, with the small orders filling once the desired price was met and the large orders immediately cancelled. The same pattern would then repeat in the opposite direction. Each of these patterns took place within one second or less. To establish Mr. Coscia‘s fraudulent intent, the Government presented (1) the testimony of Jeremiah Park, Mr. Coscia‘s computer programmer; (2) testimony of representatives of ICE and CME, who described Mr. Coscia‘s trading activities and presented charts summarizing relevant trading data; (3) testimony of other traders on the effect of Mr. Coscia‘s trading on their businesses; (4) Mr. Coscia‘s deposition testimony taken by the Commodity Futures Trading Commission; and (5) the rebuttal testimony of financial markets expert Hank Bessembinder.
Park testified that he created, at Mr. Coscia‘s direction, two programs: Flash Trader and Quote Trader. He confirmed that Mr. Coscia had specified that the programs were to act “[l]ike a decoy” to “pump [the] market.”5 Specifically, the large-volume orders were designed to avoid being filled and would be cancelled based on (1) the passage of time, (2) the partial filling of large orders, or (3) the complete filling of a small order. These cancellation settings were intended to reduce the risk that the large orders would be filled. After the large orders were cancelled, the program would reenact the trades in reverse.
The Government also presented representatives of ICE and CME who testified about trading data summarized in data charts. The court admitted, without objection, six ICE summary charts and six CME summary charts. John Redman, the director of compliance for ICE, testified about the ICE data and summary charts. Ryan Cobb, a data scientist for CME, testified about the CME data and summary charts. Both Redman‘s and Cobb‘s testimony supported the Government‘s view that Mr. Coscia had engaged in a specific trading pattern that was outside trading norms. We briefly review the charts relevant to this appeal.
ICE Summary Chart 2 compared the rate at which Mr. Coscia filled his large
ICE Summary Chart 3 displayed Mr. Coscia‘s “order-to-trade ratio,” or “the average size of the order he showed to the market divided by the average size of the orders filled.”7 This chart compared the activity of Mr. Coscia‘s firm on the ICE market to the activity of others trading at approximately the same volume. ICE Summary Chart 3 showed that Mr. Coscia‘s average order size was 39.8 lots, but his average trade size was 2.5 lots. Thus, Mr. Coscia‘s order-to-trade ratio was 1,592%. According to the chart, other trading entities had ratios between 91% to 264%.
ICE Summary Chart 6 displayed Mr. Coscia‘s share of cancellations of large orders that followed the trade of a small order in the opposite direction. This chart showed that, between September and October 2011, Mr. Coscia cancelled large orders 14,563 times following the execution of small-order trades; other market participants followed this pattern only 671 times combined. Thus, according to the chart, Mr. Coscia accounted for 96% of all of the cancelled large orders that followed the execution of a small order in the opposite direction on the ICE exchange.
CME Summary Charts 2 and 3 compared the rates at which Mr. Coscia filled large and small orders, referred to as a “fill-rate differential.” These charts showed that, on the CME markets, Mr. Coscia filled 35.61% of his small orders, but only 0.08% of his large orders, resulting in a 35.53% fill-rate differential.8
CME Summary Chart 5 showed how Mr. Coscia ranked among all trading entities in the same markets in terms of large orders placed (“large order entry rank“) and large orders actually traded (“volume rank“). Mr. Coscia ranked first, entering the most large orders in eleven of the seventeen CME commodities. Mr. Coscia‘s volume rank for large orders actually traded, however, was significantly lower across all commodities.9
Finally, the Government introduced testimony of other traders, some of whom lost hundreds of thousands of dollars as a result of Mr. Coscia‘s trading activity. Anand Twells, a trading supervisor at Citadel, LLC, testified that in a transaction with Panther Trading, it lost “about $480” in “roughly 400 milliseconds.”10 Hovannes Dermenchyan, the global head of trading and markets at Teza Technologies, testified that his firm “lost $10,000 over the course of an hour” because its programs were “induced into trading” by this single participant‘s behavior.11 “[E]very time that participant placed a very large ordеr,” he went on, “it would induce this specific strategy to trade on the opposite side.”12 Alexander Gerko, who was previously a portfolio manager at GSA Capital, testified that he “noticed a pattern of activity”
In his defense, Mr. Coscia maintained that his trading was legitimate because each order placed was an order capable of being filled prior to its cancellation. He testified that the strategy of his programs was to “make a lopsided market and hope to get traded on the better of the offer.”17 If the small order was executed, the large order would be cancelled; if the large order was executed, the small order would be cancelled. Mr. Coscia also testified that he had no preference, and sometimes did not even know, whether his small or large orders were filled.
In rebuttal, the Government presented testimоny from financial markets expert Hank Bessembinder. He testified that Mr. Coscia‘s trading was materially different from that of other high-frequency traders. In contrast to Mr. Coscia‘s claims of indifference as to which of his orders were filled, Bessembinder testified that “[t]he outcomes don‘t seem to reflect that same sort of even balance” of an indifferent trader.18 Rather, “the outcomes are far, far from being 50/50 or equal outcomes on both sides of the market.”19 Bessembinder added that “[t]here were more than 10 times as many contracts traded on the small orders as compared to the large orders.”20 Mr. Coscia “was entering over 60 percent of his orders as large orders, whereas, the other high-frequency traders were entering only about a quarter of one percent of their orders as large orders.”21 But Mr. Coscia cancelled “[a] little over 97 percent” of his large orders within one second, while other high-frequency trading firms canceled their large orders within one second “[j]ust under 35 percent” of the time.22 Further, Bessembinder testified that Mr. Coscia‘s large-order fill rate did not account for his successive attempts to cancel orders that failed because the order had already fully executed milliseconds earlier.23
The jury convicted Mr. Coscia on all twelve counts. The court sentenced Mr. Coscia to a term of thirty-six months’ imprisonment, followed by two years’ supervised release. Mr. Coscia filed a motion for
C.
Direct Appeal
Mr. Coscia appeаled his conviction and sentence, and we affirmed. Coscia, 866 F.3d at 782. In his appeal, Mr. Coscia challenged the anti-spoofing statute as unconstitutionally vague. He also contended that the Government produced insufficient evidence to support his spoofing conviction.
We first held that the anti-spoofing statute provided sufficient notice and that “Mr. Coscia‘s actions [fell] well within the core of the anti-spoofing provision‘s prohibited conduct, precluding any claim that he was subject to arbitrary enforcement.” Id. at 795. With respect to the sufficiency of the evidence, we observed:
As we have noted earlier, a conviction for spoofing requires that the prosecution prove beyond a reasonable doubt that Mr. Coscia knowingly entered bids or offers with the present intent to cancel the bid or offer prior to execution. Mr. Coscia‘s trading history clearly indicates that he cancelled the vast majority of his large orders. Accordingly, the only issue is whether a rational trier of fact could have found that Mr. Coscia possessed an intent to cancel the large orders at the time he placed them.
A review of the trial evidence reveals the following. First, Mr. Coscia‘s cancellations represented 96% of all Brent futures cancellations on the Intercontinental Exchange during the two-month period in which he employed his
software. Second, on the Chicago Mercantile Exchange, 35.61% of his small orders were filled, whereas only 0.08% of his large orders were filled. Similarly, only 0.5% of his large orders were filled оn the Intercontinental Exchange. Third, the designer of the programs, Jeremiah Park, testified that the programs were designed to avoid large orders being filled. Fourth, Park further testified that the “quote orders” were “[u]sed to pump [the] market,” suggesting that they were designed to inflate prices through illusory orders. Fifth, according to one study, only 0.57% of Coscia‘s large orders were on the market for more than one second, whereas 65% of large orders entered by other high-frequency traders were open for more than a second. Finally, Mathew Evans, the senior vice president of NERA Economic Consulting, testified that Coscia‘s order-to-trade ratio was 1,592%, whereas the order-to-trade ratio for other market participants ranged from 91% to 264%.
Id. at 795-96 (alterations in original) (footnotes omitted). We therefore concluded that, “when evaluated in its totality, the cumulative evidence certainly allowed a rational trier of fact to determine that Mr. Coscia entered his orders with the intent to cancel them before their execution.” Id. at 796.
We decided Mr. Coscia‘s direct appeal on August 7, 2017. On January 10, 2019, Mr. Coscia filed in the district court a second motion for a new trial. The district court denied this motion on May 15, 2019. Two months later, Mr. Coscia filed a motion to vacate his conviction under
II
The Motion for A New Trial
A.
Governing Standards
We review a district court‘s denial of a motion for new trial based on newly discovered evidence for an abuse of discretion. United States v. Reyes, 542 F.3d 588, 595 (7th Cir. 2008). District courts may “grant a new trial if the interest of justice so requires.”
In seeking a new trial, based on newly discovered evidence, the defendant must demonstrate that the new evidence “(1) was discovered after trial, (2) could not have been discovered sooner through the exercise of due diligence, (3) is material and not merely impeaching or cumulative, and (4) probably would have led to acquittal.” United States v. O‘Malley, 833 F.3d 810, 813 (7th Cir. 2016). In an effort to meet these criteria, Mr. Coscia presents two categories of “newly discovered” evidence: (1) ICE and CME data disclosed post-trial, and (2) subsequent indictments against other traders for similar activities. We address each of these categories in turn.
B.
Newly Discovered Data
The first category of newly discovered evidence proffered by Mr. Coscia is data disclosed post-trial by ICE and CME. In Mr. Coscia‘s view, this newly discovered information raises a significant question regarding the accuracy of the charts that the Government employed at trial to establish that he intentionally had engaged in spoofing.
1. Background
During pretrial discovery, ICE and CME produced certain dаta that the Government intended to use at trial through the summary charts that we described earlier. One month before trial, Mr. Coscia‘s counsel requested produc-
(... continued) ly-conducted proceedings; this is particularly appropriate when, as here, the action has been tried before a jury.” (footnotes omitted)).
tion of these charts. The Government responded that it had not yet prepared the summary charts but that “the information that they summarize ha[d] already been produced” to the defense.26
Mr. Coscia‘s counsel independently issued four subpoenas: one subpoena to ICE
Following trial but before sentencing, CME produced a complete record of all market participants’ order and trading histories covering approximately ten weeks in all seventeen markets in which Mr. Coscia had traded.30 Through Sullivan
& Cromwell, and later Kobre & Kim LLP, Mr. Coscia attempted to obtain the full audit trail data of all market participants on the Brent Crude Futures market for the period between September 6, 2011 and October 18, 2011, as well as personal and confidential information relating to government witness Hovannes Dermenchyan. During Mr. Coscia‘s attempt to obtain additional data from ICE, that exchаnge disclosed that it had inadvertently failed to produce all of the data underlying ICE Summary Chart 6 to either the Government or the defense before trial. The court denied Mr. Coscia‘s request to subpoena ICE for its full audit trail data but ordered ICE to produce the information that had been used to create ICE Summary Chart 6.
(... continued) counsel responded, on January 22, that it would be a ‘substantial burden’ to obtain this information, but confirmed that defendant did not have before trial the CME data on which his [second motion for a new trial] relies.“).
ICE complied with the court‘s order to produce the data used to create ICE Summary Chart 6. In its letter producing the data, ICE explained that the order cancellations displayed in ICE Summary Chart 6 are “based on an ICE system tool that, for regulatory purposes, generates an alert when the tool detects suspicious trading activity.”31 ICE also disclosed that, “due to an inadvertent error in calculating the total alerts from the Backup Data to create Summary Chart 6, the totals for the alerts for Mr. Coscia and ‘All other partici-
pants’ ... were misstated.”32 Specifically, Mr. Coscia accounted for 14,141 of the alerts (not 14,563), and “All other participants” accounted for 1,328 of the alerts (not 671).
2. The Present Motion
On January 10, 2019, Mr. Coscia filed a second motion for a new trial based on newly discovered evidence, the motion now before us. In this motion, Mr. Coscia first submitted that the newly disclosed ICE and CME data established that there were errors in the data presented to the jury. Mr. Coscia also submitted that subsequent indictments against other traders for similar spoofing аctivities undercut the Government‘s characterization of Mr. Coscia as “unique” or that he was a trading “outlier.”
In response, the Government submitted that Mr. Coscia had failed to establish that
Mr. Coscia replied that the data that he received after trial proved that there were material errors in the evidence presented to the jury. In particular, he invited the court‘s attention to five charts: ICE Summary Charts 3 and 6, and CME Charts 2, 3, and 5. We therefore briefly review each of the alleged errors that Mr. Coscia identified and the Gov-
ernment‘s response.
ICE Summary Chart 3. ICE Summary Chart 3 showed that, on the ICE New Brent crude market, Mr. Coscia‘s order-to-trade ratio of 1,592% was significantly greater than the ratio of any other market participant. The closest firm had a ratio of 264%. Mr. Coscia maintained that the new CME data conclusively establishes that there were actually dozens and even hundreds of traders with order-to-trade ratios greater than 1,592% for each of the seventeen commodities traded on the CME.
The Government responded that Mr. Coscia “glosses over his misleading juxtaposition of data from CME markets against data from ICE markets[] without ever establishing: (1) that CME and ICE markets are comparable (i.e., ‘apples-to-apples‘); or (2) what defendant‘s order-to-trade-size ratios were for each of the seventeen CME commodities.”33
ICE Summary Chart 6. ICE Summary Chart 6 reflected that Mr. Coscia accounted for 96% of all large orders cancelled after a small order was filled in the opposite direction. Mr. Coscia contends, however, that the new data presents two issues. First, he stated that ICE Summary Chart 6 was presented to the jury as a summary of all order cancellations, when actually it was based on a limited set of data based on ICE‘s regulatory tool that generated alerts when the tool detected suspicious activity. The full data, he submitted, actually shows that his transactions “represented a fraction of
one percent of all order cancellations.”34 Second, he noted that, as ICE disclosed post-trial, the numbers generated in the chart were inaccurate. Mr. Coscia represented 91%, as opposed to 96%, of the alerts.
In reply, the Government first submitted that Mr. Coscia misunderstood and misrepresented the testimony at trial. Redman specifically testified that ICE Summary Chart 6 showed a specific type of cancellations: cancellations of large orders that followed the trading of a small order in the other direction. In any event, suggested the Government, demonstrating Mr. Coscia‘s overall cancellation rate of less than one percent and ICE‘s inadvertent, and minor, counting error only served to impeach the data presented at trial.
CME Summary Charts 2 and 3. CME Summary Charts 2 and 3 demonstrated that Mr. Coscia filled 35.61% of his small orders, but only 0.08% of his large orders, resulting in a 35.53% fill-rate differential. Mr. Coscia submitted that the post-trial CME data shows that Mr. Cosсia‘s 35.53% fill rate was not abnormal or uncommon, as there were “dozens and even hundreds of traders” in each of the seventeen CME markets who had fill-rate differentials greater than 35.53%.35 In his view, it was
In reply, the Government submitted that Mr. Coscia‘s updated data analysis misleadingly “pitt[ed] defendant‘s aggregate differential against the commodity-specific differentials of other traders.”36 The Government further observed that “defendant‘s newly-proffered evidence does not demonstrate that any other trader across the CME markets had an aggregate fill-rate differential higher than 35.53%.”37 In the Government‘s view, then, tallying the number of individual traders with higher fill-rate differentials in a single commodity market—without knowing what each trader‘s aggregate fill-rate differential was across all markets or if each trader traded in all seventeen markets as Mr. Coscia—was of little value when compared against Mr. Coscia‘s aggregate fill-rate differential for all seventeen markets.
CME Summary Chart 5. Finally, Mr. Coscia contended that the newly-produced data demonstrated that CME Summary Chart 5, which reflected that Mr. Coscia was a market leader in placing large orders but ranked lower in filling large orders, was inaccurate in three ways. First, the chart failed to include modifications of orders. Second, the data compared Mr. Coscia‘s individual trading activity to trading activity of firms, which were comprised of dozens of individual traders. Third, the chart showed how Mr. Coscia ranked in large orders placed compared to both large and small orders filled. Mr. Coscia‘s updated analysis included order modifications, which reduced Mr. Coscia‘s overall cancellation rate. Moreover, considering only large orders filled, as opposed to large and small orders, Mr. Coscia had among the highest fill rates of anyone in the industry, and much more comparable order and fill rankings relative to other traders.
The Government countered that including modifications is misleading, as “defendant‘s spoofing algorithm was not programmed to modify—but to cancel—large orders.”38 And in any event, the exclusion of modifications was discussed on cross-examination. Further, the Government submitted that its rebuttal witness, Bessembinder, “testified that defendant‘s large-order fill rate offers only a partial picture, overlooking his successive attempts to cancel orders filled milliseconds before his cancellation instructions arrived.”39
3. District Court‘s Ruling
The district court found Mr. Coscia‘s presentation of this new evidence problematic because it was not relevant to the actual defense that he had presented at trial. Mr. Coscia‘s defense “admitted the substance of his trading activity,” “claimed that this was a legitimate trading strategy,” and “argued that many traders pursued trading strategies similar to his.”40 Observing that “the most likely use of the so-called newly discovered evidence would be to impeach the government‘s witnesses,” which could not serve as the basis for a new trial, the district court concluded that the new statistical evidence would probably not lead to an acquittal.41 The district court also rejected the subsequent in-dictments, concluding that “[a]ny such evidence would hardly be relevant or material.”42
4. Our Assessment
We now evaluate Mr. Coscia‘s arguments. We ask first whether he established that the ICE and CME data disclosed after trial constitutes new evidence. In short, Mr. Coscia must demonstrate that he could not have discovered the data sooner through the exercise of due diligence. See United States v. Westmoreland, 712 F.3d 1066, 1073 (7th Cir. 2013). A claim of diligence, however, is seriously undermined when the defendant fails to have a subpoena issued or fails to request a continuance because critical evidence was not available. See United States v. Oliver, 683 F.2d 224, 228 (7th Cir. 1982) (holding that failure to exercise diligence in locating witnesses before trial precluded new trial based on newly discovered evidence). Mr. Coscia must show that the failure to obtain production of this new information was not due to his lack of diligence.
Recall that, after trial concluded, Mr. Coscia obtained from CME a complete audit trail covering approximately ten weeks of all market participants for every market in which he traded. In addition, while the court was considering the Government‘s motion to quash Mr. Coscia‘s post-trial subpoena, ICE disclosed that it inadvertently had failed to turn over the data underlying ICE Summary Chart 6, which set out Mr. Coscia‘s share of cancellations of large orders following the trade of a small order in the opposite direction. In accordance with the court‘s order, ICE then produced the data underlying ICE Summary Chart 6 and disclosed that the original numbers on the chart were misstated: Mr. Coscia accounted for 14,141, not 14,563, of such cancellations, and all other participants accounted for 1,328, not 671, of such cancellations.
Mr. Coscia submits that this information constitutes new evidence because he was entitled to rely at trial on the Government‘s representations that he had all of the data. He points out that, in response to his request for the summary charts, the Government had responded: “We have not yet prepared the summary charts, but the information that they summarize has already been produced to you.”44 He also notes that ICE witness John Redman confirmed at trial that he had reviewed the data on the ICE disk and that the summary charts were true and accurate summaries of the data on the ICE disk.
First of all, to the extent Mr. Coscia intimates that he was not provided any of the data underlying any of the summary charts, that contention is, to put it mildly, overblown.45 Prior to trial, Mr. Coscia obtained data through discovery and his own independent subpoenas. Indeed, Mr. Coscia‘s own expert witness used that data to create his own summary charts. We therefore cannot accept Mr. Coscia‘s suggestion that he was deprived of complete data underlying all of the ICE and CME summary charts. Indeed, the representations
Mr. Coscia simply has not demonstrated how the limited non-disclosure of ICE Summary Chart 6 casts doubt on all of the summary charts from both ICE and CME. Nor has he connected the missing data from ICE Summary Chart 6 to any explanation of why he failed to obtain earlier the data he sought after trial. In an effort to meet the latter burden, he points to the four subpoenas that he issued prior to trial as proof of his diligence.46 These subpoenas were crafted, how-ever, to produce specifically described information. For example, Mr. Coscia‘s single ICE subpoena requested the audit trail data for only ten trading firms between September 6, 2011 and October 18, 2011, as well as the data underlying the statistics in its Suspicious Trading Report.47 Mr. Coscia‘s subpoenas to CME were cabined to his own orders and trades, orders and trade data of specific entities, and audit trail data for eight markets on four dates. It was not until well after trial that Mr. Coscia sought the full audit trail of all CME transactions and all ICE transactions. Mr. Coscia has not demonstrated why he was unable to obtain, through compulsory process, the full audit trail data he has since obtained or why he did not request a continuance prior to trial to obtain those records.
Even if we were to assume that this new evidence could not have been discovered sooner through the exercise of due diligence, Mr. Coscia fails to explain convincingly how this new information is material. In the context of a motion for a new trial, evidence is considered material “if there is a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different.” United States v. Bagley, 473 U.S. 667, 682 (1985). Mr. Coscia has not carried his burden of demonstrating that the new information here seriously called into question the jury verdict. Instead, the new information would serve only as impeachment evidence against some of the Government‘s witnesses. Given the amount and strength of the other evi-dence against Mr. Coscia, this simply does not warrant a new trial.48
Mr. Coscia relies on the post-trial data to recast the summary charts presented at trial. The new data analysis Mr. Coscia urges us to adopt, however, misrepresents the data or requires us to make unjustified inferences. For instance, Mr. Coscia requests that we make comparisons between different sets of data that can be compared only by accepting false equivalencies. ICE Summary Chart 3 showed Mr. Coscia‘s order-to-trade ratio to be 1,592% on the ICE Brent Futures market, whereas the next firm down had a ra-tio of only 264%. To undermine the ICE data summarized in ICE Summary Chart 3, Mr. Coscia invites our attention to the CME data that he obtained post-trial and asks us to conclude that “literally dozens, and sometimes hundreds” of traders had order-to-trade ratios greater than 1,592%.49 Mr. Coscia reasons, without any support, that “[g]iven the robustness of the CME data,” we may assume that the additional ICE data would show similar results to the CME data.50 Focusing on this evidence, he asserts that he was not the outlier the Government made him out to be. We decline to rely on CME data to make unsupported assumptions about the validity of the ICE data. Notably, Mr. Coscia has hampered our ability to compare the CME order-to-trade ratios by not sharing what his own order-to-trade ratio was for each of the CME commodities.
Mr. Coscia attempts to discredit CME Summary Charts 2 and 3 with another apples-to-oranges comparison. CME Summary Charts 2 and 3 showed that Mr. Coscia had an aggregate 35.53% “fill-rate differential,” the differencе between Mr. Coscia‘s small-order fill rate and large-order fill rate, across all seventeen CME markets. Mr. Coscia, with the new CME data in hand, observes that “dozens and even hundreds of traders” had fill-rate differentials greater than his 35.53%, counting 1,189 “unique traders” with larger fill-rate differentials.51 This summation, however, is achieved by counting each trader with a commodity-specific differential greater than Mr. Coscia‘s aggregate fill-rate differential across all markets. For us to see it Mr. Coscia‘s way, we must compare the fill-rate differentials of specific traders in single commodity markets against his aggregate fill-rate differential across seventeen markets. Without establishing whether the other traders traded in each of the same seventeen markets as Mr. Coscia or what the aggregate fill-rate differentials were for each of the “unique traders” Mr. Coscia identifies, Mr. Coscia has not met his burden demonstrating that this is an apt comparison.
Mr. Coscia also attempts to use the data to support propositions that we do not think can be fairly maintained. Mr. Coscia challenges several aspects of ICE Summary Chart 6, which showed Mr. Coscia‘s share of cancellations of large orders following a small order filled in the opposite direction. Mr. Coscia first contends that ICE Summary Chart 6 was presented to the jury as a chart showing all order cancellations
So what we did to get to this chart was we looked at how frequently a large order was canceled following the trading of a small order in the other direction.
. . . It looks at everybody else who‘s—who had the same instance of large order—small order trades, large orders canceled.54
Thus, Mr. Coscia‘s submission that he actually represented less than 1% of all market-wide cancellations is not at all supported by the evidence. The record is clear that ICE Summary Chart 6 referred to a subset of cancellations only: Mr. Coscia accounted for over 90% of cancellations of large orders that followed the fill of a small order in the opposite direction. The post-trial data correction simply reflects that Mr. Coscia represented 91%, as opposed to 96%, of large order cancellations following the trade of a small order in the other direction. We find it difficult to see how this de minimis error probably could have led to an aсquittal. Mr. Coscia offers no other justification why this minor error should cast doubt on all of the data evidence.
Finally, Mr. Coscia attacks CME Summary Chart 5 by suggesting three ways the data could have been calculated differently. He contends: (1) that order modifications should have been included in the cancellation count; (2) that small and large firms should have been treated differently; (3) and that large orders placed only should have been compared to large orders filled. But where the data or the calculations may have fallen short are matters that should have been dealt with on cross-examination. Indeed, Mr. Coscia‘s trial counsel did cross-examine CME witness Ryan Cobb on the exclusion of modifications from the chart.55
Mr. Coscia also fails to carry his burden of demonstrating that he likely would have been acquitted if the jury had been presented this data or his updated charts. First, as we have discussed, Mr. Coscia‘s proposed presentation of the evidence does not present the new evidence fairly or accurately. It is a safe assumption that Government counsel would have exposed these shortcomings. More fundamentally, there was a significant amount of other evidence against Mr. Coscia that established his intent to spoof. The jury considered Mr. Coscia‘s own testimony, the testimony
For these reasons, we conclude that the district court did not abuse its discretion in denying Mr. Coscia‘s motion for a new trial bаsed on the post-trial data.
C. Subsequent Indictments of Other Traders
Mr. Coscia also submits that subsequent indictments of other traders for spoofing materially undercuts the Government‘s key theory at trial: that Mr. Coscia was an “outlier.” In his view, these subsequent indictments establish that the Government had asserted falsely that Mr. Coscia‘s trading activities were unique and that this uniqueness demonstrated his criminal intent. Mr. Coscia also submits a new trial is warranted in his case because the Government treated Park‘s testimony differently in the prosecution of another trader, see United States v. Jitesh Thakkar, No. 18-cr-00036 (N.D. Ill.), where it argued that Park‘s testimony did not support a finding of intent to spoof.
As to whether the subsequent indictments contradict the Government‘s characterization of Mr. Coscia as “unique” or as an “outlier,” the district court was entitled to conclude, in the context of a motion for a new trial, that the fact “[t]hat others may have employed illegal trading strategies does not constitute a defense to a criminal indictment based on the employment of illegal trading strategies.”56 From our review of the record, the case against Mr. Coscia was not built exclusively around the Government‘s characterization of Mr. Coscia‘s trading strategy as “unique.” Significantly, it included Mr. Coscia‘s own admissions about his trading patterns, Park‘s testimony, and the testimony of other traders.
With respect to the Thakkar prosecution, Mr. Coscia contends that the Government took a position contrary to the one it took against him. Specifically, Thakkar alleged that the Government engaged in selective prosecution because it declined to prosecute Jeremiah Park, the computer programmer who built Mr. Coscia‘s trading program. In reply, the Government stated that “Park‘s awareness of Coscia‘s intent to spoof is not supported by Park‘s own testimony in Coscia. . . . Park testified that Coscia never suggested to Park that Coscia was doing something wrong or fraudulent when using Park‘s trading programs.”57 Whether Park was subjectively aware of Mr. Coscia‘s intent to spoof or whether Park had a subjective intent to spoof, however, is irrelevant to Mr. Coscia‘s intent to spoof. We cannot accept Mr. Coscia‘s attempt to conflate his own intent with that of Park.
Mr. Coscia has failed to establish that the interests of justice warrant a new trial, for either the post-trial data or the subsequent indictments. The district court therefore did not abuse its discretion in denying Mr. Coscia‘s new trial motion.
III
The Section 2255 Motion
After the district court denied the motion for a new trial, Mr. Coscia filed a motion under
We will review each of those allegations in turn. We review de novo a district court‘s denial of a defendant‘s motion to vacate or set aside his convictions pursuant to
A. The Conflict-of-Interest Allegation
1. Background
Mr. Coscia submits that, at the time of his trial, Sullivan & Cromwell represented, either simultaneously or in the past, several government witnesses, including ICE, D.E. Shaw, and Citadel. He further alleges that Sullivan & Cromwell never disclosed such conflict to him and that its representation of an adverse witness constituted an actual conflict of interest. In his view, this conflict of interest incen-tivized Sullivan & Cromwell to neglect critical discovery because the information derived from such a discovery process necessarily would impact adversely these clients.
Mr. Coscia supported these allegations by noting that, with respect to ICE, Sullivan & Cromwell‘s website revealed that it had represented ICE in various transactions over a fourteen-year period. Notably, it represented ICE in a $5.2 billion acquisition that had been finalized on the first day of Mr. Coscia‘s trial. Sullivan & Cromwell never disclosed that representation. Furthermore, Sullivan & Cromwell‘s lead counsel, Attorney Kenneth Raisler, personally had represented ICE in prior matters. According to Mr. Coscia, Attorney Raisler therefore knew that Sullivan & Cromwell had a long-term and valuable attorney-client relationship with ICE. Mr. Coscia contended that, because of its concurrent representation of ICE, Sullivan & Cromwell chose trial strategies that would not create difficulties for its long-standing client by failing to ascertain the completeness or accuracy of the summary charts and by failing to cross-examine effectively Redman, the ICE representative.
Mr. Coscia also alleged that Sullivan & Cromwell previously had represented D.E. Shaw and Citadel, entities whose representatives testified for the Government at his trial. He supported this allegation by submitting attorney profile pages from the Sullivan & Cromwell website showing that various attorneys from the firm had represented D.E. Shaw and Citadel in various transactions.58 This situation, in Mr. Coscia‘s view, amounted to an actual conflict of interest because Sullivan & Cromwell attorneys faced the possibility of having to cross-examine their former clients. Mr. Coscia further speculates that Sullivan & Cromwell “represented other persons or entities who testified at trial, and therefore had yet further conflicts of interest.”59 Mr.
The district court ruled that Mr. Coscia had demonstrated successfully that the firm actively provided legal services to ICE at the time of the trial. It nevertheless concluded that Mr. Coscia failed to show that this simultaneous representation had affected adversely Attorney Raisler‘s performance during trial. Taking the same view as it had in disposing of the second motion for a new trial, the district court determined that Sullivan & Cromwell‘s strategy was to acknowledge Mr. Coscia‘s trading conduct and to justify that trading conduct as legitimate. The court therefore concluded that Mr. Coscia failed to demonstrate that any alleged conflict adversely affected Sullivan & Cromwell‘s representation of him.
2. Governing Principles
The
An allegation of the sort presented here is governed by the rule established by the Supreme Court in Cuyler v. Sullivan, 446 U.S. 335 (1980). Under this rule, the defendant must first establish the existence of a conflict of interest. Once the defendant has established such a conflict, he must further establish that the conflict “adversely affected his lawyer‘s performance.” Id. at 348. “[U]ntil a defendant shows that his counsel actively represented conflicting interests, he has not established the constitutional predicate for his claim of ineffective assistance.” Id. at 350 (emphasis added). This showing, although not as difficult to meet as the Strickland v. Washington, 466 U.S. 668 (1984), prejudice standard, is nevertheless a significant burden. See Spreitzer v. Peters, 114 F.3d 1435, 1450 (7th Cir. 1997); see also Hall, 371 F.3d at 973 (observing that the Sullivan adverse-effect standard is significantly easier to meet than the Strickland prejudice standard).
In sum, “[a]n ‘actual conflict,’ for
3. Our Assessment
We first consider Mr. Coscia‘s conflict of interest claim as to ICE, and we agree with the district court that there was a conflict of interest with respect to ICE. We conclude, however, that Attorney Raisler‘s conflict of interest did not adversely affect his performance.
With respect to the conflict of interest, Mr. Coscia presented evidence that his trial attorney, Kenneth Raisler, was involved in providing legal and lobbying services to ICE in the years prior to Mr. Coscia‘s criminal proceeding. In addition, Sullivan & Cromwell was directly providing
As we noted earlier, the presence of a conflict of interest, standing alone, does not carry the day for Mr. Coscia. Having established that Sullivan & Cromwell had a conflict with respect to ICE, Mr. Coscia still must demonstrate that there is a reasonable possibility that, absent this conflict of interest, his counsel‘s representation was adversely affected. In an effort to carry this burden, Mr. Coscia submits that, because his counsel‘s firm had a conflict of interest, the аttorney did not obtain or verify the data underlying the ICE summary charts. If this underlying statistical evidence had been available, Mr. Coscia continues, it would have “expose[d] the objective inaccuracies in the prosecution‘s charts” and demonstrated that his trading strategy was not unique.61 Mr. Coscia also maintains that an unconflicted lawyer would have, through more effective cross-examination, rebutted the Government‘s assertion that Mr. Coscia was an outlier in his trading activity.62
Mr. Coscia‘s argument encounters some very strong headwinds. At the outset, the newly discovered post-trial data does not uncover the large inaccuracies he claims.63
The focus of Mr. Coscia‘s defense was that he was not attempting to rig the market through spoofing. The post-trial statistical evidence recovered is only mildly relevant and probative to this defense. By diluting, somewhat, the Government‘s assertion that he was an outlier in his trading mеthodology, the new evidence provides some circumstantial evidence relevant to whether he was attempting to rig the market. In light of the other evidence, however, this mild variation of ICE Summary Chart 6 could not have made a significant difference in the jury‘s determination. Considering the design of the program and the testimony of Park, Mr. Coscia‘s programmer, that Mr. Coscia wanted the program to act “[l]ike a decoy” to “pump [the] market,” it was entirely reasonable for trial counsel to pursue the chosen strategy.65 In the end, Mr. Coscia set up a system designed to spoof the market.
The situation is somewhat different with respect to D.E. Shaw or Citadel. Here, Mr. Coscia has not demonstrated that a conflict of interest existed. Relying on Hall and Enoch v. Gramley, 70 F.3d 1490 (7th Cir. 1995), Mr. Coscia contends that “even the possibility of cross-examining a former client constitutes an actual conflict.”66 This position misses the mark: In Enoch, 70 F.3d at 1498, we declined to adopt a rule “that any lawyer has a conflict of interest when he cross-examines a former client.” Although the possibility of having to cross-examine a former client may lead to an actual conflict of interest, we have held that the defendant must show one of two things: “(1) that the attorney‘s representation of the first client was ‘substantially and particularly related to his later representation of defendant’ or (2) that the attorney actually ‘learned particular confidential information during the prior representation of the witness that was relevant to defendant‘s later case.‘” Hall, 371 F.3d at 973 (quoting Enoch, 70 F.3d at 1496–97).
Mr. Coscia has not established that Sullivan & Cromwell‘s representation of D.E. Shaw in its unrelated structured privаte
Mr. Coscia has not established that Sullivan & Cromwell learned of relevant and confidential information from its representations of D.E. Shaw and Citadel in unrelated transactions. He has presented no facts to suggest that Mr. Coscia‘s trial lawyers were torn between the duty of confidentiality to their firm‘s former client and their duty of loyalty to Mr. Coscia.
Inviting our attention to United States v. Alex, 788 F. Supp. 359 (N.D. Ill. 1992), Mr. Coscia further contends that “a lawyer cannot represent a defendant if he previously represented a victim of the crime.”68 Alex is not binding precedent, but, in any event, Mr. Coscia overstates the district court‘s conclusion. In Alex, an attorney undertook representation of a criminal defendant while simultaneously representing several of the alleged victims of the defendant‘s extortionate conduct in a grand jury investigation. Id. at 362. The court concluded that, because of his representation of the victims, counsel was “aware of certain matters which could be used to attack the credibility of the witnesses at trial.” Id. at 364. The court‘s concern was grounded in the fact that the attorney sought “to represent one of the alleged perpetrators of the criminal activity when he and his firm previously represented individuals who were allegedly victims of the very same criminal activity.” Id.
Even if we were to assume that D.E. Shaw and Citadel can be characterized as victims of Mr. Coscia‘s spoofing conduct, Mr. Coscia does not allege, and there is nothing in the record to suggest, that Sullivan & Cromwell represented D.E. Shaw or Citadel as victims in the context of Mr. Coscia‘s criminal activity. See Enoch, 70 F.3d at 1497 (concluding no
B. Ineffective Assistance of Counsel
1. Background
As a second ground for relief under
The district court agreed with the Government that Mr. Coscia could not establish either Strickland prong. In its view, Mr. Coscia‘s case presented “the common situation” where an attorney concludes that “the client stands a better chance of success by admitting the underlying actions alleged to have been taken by the client which appear to be easily provable, and instead argue to the jury that the actions do not amount to a crime.”70 The court concluded that trial counsel‘s strategic decision was objectively reasonable, and there was no reasonable probability that a different strategy would have led to a different outcome. Accordingly, the district court denied Mr. Coscia‘s
2. Governing Principles
It is well established that the right to counsel is the right to effective assistance of counsel. Id. at 686. Under the two-prong test set forth in Strickland, 466 U.S. at 687–88, ineffective assistance of counsel is
3. Mr. Coscia‘s Contentions
Mr. Coscia submits that his trial counsel failed to investigate and offer probative evidence to undermine the Government‘s case by (1) failing to investigate or challenge inaccurate summary charts; (2) failing to obtain and introduce evidence supporting Mr. Coscia‘s good faith; and (3) failing to impeach Government witnesses.
The Government submits that Mr. Coscia‘s “claims of deficient performance relate to strategic choices made by defendаnt‘s trial counsel.”71 The data and summary charts in-dicated clearly that Mr. Coscia‘s trading practices were different and unusual from that of other high-frequency trading firms.
We already have rejected Mr. Coscia‘s argument that the data was as inaccurate as he claims. More importantly, the strategic choice to accept the trading data as presented but argue that nothing was wrong with his trading practices was a reasonable decision in light of other evidence against Mr. Coscia. Park‘s testimony that Mr. Coscia directed him to design a program to avoid large orders being filled made it difficult for Mr. Coscia to deny his trading choices. Mr. Coscia‘s prior deposition testimony for the Commodity Futures Trading Commission confirms that the choice to admit Mr. Coscia‘s conduct but to argue that it was legal was entirely reasonable.
Mr. Coscia insists that his trial counsel failed to pursue a good-faith defense. But, as the Government submits and the district court recognized, Mr. Coscia‘s defense strategy at trial was a good-faith defense.72 From the outset, Mr. Coscia‘s defense acknowledged the differences between his trading activities and that of other traders. Trial counsel submitted that Mr. Coscia‘s choice of conduct was “just good trading.”73
Mr. Coscia next asserts that trial counsel failed to impeach various government witnesses. For example, he points to counsel‘s failure to use prior inconsistent statements to impeach Dermenchyan, an employee
[L]arge size[] [orders] were placed in the market in order to induce participants to trade on the opposite side, and ... it was clear it was an individual participant doing this. And if you follow the logic, it was clear that it was a participant playing with supply and demand in order to push prices in one direction and then push them back in the other direction.75
These statements, however, are not inconsistent with one another. Dermenchyan‘s testimony at trial concerned large orders only, not whether the same participant was placing large orders and small orders in the opposite direction. Mr. Coscia further complains that his trial counsel did not adequately dispute the trading practice; yet his defense before the jury was to acknowledge and admit to his trading practices.
Mr. Coscia also submits that his trial counsel was deficient in failing to cross-examine Alex Gerko of GSA Capital about GSA Capital‘s settlement with CME regarding matched orders. Gerko testified to his observation of a particular pattern of activity, where he “would see very, very large orders appearing on the market indicating some kind of very sharp imbalance between buyers and sellers, and then these orders would disappear from the bid and appear on the offer and ... repeat tens of times in a row.”76 Cross-examining Gerko on GSA Capital‘s settlement with CME, howevеr, would have done little for Mr. Coscia‘s defense because his defense strategy was to admit to his trading practices. The failure to cross-examine here is insufficient to overcome the “strong presumption” that counsel‘s decisions fell “within the wide range of reasonable professional assistance.” Strickland, 466 U.S. at 689.
We agree with the district court‘s assessment that Mr. Coscia‘s trial counsel was presented with “the common situation” where “the client stands a better chance of success by admitting the underlying actions alleged to have been taken by the client which appear to be easily provable, and instead argue to the jury that the actions do not amount to a crime.”77 That the jury did not accept his defense does not render it constitutionally deficient. We cannot conclude that his trial counsel‘s performance was so deficient as to fall below an objective standard of reasonableness.
Even if we were to assume that trial counsel‘s performance was deficient, Mr. Coscia has not demonstrated prejudice. Given the strong evidence of Mr. Coscia‘s intent, it is highly improbable that the introduction of a weak statistical characterization of Mr. Coscia‘s trading patterns would have led to a different outcome. Not only did Park testify as to his instructions, but Mr. Coscia, himself, testified to how he designed his trading programs to work. His ineffective assistance of counsel claim therefore must fail.
C. Evidentiary Hearing
Finally, we turn to the district court‘s denial of Mr. Coscia‘s request for
Mr. Coscia submitted that he became aware only after trial that trial counsel simultaneously or previously represented ICE, D.E. Shaw, and Citadel. He sought an evidentiary hearing and requested discovery in the form of a document subpoena to Sullivan & Cromwell to determine, among other things, whether Sullivan & Cromwell represented ICE, D.E. Shaw, Citadel, or any other government witnesses or trading firms identified in the indictment; the subject matter and time period of those representations; which attorneys were involved or knew about those representations; the conflict check procedures at Sullivan & Cromwell; and the communications between, and the fees obtained from, any parties Sullivan & Cromwell represented. Mr. Coscia also requested to depose his trial counsel.
As we already have concluded that trial counsel presented an actual conflict with ICE, we evaluate whether the district court erred in denying his request for an evidentiary hearing concerning his conflict allegations relаted to D.E. Shaw and Citadel. He contends that Sullivan & Cromwell‘s prior representation of these entities explains what he characterizes as the “disturbingly light touch” given by trial counsel.78 Mr. Coscia submits that, without such a conflict of interest, his trial counsel would have obtained data or elicited testimony from these entities to show that Mr. Coscia‘s trading patterns were not abnormal or an outlier.
This defense, however, was the opposite of Mr. Coscia‘s actual defense strategy to admit Mr. Coscia‘s trading practices but submit that they were above board. And as we have discussed, in light of Park‘s testimony and Mr. Coscia‘s own testimony, Mr. Coscia‘s good-faith defense was a more than reasonable strategy.
Mr. Coscia has submitted only that trial counsel had previously represented adverse witnesses in unrelated transactional matters and that they therefore must have obtained confidential information. He has not provided any specific allegations as to what relevant information might have been obtained from those transactions or how such information would have affected this case. We therefore conclude that the district court did not abuse its discretion in denying Mr. Coscia‘s request for an evidentiary hearing.
Conclusion
The district court did not abuse its discretion in denying Mr. Coscia‘s new trial motion on the basis of new evidence. We also affirm the district court‘s denial of Mr. Coscia‘s
AFFIRMED