UNITED STATES OF AMERICA, Plaintiff-Appellee, versus WILLIAM A. GOLDSTEIN, MARC BERCOON, Defendants-Appellants.
No. 18-13321
D.C. Docket No. 1:15-cr-00022-LMM-JFK-2
In the United States Court of Appeals for the Eleventh Circuit
February 26, 2021
Before WILSON, BRANCH, and JULIE CARNES, Circuit Judges.
Appeals from the United States District Court for the Northern District of Georgia
JULIE CARNES, Circuit Judge:
Defendants now appeal their convictions, arguing that the district court erred in (1) denying their motions to suppress evidence obtained from wiretaps, (2) denying an evidentiary hearing concerning alleged omissions from a wiretap affidavit, (3) ruling that the trial evidence did not materially vary from the indictment, and (4) entering a $1.9 million forfeiture order against both Defendants. Separately, Defendant Bercoon argues that the Government engaged in prosecutorial misconduct by mischaracterizing the evidence during closing arguments, as well as before the grand jury. And Defendant Goldstein argues that the district court erred (1) in denying his motion to suppress statements he made during an informal telephone interview with an attorney from the Securities and
I. BACKGROUND
Defendants’ convictions arise from two fraud schemes. The first was a “pump and dump” market-manipulation operation in March and May of 2010, which involved MCGI‘s publicly traded stock. Defendants executed a plan to artificially inflate the price of MCGI stock (i.e., “pump” the stock) by obtaining control of shares, promoting the stock with mass emails and misleading press releases, and making numerous small trades to generate interest. Then, Defendants profited by selling the artificially inflated shares (i.e., by “dumping” the stock). The second scheme involved a plan to sell shares of the privately traded company Find.com via misleading and fraudulent representations. Defendants provided potential investors with written materials—including a “Confidential Investor Information” sheet and a “Confidential Private Placement Memorandum“—falsely stating that five million shares of Find.com were being offered at $1.00 per share and that the proceeds (minus a selling commission of 12.5 cents per share) would be reinvested in the business. In fact, however, shares of Find.com had been sold for less than $1.00 each, sales commissions were higher than 12.5 cents per share,
A. The SEC‘s Investigation and Interview of Goldstein
The Atlanta SEC office started investigating Defendants’ manipulative trades of MCGI stock in the spring of 2010. On June 30, 2010, Atlanta SEC attorney Natalie Brunson called Goldstein for an informal interview in connection with the investigation. By the time of trial in this case, Brunson no longer recalled her discussion with Goldstein, but her notes regarding the conversation reflected that Goldstein said he had received no compensation or shares from MCGI and he did not know whether Peter Veugeler, a co-conspirator in the MCGI scheme, was associated with MCGI.1 Testimony at trial showed that Goldstein‘s statements were untrue.
After the June 30 call, Brunson sent Goldstein a follow-up letter enclosing a copy of SEC Form 1662. The letter thanked Goldstein for “taking time today to speak . . . voluntarily, about [his] relationship with [MCGI]” and stated, “As I explained, this inquiry is nonpublic and confidential.” Form 1662 provided information about a witness‘s rights, including the right to refuse to speak to the SEC, the right to contact an attorney, and the penalties for providing false
B. The FBI‘s Investigation and Wiretap Affidavits
Brunson shared her notes with the Atlanta U.S. Attorney‘s Office, which began a criminal investigation into the MCGI scheme in August 2010. Two confidential sources, CS-1 (Marc Rosenberg) and CS-2 (Alan Weiner), provided the FBI information during the initial investigation.2 Rosenberg was Goldstein‘s personal assistant and worked for Goldstein and Bercoon for many years prior to the MCGI scheme. He told FBI agents that Bercoon had instructed him to open brokerage accounts to trade MCGI stock and to open a bank account in the name of HMRZ Consulting, LLC (“HMRZ“). Defendants controlled the trading in Rosenberg‘s brokerage accounts, and they transferred proceeds from the sale of MCGI stock into the HMRZ bank account and their personal bank accounts.
In July 2010, Rosenberg discovered that he had incurred a substantial tax liability as a result of Defendants using his brokerage accounts to execute MCGI trades. Shortly thereafter, he retained a lawyer and agreed to cooperate with the
CS-2 (Weiner) began working for Goldstein in 2009. In the summer of 2009, Weiner traveled to Florida with Goldstein to meet David and Donna Levy, two well-known stock promoters.3 Weiner reported that after this meeting, and on the advice of David Levy, Goldstein purchased a shell company that became MCGI. David Levy then introduced Goldstein to Peter Veugeler to promote MCGI‘s launch and used third party Eric Cusimano4 to send email blasts to thousands of potential investors.
Weiner traveled with Goldstein to Florida to meet Veugeler in March 2010. During this trip, and with Weiner present, Goldstein and Veugeler spent several days trading MCGI stock, with Goldstein using Rosenberg‘s brokerage accounts. Weiner again accompanied Goldstein to meet Veugeler in Florida in May 2010, when the two traded MCGI stock a second time. This time, Veugeler told Weiner and Goldstein that, earlier that day, he had been served with an SEC civil
In addition to the information that Rosenberg and Weiner provided, the FBI obtained data from the SEC that showed the trading volume and price of MCGI shares between January 25, 2010 and April 8, 2011. The FBI‘s analysis of the data corroborated the information provided by Rosenberg and Weiner concerning the March and May 2010 market manipulations.
Finally, the FBI obtained information suggesting that Defendants engaged in another market manipulation of MCGI stock in late March 2011. On March 28, 2011, Hotstocked.com, a Bulgarian website that reported on penny stock manipulations, announced that MCGI was starting a new promotional campaign. Trading data during the relevant timeframe corroborated this reporting, showing that on March 28, 2011 MCGI‘s price increased by 108% and its trading volume increased by more than 8,000%. The reporting was further corroborated by telephone records showing a high volume of contacts between Goldstein, Bercoon, and Veugeler during the last week of March 2011, as well as numerous contacts around the same time between Goldstein and Gerard Adams, the target of another SEC “pump and dump” investigation.
Agent Taylor‘s affidavit in support of the June 24, 2011 wiretap application explained that the FBI was investigating Bercoon, Goldstein, Veugeler, and others for participating in a market-manipulation conspiracy involving MCGI stock. Taylor disclosed in the affidavit that the facts asserted therein were based in part on the SEC‘s ongoing civil investigation of the market manipulation, including trading data provided by the SEC, and that the FBI and the SEC had “participated in joint interviews with cooperating witnesses.” He also referenced a civil suit filed by the SEC against Bercoon and Goldstein in Los Angeles, which concerned a different stock fraud related to the company LADP Acquisitions, Inc. (“LADP“).
Taylor asserted in the affidavit that there was probable cause to believe the wiretap requested by the Government would uncover critical facts concerning the MCGI market manipulation conspiracy, including information about its scope, its participants, and the distribution and location of proceeds. In support of that assertion, he described in detail the evidence set out above, including the
In the necessity section of the affidavit, Taylor argued that a wiretap was necessary because other investigative techniques were not likely to succeed in accomplishing all the objectives of the investigation, including identifying all the co-conspirators and uncovering the contents of their conversations. Specifically, Taylor stated that surveillance was of limited value in revealing the substance of relevant conversations and that an undercover agent would not likely obtain any useful information because Defendants were hesitant to work with people they did not know. Taylor acknowledged that confidential informants and financial records had provided useful historical information, but he noted that CS-1 (Rosenberg) and CS-2 (Weiner) no longer worked with or were trusted by Defendants and that financial records could only provide information about past events. Taylor stated further that the use of interviews, grand jury subpoenas, and search warrants would not identify all the co-conspirators or reveal the full scope of their criminal activity and would likely hamper the investigation by alerting targets to the investigation.
Based on the information provided in Taylor‘s June 24 affidavit, the district court granted the Government‘s Title III wiretap application. Different district
C. Indictment and Pretrial Motions
Following the investigation, Defendants were indicted on 19 counts of conspiracy, mail fraud, wire fraud, securities fraud, and money laundering related to the MCGI and Find.com schemes. Six of the counts were dismissed before or during trial, leaving 13 counts against Defendants in the indictment. As to Find.com, the indictment alleged that Goldstein and Bercoon had conspired to defraud investors in the company by distributing written offering materials that contained misrepresentations concerning the share price, commission rates, and how investment proceeds would be used. With regard to MCGI, the indictment
Prior to trial, Defendants moved to suppress the wiretap recordings, arguing that Agent Taylor‘s affidavits failed to establish probable cause or necessity. Defendants also asked the district court for a hearing under Franks v. Delaware, 438 U.S. 154 (1978) to determine whether Taylor‘s wiretap affidavit included statements that were deliberately false or made with reckless disregard for the truth, given that the affidavit did not discuss records obtained by the Los Angeles SEC office in connection with the pending LADP litigation. The Government opposed Defendant‘s motions and argued that the good-faith exception to the exclusionary rule would apply even if the district court had erred in issuing the wiretap orders.
The magistrate judge recommended denying the motion to suppress and the motion for a Franks hearing, concluding that Taylor‘s wiretap affidavits established probable cause and necessity, that the good-faith exception to the exclusionary rule applied in any event, and that Defendants had not shown a Franks hearing was warranted. The district court agreed and adopted that recommendation.
Finally, Goldstein filed a motion to suppress the statements he made to SEC attorney Brunson during her informal interview in June 2010. The magistrate judge held an evidentiary hearing on the motion, during which Brunson testified that it was her practice to recite the SEC‘s “Privacy Act script” before interviewing any witness who is not under subpoena. Brunson stated further that it is SEC procedure and her practice to send a form letter along with a copy of Form 1662 to a witness after an initial call. As described above, the form letter in Brunson‘s file on Goldstein stated, “Thank you for taking time to speak with me, voluntarily, about your relationship with [MCGI]. . . . As I explained this inquiry is nonpublic and confidential.” Brunson testified that she did not typically address what it
Crediting Brunson‘s testimony, the magistrate judge found that Brunson had read the Privacy Act script to Goldstein before speaking with him. The magistrate judge therefore concluded that, under the totality of the circumstances, Goldstein voluntarily agreed to the interview after being advised that the information could be used by the SEC and other authorities to determine if there had been legal violations. To the extent the phrase “nonpublic and confidential” was discussed, the magistrate judge found that Brunson might have asked Goldstein not to speak with anyone else about the investigation, but that she had not misled Goldstein or promised that the information he provided would not be used against him. The district court adopted the magistrate judge‘s ruling.
D. Trial
At trial, the Government presented overwhelming evidence that Defendants had orchestrated the MCGI market manipulation and misled investors in Find.com. Rosenberg explained that, following Defendants’ instructions, he had set up brokerage accounts and the HMRZ account to allow Defendants to trade MCGI stock and receive the proceeds. Weiner described traveling to Florida with Goldstein to meet Levy, who gave Goldstein step-by-step instructions for
The Government entered 17 wiretap recordings into evidence in connection with testimony from FBI Special Agent Cromer. On August 15, 2011, Cromer visited Goldstein‘s house, where he informed Goldstein that the FBI was investigating unusual trading activity in MCGI stock and that there was an
To prove the misrepresentations made in connection with the Find.com scheme, the Government introduced the offering documents used to solicit investors, which represented that the price was $1.00 per share, that the company would pay sales commissions of 12.5%, and that the proceeds would be reinvested into the business. Weiner testified that these representations were false, as Defendants sold Find.com stock at less than $1.00 per share, paid sales personnel 30–40% commissions, and did not reinvest the investment proceeds into the business.
The offering documents also contained false information about a woman named Cynthia White, who was affiliated with the company Scientigo, Inc., which had sold the Find.com URL to Goldstein and Bercoon. White testified that the description of Scientigo in the Find.com offering documents inaccurately listed her as a member of the board of managers for Find.com and that the documents were otherwise outdated and misleading. In addition, the offering documents contained
SEC attorney Brunson testified that, during her June 2010 call with Goldstein, he had told her that he did not receive any shares or compensation from MCGI, and that he did not know whether Veugeler was associated with MCGI. According to Veugeler‘s testimony, however, those statements were untrue. Addressing the Privacy Act script issue, Brunson testified that SEC personnel are required to read the script before speaking to a witness. She acknowledged that attorneys do not read the script word for word in every instance but said they always “hit the high notes,” addressing the witness‘s rights and how the SEC might use any information provided. Brunson said she always told the witness that it was a voluntary decision to speak with her, that the witness could consult an attorney, and that the information provided by the witness might be shared with other agencies.
The Government‘s financial evidence showed that Defendants’ schemes generated millions of dollars in proceeds. Trading data showed that Veugeler‘s and Rosenberg‘s accounts owned 100% of the MCGI free-trading shares before the March and May 2010 manipulations, that the conspirators executed a series of small trades during the relevant timeframe to give the stock an appearance of activity, and that price and trading-volume spikes in MCGI stock followed. Financial records established that numerous accounts controlled by Veugeler and Rosenberg raised net proceeds of over $2.5 million from the MCGI manipulations. As to the Find.com scheme, an FBI forensic analysis revealed that 84 individuals
E. Conviction and Sentencing
The jury convicted Defendants on 12 of the 13 remaining counts, including two counts of conspiracy, two counts of mail fraud, seven counts of wire fraud, and one count of securities fraud.5 The district court sentenced Defendants to ten years and ordered each to pay restitution in the amount of approximately $1.5 million. Finding that Defendants both had access to and control over all the accounts containing the fraud proceeds, the court imposed a forfeiture order against each defendant for the total amount of the proceeds: approximately $1.9 million. The court specified, however, that the Government could not recover more than the total of $1.9 million from Defendants under the forfeiture order.
II. DISCUSSION
On appeal, Defendants jointly challenge the district court‘s admission of wiretap evidence, its denial of a Franks hearing, its ruling that the trial evidence did not materially vary from the indictment, and its imposition of a $1.9 million forfeiture order against both Defendants. Defendant Bercoon also argues that the Government engaged in prosecutorial misconduct by mischaracterizing the
A. Suppression of Wiretap Evidence
Evidence obtained by wiretap is subject to the Fourth Amendment‘s prohibition against unreasonable searches. See Vista Mktg., LLC v. Burkett, 812 F.3d 954, 970 (11th Cir. 2016) (noting that the Government must show “all that the Fourth Amendment itself requires” to obtain a wiretap). As such, a wiretap must be supported by the same probable cause necessary to obtain a search warrant. See id. Furthermore, a wiretap is statutorily required to be justified by a showing of necessity—a showing that “normal investigative procedures have been tried and have failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous.”
Defendants argue that Agent Taylor‘s affidavit submitted in support of the Government‘s June 24, 2011 wiretap application did not establish probable cause or satisfy the necessity requirement.6 We apply a mixed standard of review to a district court‘s denial of a motion to suppress evidence obtained from a wiretap, reviewing findings of fact for clear error and conclusions of law de novo. United States v. Emmanuel, 565 F.3d 1324, 1330 (11th Cir. 2009). Under this standard, we review de novo whether a wiretap is supported by probable cause, cf. United States v. Jiminez, 224 F.3d 1243, 1248 (11th Cir. 2000), and we review the district court‘s necessity determination for clear error, Maxi, 886 F.3d at 1331.
1. Probable Cause
The Government can establish probable cause for a wiretap with facts showing that (1) a crime is being, has been, or is about to be committed and (2) communications about the crime will be intercepted by the requested wiretap. See
Defendants concede that Agent Taylor’s affidavit established probable cause to believe unlawful market manipulations involving MCGI had occurred in March and May of 2010. But according to Defendants, Taylor’s affidavit failed to establish probable cause to believe the market manipulations were continuing or that any information about the past manipulations would be obtained via a wiretap issued more than a year after the 2010 manipulations were completed. Thus, Defendants argue, the probable cause established by Taylor’s affidavit was stale by the time the Government submitted its first wiretap application on June 24, 2011.
There is no arbitrary time limit after which information offered to support a wiretap becomes stale. See Bervaldi, 226 F.3d at 1265. Rather, evaluating staleness requires a fact-intensive inquiry based on the totality of the circumstances, including the “nature of the suspected crime (discrete crimes or ongoing conspiracy), habits of the accused, [and] character of the [information] sought.” Id. (quotation marks omitted). Depending on the circumstances, a valid
Here, the magistrate judge did not err in concluding that the probable cause contained in Taylor’s June 24, 2011 wiretap affidavit was not stale. First, Taylor’s affidavit showed that Bercoon had used the phone targeted by the June 24 wiretap application to discuss the 2010 MCGI market-manipulation conspiracy as late as May 2011. In February, April, and May of 2011, Rosenberg recorded phone calls with Bercoon while cooperating with the FBI. In a February call, Rosenberg informed Bercoon that he was facing $83,000 in tax liability for the stock trades Bercoon and Goldstein had executed through Rosenberg’s account in March and May 2010. Rather than denying his involvement in and responsibility for the MCGI trades that had generated Rosenberg’s tax liability, Bercoon responded, “I’ll have to meet you and sit down and take a look at it and I’ll go through it with you.” Bercoon further offered that “I have a legitimate way to deal with it.” Nor did Bercoon deny his responsibility for the tax liability when Rosenberg expressed that he was “worried about this $83,000 y’all owe.” Instead, Bercoon said “I understand.” Bercoon continued to tacitly accept responsibility for Rosenberg’s tax liability in an April call, where he advised Rosenberg to seek an extension of the tax filing deadline while he made necessary arrangements. In a May 2011 follow-up call, Rosenberg stressed the need for Bercoon to complete Rosenberg’s
Further, Taylor’s affidavit showed that another market manipulation involving MCGI had occurred in March 2011, indicating that the conspiracy was ongoing. As Taylor described, a report on the website Hotstocked.com announced that MCGI was the subject of an “internet promotional campaign” on March 27 and 28, 2011. The FBI verified that a few days prior to March 27, Goldstein called Gerard Adams, a stock promoter known for market manipulation and pump-and-dump conduct, and then immediately called Bercoon. Taylor identified 27 additional contacts between Goldstein and Adams during the last week of March 2011, as well as an unusually large number of contacts between Goldstein and Bercoon the same week. Further, SEC trading data showed that on March 28,
Defendants characterize the information concerning the March 2011 manipulation as mere speculation, noting that the FBI was not able to verify the Hotstocked.com website. Defendants also point out that internet promotion of a stock and corresponding increased trading could reflect lawful advertising rather than an illegal market manipulation. The same is true, Defendants argue, about the frequency of Goldstein’s communications with Adams and Bercoon in March 2011, which Defendants contend could just as likely have pertained to a lawful internet promotion as to a market manipulation. These arguments, however, ignore the history and established pattern of the MCGI conspiracy, Adams’s status as a known market manipulator, the timing of the Hotstocked.com reporting, and the suspicious trading data and contacts.
In short, the magistrate judge correctly found that the probable cause asserted in Taylor’s June 24, 2011 wiretap affidavit was not stale under the totality of the circumstances, given Bercoon’s recorded calls with Rosenberg in April and
In addition to being supported by probable cause, a wiretap application must satisfy the necessity requirement by including a “full and complete statement” describing other investigative techniques that have been tried and failed or explaining why such other techniques are unlikely to succeed. See
Agent Taylor’s June 24 affidavit clearly satisfied the necessity requirement. The affidavit included an 11-page section explaining in detail why the wiretap was needed to accomplish the investigation’s objectives. It exhaustively described numerous investigative techniques that had been tried with only partial success or that would not likely succeed, including analyzing phone records, using confidential informants, surveillance, interviews, grand jury subpoenas, financial records, and search warrants. As Taylor explained, although some of these
Defendants argue that the wiretap was unnecessary because the Government had already obtained enough information from the SEC’s investigation of MCGI, surveillance, phone records, and two confidential sources to convict Defendants. This is a somewhat odd position for Defendants to take, given that they aggressively challenged the sufficiency of the Government’s evidence at trial, questioning the bias and veracity of the informants and arguing that the trading data was not consistent with market manipulations. In any event, the Government’s showing of necessity was not defeated based on the mere possibility that the Government might have otherwise had enough evidence to sustain a conviction against Defendants for their past market manipulations of MCGI. Again, the Government’s stated objective in the investigation here was to identify all the co-conspirators involved in the market-manipulation scheme and to determine the full scope of the conspiracy. Taylor’s affidavit shows that the wiretap was necessary to meet this objective. See Perez, 661 F.3d at 582 (holding that, while the Government had enough evidence to prosecute one defendant before the wiretap, it need not end the investigation before learning the full extent of the defendant’s criminal activities and identifying his co-conspirators); United States v. Hyde, 574 F.2d 856, 869 (5th Cir. 1978) (affirming necessity of wiretap,
Finally, Defendants argue that the Government should have tried to obtain evidence from the LADP litigation pending in Los Angeles before seeking a wiretap. According to Defendants, this evidence would have made the June 24, 2011 wiretap unnecessary. Yet, Defendants have not shown that the magistrate judge clearly erred in rejecting this argument. Indeed, Defendants do not even attempt to explain how the information produced in the LADP litigation would have uncovered the evidence the Government sought via the wiretap issued in this case, which involved a different company and a different fraud scheme. See United States v. Alonso, 740 F.2d 862, 869 (11th Cir. 1984) (“The order will not be overturned simply because defense lawyers are able to suggest post factum some investigative technique that might have been used and was not.” (quotation marks omitted)).
Even assuming there was some deficiency in Taylor’s June 24 affidavit, the district court held that the good-faith exception to the exclusionary rule applied to the wiretap evidence. The good-faith exception applies when “an officer has in good faith obtained a search warrant from a judge or magistrate and acted within its scope.” United States v. Travers, 233 F.3d 1327, 1329 (11th Cir. 2000) (citing United States v. Leon, 468 U.S. 897, 920–21 (1984)). The exclusionary rule is designed to deter unlawful police conduct. See United States v. Malekzadeh, 855 F.2d 1492, 1497 (11th Cir. 1988). When law enforcement officers act in good faith and in reasonable reliance upon a judge’s order, exclusion is not warranted because there is no unlawful conduct to deter. Travers, 233 F.3d at 1329.
There are four situations in which the good-faith exception does not apply: (1) where the issuing judge “was misled by information in an affidavit that the affiant knew was false or would have known was false except for his reckless disregard of the truth”; (2) “where the issuing magistrate wholly abandoned his judicial role”; (3) “where the affidavit supporting the warrant is so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable”; and (4) where “a warrant is so facially deficient . . . that the executing officers cannot reasonably presume it to be valid.” United States v. Martin, 297 F.3d 1308, 1313 (11th Cir. 2002)
Repackaging their probable-cause argument, Defendants contend that the wiretap affidavit and the resulting wiretap order were facially deficient because Agent Taylor’s affidavit lacked fresh probable cause. We have already rejected Defendants’ staleness challenge on the merits. Their contention that no reasonable officer could believe that probable cause supported the wiretap is less compelling still.
Defendants’ only other argument is that the good-faith exception does not apply because they raised a Franks issue. As discussed below, however, Franks is inapplicable because Defendants failed to make the required preliminary showing that Taylor’s wiretap affidavit was deliberately or recklessly misleading. Accordingly, Defendants have not shown that the district court erred in concluding that the wiretap evidence was admissible under the good-faith exception to the exclusionary rule, even assuming there was some deficiency in the necessity or probable cause showing.
B. Franks Hearing
Defendants challenge the validity of the wiretap orders issued in this case under the Supreme Court’s decision in Franks v. Delaware, 438 U.S. 154 (1978), which requires an evidentiary hearing when a defendant makes a substantial preliminary showing that
Defendants challenge the district court’s refusal to conduct a Franks hearing to determine if Agent Taylor deliberately or recklessly omitted from his wiretap affidavit information concerning (1) the Government’s access to information produced by Defendants in the LADP litigation pending in Los Angeles and (2) the
As to the first category, Defendants have not pointed to any information uncovered in the LADP litigation that would have rendered a wiretap unnecessary in this case, which involved a different fraud scheme and a different corporate entity. The fact that the Los Angeles SEC office collected “voluminous” materials from Defendants in connection with the LADP litigation is irrelevant without some indication as to how those materials would shed light on the MCGI scheme that was the subject of the wiretap at issue here. As stated in Taylor’s affidavit, the object of the MCGI investigation was to determine the scope of the MCGI conspiracy and all its participants. Defendants have not identified any materials generated in the LADP litigation that would have achieved this objective.
Further, Defendants failed to make a preliminary showing that Taylor possessed any of the LADP litigation materials when he submitted the June 24 affidavit. To the contrary, the district court found there was no “serious dispute” that the Government did not obtain the information from the LADP litigation until July 2015, well after the affidavit was filed. Defendants contend that the
Nor did Defendants’ decision to divest interest in MCGI in November 2010 negate the possibility that they were conspiring to manipulate MCGI stock in March 2011, given that their modus operandi was to manipulate stocks held in others’ names. Defendants did not own a controlling share of MCGI stock in the months leading up to the March and May 2010 MCGI market manipulations, and acquiring control of the stock was one of the last steps necessary to accomplish the scheme.
In short, because Defendants did not make a substantial preliminary showing that Agent Taylor deliberately or recklessly omitted material information from his wiretap affidavit, the court did not abuse its discretion in denying their motions for a Franks hearing.
C. Material Variance
“The Fifth Amendment guarantees that a defendant can be convicted only of crimes charged in the indictment.” United States v. Holt, 777 F.3d 1234, 1261 (11th Cir. 2015). This principle ensures that the defendant receives proper notice of the charges against him and has an opportunity to present a defense. Id. Accordingly, a material variance requiring reversal occurs “when the facts proved
Defendants argue that there was a material variance between the indictment’s allegations concerning the Find.com scheme and the evidence the Government presented at trial to prove the scheme. Defendants note that the indictment alleged only three misrepresentations supporting the Find.com scheme, including statements related to share price, commissions, and the use of investment proceeds, but that the Government introduced evidence at trial about misrepresentations related to the technology possessed by Find.com, Cynthia White’s role in the company, and the description of Scientigo, a shareholder in the company. We review de novo whether a material variance warranting relief occurred. See United States v. Lander, 668 F.3d 1289, 1295–96 (11th Cir. 2012).
Here, Defendants have not established a material variance, much less that any deviation between the facts alleged in the indictment and those proved at trial warrants reversal. For starters, the specific allegations in the indictment encompass many of the misrepresentations that Defendants contend created a material variance. The indictment repeatedly alleged that Defendants defrauded Find.com investors “by means of materially false and fraudulent pretenses, representations, and promises,” including by making misleading statements about “the way in which” investment proceeds “would be used.” Statements falsely
Moreover, the technology, White, and Scientigo misrepresentations were consistent with the general Find.com scheme alleged in the indictment. A fatal variance exists only “where the evidence at trial proves facts different from those alleged in the indictment, as opposed to facts which, although not specifically mentioned in the indictment, are entirely consistent with its allegations.” United States v. Champion, 813 F.2d 1154, 1168 (11th Cir. 1987) (emphasis in original) (quotation marks omitted). Here, the scheme as described in the indictment was exemplified by, but not strictly limited to, misrepresentations involving share prices, commissions, and use of proceeds. That the evidence at trial proved additional misrepresentations consistent with the exemplary categories of misrepresentations charged in the indictment did not cause a material variance. Compare id. (holding that, where the defendants were charged with conspiracy to import multiple loads of marijuana, consistent trial evidence regarding additional “uncharged loads during the time period of the indicted conspiracy” did not cause a material variance), with Lander, 668 F.3d at 1296 (finding a material variance where the central misrepresentation alleged in the indictment was specifically
Finally, even assuming a variance occurred, Defendants have not shown substantial prejudice. To assess prejudice, we consider “whether the proof at trial differed so greatly from the charges that [the defendant] was unfairly surprised and was unable to prepare an adequate defense.” See Lander, 668 F.3d at 1295 (quotation marks omitted). Here, Defendants could not have been surprised by the Government’s reliance on misleading statements about Find.com technology, Cynthia White, and Scientigo because those misrepresentations were contained within one of the two written offering documents identified by the indictment as the core of the Find.com scheme. By identifying these documents and describing in detail how they were used to defraud Find.com investors, the indictment gave Defendants adequate notice to prepare a defense. Accordingly, any variance did not cause Defendants prejudice warranting relief.
D. Prosecutorial Misconduct
Defendant Bercoon argues that the Government engaged in prosecutorial misconduct during its closing argument. Bercoon did not object to the prosecutor’s closing remarks at trial. We therefore review his claim of prosecutorial misconduct for plain error. United States v. Frank, 599 F.3d 1221, 1238 (11th Cir. 2010). Under the plain error standard, we will only reverse a conviction if (1) an
To establish prosecutorial misconduct based on closing remarks, a defendant must show that the remarks were both improper and prejudicial to the defendant’s substantial rights. Id. at 1237. A prosecutor’s closing remarks can be improper if they materially misstate the facts shown by the evidence. See United States v. Hands, 184 F.3d 1322, 1333 (11th Cir. 1999) (“It is a fundamental tenet of the law that attorneys may not make material misstatements of fact in summation.” (quotation marks omitted)). Determining whether a defendant suffered prejudice requires the court to consider the closing remarks “in the context of the trial as a whole and assess their probable impact on the jury.” Frank, 599 F.3d at 1237 (quotation marks omitted). “A defendant’s substantial rights are prejudicially affected when a reasonable probability arises that, but for the remarks, the outcome of the trial would have been different.” United States v. Reeves, 742 F.3d 487, 505 (11th Cir. 2014) (quotation marks omitted).
Here, Bercoon argues that the prosecutor acted improperly by suggesting in closing remarks that the jury could infer his intent to commit fraud from the fact that, rather than contacting law enforcement, he had pursued another pump-and-
Contrary to Bercoon’s suggestion, the prosecutor’s closing remarks were not false or misleading. Unlike Rosenberg and Weiner, who contacted law enforcement when they learned that the MCGI trading activity was fraudulent, Bercoon did not immediately and proactively contact law enforcement after being advised that the FBI was investigating the MCGI market manipulation scheme. Instead, the wiretap evidence showed that Bercoon continued to conspire with Goldstein and to plan other market manipulations with Veugeler as late as August 2011. Further, three of the four remarks Bercoon challenges were made during the prosecutor’s rebuttal to Bercoon’s argument that Weiner was the bad guy “in charge” of the operation, while Defendants were merely well-intentioned businessmen. Contrasting Bercoon’s conduct with that of Weiner was a fair rebuttal to this argument. See Reeves, 742 F.3d at 505 (noting that “issues raised
Even assuming the prosecutor’s closing remarks were improper, Bercoon has not shown that his rights were substantially prejudiced, much less that a “miscarriage of justice” would result if his conviction stands. The district court instructed the jury that it should only consider the evidence admitted in the case and that “anything the lawyers say is not evidence,” thereby curing any potential prejudice. United States v. Bobal, 981 F.3d 971, 976 (11th Cir. 2020) (holding that, even if the prosecutor’s statements in closing were improper, the court “cured the problem” by “instruct[ing] the jury that the lawyers’ statements were not evidence”). Moreover, given the overwhelming evidence of Bercoon’s guilt, the prosecutor’s closing remarks, viewed in context, did not “undermine the fundamental fairness of the trial” or constitute “a miscarriage of justice.” United States v. Mueller, 74 F.3d 1152, 1157 (11th Cir. 1996) (quotation marks omitted); see Reeves, 742 F.3d at 505–06 (holding that “the strength of the competent proof establishing the guilt of the defendant” weighed against concluding that improper closing remarks substantially prejudiced the defendant).
E. Statements to the SEC
Goldstein challenges the district court’s denial of his motion to suppress statements he made to SEC attorney Brunson during a preliminary, informal
The magistrate judge held a hearing on Goldstein’s motion to suppress, during which Brunson testified that she had no recollection of the telephone conversation with Goldstein, but that her file contained notes recording the substance of Goldstein’s answers to her questions and a copy of a follow-up letter she sent to Goldstein after they spoke. The letter stated, “As I explained, this inquiry is nonpublic and confidential.” Enclosed with the letter is a copy of the SEC’s Form 1662, which explained in detail (1) a witness’s rights during an SEC interview, including the right to have an attorney and the right to refuse to speak
Brunson testified at the suppression hearing that, although she did not have a specific recollection of the conversation with Goldstein, her practice was to read the SEC’s “Privacy Act script” at the beginning of every informal interview she conducted with a witness. The script informed the witness that (1) the interview relates to the investigation of a potential securities violation, (2) the witness has the right to have an attorney present while speaking to the SEC, (3) the witness has the right to refuse to speak with the SEC, but is subject to criminal penalties if he provides false information, and (4) the SEC routinely shares information obtained from witnesses with other authorities for investigation and enforcement purposes. Crediting Brunson’s testimony, the magistrate judge found that, prior to interviewing Goldstein, Brunson had advised him of his basic rights and how his statements could be shared and otherwise used by the SEC. As such, the magistrate judge concluded that Goldstein’s statements were voluntary. The district court adopted that ruling.
The court did not err, clearly or otherwise. Goldstein relies on Brunson’s purported instruction before the interview that her inquiry was “nonpublic and confidential,” arguing that this instruction led him to falsely believe he could speak freely to Brunson without fearing self-incrimination. But this argument is
In a last-ditch effort, Goldstein challenges the magistrate judge’s finding that Brunson read the Privacy Act script based on an alleged inconsistency between Brunson’s testimony at the suppression hearing and at trial. According to Goldstein, Brunson testified at the suppression hearing that she typically read the script “word for word,” but she acknowledged during trial that SEC practice was to “hit the high notes” of the script, including the witness’s rights and the routine uses of information gathered during an interview. To the extent there is any inconsistency here, however, it is immaterial. On both occasions, Brunson testified that she “always” told witnesses the four most essential aspects of the Privacy Act script, including the fact that she “might share this information with other agencies.”
F. Merged Civil and Criminal Investigations
Next, Goldstein challenges the district court’s denial of his request for an evidentiary hearing to determine whether the SEC’s civil investigation and the U.S. Attorney’s criminal investigations improperly merged, depriving him of his due process rights. We review this issue for an abuse of discretion. See United States v. Arbolaez, 450 F.3d 1283, 1293 (11th Cir. 2006) (“Generally, a court’s decision about whether to hold an evidentiary hearing lies within that court’s sound discretion and will be reviewed only for an abuse of discretion.“). Here, the district court did not abuse its discretion.
Goldstein’s allegation that the SEC’s civil investigation unfairly merged with the U.S. Attorney’s criminal investigation is based on two facts: (1) that the SEC and FBI jointly interviewed cooperating witnesses and (2) that the agencies conducted their investigations at roughly the same time and shared information. Those facts are typical of parallel governmental investigations, which are common and generally proper. See United States v. Edwards, 526 F.3d 747, 759 (11th Cir. 2008). Indeed, the SEC is statutorily authorized to share information with the U.S. Attorney’s Office. Id. (citing
A due process problem might arise in the context of parallel investigations if the two government arms collude in bad faith to deprive the defendant of his constitutional rights. See id.; see also United States v. Stringer, 535 F.3d 929, 940 (9th Cir. 2008) (collecting cases recognizing that dual investigations can implicate due process limitations). Such bad faith collusion generally involves “affirmative misrepresentations” or “trickery or deceit” by the investigating authority to get the defendant to voluntarily turn over documentary or physical evidence relevant to the criminal investigation. See Stringer, 535 F.3d at 940. But Goldstein’s allegation that the investigations overlapped failed to establish even a prima facie case of misconduct by either the civil or the criminal arm of the investigation against him. As such, the district court did not abuse its discretion in denying his request for an evidentiary hearing challenging the legitimacy of the investigations.
G. Forfeiture
Defendants argue that the district court’s $1,953,974 forfeiture order improperly held them jointly and severally liable, in violation of the Supreme Court’s decision in Honeycutt v. United States, 137 S. Ct. 1626, 1632 (2017). In
In Honeycutt, the Supreme Court held that the language and structure of
Here, we need not decide whether Honeycutt’s reasoning applies to the forfeiture statute at issue here,
Further, consistent with Honeycutt, the district court limited the forfeiture to the total amount of proceeds Defendants personally acquired, ordering that the
H. Bercoon’s Motion to Dismiss Indictment
Finally, Defendant Bercoon has filed a pro se motion to dismiss his indictment, alleging prosecutorial misconduct based on what he characterizes as numerous instances of Agent Cromer allegedly offering “perjured, false, and improper opinion testimony” before the grand jury. After thoroughly reviewing Bercoon’s motion and the grand jury transcript, we find no merit in Bercoon’s arguments. “[D]ismissal of an indictment for prosecutorial misconduct is an extreme sanction which should be infrequently utilized.” United States v. Jordan, 316 F.3d 1215, 1249 n.68 (11th Cir. 2003) (quotation marks omitted). Where, as here, a defendant seeks to dismiss his indictment for the first time on appeal, we review only for plain error. United States v. Vallejo, 297 F.3d 1154, 1164–65 (11th Cir. 2002). Further, “[w]hen the alleged prosecutorial misconduct occurs in the context of a grand jury proceeding, we dismiss the indictment only when the misconduct ‘substantially influenced the grand jury’s decision to indict’ or when there is ‘grave doubt that the decision to indict was free from the substantial
Here, many of Bercoon’s arguments rely upon an unfair reading of the grand jury transcript. See id. at 1220 (holding that the defendants had not shown that an agent intentionally lied before the grand jury because the defendants’ interpretation of the agent’s testimony was not “a fair reading” in context). For example, Bercoon contends that the prosecutor must have known that Weiner’s story was false based on evidence contradicting aspects of his account, and thus that Agent Cromer testified falsely when he related to the grand jury what Weiner had told law enforcement. But Bercoon ignores the fact that the prosecutor elicited testimony from Cromer about parts of Weiner’s testimony “that sound not quite right,” highlighting certain inconsistencies in Weiner’s description of the scheme. Similarly, Bercoon’s argument that Cromer falsely testified that he had personally observed Goldstein trading out of one of Rosenberg’s accounts unfairly reads Cromer’s response to a compound question, which, given the context, any reasonable person would interpret as a statement about what Weiner had seen.
Other arguments that Bercoon makes lack any legal basis that could support a finding of plain error. For example, Bercoon cites no authority suggesting that the prosecutor acted improperly when, after numerous interruptions, she requested
In short, the transcript reveals that the grand jury proceeding was a miniature version of the real trial, with Agent Cromer presenting the core evidence that the Government ultimately offered at trial. We discern no misconduct by the Government at either proceeding. Moreover, given the overwhelming evidence presented against Defendants both during the grand jury proceedings and at trial—including, among other things, Weiner’s and Rosenberg’s detailed description of the scheme, the wiretap recordings, the SEC’s analyses of MCGI trading activity, and the financial analysis of bank accounts under Defendants’ control—we are convinced that the grand jury’s decision to indict was not substantially influenced by any improper testimony. See United States v. Jennings, 991 F.2d 725, 729 (11th Cir. 1993) (holding that a grand juror’s friendship with one of the victims was harmless because “[t]he government presented overwhelming evidence to the grand jury for it to find probable cause to believe that [the defendant] committed
III. CONCLUSION
Because Defendants have identified no error warranting reversal, we affirm Defendants’ convictions and the district court’s forfeiture order.
AFFIRMED.