UNITED STATES OF AMERICA, Appellee, v. MIKHAIL ZEMLYANSKY, Defendant-Appellant.
No. 16-409
United States Court of Appeals, Second Circuit
August Term 2017 (Argued: September 12, 2017 Decided: November 5, 2018)
United States v. Zemlyansky
Defendant-appellant Mikhail Zemlyansky appeals from a February 1, 2016 judgment of conviction entered after a jury trial in the United States District Court for the Southern District of New York (Oetken, J.). In 2013, Zemlyansky was tried for substantive and conspiracy crimes relating to healthcare fraud. He was acquitted of all counts except for conspiring to engage in racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act,
JOSHUA NAFTALIS, Assistant United States Attorney (Daniel Goldman, Daniel Noble, Margaret Garnett, Assistant United States Attorneys, on the brief) for Geoffrey S. Berman, United States Attorney for the Southern District of New York, New York, NY, for Appellee.
JERALD BRAININ, Los Angeles, CA, for Defendant-Appellant.
WESLEY, Circuit Judge:
Twice—in 2013 and 2015—the Government tried defendant-appellant Mikhail Zemlyansky for his alleged involvement in criminal activity. The first jury did not convict him, but the second jury did. On appeal, Zemlyansky argues that the second conviction amounted to double jeopardy, because the Government secured the conviction by proving an issue the first jury had already decided in his favor. We are asked to decide whether the issue-preclusion component of the Double Jeopardy Clause prohibits the Government from predicating a Racketeer Influenced and Corrupt Organizations Act (“RICO“) conspiracy charge on acts mirroring the defendant‘s earlier substantive and conspiracy acquittals. We
BACKGROUND
I. Zemlyansky‘s Criminal Schemes1
Zemlyansky was involved in several criminal schemes from before 2007 until his first indictment in 2013. These schemes included Lyons Ward; the Rockford Group; the Illegal Gambling Ring; and the No-Fault Insurance Organization.
A. Lyons Ward
In 2007, Zemlyansky started a fraudulent investment firm, “Lyons, Ward & Associates.” The firm purported to invest in insurance-settlement claims, and it received almost $7 million from investors by guaranteeing them an 18% yearly return. But their money was never invested; instead, it was embezzled and then laundered through shell companies. To perpetuate the scheme, Zemlyansky issued false account statements and small interest payment checks to investors.
In 2009, Zemlyansky started “Rockford Funding Group LLP.” Like Lyons Ward, the Rockford Group was built on falsehoods and ultimately garnered approximately $10 million in investments. The proceeds from the two securities fraud schemes were wired to and from shell companies located in the United States and overseas.
C. Illegal Gambling Ring
Around the time Zemlyansky ran the Lyons Ward and Rockford Group securities fraud schemes, he also operated an illegal, high-stakes poker ring in Brooklyn, New York.
D. No-Fault Insurance Organization
Between 2009 and February 2012, Zemlyansky and his co-defendant Michael Danilovich owned and controlled medical professional corporations (“P.C.s“). These P.C.s fraudulently billed insurance companies for millions of dollars under New York‘s No-Fault Comprehensive Motor Vehicle Insurance Reparations Act,
Under the No-Fault Act, individuals injured in car accidents assign their statutory benefits to licensed medical professionals, who submit claims for
II. The S13 Indictment and First Trial
In May 2013, a federal grand jury returned the Superseding Indictment S13 (“S13 Indictment,” or “first indictment“), charging Zemlyansky, Danilovich, and others with nine counts relating to the No-Fault Insurance Organization. The S13 Indictment did not include allegations relating to the Lyons Ward or Rockford Group securities fraud schemes, or to the Illegal Gambling Ring.
Count One of the S13 Indictment charged Zemlyansky with conspiring to participate in the affairs of a RICO enterprise,
The S13 Indictment also charged Zemlyansky with eight counts that mirrored the RICO conspiracy‘s predicate offenses: conspiracy to commit healthcare fraud,
On November 13, 2013, after a trial that lasted eight weeks, the jury acquitted Zemlyansky of the non-RICO conspiracy and substantive counts, Counts Two through Nine. The jury was unable to reach a verdict with respect to the RICO conspiracy count, Count One. The District Court declared a mistrial on that Count.
III. The S18 Indictment and Second Trial
Following the mistrial, a grand jury in 2015 returned the Superseding Indictment S18 (“S18 Indictment,” or “second indictment“) against Zemlyansky
The S18 Indictment also charged Zemlyansky with five substantive counts relating to Lyons Ward. Those charges were: conspiracy to commit securities fraud,
Zemlyansky moved to dismiss the RICO conspiracy count (Count One) and to preclude the Government from offering evidence of his involvement in the No-Fault Insurance Organization to prove that Count. He argued that under the issue-preclusion component of the Double Jeopardy Clause, the Government could not
Two occurrences at Zemlyansky‘s second trial are the focus of his other challenges on appeal: the prosecution‘s comments in summation and the introduction of an audio-recording transcript. First, during rebuttal summation, the prosecution mentioned to the jury that Zemlyansky had cried during the testimony of a government witness. The District Court ordered the Government to “move on” and later issued a curative instruction. Joint App. 549–50. The District Court subsequently denied Zemlyansky‘s motion for either a mistrial or to reopen the proceedings to allow defense counsel to present an alternative explanation of Zemlyansky‘s demeanor. Second, the District Court admitted, over Zemlyansky‘s objection and subject to a limiting instruction, a government-
After a month-long trial, the jury convicted Zemlyansky of all six counts. The special verdict form reflected the jury‘s determination that Zemlyansky was liable for all five of the RICO conspiracy count‘s predicate acts.
The District Court denied Zemlyansky‘s motion for a new trial and sentenced him principally to 180 months’ imprisonment and three years’ supervised release. It also ordered him to forfeit $29,575,846 and to pay restitution of $27,741,579.67. Zemlyansky timely appealed his conviction and sentence.2
On appeal, Zemlyansky renews his argument that his conviction of the RICO conspiracy count charged in the second indictment violated his Fifth Amendment right to be free from double jeopardy. He also maintains that the prosecution‘s rebuttal summation comments on his courtroom demeanor violated his Fifth and Sixth Amendment rights against self-incrimination, to adverse witness confrontation and conflict-free counsel, and to a fair trial. He further
DISCUSSION3
I. Double Jeopardy and Issue Preclusion
The Double Jeopardy Clause protects individuals from being “twice put in jeopardy of life or limb” “for the same offence.”
Zemlyansky argues that collateral estoppel precludes the Government from predicating a RICO conspiracy charge on acts mirroring earlier substantive and conspiracy acquittals.4 Because none of the earlier acquittals necessarily decided an essential element of RICO conspiracy in his favor, we disagree. Furthermore, the District Court did not err in permitting the Government to reuse evidence from the first trial to prove Zemlyansky‘s guilt in the second because the evidence was used to prove different, non-precluded conduct.
A. The Government Was Not Precluded from Using Acquitted Substantive Offenses as Racketeering Predicates in the Second RICO Conspiracy Charge
Zemlyansky first contends that his acquittals of substantive counts of insurance-related mail fraud and money laundering at his first trial precluded the Government from predicating his RICO conspiracy charge on conduct mirroring
As a general matter, a jury‘s finding that a defendant did not commit certain substantive crimes does not necessarily preclude the government from later proving that he or she knowingly agreed to facilitate a racketeering scheme involving, or intended to involve, the same substantive crimes. See Salinas v. United States, 522 U.S. 52, 65 (1997) (holding that RICO‘s conspiracy provision “does not . . . excuse from [its] reach . . an actor who does not himself commit . . . the two or more predicate acts requisite to the underlying offense“). So it is in this case. Substantive mail fraud and money laundering require proof that the defendant committed those offenses. See
B. The Government Was Not Precluded from Using Acquitted Non-RICO Conspiracy Offenses as Racketeering Predicates in the Second RICO Conspiracy Charge
Zemlyansky next argues that the Government may not predicate a RICO conspiracy charge on acquitted conspiracy counts from a previous trial. At his first trial, Zemlyansky was acquitted of “basic” conspiracies to commit insurance-related mail fraud and money laundering. At his second trial, the expanded RICO conspiracy count listed insurance-related mail fraud and money laundering as predicate acts. While this is a closer call, we again disagree. We come to this conclusion by comparing the elements of “basic” and RICO conspiracy charges—in particular, how those elements differ as a result of the distinct objects of each.
RICO conspiracy requires proof that the defendant “agree[d] to conduct or to participate in the conduct of [an] enterprise‘s affairs through a pattern of racketeering activity.” United States v. Pizzonia, 577 F.3d 455, 462 (2d Cir. 2009). To prove the agreement element, the government must show that the defendant “knew about and agreed to facilitate [a racketeering] scheme.” Salinas, 522 U.S. at 66; see also Pizzonia, 577 F.3d at 459 (“[T]he object of a racketeering conspiracy is to conduct the affairs of a charged enterprise through a pattern of racketeering, not to commit discrete predicate acts.“). To prove the pattern element, the government must show that two or more “predicate acts were, or were intended to be, committed as part of [the] conspiracy.” United States v. Cain, 671 F.3d 271, 291 (2d
A comparison of “basic” and RICO conspiracy makes clear that acquittal of the former does not compel the conclusion that a jury necessarily decided an essential element of the latter in Zemlyansky‘s favor. Unlike “basic” conspiracy, RICO conspiracy does not require proof that a defendant knowingly agreed to facilitate a specific crime (e.g., mail fraud). So long as the defendant knowingly agreed to facilitate “the general criminal objective of a jointly undertaken [racketeering] scheme,” Yannotti, 541 F.3d at 122, the government need not prove
Having thus determined in the abstract that an acquittal on “basic” conspiracy does not in all cases preclude a subsequent trial for RICO conspiracy predicated upon the same conduct, we must now determine whether a retrial was permissible in Zemlyansky‘s case. The question we must answer is whether a “rational jury” could have acquitted Zemlyansky in the first trial for similar, non-preclusive reasons. See Ashe, 397 U.S. at 444. We determine what a rational jury could have done by examining the record of the prior proceeding “in a practical frame and viewed with an eye to all [of its] circumstances.” Id. (quoting Sealfon v. United States, 332 U.S. 575, 579 (1948)). This inquiry is “realis[tic] and rational[],” not “hypertechnical and archaic“; we evaluate the evidence in light of what was proven at trial and will not contort the analysis to find that a jury could have based its decision on alternate grounds when it clearly did not. Id. & n.9.
In acquitting Zemlyansky of the “basic” conspiracy counts, the first jury did not necessarily decide that he did not knowingly agree to further the no-fault insurance scheme or that the pattern of racketeering did not exist. As a result, the Government was not precluded from predicating the second RICO conspiracy count upon the insurance-related “basic” conspiracies of which Zemlyansky had earlier been acquitted.
C. The District Court Properly Admitted Evidence from the First Trial Because the Evidence Was Used for Different, Non-precluded Purposes in the Second Trial
Furthermore, we find no error in the District Court‘s decision to permit the Government to introduce evidence from the first trial to prove Zemlyansky‘s guilt
In United States v. Mespoulede, 597 F.2d 329 (2d Cir. 1979), on which Zemlyansky relies, the defendant was acquitted of possessing cocaine with the intent to distribute. Id. at 332. In a second trial, the government offered evidence of the defendant‘s cocaine possession to prove he conspired to distribute the drug. Id. On appeal the defendant argued that the government should have been precluded from introducing evidence of his possession in the second trial when the first jury had necessarily resolved the question of possession in his favor. Id. We agreed, rejecting the government‘s contention that issue preclusion applies only “where the issue sought to be excluded is a Sine qua non of conviction in the second trial.” Id. at 334. Instead, the issue-preclusion component of double jeopardy protects the defendant from “defend[ing] against charges or factual allegations that he overcame in the earlier trial, just as if that trial had never taken place.” Id. at 335 (internal citation omitted). Thus, although the government is free
Mespoulede teaches that Ashe‘s issue-preclusion paradigm protects defendants from the government‘s relitigation of even those issues that are not essential to conviction in the later trial, as long as those issues were “necessarily determined” in the defendant‘s favor in a prior proceeding. Id. at 334–35; see also Kramer, 289 F.2d at 915–16; cf. Dowling v. United States, 493 U.S. 342, 348–49 (1990) (issue preclusion inapplicable where issue presented in a subsequent trial is governed by a lower standard of proof). But to warrant this protection, a defendant must prove that the issue he seeks to preclude was, in fact, decided in his favor.
Here, Zemlyansky argues that it would have been error for the District Court to permit the Government to prove that he joined the no-fault insurance scheme by reference to evidence that he committed, or conspired to commit, mail fraud and money laundering.8 We agree with Zemlyansky on this point. But, as
Rather, the Government argued that Zemlyansky knowingly facilitated the no-fault insurance scheme by providing physical space (the P.C.s); recruiting doctors to serve as so-called paper owners of the clinics; and paying employees to manage clinics in which he knew, based on the outsized monetary benefits he derived from the clinics, that the employees/co-conspirators carried out a scheme of insurance fraud. The Government similarly did not attempt to prove up the pattern element with evidence that Zemlyansky committed, or conspired to commit, mail fraud and money laundering, but instead introduced evidence that his co-conspirators satisfied that requirement.
Thus, because the Government did not seek to establish any element of RICO conspiracy by reusing evidence to prove an issue previously determined in Zemlyansky‘s favor, but instead relied on separate, non-precluded evidence to prove each element, the District Court did not err by permitting the Government to introduce evidence from Zemlyansky‘s first trial.
II. Prosecution‘s Rebuttal Summation Comments
At the second trial, the Government sought to establish Zemlyansky‘s involvement in the investment schemes in part through a recording of a telephone conversation between an agent of the Alabama Securities Commission and a Lyons Ward employee, “Bob Hamilton.” The recording reflected “Bob Hamilton” repeatedly and falsely claiming that Lyons Ward was a legitimate investment company. At trial, three government witnesses testified that “Bob Hamilton” was Zemlyansky. During the testimony of one of these witnesses, Zemlyansky cried for five to ten minutes—observed by at least some members of the jury—in what the District Court later described as a “noticeable” but “not audible” manner. Joint App. 532. Zemlyansky did not testify at trial.
In rebuttal summation to the jury, the prosecutor mentioned Zemlyansky‘s
So what happens next? After [the witness] identifies Mikhail Zemlyansky‘s voice on that recording, the defendant breaks down and starts crying in open court at that table. And I looked over at you and I know you all saw that. And why was he doing that?
Id. at 511.
Defense counsel objected, and after a brief side bar, the Court overruled the objection and ordered that the prosecutor move on. The prosecutor continued:
When the third person identifies the voice of Bob [Hamilton] on the witness stand, the defendant knows that the game is up. All of his efforts to stay above the fray—the fake names, the paper owners, the prepaid phones—have all come crumbling down. He is Bob Hamilton, the voice behind Lyons Ward. So what does he do? He makes a last-ditch effort, desperate effort, to perpetuate the fraud.
Id. at 514-15.
The following morning, the District Court heard additional argument on these comments. Defense counsel moved for a mistrial, to reopen the proceedings for defense counsel to testify on the reason for Zemlyansky‘s demeanor, or, as a third option, for a curative instruction. The court found the comments improper but ruled they were not prejudicial enough to warrant a mistrial. The court noted that the comments “did not actually ask the jury to make an inference,” were
The Fifth Amendment provides in relevant part that “[n]o person . . . shall be compelled in any criminal case to be a witness against himself.”
Zemlyansky‘s behavior was neither compelled nor testimonial. Determining whether communication was compelled requires looking to the circumstances of the communication‘s creation; the government‘s unilateral use of a communication does not make it compelled. Fisher v. United States, 425 U.S. 391, 409–10 (1976) (subpoenaed papers not compelled testimonial evidence); In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d 87, 93 (2d Cir. 1993). Like an “act . . . exhibiting [certain] physical characteristics,” spontaneous crying is “not the same as a sworn communication by a witness that relates either express or implied assertions of fact or belief.” Hubbell, 530 U.S. at 35.10
Zemlyansky additionally argues that his Sixth Amendment rights to confrontation and counsel were violated. The Sixth Amendment provides in
Zemlyansky contends he was deprived of the opportunity to cross-examine the prosecutor, who became a witness against him upon making the improper comments. The prosecutor was not a witness, however. This is not a case of the government placing its imprimatur on facts unobserved by the jury. The record reflects that Zemlyansky‘s behavior was readily noticeable by the jury, counsel for both parties, and the judge; thus, the prosecutor‘s comments were not factual observations warranting witness cross-examination.
The prosecution‘s comments also did not violate Zemlyansky‘s right to conflict-free counsel. Although there are cases where a prosecutor‘s actions require that defense counsel cease representation in order to testify on her former client‘s behalf, see, e.g., Ramchair v. Conway, 601 F.3d 66, 73 (2d Cir. 2010), the comments here did not require that remedy. Nor did they divide defense counsel‘s loyalties or otherwise create a conflict of interest in his representation of Zemlyansky. Cf. United States v. Curcio, 680 F.2d 881, 889–90 (2d Cir. 1982).
“A prosecutor‘s improper summation results in a denial of due process when the improper statements cause substantial prejudice to the defendant.” United States v. Myerson, 18 F.3d 153, 162–63 (2d Cir. 1994) (quoting United States v. Modica, 663 F.2d 1173, 1181 (2d Cir. 1981) (per curium)); see also United States v. Banki, 685 F.3d 99, 120 (2d Cir. 2012) (examining record for prosecutorial misconduct that is “so severe and significant” as to deny right to fair trial (quoting United States v. Locascio, 6 F.3d 924, 945 (2d Cir. 1993))). In deciding whether a prosecutor‘s improper comments caused substantial prejudice, we view the improper statements in context, considering “[1] the seriousness of the misconduct, [2] the measures adopted by the trial court to cure the misconduct, and [3] the certainty of conviction absent the improper statements.” Banki, 685 F.3d
The District Court acted within its broad discretion in denying Zemlyansky‘s motion for a mistrial for improper prosecutorial comments. Immediately after defense counsel‘s objection to the prosecutor‘s comments, the court permitted the parties to address the objection and then properly instructed the prosecutor to move on, which he did. As soon as possible thereafter, the court heard argument on the impropriety of the prosecutor‘s remarks and on the appropriate cure. After determining that the prosecutor had erred, the District Court reasonably concluded that the implications were limited and sensibly regarded a curative instruction as the best remedial route for moving past an issue inappropriate for the jury‘s consideration. The resulting instruction—a product of party collaboration—not only sustained Zemlyansky‘s objection, but also described the comments as improper and struck them; clarified that many inferences could be drawn from Zemlyansky‘s demeanor; and reminded the jurors
Unlike in the out-of-circuit cases Zemlyansky cites, here the District Court not only immediately responded to the impropriety by directing the prosecution to move on, but it also later sustained the objection and gave a strong curative instruction.11 And unlike in those cases, the prosecutor was, we conclude here, not a character witness. He therefore did not implicate Zemlyansky‘s Sixth Amendment confrontation rights.
The District Court‘s remedial measures were particularly appropriate when viewed in context of the trial. There is no indication the prosecutor intended the comments to prejudice Zemlyansky‘s case; multiple witnesses corroborated the “Bob Hamilton” identification; and there was a mountain of other evidence—bank records, witness testimony, etc.—with respect to not one but two investment fraud
III. The Transcript
Finally, Zemlyansky maintains that the District Court abused its discretion and deprived him of his Sixth Amendment right to a fair trial by admitting into evidence and allowing into jury deliberations a transcript that identified him as the speaker. The District Court, however, acted within its discretion.
At trial, the Government sought to publish to the jury a transcript of the “Bob Hamilton” audio recording. The transcript‘s unredacted cover page indicated that Zemlyansky was a participant in the conversation. Defense counsel stipulated to the accuracy of the record but contested that Zemlyansky was a conversation participant. The court admitted the transcript “subject to connection“—that is, subject to the Government offering evidence that the voice attribution was accurate—and gave a corresponding limiting instruction to the
By proffering the testimony of three witnesses identifying Zemlyansky‘s voice on the recording, the Government offered sufficient evidence of identification for the recording to be admitted. See
For similar reasons, the District Court also did not err in allowing the transcript to be reviewed by the jury during its deliberations. See United States v. Rosa, 17 F.3d 1531, 1548 (2d Cir. 1994). Although the District Court did not explicitly charge the jury as to the transcript‘s disputed voice attribution, it clearly stated that the transcript was merely an aid and was not guaranteed to be accurate. See United States v. Ulerio, 859 F.2d 1144, 1146 (2d Cir. 1988) (finding no jury instruction necessary where jury “was well aware of” defendants’ disagreement with voice attributions made by government). The District Court‘s earlier limiting instruction informed the jury that Zemlyansky disagreed with the transcript‘s
IV. Cumulative Error
As foreshadowed by the above, we reject Zemlyansky‘s cumulative error argument. “[T]he cumulative effect of a trial court‘s errors, even if they are harmless when considered singly, may amount to a violation of due process requiring reversal of a conviction.” United States v. Al-Moayad, 545 F.3d 139, 178 (2d Cir. 2008). Notwithstanding the prosecution‘s improper remarks, the evidence against Zemlyansky was overwhelming and the cumulative impact of the improper commentary does not rise to the level of a due process violation. See United States v. Hurtado, 47 F.3d 577, 586 (2d Cir. 1995)
CONCLUSION
For these reasons, we AFFIRM the judgment of the District Court.
Notes
“[Y]esterday afternoon during his rebuttal summation, counsel for the government said that the defendant had been crying at one point during the trial and defense counsel objected. Upon consideration, I now sustain the objection to those comments, which were improper, and order them stricken. There may be any number of reasons why the defendant may have been crying, and you must disregard any comments about that by counsel. You are to consider only the evidence that has been admitted, including the sworn testimony of witnesses, but that does not include the defendant‘s demeanor during this trial.
Id. at 552.