SDNY COURTHOUSE, August 13 – In the criminal securities fraud trial of Joel Margulies on August 9 defense lawyer Brent Horst asked at day's end if he should bother to fly in one of his two witnesses from Missouri on Monday or if U.S. District Court for the Southern District of New York Judge Jed S. Rakoff would bar the witnesses. Ultimately, the defense case consisted of text messages between Margulies and Lisa Bersham, who has pleaded guilty, about her Non Disclosure Agreement and the SEC. But not before gun evidence.
This defense didn't work. The jury on August 13 returned guilty verdicts in less than two hours. The sentencing on those has been set for December 13. Afterward Judge Rakoff called issues surrounding the remaining severed narcotics charge "a royal waste of time," to be put on trial, pleaded to or dropped, adding "You'll let me know." Watch this site.
On the day before the verdict there were text messages in which Bersham asked Margulies to buy and FedEx her a gun. Some of the messages concerned a stun gun for sale in Wal-Mart. Ultimately, it seems, a Smith & Wesson .380 was mailed. The police later found it in Bersham's storage locker in, where else, the South Bronx. Why not in her Upper West Side apartment? The gun, it was said, was to protect her from an irrate investor in Starship Snacks.
The summations will be August 13 and Judge Rakoff's instructions. Then the case goes to the jury. Inner City Press will be there - watch this site.
On the morning of Monday, August 12 the government was questioning a witness with a German accent about Margolies' e-mails to him about the supposedly possible sale of All American Pet Company and its dog food bar business to Nestle. Judge Rakoff called a sidebar.
The evidence and even summations should be finished Monday, with Judge Rakoff's jury charge on Tuesday and then deliberation. Inner City Press will continue to cover this and another trial starting Monday - and, if possible, the "Part 1" matter Judge Rakoff retired to him chambers to hear from the SDNY prosecutors on August 9. Watch this site.
Previously Margolies' lawyer from Nashville, Tennessee was slowly cross examining a witness, about how many times she has communicated with Margulies. "I'm hard of hearing, that's why I sometimes ask you to repeat yourself," he told the witness," adding "let me lay some foundation."
Judge Rakoff cut in from the bench: "I've told you before to just ask questions - not the whole prelude, not what's going on in your mind, not the state of the universe, but just the questions."
It may be that thing are not going well for Margulies and his Starship Snacks.
Back on August 7 a series of letters from Deutsche Bank and Wells Fargo, account statements from Royal Bank of Canada, and contracts about caffeine infused chocolate by something called Starship Snacks were methodically introduced to the jury.
Assistant US Attorney Christine I. Magdo, who earlier this year convicted S&P's Sebastian Pinto-Thomaz of insider trader before Judge Rakoff, flashed exhibit after exhibit on the video monitor, focusing on the meta-data showing which were docx and which were pdf.
Surely it will all be connected for the jury, some of whom appeared inundated, at least from where Inner City Press observed as the only media in the courtroom on the morning of August 7. (Later on August 7 it would be ousted from a criminal presentment of "John Doe" by SDNY Judge John G. Koeltl, without any notice or opportunity to be heard, in aprocess it is unclear Judge Rakoff would follow - perhaps we'll see).
Many of the exhibits concerned the inheritance and accounts of co-defendant Lisa Bersham, who has pleaded guilty and pushed back her sentencing before SDNY Judge Jesse M. Furman until October 17, 2019. Margulies and his lawyer and other lunched on August 7 in the 500 Pearl Street cafeteria, then waited as Judge Rakoff prepared a Fair Labor Standards Act case for trial, including demanding of the defense lawyer why he was not available in late August. (He replied he is volunteering in the Dominican Republic; asked and answered). We'll have more - on both cases.
Also before Judge Rakoff back on July 30, the day after insider trading tipper Sebastian Pinto-Thomaz was sentenced to 14 months in prison, one of his two tippees Jeremy Millul was sentenced to five months, not to begin until January 9, 2020 so that Millul can (probably) witness the birth of his third child.
Judge Rakoff said he had planned to sentence Millul to nine months, for general deterrence. But the arguments of Millul's Arent Fox LLP lawyer Glenn C. Colton about probable non eligibility for a camp and about ICE detention led him to reduce that by four months.
One might wonder if there can be contingency fees for sentencing reductions.
More seriously, Judge Rakoff cited criminologists for the proposition that jail time is the best deterrent particularly for hard to detect crimes like insider trading. He also emphasized that Millul had done it twice, in 2016 and 2018.
Millul's lawyer said he had faced anti-Semitic attacks in France and does not want to return there. Judge Rakoff asks if his mother doesn't live in Israel and couldn't he go there. The response seemed to be that then his sons would face military service.
Judge Rakoff said that while the US is strengthened by those who come here, if they commit crimes they may be deported. More generally he mused how criminals do not think of their families during the crime, only when they are caught.
The second tippee Abell Oujaddou faces sentencing on September 5 at 3 pm and, since he testified for the government (but also, as noted, welshed on paying the full agreed kickback to Pinto-Thomaz), probation is predicted. Inner City Press will be there. and noted during the sentencing that Pinto-Thomaz's lawyer's argument in the trial had been to "throw his mother under the bus." The lawyer, Henry Mazurek with another client facing a jury across the hallway, said it was more complicated that that. And complicated it is.
Sentencings in the SDNY often involve the invocation of the sins of the father, absent fathers, abusive fathers. This absent father was different than the norm: a Brazilian industrial magnate. Equally absent, even as Sebastian's mother sent to open luxury stores in Asia. Call it the Nanny Diaries.
When Sebastian spoke, just before sentencing, it was strange to hear his voice after weeks of the trial, him sad faced in the 500 Pearl Street lobby or working his cell phone in the plaza outside. Then it was said he was looking for work in Houston. Now he is also an EMT, and offering to do community service.
Judge Rakoff was his usual erudite self, calling the sentencing guidelines irrational and saying that these days, AUSAs probably wish more defendants went to trial rather than, like 97%, pleading out. The AUSA here, Christine I. Magdo, spoke of the need for general deterrence. Co-defendant Jeremy Millul is to be sentenced on July 29 - Inner City Press aims to be there, watch this site.
He was barely 30 years old but was publicly traded paint company Sherwin Williams' main contact at S&P when it moved to acquire Valstar in 2016. Mysteriously a hairdresser Abell Oujaddou linked to both Sebastian and to his mother Nathalie Pinto-Thomaz made large purchases of Valspar stock and options and fell under suspicious by FINRA. A Jeremy Millul made even larger trades, of options. On April 24 the defense was barred from putting Millul's mother on the stand, to testify about another bank account and more, Inner City Press was informed.
Late morning on April 26 the the U.S. District Court for the Southern District of New York courtroom of Judge Jed Rakoff, the jury was read the elements of the crime and told that if they did not decide today, the next day would be Tuesday. The marshall was sworn, to take them to a "private and convenient place" - an adjacent room. Where well before the 2:30 pm knock off time for the more covered college basketball prosecution upstairs, the jury decided guilty. The sentencing will be in July. We'll have more on this.
On April 25 prosecutor Christine I. Magdo called the defense shatter-shot and desperate. She showed that Sebastian Pinto-Thomaz was in the WhatsApp and Viber contracts of jewerly dealer and Valspar options trader Jeremy Millul. But as defense lawyer Henry Mazurek pointed out after the jury was gone for the day, this doesn't prove that the two men communicated over the platforms, which when installed demand or trick a user into importing all of their contacts from email, for example.
Judge Rakoff said the jury could make a reasonable inference from the contacts information, adding that in the view of one reasonable observer Mazurek has engaged in his summation in gross speculation. Mazurek asked, Who is that reasonable observer? Rakoff shot back, you'll have to speculate. He will instruct the jury for a half hour on April 26 then they will deliberate. According to the government, the health and safety of the stock market is on the line. Watch this site - more here on Patreon.
Earlier on April 25 the defense put on the stand an IT consultant who showed charts he's made of hairdresser and tipee Abell Ajouddou's stock trades including Citigroup, JPM Chase and Bank of America, twice, and compare the volume of his communications, cell phone and text message, with the mother (65%) and son (35%).
The government counter-punched by noting that WhatsApp and Viber calls were not included, and that Bank of America, Sprint and Blackberry / RIM were double counted. It was a strange ending to the evidence. After summations, the jury will begin deliberating early on April 26. Watch this site, and @SDNYLIVE.
Back on April 18, before the disenchantment, an issue arose after the jury left for lunch as to whether Oujaddou had told his then-lawyer Robert Anello to tell the government he had paid Sebastian Pinto-Thomaz about of a "tip fund" from his salon, or as he claimed earlier in the week from cash he and his wife kept in the apartment after the power outrages in Super Storm Sandy. Judge Rakoff asked for Anello's telephone number, dialed it and put him on speaker phone. There, with the consent of Oujaddou's current lawyer, Anello said, yes, his client had told him to convey that. So Oujaddou can be cross examined about that, and about the unredacted PSR report the government must now give to defense counsel. The jury will not sit on Good Friday, so things may come to a head on the afternoon on Thursday, April 18, between an equity analyst and a FINRA witnesses up from Baltimore. Watch this site.
the second day of the trial of Sebastian Pinto-Thomaz on four felony counts proceeded, with Oujaddou in the stand. Assistant U.S. Attorney Christine I. Magdo walked him through his Charles Schwab accounts, and photos from the Home Depot on 23rd Street where he said he handed Sebastian $7,500 in cash he kept in his apartment with his wife, since Hurricane Sandy.
But when the jury left, questions were raised. Oujaddou had been threatened with a lawsuit for sexual assault by a woman whom he fired from the salon, just before marrying his Superstorm Sandy co-hoarder wife. This information, who said on the record, was deemed too prejudicial for the jury to hear.
Sebastian's lawyer Henry Mazurek argued that it was relevant, that Oujaddou's need for hush money for the threatened lawsuit explained his trading. Even when this was denied, he made a point of saying that hush money is in the news, and that being an alleged sexual assaulter may not be so prejudicial, given that the current US President was elected. Judge Rakoff riffed, I am interested in your political analysis - but not as a lawyer. And thus ended Day Two of US v Pinto.
Career not destroyed, Sebastian Pinto-Thomaz asked the court this year to travel to Houston for a possible new job. But for two week he's set to be in Judge Rakoff's courtroom - and after that, nobody knows. At the lunch break on April 17 he was out in front of 500 Pearl Street working his cell phone. Watch this site.
Back on April 10 a defendant awaiting sentencing on hedge fund fraud appeared to change lawyers on April 10 before SDNYJudge William Pauley. First his outgoing lawyer Edward Little visited him in the green brick hallway outside the courtroom, then his prospective or potential replacement counsel, Jonathan Halpern, went into the hall to see him. When the defendant Nicholas Genovese was brought out in shackles he was thin and bespectacled, guarded by two marshals. In between the two counsel recounted their histories working in the U.S. Attorney's Office, Little from 1982 to 1990 then on Wedtech cases, Halpern from 1989 to 2004 (yes, they overlapped one year.) Still when Judge Pauley took the bench he said as early as April 18 he will appoint a CJA lawyer if the connection between Genovese - fees paid by his mother - and Halpern doesn't take. According to the U.S. Attorney, "NICHOLAS JOSEPH GENOVESE pled guilty today in Manhattan federal court to securities fraud for inducing investments in a hedge fund that he founded, Willow Creek Investments LP (“Willow Creek”), by misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes. In February 2018, GENOVESE was charged and arrested for perpetrating this fraud. Today, GENOVESE pled guilty to one count of securities fraud before United States District Judge William H. Pauley III. As part of his guilty plea, GENOVESE agreed to forfeit more than $13 million of proceeds of the securities fraud, including his interest in two watercraft that GENOVESE purchased with funds that he obtained from his victims." Inner City Press will continue to follow this case, so different than another recent change of counsel in the SDNY.
On April 8 a defendant accused of four armed robberies of livery cab drives in The Bronx asked for bail - and when it was denied, he fired his lawyer, who told the court the defendant was bipolar and heard voices. It wasbefore SDNY Judge Paul Crotty, who denied bail and then assigned the defendant James Jackson a new CJA lawyer. Before the switch off, Jackson's Federal Defenders lawyer argued that Jackson has a friend who makes $100,000 a year working construction and would put up $5000, and that Jackson's mother said if he fled the U.S. Marshals wouldn't have to chase him down, she would. Crotty was unmoved. The Assistant US Attorney Thomas Wright told Crotty that Jackson had confessed to all four Hobbs Act robberies and to brandishing a weapon, which the government believes he still has access too.
Wright said Jackson during interrogation spoke of suicide and of hearing voices. His Federal Defender lawyer Philip Weinstein, before he learned he would be fired, said Jackson had swallowed bleach at age 20 and needed time on bail to say goodbye to his seven year old who does not live with him but whom he still fathers. Weinstein waved a plea offer then government has made with a deadline of May 3. That has now been pushed back at least until 8. Inner City Press, the only media in Judge Crotty's courtroom, albeit still without electronics, will continue to follow this case.
