Isaacson appealed his conviction following a jury trial for conspiracy to commit wire fraud and mail fraud and securities fraud. The conspiracy defrauded investors through a hedge fund that placed money in shell companies with no assets or business operations. The hedge fund drove up the prices of the shell companies causing them to appear more valuable than they really were. From his Florida office, the defendant assisted in creating fraudulent valuation reports in an effort to placate auditors.
In his appeal, the defendant challenged the district court’s failure to grant his speedy trial motion. The court of appeals upheld the district court’s decision because it found the defendant filed his motion after the trial began. The defendant’s speedy trial motion was filed on April 19, 2010. Prior to that the trial court began ruling on jury challenges based on the written responses to juror questionnaires sent to perspective jurors. The court of appeals concluded that the voir dire had begun when the trial court began making its rulings.
The court also upheld the district court’s denial of the defendant’s statute of limitations challenge based on his claim that the government failed to prove an overt acts occurred within the period of the statute of limitations. The one overt act that took place within the statute of limitation period was done by the codefendant. The defendant argued that the overt act does not mention the defendant and cannot be used to bootstrap the defendant’s conduct within the statute of limitations. Rejecting this argument, the court of appeals found an individual conspirator need not participate in the overt act done in furtherance of the conspiracy for the overt act to fall within the statute of limitations.
The court also rejected the defendant’s argument that the evidence was insufficient to support his conviction. The argument was largely based the argument that two of the government’s witnesses were not credible. The defendant could not point to any circumstances that would render their testimony incredible as a matter of law.
Loss amount incorrect
The defendant successfully challenged his sentence in arguing that the court erred in by attributing Morgan Stanley’s $15 million dollars investment loss to the defendant. The court takes a two-step process in determining whether to hold the defendant responsible for losses from the receipt reasonably foreseeable acts of co-conspirators. First the district court must make the individualized findings concerning the scope of criminal activity undertaken by a particular defendant. Second the court can only enhance for reasonably foreseeable losses caused by the co-conspirators acting in furtherance of the conspiracy to which the defendant agree to participate. Here, the government failed to establish that Morgan Stanley’s losses were the result the defendant or his co-conspirators conduct in furtherance of the conspiracy. The government could not prove that Morgan Stanley’s losses were attributable to any fraud by the coconspirators. Morgan Stanley never saw any of the false evaluations prepared by the co-conspirators and apparently made its investment decision entirely independent of any false audit reports.