After a two-week trial, defendant in U.S. v Stein was convicted of mail, wire, and securities fraud based on evident that he fabricated press releases and purchase money orders to inflate the stock price of his client, Signalife, Inc, a publicly traded manufacturer of medical devices. The district court sentenced Stein to 205 months in prison, ordered $5 million in forfeiture, and $13 million in restitution. In his appeal Stein argued that the government failed to disclose Brady v. Maryland material to the defense before trial and knowingly relied on false testimony to make its case. As for the sentence, Stein argues that the district court erred in calculating actual loss for the purpose of the Mandatory Victims Restitution Act of 1996 (MVRA) and § 2B1.1 of the U.S. Sentencing Guidelines. He argued that in estimating actual loss the district court erroneously presumed that all purchasers of Signalife stock during the period the fraud was ongoing relied on false information advanced by Stein. He also argued that the district court failed to take into account other market forces that likely contributed to the investors losses.
After the Department of Justin conducted a criminal investigation of Stein and his work with Signalife, he was charged with money laundering and wire and securities fraud. Prior to his trial Stein moved to produce documents in the Security and Exchange Commission’s (SEC) files. The government’s response was that is lacked control over the SEC and it did not conduct a joint investigation with the SEC. Prior to trial Stein learned that in the course of its investigation the DOJ had accessed a very small subset of documents in the SEC’s date base which the DOJ then provided to him. As a result he filed a motion to dismiss on the basis of this Brady violation. Following his conviction at trial, he obtained additional documents from the SEC that he believed were exculpatory and he filed motion for a new trial based on the Brady violation.