Antitrust Law Daily Wrap Up, ANTITRUST NEWS: U.S. Refutes Arguments Raised on Appeal by Convicted Financial Services Executives, (May 13, 2013)

By Jeffrey May, J.D.

The Department of Justice Antitrust Division is asking the U.S. Court of Appeals in New York City to uphold the convictions of three financial services executives for their roles in fraud schemes and conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts. In a brief filed last week, the Justice Department urged the court to reject the appeals of Dominick P. Carollo, Steven E. Goldberg, and Peter S. Grimm (U.S. v. Carollo,12-4365(con), 12-4371(con)).

In May 2012, a federal jury in New York City convicted Carollo, Goldberg, and Grimm. Carollo was found guilty on two counts of conspiracy to commit wire fraud and defraud the United States, Goldberg was found guilty on four counts of conspiracy to commit wire fraud and defraud the United States, and Grimm was found guilty on three counts of conspiracy to commit wire fraud and defraud the United States.

The Department of Justice asserted at trial that the three defendants and their co-conspirators corrupted the bidding process for dozens of investment agreements to increase the number and profitability of investment agreements awarded to provider companies where they were employed. The three deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities for public works projects at schools, hospitals, and roads. Evidence established that they cost municipalities around the country millions of dollars, the Department of Justice said.

The defendants were sentenced to prison terms ranging from 36 months to 48 months and ordered to pay criminal fines ranging from $50,000 to $90,000 in October 2012.

Among other things, the former executives argued on appeal that the trial court should have granted a mistrial because one of the government's witnesses, after perjuring himself, attempted suicide and was unable to complete his cross-examination. The government refuted the defendants' argument that the court abused its discretion by denying a mistrial on the five counts of conviction.

The government contended that the court properly struck that witness’s testimony and instructed the jury to disregard it, dismissing one of the counts—the only charge about which he testified—and striking all evidence concerning that charge. There was no prejudicial delay, and defendants provided no reason to believe that the jury could not follow the court’s instructions, according to the Justice Department. Moreover, the government refuted the defendants' argument that their inability to complete their cross-examination of the witness prevented them from introducing exculpatory evidence and arguing their theory of the defense.

Statute of Limitations Arguments. In addition, the government argued that the trial court correctly rejected the defendants’ statute of limitations arguments with respect to the six counts that proceeded to trial. The trial court and the jury "correctly concluded that the charged conspiracies continued into the period of the statute of limitations," according to the government.

Further, the trial court properly rejected the defendants' proposed instructions on the statute of limitations, in the government’s view. The court instructed that the government must prove that a co-conspirator "knowingly committed at least one overt act charged in the count you are considering in furtherance of the conspiracy you are considering" and that "the overt act occurred while the conspiracy was still in existence."

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