United States v. Velissaris

1

UNITED STATES OF AMERICA v. JAMES VELISSARIS, Defendant.

No. 22cr105 (DLC)

United States District Court, S.D. New York

November 18, 2022

For the United States of America: Daniel Marc Tracer Margaret Graham, U.S. Attorney's Office, SDNY, Daniel Loss, U.S Attorney's Office, SDNY.

For the defendant: Kathleen Anne Reilly Michael Kim Krouse Veronica Ellen Callahan, Arnold & Porter Kaye Scholer LLP (NYC), Paul Joseph Fishman, Arnold & Porter Kaye Scholar LLP.

OPINION AND ORDER

DENISE COTE, United States District Judge.

The defendant has been charged in a six-count indictment with securities fraud and obstruction of an SEC investigation based on the defendant's alleged manipulation of the valuation of certain over-the-counter derivative securities. The defendant filed one motion in limine on October 19 and four additional motions in limine on November 8. The Government filed four motions in limine on November 8. Trial is scheduled to commence on November 28.

To assist in the resolution of the issues to be addressed at the final pretrial conference of November 18, this Opinion sets out some of the well-established legal principles that will be incorporated into the rulings at the conference. They are the evidentiary standards under Rules 401, 403, 702, 701, 803(6), and 404(b)(1) of the Federal Rules of Evidence, and rules regarding hypothetical questions placed to lay witnesses.

Rule 401

Evidence is relevant if it has any tendency to make a fact of consequence in determining the action “more or less probable than it would be without the evidence.” Fed.R.Evid. 401. “To be relevant, evidence need not be sufficient by itself to prove a fact in issue, much less prove it beyond a reasonable doubt.” United States v. Litvak, 808 F.3d 160, 179-80 (2d Cir. 2015) (citation omitted). Relevance is, instead, a “low threshold” that is “easily satisfied.” United States v. Gramins, 939 F.3d 429, 450 (2d Cir. 2019).

“Unless an exception applies, all relevant evidence is admissible.” Id. (citation omitted).

Rule 403

Under Rule 403, courts may exclude relevant evidence “if its probative value is substantially outweighed by a danger of . . unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.” Fed.R.Evid. 403. The question of whether evidence is unduly prejudicial to a criminal defendant

is not whether the evidence [is] suggestive of guilt -- as all relevant evidence offered against the defendant would suggest guilt -- but rather, whether it tends to have some adverse effect upon a defendant beyond tending to prove the fact or issue that justified its admission into evidence. This adverse effect may consist of a tendency of the evidence in question to prove some adverse fact not properly in issue or unfairly excite emotions against the defendant.

United States v. Massino, 546 F.3d 123, 132-33 (2d Cir. 2008) (citation omitted).

Rule 702

Federal Rule of Evidence 702 governs the admission of expert testimony. Rule 702 allows a “witness who is qualified as an expert by knowledge, skill, experience, training, or education” to testify, “in the form of an opinion or otherwise,” if:

(a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and methods; and

(d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. Under this rule, the trial judge must first address “the threshold question of whether a witness is qualified as an expert by knowledge, skill experience, training, or education to render his or her opinions.” Nimely v. City of New York, 414 F.3d 381, 396 n.11 (2d Cir. 2005) (citation omitted).

If that question is answered in the affirmative, the trial judge has a “gatekeeper function,” requiring her to “ensur[e] that any and all scientific testimony or evidence admitted is not only relevant, but reliable.” Restivo v. Hessemann, 846 F.3d 547, 575 (2d Cir. 2017) (citing Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993)). In exercising the gatekeeping role established in Daubert, a district court should consider the specific criteria for expert testimony set forth in Rule 702. Clerveaux v. E. Ramapo Central School Dist., 984 F.3d 213, 233 (2d Cir. 2021). Beyond that, however, the Daubert inquiry is “fluid and will necessarily vary from case to case.” In re Mirena IUS Levonorgestrel-Related Prods. Liab. Litig. (No. II), 982 F.3d 113, 123 (2d Cir. 2020) (citation omitted). The gatekeeping inquiry must, of course, “be tied to the facts of a particular case.” United States v. Requena, 980 F.3d 30, 47 (2d Cir. 2020) (citation omitted).

“[T]here are many different kinds of experts, and many different kinds of expertise.” United States v. Romano, 794 F.3d 317, 330 (2d Cir. 2015) (quoting Kumho Tire Co. v. Carmichael, 526 U.S. 137, 150 (1999)). A court must “assess whether the expert employs the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” Restivo, 846 F.3d at 577 (citation omitted). Expert testimony should be excluded “if it is speculative or conjectural or based on assumptions that are so unrealistic and contradictory as to suggest bad faith or to be in essence an apples and oranges comparison.” Zerega Ave. Realty Corp. v. Hornbeck Offshore Transp., LLC, 571 F.3d 206, 214 (2d Cir. 2009) (citation omitted). Contentions that “the assumptions are unfounded,” however, “go to the weight, not the admissibility, of the testimony.” Id. (citation omitted). “Vigorous crossexamination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596.

To be admissible, an expert's analysis must be reliable “at every step.” Amorgianos v. Nat'l R.R. Passenger Corp., 303 F.3d 256, 267 (2d Cir. 2002). “[A]ny step that renders the analysis unreliable . . . renders the expert's testimony inadmissible. Id. (emphasis omitted). Moreover, “nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert.” Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997).

An expert's opinion must also be relevant, meaning that it will “help the trier of fact to understand the evidence or to determine a fact in issue.” Fed.R.Evid. 702; see Daubert, 509 U.S. at 591. “The role of an expert is not to displace the [trier of fact] but rather to provide the groundwork to enable the jury to make its own informed determination.” In re Methyl Tertiary Butyl Ether (MTBE) Products Liab. Litig., 725 F.3d 65, 114 (2d Cir. 2013) (citation omitted). Expert testimony assists the trier of fact “when it sheds light on activities not within the common knowledge of the average juror.” United States v. Wexler, 522 F.3d 194, 204 (2d Cir. 2008) (citation omitted).

Finally, even if expert testimony satisfies the requirements of Rule 702, the expert testimony may nonetheless be excluded pursuant to Rule 403. United States v. Gatto, 986 F.3d 104, 117-18 (2d Cir. 2021) (upholding exclusion where expert testimony, even if helpful, “was substantially more prejudicial than probative”). In United States v. Aiyer, 33 F.4th 97 (2d Cir. 2022), the Court of Appeals affirmed the conviction of a defendant accused with violating the antitrust laws and, inter alia, rejected the defendant's argument that the district court erred in excluding expert testimony that the defendant's trading activity in the foreign currency exchange market lacked anticompetitive effects and yielded procompetitive effects. Id. at 123. Among other rulings, the district court had excluded expert testimony about the lack of anticompetitive effect as an attempt “to suggest why the alleged conspirators in this case acted as they did,” and thus as an “impermissible attempt for an expert to testify as to the state of mind” of the defendants. Id. at 126 (citation omitted). In Litvak, 808 F.3d 160, the district court did not abuse its discretion in excluding expert testimony in a securities fraud trial that the trades were executed at a fair market value where the issues for the jury were “whether a reasonable investor might have found the misstatements important and whether [the defendant] intended to deceive the purported victims.” Id. at 185-86.

Rule 701

“The Federal Rules of Evidence allow the admission of fact testimony so long as the witness has personal knowledge while opinion testimony can be presented by either a lay or expert witness.” United States v. Afriyie, 929 F.3d 63, 69 (2d Cir. 2019) (citation omitted); Fed.R.Evid. 602, 701, 702. “The distinction between statements of fact and opinion is, at best, one of degree.” Afriyie, 929 F.3d at 69 (citation omitted). The Federal Rules of Evidence do not “distinguish between expert and lay witnesses, but rather between expert and lay testimony.” Fed.R.Evid. 701 advisory committee's note to 2000 amendment.

Under Rule 701,

[i]f a witness is not testifying as an expert, testimony in the form of an opinion is limited to one that is: (a) rationally based on the witness's perception; (b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.

Fed. R. Evid. 701; Afriyie, 929 F.3d at 69. “The ‘specialized knowledge' restriction in Part (c) prevents a party from conferring an aura of...