United States v. Newsom ( 2011 )

09-3406-cr
USA v. Newsom
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC
DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan Courthouse, 500 Pearl Street, in the City of New York, on the 16th day
of September, two thousand eleven.
Present: GUIDO CALABRESI,
ROBERT A. KATZMANN,
Circuit Judges,
JOHN GLEESON,
District Judge.*
________________________________________________
UNITED STATES OF AMERICA,
Appellee,
v. No. 09-3406-cr
WILLIAM A. NEWSOM, also known as 2-02cr0881-d15,
Defendant-Appellant.
________________________________________________
For Appellee: CHARLES P. KELLY, Assistant United States Attorney (Susan
Corkery, Assistant United States Attorney, on the brief), for
Loretta E. Lynch, United States Attorney for the Eastern
District of New York, Brooklyn, N.Y.
For Defendant-Appellant: BOBBI C. STERNHEIM, Law Offices of Bobbi C. Sternheim,
New York, N.Y.
*
The Honorable John Gleeson, United States District Judge for the Eastern District of
New York, sitting by designation.
Appeal from the United States District Court for the Eastern District of New York
(Wexler, J.).
ON CONSIDERATION WHEREOF, it is hereby ORDERED, ADJUDGED, and
DECREED that the judgment of the district court be and hereby is AFFIRMED.
Defendant-Appellant William A. Newsom appeals from the July 23, 2009 judgment of
the district court, following two separate jury trials, convicting him of conspiracy to engage in
securities fraud and mail fraud, in violation of 18 U.S.C. § 371, and securities fraud, in violation
of 15 U.S.C. §§ 78j(b), 78ff. In the first trial, United States v. William A. Newsom, Cr. 02-881
(S-3) (LDW), (“Newsom I”), a jury found that Newsom, a sales agent, had conspired with others
to defraud the investing public in the marketing of a private-placement offering known as
Heritage Film Group, LLC (“Heritage”). In the second trial, United States v. William A.
Newsom, Cr. 02-879 (S-2) (LDW) (“Newsom II”), a jury similarly found that Newsom had
conspired with others to defraud the investing public in the marketing of a private-placement
offering known as Out of the Black Partners, LLC (“Out of the Black”). On appeal, Newsom
argues that he was deprived of his constitutional right to a fair trial in both cases because the
district court improperly admitted, in Newsom I, evidence of Newsom’s involvement in Out of
the Black and, in Newsom II, evidence of his role in Heritage. He contends also that the
government should have been collaterally estopped from admitting in Newsom II evidence of his
convictions in Newsom I. We assume the parties’ familiarity with the facts and procedural
history of this case.
We review a district court’s evidentiary rulings for abuse of discretion. See Old Chief v.
United States, 519 U.S. 172, 174 n.1 (1997); United States v. Kelley, 551 F.3d 171, 174 (2d Cir.
2009) (per curiam). “We will find an abuse of discretion only where the trial judge ruled in an
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arbitrary or irrational fashion.” Kelley, 551 F.3d at 175 (internal quotation marks omitted).
We begin with Newsom’s argument that the district court abused its discretion by
admitting, in Newsom I, evidence of Newsom’s involvement in Out of the Black and, in Newsom
II, evidence of his involvement in Heritage. Federal Rule of Evidence 404(b) provides in
pertinent part that “[e]vidence of other crimes, wrongs, or acts is not admissible to prove the
character of a person in order to show action in conformity therewith. It may, however, be
admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan,
knowledge, identity, or absence of mistake or accident.” Fed. R. Evid. 404(b). “The Second
Circuit’s inclusionary approach to the admission of other act evidence allows such evidence to
be admitted for any purpose other than to demonstrate criminal propensity.” United States v.
Guang, 511 F.3d 110, 121 (2d Cir. 2007) (internal quotation marks omitted). “To determine
whether a district court properly admitted other act evidence, the reviewing court considers
whether (1) it was offered for a proper purpose; (2) it was relevant to a material issue in dispute;
(3) its probative value is substantially outweighed by its prejudicial effect; and (4) the trial court
gave an appropriate limiting instruction to the jury if so requested by the defendant.” Id.(citation omitted). We address each of these factors in turn.
As an initial matter, there is no dispute that evidence of Newsom’s involvement in Out of
the Black and Heritage was both relevant and offered for a proper purpose in Newsom I and
Newsom II, respectively. Here, Newsom placed his intent at issue in both trials. In Newsom I,
Newsom’s counsel stated in opening: “This case is about intent. . . . I submit to you that when
you listen to the evidence in this case, you will see that [Newsom] did not have intent to deceive
the investors.” Gov’t App. 2. Newsom’s counsel likewise stated in opening in Newsom II: “The
evidence will show that Mr. Newsom acted reasonably and in good faith, based on information
that he had from various sources.” Id. at 18. In these circumstances, evidence of similar acts
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was offered properly by the government and relevant to prove Newsom’s intent. See, e.g.,
United States v. Myerson, 18 F.3d 153, 166-67 (2d Cir. 1994) (concluding that evidence of prior
frauds was relevant and admissible to rebut defendant’s assertion that a recent divorce caused
him to engage in charged fraud).
The next question is whether the probative value of such evidence is outweighed by its
prejudicial effect. We have observed that evidence is unfairly prejudicial “only when it tends to
have some adverse effect upon a defendant beyond tending to prove the fact or issue that
justified its admission into evidence.” United States v. Figueroa, 618 F.2d 934, 943 (2d Cir.
1980); see also United States v. Roldan-Zapata, 916 F.2d 795, 804 (2d Cir. 1990) (holding that
evidence of similar acts was not unfairly prejudicial where it was not “any more sensational or
disturbing than the crimes” with which the defendant was charged). Newsom maintains that
admission of the “other acts” evidence was improper because the district court did not explicitly
balance the potential prejudice of that evidence against its probative value. We have held,
however, that “a mechanical recitation of the Rule 403 [balancing] analysis is not required.”
United States v. Pitre, 960 F.2d 1112, 1120 (2d Cir. 1992).
Newsom rejoins that the evidence of other acts was unfairly prejudicial because of the
similarity between Heritage and Out of the Black. In fact, however, “other acts” evidence is
considered to be probative if it is substantially similar to evidence of the charged conduct. See
United States v. Downing, 297 F.3d 52, 59 (2d Cir. 2002) (“[The defendant’s] own defense
strategy . . . made evidence of his previous participation in a substantially similar scheme highly
probative. That [the defendant] previously prepared false audit reports to facilitate a securities
fraud scheme tends strongly to belie his assertion that he did not understand the nature of the
scheme for which he was being prosecuted.”). By arguing that the “other acts” evidence was
“virtually identical to the conduct charged in the indictment being tried,” Def. Br. 37-38,
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Newsom essentially concedes that such evidence was highly probative of his intent to conceal
from investors the commissions he received in connection with the charged crimes. In any
event, we find that the proffered other-acts evidence was not “any more sensational” than the
evidence of the charged crimes. Roldan-Zapata, 916 F.2d at 804. Accordingly, the probative
value of the other-acts evidence was not outweighed by any prejudicial effect.
Finally, we reject Newsom’s contention that the district court’s limiting instructions
during both trials were “utterly ineffective.” Def. Br. 26. The district court correctly charged the
jury, in pertinent part, that “the defendant to whom that evidence relates is not on trial for those
acts. Accordingly, you may not consider the evidence of similar acts as a substitute for proof
that a defendant committed the crime charged. Nor may you consider this evidence as proof that
a defendant has a criminal personality or bad character.” Gov’t App. 16. Therefore, having
considered each of the Rule 404(b) factors, we conclude that the district court did not abuse its
discretion by admitting, in Newsom I, evidence of Newsom’s involvement in Out of the Black or,
in Newsom II, evidence of his involvement in Heritage.
We turn next to Newsom’s argument that admission in Newsom II of his convictions for
mail fraud and securities fraud in Newsom I violates the doctrine of collateral estoppel. “When
the defendant invokes collateral estoppel in the usual criminal case, the Government is seeking
to relitigate an issue in a second prosecution that was necessarily resolved in defendant’s favor in
an earlier proceeding.” Pinkney v. Keane, 920 F.2d 1090, 1097 (2d Cir. 1990). Here, there is no
support for Newsom’s contention that the government sought to relitigate in Newsom II any
issues decided in Newsom’s favor in Newsom I. Instead, the government sought admission of
Newsom’s prior convictions for purposes of impeachment. Although Newsom argues that the
government sought to admit the convictions under Rule 404(b), the government stated at trial
that it would seek to elicit evidence of the convictions only if Newsom testified. GA 20. In fact,
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it was Newsom’s counsel, not the government, who elicited such evidence from Newsom during
his direct examination in Newsom II. In any event, evidence of Newsom’s convictions for mail
fraud and securities fraud was admissible in Newsom II because they required “proof or
admission of an act of dishonesty or false statement” under Rule 609(a)(2).
We have considered Newsom’s remaining arguments and find them to be without merit.
For the reasons stated herein, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, CLERK
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