January 6, 2006
Stewart and Bacanovic Convictions Upheld
The Second Circuit upheld the convictions of Martha Stewart and Peter Bacanovic on conspiracy, false statement, perjury (Bacanovic only), and obstruction of an agency investigation charges in a published opinion (available on Findlaw here). The opinion is long -- 74 pages -- and goes into a fair amount of detail about the government's evidence because many of the legal issues relate to the weight of the evidence. After looking through it, it appears to me that the court deals with a number of discrete issues that are largely unremarkable, and only the first two issues in the opinion appear to be a potential basis for a Supreme Court appeal (assuming either defendant wishes to pursue a further appeal at this point).
The first issue the Second Circuit deals with concerns the application of the Supreme Court's 2004 decision in Crawford v. Washington, 541 U.S. 36 (2004), to a Confrontation Clause claim regarding the admission of statements by Stewart and Bacanovic in their interviews with the SEC and FBI as evidence against the other. The Court issued Crawford a short time after the jury verdict in the case, so the issue is reviewed only for "plain error," which is a very difficult standard for defendants to meet. For those whose eyes glaze over at the mere mention of the Confrontation Clause, suffice to say that Crawford does not permit the government to introduce out-of-court statements that are "testimonial," and Stewart and Bacanovic argued that the introduction of their statements violated the Confrontation Clause because they were made to government officials, and hence "testimonial" in nature. After Crawford, such statements cannot be introduced against another defendant without a chance to cross-examine the declarant (recall that neither Stewart nor Bacanovic testified). Crawford has caused a great deal of uncertainty about its application by not defining what is a "testimonial" statement, which is one reason why it could be an issue that might draw the Supreme Court's attention. The Second Circuit dealt with the defense argument in this way:
Here, Defendants do not have the temerity to argue that somehow Crawford precludes the government’s proof of the Defendants’ false portions of their statements because they were provided in a testimonial setting. Crawford expressly confirmed that the categorical exclusion of out-of-court statements that were not subject to contemporaneous cross-examination does not extend to evidence offered for purposes other than to establish the truth of the matter asserted. * * * Defendants object that certain truthful portions of their statements made during the course of the agreed-upon obstruction must be excluded because they are "testimonial." On the facts of this case, where the object of the conspiracy is to obstruct an investigation that is engaged in obtaining those testimonial statements of the conspirators, that objection must fail. * * *
As noted, the admissibility of such totally false statements, made in the course and in furtherance of the conspiracy, suffers no Sixth Amendment bar under Crawford. The truthful portions of statements in furtherance of the conspiracy, albeit spoken in a testimonial setting, are intended to make the false portions believable and the obstruction effective. Thus, the truthful portions are offered, not for the narrow purpose of proving merely the truth of those portions, but for the far more significant purpose of showing each conspirator’s attempt to lend credence to the entire testimonial presentation and thereby obstruct justice. It would be unacceptably ironic to permit the truthfulness of a portion of a testimonial presentation to provide a basis for keeping from a jury a conspirator’s attempt to use that truthful portion to obstruct law enforcement officers in their effort to learn the complete truth.
In other words, good effort, but it just can't work that way.
The second issue concerns the false testimony of Lawrence Stewart, the Chief Forensic Scientist at the Secret Service laboratory who testified about the ink used in a notation in Bacanovic's broker book about selling Stewart's ImClone shares "@60." Lawrence Stewart was later prosecuted and acquitted of perjury charges related to his testimony, and Stewart and Bacanovic argued that the government's use of perjured testimony violated their due process rights. False testimony in the government's case-in-chief is highly suspect, but the jury returned a not guilty verdict on the charge related to the false testimony. In light of that, the Second Circuit held:
Lawrence’s testimony did not influence the verdict on the counts of conviction. It pertained exclusively to Bacanovic’s "@60" worksheet and was used by the Government to support its position that the $60 stop-loss agreement was an after-the-fact fabrication. The jury acquitted Defendants of all of the counts and specifications relating to the existence of the agreement. Because the Government failed to persuade the jury to convict on the only counts to which Lawrence’s testimony related, that testimony cannot be considered capable of materially affecting the verdict on the counts to which it had no relevance.
The other issues relate to juror misconduct, the failure to give a jury charge for the defendants related to insider trading, evidentiary rulings excluding evidence of the legality of Stewart's sale of ImClone stock, and challenges by Bacanovic to his convictions (e.g., the "two-witness" rule for perjury). The issues are largely non-controversial, and the court's resolution of them is unlikely to be the basis for a Supreme Court appeal because they involve judgment calls by the district court in areas in which the trial judge has fairly wide discretion.
While the Stewart case has received an a great deal of media attention, the appellate opinion affirming the convictions shows that the legal issues are rather mundane, and certainly not of great legal importance except perhaps the Crawford and witness perjury questions. (ph)
UPDATE: Doug Berman has an interesting post (here) on the Sentencing Law & Policy blog on the pace of appellate review in non-capital cases like this one. (ph)
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Thank you for a concise report on a lengthy opinion. My understanding is that the Supreme Court recently granted cert to one or two cases involving the definition of "testimonial" that was left undefined by Crawford.
Posted by: DJ | Jan 6, 2006 3:11:42 PM
That's right. One case, Davis v. Washington, involves a 911 call, and the other, Hammon v. Indiana, involves a statement made to an officer at the scene of the crime. The Court will fill in some of the blanks on the meaning of "testimonial" in these cases, but with Walter Dellinger representing Martha, he may come up with a way to get the Supreme Court's attention on the Crawford issue related to coconspirator statements. Unlikely, but then that's true of most cert. petitions.
Posted by: Peter Henning | Jan 6, 2006 7:22:53 PM