16-898 (L) 16-939 (CON)

IN THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT ____________________

UNITED STATES OF AMERICA, Appellee,

v.

PAUL ROBSON, PAUL THOMPSON, TETSUYA MOTOMURA, TAKAYUKI YAGAMI, LEE STEWART,

Defendants,

ANTHONY ALLEN & ANTHONY CONTI, Defendants-Appellants. ____________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

District Court No. 1:14-cr-00272-JSR (Rakoff, J.) ______________

BRIEF FOR THE UNITED STATES ______________

ANDREW WEISSMANN Chief, Fraud Section

CAROL SIPPERLY Senior Litigation Counsel Fraud Section

BRIAN R. YOUNG Senior Trial Attorney Fraud Section Criminal Division Additional Counsel Listed Inside

LESLIE R. CALDWELL Assistant Attorney General

SUNG-HEE SUH Deputy Assistant Attorney General

JOHN M. PELLETTIERI Attorney, Appellate Section Criminal Division U.S. Department of Justice 950 Pennsylvania Ave., N.W., Rm. 1260 Washington, D.C. 20530 (202) 307-3766

ADDITIONAL COUNSEL FOR THE UNITED STATES

MICHAEL T. KOENIG Trial Attorney Antitrust Division U.S. Department of Justice

i

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................. i

TABLE OF AUTHORITIES ..................................................................... vii

INTRODUCTION ...................................................................................... 1

JURISDICTIONAL STATEMENT ............................................................. 2

STATEMENT OF THE ISSUES ................................................................. 2

STATEMENT OF THE CASE .................................................................... 4

I. Procedural Overview ................................................................. 4

II. Statement Of Facts .................................................................... 4

A. The LIBOR Is A Benchmark Interest Rate Devised By The British Bankers’ Association And Used In Financial Transactions Throughout The World.................. 4

B. Interest Rate Swaps Are Tied To The LIBOR .................... 6

C. Allen And Conti Are Responsible For Rabobank’s LIBOR Submissions ......................................................... 8

D. Allen And Conti Manipulate The LIBOR To Increase The Profitability Of Rabobank’s Interest Rate Swaps ........ 10

1. Manipulation Of The Dollar LIBOR ...................... 12

2. Manipulation Of The Yen LIBOR .......................... 15

3. The Scheme Continues Over Several Years ............. 16

III. Indictment And Trial ............................................................... 19

SUMMARY OF ARGUMENT ................................................................. 21

ARGUMENT ........................................................................................... 26

ii

I. Defendants’ Challenges To The Sufficiency Of The Evidence And The Jury Instructions On The Wire Fraud Counts Are Meritless ............................................................... 26

A. Background .................................................................... 26

1. The Wire Fraud Statute ......................................... 26

2. The Rule 29 Motions ............................................. 27

B. Standards Of Review ...................................................... 28

1. Sufficiency Of The Evidence .................................. 28

2. Jury Instructions .................................................... 29

3. The Sufficiency Of The Evidence Is Evaluated Against The Statutory Elements Of The Offense ..... 30

C. Argument ....................................................................... 31

1. There Were No Deficiencies In The Evidence Or Jury Instructions On The Scheme-To-Fraud Requirement Of The Wire Fraud Statute ................ 32

a. The Evidence Established That Allen And Conti Devised And Participated In A Scheme To Defraud ...................................... 33

b. The District Court Accurately Instructed The Jury On The Scheme-To-Defraud Requirement ................................................ 49

2. There Were No Deficiencies In The Evidence Or Jury Instructions On The Mental State Requirement Of The Wire Fraud Statute ................ 52

a. The Wire Fraud Statute Does Not Require Knowledge That The Conduct Was Unlawful .............................................. 53

iii

b. The Jury Instructions Accurately Conveyed The Requirements For Intent To Defraud .................................................. 56

c. Ample Evidence Established That Defendants Possessed The Requisite Mental State ................................................. 58

3. Ample Evidence Established Materiality................. 62

II. A Ten-Year Statute Of Limitations Applies To The Charged Offenses .................................................................................. 67

A. Background .................................................................... 67

B. Standard Of Review ........................................................ 68

C. Argument ....................................................................... 69

1. Ample Evidence Established That The Wire Fraud Affected An FDIC-Insured Institution .......... 69

2. The Jury Instructions Were Legally Correct And Any Error Was Harmless ....................................... 73

3. Defendants’ Statute-Of-Limitations Arguments Do Not Pertain To Their Conspiracy Convictions ........................................................... 76

III. There Was No Constructive Amendment Of The Indictment .... 76

A. Legal Standard ............................................................... 76

B. Standard Of Review ........................................................ 78

C. Argument ....................................................................... 78

IV. The District Court’s Evidentiary Rulings Were Not An Abuse Of Discretion Or Plainly Erroneous ................................ 81

A. Standard Of Review ........................................................ 81

B. Argument ....................................................................... 82

iv

1. The District Court Did Not Abuse Its Discretion in Controlling the Scope of Cross-Examination ....... 83

a. Background: Direct Examination Of The Counterparty Witnesses ................................ 83

b. Defendants Did Not Provide An Adequate Offer Of Proof For Much Of The Testimony They Now Claim Was Excluded ...................................................... 84

2. The Court’s In Limine Ruling Did Not Exclude Evidence That Defendants Now Contend They Would Have Introduced At Trial ........................... 91

a. Background: The Government’s Motion In Limine ..................................................... 91

b. The Parties Understood The Narrow Scope Of The Court’s In Limine Ruling ........ 93

c. The Court’s In Limine Ruling Did Not Preclude Expert Testimony Or Cross-Examination Of Michael DiTore ................... 94

3. The Evidence Defendants Now Claim They Would Have Introduced At Trial Would Not Have Made A Difference ....................................... 97

V. The District Court Did Not Abuse Its Discretion In Denying Defendants’ Motion To Compel John Ewan’s Deposition ....... 101

A. Standard of Review....................................................... 101

B. Background .................................................................. 101

1. Federal Rule Of Criminal Procedure 15 ................ 101

2. Defendants’ Motion To Compel A Deposition ...... 102

C. Argument ..................................................................... 103

v

VI. The District Court Correctly Denied Defendants’ Kastigar Motion .................................................................................. 107

A. Background .................................................................. 108

1. Legal Background: The Kastigar Decision ............. 108

2. U.K. And U.S. Authorities Separately Investigate Manipulation Of The LIBOR At Rabobank ............................................................ 109

3. The Justice Department Conducts Interviews And Enters Into A Deferred Prosecution Agreement With Rabobank .................................. 110

4. The FCA Temporarily Decides To Pursue Regulatory Proceedings Against Robson And Provides Him With Interview Transcripts ............. 111

5. Robson Is Indicted And Agrees To Plead Guilty And Cooperate With The Justice Department ....... 112

6. Defendants Are Indicted And The District Court Holds A Kastigar Hearing ........................... 113

7. The District Court Denies The Kastigar Motion ..... 114

B. Standard Of Review ...................................................... 116

C. Argument ..................................................................... 116

1. The Interviews Conducted By U.K. Authorities Do Not Implicate The Fifth Amendment .............. 118

2. Assuming The Fifth Amendment Applies, The District Court Correctly Concluded There Was No Violation ....................................................... 124

a. Robson’s Kastigar Testimony Established That His Trial Testimony And The Evidence Presented To The Grand Jury Were Not Tainted By His Exposure To Defendants’ FCA Testimony ...................... 124

vi

b. The Record Corroborated Robson’s Kastigar Testimony And Further Demonstrated A Lack Of Taint ................... 129

c. Comparisons Between Robson’s FCA Testimony And His Trial Testimony Do Not Demonstrate Taint ............................... 133

d. The District Court Applied The Correct Legal Standard ........................................... 137

3. Any Error Was Harmless Beyond A Reasonable Doubt ................................................................. 140

VII. There Is No Basis To Reassign This Case To A Different District Judge In The Event Of A Remand .............................. 141

CONCLUSION....................................................................................... 143

CERTIFICATE OF COMPLIANCE ....................................................... 144

CERTIFICATE OF SERVICE ................................................................ 145

vii

TABLE OF AUTHORITIES

Cases

Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184 (2013)............... 62

Arizona v. Fulminante, 499 U.S. 279 (1991) ................................................. 121

Barber v. Thomas, 560 U.S. 474 (2010) ......................................................... 75

Bram v. United States, 168 U.S. 532 (1897) .................................... 120, 121, 122

Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) ............................... 98

Brulay v. United States, 383 F.2d 345 (9th Cir. 1967) .................................... 122

Bryan v. United States, 524 U.S. 184 (1998) ................................................... 53

Colorado v. Connelly, 479 U.S. 157 (1986) ............................................ 121, 122

Feldman v. United States, 322 U.S. 487 (1944) ............................................. 119

Fortunato v. Ford Motor Co., 464 F.2d 962 (2d Cir. 1972) ............................... 85

Garrity v. New Jersey, 385 U.S. 493 (1967) .................................................. 123

Gregory v. United States, 253 F.2d 104 (5th Cir. 1958) .................................... 46

Hammerschmidt v. United States, 265 U.S. 182 (1924) ..................................... 32

Hedgpeth v. Pulido, 555 U.S. 57 (2008) .......................................................... 75

Henry v. Wyeth Pharm., Inc., 616 F.3d 134 (2d Cir. 2010)............................... 82

Hoffa v. United States, 385 U.S. 293 (1966) .................................................. 118

In re Terrorist Bombings of U.S. Embassies in E. Africa, 552 F.3d 177 (2d Cir. 2008) ........................................................................ 118, 120, 122

Jackson v. Virginia, 443 U.S. 307 (1979) ........................................................ 30

Jones v. Berry, 880 F.2d 670 (2d Cir. 1989) .............................................. 85, 87

Kastigar v. United States, 406 U.S. 441 (1972) ...........................................passim

viii

Liparota v. United States, 471 U.S. 419 (1985) ................................................ 74

LoSacco v. City of Middletown, 71 F.3d 88 (2d Cir. 1995) .............................. 117

Loughrin v. United States, 134 S. Ct. 2384 (2014) ...................................... 32, 46

McNally v. United States, 483 U.S. 350 (1987) .......................................... 27, 32

Mickey v. Ayers, 606 F.3d 1223 (9th Cir. 2010) ............................................ 121

Miranda v. Arizona, 384 U.S. 436 (1966) ..................................................... 120

Musacchio v. United States, 136 S. Ct. 709 (2016) ..................... 30, 31, 68, 72, 76

Neder v. United States, 527 U.S. 1 (1999) ..................................................passim

O’Rourke v. United States, 587 F.3d 537 (2d Cir. 2009) ................................... 97

Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund, 135 S. Ct. 1318 (2015) ............................................................................ 43

Oregon v. Elstad, 470 U.S. 298 (1985) ......................................................... 120

Pasquantino v. United States, 544 U.S. 349 (2005)................................ 33, 46, 98

Pereira v. United States, 347 U.S. 1 (1954) ..................................................... 27

Smith v. United States, 133 S. Ct. 714 (2013) ................................................. 75

Sprint/United Mgmt. Co. v. Mendelsohn, 552 U.S. 379 (2008) .......................... 82

Stewart v. Wyoming Cattle Ranche Co., 128 U.S. 383 (1888) ............................ 46

United States ex rel. O’Donnell v. Countrywide Home Loans, Inc., 822 F.3d 650 (2d Cir. 2016) .......................................................................... 31

United States v. Agrawal, 726 F.3d 235 (2d Cir. 2013) ............................... 77, 78

United States v. Al Kassar, 660 F.3d 108 (2d Cir. 2011) ................................... 81

United States v. Altman, 48 F.3d 96 (2d Cir. 1995) ......................................... 33

United States v. Amrep Corp., 560 F.2d 539 (2d Cir. 1977).......................... 43, 44

United States v. Arboleda, 20 F.3d 58 (2d Cir. 1994) ....................................... 40

ix

United States v. Autuori, 212 F.3d 105 (2d Cir. 2000) ................................passim

United States v. Awadallah, 436 F.3d 125 (2d Cir. 2006) ............................... 143

United States v. Balsys, 524 U.S. 666 (1998) .......................................... 118, 119

United States v. Bell, 584 F.3d 478 (2d Cir. 2009) ........................................... 81

United States v. Binday, 804 F.3d 558 (2d Cir. 2015) ................ 26, 27, 74, 77, 80

United States v. Blau, 159 F.3d 68 (2d Cir. 1998) ......................................... 116

United States v. Bouyea, 152 F.3d 192 (2d Cir. 1998) ...................................... 69

United States v. Carlo, 507 F.3d 799 (2d Cir. 2007) ......................................... 52

United States v. Clemente, 22 F.3d 477 (2d Cir. 1994) ..................................... 76

United States v. Cloud, 872 F.2d 846 (9th Cir. 1989) ....................................... 54

United States v. Cohen, 260 F.3d 68 (2d Cir. 2001) ....................................... 101

United States v. Colton, 231 F.3d 890 (4th Cir. 2000) ...................................... 46

United States v. Corsey, 723 F.3d 366 (2d Cir. 2013) .................................. 63, 99

United States v. Crandall, 525 F.3d 907 (9th Cir. 2008) ................................... 53

United States v. Cuevas, 496 F.3d 256 (2d Cir. 2007) .................................... 116

United States v. David, 681 F.3d 45 (2d Cir. 2012) ....................................... 116

United States v. Delano, 55 F.3d 720 (2d Cir. 1995) ................................... 29, 58

United States v. DeMott, 513 F.3d 55 (2d Cir. 2008) ..................................... 141

United States v. Desposito, 704 F.3d 221 (2d Cir. 2013) ................................... 82

United States v. Dupre, 462 F.3d 131 (2d Cir. 2006)........................................ 76

United States v. Dynalectric Co., 859 F.2d 1559 (11th Cir. 1988) .................... 133

United States v. Facen, 812 F.3d 280 (2d Cir. 2016) ........................................ 31

United States v. Ferguson, 676 F.3d 260 (2d Cir. 2011) .................................... 75

x

United States v. Finnerty, 533 F.3d 143 (2d Cir. 2008) ............................... 48, 49

United States v. Florez, 447 F.3d 145 (2d Cir. 2006) ................................... 68, 69

United States v. Friedman, 998 F.2d 53 (2d Cir. 1993) ............................. 61, 133

United States v. Gallo, 863 F.2d 185 (2d Cir. 1988)....................................... 133

United States v. Gay, 967 F.2d 322 (9th Cir. 1992) ......................................... 54

United States v. George, 386 F.3d 383 (2d Cir. 2004) ....................................... 53

United States v. Goldblatt, 813 F.2d 619 (3d Cir. 1987) ................................... 33

United States v. Golitschek, 808 F.2d 195 (2d Cir. 1986) ............................. 54, 55

United States v. Greenberg, No. 14- 4208, 2016 WL 4536514 (2d Cir. Aug. 31, 2016) ....................................................................................... 64

United States v. Greer, 631 F.3d 608 (2d Cir. 2011) ......................................... 28

United States v. Guadagna, 183 F.3d 122 (2d Cir. 1999) .................................. 27

United States v. Harris, 821 F.3d 589 (5th Cir. 2016) ...................................... 46

United States v. Harry, 816 F.3d 1268 (10th Cir. 2016) ................................... 82

United States v. Heinz, 790 F.3d 365 (2d Cir. 2015) ................................... 69, 73

United States v. Helmsley, 941 F.2d 71 (2d Cir. 1991) ..................................... 98

United States v. Hinton, 543 F.2d 1002 (2d Cir. 1976)................................... 133

United States v. Jackson, 196 F.3d 383 (2d Cir. 1999) ..................................... 30

United States v. James, 712 F.3d 79 (2d Cir. 2013) .......................................... 82

United States v. Johnpoll, 739 F.2d 702 (2d Cir. 1984) .................................. 101

United States v. Klein, 476 F.3d 111 (2d Cir. 2007) .................................... 26, 46

United States v. Kurlemann, 736 F.3d 439 (6th Cir. 2013) ............................... 46

United States v. Lanier, 520 U.S. 259 (1997) .................................................. 75

xi

United States v. Leonard, 529 F.3d 83 (2d Cir. 2008) ..................................... 100

United States v. Litvak, 808 F.3d 160 (2d Cir. 2015) ................................ 95, 106

United States v. Males, 459 F.3d 154 (2d Cir. 2006) ........................................ 52

United States v. Marcus, 560 U.S. 258 (2010) ................................................. 29

United States v. Martin, 411 F. Supp. 2d 370 (S.D.N.Y. 2006) ........................ 47

United States v. Massa, 740 F.2d 629 (8th Cir. 1984) ...................................... 56

United States v. McGinn, 787 F.3d 116 (2d Cir. 2015) ..................................... 55

United States v. Mechanik, 475 U.S. 66 (1986) .............................................. 140

United States v. Milstein, 401 F.3d 53 (2d Cir. 2005) ....................................... 80

United States v. Morgan, 385 F.3d 196 (2d Cir. 2004) ..................................... 29

United States v. Morgenstern, 933 F.2d 1108 (2d Cir. 1991) ............................. 47

United States v. Morrison, 153 F.3d 34 (2d Cir. 1998) ..................................... 60

United States v. Mullins, 613 F.3d 1273 (10th Cir. 2010) ............................ 70, 73

United States v. Murdock, 284 U.S. 141 (1931) ............................................. 119

United States v. Nanni, 59 F.3d 1425 (2d Cir. 1995) ....................... 108, 128, 140

United States v. Nemes, 555 F.2d 51 (2d Cir. 1977) ....................................... 129

United States v. North, 910 F.2d 843 (D.C. Cir. 1990) .................................. 139

United States v. North, 920 F.2d 940 (D.C. Cir. 1990) .................................. 128

United States v. O’Hagan, 521 U.S. 642 (1997) ............................................... 45

United States v. Orlandez-Gamboa, 320 F.3d 328 (2d Cir. 2003) ..................... 121

United States v. Parse, 789 F.3d 83 (2d Cir. 2015)........................................... 52

United States v. Patane, 542 U.S. 630 (2004) ................................................ 120

United States v. Pelletier, 898 F.2d 297 (2d Cir. 1990) ................................... 138

xii

United States v. Pierce, 224 F.3d 158 (2d Cir. 2000) ........................................ 33

United States v. Pimentel, 346 F.3d 285 (2d Cir. 2003) .................................... 30

United States v. Poindexter, 951 F.2d 369 (D.C. Cir. 1991) .............. 126, 127, 128

United States v. Porcelli, 865 F.2d 1352 (2d Cir. 1989) .................................... 53

United States v. Precision Med. Labs., Inc., 593 F.2d 434 (2d Cir. 1978) ............. 54

United States v. Quattrone, 441 F.3d 153 (2d Cir. 2006) ................................ 142

United States v. Quinones, 511 F.3d 289 (2d Cir. 2007) ................................... 29

United States v. Ragosta, 970 F.2d 1085 (2d Cir. 1992) .............................. 33, 46

United States v. Rahman, 189 F.3d 88 (2d Cir. 1999) ...................................... 60

United States v. Reifler, 446 F.3d 65 (2d Cir. 2006) ......................................... 33

United States v. Rigas, 490 F.3d 208 (2d Cir. 2007) ........................... 77, 81, 106

United States v. Rivera, 799 F.3d 180 (2d Cir. 2015) ....................................... 30

United States v. Rivieccio, 919 F.2d 812 (2d Cir. 1990) .................................. 140

United States v. Robin, 553 F.2d 8 (2d Cir. 1977) ......................................... 141

United States v. Sabhnani, 599 F.3d 215 (2d Cir. 2010) ........................ 28, 29, 30

United States v. Salameh, 152 F.3d 88 (2d Cir. 1998) ............................. 121, 122

United States v. Salmonese, 352 F.3d 608 (2d Cir. 2003) .................................. 77

United States v. Schlisser, 168 Fed. Appx. 483 (2d Cir. 2006) .......................... 56

United States v. Schmidgall, 25 F.3d 1533 (11th Cir. 1994) ............................ 135

United States v. Seidling, 737 F.3d 1155 (7th Cir. 2013) .................................. 65

United States v. Sewell, 252 F.3d 647 (2d Cir. 2001) ....................................... 52

United States v. Skelly, 442 F.3d 94 (2d Cir. 2006) .......................................... 48

United States v. Slough, 641 F.3d 544 (D.C. Cir. 2011) ........... 128, 129, 130, 139

xiii

United States v. Snow, 462 F.3d 55 (2d Cir. 2006) ........................................ 122

United States v. Solomon, 509 F.2d 863 (2d Cir. 1975) .................................. 123

United States v. Stavroulakis, 952 F.2d 686 (2d Cir. 1992) ............................... 27

United States v. Stevens, Nos. 97-1260, 97-1586 & 98-1348, 2000 WL 419938 (2d Cir. 2000) ..................................................................... 55

United States v. Stockheimer, 157 F.3d 1082 (7th Cir. 1998) ............................. 54

United States v. Tagliaferri, 648 Fed. Appx. 99 (2d Cir. 2016) ......................... 29

United States v. Tantalo, 680 F.2d 903 (2d Cir. 1982) ................................... 129

United States v. Thomas, 377 F.3d 232 (2d Cir. 2004) ................................ 27, 88

United States v. Trapilo, 130 F.3d 547 (2d Cir. 1997) ........................... 27, 32, 46

United States v. Vilar, 729 F.3d 62 (2d Cir. 2013) ........................................... 77

United States v. Weissman, 195 F.3d 96 (2d Cir. 1999) .................................. 126

United States v. Welch, 455 F.2d 211 (2d Cir. 1972) ..................................... 122

United States v. Whiting, 308 F.2d 537 (2d Cir. 1962) ................................... 101

United States v. Whitten, 610 F.3d 168 (2d Cir. 2010) ..................................... 91

United States v. Wilson, 699 F.3d 235 (2d Cir. 2012) .................................... 116

United States v. Wolf, 813 F.2d 970 (9th Cir. 1987) ...................................... 122

United States v. Worthington, 822 F.2d 315 (2d Cir. 1987)............................... 42

United States v. Yousef, 327 F.3d 56 (2d Cir. 2003) ....................................... 122

Williams v. United States, 458 U.S. 279 (1982) ............................................... 42

Statutes, Rules, and Constitutional Provisions

15 U.S.C. § 77k(a) ...................................................................................... 43

15 U.S.C. § 78ff .................................................................................... 53, 56

xiv

18 U.S.C. § 20(1) ....................................................................................... 68

18 U.S.C. § 924(a)(1)(D) ............................................................................ 53

18 U.S.C. § 1014 ........................................................................................ 42

18 U.S.C. § 1341 ................................................................................... 27, 53

18 U.S.C. § 1343 ................................................................................. passim

18 U.S.C. § 1344 ........................................................................................ 53

18 U.S.C. § 1344(1) .................................................................................... 27

18 U.S.C. § 1349 .................................................................................... 4, 19

18 U.S.C. § 3231 .......................................................................................... 2

18 U.S.C. § 3282 ........................................................................................ 67

18 U.S.C. § 3290 ........................................................................................ 68

18 U.S.C. § 3293(1) .................................................................................... 76

18 U.S.C. § 3293(2) ......................................................................... 67, 69, 74

18 U.S.C. § 6002 ...................................................................................... 108

18 U.S.C. § 6003 ...................................................................................... 108

22 U.S.C. § 2778(b)(2) ................................................................................ 54

28 U.S.C. § 1291 .......................................................................................... 2

Fed. R. App. P. 4 ......................................................................................... 2

Fed. R. Crim. P. 15 ......................................................................... 3, 24, 101

Fed. R. Crim. P. 29 ......................................................................... 27, 28, 31

Fed. R. Evid. 103 advisory committee’s note ............................................... 82

Fed. R. Evid. 103(a)(2) ............................................................................... 84

Fed. R. Evid. 103(e) ................................................................................... 82

xv

Fed. R. Evid. 403 ............................................................................ 82, 92, 97

Second Circuit Rule 32.1.1(b)(2) ................................................................. 55

U.S. Const. amend. V .............................................................................. 108

Other Authorities

1 Weinstein’s Federal Evidence § 103.20 (2d ed. 2016) ..................................... 85

2 Wayne R. LaFave, et al., Crim. Proc. § 6.10(d) (4th ed. 2015) ................... 122

3 Leonard B. Sand, et al., Modern Federal Jury Instructions: Criminal, Instruction 44-5 (2016) ........................................................................... 56

W. Page Keeton et al., Prosser & Keeton on Torts § 109 (5th ed. 1984) ............. 43

Restatement (Second) of Torts § 525 cmt. c (1977) ....................................... 43

Restatement (Second) of Torts § 525 cmt. d (1977) ................................. 43, 45

Restatement (Second) of Torts § 529 (1977) ................................................. 46

Restatement (Second) of Torts § 538 (1977) ................................................. 62

Restatement (Second) of Torts § 538A cmt. a (1977) .................................... 45

Restatement (Third) of Torts: Liab. for Econ. Harm § 14 Tentative Draft No. 2 cmt. a (2014) ....................................................................... 51

I Oxford English Dictionary 211 (2d ed. 1989) ................................................. 73

Chad Bray, Ex-Trader Tom Hayes Ordered to Pay $1.2 Million in Libor Case, N.Y. Times, Mar. 23, 2016 .......................................................... 102

1

INTRODUCTION

Defendants Anthony Allen and Anthony Conti devised and participated

in a scheme to manipulate the London Interbank Offered Rate (LIBOR), a

benchmark interest rate calculated by the British Bankers’ Association (BBA)

and used by participants in financial transactions throughout the world.

The fraudulent scheme was simple. Defendants were responsible for

submitting to the BBA a daily estimate of the interest rate that Rabobank (their

employer, a large international bank) could obtain if it were to borrow money

from another bank on that day. Their submission was then averaged with

submissions from other banks to calculate that day’s LIBOR. Every morning,

defendants arrived at a number that estimated Rabobank’s borrowing costs, as

required by the BBA, but they often did not convey that number to the BBA—

instead “biasing” or “bumping” the number in a direction that they knew

would benefit Rabobank traders who had entered into LIBOR-dependent

financial transactions. The deceptive submissions enriched Rabobank and its

traders but were costly to Rabobank’s counterparties in those transactions,

which included numerous institutions in the United States.

Allen and Conti were convicted of wire fraud and conspiracy to commit

wire fraud and bank fraud. Their convictions should be affirmed.

2

JURISDICTIONAL STATEMENT

The district court had jurisdiction over this criminal case under 18

U.S.C. § 3231. The court entered judgments on March 18, 2016. SPA 66-77.1

Defendants filed timely notices of appeal on March 23 and March 28, 2016. JA

715-20; see Fed. R. App. P. 4(b)(1)(A)(i). This Court has jurisdiction under 28

U.S.C. § 1291.

STATEMENT OF THE ISSUES

1. Whether the evidence sufficiently established the elements of wire

fraud, in violation of 18 U.S.C. § 1343, and whether the district court’s jury

instructions accurately conveyed the elements of wire fraud to the jury;

specifically:

a. Whether (i) a reasonable jury could conclude that

defendants devised or participated in a scheme to defraud, and (ii) the district

court properly instructed the jury on the requirements of a scheme to defraud.

1 “SPA” refers to the Special Appendix defendants submitted with their

appellate brief. “JA” refers to the Joint Appendix. “GSA” refers to the Government’s Supplemental Appendix, which contains the trial exhibits cited in this brief. “Dkt.” refers to a district court docket entry. “Tr.” refers to the consecutively-paginated trial transcript. “Kastigar Tr.” refers to the consecutively-paginated transcript of the Kastigar hearing, and “Kastigar GX” refers to a government exhibit at that hearing. “Br.” refers to defendants’ consolidated brief on appeal. “Amicus Br.” refers to the amicus brief filed by the New York Council of Defense Lawyers.

3

b. Whether (i) a reasonable jury could conclude that

defendants possessed an intent to defraud, and (ii) the district court properly

instructed the jury on the requisite mental state for wire fraud.

c. Whether a reasonable jury could conclude that the deceptive

misrepresentations underlying the scheme to defraud were material.

2. Whether a ten-year statute of limitations applied to defendants’

wire fraud offenses.

3. Whether the government’s trial evidence and the district court’s

jury instructions constructively amended the wire fraud charges alleged in the

indictment.

4. Whether the district court erroneously excluded evidence that was

important to the defense.

5. Whether the district court abused its discretion in denying

defendants’ motion under Fed. R. Crim. P. 15 to depose a potential witness in

the United Kingdom.

6. Whether the district court correctly denied defendants’ Kastigar

motion.

7. Whether the case should be reassigned to a different district judge

in the event of a remand.

4

STATEMENT OF THE CASE

I. Procedural Overview

After a jury trial in the United States District Court for the Southern

District of New York, defendants Anthony Allen and Anthony Conti were

convicted on one count of conspiracy to commit wire fraud and bank fraud, in

violation of 18 U.S.C. § 1349, and eight substantive counts of wire fraud, in

violation of 18 U.S.C. § 1343. SPA 66-67, 72-73. Allen was also convicted on

ten additional substantive counts of wire fraud. SPA 66-67. Allen was

sentenced to 24 months of imprisonment. SPA 68. Conti was sentenced to a

year and a day of imprisonment. SPA 74.

II. Statement Of Facts

The evidence at trial, construed in the light most favorable to the

verdicts, established the following.

A. The LIBOR Is A Benchmark Interest Rate Devised By The British Bankers’ Association And Used In Financial Transactions Throughout The World

Banks borrow cash (in different currencies) from other banks through

what is called the “interbank market.” Tr. 143-45, 320. The London Interbank

Offered Rate (LIBOR) is a benchmark interest rate that is intended to reflect

interest rates in the interbank market on any given day. Tr. 117, 138-39, 143.

During the time period relevant to this case, the LIBOR was administered by a

5

trade group, the British Bankers’ Association (BBA), which published the

LIBOR each day for a number of different currencies (including the dollar and

the yen) and a number of different loan durations (called “tenors”). Tr. 141.

As the administrator of the LIBOR, the BBA determined the method for

calculating the benchmark rate. Tr. 143. For each currency, the BBA picked a

panel of banks, typically established institutions that were active in the

interbank market and had a large presence in London. Tr. 143, 987. The dollar

LIBOR panel, for example, consisted of 16 banks, including Rabobank. Tr.

143, 146-47. Every day, the BBA required each panel member to submit an

honest and truthful estimate of the best interest rate the bank could obtain if it

were to borrow money from another bank at around 11 a.m. London time. Tr.

143-45, 1073. The BBA specifically instructed each panel member to report

“the rate at which it could borrow funds, were it to do so by asking for and

then accepting inter-bank offers in reasonable market size just prior to” 11:00

a.m. London time. GSA 96. The panel banks submitted that figure each

morning for loans of different tenors (e.g., one month, three months, six

months, and a year). Tr. 145, 155-56, 305.

Each panel bank designated someone within its organization to collect

the relevant information and send the figures to the BBA. Tr. 145. The BBA

sorted the submitted numbers by size, eliminated the four highest and the four

6

lowest submissions, and then averaged the remaining eight submissions. Tr.

146, 321. The resulting number became the LIBOR fixed rate and was released

to the public daily. Tr. 146. The BBA publicly published its method for

calculating the LIBOR, and that method remained the same throughout the

relevant period in this case. Tr. 147-49.

The LIBOR was (and is) used in transactions throughout the financial

system and across the world. Tr. 128-30, 139-40, 142-43. The LIBOR is often

used, for example, to set the terms of different types of financial products,

including certain types of derivative contracts, such as interest rate futures and

interest rate swaps. Tr. 137, 305, 321.

B. Interest Rate Swaps Are Tied To The LIBOR

An interest rate swap is an agreement between two parties in which one

agrees to pay a fixed interest rate on some agreed-upon notional amount, while

the other party agrees to pay a floating rate (usually tied to the LIBOR) on that

same amount. Tr. 122, 150, 304-05, 648-49. The two sides agree to exchange

payments on agreed-upon dates over the course of an agreed-upon time period.

Tr. 122, 305-06, 310-11. An interest rate swap agreement therefore will specify

the notional amount; the duration of the agreement; the fixed rate paid by one

party; the benchmark rate (typically the LIBOR) used to determine the floating

rate paid by the other party; the dates on which the floating rate is reset (often

7

called the “fixing” or “fixing date”); and the dates of the payments. Tr. 131-32,

140-41, 816-19; see, e.g., GSA 103-08 (swap agreement between Rabobank and

Citibank).

A trader might enter into an interest rate swap for speculative purposes,

i.e., to make money, if he or she thinks that interest rates will move in a

particular direction. Tr. 123-24. A trader who thinks interest rates are going to

fall would agree to pay the floating rate (LIBOR), while a trader who thinks

interest rates are going to rise would agree to pay the fixed rate. Tr. 123-26,

306, 309-10, 311.

A party may also enter into an interest rate swap in order to manage risk,

i.e., to “hedge.” Tr. 126-27, 135-36. A company that funds its operations

through a loan with a floating interest rate tied to the LIBOR, for example, is

exposed to the risk that the LIBOR will increase. Tr. 126-27. The company can

use an interest rate swap as, in effect, an insurance contract against the risk

that interest rates will increase, effectively transforming the company’s initial

loan agreement into a fixed rate loan. Tr. 127-28. Traders may also use interest

rate swaps to hedge, in an attempt to “balance their book” and reduce their

exposure to changing interest rates. Tr. 133, 135-36.

8

Interest rate swaps are widely used in the marketplace. Tr. 128-29, 132-

33. Between 2007 and 2010, the cumulative notional value of interest rate

swaps tied to the dollar or yen LIBOR averaged about $160 trillion. Tr. 142-43.

The LIBOR definition devised by the BBA did not allow a panel bank,

when submitting its honest estimate of its borrowing costs, to take into account

the submission’s effect on the profitability of interest rate swaps held by the

bank’s traders. Tr. 150, 250-52, 684, 1204, 1206, 1208-09, 1277-78. Rather, the

definition strictly provided that a panel bank’s submission should reflect an

honest and truthful estimate of the best interest rate the bank could obtain if it

were to borrow money from another bank at around 11 a.m. London time on

that particular day. Tr. 150, 1204.

C. Allen And Conti Are Responsible For Rabobank’s LIBOR Submissions

During the time periods relevant to this case, Rabobank was appointed

by the BBA to the yen and dollar LIBOR panels. Tr. 146-47. Anthony Allen

started at Rabobank in 1998 as a cash trader, borrowing and lending cash (U.S.

dollars) on behalf of the bank. Tr. 172-74, 1162-63. He was also responsible for

determining and submitting Rabobank’s dollar LIBOR submissions to the

BBA until his promotion in 2005, when he became Global Head of Liquidity

and Finance, with responsibility for supervising other cash traders at

Rabobank. Tr. 315-16, 650-51, 1162-64. Upon his promotion, Allen transferred

9

responsibility for Rabobank’s dollar LIBOR submissions to Anthony Conti.

Tr. 315-16, 1171-72.

Conti was a cash trader who worked under Allen’s supervision and, as

noted, was responsible for Rabobank’s dollar LIBOR submissions starting in

2005. Tr. 175-76, 183, 651-52. If Conti was out of the office or otherwise

unavailable, responsibility for the dollar LIBOR submission fell to another

cash trader, Damon Robbins. Tr. 191, 317-18. If neither Conti nor Robbins

was available, responsibility for the dollar LIBOR submission reverted back to

Allen. Tr. 184-85, 191, 235-36. Paul Robson also was a cash trader who

worked under Allen’s supervision and was responsible for Rabobank’s yen

LIBOR submissions. Tr. 300-02, 315-16, 599-600. When Robson was

unavailable, responsibility for the yen LIBOR submission fell to another cash

trader, Paul Butler. Tr. 335-36, 599.

The cash traders—including Allen, Conti, and Robson—often used

interest rate swaps to mitigate risk, but also for speculative purposes as well.

Tr. 175-77, 301-02, 307, 316-18, 650. Derivatives traders at Rabobank also

entered into (or “traded”) interest rate swaps agreements, generally on a

speculative basis with the hope of profiting from the transactions. Tr. 166-71,

317. Among the Rabobank derivatives traders who traded interest rate swaps

were Lee Stewart, who traded dollar-based swaps out of Rabobank’s London

10

office, Tr. 166, 317; Christian Schluep, who traded dollar-based swaps out of

the bank’s New York office, Tr. 178; Paul Thompson, who traded dollar- and

yen-based swaps out of the Hong Kong office, Tr. 201-02, 319, 650; and

Tetsuya Motomura and Takayuki Yagami, who both traded yen-based swaps

out of the Tokyo office, Tr. 318-19, 645-46, 751.2

D. Allen And Conti Manipulate The LIBOR To Increase The Profitability Of Rabobank’s Interest Rate Swaps

As described, Conti and Robson were principally responsible for

Rabobank’s dollar and yen LIBOR submissions to the BBA, with their

responsibilities occasionally covered by Butler, Robbins, or Allen. As also

described, the LIBOR submitter’s task was to convey to the BBA his estimate

of the rates at which Rabobank could borrow money in those currencies, for

different tenors, as of 11 a.m. London time. Rabobank’s LIBOR submissions

were transmitted electronically at around 11 a.m. each day. Tr. 320, 1165.

In order to accomplish that task, the dollar and yen LIBOR submitters—

usually Conti and Robson, but sometimes Allen—collected market

information each morning. Tr. 185. As cash traders, they possessed relevant

market knowledge and expertise. Tr. 1168. The LIBOR submitters also

2 Allen, Conti, Robson, Robbins, Butler, and Stewart all worked in close

proximity to each other at an open desk in Rabobank’s London office. Tr. 180-82, 313-15; GSA 93 (seating chart).

11

collected information from outside sources, including cash brokers, i.e., brokers

who acted as middlemen for banks borrowing and lending cash. Tr. 185, 354,

515-17, 1084-85, 1165-66. Armed with that information, the submitters arrived

at an estimate that would figure into the daily LIBOR. Tr. 183, 333-34.

According to Allen, the process was “straightforward.” Tr. 1168-69.3

Rabobank’s LIBOR submitters, however, did not always—or even

usually—transmit their honest estimate to the BBA, but instead sent in a

different number that would benefit Rabobank traders. Tr. 185-90, 252-53, 320-

22, 605. Before transmitting their interest-rate estimates, the submitters—

usually Conti and Robson, but sometimes Allen—received information from

traders whose positions (typically interest rate swaps) would be affected by that

day’s LIBOR. Tr. 187-88, 192, 324-27, 361, 391-93, 653. The submitters then

changed the number that they otherwise would have submitted to the BBA,

biasing their submission to the Rabobank trader’s advantage. Tr. 321-22, 414,

605; see, e.g., Tr. 203-04; GSA 14 (Conti to Thompson: “where do you like to

3 Rabobank did not necessarily borrow money from another bank on any

particular day, let alone borrow money shortly before 11 a.m. that day, see Tr. 514, 1169, and therefore determining Rabobank’s LIBOR submission required an estimate of the interest rates Rabobank would be able to obtain if it were to borrow money from another bank, rather than an evaluation of the interest rates another bank actually offered to Rabobank, Tr. 407-14; GSA 21, 73-78.

12

see” the LIBOR); Tr. 244-46; GSA 120 (Allen to Thompson: “[w]here do you

want” the LIBORs; Thompson to Allen: “[s]midgen lower”).4

1. Manipulation Of The Dollar LIBOR

The derivatives trader Lee Stewart (nicknamed the “Ambassador”)

traded interest rate swaps tied to the dollar LIBOR and regularly informed

Conti if he had a “fixing” that would benefit from either a high or low

LIBOR—meaning that, on that day, the floating rate on one of his swaps

would be “fixed” by reference to that day’s LIBOR. Tr. 167, 186-87, 191-95,

234-35, 246-47, 327. If Stewart held a position, for example, in an interest rate

swap in which a counterparty agreed to pay LIBOR, Conti—at Stewart’s

request, and in order to benefit Stewart—often sent in an inflated LIBOR

submission that did not reflect his honest estimate of Rabobank’s borrowing

costs. Tr. 187-89, 211-12, 257; GSA 20, 111, 119. According to Stewart, Conti

assisted him “quite a lot” in this manner. Tr. 189; see Tr. 211-12; GSA 20

(Conti email, stating that Stewart “had big fixing so we help him today”); Tr.

230-31; GSA 5 (Conti explaining that Stewart had a “fixing” and so the

4 Rabobank traders sometimes held positions that contradicted each

other, with one requesting a high LIBOR and another a low one. Tr. 239-40, 334. In that case, the submitter had to determine whose request to act upon, often giving preference to the trader with the greatest exposure. Tr. 189-90, 334-35, 653, 794.

13

LIBOR submission was “low”). If Conti or Robbins was unavailable, Allen

received and acted on Stewart’s requests. Tr. 191, 193, 235-37.5

Conti and Allen also received and accommodated requests from others

who traded dollar-based interest rate swaps, including Christian Schluep and

Paul Thompson. On August 13, 2007, for example, Schluep emailed Conti

saying he was “GONNA NEED A FRICKIN HIGH 6 MTH FIX

TOMORROW IF OK WITH U ..... 5.42?” GSA 15; Tr. 207-11. Conti

instructed Schluep to send him a reminder the next day. GSA 15. Schluep

complied, and again requested a submission of 5.41 or 5.42. GSA 16. Allen

knew about Schluep’s request, informing another trader, shortly after 10 a.m.,

that Rabobank’s six-month LIBOR submission would be 5.42, because “i think

thats [sic] what christian [Schluep] needs.” GSA 17. Rabobank’s submission

that day was, in fact, 5.42. Tr. 867-68; GSA 47.

Conti and Allen similarly accommodated trader requests on many other

occasions. For example:

5 Once, when Conti, Robbins, and Allen were all unexpectedly absent at

the 11 a.m. deadline, Robson (the yen LIBOR submitter) was required on short notice to determine and transmit the bank’s dollar LIBOR submissions. Tr. 401-02. Stewart later became angry when he learned that Robson had submitted the numbers without first consulting him. Tr. 402. Allen told Robson not to worry but instructed Robson to check with Stewart in the future. Tr. 402.

14

• On October 6, 2006, Schluep sent a message to Allen stating, “HELLO SKIPPER, CAN U PUT 3S AT 37 FOR ME TOMORROW PLS ..... MANY THANKS.” GSA 8; Tr. 236-37. Allen replied, “NEVER IN DOUBT!” GSA 8.

• On October 31, 2006, Schluep asked Conti for a “SMALL FAVOUR AS USUAL, LOW 2S HIGH 3S IF POSSIBLE MATEY,” meaning he wanted a low two-month LIBOR and a high three-month LIBOR. GSA 116; Tr. 199-200. Conti responded, “Will do matey on the libors.” GSA 116.

• On November 29, 2006, Schluep sent a message to Allen asking for a “LOW 1S HIGH 3S LIBOR PLS!!!” GSA 6; Tr. 239-40. Allen told Schluep “OK MATE,” he would “DO MY BEST,” and they would “SPEAK LATER.” GSA 6. Schluep later thanked Allen, because the submissions were “BANG ON THE MONEY!” GSA 6; Tr. 403-04. Allen told Schluep, “NO WORRIES” and joked that he “HAD TO WORK MY WAY OUT OF AN AMBASS HEADLOCK TO GET THOSE IN,” probably because Stewart (the Ambassador) had different needs that day with respect to the LIBOR. GSA 6; Tr. 239-40.

• On December 1, 2006, Schluep sent a message to Allen stating,

“APPRECIATE 3S GO DOWN, BUT A HIGH 3S TODAY WOULD BE NICE.” GSA 10; Tr. 242-43. Allen told Schluep, “I AM FAST TURNING INTO YOUR LIBOR BITCH!!!” GSA 10. Schluep responded that his request was “JUST FRIENDLY ENCOURAGEMENT” and that he “APPRECIATE[D] THE HELP.” GSA 10. Allen assured Schluep that he should have “NO WORRIES” and that he (Allen) was “GLAD TO HELP.” GSA 10.

• On July 17, 2007, Schluep asked Conti, “IF ANY CHANCE, A HIGH

3MTH TODAY PL!” GSA 26. Conti agreed to help, telling Schluep, “Ok matey ... high one today.” GSA 26.

• On August 13, 2007, Schluep sent a message to Conti, requesting “HIGH 3S AND 6S PLS TODAY MATE (ESP 6MNTHS!!) IF U WOULD BE SO KIND... GOTTA MAKE MONEY SOMEHOW!”

15

GSA 13; Tr. 203, 388-89. Conti responded, “cool,” and Schluep thanked him, noting that “EVERY LITTLE HELPS!” GSA 13.6

2. Manipulation Of The Yen LIBOR

Robson likewise altered his LIBOR submissions to benefit traders who

held positions in interest rate swaps tied to the yen LIBOR. Tr. 343, 662-63.

Robson sought and received confirmation from Allen (his supervisor) that the

practice was accepted. Tr. 323-24, 327-28, 335-36, 340-43; see Tr. 401-03.

Robson knew that a LIBOR submission outside a certain range would prompt

a phone call from the BBA questioning the submission. Tr. 328-33; see GSA

24. Consequently, when submitting an altered rate to accommodate a trader,

Robson generally chose a rate that appeared plausible on its face (to avoid

scrutiny), although he sometimes transmitted LIBOR submissions outside this

range when requested. Tr. 329, 333, 344-46, 445-47, 605-06; GSA 9, 112-15.

Robson regularly accommodated requests from Tetsuya Motomura,

Takayuki Yagami, and Paul Thompson. For example:

• On September 21, 2008, Robson told Yagami that market information supported a submission of 0.85 for the one-month yen LIBOR. GSA 19; Tr. 356-58. Yagami asked for a higher rate, specifically 0.90. GSA 18-19. Robson agreed, even though he would “probably get a few phone calls,”

6 For the sake of economy, we provide only illustrative examples and do

not detail all the evidence showing that Conti and Allen accommodated trader requests. See generally Tr. 196-246, 325-26, 403-05, 664-69; GSA 1-17, 26-27, 70-72, 79-87, 94, 100-02, 116, 118-22.

16

telling Yagami that there were “bigger crooks in the market than us guys!” GSA 18.

• On November 8, 2006, Thompson told Robson he had “a few big 3mth fixings in next 2 days” and asked Robson to “bump it up a couple,” despite what the three-month Yen LIBOR rate “actually” should have been. GSA 117; Tr. 358-59. Robson responded that he would “set them high and dry.” GSA 117.

• On March 19, 2008, Yagami told Robson “[w]e have loads of 6mth fixings today” and—conveying a request from Motomura—asked Robson to submit 1.10 for the six-month yen LIBOR. GSA 119; Tr. 659-62. Robson responded that market information supported a 1.03 submission for the six-month LIBOR but that he would submit 1.10 as asked, even though it would likely prompt a phone call. GSA 109-10.

3. The Scheme Continues Over Several Years

The biased LIBOR rates submitted by Allen, Conti, Robson, and others,

often had their intended effect, changing the LIBOR in a manner that benefited

Rabobank traders. Tr. 343-44. On May 10, 2006, for example, Robson had

determined, based on market information, that Rabobank’s six-month yen

LIBOR submission should be 0.33. Tr. 346-48; GSA 114. The derivatives

trader Paul Thompson, however, requested a low six-month yen submission

for that day. Tr. 346-49; GSA 112, 114. Robson submitted 0.26 to help

Thompson, although he was “embarrassed” by that very low submission. Tr.

346-49; GSA 114. The following chart demonstrates the submission’s effect on

the LIBOR for that day:

17

GSA 99; see Tr. 348-49.7

The scheme was well entrenched by 2006 and continued for several

years. Tr. 628-29, 654-56. There was an established culture of manipulating the

LIBOR at Rabobank, involving a core “circle” of participants that included

Allen, Conti, Robson, Robbins, Butler, Stewart, Thompson, Motomura, and

Yagami. Tr. 323-25, 629-31, 664-69, 685.

Accordingly, when Robson left Rabobank in 2008, and it was unclear to

Yagami who would be handling Rabobank’s yen LIBOR submissions, Yagami

7 The chart assumes a more conservative 0.30 honest submission by

Robson, rather than the 0.33 submission that the evidence demonstrates he otherwise would have provided. Tr. 348.

18

contacted other participants in the scheme—including Conti and Allen—to

make sure that his requests would be received and accommodated. Tr. 685-

700; GSA 4, 86, 94. Conti eventually conveyed the name of the new yen

LIBOR submitter to Yagami and assured him that they would proceed

“exactly the same as [Robson] did it previously.” GSA 87. Conti confirmed

that LIBOR submitters would still accept requests “to go a bit higher or a bit

lower.” GSA 80-81; Tr. 690-95.

Allen, Conti, and the others understood that these practices were

deceptive and provided Rabobank with an unfair advantage over its

counterparties. Tr. 252-53, 414, 697, 1278; GSA 71-72; see infra pp. 58-61.

They knew that it was improper to take into account trader profits to determine

Rabobank’s LIBOR submissions. Tr. 250-51, 322, 1204, 1277-78. And they

understood that there was a “true rate”—their honest estimate of Rabobank’s

borrowing costs—which was different than the rates they actually submitted to

the BBA. GSA 22; Tr. 253-55; see Tr. 333-34, 414 (Robson explaining that he

would use market information to come to a specific number and then “moved

it higher” if requested by a trader); Tr. 389-91; GSA 100 (Conti explaining that

his LIBOR submissions were “on the high side from where they should’ve

been”); see infra pp. 36-40.

19

III. Indictment And Trial

A federal grand jury returned an indictment charging Allen and Conti

with one count of conspiracy to commit wire fraud and bank fraud, in

violation of 18 U.S.C. § 1349, and eight substantive counts of wire fraud, in

violation of 18 U.S.C. § 1343. JA 77-110. Allen was also charged with ten

additional substantive counts of wire fraud. JA 106-10.

Allen and Conti were tried jointly by a jury and found guilty on all

counts. Tr. 1655-59. At trial, the government introduced, among other

evidence, communications between participants in the fraudulent scheme—

including emails, “instant chats,” and phone calls—and testimony from three

central participants: Lee Stewart, Paul Robson, and Takayuki Yagami. Tr.

165-286 (Stewart); Tr. 298-485, 510-643 (Robson); Tr. 643-814 (Yagami). The

government also introduced testimony from three witnesses whose companies

had entered into swap agreements with Rabobank. Tr. 494-510 (Timothy

Smith); Tr. 822-31 (Tracy Twomey); Tr. 831-43 (Michael DiTore). Expert

testimony from Lawrence Harris, Ph.D., provided background about the

LIBOR and about interest rate swaps. Tr. 115-61. A forensic accountant from

the FBI provided summary testimony regarding Rabobank’s LIBOR

submissions. Tr. 843-960.

20

Defendants offered testimony from two expert witnesses. Tr. 981-1029

(Edward Weinberger, Ph.D.); Tr. 1034-1156 (Marti Subrahmanyam, Ph.D.).

Conti’s expert (Weinberger) testified that he evaluated Rabobank’s LIBOR

submissions and did not observe a statistically significant benefit to certain

Rabobank traders, including Conti and Stewart. Tr. 1011-13. Subrahmanyam

testified that the dollar LIBOR submissions from Rabobank (on select dates he

examined) were “in line with” information from brokers on those dates and

submissions by other LIBOR panel banks. See, e.g., Tr. 1098-1102.

Subrahmanyam testified, however, that—on the basis of the data he

examined—he had “no ability to answer” whether defendants submitted an

altered LIBOR rate in order to accommodate a trader’s preferences and profit

that trader. Tr. 1037, 1040-41, 1075-76, 1083, 1122.

Allen also took the stand in his defense. Tr. 1157-1330. He testified that

the procedure for determining Rabobank’s LIBOR submissions was

“straightforward.” Tr. 1168-69. Allen testified that cash traders possessed the

relevant expertise and market knowledge and also had access to useful

information from cash brokers. Tr. 1165-67, 1169, 1175, 1277. He repeatedly

said that it would be improper to take into account a trader’s financial position

when determining Rabobank’s LIBOR submission. Tr. 1204, 1206, 1210-11,

1214-15, 1222, 1227, 1232-33, 1277-78, 1289, 1303. Allen acknowledged that

21

there were occasions when derivatives traders improperly asked him to alter a

LIBOR submission. Tr. 1201-03, 1205-06, 1208-12, 1219-23, 1274-75.

According to Allen, however, he never acted upon or accommodated those

requests. Tr. 1222, 1266-67, 1279, 1328.

SUMMARY OF ARGUMENT

1. Ample evidence supported defendants’ wire fraud convictions, and

the jury instructions accurately described the elements of the crime.

a. The district court correctly conveyed to the jury that a scheme to

defraud is a plan to deprive another of money or property through deceit. The

court also correctly instructed that the requisite deceit may be accomplished

by, among other things, outright lies or misleading half-truths.

The evidence established that Allen and Conti participated in a scheme

to deprive Rabobank’s counterparties of their money through deceitful LIBOR

submissions. Defendants were tasked with providing an estimate, every day, of

the best interest rate Rabobank would be able to obtain if it were to borrow

money from another bank at around 11 a.m. London time. Defendants

purported to provide that estimate each day and on some days, they did.

Oftentimes, however, defendants did not convey their honest estimate and

instead submitted a different number: They first arrived at an honest estimate

of the bank’s borrowing costs, but then “biased” or “bumped” the number in a

22

direction that would benefit a Rabobank trader’s position. These submissions

were false and misleading. They did not reflect defendants’ honestly held views

and they were also half-truths of the most classic sort: while purporting

allegiance to the LIBOR honest-estimate definition, defendants’ submissions

instead reflected benefits to Rabobank traders.

b. The district court correctly conveyed to the jury that an intent to

defraud means an intent to deprive another of money or property through

deceit and requires contemplated harm to the property rights of the victim.

Overwhelming evidence established that defendants possessed the requisite

fraudulent intent. The purpose of their scheme was to deprive counterparties of

their money and property, and defendants knew that the scheme was deceitful

and improper and that it harmed counterparties.

Under longstanding law, intent to defraud does not require knowledge

that the conduct is unlawful. But in any event, the jury instructions effectively

required the jury to make that finding, and ample evidence established that

defendants knew what they were doing was a crime.

c. The evidence also established that the deceptive LIBOR

submissions were material. The submissions were intended to affect the

payments that counterparties in swap agreements owed to or received from

Rabobank. As a number of Rabobank counterparties attested, a reasonable

23

person in their shoes would have attached importance to the deceptive

submissions. A counterparty would have wanted to know about the

submissions at the time he or she entered into a swap agreement with

Rabobank; on the “fixing dates” (when the deceptive submissions were

designed to cause the counterparty to pay more or receive less money from

Rabobank); and over the life of the swap agreement, when the counterparty

had the option to buy out of the agreement for a negotiated sum.

2. Ample evidence established that the fraud affected a bank insured

by the Federal Deposit Insurance Corporation (FDIC), triggering the ten-year

statute of limitations. Several FDIC-insured banks were counterparties with

Rabobank in swap agreements and were the intended object of defendants’

fraud. The evidence therefore established that the fraudulent scheme—to

deprive Rabobank’s counterparties of their money—exposed the banks to an

increased risk of loss, thereby affecting those institutions.

3. Neither the evidence nor the jury instructions constructively

amended the indictment. The indictment alleged, the jury was instructed, and

the evidence proved that defendants’ LIBOR submissions were “false and

fraudulent” because they deviated from the LIBOR definition and did not

reflect defendants’ honest estimate of Rabobank’s borrowing costs. If anything,

the evidence and jury instructions narrowed the charges in the indictment.

24

4. There was no abuse of discretion, let alone plain error, in the

district court’s evidentiary rulings. Defendants did not inform the district court

of the evidence they now claim they were precluded from eliciting from three

counterparty witnesses on cross-examination—namely, that the counterparties

would have transacted with Rabobank even had they known (or did know)

about defendants’ manipulation of the LIBOR. Indeed, the district court made

clear that it would have allowed such evidence. Moreover, there is no

indication that the counterparties would have provided this testimony—their

direct testimony was to the contrary—and defendants were of course free to

present their own counterparty witnesses to offer that proof (assuming they

could find a witness who would so testify). The court’s in limine ruling also

was narrow and did not preclude the questioning defendants now claim was

prohibited, including questioning of their expert.

In any event, any error in the court’s rulings did not prejudice

defendants. The evidence would have done little if anything to undermine the

overwhelming evidence of materiality and a scheme to defraud, particularly

because a scheme to defraud does not require proof of a completed fraud or

actual reliance, and materiality is an objective standard.

5. The district court acted well within its discretion in denying a

motion under Fed. R. Crim. P. 15 to depose a potential witness in the United

25

Kingdom. The testimony that the witness, John Ewan, provided at a LIBOR

manipulation trial in the United Kingdom demonstrates that his deposition

testimony would not have been material to Allen and Conti’s defense but

would, in fact, have bolstered the government’s case.

6. The district court correctly denied defendants’ Kastigar motion.

Witness Paul Robson’s exposure to testimony by defendants that was

compelled by regulatory authorities in the United Kingdom could not result in

a violation of the Fifth Amendment, because the United Kingdom is not

bound by our Constitution. Even assuming that compelled testimony by U.K.

authorities could result in a Fifth Amendment violation in an American

proceeding, the district court correctly found that Robson’s exposure to

defendants’ compelled testimony did not in any way affect his trial testimony

or the information he provided to U.S. investigators prior to trial. The district

court’s findings were not clearly erroneous. Far from it: The court meticulously

compared defendants’ immunized testimony with Robson’s trial testimony,

evaluated credibility, and carefully concluded that none of Robson’s testimony

or information was tainted. Finally, even assuming a Fifth Amendment

violation, the error was harmless beyond a reasonable doubt. The jury would

have reached the same verdict even without Robson’s allegedly tainted

testimony, and the verdicts cured any potential error in the grand jury.

26

7. Reassignment to a different district judge would not be warranted

in the event of a remand for additional proceedings. The court presided over

the trial fairly and impartially. Defendants fall far short of the demanding

showing required to justify reassignment.

ARGUMENT

I. Defendants’ Challenges To The Sufficiency Of The Evidence And The Jury Instructions On The Wire Fraud Counts Are Meritless

Allen and Conti mount a variety of challenges (Br. 37-50, 57-70) to the

sufficiency of the evidence and the jury instructions on the substantive wire

fraud counts. Their arguments are unavailing.

A. Background

1. The Wire Fraud Statute

The wire fraud statute makes it a crime to use the wires in furtherance of

a “scheme or artifice to defraud, or for obtaining money or property by means

of false or fraudulent pretenses, representations, or promises.” 18 U.S.C.

§ 1343. Although this Court has offered different formulations of the elements

of wire fraud, the government must prove (1) a scheme to defraud with money

or property as the object of the scheme, United States v. Binday, 804 F.3d 558,

569 (2d Cir. 2015); (2) the materiality of the deceptive conduct underlying the

scheme, United States v. Klein, 476 F.3d 111, 113 (2d Cir. 2007); (3) intent to

27

defraud, United States v. Trapilo, 130 F.3d 547, 551-53 (2d Cir. 1997); and (4)

use of the wires to further the scheme, Binday, 804 F.3d at 569.8

2. The Rule 29 Motions

The district court denied defendants’ motions for judgment of acquittal

under Fed. R. Crim. P. 29. Tr. 965-77, 1334; SPA 37-53. As relevant here, the

court concluded that sufficient evidence established a scheme to defraud,

materiality, and intent to defraud.

First, the court concluded that a reasonable jury could find that

defendants participated in a fraudulent scheme. SPA 38-42. A rational jury

could find, the court concluded, that defendants deceptively purported to

provide an honest estimate of Rabobank’s borrowing costs in accordance with

8 The wire fraud statute can be construed as containing two essential

elements: (1) a scheme to defraud, and (2) use of the wires in furtherance of the scheme. See Pereira v. United States, 347 U.S. 1, 8 (1954). The scheme-to-defraud requirement may then be further divided into (a) the existence of a scheme to defraud, United States v. Guadagna, 183 F.3d 122, 129 (2d Cir. 1999); (b) money or property as the object of the scheme, McNally v. United States, 483 U.S. 350, 356-58 (1987); (c) materiality, Neder v. United States, 527 U.S. 1, 21-23 (1999); and (d) intent to defraud, Guadagna, 183 F.3d at 129. Because the wire fraud statute, the mail fraud statute, and a provision of the bank fraud statute each contain identical “scheme or artifice to defraud” language, see 18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1343 (wire fraud); 18 U.S.C. § 1344(1) (bank fraud), we follow this Court’s practice and cite decisions construing that phrase in each of those statutes. See United States v. Thomas, 377 F.3d 232, 242 n.5 (2d Cir. 2004); Trapilo, 130 F.3d at 551 n.7; United States v. Stavroulakis, 952 F.2d 686, 694 (2d Cir. 1992).

28

the BBA definition but instead provided submissions to benefit Rabobank

trader positions and obtain money from counterparties. SPA 39-42.

Second, the court concluded that defendants’ deceptive representations

were material. SPA 42-44. The court found that “there was more than

sufficient evidence from which a reasonable juror could conclude that

defendants’ representations were ‘capable of influencing’ Rabobank’s

counterparties.” SPA 43.

Third, the court rejected defendants’ sufficiency challenge to the

evidence on intent. SPA 45. The court found sufficient proof that defendants

contemplated actual harm to the victims of the fraud, i.e., Rabobank’s

counterparties. SPA 45.

B. Standards Of Review

1. Sufficiency Of The Evidence

This Court reviews de novo a district court’s denial of a motion for

judgment of acquittal under Fed. R. Crim. P. 29. See, e.g., United States v. Greer,

631 F.3d 608, 613 (2d Cir. 2011). The Court views the evidence in the light

most favorable to the government and evaluates whether “any rational trier of

fact could have found the essential elements of the crime beyond a reasonable

doubt.” United States v. Sabhnani, 599 F.3d 215, 241 (2d Cir. 2010) (citations

omitted). The evidence need “not exclude every possible hypothesis of

29

innocence.” United States v. Morgan, 385 F.3d 196, 204 (2d Cir. 2004) (citations

omitted).

A Rule 29 motion that identifies specific grounds for a judgment of

acquittal forfeits grounds it does not raise. See United States v. Delano, 55 F.3d

720, 726 (2d Cir. 1995). Unpreserved grounds for judgment of acquittal are

reviewed for plain error. Id.; see United States v. Tagliaferri, 648 Fed. Appx. 99,

101 (2d Cir. 2016) (summary order). To obtain reversal of a conviction on

plain error review, a defendant must demonstrate “that (1) there is an error; (2)

the error is clear or obvious, rather than subject to reasonable dispute; (3) the

error affected the [defendant’s] substantial rights, which in the ordinary case

means it affected the outcome of the district court proceedings; and (4) the

error seriously affect[s] the fairness, integrity or public reputation of judicial

proceedings.” United States v. Marcus, 560 U.S. 258, 262 (2010) (citation

omitted).

2. Jury Instructions

This Court also reviews de novo a preserved challenge to the district

court’s jury instructions. Sabhnani, 599 F.3d at 237. The defendant must show

both error in the instructions and ensuing prejudice. United States v. Quinones,

511 F.3d 289, 313 (2d Cir. 2007). The Court will find error only if it concludes,

after evaluating the challenged instruction in the context of the jury charge as a

30

whole, that the instruction “either fails to adequately inform the jury of the

law, or misleads the jury as to the correct legal standard.” Sabhnani, 599 F.3d

at 237. An erroneous instruction is harmless (i.e., not prejudicial) “if the verdict

would surely not have been different” absent the error. United States v. Rivera,

799 F.3d 180, 186 (2d Cir. 2015) (citations omitted). In assessing for harmless

error, the Court “begin[s] by asking whether the evidence in the record could

rationally lead to a finding favoring the defendant” on the affected element,

and if the answer is “yes,” the Court “ask[s] whether the verdict, absent the

error, would have been the same.” United States v. Jackson, 196 F.3d 383, 386

(2d Cir. 1999); see United States v. Pimentel, 346 F.3d 285, 302 (2d Cir. 2003).

3. The Sufficiency Of The Evidence Is Evaluated Against The Statutory Elements Of The Offense

Defendants erroneously argue (Br. 47, 70, 91-92) that the sufficiency of

the evidence should be measured against the jury instructions, the allegations

in the indictment, or the government’s closing arguments. The Supreme Court

has held, however, that a court evaluating the sufficiency of the evidence

conducts a “limited review” and “considers only the ‘legal’ question ‘whether,

after viewing the evidence in the light most favorable to the prosecution, any

rational trier of fact could have found the essential elements of the crime

beyond a reasonable doubt.’” Musacchio v. United States, 136 S. Ct. 709, 715

(2016) (quoting Jackson v. Virginia, 443 U.S. 307, 314-315 (1979)). “A

31

reviewing court’s limited determination on sufficiency review thus does not

rest on how the jury was instructed.” Id.; see United States v. Facen, 812 F.3d

280, 289-90 (2d Cir. 2016).

This Court’s decision in United States ex rel. O’Donnell v. Countrywide Home

Loans, Inc., 822 F.3d 650 (2d Cir. 2016), is not to the contrary. Countrywide was

a civil case, so the Court did not review the sufficiency of the evidence under

Fed. R. Crim. P. 29 or the constitutional standards that apply in a criminal

case. Moreover, to the extent the Court adverted to the jury instructions in

evaluating the sufficiency of the evidence, it merely concluded that it would

not sua sponte consider a factual theory that the government did not press at

trial or on appeal. 822 F.3d at 663. Countrywide should not be construed in a

broader manner that conflicts with authoritative Supreme Court precedent.

C. Argument

Defendants contend (Br. 37-47, 57-70) that the evidence was insufficient

to establish a scheme to defraud, intent to defraud, and materiality. They also

contend (Br. 47-50, 66-67) that the district court erroneously instructed the jury

with respect to the scheme-to-defraud and intent-to-defraud requirements.

Their arguments lack merit.9

9 Defendants contend (Br. 126-27) that their challenges to the substantive

wire fraud counts also support reversal of their conspiracy convictions. The government agrees that the conspiracy convictions stand or fall with the

32

1. There Were No Deficiencies In The Evidence Or Jury Instructions On The Scheme-To-Fraud Requirement Of The Wire Fraud Statute

The wire fraud statute makes it a crime to “devise[] or intend[] to devise

any scheme or artifice [1] to defraud, or [2] for obtaining money or property by

means of false or fraudulent pretenses, representations, or promises.” 18

U.S.C. § 1343. The second clause does not limit the first clause but merely

confirms that a scheme to defraud includes “certain conduct,” as outlined in

the second clause. Loughrin v. United States, 134 S. Ct. 2384, 2391 (2014).

As construed by the Supreme Court, “the words ‘to defraud’ commonly

refer ‘to wronging one in his property rights by dishonest methods or schemes,’

and ‘usually signify the deprivation of something of value by trick, deceit,

chicane or overreach.’” McNally, 483 U.S. at 359 (quoting Hammerschmidt v.

United States, 265 U.S. 182, 188 (1924)). A scheme to defraud is therefore a

plan to deprive another of money or property through deceit. United States v.

Autuori, 212 F.3d 105, 115 (2d Cir. 2000). The deceit need not take any

particular form, see Trapilo, 130 F.3d at 550 & n.3, but as a general matter

requires a “departure from community standards of ‘fair play and candid

substantive wire fraud charges, with one exception: The statute-of-limitations argument they assert (Br. 84-96) would not apply to their conspiracy convictions. See infra p. 76.

33

dealings,’” Autuori, 212 F.3d at 115 (quoting United States v. Ragosta, 970 F.2d

1085, 1090 (2d Cir. 1992), and United States v. Goldblatt, 813 F.2d 619, 624 (3d

Cir. 1987)); see also United States v. Altman, 48 F.3d 96, 101 (2d Cir. 1995)

(scheme to defraud is given a “broad interpretation”).

The wire fraud statute “‘punishes the scheme, not its success.’”

Pasquantino v. United States, 544 U.S. 349, 371 (2005) (quoting United States v.

Pierce, 224 F.3d 158, 166 (2d Cir. 2000)). The statute therefore does not require

proof of “justifiable reliance” or “damages.” Neder, 527 U.S. at 24-25. The

defendant “need not have completed or succeeded in his scheme to defraud,

and the scheme need not have resulted in actual injury to the scheme’s

victims.” United States v. Reifler, 446 F.3d 65, 96 (2d Cir. 2006).

a. The Evidence Established That Allen And Conti Devised And Participated In A Scheme To Defraud

Ample evidence established that Allen and Conti, along with others at

Rabobank, devised and participated in a scheme to obtain money from

counterparties who entered into financial transactions (namely, interest rate

swaps) with Rabobank traders. The plan was to obtain money from those

counterparties through deceitful manipulation of the LIBOR. See, e.g., GSA 13;

Tr. 252-53, 697, 801. As a bank named to the dollar and yen LIBOR panels,

Rabobank was supposed to report a figure that represented an honest estimate

of its daily borrowing costs. See, e.g., Tr. 145, 1069-70, 1072-73. Defendants

34

and others at Rabobank sometimes submitted that figure as required, but often

they submitted a different figure that impermissibly took into account the

profitability of the bank’s interest rate swap agreements. See supra pp. 11-15.

The purpose of submitting a different number—which did not represent

their honest estimate of the best interest rate Rabobank could obtain if it were

to borrow from another bank—was to obtain money and property from

counterparties. As discussed above, the amount of money that Rabobank

received from or paid to a counterparty in an interest rate swap was directly

tied to the LIBOR. For example, Rabobank entered into a swap agreement

with Citibank in 2007 in which Citibank agreed to periodically pay a fixed

interest rate on $18 million, while Rabobank agreed to periodically pay a

floating rate on that same amount as determined by the three-month dollar

LIBOR. GSA 105-06. One of the “fixing” dates for that swap, when the

floating rate owed by Rabobank was determined by reference to the LIBOR,

was January 24, 2008. GSA 68 (listing fixing dates for Rabobank swap

agreements); Tr. 816-18 (stipulation on fixing dates). On that day, Conti

estimated that Rabobank could borrow at 3.23 percent, but he offered to “go

lower” in order to benefit Schluep, who had a “big fix” that day, GSA 102,

and Conti ultimately submitted 3.22, Tr. 870. Had Conti’s false estimate

successfully decreased the final LIBOR for that day, Rabobank would have

35

paid less money to Citibank than it otherwise would have paid had Conti

conformed to the BBA definition and provided his honest estimate.

Deception was an essential component of this scheme. Defendants knew

that they were not allowed to submit LIBOR rates that took into account

trader profits. See, e.g., Tr. 1277-78, 1303. They knew that altering a LIBOR

submission in order to increase the profitability of a swap agreement was

contrary to the BBA definition, and that counterparties would not transact

with Rabobank if they knew about the altered submissions. See, e.g., Tr. 414,

697, 1210-11, 1278.

Defendants and others at Rabobank accordingly took measures to

conceal their conduct. Knowing that their submissions would not arouse

suspicion if within a reasonable range of their actual honest estimates, they

made facially plausible submissions that were at the same time surreptitiously

altered to profit Rabobank trader positions. See Tr. 328-33. Thus, Allen

publicly proclaimed fidelity to the BBA definition, Tr. 408-14; GSA 73-78,

while he and others actually deviated from that definition when providing

Rabobank’s LIBOR submissions, see supra pp. 11-18.

Defendants nonetheless contend (Br. 47-50) that the evidence did not

establish a scheme to defraud. Along with their amicus, they contend (Br. 44,

46; Amicus Br. 3, 5-6) that because their LIBOR submissions did not qualify as

36

“false statements” or “affirmative misrepresentations,” they did not violate the

wire fraud statute. These arguments are factually and legally flawed.

1. Defendants contend (Br. 47-48) that their LIBOR submissions

were not “actionable” under the wire fraud statute—i.e., could not support a

scheme to defraud—because defendants “estimated a range of rates in response

to the BBA’s hypothetical question, any of which fairly reflected their

understanding of Rabobank’s borrowing costs,” and then chose a number

within that range that “aligned with a trader’s request for a higher or lower

submission.” According to defendants (Br. 37, 48), their LIBOR submissions

were not false or fraudulent because any number within that range, even a

number that they arrived at in order to benefit a trader’s positions, “reflected

their honest perception of Rabobank’s borrowing costs” and therefore was

“accurate.”

The evidence, however, provided scant support for this “range” theory.

While defendants claim (Br. 1, 13) that it was “undisputed” that there was a

“range of rates” that “fairly reflected” the bank’s “estimated” or “perceived”

cost of interbank borrowing, even the most cursory review of the record refutes

this assertion. Indeed, when the district court was presented with this “range”

theory at the charge conference, see Tr. 1366, the court said it had “heard

nothing” at trial that would support it as a factual matter, and that defendants

37

did not “have a basis [i]n the evidence for arguing” that that was how the plan

worked, Tr. 1368.

The evidence instead established that defendants and other LIBOR

submitters were required (and able) to determine a single number that

represented their honest estimate of the interest rate Rabobank could obtain if

it were to borrow from another bank on the interbank market. In Allen’s own

words, it was “quite a straightforward process,” Tr. 1168, and defendants

followed the procedure, deriving a number that, if submitted to the BBA,

would have conformed to the LIBOR definition—but then often “bumped” or

“biased” that number in order to benefit a trader position, see, e.g., Tr. 322, 342,

359, 414. The LIBOR submitters knew that trader requests and the profitability

of Rabobank derivatives were not to be factored into their estimate of

Rabobank’s borrowing costs. See, e.g., Tr. 1277-78. The LIBOR submissions

that were “bumped” in this manner were therefore deceptive and misleading.

Allen’s testimony at trial established these facts. Allen never mentioned

a “range” and instead testified that he had no problem collecting market

information and determining Rabobank’s LIBOR submission. Tr. 1168-69.

Even during the financial crisis, when there was little borrowing on the

interbank market, Allen was able to apply the definition and determine the

bank’s LIBOR submission. Tr. 1266. He confirmed that trader positions

38

“[a]bsolutely” were not relevant in that process and claimed that “they weren’t

considered.” Tr. 1266. When Allen spoke with a representative from the BBA

during the financial crisis, he was adamant that the LIBOR definition was

administrable and expressed his willingness to defend specific LIBOR

submissions on certain dates. Tr. 408-14; GSA 24, 73-78. Never did Allen

mention a range of permissible submissions.

Conti’s contemporaneous phone conversations, emails, and chats

likewise refute defendants’ “reasonable range” theory. In a phone conversation

with Christian Schluep, for example, Conti made clear that he was able to

determine a single number for Rabobank’s LIBOR submission, admitting that

he made a “high” LIBOR submission (5.20) that was not “specifically

correct[]” and higher than it “should’ve been” because “Lee [Stewart] had a

fixing.” GSA 100-01; Tr. 389-91. Similarly, in a chat with Paul Thompson,

Conti stated that market information supported a particular LIBOR

submission (“seems to be 23”) but that he could “go lower if you like.” GSA

102; Tr. 362-63. Conti thus could, and did, determine a single number that

represented his estimate of Rabobank’s borrowing costs—but then biased the

number to favor the bank’s traders on fixing dates.

Defendants erroneously claim (Br. 48-49) that Lee Stewart testified that

Conti’s LIBOR submissions accurately reflected market conditions. In fact,

39

Stewart testified that Conti submitted a LIBOR figure in accordance with the

correct standard when “there weren’t any fixings around on that date.” Tr.

252. Conti would “take advice from brokers, what was going on in the

markets,” and then “make his mind up on where he felt he should be.” Tr.

267; see Tr. 183 (describing general LIBOR submission procedure). But if there

was a “fixing” that affected Stewart’s trading positions, Conti often altered

whatever number he came up with through market information, at Stewart’s

request, in order to benefit Stewart’s trading positions. Tr. 187-95. According

to Stewart, Conti “help[ed] [him] quite a lot” in this way. Tr. 188-89. Stewart

knew that there was a “true rate,” GSA 23, which was different than the rate

actually submitted when Conti granted him an accommodation on fixing

dates, see Tr. 187-95.

Defendants similarly contend (Br. 13, 19) that testimony from Paul

Robson supports their “range” theory. To the contrary, Robson flatly denied

that he thought there was “a range of reasonable fair LIBOR rates for [him] to

submit at the time.” Tr. 418; see Tr. 625-26. He also denied that he thought it

appropriate to take into account trader preferences as long as the LIBOR

submission was within a reasonable range. Tr. 423-24. Robson testified that he

determined the proper LIBOR submission based on market information and

then “biased th[at] number[] at the request of traders.” Tr. 322. Robson

40

mentioned a “range” of LIBOR submissions, but only because he generally

tried to keep the altered submissions within a range that was facially plausible

and would not invite scrutiny from the BBA. Tr. 329, 333, 614.

According to defendants (Br. 13), Yagami’s testimony supports their

“range” theory as well. But Yagami testified that “if you are the submitter”

and “have a responsibility to decide a level of the submission of LIBOR,” then

you “should have the rate come up in your mind and that should be the rate to

be submitted for the LIBOR.” Tr. 742. Once the “submitter decide[s] that

level,” Yagami testified, “the rate has to be submitted.” Tr. 742.

Defendants also rely (Br. 13-14, 23, 49) on parts of the record that do not

qualify as evidence and therefore are not relevant in evaluating the evidence’s

sufficiency. They suggest (Br. 49), for example, that the government

accepted—or at least did not dispute—their “range” theory during closing

arguments. At the threshold, a lawyer’s argument is not evidence, United States

v. Arboleda, 20 F.3d 58, 61 (2d Cir. 1994), but in any event, the government

made clear its view that “this range concept” was “completely inconsistent

with the evidence.” Tr. 1610; see Tr. 1470-72, 1608-09. The government

instead argued that submitting within a certain range was merely intended to

“make it subtle” so that defendants did “not get caught,” Tr. 1610, and that

41

Allen and Conti were culpable “[r]egardless of whether the submission was

inside or outside some so-called range,” Tr. 1609.

Defendants further turn the sufficiency standard on its head, construing

isolated evidence (and non-evidence) in the light most favorable to their

“range” theory. Defendants cite (Br. 13) an email from Conti, for example, in

which he used the word “range.” JA 457. As the district court concluded, it

was perfectly appropriate for defendants to urge the jury to accept their

interpretation of this email, even if, as the court apparently felt, it was a highly

strained interpretation. Tr. 1369-70. On appeal, however, the evidence must be

construed as a whole in the light most favorable to the verdict.

In the end, the evidence cited by defendants, including the ambiguous

email from Conti, does not support their “range” theory, let alone compel this

Court to adopt the range theory and reject the jury’s verdict.10 The jury was

entitled to conclude, on the basis of the evidence at trial, that defendants were

able to—and in fact did—determine a single number for their LIBOR

submissions in accordance with the established LIBOR definition. The jury

was also entitled to conclude that defendants sometimes submitted that

10 We note that only Conti urged this “range” theory to the jury. Tr.

1549-85. Allen instead claimed that he simply never accommodated a request from a trader, and so a “range” was never mentioned during his testimony or in his closing arguments. See Tr. 1487-1542.

42

number to the BBA but on many occasions instead weighted the number in

order to benefit trader positions. Despite defendants’ protestations, the actual

proof readily supports the verdicts.

2. In addition to being based on an erroneous view of the evidence,

defendants’ arguments also rest on a legally incorrect understanding of the wire

fraud statute. Defendants contend that the government was required to prove a

“false statement” or an “affirmative misrepresentation,” which they apparently

use synonymously. According to defendants (Br. 39), the government failed to

prove that their LIBOR submissions were false statements because the

government did not prove that Rabobank actually could not obtain a loan at

the rates submitted. Defendants suggest that if Rabobank could have obtained

a loan at the submitted rates, those submissions were “accurate” and therefore

not actionable under the wire fraud statute. Defendants are wrong.

A false statement requires, of course, a “statement,” which the Supreme

Court has characterized as an assertion of fact capable of confirmation or

contradiction. Williams v. United States, 458 U.S. 279, 284 (1982) (construing

“false statement” under 18 U.S.C. § 1014); see United States v. Worthington, 822

F.2d 315, 318 (2d Cir. 1987). A “‘fact’ includes not only the existence of a

tangible thing or the happening of a particular event,” but also an individual’s

“state of mind, such as the ..... holding of an opinion.” Restatement (Second)

43

of Torts § 525 cmt. d (1977); see W. Page Keeton et al., Prosser & Keeton on Torts

§ 109, at 755 (5th ed. 1984) (“[A]n expression of opinion is itself always a

statement of at least one fact—the fact of the belief, the existing state of mind,

of the one who asserts it.”). A statement of opinion is therefore false if the

person’s actual “state of mind ..... is otherwise than as represented.”

Restatement (Second) of Torts § 525 cmt. c (1977); see Omnicare, Inc. v. Laborers

Dist. Council Const. Indus. Pension Fund, 135 S. Ct. 1318, 1326-27 (2015) (an

opinion is a false statement of fact “if the speaker did not hold the belief she

professed”) (interpreting 15 U.S.C. § 77k(a)). Or as this Court has put it, “[t]he

expression of an opinion not honestly entertained is a factual

misrepresentation.” United States v. Amrep Corp., 560 F.2d 539, 543-44 (2d Cir.

1977).

The government proved that defendants’ LIBOR submissions were false

statements. As described, defendants were able to—and did—evaluate market

information and arrive at an honest interest-rate estimate per the BBA

definition. They often, however, conveyed a different number to the BBA,

bumping their estimate to favor a trader’s position. Because the LIBOR

submissions did not reflect defendants’ actual opinions but, in fact,

“contradicted [their] honest view,” Autuori, 212 F.3d at 119, they were false

statements under the wire fraud statute.

44

Defendants and their amicus advocate a different standard. They

contend (Amicus Br. 7-8) that a statement of opinion can be actionable under

the wire fraud statute only if the statement “lack[s] a reasonable basis”—even

if the statement does not represent the speaker’s actual state of mind and is

made in order to deceive and obtain money and property from others. Under

the standard proposed by defendants and their amicus (Amicus Br. 8), the

government was required to prove that defendants’ “LIBOR submissions were

not accurate or fair estimates of the rate at which Rabobank could, in fact,

borrow in the interbank market.” That is not the law, nor should it be.

In order to be a false statement, and actionable under the wire fraud

statute, a statement of opinion need only contradict the speaker’s honest

view—i.e., it must misrepresent the speaker’s state of mind—as long as, of

course, the other requirements of the statute, such as materiality and intent to

defraud, are also satisfied. Autuori, 212 F.3d at 119. As the district court

explained, “the relevant issue was not the accuracy or inaccuracy of

defendants’ LIBOR submissions, but the intent with which these submissions

were made.” SPA 39 (citing Amrep, 560 F.2d at 544). Even if, hypothetically,

there may have been a bank that was willing to lend money to Rabobank at the

45

rates submitted, the LIBOR submissions were false nonetheless, because they

misrepresented defendants’ state of mind.11

Requiring proof that Rabobank could not actually obtain a loan at the

rates submitted by defendants would lead to absurd results. The evidence

established that traders often requested a high LIBOR submission, i.e., a

submission that was bumped up from the rate the submitter otherwise would

have submitted had he provided an honest estimate. But a lending bank would

obviously be willing to lend money at an inflated interest rate and reap the

profits from a bank willing to pay it. Thus, under the defense theory, because

Rabobank “could” obtain a loan at inflated rates, a LIBOR submitter could

also alter his LIBOR submission upwards to benefit a trader by any amount

whatsoever.

Defendants’ arguments also miss the fundamental point of the wire fraud

statute. The touchstone of fraud is “deception.” United States v. O’Hagan, 521

U.S. 642, 653 (1997). The “‘gist’” of the offense is “‘fraudulently producing a

11 Under the common law, a false statement of opinion may be treated

differently than other false statements for purposes of determining “justifiable reliance.” Restatement (Second) of Torts § 525 cmt. d (1977). Reliance on a false statement of opinion may be deemed unjustified in some circumstances. See Restatement (Second) of Torts § 538A cmt. a (1977). But the “common-law requirement[] of ‘justifiable reliance’ ..... ha[s] no place in the federal fraud statutes.” Neder, 527 U.S. at 24-25. These common law distinctions are therefore inapposite here.

46

false impression upon the mind of the other party.’” United States v. Kurlemann,

736 F.3d 439, 446 (6th Cir. 2013) (quoting Stewart v. Wyoming Cattle Ranche

Co., 128 U.S. 383, 388 (1888)). The deception need not, as defendants appear

to assert (Br. 44), be accomplished only by a false statement or silence (an

omission) in the face of a duty to speak. Loughrin, 134 S. Ct. at 2390 n.4

(identifying check kiting, which involves no false representations, as a scheme

to defraud); see Trapilo, 130 F.3d at 550 n.3; United States v. Colton, 231 F.3d

890, 897-901 (4th Cir. 2000).

In addition to a false statement, such as a statement of opinion not

honestly held, the deception may also be accomplished by a “half-truth,”

which is a “representation stating the truth so far as it goes” but nonetheless

misleading because of the “failure to state additional or qualifying matter.”

Restatement (Second) of Torts § 529 (1977); see Autuori, 212 F.3d at 118. The

deception may further be accomplished through an “implied representation,”

United States v. Harris, 821 F.3d 589, 599 (5th Cir. 2016), or even nonverbal

“conduct,” Klein, 476 F.3d at 113; see Ragosta, 970 F.2d at 1090-91. A

deception has thus been accomplished by illicitly smuggling goods into Canada

to avoid Canadian taxes, Pasquantino, 544 U.S. at 357-58; Trapilo, 130 F.3d at

549-50 & n.3; rigging a mail-in contest, Gregory v. United States, 253 F.2d 104,

47

109 (5th Cir. 1958); or fixing a horse race, United States v. Martin, 411 F. Supp.

2d 370, 372 (S.D.N.Y. 2006).

The plan to manipulate the LIBOR as devised and executed by

defendants was a quintessential scheme to deprive another of money or

property through deceit. The LIBOR was devised as an impartial market tool

for use by participants in financial transactions throughout the world. Tr. 342.

The LIBOR was intended to reflect the panel banks’ honest and truthful

estimates of their borrowing costs at around 11 a.m. London time each day.

Tr. 1072-73. Defendants instead used the LIBOR to profit Rabobank and its

traders, by purporting to comply with the established LIBOR definition while

actually (and surreptitiously) deviating from it. The LIBOR submissions were

precisely the type of deception prohibited by the wire fraud statute, whether

they are viewed as false statements, misleading half-truths, or merely a

“pattern of deceptive conduct” that was designed to “convey [a] misleading

impression.” United States v. Morgenstern, 933 F.2d 1108, 1113 (2d Cir. 1991).12

12 As the district court put it, each LIBOR submission carried an

assertion that the submitter arrived at the number “in accordance with the rules of the game,” namely the BBA-established definition. Tr. 1382-83; see Tr. 1386-90. The submissions were deceptive and misleading because, in fact, the submitters deviated from those rules by “bas[ing] their number in part on an illicit consideration,” Tr. 1383, namely the benefits to Rabobank trader positions, SPA 40-41.

48

Defendants’ reliance (Br. 41-42) on United States v. Skelly, 442 F.3d 94 (2d

Cir. 2006), is misplaced. In that case, the Court held that stock sellers accused

of engaging in a pump-and-dump scheme could be held liable under the wire

fraud statute for telling lies or misleading half-truths to a purchaser, but not for

“simply fail[ing] to disclose information,” because under “the common law

principle of caveat emptor,” a seller does not have “an obligation to disclose his

financial incentives for selling a particular commodity.” 442 F.3d at 97. In this

case, however, the government did not claim that defendants simply failed to

disclose financial incentives. See Tr. 1380-88. Rather, the government

consistently claimed that the LIBOR submissions were outright lies,

misleading half-truths, or deceptive conduct. Tr. 1388, 1632.

Defendants’ reliance (Br. 43-44) on United States v. Finnerty, 533 F.3d 143

(2d Cir. 2008), is likewise misplaced. In that case, the defendant failed to

comply with stock exchange rules that prohibited “interpositioning” at the

expense of customers, but he did not “communicate[] anything to his

customers, let alone anything false.” 533 F.3d at 148-49. There was thus no

proof of “a statement or conduct” by the defendant that deceived his

customers. Id. at 150 (no proof of “manipulation or a false statement, breach of

a duty to disclose, or deceptive communicative conduct”). The defendant’s

conviction for use of a “manipulative or deceptive device or contrivance” in

49

connection with the purchase or sale of securities, in violation of Section 10(b)

of the Securities Exchange Act, therefore could not stand. Id. at 148. In this

case, in contrast, Allen and Conti communicated to the BBA a deceptive

LIBOR submission, which was then incorporated into the final LIBOR and

disseminated throughout the business world, including to Rabobank’s

counterparties, with the object of depriving those counterparties of money and

property. In contrast to Finnerty, defendants affirmatively engaged in an “act

that [gave] the victim a false impression.” Id. at 148.

b. The District Court Accurately Instructed The Jury On The Scheme-To-Defraud Requirement

The district court instructed the jury that “a scheme to defraud is a plan

or design to obtain money or property by means of false or fraudulent

pretenses, representations, or promises.” Tr. 1632. It further instructed that

“[f]raudulent pretenses, representations or promises can take the form of

outright lies, but they can also consist of misleading half-truths.” Tr. 1632. “In

this case,” the court explained, “the government charges that the defendants

participated in a scheme to manipulate and attempt to manipulate LIBOR

interest rates to their advantage by submitting or causing to be submitted on

behalf of Rabobank LIBOR rate estimates that were not at the levels the

defendants would have honestly submitted otherwise but were instead at levels

50

reflecting, at least in part, an intent to benefit Rabobank’s trading positions and

thereby obtain profits that Rabobank might not otherwise realize.” Tr. 1632.

These instructions accurately conveyed the requirements of a scheme to

defraud. The court required the jury to find a scheme to deprive another of

money or property through deceit, and also to find deceit through “false or

fraudulent pretenses, representations, or promises”—which the court correctly

explained can take the form of outright lies or misleading half-truths.

Defendants contend (Br. 40) that the instructions were deficient because they

did not require the jury to find that their submissions were “false.” But, in

language taken verbatim from the wire fraud statute, see 18 U.S.C. § 1343, the

jury was instructed to determine whether the submissions amounted to “false

or fraudulent pretenses, representations, or promises,” Tr. 1632.

Defendants suggest (Br. 38) that the court erroneously rejected their

request for an instruction that a “statement of opinion or an estimate” may

“constitute a false statement or misrepresentation only if the government can

prove beyond a reasonable doubt that it was not honestly held by the person

making it at the time it was made.” Tr. 1392-93. The court correctly

concluded, however, that this proposition was already “contained within” the

court’s instructions. Tr. 1393. As discussed, a statement of opinion not

honestly held is a false representation. See also Restatement (Third) of Torts:

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Liab. for Econ. Harm § 14 Tentative Draft No. 2 cmt. a (2014) (“[W]hen a

speaker claims to hold an opinion but does not, the claim is as contrary to the

truth as any other lie.”). Moreover, the court explained that the government

alleged that defendants submitted “LIBOR rate estimates that were not at the

levels the defendants would have honestly submitted” had they not taken into

account trader positions and profits. Tr. 1632 (emphasis added).

Other of the instructions further ensured that defendants would not be

convicted if, in the jury’s view, Conti and Allen believed their LIBOR

submissions were accurate. The court instructed that “a defendant’s good faith

is a complete defense to the charges in this case.” Tr. 1634. It also explained

that “[a] statement made with good-faith belief in its accuracy does not amount

to an intentional false or misleading statement and is not a crime.” Tr. 1634.

“This is so even if the statement is itself inaccurate or misleading,” the court

instructed, and so “[i]f a defendant believed in good faith that he was acting

properly in making such a statement or causing it to be made, even if he was

mistaken in that belief, and even if others were injured by his conduct, there

would be no crime.” Tr. 1634.

On behalf of their jury-instruction challenge, defendants also point to

(Br. 40) language contained in the district court’s decision denying their

motion for a new trial and judgment of acquittal. The quoted language,

52

however, was not conveyed to the jury, and therefore provides no basis for

faulting the instructions.

2. There Were No Deficiencies In The Evidence Or Jury Instructions On The Mental State Requirement Of The Wire Fraud Statute

Wire fraud is a specific intent crime. United States v. Parse, 789 F.3d 83,

121 (2d Cir. 2015); see United States v. Sewell, 252 F.3d 647, 650 (2d Cir. 2001)

(specific intent “is ‘a special mental element’ particular to the crime with which

defendant is charged”). The specific intent required for wire fraud is the

“conscious knowing intent to defraud,” sometimes referred to as “fraudulent

intent.” Autuori, 212 F.3d at 116 (citations omitted). The defendant must

possess the intent to deprive another of money or property through deceit.

United States v. Males, 459 F.3d 154, 157-58 (2d Cir. 2006). Contemplated harm

to the property rights of the victim is required. United States v. Carlo, 507 F.3d

799, 801 (2d Cir. 2007) (per curiam).

Despite this well-established law, Allen and Conti argue (Br. 57-60) that

a wire fraud defendant must additionally know his conduct was unlawful.

They contend that in light of this alleged requirement, the evidence was

insufficient to support their convictions, and the district court’s jury

instructions were erroneous. Defendants are wrong.

53

a. The Wire Fraud Statute Does Not Require Knowledge That The Conduct Was Unlawful

Many criminal statutes proscribe conduct committed “willfully.” See,

e.g., 15 U.S.C. § 78ff(a), 18 U.S.C. § 924(a)(1)(D). The term “willfully” is “a

word of many meanings whose construction is often dependent on the context

in which it appears.” Bryan v. United States, 524 U.S. 184, 191 (1998) (citation

omitted). “As a general matter, when used in the criminal context, a ‘willful’

act is one undertaken with a ‘bad purpose,’” i.e., “with knowledge that [the]

conduct was unlawful.” Id. at 191-92 (citation omitted). But in some contexts,

the term merely “denotes an intentional as distinguished from an accidental

act.” United States v. George, 386 F.3d 383, 389-390 (2d Cir. 2004).

The wire fraud statute does not use the term “willfully,” see 18 U.S.C.

§ 1343, nor do the mail or bank fraud statutes, see 18 U.S.C. §§ 1341, 1344.

These fraud statutes, as construed for decades by federal courts, create specific

intent crimes that require an intent to defraud, i.e., the intent to deprive another

of money or property through deceit. They do not require proof that the

defendant knew his conduct was unlawful. See United States v. Porcelli, 865 F.2d

1352, 1358 (2d Cir. 1989) (mail fraud does not require “intent to violate a

statute”); United States v. Crandall, 525 F.3d 907, 912 (9th Cir. 2008) (intent to

defraud does not require consciousness of criminal wrongdoing).

54

It is true that in describing the intent-to-defraud requirement, some

courts have stated that a defendant must act “willfully.” See, e.g., United States

v. Cloud, 872 F.2d 846, 852 n.6 (9th Cir. 1989). The judicial use of the term

“willfully” in this context, however, “simply means knowing and purposeful

conduct.” United States v. Stockheimer, 157 F.3d 1082, 1089 (7th Cir. 1998).

Although “a more expansive interpretation of the term ‘willfully’ may be

appropriate when Congress includes both the words ‘willfully’ and ‘knowingly’

in the text of the statute, such a method of interpretation is not reliable” when

the willfulness requirement “has been supplied by the courts instead of

appearing in the text.” Id.; see United States v. Gay, 967 F.2d 322, 327 (9th Cir.

1992) (noting that the mail fraud statute does “not even contain a willfulness

requirement”); cf. United States v. Precision Med. Labs., Inc., 593 F.2d 434, 443-44

(2d Cir. 1978) (if using “willfully” in an indictment charging mail fraud “had

any effect at all,” “it was to place a more exacting standard on what the

Government had to prove”).

This Court’s decision in United States v. Golitschek, 808 F.2d 195 (2d Cir.

1986), should not be read to break the rule. In that case, the defendant was

convicted of mail fraud and conspiracy to export defense articles without a

license, a violation of the Arms Export Control Act, 22 U.S.C. § 2778(b)(2).

The Court focused on the detailed regulatory scheme of the Arms Export

55

Control Act and its penalty provision, which applies to anyone who “willfully”

violates the statute. 808 F.2d at 197-98. The Court found erroneous an

instruction that ignorance of the law was no defense, because a violation of the

Arms Export Control Act “required knowledge of a legal obligation.” Id. at

203. Without explanation, the Court also reversed the defendant’s wire fraud

conviction, but the requirements of the Arms Export Control Act were plainly

the focal point of the decision. Id. at 202-03. Golitschek should not be construed

as adding a new mental state requirement to the wire fraud statute, which

would deviate from decades of law applying the intent-to-defraud requirement

in various fraud statutes. See, e.g., United States v. McGinn, 787 F.3d 116, 123

(2d Cir. 2015) (to prove wire fraud, the government must “establish that the

defendant had fraudulent intent or ‘a conscious knowing intent to defraud,’

and that some harm or injury to the property rights of the victim was

contemplated”).

The summary orders cited by defendants (Br. 58-60) are also inapposite.

See Second Circuit Rule 32.1.1(b)(2). In United States v. Stevens, Nos. 97-1260,

97-1586 & 98-1348, 2000 WL 419938 (2d Cir. 2000) (summary order), the

Court used the term “willfully” to describe the mental state requirement for

mail and wire fraud, but the Court specifically approved a jury instruction that

defined intent to defraud as acting “knowingly and with the intent to deceive,

56

for the purpose of causing some financial loss to another,” and made no

mention of knowledge that the conduct was unlawful. Id. at *1. And in United

States v. Schlisser, 168 Fed. Appx. 483, 485 (2d Cir. 2006) (summary order), the

Court construed the mental state requirement in 15 U.S.C. § 78ff, which

expressly reaches only those who act “willfully.”13

b. The Jury Instructions Accurately Conveyed The Requirements For Intent To Defraud

The district court instructed the jury that in order to convict defendants

of wire fraud, it had to find they “knowingly and willfully participated at some

point in the scheme to defraud, with knowledge of its fraudulent nature and

with a specific intent to defraud.” Tr. 1631. “[T]o act knowingly,” the court

instructed, “means to act consciously and deliberately rather than mistakenly

or inadvertently.” Tr. 1633. “This includes,” the court explained, “a

requirement that the defendant have knowledge that he was engaged in a

fraudulent scheme.” Tr. 1633. “To act willfully,” the court instructed, “means

to act voluntarily and with an improper purpose.” Tr. 1634. And “[t]o act with

13 In 3 Leonard B. Sand, et al., Modern Federal Jury Instructions: Criminal,

Instruction 44-5 (2016), the authors propose a mail fraud instruction that requires a finding of willfulness and a “bad purpose either to disobey or to disregard the law.” But as authority, they cite United States v. Massa, 740 F.2d 629, 643 n.8 (8th Cir. 1984), which merely recites the district court’s instructions in a footnote and does not sanction the instructions in full, let alone approve the portion requiring bad purpose to disobey the law.

57

a specific intent to defraud goes further and requires that the defendant .....

intended, at least in part, to deceive one or more of his trading counterparties

in order to obtain money or property or deprive one or more of the

counterparties of material information ..... and to thereby harm one or more

victims.” Tr. 1634.

These instructions accurately conveyed the wire fraud statute’s intent-to-

defraud requirement, as described above. See supra pp. 52-56. And as

defendants’ reading of the requirement fails, so, too, does their objection (Br.

60) to the jury instructions.

Even if a wire fraud offense were to require knowledge of unlawfulness,

the court’s failure to explicitly reference that idea in its intent-to-defraud

instruction was harmless error, because the instructions, considered as a

whole, effectively required the jury to make that finding. See Neder, 527 U.S. at

15-16 (jury instruction that omits element of offense is subject to harmless-error

analysis). As to the conspiracy charge, the jury was instructed that, to convict,

it had to find that defendants “participated in the conspiracy with knowledge

of its unlawful purpose and with intent to aid in the accomplishment of its

unlawful purpose.” Tr. 1639. “In short,” the court explained, “you must find

beyond a reasonable doubt that the defendant you are considering, with an

understanding of the unlawful character of the charged conspiracy, knowingly and

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willfully joined in the conspiracy for purpose of furthering one or both of its

unlawful objects.” Tr. 1639-40 (emphasis added). The court also provided a

good faith instruction, explaining that “a defendant’s good faith is a complete

defense to the charges in this case.” Tr. 1634-35.

In light of these instructions, there is no reasonable probability that the

jury found defendants guilty without concluding that they knew their conduct

was unlawful. The omission of the specific language regarding knowledge of

unlawfulness would have had no effect on the guilty verdicts in this case.

c. Ample Evidence Established That Defendants Possessed The Requisite Mental State

Defendants have never previously claimed that the evidence at trial was

insufficient because it failed to establish that they knew their conduct was

unlawful. See Dkt. 185 (Rule 29 motion); SPA 45 (rejecting different intent

argument). Defendants’ current sufficiency argument should therefore be

reviewed for plain error. Delano, 55 F.3d at 726. The well-established intent-to-

defraud requirement of the wire fraud statute, together with the record

evidence of defendants’ mental state, precludes a finding of error, let alone

clear or obvious error that affected defendants’ substantial rights and

undermined the integrity of judicial proceedings.

Overwhelming evidence established that defendants possessed the

requisite intent to defraud. The whole point of the scheme was to reap profits

59

from counterparties through deceitful LIBOR submissions. Tr. 188-89 (Stewart

testimony). As one coconspirator put it, “GOTTA MAKE MONEY

SOMEHOW,” and “EVERY LITTLE HELPS[.]” GSA 13; Tr. 203, 388-89.

The most profitable traders were given greater priority to request biased

LIBOR submissions. Tr. 751. Defendants knew they were tricking the

counterparties to gain a financial advantage. Tr. 252-53, 281 (Stewart

testimony); see GSA 71 (Conti and Robbins “winking at each other” when

discussing low LIBOR submissions). They knew that what they were doing

was unfair and that counterparties would feel aggrieved about the trickery, and

so they kept the scheme under wraps. Tr. 414 (Robson); Tr. 697 (Yagami).

They knew their conduct was wrong and improper. Tr. 322-24, 336, 342-43,

625 (Robson); Tr. 800-01 (Yagami). It was “pretty much common sense,”

Robson explained, because they had “privileged access to a number, a

reference number, and ..... were using it to [their] own benefit.” Tr. 322. As

another participant described the scheme, it was like “free money” and was

“not right to do.” Tr. 801 (Yagami).

Allen’s testimony itself was highly damning. He acknowledged that he

knew it was improper to take into account trader preferences when

determining a LIBOR submission. Tr. 1204, 1206-11, 1277-78, 1288-89, 1303.

He knew it was wrong for traders even to request a biased submission. Tr.

60

1274-75. He also conceded that counterparties would have felt that Rabobank

had an unfair advantage and therefore would not have entered into swap

agreements with Rabobank had they known about attempts to manipulate the

LIBOR. Tr. 1278. Allen never claimed that he thought it was proper or lawful

to change a LIBOR submission to benefit a trader. He instead testified that he

never acted improperly and never actually changed a LIBOR submission to

benefit a trader. Tr. 1266-67, 1266, 1278, 1328.

Allen struggled to explain documents that showed he participated in the

manipulation scheme. On August 2, 2005, for example, Allen received an

email from swap trader Justin Sliney asking if he (Allen) could “please set

tomorrow’s [six-month LIBOR] as high as possible” because Sliney had a

“large reset” that day. GSA 7; Tr. 405. Allen forwarded the email to Conti and

Lee Stewart with an “FYI.” GSA 7. When confronted with the email, which

showed a coordinated effort to manipulate LIBOR submissions to benefit

Rabobank traders, Allen simply dissembled. See Tr. 1206-08, 1301-03.

Allen’s testimony alone sufficed to demonstrate that he acted with guilty

intent. The jury was entitled to “assess [Allen’s] credibility,” “conclude that

[his] testimony was fabricated,” and decide that “the opposite [of what he said]

was true.” United States v. Morrison, 153 F.3d 34, 50 (2d Cir. 1998); see United

States v. Rahman, 189 F.3d 88, 128 (2d Cir. 1999) (“In light of [the defendant’s]

61

sometimes false and often strained testimony during the trial, the jury could

also have concluded that he gave such testimony because he was conscious of

his guilt.”); United States v. Friedman, 998 F.2d 53, 57 (2d Cir. 1993) (when a

defendant takes the stand, the jury may conclude that his “version of the events

was false and thereby infer his guilt”).

Against all that, defendants nonetheless contend (Br. 60-66) that the

evidence demonstrated that they never thought that what they were doing was

inappropriate, or at least unlawful. Their claims, however, find no grounding

in the record.

For example, Allen now claims (Br. 64-65) that he thought it was

perfectly appropriate to take into account trader requests, ostensibly because

(Br. 61-62) the rules were insufficiently clear and he received inadequate

training. But at trial, he was adamant that he knew it was not appropriate to

take trader requests into account in determining the LIBOR, and he testified

that he simply never accommodated such a request. Both defendants similarly

claim (Br. 63-64) that the free and open discussion of LIBOR preferences at the

trading desk shows that they thought what they were doing was not wrong.

But the more likely explanation was that the traders’ boss (Allen) sanctioned

the accommodation of requests (being an active participant himself) and so the

traders felt free to discuss it openly. Defendants also suggest (Br. 65-66) that

62

they thought their behavior was appropriate because everybody else in the

industry did the same thing. But they do not suggest that there is evidence that

they personally believed that their conduct was, as they put it, an acceptable

“industry practice.” Defendants’ claims are belied by the overwhelming

evidence at trial.

3. Ample Evidence Established Materiality

Materiality is an element of the wire fraud statute. Neder, 527 U.S. at 25.

As a general matter, a misrepresentation is material “if it has a natural

tendency to influence, or [is] capable of influencing, the decision of the

decisionmaking body to which it was addressed.” Id. at 16 (citation omitted).

Actual reliance on the misrepresentation is not required. Id. at 24-25.

Materiality is “judged according to an objective standard,” Amgen Inc. v. Conn.

Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1191 (2013), which asks whether a

reasonable person would attach importance to the misrepresentation in

determining his course of action, or whether the maker of the representation

has reason to know that the recipient “‘is likely to regard the matter as

important in determining his choice of action,’” Neder, 527 U.S. at 22-23 & n.5

(quoting Restatement (Second) of Torts § 538 (1977)). As this Court has put it,

“a misrepresentation is material if it is capable of influencing the

63

decisionmaker, no matter what the victim decides to do.” United States v.

Corsey, 723 F.3d 366, 373 n.3 (2d Cir. 2013) (per curiam).

Substantial evidence established the materiality of the misrepresentations

(the false LIBOR submissions) in this case. At three decision points (at least), a

reasonable counterparty in an interest rate swap with Rabobank would have

attached importance to those misrepresentations in determining a course of

action.

1. First, a reasonable counterparty would have wanted to know

about the deceitful LIBOR submissions at the time it entered into an interest

rate swap agreement with Rabobank. As Allen testified, counterparties would

not have entered into interest rate swap agreements if they had known

Rabobank traders were trying to manipulate the LIBOR, because they would

have felt (rightly) that Rabobank held an unfair advantage. Tr. 1278. Given the

very nature of their scheme, Allen and Conti had reason to know that

counterparties would have attached importance to the deceitful submissions in

deciding a course of action.

Witnesses from actual counterparties confirmed Allen’s admission. See

Tr. 499-500, 827-28, 836-37. Tim Smith, from Dean Foods, testified that he

would have wanted to know about the manipulation when he entered a swap

agreement with Rabobank: Had he known about Rabobank’s advantage, he

64

said, he would have considered an alternative method for reducing his

company’s interest rate exposure. Tr. 499-500. Tracy Twomey, from Super

Stores Industries, similarly testified that she likely would not have entered into

an interest rate swap agreement with Rabobank had she known that

defendants were endeavoring to manipulate the LIBOR. Tr. 827-28.

Coconspirators agreed. Tr. 252-53, 414, 697. Robson testified, for

example, that he knew counterparties “would have been aggrieved about” the

deceitful LIBOR submissions and he, therefore, would not have told

counterparties about the manipulation. Tr. 414. Yagami similarly testified that

he did not tell counterparties about the deceitful LIBOR submissions because

“it was [an] unfair advantage,” and if he “ma[d]e money by manipulating

LIBOR, that means the other party lost the money.” Tr. 697.

Defendants contend (Br. 68-69) that their misrepresentations could not

have been material at the time counterparties entered into the interest rate

swaps because the misrepresentations were not directly addressed to the

counterparties at that time. As the district court concluded, however,

defendants had commenced their scheme “before counterparties executed” the

swap agreements. SPA 44. Moreover, a material misrepresentation need not be

directed contemporaneously to the victim of the fraud. See United States v.

Greenberg, No. 14-4208, 2016 WL 4536514, at *7 (2d Cir. Aug. 31, 2016)

65

(misrepresentations directed to credit card processing company and used to

obtain money from cardholders); United States v. Seidling, 737 F.3d 1155, 1160-

61 & n.2 (7th Cir. 2013) (misrepresentations material where directed to court

to obtain default judgments, and then used to obtain money and property from

victims).

2. A reasonable counterparty in an interest rate swap also would

have wanted to know about the deceitful LIBOR submissions on the fixing

dates, when the floating rate was “fixed” by reference to the LIBOR. On those

days, a manipulated LIBOR meant that the counterparty would have either

made a payment to Rabobank that was higher than it otherwise would have

made or received a payment lower than it would otherwise would have

received had the LIBOR been honestly set. As the district court concluded,

“the jury could reasonably have inferred that counterparties would have

terminated swap contracts with Rabobank, or otherwise changed their

behavior, had they known of defendants’ allegedly fraudulent scheme.” SPA

44.

Defendants contend (Br. 69-70) that the deceitful LIBOR submissions

could not have been material on the fixing dates because, according to them,

the counterparties were irrevocably locked into the swap agreements at that

point in time. Defendants thus suggest that counterparties simply had to

66

passively accept the monetary losses inflicted on them by defendants’

manipulation of the LIBOR. Even putting aside the merits of their claim, the

evidence also established that counterparties had available recourse. Tracy

Twomey, from Super Stores Industries, testified that her company purchased

its way out of a swap agreement with Rabobank. Tr. 827. The company paid

the market value of the swap as determined by Rabobank, which turned out to

be $4.5 million. Tr. 827. Tim Smith, from Dean Foods, similarly testified that

he would have pursued “alternative forms of financing” had he known about

the deceitful LIBOR submissions. Tr. 500. The jury could reasonably infer

from this testimony that there were exit options available to counterparties and

that they would not have been irrevocably stuck with swaps that they later

learned might be disadvantaged by deceitful LIBOR submissions. At the very

least, the counterparties could buy their way out of the unfair agreements.

Defendants contend (Br. 70) that some of the counterparties’ testimony

should not be considered in the sufficiency analysis because it was not

referenced in the government’s closing arguments. The sufficiency of the

evidence is determined, however, with reference to the evidence—not a

lawyer’s arguments.

3. The deceitful LIBOR submissions were also material at a third

point in a Rabobank-counterparty relationship. As noted, after entering into an

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interest rate swap with Rabobank, a counterparty had the option of purchasing

its way out of the agreement. Tr. 827. To exercise this buy-out option, the

parties had to first determine the “market value” of the swap. Tr. 827. In that

way, the swap agreement was effectively an asset with a market value. The

jury could have reasonably concluded defendants’ deceit would have affected

that market value—and that a counterparty negotiating the value of a swap

agreement would surely have wanted to know that Rabobank was

manipulating the LIBOR.

II. A Ten-Year Statute Of Limitations Applies To The Charged Offenses

Defendants contend (Br. 84-95) that the government failed to prove that

their scheme to defraud affected a financial institution, which was necessary in

order to trigger a ten-year statute of limitations for the substantive wire fraud

charges. Defendants also contend (Br. 96) that the district court erroneously

instructed the jury on the standard for determining whether their scheme

affected a financial institution. These arguments lack merit.

A. Background

A five-year statute of limitations generally applies to wire fraud offenses,

see 18 U.S.C. § 3282, except “if the offense affects a financial institution,” in

which case a ten-year statute of limitations applies, 18 U.S.C. § 3293(2). The

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definition of “financial institution” includes a bank insured by the Federal

Deposit Insurance Corporation (FDIC). 18 U.S.C. § 20(1).

The district court concluded that the government presented sufficient

evidence that the scheme to defraud “affected” a financial institution, namely

an FDIC-insured bank. SPA 47-50. The court concluded that the evidence

demonstrated that FDIC-insured banks “would, if they had known of

defendants’ alleged fraud, have made different investment decisions or would

have been otherwise ‘affected.’” SPA 48-49.

B. Standard Of Review

Although the jury was instructed to determine whether a financial

institution was affected by the scheme to defraud in this case, Tr. 1635-36, the

district court was actually required to make that determination, applying a

preponderance-of-the-evidence standard, and reviewable for clear error. See

United States v. Florez, 447 F.3d 145, 150 n.2 (2d Cir. 2006) (applying 18 U.S.C.

§ 3290). The statute that extends the limitations period for wire fraud offenses

is analogous to the statute that tolls the limitations period while a defendant is

“fleeing from justice.” 18 U.S.C. § 3290. Neither statute creates an “element of

the charged” offense, see Musacchio, 136 S. Ct. at 717-18, and therefore the facts

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necessary to extend the limitations period are “properly determined by the trial

court rather than the jury,” Florez, 447 F.3d at 150.14

If this Court concludes that the determination was properly submitted to

the jury, however, it should review under the generally-applicable sufficiency

standard. See supra pp. 28-29. The Court should likewise apply the usual

standard for evaluating jury instructions. See supra pp. 29-30.

C. Argument

1. Ample Evidence Established That The Wire Fraud Affected An FDIC-Insured Institution

This Court has stated that 18 U.S.C. § 3293(2) “broadly applies to any

act of wire fraud that affects a financial institution.” United States v. Bouyea, 152

F.3d 192, 195 (2d Cir. 1998) (per curiam) (citations omitted). A bank, of

course, is affected by a fraud if it is the object of that fraud, but “[t]he plain

language of § 3293(2) [also] makes clear that ‘Congress chose to extend the

statute of limitations to a broader class of crimes’ than those in which ‘the

financial institution is the object of fraud.’” United States v. Heinz, 790 F.3d 365,

367 (2d Cir. 2015) (quoting Bouyea, 152 F.3d at 195). Defendants agree (Br. 88-

14 Once a district court makes a finding that extends the statute of

limitations, the government must then prove to the jury “beyond a reasonable doubt that the defendant committed the charged criminal conduct within that period.” Florez, 447 F.3d at 150 n.2. There is no dispute here, however, that the wire fraud offenses were committed within the ten-year statute of limitations.

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90; Tr. 1405-06) that, at the very least, proof of an increased risk of loss is

sufficient to prove that a fraud affects a financial institution. See United States v.

Mullins, 613 F.3d 1273, 1278-79 (10th Cir. 2010).

Whether the court or the jury was the appropriate factfinder, and

regardless of the standard of review, ample evidence established that

defendants’ wire fraud offenses affected an FDIC-insured institution. The

parties stipulated that Bank of America, Citibank, JPMorgan Chase, Morgan

Stanley, Wachovia, U.S. Bank, and PNC Bank were insured by the FDIC. Tr.

814-15. The government introduced evidence that Rabobank entered into

interest rate swap agreements with those institutions. Tr. 816-18; GSA 68-69.

The government also introduced evidence that defendants schemed to

manipulate the LIBOR on the “fixing” dates for those interest rate swaps,

plainly creating a risk of loss to those FDIC-insured banks. See GSA 68-69

(chart listing swaps with FDIC-insured banks, with fixing dates).

In July 2007, for example, Rabobank entered into an interest rate swap

agreement with Citibank. GSA 103-08. Citibank agreed to pay a fixed rate

(5.388) on the notional amount of $18 million, while Rabobank agreed to pay

a floating rate (LIBOR) as determined on specified fixing dates, one of which

was January 24, 2008. GSA 68, 105-06; Tr. 816-18. On that date, Conti

provided a low LIBOR submission (3.22) to benefit Rabobank traders. Tr. 362-

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63, 870; GSA 102. Citibank’s money was thus put at risk—for a lower LIBOR

would translate into a lower payment to Citibank than otherwise would have

been the case absent the fraudulent submission.

Rabobank similarly entered into an interest rate swap agreement with

U.S. Bank, agreeing to pay a floating rate (determined by the one-month dollar

LIBOR) on a notional amount of $10 million. GSA 88-92. The agreement had

a fixing date on November 29, 2006. GSA 68; Tr. 816-18. On that date, Allen

provided a low submission for the one-month dollar LIBOR, accommodating

a request from Christian Schluep. Tr. 239-40, 403-04, 1219; GSA 6. Again, the

fraudulent submission put U.S. Bank’s money at risk, as its obligation to

Rabobank on the swap was tied directly to the LIBOR.

The evidence therefore established that FDIC-insured banks were both

the object of defendants’ fraud and were exposed, at a minimum, to an

increased risk of loss. Defendants nonetheless contend (Br. 92-95) that the

evidence was insufficient because the government did not present testimony

from employees of Citibank or any of the other FDIC-insured institutions. As

an initial matter, defendants waived this argument by pledging not to raise it if

the government (in order to conserve judicial resources) did not call witnesses

from the FDIC-insured institutions. Dkt. 196-1 (email exchange between

counsel); see SPA 49 n.4. But in any event, the interest rate swap agreements

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with those FDIC-insured institutions, as well as the evidence that defendants

schemed to manipulate the LIBOR on the relevant fixing dates, was more than

adequate to establish that the fraud affected those institutions.

Defendants further contend (Br. 91-95) that the evidence was insufficient

when measured against the jury instructions. The sufficiency of the evidence,

however, is not evaluated against the jury instructions, but against the elements

of the crime. Musacchio, 136 S. Ct. at 715-16. But even if measured against the

instructions, the evidence was sufficient. The jury was instructed that fraud

affected a bank if it exposed the bank to an increased risk of loss or if the bank’s

investment decisions would have been different had it known about the fraud.

See Tr. 1636. As described above, ample evidence established that the fraud

exposed the banks to an increased risk of loss. That evidence alone was

sufficient to extend the limitations period. The government did not have to

also prove that the fraud affected a bank’s investment decisions. Nevertheless,

as the district court correctly concluded, the evidence also established that the

investment decisions of the FDIC-insured institutions would have been

different had they known about the fraud. SPA 48-49 & n.4. Allen himself

conceded, for example, that financial institutions would not have entered into

swap agreements with Rabobank had they known that the bank’s traders were

trying to manipulate the LIBOR. Tr. 1278.

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2. The Jury Instructions Were Legally Correct And Any Error Was Harmless

The district court instructed the jury that the government had to prove

that the scheme to defraud “directly affected” one of the FDIC-insured banks.

Tr. 1635-36. The court informed the jury that the fraud directly affected a bank

if “the fraud created an increased risk of loss for that bank” or “the investment

decisions of that bank would have been different if the bank had known of the

fraud.” Tr. 1636; see Tr. 1404-09 (charge conference).

The instructions correctly conveyed the statutory requirements. As

noted, defendants agree (Br. 88-90) that a scheme to defraud affects a bank if it

exposes the bank to an increased risk of loss. Mullins, 613 F.3d at 1278-89. The

district court also correctly instructed that a scheme to defraud “affects” a bank

if it would have made different investment decisions had it known of the fraud.

The “plain language” of the statute supports this conclusion, as the “verb

‘to affect’ expresses a broad and open-ended range of influences.” Heinz, 790

F.3d at 367 (citations omitted). The term “affects” “means simply to ‘make a

material impression on; to act upon, influence, move, touch, or have an effect

on.’” Mullins, 613 F.3d at 1278 (quoting I Oxford English Dictionary 211 (2d ed.

1989)). Although “there may be some point where the ‘influence’ a defendant’s

wire fraud has on a financial institution becomes so attenuated, so remote, so

indirect that it cannot trigger the ten-year limitations period because it does not

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in any meaningful sense ‘affect’ the institution,” id. at 1278-79, that is not the

case when the fraud directly affects a bank’s investment decision, i.e., changes

the manner in which the bank spends its capital with the hope that the

investment will generate income or appreciate in the future. In fact, there is

little if any difference between fraud that increases a bank’s risk of loss and

fraud that affects the bank’s investment decisions. Investment decisions are

intended to maximize gains while avoiding losses. A fraud that affects a bank’s

investment decision by its nature exposes the bank to an increased risk of loss,

because absent the fraud the bank would have allocated its capital in a different

manner that, in the bank’s view, would have increased the likelihood of profit

and decreased the potential for loss.

Defendants misplace their reliance (Br. 90-91) on cases construing the

wire fraud statute’s requirement of contemplated “harm or injury.” See, e.g.,

Binday, 804 F.3d at 569. Under 18 U.S.C. § 3293(2), the limitations period is

extended for wire fraud that “affects” a financial institution, not just fraud that

“harms or injures” an institution. Congress would have used different,

narrower language if it intended the limited scope suggested by defendants.

The rule of lenity (Br. 87) is also inapplicable. That rule “ensures that

criminal statutes will provide fair warning concerning conduct rendered

illegal.” Liparota v. United States, 471 U.S. 419, 427 (1985); see United States v.

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Lanier, 520 U.S. 259, 266 (1997). A statute of limitations, however, “does not

render the underlying conduct noncriminal” and “does not call the criminality

of the defendant’s conduct into question.” Smith v. United States, 133 S. Ct. 714,

720 (2013). Moreover, the rule of lenity applies only in the face of “grievous

ambiguity or uncertainty” in a statute, Barber v. Thomas, 560 U.S. 474, 488

(2010), neither of which is present here.

Finally, even if it was error to instruct the jury that fraud affects a bank if

it affects the bank’s investment decisions, the error was harmless beyond a

reasonable doubt. The jury instructions were superfluous, because it was the

responsibility of the court—not the jury—to determine whether the wire fraud

affected a financial institution. See supra pp. 68-69. Moreover, when a jury is

instructed on two alternative theories of guilt, only one of which is improper,

the error is harmless if the verdict would have been the same absent the error.

See Hedgpeth v. Pulido, 555 U.S. 57, 58 (2008) (per curiam); United States v.

Ferguson, 676 F.3d 260, 276-77 (2d Cir. 2011).

Overwhelming evidence supported the jury’s finding on the theory that

defendants agree was proper, i.e., that a fraud affects an FDIC-insured bank if

it increases the risk of loss. In addition, the government did rely on the theory

that that the fraud affected bank investment decisions. See Tr. 1477-78 (closing

arguments); Dkt. 117, at 19; Dkt. 140, at 4 (government’s proposed

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instructions). The jury would have reached the same result even if the district

court had omitted that aspect of the instruction.

3. Defendants’ Statute-Of-Limitations Arguments Do Not Pertain To Their Conspiracy Convictions

Even if the wire fraud charges were untimely, the conspiracy convictions

still stand. A ten-year statute of limitations applied to the conspiracy charges

because an object of the conspiracy was bank fraud. See 18 U.S.C. § 3293(1).

Defendants did not assert a statute-of-limitations defense to the conspiracy

charges at trial. Tr. 1631-36; see Tr. 1477. They therefore may not assert the

defense on appeal. Musacchio, 136 S. Ct. at 717-18.

III. There Was No Constructive Amendment Of The Indictment

Defendants contend (Br. 50-57) that the district court’s jury instructions

and the evidence presented by the government at trial constructively amended

the indictment. This argument lacks merit.

A. Legal Standard

A defendant has a Fifth Amendment right to be tried only on charges

contained in an indictment returned by a grand jury. United States v. Clemente,

22 F.3d 477, 482 (2d Cir. 1994). A variance “occurs when the charging terms

of the indictment are left unaltered, but the evidence at trial proves facts

materially different from those alleged in the indictment.” United States v.

Dupre, 462 F.3d 131, 140 (2d Cir. 2006) (citation omitted). A constructive

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amendment “occurs when the trial evidence or the jury charge operates to

broaden the possible bases for conviction from that which appeared in the

indictment.” Binday, 804 F.3d at 584 (citation omitted). The difference

between a variance and a constructive amendment is largely “one of degree,”

but a variance requires reversal only if the defendant shows prejudice, whereas

a constructive amendment is reversible error without inquiry into prejudice.

United States v. Salmonese, 352 F.3d 608, 621 (2d Cir. 2003).

This Court has “proceeded cautiously” in evaluating a constructive

amendment claim. United States v. Agrawal, 726 F.3d 235, 259-60 (2d Cir.

2013). A defendant must show “that the terms of the indictment are in effect

altered by the presentation of evidence and jury instructions which so modify

essential elements of the offense charged that there is a substantial likelihood

that the defendant may have been convicted of an offense other than that

charged in the indictment.” United States v. Vilar, 729 F.3d 62, 81 (2d Cir. 2013)

(emphasis and citation omitted). “The critical determination is whether the

allegations and the proof substantially correspond.” Binday, 804 F.3d at 584

(citation omitted). This Court “permit[s] significant flexibility in proof,” as

long as “the defendant was given notice of the core of criminality to be proven

at trial.” United States v. Rigas, 490 F.3d 208, 228 (2d Cir. 2007) (emphasis and

citation omitted).

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B. Standard Of Review

This Court reviews a preserved claim of constructive amendment de

novo. Agrawal, 726 F.3d at 259.

C. Argument

The indictment alleged that a panel bank’s LIBOR submission “was to

be an independent assessment of that bank’s perceived borrowing costs, and

not altered to reflect trading positions that stood to gain or lose based on

LIBOR rates.” JA 80. The indictment alleged that Rabobank derivatives

traders asked Rabobank LIBOR submitters, including defendants, “to make

USD [dollar] and Yen LIBOR submissions that favored the traders’ derivative

positions.” JA 87. The LIBOR submitters “accommodated those requests by

making USD and Yen LIBOR submissions that were intended to benefit

Rabobank’s traders rather than making submissions that reflected the perceived

rate at which Rabobank could borrow unsecured funds.” JA 87. In sum, the

indictment alleged that defendants, “intending to manipulate and attempt to

manipulate to their advantage the benchmark interest rates referenced by

derivative products throughout the financial industry, engaged in a scheme to

obtain money and property by making false and fraudulent USD and Yen

LIBOR submissions.” JA 86.

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The proof at trial and the court’s jury instructions were fully consistent

with these allegations. The government proved that defendants determined a

number that represented their estimate of Rabobank’s borrowing costs. They

sometimes provided that number to the BBA, but oftentimes they “bumped” or

“biased” that number in a direction that benefited a trader’s derivative

positions. In the language of the indictment, those LIBOR submissions did not

represent defendants’ “independent assessment” or “perce[ption]” of the

bank’s borrowing cost, but instead “reflect[ed] trading positions that stood to

gain or lose based on LIBOR rates.” JA 80.

As the court explained to the jury, the government charged that

defendants’ LIBOR submissions “were not at the levels the defendants would

have honestly submitted otherwise but were instead at levels reflecting, at least

in part, an intent to benefit Rabobank’s trading positions and thereby obtain

profits that Rabobank might not otherwise realize.” Tr. 1632. Consistent with

that description, the government argued that whether or not defendants’

LIBOR submissions were “inside or outside some so-called range,” Tr. 1609,

they did not reflect defendants’ honest estimate of Rabobank’s borrowing

costs, see Tr. 1470-72, 1608-11.

Defendants erroneously claim (Br. 52-55) that the evidence and jury

instructions allowed for conviction even if their LIBOR submissions matched

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their “perception” of Rabobank’s borrowing costs. The court instructed,

however, that “[a] statement made with good-faith belief in its accuracy does

not amount to an intentional false or misleading statement and is not a crime.”

Tr. 1634. And the government proved that defendants’ LIBOR submissions

did not, in fact, represent their honest view of Rabobank’s borrowing costs.

Had the jury concluded that defendants’ LIBOR submissions matched their

honest perceptions, it would have acquitted.

The indictment provided defendants with ample notice of the “core of

criminality to be proven at trial.” Binday, 804 F.3d at 585 (citation omitted).

This case is therefore far different from those in which this Court has found a

constructive amendment. In United States v. Milstein, 401 F.3d 53 (2d Cir.

2005), for example, the indictment alleged that drugs were misbranded because

they had been repackaged to look as if they were the original product from the

original manufacturer, but the government proved that the drugs were

misbranded because they were contaminated with bacteria and therefore not

sterile. Id. at 64-66. No such divergence between the indictment and proof was

present here.

If anything, the jury instructions and presentation of evidence at trial in

this case narrowed the allegations in the indictment. The indictment alleged

that the LIBOR submissions were “false and fraudulent.” JA 86. Fraudulent

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representations include false statements, omissions in the face of a duty to

speak, misleading half-truths, and deceptive conduct. See supra pp. 45-47. The

government did not pursue a theory that defendants remained silent in the face

of a duty to speak but argued that defendants deceived through “outright lies,”

“deceptive half truths,” or “deceptive conduct.” Tr. 1388 (charge conference).

There is no constructive amendment where “a generally framed indictment

encompasses the specific legal theory or evidence used at trial.” Rigas, 490 F.3d

at 228 (citation omitted).

IV. The District Court’s Evidentiary Rulings Were Not An Abuse Of Discretion Or Plainly Erroneous

Defendants contend (Br. 71-75, 80-84) that the district court abused its

discretion by excluding evidence at trial. Their arguments do not withstand

scrutiny.

A. Standard Of Review

When a party preserves an objection to a district court’s exclusion of

evidence, this Court reviews “under a deferential ‘abuse of discretion’

standard” and will reverse only if the ruling was “manifestly erroneous.”

United States v. Bell, 584 F.3d 478, 486 (2d Cir. 2009) (citation omitted). “Even

manifest error does not require reversal if the error was harmless,” i.e., if the

Court “can conclude with fair assurance that the evidence would not have

substantially influenced the jury.” United States v. Al Kassar, 660 F.3d 108, 123

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(2d Cir. 2011). A district court’s exclusion of evidence under Fed. R. Evid. 403

is “particularly” entitled to deference, Sprint/United Mgmt. Co. v. Mendelsohn,

552 U.S. 379, 384 (2008), and will be reversed only if this Court “find[s] the

decision to be arbitrary and irrational,” United States v. Desposito, 704 F.3d 221,

234 (2d Cir. 2013). A district court also is afforded broad discretion in

controlling the scope and extent of cross-examination. United States v. James,

712 F.3d 79, 103 (2d Cir. 2013).

An unpreserved claim of evidentiary error is reviewed for plain error

only. Fed. R. Evid. 103(e). If a party has failed to provide an adequate offer of

proof in the face of a court’s exclusion of evidence, the plain error standard

generally cannot be satisfied, because “failure to comply with normal

requirements of offers of proof is likely to produce a record which simply does

not disclose the error.” Fed. R. Evid. 103 advisory committee’s note; see Henry

v. Wyeth Pharm., Inc., 616 F.3d 134, 151 (2d Cir. 2010); United States v. Harry,

816 F.3d 1268, 1282-83 (10th Cir. 2016).

B. Argument

Defendants contend that the district court abused its discretion by (1)

improperly curtailing cross-examination of three government witnesses (Br. 72,

73-74, 80-81); and (2) improperly excluding evidence (including testimony

83

from a defense expert) by granting a government motion in limine (Br. 80-81,

82-84). They are wrong on both scores.

1. The District Court Did Not Abuse Its Discretion in Controlling the Scope of Cross-Examination

Defendants contend (Br. 72, 73-74, 80-81) that the district court

prevented them from introducing essential evidence during cross-examination

of three counterparty witnesses. But defendants did not provide an offer of

proof or alert the district court about the evidence they now claim they would

have elicited, and as a result they failed to preserve these claims.

a. Background: Direct Examination Of The Counterparty Witnesses

Tim Smith, the former treasurer for Dean Foods, testified that his

company entered into two swap agreements with Rabobank in order to hedge

against the risk that interest rates would increase. Tr. 494-99. Smith testified

that he would have wanted to know if Rabobank was manipulating the

LIBOR, and would have considered different alternatives had he known,

because the manipulation would have provided an advantage to Rabobank and

because “it speaks to [the] integrity and the sanctity of the market that you are

dealing with.” Tr. 499-502.

Tracy Twomey, the CFO at Super Store Industries, similarly testified

that her company entered into a series of swap agreements with Rabobank in

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order to hedge against the risk of interest rate increases. Tr. 822-27. Twomey

testified that if she had known that Rabobank might manipulate the LIBOR,

“we probably wouldn’t have entered into [the swaps] because if the interest

rate could have been manipulated higher or lower, we wouldn’t have wanted

to be involved in it.” Tr. 827-28.

Michael DiTore, a former derivatives trader at Lehman Brothers,

testified that he entered into interest rate swap agreements both to hedge and to

turn a profit, and he would have wanted to know if Rabobank attempted to

manipulate the LIBOR to benefit its trading positions, because that would

have put him “at a disadvantage.” Tr. 831-37. DiTore testified that he would

have been “less inclined to trade with someone [who] had more information

than me.” Tr. 837-38.

b. Defendants Did Not Provide An Adequate Offer Of Proof For Much Of The Testimony They Now Claim Was Excluded

In order to preserve a claim of error in a ruling that “excludes evidence,”

a party must “inform[] the court of its substance by an offer of proof, unless the

substance was apparent from the context.” Fed. R. Evid. 103(a)(2). The

purpose of an offer of proof is to “inform the trial judge about what counsel

expected to prove by the excluded evidence,” and therefore an offer of proof

should “generally state a ground for admissibility, inform the court and

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opposing counsel what the proponent expected to prove by the excluded

evidence, and demonstrate the significance of the excluded testimony.” 1

Weinstein’s Federal Evidence § 103.20[2] (2d ed. 2016). An offer of proof “has the

twofold benefit of (a) allowing the trial court to make its decision on a fully

informed basis and (b) allowing the reviewing court to make a reasoned

evaluation of the impact of the trial court’s decision.” Jones v. Berry, 880 F.2d

670, 673 (2d Cir. 1989). The “[p]resentation of an offer after the trial or on

appeal does not help the trial judge, and is too late.” Weinstein, supra,

§ 103.20[4]; see Fortunato v. Ford Motor Co., 464 F.2d 962, 969 (2d Cir. 1972)

(offer of proof “must be made at the trial”).

Defendants did not provide an offer of proof, as required, or otherwise

give the district court notice about the evidence they now claim they would

have elicited on cross-examination of the counterparty witnesses. Defendants’

appellate brief provides, for the first time, a description of the evidence they

allegedly would have elicited, along with a justification for admitting that

evidence at trial. Their proffer comes too late.

Defendants contend, for instance, that they would have elicited

testimony from Tim Smith that Dean Foods was indifferent to LIBOR

manipulation by Rabobank because “it was hedged against LIBOR-related

loss” and Dean Foods “made its decision to trade with Rabobank because

86

Rabobank was the safest counterparty in the market.” Br. 72-74. On behalf of

this claim, defendants refer to an email exchange with the government during

trial (JA 675) and an analysis performed by KPMG that Allen submitted to the

court at sentencing (JA 588, 597). But none of that was presented to the district

court at trial.

Instead, when Smith was on the stand, defense counsel asked him if

Dean Foods had entered into a $4.8 billion credit facility in April 2007. Tr.

504. After the court sustained the government’s objection, it called a sidebar

and said Smith’s testimony would be relevant to materiality “if [Smith] had

known what is alleged and, if it were true, whether it would have influenced

his investment decision,” but the court did not see the relevance of “whether

the investment decision was big or small.” Tr. 505. Defense counsel countered

that the size of the credit facility was relevant because Smith had allegedly

testified that “the significance of the move” or the “significance of the

conduct” would have influenced whether he would have entered into a swap

agreement with Rabobank had he known about the LIBOR manipulation. Tr.

506. The court allowed defense counsel to inquire further to determine whether

Smith had opened the door to the proposed questioning. Tr. 506. When

questioning resumed, however, defense counsel “[d]ecided to move in a

slightly different direction,” and instead asked about Rabobank’s financial

87

strength and AAA credit rating. Tr. 507-08. Defendants did not offer any

explanation for this shift after the court sustained the government’s objections

to these questions. Tr. 507-08.

Defendants now say (Br. 72-74) their different line of questioning about

Rabobank’s financial strength was relevant because, they claim, institutions

that used swap agreements to hedge only cared about the credit worthiness of

their swap counterparty and not whether that counterparty (e.g., Rabobank)

manipulated the LIBOR to its advantage. In light of the district court’s

“discretion to limit cross-examination,” however, defendants were required to

“make all reasonable efforts to alert the court to the relevance and importance

of the proposed questions.” Berry, 880 F.2d at 673. Defendants failed to meet

that requirement. In fact, when the district court later sustained a government

objection after defense counsel asked Tracy Twomey if she “perceive[d]

Rabobank as being a safe investment” and “credit worthy,” the district court

offered a sidebar to explain its ruling, but counsel declined the offer. Tr. 829.

There can be no abuse of discretion in limiting cross-examination when the

district court gave “counsel the chance to explain the legal relevance of the line

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of questioning and counsel demurred.” Thomas, 377 F.3d at 241. Defendants

cannot rectify that failure by providing an offer of proof on appeal.15

Defendants’ arguments vis-à-vis Michael DiTore are similarly

unavailing. Defendants contend (Br. 74) that, if allowed, they would have

elicited testimony that DiTore traded with Rabobank because it was the “safest

counterparty in the market.” But defendants merely asked Ditore if he

performed a “credit check” on counterparties. Tr. 839. They did not explain,

after the court sustained an objection, the purpose of the question or where

they might be going with it. Indeed, at no time did defendants put the court on

notice that they were trying to ask DiTore whether he would have transacted

with Rabobank, despite manipulation, in light of the bank’s credit rating.

Defendants also contend (Br. 80-81) that the district court barred them,

on relevance grounds, from asking DiTore if he “expected Panel Banks to take

their own interests into account” when making LIBOR submissions. But that

is not the case. Instead, after defense counsel questioned DiTore about his

understanding of how the LIBOR was set, the court asked counsel at a sidebar

15 We also note that, despite the court’s rulings during cross-

examination, defendants nonetheless introduced evidence that the financial strength of a counterparty was important to an institution entering into a swap agreement, Tr. 507-08, 829, and that Rabobank had a AAA credit rating, Tr. 272, 413, 988-95.

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to explain why it mattered whether DiTore “had an understanding that

LIBOR was created in X, Y, Z way or any other way.” Tr. 840-41. Defense

counsel argued that DiTore had testified “that manipulation would be relevant

or material to him” and therefore “[w]hat he understands manipulation to be

is” relevant. Tr. 841. Based on that explanation, the district court said it

“would be fine” to ask DiTore “what do you understand manipulation to be in

this context.” Tr. 841.

When questioning resumed, however, defense counsel did not ask

DiTore about his understanding of manipulation; counsel instead pursued a

different line of questioning, asking DiTore if it was his “understanding .....

that LIBOR setters took their bank’s interest rate exposure into account when

they set rates.” Tr. 842. Defendants never explained the relevance of this

question, and nothing in the record suggests that the court disallowed DiTore’s

answer on relevance grounds. Tr. 841. To the extent defendants wanted to

elicit testimony that DiTore knew there was manipulation at Rabobank, the

court likely would have allowed the questioning: as the court recognized,

DiTore’s testimony was relevant to materiality insofar as DiTore testified that

“he would have been less likely to trade” with Rabobank had he “known that

the rate was being manipulated.” Tr. 841. Again, defendants should not be

heard to complain about the district court’s ruling when they shifted gears into

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a new area without explaining what information they sought to elicit, or

why.16

Defendants identify no error, let alone plain error, in the district court’s

rulings on cross-examination. The court made clear that it would have allowed

evidence that counterparties would have entered into swap agreements with

Rabobank even had they known about the LIBOR manipulation at Rabobank.

See Tr. 505, 841. But defendants failed to explain to the court how their

questions aimed to elicit any such answers. Indeed, in light of the testimony by

counterparty witnesses on direct examination, it is unlikely, despite what

defendants now suggest, that the counterparties would have testified to the

exact opposite on cross-examination. Moreover, nothing prevented defendants

from offering their own witnesses from a Rabobank counterparty to say that

they would have transacted with Rabobank even had they known of its LIBOR

manipulation, assuming of course defendants could find such a witness.

Defendants had the opportunity to offer what they now claim was essential

evidence. Their arguments that the district court improperly prevented them

16 Defendants’ response to the government’s motion in limine did not

explain the basis for the question posed to DiTore, because in that filing, defendants proposed cross-examination of witnesses from other panel banks about manipulation at those banks. JA 160. DiTore’s employer, Lehman Brothers, was not a member of the LIBOR panel, see GSA 28, and therefore could not influence the LIBOR through deceptive submissions.

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from introducing the evidence are without merit. See United States v. Whitten,

610 F.3d 168, 183 (2d Cir. 2010) (no abuse of discretion where defense counsel

did not “explain the significance of [the witness’s] potential answers” on cross-

examination, “did not request a sidebar conference to argue any basis upon

which the district court should have permitted this line of questioning,” and

there was “no reason to believe that the district court would have understood

the significance of [the witness’s] potential answers”).

2. The Court’s In Limine Ruling Did Not Exclude Evidence That Defendants Now Contend They Would Have Introduced At Trial

Defendants contend (Br. 80-84) that the court’s in limine ruling

prohibited them from eliciting evidence from a defense expert (Marti

Subrahmanyam) and Michael DiTore. The court’s narrow in limine ruling did

not, however, prevent defendants from offering this evidence.

a. Background: The Government’s Motion In Limine

Before trial, the government moved to exclude evidence that “some of

Rabobank’s counterparties admitted to, or were investigated for, manipulating

LIBOR.” JA 126. The in limine motion also asked the court to prohibit

argument that “a counterparty’s involvement in LIBOR manipulation

rendered the defendants’ conduct immaterial.” JA 126-27. The government

argued that evidence of counterparty manipulation had little relevance to the

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charges against defendants and that any probative value was substantially

outweighed by the danger of unfair prejudice, confusing the issues, and

wasting time. JA 128-33; see Fed. R. Evid. 403.

Defendants responded that if witnesses from banks on the LIBOR panel

testified that they would not have entered into a swap agreement with

Rabobank had they known that Rabobank’s submitters accommodated trader

requests, defendants “should be permitted to cross-examine these witnesses by

demonstrating that swap traders at their institutions themselves requested

LIBOR submitters to put in higher or lower LIBOR rates.” JA 160. According

to defendants, this evidence would demonstrate that panel banks were aware

that they could manipulate the LIBOR and yet continued to transact with

other panel banks. JA 160-61. Defendants also claimed that Allen’s expert

(Subrahmanyam) would testify that he had reviewed documents from panel

banks and had concluded that “these institutions were aware that LIBOR was

influenced by Panel Banks’ self-interest, but continued to engage in swap

transactions with other Panel Banks nonetheless.” JA 163. According to

defendants, Subrahmanyam would also testify that institutions that used swap

agreements to hedge were “indifferent to LIBOR movements and what is

behind them.” JA 163.

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b. The Parties Understood The Narrow Scope Of The Court’s In Limine Ruling

On the first day of trial, the court granted the motion to “exclude

evidence that some of Rabobank’s [counterparties] were also attempting to

manipulate the LIBOR rate.” Tr. 4. Thereafter, the court made clear that its

ruling only precluded defendants from arguing that they were not culpable

“because other people were doing it.” Tr. 526. Defendants were allowed to

introduce evidence that counterparties were manipulating the LIBOR, so long

as it was probative of an issue relevant to defendants’ culpability and not

merely used to argue that defendants should be acquitted because others were

also engaging in the same conduct. Tr. 526-29, 535-37.

Thus, during cross-examination of Paul Robson, the court permitted

defense counsel to ask Robson if he “believed that other banks were

manipulating the LIBOR rate.” Tr. 536; see Tr. 526-29, 537-51. The court

instructed the jury that Robson’s testimony “may be relevant to his state of

mind and why he took actions he did,” but “the fact that some others may

have been [manipulating the LIBOR] doesn’t make what [defendants] were

doing right if what they were doing was illegal.” Tr. 536-37.

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c. The Court’s In Limine Ruling Did Not Preclude Expert Testimony Or Cross-Examination Of Michael DiTore

The cross-examination of Robson—by which the court allowed

testimony about attempted LIBOR manipulation by other banks—

demonstrated the parameters for any defense questions along these lines: such

evidence was admissible for purposes other than to say that defendants’

conduct was acceptable because other banks were doing the same thing.

Defendants simply did not attempt to offer any permissible justification for

eliciting such evidence during their examinations of Subrahmanyam and

DiTore.

1. Defendants contend (Br. 82-83) that they had intended to

introduce testimony from Subrahmanyam—as summarized in their expert

witness disclosure, JA 374—that many of Rabobank’s counterparties were

themselves members of the LIBOR panel, that “these institutions were aware

that LIBOR was influenced by Panel Banks’ self-interest,” and that these banks

still continued to engage in swap transactions with other panel banks.

Defendants claim (Br. 83) that the district court’s in limine ruling prohibited

this testimony.

It did not. As noted, the parties were well aware that the court’s in

limine ruling merely prohibited the use of evidence that other panel banks may

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have tried to manipulate the LIBOR as an “excuse” for conduct by defendants

that otherwise “violate[d] the law.” Tr. 527-28, 536-37. The in limine ruling

did not bar defendants from questioning Subrahmanyam, as relevant to

materiality, about whether counterparties knew about manipulation at

Rabobank and yet continued to transact with Rabobank. To the contrary, the

court made clear that it would allow evidence about whether a counterparty

“had known what is alleged and, if it were true, whether it would have

influenced [the counterparty’s] investment decision.” Tr. 505. Defendants

cannot claim that their counterfactual reading of the in limine ruling prohibited

them from pursuing a line of questioning that, by all indications, was open to

them. This Court’s decision in United States v. Litvak, 808 F.3d 160 (2d Cir.

2015), is therefore inapposite, because in that case the district court “excluded

the entirety of [the defense expert’s] proffered testimony.” Id. at 182.

Defendants also claim (Br. 72-73) that Subrahmanyam would have

testified—as again summarized in their expert witness disclosure, JA 373—that

counterparties who used interest rate swaps to hedge were “indifferent” to

manipulation of the LIBOR at Rabobank. Although defendants contend (Br.

73) that the district court “prohibited the defense from presenting this evidence

to the jury,” they cite no such ruling, and the court’s in limine ruling, again,

did not prohibit the testimony. As described, that ruling excluded, in limited

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circumstances, evidence that other panel banks attempted to manipulate the

LIBOR. The ruling left defendants free to pose questions to Subrahmanyam

about hedging, but they instead chose to focus on three discrete and different

topics. Tr. 1031-32. Defendants cannot claim that the court erroneously

excluded evidence that they never sought to introduce in the first place.

2. Defendants likewise claim that the court’s in limine ruling

prevented them from asking DiTore if it was his “understanding ..... that

LIBOR setters took their bank’s interest rate exposure into account when they

set rates.” Tr. 842. The question was ambiguous and lacked a foundation, and

those were the likely reasons the court sustained the government’s objection.

The court made no mention of its in limine ruling when it precluded this

question and had previously made clear that it would allow DiTore to testify

about how he would have responded “had [he] known that the rate was being

manipulated.” Tr. 841; see also Tr. 505 (“It is material if [the counterparty] had

known what is alleged and, if it were true, whether it would have influenced

his investment decision.”).

Without contemporaneous guidance from the defense explaining the

basis for the question posed to DiTore, as the defense provided during cross-

examination of Robson, see Tr. 525-29, the district court could not know how

the question would support a factual theory that defendants only now flesh out

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in their appellate brief. Defendants’ speculation about what a properly

informed court would (or would not) have done does not demonstrate error.17

3. The Evidence Defendants Now Claim They Would Have Introduced At Trial Would Not Have Made A Difference

Even had the district court abused its discretion in excluding the

evidence that defendants now claim was so important, no doubt would be cast

on the verdicts—for whether reviewed for plain or harmless error, the court’s

rulings did not affect the outcome.

Defendants contend (Br. 81-82) that if they were able to show that some

counterparties were on the LIBOR panel and, like them, also manipulated the

LIBOR, the evidence would have defeated the government’s proof of a scheme

to defraud, because it would have shown that the counterparties were not

actually deceived by defendants’ manipulation of the LIBOR. A number of

Rabobank’s counterparties were not members of the LIBOR panel, however,

so defendant’s notion, at the threshold, has no application to many of their

17 Defendants also suggest (Br. 81) that the in limine ruling excluded an

article from the Wall Street Journal, but they make no argument in support of this claim. A claim not adequately raised in an opening brief is waived. O’Rourke v. United States, 587 F.3d 537, 542 (2d Cir. 2009). In any event, the exclusion of the article was not an abuse of discretion: The article was not prohibited by the in limine ruling but rather, as the district court explained, was inadmissible hearsay and also excludable under Fed. R. Evid. 403. Tr. 1180-81; see Tr. 1243.

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victims. See, e.g., Tr. 495, 824; compare GSA 68 (partial list of counterparties),

with GSA 28 (panel banks). In fact, at least one counterparty thought the

LIBOR “couldn’t be manipulated.” Tr. 828. To the extent defendants suggest

that non-panel bank counterparties (e.g., DiTore, Smith, Twomey) might have

known of the manipulation (yet still transacted with Rabobank), they are even

further afield of the record. Not only did defendants not suggest such an idea

below, there is no reason to think these witnesses would have so testified. In

fact, as noted, they took the stand to say that, had they known of the

manipulation, they would have steered clear of Rabobank.

But more importantly, the wire fraud statute “punishes the scheme, not

its success.” Pasquantino, 544 U.S. at 371 (citation omitted); see United States v.

Helmsley, 941 F.2d 71, 94 (2d Cir. 1991). The government need not prove a

completed fraud or demonstrate actual reliance or damage. Bridge v. Phoenix

Bond & Indem. Co., 553 U.S. 639, 647 (2008) (the “gravamen of the offense is

the scheme to defraud”); Neder, 527 U.S. at 24-25. So even if some

counterparties were not actually deceived by defendants’ LIBOR submissions,

those submissions amounted to a scheme to defraud, because they were false

and misleading and were intended to obtain money and property through

deceit. See Bridge, 553 U.S. at 648-49 (“Using the mail to execute or attempt to

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execute a scheme to defraud is indictable as mail fraud ..... even if no one

relied on any misrepresentation.”).

Evidence that certain counterparties may have themselves manipulated

the LIBOR also was not, as defendants contend (Br. 82-83), critical to

materiality. As noted, many of Rabobank’s counterparties were not members

of the LIBOR panel. But moreover, materiality is an objective standard that

asks how a misrepresentation “would affect a reasonable person[.]” Corsey, 723

F.3d at 373. Materiality does not involve a “subjective inquiry” that looks to

the individual characteristics of the actual victim. Id. “The question is not

whether victims might smell a rotten deal before they hand over money,” but

whether a misrepresentation “is capable of influencing the decisionmaker, no

matter what the victim decides to do.” Id. at 373 n.3. Here, as Smith, Twomey,

and DiTore attested, a reasonable counterparty would have wanted to know if

it was on the disadvantaged side of a Rabobank deal. In fact, Allen himself

conceded that counterparties would not have transacted with Rabobank had

they known Rabobank traders were trying to manipulate the LIBOR. Tr. 1278.

Evidence that certain counterparties used swap agreements to hedge (Br.

71-75) also had little if any relevance to materiality. To begin with, the

evidence established that many of Rabobank’s counterparties did not use the

swaps to hedge but instead used them to generate profit. See Tr. 123-26, 135-

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36, 306-07, 835. And even for parties who used swaps to hedge, it was virtually

impossible to fully hedge against interest rate risk, and many that used swaps

to hedge did not even try to fully hedge against interest rate risk. Tr. 134-36,

501, 835-36. Moreover, a misrepresentation is actionable under the wire fraud

statute even if it causes no net loss to the victims, as long as it deprived them

“of the full information they needed to make refined, discretionary

judgments.” United States v. Leonard, 529 F.3d 83, 91 (2d Cir. 2008) (citation

omitted). A reasonable counterparty using a swap to hedge would have wanted

to know about potential manipulation in deciding whether to enter into the

swap or whether to sell the swap, and on what terms.

In light of the compelling evidence of deception and materiality, any

error in excluding defendants’ newly-proposed evidence did not affect the

outcome of the trial. Defendants’ manipulation of the LIBOR was intended to

cause counterparties to lose money in their deals with Rabobank. Any

reasonable counterparty would have wanted to know about defendants’

misrepresentations at the time they entered the swap, at the time their

payments came due on fixing dates, and when evaluating the market value of

the swap over the course of the swap’s duration. See supra pp. 62-67.

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V. The District Court Did Not Abuse Its Discretion In Denying Defendants’ Motion To Compel John Ewan’s Deposition

The district court acted well within its broad discretion in declining to

order a deposition of a potential witness in the United Kingdom. Defendants’

arguments to the contrary (Br. 76-80) are without merit.

A. Standard of Review

The decision to permit a deposition under Fed. R. Crim. P. 15 “rests

within the sound discretion of the trial court, and will not be disturbed absent

clear abuse of that discretion.” United States v. Johnpoll, 739 F.2d 702, 708 (2d

Cir. 1984) (citation omitted).

B. Background

1. Federal Rule Of Criminal Procedure 15

The Federal Rules of Criminal Procedure provide that “[a] party may

move that a prospective witness be deposed in order to preserve testimony for

trial,” and “[t]he court may grant the motion because of exceptional

circumstances and in the interest of justice.” Fed. R. Crim. P. 15(a)(1). A party

seeking a deposition has the burden of demonstrating that “(1) the prospective

witness is unavailable for trial, (2) the witness’ testimony is material, and (3)

the testimony is necessary to prevent a failure of justice.” United States v. Cohen,

260 F.3d 68, 78 (2d Cir. 2001); see United States v. Whiting, 308 F.2d 537, 541

(2d Cir. 1962) (burden on moving party).

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2. Defendants’ Motion To Compel A Deposition

Defendants moved to depose John Ewan, who had worked at the British

Bankers’ Association as its “LIBOR Manager” and “Secretary to the Foreign

Exchange and Money Markets Committee.” Dkt. 83. Defendants claimed that

Ewan’s testimony would be material because it would demonstrate that their

LIBOR submissions were not “false” or material. Dkt. 97, at 6-10. The

government did not dispute Ewan’s unavailability for trial but argued that that

the motion was untimely and that Ewan’s potential deposition testimony was

neither material nor necessary to prevent a failure of justice. SPA 3-4. In order

to demonstrate the likely content of Ewan’s deposition testimony, defendants

and the government each provided the court with select portions of Ewan’s

testimony from a criminal trial in the United Kingdom. Dkt. 93, 98.18

The district court concluded that the government had a “fair argument”

that the motion was untimely but instead denied the motion on the merits.

SPA 3; see Dkt. 103, at 36-81 (oral argument). The court concluded that

18 Ewan’s testimony was offered by the Crown in the criminal

prosecution of Thomas Hayes, in support of charges arising from manipulation of the LIBOR. Hayes, a former trader at UBS and Citigroup, was found guilty and sentenced to 11 years of imprisonment. See Chad Bray, Ex-Trader Tom Hayes Ordered to Pay $1.2 Million in Libor Case, N.Y. Times, Mar. 23, 2016, http://www.nytimes.com/2016/03/24/business/dealbook/ex-trader-tom-hayes-ordered-to-pay-1-2-million-in-libor-case.html.

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“[m]ost, if not all,” of the testimony defendants expected to elicit from Ewan

“would be inadmissible as hearsay and/or opinion evidence,” and even if

admissible, the testimony would be immaterial. SPA 5. The court explained,

for example, that Ewan would not testify that “he approved of personal

financial interests influencing [LIBOR] submissions,” let alone that he thought

such practices “were acceptable.” SPA 5.

The court subsequently denied a motion for reconsideration. SPA 7-10.

It first concluded that the motion was procedurally improper because it was

accompanied by hundreds of additional, new pages of Ewan’s trial testimony.

SPA 9-10; see Dkt. 106-1, 106-2, 106-3 (U.K. trial transcripts). The court also

denied the reconsideration motion on the merits, concluding that “the

additional material, even if considered at this belated stage, does not alter” the

court’s previous conclusion. SPA 10. The court found that the additional

excerpts did not support defendants’ assertions and, moreover, “much of the

new testimony is riddled with inadmissible hearsay, as well as the witness’s

own admissions of uncertainty.” SPA 10.

C. Argument

The district court acted well within its broad discretion in denying the

motion to depose Ewan. The contents of Ewan’s trial testimony in the United

Kingdom confirmed that his deposition testimony would be neither material

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nor necessary to prevent a failure of justice under Rule 15. In fact, Ewan’s

United Kingdom testimony aligned with the government’s case, not Allen and

Conti’s defense. Ewan testified that the BBA never approved or endorsed any

deviation from the established LIBOR definition and was never prepared to let

panel banks ignore or not adhere to that definition. Dkt. 106-1, at 12; see Dkt.

106-1, at 24-25 (definition did not change). Ewan testified that it was “clearly

not within the spirit or the letter of the definition” for a submitter to take into

account benefits to a trader’s portfolio. Dkt. 106-1, at 13. Ewan confirmed that

it was “not remotely compatible” with the LIBOR definition to try to “get the

LIBOR to move” in a “particular direction” and at a “particular time” in order

to benefit a trader’s position. Dkt. 106-1, at 14. Ewan testified that through

2010 he did not have any suspicion or awareness that this type of conduct was

taking place and first became aware of it in 2012. Dkt. 106-1, at 14, 26-28.

Defendants nonetheless strain to interpret Ewan’s testimony in a manner

that suggests it would have been material and necessary to their defense. Their

efforts fall short.

1. Defendants contend (Br. 77) that Ewan’s deposition testimony

would have shown that he believed it was acceptable to deviate from the

“written” definition of LIBOR, as long as submitters remained consistent with

the “spirit” of the definition. But Ewan’s testimony in the United Kingdom

105

made clear that, in his view, neither the spirit nor letter of the definition

contemplated that a submitter could take into account the financial benefits

that a higher or lower submission would provide to a derivatives trader who

held a positon tied to the LIBOR. Dkt. 106-1, at 13.

2. Defendants contend (Br. 78) that Ewan would have testified that

the LIBOR definition allowed a submitter to select any number within a “wide

range of offered rates.” In his testimony in the United Kingdom, however,

Ewan explained that “there is a final component to the definition which is a

bank can’t submit a range, it has to submit one number.” Dkt. 106-3, at 8

(emphasis added). And “in order to arrive at that ..... one number,” Ewan

explained, the submitter must answer the question, “[W]here do you think you

would be lent money? And there can only be one answer to that and it should be

where you think an unnamed counterparty would offer you money.” Dkt.

106-3, at 8 (emphasis added). According to Ewan, the LIBOR submitter

“should be using all of the information available to [him] to get to that one

figure.” Dkt. 106-3, at 8 (emphasis added).

3. Defendants contend (Br. 78) that Ewan would have testified that

“virtually everyone responsible for LIBOR submissions engaged in conduct

similar” to defendants and yet “the BBA did not put a stop to that practice.”

106

To the contrary, Ewan made clear that he was unaware of this conduct until

2012. Dkt. 106-1, at 14, 26.

Defendants’ reliance on United States v. Litvak, 808 F.3d 160 (2d Cir.

2015), is misplaced. In that case, the Court held that evidence that managers at

the defendant’s company approved of other employees engaging in the same

conduct was relevant, under Federal Rule of Evidence 401, to the defendant’s

criminal intent. Id. at 188-89. Putting aside that relevance under Rule 401 is

different than materiality under Rule 15, cf. Rigas, 490 F.3d at 234

(“‘[R]elevance’ and ‘materiality’ are not synonymous.”), defendants’

contention falls on the facts. The permissible inference from the evidence in

Litvak was that the defendant knew the managers at his company sanctioned

the similar conduct of other employees, whereas here there is no suggestion

that Ewan would testify that defendants knew other banks engaged in similar

conduct, let alone that the BBA sanctioned defendants’ misrepresentations. In

fact, the evidence here demonstrated that Allen repeatedly assured Ewan

(falsely) that Rabobank’s LIBOR submissions conformed to the BBA

definition. See Tr. 408-14; GSA 73-78.

4. Defendants also contend (Br. 77) that the government attempted to

portray the LIBOR definition as “the equivalent of law,” and that Ewan’s

testimony would have established that LIBOR was produced by a trade

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organization and not legally binding. The evidence at trial established,

however, that the LIBOR definition was devised by the BBA, not a

government agency, and the government never claimed otherwise. See, e.g., Tr.

139-49 (government expert testifying that BBA established and published the

LIBOR definition).

In sum, defendants fail to establish the exceptional circumstances that

would warrant a deposition under Rule 15—and given the substance of Ewan’s

testimony, they surely do not show how it was material or, even more,

necessary to prevent an injustice. The district court did not abuse its discretion

in denying their motion. The district court carefully considered defendants’

claims and, in light of Ewan’s testimony at a criminal trial in the United

Kingdom, correctly concluded that his deposition testimony would not be

material.

VI. The District Court Correctly Denied Defendants’ Kastigar Motion

Defendants contend (Br. 96-126) that the district court erroneously

denied their motion for relief under Kastigar v. United States, 406 U.S. 441

(1972). Their arguments lack merit.

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A. Background

1. Legal Background: The Kastigar Decision

The Fifth Amendment provides that “[n]o person ..... shall be compelled

in any criminal case to be a witness against himself.” U.S. Const. amend. V.

The federal immunity statute authorizes the government to obtain a court

order requiring a witness to provide testimony despite invocation of the

privilege against self-incrimination, “but no testimony or other information

compelled under the order (or any information directly or indirectly derived

from such testimony or other information) may be used against the witness in

any criminal case.” 18 U.S.C. §§ 6002-6003.

In Kastigar, the Supreme Court held that the scope of the immunity

provided by this statute, which prohibits both direct and derivative use of

immunized testimony, is coextensive with the protections of the Fifth

Amendment, and therefore the statute may be used to compel testimony over a

claim of the privilege. 406 U.S. at 453. Once a defendant demonstrates that he

has testified under a grant of immunity about matters related to the federal

prosecution, prosecutors have the burden of showing—by a preponderance of

the evidence—that their evidence is not tainted and derives from a legitimate

source wholly independent of the compelled testimony. Id. at 460; see United

States v. Nanni, 59 F.3d 1425, 1431-32 (2d Cir. 1995).

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2. U.K. And U.S. Authorities Separately Investigate Manipulation Of The LIBOR At Rabobank

As of 2012, the Justice Department and the United Kingdom’s Financial

Conduct Authority (FCA) had each commenced separate investigations into

manipulation of the LIBOR at Rabobank. Kastigar Tr. 133-36; SPA 15.19 The

FCA and the Justice Department separately received documents from

Rabobank and interviewed witnesses. Kastigar Tr. 134-37; SPA 26-27.

The FCA began interviewing witnesses around November 2012.

Kastigar Tr. 135. In accordance with U.K. law, the witnesses were granted

immunity from direct use of their testimony but not derivative use. Kastigar

GX 205, at 2. Refusal to provide testimony on these terms was punishable

through contempt sanctions. SPA 15-16. The FCA interviewed a number of

Rabobank witnesses under these procedures, including Paul Robson (on

January 17, 2013), Conti (on January 25, 2013), and Allen (on June 20 and 21,

2013). SPA 15-16; see Kastigar GX 205, 206 (Conti and Allen transcripts).

During his interview, Robson denied improper conduct at Rabobank. Tr.

418, 625-27, 638; Kastigar Tr. 75. Allen and Conti also “disavowed”

19 The FCA replaced the Financial Services Authority (FSA) on or about

April 2013. SPA 15 n.4. We refer to both U.K. agencies as the FCA.

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misconduct during their interviews and frequently claimed a lack of

recollection. SPA 35; see generally Kastigar GX 205, 206 (interview transcripts).

3. The Justice Department Conducts Interviews And Enters Into A Deferred Prosecution Agreement With Rabobank

The Justice Department, out of an abundance of caution, requested that

the FCA not share the interviews or any information derived from the

interviews, emphasizing the importance of maintaining a “wall” between the

investigations conducted by the two countries in order to avoid potential Fifth

Amendment issues in the event of a criminal prosecution in the United States.

SPA 28-29; Dkt. 95-2, 190-6, 190-7. The FCA agreed to abide by this request

and agreed to procedures to maintain a wall, including a “day one/day two”

interview procedure in which the Justice Department interviewed witnesses

prior to the FCA. SPA 28-29; Dkt. 95-3; Kastigar Tr. 135-36.

The Justice Department separately interviewed witnesses in accordance

with these procedures. Kastigar Tr. 136-37. Between January and August

2013, the Department interviewed Conti, Lee Stewart, Paul Thompson,

Damon Robbins, Takayuki Yagami, and Christian Schluep, among others.

Kastigar Tr. 137-43. A number of the witnesses provided information that

incriminated Allen and Conti. SPA 27.

On October 29, 2013, the Justice Department entered into a deferred

prosecution agreement with Rabobank. SPA 18.

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4. The FCA Temporarily Decides To Pursue Regulatory Proceedings Against Robson And Provides Him With Interview Transcripts

In November 2013, the FCA sent Robson’s U.K. legal counsel a warning

notice informing him that the FCA intended to pursue regulatory proceedings

against Robson. SPA 16. In accordance with U.K. law, the FCA accompanied

the notice with materials supporting the charges against Robson, including

FCA interview transcripts. SPA 16; Kastigar Tr. 5. Among the materials sent

to Robson’s counsel were transcripts of the FCA’s interviews with Allen and

Conti. SPA 16-17.

Robson’s counsel sent the box of materials to Robson and instructed

him, in preparation for meeting with his lawyers, to read through the materials

and highlight anything that was relevant or raised questions. SPA 16-17;

Kastigar Tr. 5-6, 20, 76, 186. Robson read through the materials as instructed

over the course of about seven hours, spread over two afternoons. SPA 17;

Kastigar Tr. 6. He circled and underlined some passages in the transcripts,

including the transcripts of Allen’s and Conti’s testimony. SPA 17; Kastigar

Tr. 76, 185-86, 221; JA 742-851 (excerpts of transcripts with notations).

A number of days later, before Robson had the opportunity to discuss

the materials with counsel, his lawyer instructed him to “seal the box, mark it

with legal/professional privilege, and put it out of the way,” because the FCA

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regulatory proceedings had been stayed in favor of criminal proceedings. SPA

17; Kastigar Tr. 6-7, 78. Robson did as instructed and placed the box in his

attic. SPA 17; Kastigar Tr. 6, 20-22. He did not review the materials in the box

at any point afterwards. SPA 17-18; Kastigar Tr. 7, 23-24.

5. Robson Is Indicted And Agrees To Plead Guilty And Cooperate With The Justice Department

On April 18, 2014, a federal grand jury in New York returned an

indictment charging Robson and two other Rabobank employees (Thompson

and Motomura) with wire fraud and conspiracy to commit wire fraud and

bank fraud. SPA 18. Another Rabobank employee, Takayuki Yagami, had

previously agreed to cooperate with the U.S. government and, on June 10,

2014, pleaded guilty to conspiracy charges. SPA 18; Kastigar Tr. 247.

Robson also decided to plead guilty and cooperate. SPA 18, 24; Kastigar

Tr. 7-8. He met with U.S. investigators for the first time on July 17 and 18,

2014, and pleaded guilty on August 18, 2014. SPA 18; JA 852. Robson

provided the government with information about his involvement in

manipulating the LIBOR, as well as information about Allen’s and Conti’s

involvement. See JA 852-73. Robson was instructed not to share any

information that he may have learned from the FCA. SPA 29 & n.16; Kastigar

Tr. 8-10, 136-37, 145-46.

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6. Defendants Are Indicted And The District Court Holds A Kastigar Hearing

On October 16, 2014, a federal grand jury returned a superseding

indictment that for the first time charged Allen and Conti with wire fraud and

conspiracy to commit wire fraud and bank fraud. SPA 18-19. In obtaining the

indictment, the government presented evidence to the grand jury through FBI

Agent Jeffrey Weeks. SPA 32-33; see Kastigar GX 186 (grand jury transcript).

Agent Weeks testified about inculpatory documents and information from

witness interviews, including his interviews with Robson, Schluep, and

Yagami. SPA 33.

Defendants moved to dismiss the indictment or suppress Robson’s

testimony, arguing that the case against them was “irrevocably tainted” by

Robson’s exposure to their FCA testimony. Dkt. 76, at 5. The district court

concluded that a hearing was necessary to resolve the motion. Dkt. 111. After

consulting with counsel, the court decided that, “in accordance with prevailing

practice in the Second Circuit,” the hearing would take place after trial if still

necessary. JA 921.

Defendants were convicted after a jury trial, as described above, at which

the jury was presented with, among other things, testimony from Robson. See

supra pp. 19-21. At the ensuing Kastigar hearing, the government presented

testimony from Robson and Agent Weeks, along with supporting exhibits.

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Kastigar Tr. 4-257. Among the exhibits introduced at the hearing were charts

that catalogued Robson’s trial testimony and identified (1) any overlap

between Robson’s testimony and defendants’ FCA testimony, and (2) the

bases for concluding that Robson’s testimony derived from sources wholly

independent from defendants’ FCA testimony. JA 923-64.

7. The District Court Denies The Kastigar Motion

The district court denied the motion in a 25-page opinion. SPA 12-36.

The court declined to reach the government’s argument that Kastigar does not

apply when a foreign government compels a defendant’s testimony. SPA 20

n.8. The court concluded that “even assuming Kastigar applies to testimony

compelled by a foreign sovereign, the Government has met its Kastigar burden

on the facts here determined.” SPA 20 n.8. The court considered and rejected

each of the four claims of taint that, according to defendants, resulted from

Robson’s exposure to the transcripts of their FCA testimony. SPA 22-36.

First, the court concluded that Robson’s decision to cooperate was not

influenced by his review of defendants’ FCA testimony. SPA 23-24. The court

concluded that “the evidence the Government adduced at the Kastigar hearing

and at the trial” established that Robson’s cooperation was motived by the

strength of the evidence against him and his hope to receive sentencing

benefits. SPA 24.

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Second, the court concluded that the government’s decision to prosecute

Allen and Conti was not caused by information provided by Robson that was

tainted by his exposure to their FCA testimony. SPA 25-32. The court found

that the government had proved that its decision to prosecute had a basis

independent from defendants’ FCA testimony. SPA 26-32.

Third, the court concluded that the government did not present evidence

to the grand jury that was tainted by Robson’s exposure to defendants’ FCA

testimony. SPA 32-34. The court found that “a substantial portion of” Agent

Weeks’ grand jury testimony derived from sources other than Robson. SPA 32-

33. With respect to his testimony that derived from Robson, the court

concluded that the government demonstrated the source of that information

was independent from Allen’s and Conti’s FCA testimony, namely Robson’s

“personal experience and observations.” SPA 33-34.

Fourth, the court concluded that the evidence at trial, and in particular

Robson’s trial testimony, was not tainted by Robson’s exposure to defendants’

FCA testimony. SPA 34-36. The court credited “Mr. Robson’s testimony at

the Kastigar hearing” and found persuasive the government’s chart “comparing

Mr. Robson’s trial testimony with defendants’ compelled testimony.” SPA 34.

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B. Standard Of Review

This Court reviews legal conclusions de novo and findings of fact for

clear error. See, e.g., United States v. Wilson, 699 F.3d 235, 241 (2d Cir. 2012). A

district court’s finding that the government did not use immunized testimony is

a factual finding. United States v. Blau, 159 F.3d 68, 73 (2d Cir. 1998). The

Court will deem a factual finding to be clearly erroneous only if it reviews “all

of the evidence” and is “left with the definite and firm conviction that a

mistake has been committed.” United States v. David, 681 F.3d 45, 48 (2d Cir.

2012) (citation omitted). A factual finding based on witness testimony and the

district court’s observation of a witness is “entitled to particular deference,”

because “assessing the credibility of witnesses is distinctly the province of the

district court.” United States v. Cuevas, 496 F.3d 256, 267 (2d Cir. 2007)

(citations omitted).

C. Argument

It is undisputed that investigators and prosecutors from the Justice

Department never reviewed or otherwise saw the transcripts of Allen’s and

Conti’s FCA testimony. Defendants’ Fifth Amendment claim instead is

premised solely on Robson’s exposure to those transcripts. According to

defendants, Robson’s exposure to the transcripts affected (1) the information

he provided to Justice Department investigators (which was presented to the

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grand jury by Agent Weeks and used to procure the indictment), and (2) his

testimony at trial (which was used to procure the convictions).20

Defendants’ arguments fail for three independent reasons. To begin with,

a violation of the Fifth Amendment prohibition against compelled self-

incrimination requires compulsion by a sovereign bound by the Self-

Incrimination Clause, namely a state government of the United States or the

federal government. Second, even if testimony compelled by a foreign

sovereign could trigger Fifth Amendment protections, the district court

correctly found—on the basis of all the evidence presented to the court at trial

and at the Kastigar hearing—that Robson’s exposure to the FCA transcripts

had no effect on the information he provided to the Justice Department or on

his trial testimony. In other words, the court correctly found that the evidence

presented to the grand and petit juries was wholly independent from the

testimony that Conti and Allen provided to the FCA. The court’s findings,

grounded in its painstaking review of the “mass of materials” adduced at the

Kastigar hearing, as well as the court’s assessment of “the demeanor and

20 Defendants do not renew their claims, asserted in the district court,

that Robson’s decision to cooperate and the government’s decision to prosecute were tainted by Robson’s exposure to their FCA testimony. Appellate review of those claims is therefore waived. See LoSacco v. City of Middletown, 71 F.3d 88, 92 (2d Cir. 1995).

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credibility of the witnesses,” SPA 15, are not clearly erroneous. Finally, even

assuming there was error, it was harmless beyond a reasonable doubt.

1. The Interviews Conducted By U.K. Authorities Do Not Implicate The Fifth Amendment

“[A] necessary element of compulsory self-incrimination is some kind of

compulsion.” Hoffa v. United States, 385 U.S. 293, 304 (1966). In addition, a

violation of the Fifth Amendment’s right against self-incrimination occurs only

when a compelled statement is used in a criminal case against the defendant.

In re Terrorist Bombings of U.S. Embassies in E. Africa, 552 F.3d 177, 199 (2d Cir.

2008). Thus, the two necessary predicates for a violation of the Self-

Incrimination Clause are (1) compulsion and (2) use of the compelled

statement in a criminal case.

The Supreme Court has held that the use requirement is limited to use

“by the government whose power the Clause limits” and does not encompass a

foreign sovereign’s use of a compelled statement. United States v. Balsys, 524

U.S. 666, 669, 672-74 (1998). Although neither this Court nor the Supreme

Court has directly addressed whether the compulsion required by the Fifth

Amendment includes compulsion by a foreign sovereign, the weight of

authority establishes that only compulsion by sovereigns bound by the Fifth

Amendment (i.e., our country’s state and federal governments) can result in a

violation.

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Before the right against compelled self-incrimination was determined to

bind the states by incorporation through the Due Process Clause, the Supreme

Court held that a statement compelled under a grant of immunity by state

authorities (then not bound by the Fifth Amendment) could be used in a

federal criminal case (which of course has always been bound by the Fifth

Amendment). Feldman v. United States, 322 U.S. 487, 491-92 (1944). The Court

similarly held that the federal government could compel a witness to give

testimony that might incriminate him under state law. United States v. Murdock,

284 U.S. 141, 149 (1931). Reconsideration of this rule was necessitated by the

Court’s later conclusion that the Self-Incrimination Clause was binding on the

states, because “the Fifth Amendment limitation could no longer be seen as

framed for one jurisdiction alone, each jurisdiction having instead become

subject to the same claim of privilege flowing from the one limitation.” Balsys,

524 U.S. at 681. The logic of these early cases supports the conclusion that the

compelling authority and the using authority must both be “bound by” the

Self-Incrimination Clause. Id. at 681. At the “heart” of the Self-Incrimination

Clause “lies the principle that the courts of a government from which a witness

may reasonably fear prosecution may not in fairness compel the witness to

furnish testimonial evidence.” Id. at 682-83.

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Cases applying Miranda v. Arizona, 384 U.S. 436 (1966), buttress this

conclusion. Under Miranda, the government may not use unwarned statements

obtained from a suspect during custodial interrogation. Oregon v. Elstad, 470

U.S. 298, 306-07 (1985). Miranda establishes a prophylactic rule intended to

protect the suspect’s Fifth Amendment right against compelled self-

incrimination and in fact “sweep[s] beyond the actual protections of the Self-

Incrimination Clause.” United States v. Patane, 542 U.S. 630, 637-39 (2004).

This Court has held, however, that Miranda does not bar the use of statements

obtained through custodial interrogation conducted overseas by foreign

officials. In re Terrorist Bombings, 552 F.3d at 202-03.

It is true that the Supreme Court, in Bram v. United States, 168 U.S. 532

(1897), found a Fifth Amendment violation when testimony was coerced by

foreign police officers, but Bram did not address the distinction between

coercion by foreign and domestic authorities, and it has been undercut by

subsequent Supreme Court authority. In particular, although Bram determined

that a confession is involuntary if obtained by “any direct or implied promises,

however slight, [or] by the exertion of any improper influence,” 168 U.S. at

542-43, the Court has since made clear that “this passage from Bram ..... does

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not state the standard for determining the voluntariness of a confession,”

Arizona v. Fulminante, 499 U.S. 279, 285 (1991).21

The “modern test for voluntariness is well established and multi-

faceted,” United States v. Orlandez-Gamboa, 320 F.3d 328, 332-33 (2d Cir. 2003),

and it requires, among other things, coercive state action resulting in a

confession by the defendant, Colorado v. Connelly, 479 U.S. 157, 166-67 (1986).

Accordingly, in United States v. Salameh, 152 F.3d 88 (2d Cir. 1998), this Court

held that the defendant had no viable constitutional claim that his statements

were involuntary when he made the statements to federal agents but the

alleged coercive conduct was perpetrated by foreign authorities abroad. Id. at

117; see also Mickey v. Ayers, 606 F.3d 1223, 1234 (9th Cir. 2010) (confession

could not be involuntary when allegedly coerced by Japanese police).

The cases cited by defendants (Br. 100-01) do not support a different

conclusion. Defendants rely on two cases in which this Court stated that

“statements taken by foreign police in the absence of Miranda warnings are

21 In addition, Bram located the right against use of involuntary

confessions in the Self-Incrimination Clause, 168 U.S. at 542-43, whereas later cases generally locate that right in the Due Process Clause, see Colorado v. Connelly, 479 U.S. 157, 163 (1986); United States v. Orlandez-Gamboa, 320 F.3d 328, 332 (2d Cir. 2003). To the extent the standard for voluntary confessions is grounded in due process, that standard should not determine whether a foreign grant of immunity triggers the government’s heavy burden under Kastigar and the Self-Incrimination Clause.

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admissible if voluntary.” United States v. Yousef, 327 F.3d 56, 145 (2d Cir.

2003); In re Terrorist Bombings, 552 F.3d at 203 (quoting Yousef). The “if

voluntary” language that appears in those cases, however, apparently derived

from Bram, see United States v. Welch, 455 F.2d 211, 213 (2d Cir. 1972) (cited in

both cases and relying on Bram), and was not necessary to the decisions

reached in those cases, see In re Terrorist Bombings, 552 F.3d at 198-215; Yousef,

327 F.3d at 144-46. The cases did not purport to, and could not, overrule prior

panel precedent (Salameh) or precedent from the Supreme Court (Colorado v.

Connelly). See United States v. Snow, 462 F.3d 55, 65 n.11 (2d Cir. 2006) (“[A]

prior decision of a panel of this court binds all subsequent panels ‘absent a

change in law by higher authority or by way of an in banc proceeding.’”); see

also United States v. Wolf, 813 F.2d 970, 972 n.3 (9th Cir. 1987) (recognizing

that “[t]he continuing vitality of [the Ninth Circuit’s] holding in [Brulay v.

United States, 383 F.2d 345, 348 (9th Cir. 1967), cited by defendants (Br. 100-

01)] was cast into serious doubt by Colorado v. Connelly”).22

22 To be sure, there may be some other constitutional doctrine apart from

the Fifth Amendment right against self-incrimination that would require exclusion of a confession coerced by foreign officials, such as a due process violation based on conduct that “shocks the judicial conscience.” Yousef, 327 F.3d at 146; see 2 Wayne R. LaFave, et al., Crim. Proc. § 6.10(d) (4th ed. 2015). But no such doctrine has been—or could be—claimed to apply in this case.

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Defendants’ argument is akin to a claim that the Self-Incrimination

Clause prohibits prosecutors from using statements obtained by a private

employer through a threat of adverse employment consequences. Although

statements provided by a government employee under threat of discharge may

not be used in a subsequent prosecution, Garrity v. New Jersey, 385 U.S. 493,

496 (1967), the same is not true when a private entity, such as the New York

Stock Exchange, obtains an employee’s statements through threat of discharge,

United States v. Solomon, 509 F.2d 863, 867-71 (2d Cir. 1975) (Friendly, J.). For

purposes of the Fifth Amendment, the British government is on the same

footing as a private entity such as the New York Stock Exchange.

In sum, a statement obtained by a foreign government through a grant of

immunity is not a “compelled” statement for purposes of the Fifth

Amendment. A holding to the contrary could seriously hamper the

prosecution of criminal conduct that crosses international borders. A foreign

government could inadvertently scuttle prosecutions in the U.S. by compelling

testimony and then making the testimony available to potential witnesses or

the public. Worse yet, a hostile government bent on frustrating prosecution of

a defendant would have to do no more than compel a witness to testify and

then publicize the substance of that testimony, unilaterally putting the United

States to its heavy Kastigar burden. Suffice it to say that it is not for a foreign

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sovereign to determine when to place such obstacles in the way of a U.S.

prosecution.

2. Assuming The Fifth Amendment Applies, The District Court Correctly Concluded There Was No Violation

The district court concluded that the government established that there

was a source of Robson’s testimony wholly independent from defendants’

FCA testimony, namely Robson’s personal experience and observations. The

court’s findings were not clearly erroneous.

a. Robson’s Kastigar Testimony Established That His Trial Testimony And The Evidence Presented To The Grand Jury Were Not Tainted By His Exposure To Defendants’ FCA Testimony

At the Kastigar hearing, Robson testified that when he met with federal

prosecutors for the first time in July 2014, he had no specific recollection of the

materials the FCA had provided to him, which he read through once in

November or December 2013. Kastigar Tr. 8; SPA 16 & n.6. Robson testified

that he had only an “[i]ncredibly vague” memory of the contents of the

transcripts, which included but were not limited to Allen’s and Conti’s

testimony. Kastigar Tr. 16; see Kastigar Tr. 126. According to Robson, he

recalled “kind of the background of the overall transcripts” and retained “more

a kind of an overall feel for what was being said,” namely that “some people

were saying it never happened, some people were saying they didn’t

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understand what was going on.” Kastigar Tr. 16. Robson testified that the

information he provided to government investigators after he decided to

cooperate derived from his personal knowledge and was not informed in any

way by defendants’ FCA testimony. Kastigar Tr. 126-28.

Robson also testified at the Kastigar hearing that defendants’ FCA

testimony did not in any way inform his testimony at trial, which commenced

in October 2015, almost two years after he reviewed the transcripts. Kastigar

Tr. 10-12, 126, 213-14. Robson testified that the bases for his trial testimony

about the scheme to manipulate the LIBOR were “my observations, personal

experiences, and my own professional understanding of the terminology in the

market at the time.” Kastigar Tr. 11. His testimony about the instructions he

received from Allen to accommodate trader requests was “based upon what I’d

been told at that time.” Kastigar Tr. 11-12. His testimony about Conti’s

participation in the scheme similarly was based on “what was happening at the

time, what I’d lived through at Rabobank and what I’d observed, again, my

understanding of terminology in the market.” Kastigar Tr. 12. Robson’s

testimony about chats, emails, and audio recordings also derived from his

personal experiences and his knowledge of market terminology, and was not in

any way informed by defendants’ FCA testimony. Kastigar Tr. 12-14.

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The district court credited Robson’s testimony. SPA 24 & n.13, 29, 31,

34. Defendants had ample opportunity to challenge Robson’s memory and

veracity. SPA 24 n.3. The court “carefully considered [the defense] arguments”

but found them “totally unpersuasive,” instead concluding that Robson’s

testimony “at the trial and at the Kastigar hearing” was “highly credible.” SPA

24 n.13; see United States v. Weissman, 195 F.3d 96, 99 (2d Cir. 1999) (district

court is “in the best position to evaluate [the] witness’s demeanor and tone of

voice as well as other mannerisms that bear heavily on one’s belief in what the

witness says”) (citation omitted).

The court’s finding was not clearly erroneous. The government thereby

sustained its burden of proving, by a preponderance of the evidence, that the

grand jury evidence and Robson’s trial testimony were untainted by

defendants’ FCA testimony. The D.C. Circuit’s decision in United States v.

Poindexter, 951 F.2d 369 (D.C. Cir. 1991), does not support a contrary

conclusion. In that case, John Poindexter provided immunized and highly

publicized testimony to Congress about the Iran/Contra affair, and Oliver

North, who was also charged with offenses arising from the same events and

was a witness at Poindexter’s trial, “had spent literally days with the testimony

as it happened, and then afterwards, and then again in preparation for his

[own] trial.” Id. at 375 (quotation omitted). At a Kastigar hearing, North

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testified that he could not rule out the possibility that his testimony about the

Iran/Contra events was a product of “having refreshed myself and having

studied [Poindexter’s immunized testimony] very carefully.” Id. The court of

appeals concluded that even if North’s assertion were “given no weight,” the

government would still have failed to meet its burden of demonstrating “that

the immunized testimony did not influence the witness.” Id. at 376 (emphasis

omitted). “[W]here a substantially exposed witness does not persuasively claim

that he can segregate the effects of his exposure,” the court ruled, “the

prosecution does not meet its burden merely by pointing to other statements of

the same witness that were not themselves shown to be untainted.” Id.

Poindexter is far different than this case. North’s exposure to the

immunized testimony was much more extensive and studied than Robson’s

single read-through. More important, whereas North was unable to say that his

trial testimony was unaffected by his exposure to Poindexter’s immunized

testimony, Robson was confident that his testimony was in no way affected by

his exposure to defendants’ FCA testimony. The record in this case therefore

contains what was missing in Poindexter: the witness’s “persuasive[]” testimony

that “he can segregate the effects of his exposure” to immunized testimony.

Poindexter, 951 F.2d at 376.

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Defendants nonetheless suggest (Br. 108) that when a witness is exposed

to immunized testimony, the government can satisfy its Kastigar burden only

by obtaining the witness’s “canned” testimony (prior to exposure) and

demonstrating that the “canned” testimony is identical to the witness’s

subsequent trial testimony. Although defendants derive this argument largely

from D.C. Circuit precedent, that court has made clear that canned testimony

is not required. United States v. Slough, 641 F.3d 544, 550 (D.C. Cir. 2011);

United States v. North, 920 F.2d 940, 942-43 (D.C. Cir. 1990). “Where two

independent sources of evidence, one tainted and one not, are possible

antecedents of particular testimony, the tainted source’s presence doesn’t ipso

facto establish taint.” Slough, 641 F.3d at 551; accord Nanni, 59 F.3d at 1432.

The government need only show that the source of the testimony was “the

witness’s perceptions of what happened.” Slough, 641 F.3d at 551. The

government can satisfy that burden, as it did here, through the witness’s

“persuasive[]” testimony at a Kastigar hearing. Poindexter, 951 F.2d at 376.

Defendants erroneously contend (Br. 117-18) that Robson’s testimony is

akin to the “rote denials” that this Court has deemed insufficient to carry the

government’s Kastigar burden. The type of bare assertions rejected by this

Court, however, were assertions by prosecutors that they did not use or have

access to immunized testimony. See United States v. Nemes, 555 F.2d 51, 55 (2d

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Cir. 1977); United States v. Tantalo, 680 F.2d 903, 908 (2d Cir. 1982). A

prosecutor’s mere denial of use or access is not sufficient to carry the

government’s burden (and avoid a Kastigar hearing) because although “[t]he

prosecutor may have never seen the witness’s testimony and may believe in

good faith that no one associated with the federal prosecution has seen it,”

“such a disclaimer does not preclude the possibility that someone who has seen

the compelled testimony was thereby led to evidence that was furnished to

federal investigators.” Nemes, 555 F.2d at 55 (2d Cir. 1977). This Court has

never concluded that credible testimony by an allegedly tainted witness is

insufficient to refute a claim of taint, let alone when that witness, as in this

case, is the only alleged source of the taint.

b. The Record Corroborated Robson’s Kastigar Testimony And Further Demonstrated A Lack Of Taint

Robson’s testimony was sufficient standing alone to sustain the

government’s Kastigar burden. The district court, however, did not rely solely

on Robson’s testimony and also concluded, appropriately, that other

components of the record further established an absence of taint.

1. Elements of a witness’s “testimony that do not overlap with the

content of the immunized statements” presumptively “could not have been

tainted.” Slough, 641 F.3d at 550. Thus, when a witness testifies about “specific

130

recollections with no referent ..... in defendants’ immunized statements,” and

therefore the testimony has “no antecedent in the immunized statements,” the

testimony “cannot be tainted,” “unless somehow the statements caused [the

witness’s] testimony in some subtler way.” Id. Moreover, a defendant must

“lay[] a firm foundation resting on more than suspicion that proffered evidence

was tainted by exposure to immunized testimony.” Id. at 551 (citations

omitted). A witness’s “exposure to immunized testimony can hardly be said to

meet that burden as to completely non-overlapping points.” Id.

The district court correctly observed that there was “no overlap between

the great bulk of Mr. Robson’s trial testimony and defendants’ compelled

statements.” SPA 35. The court specifically credited the charts composed by

the government that catalogued Robson’s testimony, dividing it into

component pieces by subject matter, and comparing it against Allen’s and

Conti’s FCA testimony. SPA 34-35. Those charts demonstrated that 31 of the

58 topics discussed during Robson’s testimony had no antecedent in Allen’s

FCA testimony, see JA 923-46, and 40 of the 58 topics had no antecedent in

Conti’s FCA testimony, see JA 947-64. Together with Robson’s testimony at

the Kastigar hearing, the charts further supported the court’s finding that

Robson’s trial testimony, and his evidence before the grand jury, had a “wholly

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independent source” apart from defendants’ FCA testimony, SPA 31, 34,

namely Robson’s “personal experience and observations,” SPA 33-34.

Defendants attempt (Br. 109-12) to rebut this showing with what the

district court found were “unconvincing ..... speculations that certain aspects of

Mr. Robson’s testimony were derived from the defendants’ compelled

testimony.” SPA 35. For example, Allen testified before the FCA that he had

no recollection of compliance training at Rabobank, JA 761-62, whereas

Robson testified at trial about a discussion with Allen after they attended

compliance training on conflicts of interest, Tr. 340-42; see Tr. 469-82.

Defendants speculate that Allen’s FCA testimony affected Robson’s trial

testimony because Robson knew, from reviewing the FCA testimony, that

Allen “could not recall any conflicts-of-interest training, and therefore, could

not easily refute Mr. Robson’s story.” Br. 112.

Allen’s speculation does hold up to casual scrutiny, let alone compel

rejection of Robson’s credible testimony. As a general matter, if Allen’s

speculation were enough to show taint, it would categorically preclude

inculpatory testimony from Robson about any topic about which defendants’

claimed a lack of recollection. More specifically, Robson began cooperating

with the government in July 2014, but he did not disclose the information

about the compliance training until June 2015, which was when he recalled the

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events. Kastigar Tr. 68-76, 88-89; Tr. 474-75; JA 874. If it were the case that

Robson’s November 2013 review of Allen’s FCA testimony prompted that

information, one would have expected him to reveal the information earlier.

2. Substantial evidence from other witnesses also tended to show that

Robson’s testimony derived from his personal experiences, rather than

defendants’ FCA testimony. The government catalogued at length, in the

charts provided to the district court, the witness testimony that corroborated

Robson’s trial testimony. See, e.g., JA 930.

For example, at trial, Robson testified about a “heated” argument

between Lee Stewart and Damon Robbins. Tr. 399-401. Defendants speculate

(Br. 113) that Robson did not personally witness this argument but instead first

learned of it by reading Allen’s FCA testimony. Stewart himself, however,

testified about the argument, explaining that he and Robbins “were shouting at

each other” at the “desk,” Tr. 254-55, where Allen, Conti, Robson, Stewart,

Robbins, and others all worked in close proximity to each other, Tr. 179-83. As

the district court concluded, this, along with other similarly corroborative

testimony, “shows that the relevant information about defendants was known

by co-workers who had not been exposed to their compelled testimony, raising

the likelihood that Mr. Robson, through his years of personal experience at

Rabobank, had alternative sources for this information.” SPA 35.

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3. Also, much of Allen’s and Conti’s FCA testimony consisted of

cursory denials, ambiguous answers, or claimed failures of recollection. See

SPA 35-36 (citing examples). A defendant’s immunized testimony

“consist[ing] mostly of denials and ambiguous answers” provides “nothing to

use” against the defendant in a criminal case. United States v. Gallo, 863 F.2d

185, 190 (2d Cir. 1988).

Conti and Allen claim (Br. 119-20) that even their denials of wrongdoing

could be used against them. But “a defendant’s non-inculpatory testimony is

relevant to a Kastigar claim” only if it yields evidence against the defendant.

United States v. Dynalectric Co., 859 F.2d 1559, 1579 (11th Cir. 1988).

Defendants’ immunized testimony was not presented to a jury, allowing jurors

to “draw an inference” of guilt from their denials. United States v. Hinton, 543

F.2d 1002, 1009 (2d Cir. 1976); see Friedman, 998 F.2d at 57 (a jury can reject a

defendant’s exculpatory testimony as “false and thereby infer his guilt”). And

Robson’s exposure to defendants’ denials and claimed memory lapses did not

yield evidence.

c. Comparisons Between Robson’s FCA Testimony And His Trial Testimony Do Not Demonstrate Taint

Defendants’ principal submission (Br. 108-16) is that taint is

demonstrated by differences between Robson’s FCA testimony and the

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information he later provided to prosecutors and his later trial testimony.

Defendants contend (Br. 98) that these alleged differences make it “impossible

to prove” that Robson was unaffected by his review of defendants’ FCA

testimony. They particularly emphasize the following claimed differences:

• Before the FCA, Robson defended his LIBOR-related communications with derivatives traders as appropriate and the result of instructions from Allen to discuss “liquidity,” JA 734-36, whereas at trial he admitted the impropriety of those communications, Tr. 322.

• Robson told the FCA he was not aware of the definition of LIBOR, see

Kastigar Tr. 106, but he testified at trial that he “understood the rules about setting LIBOR, the definition,” Tr. 558.

• Robson told the FCA that his bonus depended on, among other things,

“how the bank had done,” and that Allen determined how the “pot would be divided up.” JA 727-28. At trial, Robson testified that a “sum of money” was set aside for bonuses if “the bank performed well,” and Allen “decide[d] how that sum of money was divided up.” Tr. 407.

• Robson told the FCA he could not “recall any specific compliance training,” JA 732, but he testified at trial about compliance training he attended with Allen, Tr. 340-42.

• Robson testified at trial about an argument between Stewart and

Robbins, Tr. 399-401, but did not mention that argument during his FCA testimony.

• Robson told the government during a proffer session that Schluep “submitted some requests regarding USD LIBOR,” and that Schluep’s requests were given lower priority, JA 858, but he did not mention those facts during his FCA testimony. Contrary to defendants’ claims, Robson’s FCA testimony does not

demonstrate that his trial testimony or the information he provided to

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prosecutors was tainted by his exposure to defendants’ FCA transcripts. At the

Kastigar hearing, the district court gave defendants wide latitude to confront

Robson with his FCA testimony. See Kastigar Tr. 35-37. After considering all

the evidence, however, the court concluded that Robson’s “testimony to the

FCA was ..... a fabrication designed to give the false appearance of

innocence.” SPA 31. Robson himself testified (both at trial and at the Kastigar

hearing) that he intentionally lied to the FCA. Tr. 418; Kastigar Tr. 75.

Robson said he wanted to “create some doubt and confusion,” Tr. 626; see Tr.

638, was “trying to be evasive” (to “create enough cloud and mystery”) and

told the FCA a “story,” a “yarn.” Kastigar Tr. 126, 185, 214. The court

deemed Robson’s admissions highly credible. SPA 24 n.13.

The speculation offered by defendants falls far short of demonstrating

that the district court’s credibility determination and factual findings were

clearly erroneous. The government “is not required to negate every abstract

possibility of taint.” United States v. Schmidgall, 25 F.3d 1533, 1538 (11th Cir.

1994).

Defendants contend (Br. 114-16), for example, that Robson could only

have learned about Schluep’s LIBOR requests from their FCA testimony

because Robson was not himself a recipient of the emails and chats that

Schluep sent to defendants containing the requests. Robson never claimed,

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however, that he possessed detailed knowledge about written communications

from Schluep. Robson merely told the government that Schluep “submitted

some requests regarding” the dollar LIBOR; Schluep’s requests received lower

priority, including lower priority than requests from Lee Stewart; and other

than Schluep, “there was no need for the people affected by [the dollar]

LIBOR to communicate in writing because most of them sat right next to each

other on the desk in London and could speak in person.” JA 858.

As the district court concluded, the information Robson provided about

Schluep’s requests (before and during trial) was grounded in his personal

experience and observations. SPA 30-31 & n.17. Robson shared an open desk

and sat in close proximity to Allen and Conti, as well as Stewart, who was a

loud and bold presence on the desk and who verbally conveyed his requests for

the dollar LIBOR. Tr. 179-94, 270 (Stewart); Tr. 327 (Robson). Stewart also

confirmed that requests from Schluep (who was located in New York) were

discussed at the desk. Tr. 268-69. In addition, Yagami observed the desk

during a visit to London and saw the open exchange of LIBOR requests. Tr.

653-55. Yagami knew that Allen, Conti, Stewart, and Robson, among others,

were members of a group that manipulated the LIBOR, Tr. 669, and he knew

that Stewart’s requests received priority, Tr. 653-54.

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Robson’s knowledge of Schluep’s requests is therefore corroborated by

the trial evidence. Robson never claimed that he received the written

communications between Schluep and defendants (containing the LIBOR

requests) or that he otherwise had contemporaneous knowledge of the specific

contents of the communications. To the contrary, Robson’s trial testimony

about Schluep was limited to providing context and explaining terminology in

the communications. See Tr. 325-26, 387-91, 403-04. Stewart provided similar,

more extensive testimony about those communications. Tr. 196-214, 232-44.

d. The District Court Applied The Correct Legal Standard

Defendants contend (Br. 97-98) that the court “refused” to consider

whether Robson’s exposure to their FCA testimony affected the information

Robson provided to the government and Robson’s trial testimony. According

to defendants, the court “focused on whether the Government could identify

another source, beyond Mr. Robson, that had provided information similar to

that provided by Mr. Robson,” rather than establishing “that Mr. Robson’s

testimony was ‘wholly independent’ of his review of [defendants’] compelled

statements.” Br. 105.

Defendants misconstrue the court’s decision. The court well understood

that the government had to prove that the evidence from Robson “derived

from legitimate sources wholly independent of defendants’ compelled

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testimony.” SPA 14. In concluding that the government satisfied its burden,

the court found that there was an “independent source” for the information

Robson provided to the government and that was conveyed to the grand jury,

namely Robson’s “personal experience and observations.” SPA 33-34. The

court likewise found that Robson’s trial testimony “had sources wholly

independent from defendants’ compelled testimony.” SPA 34. The court made

clear that the government had not merely proved “‘the availability of wholly

independent evidence from which it might have procured indictment or

conviction had it not used the immunized testimony,’” but rather had “proved

to the Court’s satisfaction that Mr. Robson did not actually rely on defendants’

compelled statements or use them in his testimony.” SPA 34-35 (quoting

United States v. Pelletier, 898 F.2d 297, 303 (2d Cir. 1990)).

Defendants further contend (Br. 106-07) that the court failed to apply the

D.C. Circuit’s standards. It is true that the court specifically applied precedent

from this Court, see SPA 20-21 n.9, but its decision is fully consistent with D.C.

Circuit case law as well.

The D.C. Circuit has held that the government “uses” immunized

testimony for purposes of Kastigar when a witness has been exposed to the

immunized testimony and that exposure refreshed the witness’s recollection or

otherwise “shaped, altered, or affected” the witness’s testimony. United States v.

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North, 910 F.2d 843, 861-63 (D.C. Cir. 1990). But the government can prove a

legitimate independent source for the witness’s testimony by demonstrating

that the testimony derives from “the witness’s perceptions of what happened.”

Slough, 641 F.3d at 551. A district court must “parse the evidence” and

“‘separate the wheat of the witnesses’ unspoiled memory from the chaff of

[the] immunized testimony.’” Id. at 550 (quoting North, 910 F.2d at 862). The

government may demonstrate a lack of taint with proof that “investigators

memorialized (or ‘canned’) a witness’s testimony before exposure,” but such

canning is not required. Id. Elements of the witness’s testimony “that do not

overlap with the content of the immunized statements,” for example, are

presumptively untainted. Id.

The district court performed the analysis required by the D.C. Circuit.

The court parsed Robson’s testimony, aided by the charts provided by the

government. See SPA 31, 34-35. The court did not “refus[e] to consider”

whether Robson’s testimony was affected by his exposure to defendants’ FCA

testimony, as defendants contend. Br. 107. To the contrary, the court

concluded that Robson’s testimony derived from a “wholly independent”

source, namely his personal experience and observations, and that Robson did

not in any way “use” or “rely” on defendants’ FCA testimony. SPA 33-35. In

reaching that conclusion, the court considered a lack of overlap between

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Robson’s testimony and defendants’ FCA testimony, as well as corroborative

evidence that buttressed the conclusion that Robson’s testimony derived from

personal observation. SPA 31, 34. The district court’s conclusions were legally

correct and grounded in substantial evidence.

3. Any Error Was Harmless Beyond A Reasonable Doubt

The appropriate remedy for a Kastigar violation is suppression of the

tainted evidence at trial. United States v. Rivieccio, 919 F.2d 812, 816 (2d Cir.

1990). When tainted evidence was presented at trial, the error is harmless if the

Court is “persuaded beyond a reasonable doubt that the jury would have

reached the same verdict even without consideration of the tainted evidence.”

Nanni, 59 F.3d at 1433. The record in this case considered as a whole

establishes beyond a reasonable doubt that the jury would have reached the

same verdict even without the testimony of Robson that defendants claim was

tainted. That nontainted evidence included extensive documentary proof of

defendants’ participation in LIBOR manipulation, testimony from two

coconspirators (Stewart and Yagami), and testimony from Allen himself.

The absence of reversible error at trial precludes dismissal of the

indictment, for a “petit jury’s verdict render[s] harmless any conceivable error

in the charging decision.” United States v. Mechanik, 475 U.S. 66, 73 (1986); cf.

Rivieccio, 919 F.2d at 817 n.5 (declining to reach whether Mechanik extends to

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Kastigar error). Moreover, even without the allegedly tainted information from

Robson, the grand jury was presented with ample evidence supporting

probable cause to charge defendants with wire fraud and conspiracy to commit

wire fraud and bank fraud. See SPA 32-33.

VII. There Is No Basis To Reassign This Case To A Different District Judge In The Event Of A Remand

Under 18 U.S.C. § 2106, this Court has discretion to reassign a case to a

different district judge when it remands for additional proceedings. United

States v. Robin, 553 F.2d 8, 9 (2d Cir. 1977) (per curiam). The Court considers

three factors: (1) whether “the original judge would reasonably be expected

upon remand to have substantial difficulty in putting out of his or her mind

previously-expressed views or findings determined to be erroneous,” (2)

whether “reassignment is advisable to preserve the appearance of justice,” and

(3) whether “reassignment would entail waste and duplication out of

proportion to any gain in preserving the appearance of fairness.” United States

v. DeMott, 513 F.3d 55, 59 (2d Cir. 2008) (citation omitted).

None of these factors would support reassignment here. A review of the

record demonstrates that Judge Rakoff was decidedly impartial throughout this

case. Defendants (Br. 128-29) cite one single portion of the record in this

lengthy case that they claim demonstrates a need for reassignment.

Specifically, at the end of Robson’s plea hearing, the court inquired about the

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status of defendants who had not yet been extradited. JA 899-900. When

informed that the paperwork was pending in the Justice Department’s Office of

International Affairs, the court said that bureaucratic delay would be

“unpalatable” in light of the size and significance of the case and, “assuming

the government’s allegations are correct, the need of people throughout the

world to see that some justice is done.” JA 900-04. These comments do not

suggest that the judge thought defendants guilty before hearing any evidence,

nor do they undermine the appearance of justice. The comments are far from

the exceptional circumstances needed to justify reassignment. See, e.g., United

States v. Quattrone, 441 F.3d 153, 192-93 (2d Cir. 2006) (the case had “already

endured two full trials” before the same judge, the “contentions of the parties

in th[e] difficult and complex matter [had] taken a toll on all involved,” and

“portions of the transcript raise[d] the concern that certain comments [by the

court] could be viewed as rising beyond mere impatience or annoyance”).

Defendants also contend (Br. 129) that reassignment would be required

because of the district judge’s public statements about matters of policy and

white collar prosecutions generally. Again, there is nothing in those statements

that suggests the district judge was not impartial and could not be impartial

again if the case were remanded for additional proceedings.

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Reassignment is a “serious request” that should be rarely made and that

this Court “rarely” grants. United States v. Awadallah, 436 F.3d 125, 135 (2d

Cir. 2006). Defendants have come nowhere close to demonstrating the special

and unique circumstances that would warrant reassignment, with all the waste

and duplication that reassignment would entail.

CONCLUSION

For the foregoing reasons, this Court should affirm the judgments of

conviction and sentence.

ANDREW WEISSMANN Chief, Fraud Section Criminal Division

CAROL SIPPERLY Senior Litigation Counsel Fraud Section

BRIAN R. YOUNG Senior Trial Attorney Fraud Section Criminal Division

MICHAEL T. KOENIG Trial Attorney Antitrust Division U.S. Department of Justice

Respectfully submitted, LESLIE R. CALDWELL Assistant Attorney General

SUNG-HEE SUH Deputy Assistant Attorney General

/s/John M. Pellettieri____ JOHN M. PELLETTIERI Attorney, Appellate Section Criminal Division U.S. Department of Justice 950 Pennsylvania Ave., N.W., Rm. 1260 Washington, D.C. 20530 (202) 307-3766 john.pellettieri@usdoj.gov

October 5, 2016

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CERTIFICATE OF COMPLIANCE WITH TYPEFACE AND LENGTH LIMITATIONS

1. On June 27, 2016, the Court entered an order establishing a 32,000

word limit for the government’s response brief. This brief contains 31,966

words, excluding the parts of the brief exempted by Fed. R. App. P.

32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App.

P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because

this brief has been prepared in proportionally spaced, 14-point serif typeface

using Microsoft Office Word 2013.

/s/John M. Pellettieri____ JOHN M. PELLETTIERI Attorney, Appellate Section Criminal Division U.S. Department of Justice 950 Pennsylvania Ave., N.W. Rm. 1260 Washington, D.C. 20530 (202) 307-3766

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CERTIFICATE OF SERVICE

I hereby certify that I electronically filed the foregoing with the Clerk of

the Court for the United States Court of Appeals for the Second Circuit by

using the appellate CM/ECF system on October 5, 2016. I further certify that

all participants in the case are registered CM/ECF users and that service will

be accomplished by the appellate CM/ECF system.

/s/John M. Pellettieri____ JOHN M. PELLETTIERI Attorney, Appellate Section Criminal Division U.S. Department of Justice 950 Pennsylvania Ave., N.W. Rm. 1260 Washington, D.C. 20530 (202) 307-3766