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United States v. Stein - 846 F.3d 1135 (11th Cir. 2017)

Rule:

The burden to show a Brady violation lies with a defendant, not the government. To establish a Brady violation, a defendant must show that: (1) the government possessed favorable evidence to the defendant; (2) the defendant did not possess the evidence and could not obtain the evidence with any reasonable diligence; (3) the prosecution suppressed the favorable evidence; and (4) had the evidence been disclosed to the defendant, there is a reasonable probability that the outcome would have been different.

Facts:

After a two-week trial, defendant Mitchell Stein, a lawyer, was convicted in federal district court of mail, wire, and securities fraud based on evidence that he fabricated press releases and purchase orders to inflate the stock price of his client Signalife, Inc., a publicly-traded manufacturer of medical devices. The district court sentenced Mr. Stein to 204 months' imprisonment, over $5 million in forfeiture, and over $13 million in restitution. Mr. Stein appealed his conviction and sentence.

Regarding his conviction, Mr. Stein argued that the government failed to disclose material evidence to the defense before trial and knowingly relied on false testimony to make its case. In regards to his sentence, Mr. Stein argued that the district court erred in calculating actual loss for the purposes of the Mandatory Victims Restitution Act of 1996 and the United States Sentencing Guidelines, when it erroneously presumed that all purchasers of Signalife stock during the period when the fraud was ongoing relied on false information Mr. Stein promulgated. He also argued that the district court failed to take into account other market forces that likely contributed to the investors' losses.

Issue:

Was Stein rightfully convicted and sentenced?

Answer:

Yes on the conviction. No on the sentence.

Conclusion:

The court of appeals upheld the conviction and held that the government did not violate Stein's rights under United States v. Brady and United States v. Giglio during his trial on charges alleging that he committed mail, wire, and securities fraud when he fabricated press releases and purchase orders to inflate a publicly-traded company's stock price while he was employed to provide legal services to the company. However, the court vacated the district court's order sentencing Stein to 204 months' imprisonment, over $5 million in forfeitures, and over $13 million in restitution because the court erred when it relied on the testimony of a few investors in finding that more than 2,000 investors relied on defendant's fraudulent information and sustained over $13 million in losses, and used that amount to apply a 20-level increase to Stein's base offense level under the United States Sentencing Guidelines in determining his sentence.

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