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. 

To prove that amount of loss investors sustained because of a defendant's fraud, the government must show that the investors relied on the defendant's fraudulent information to satisfy the "but for" causation requirement under U.S. Sentencing Guidelines Manual § 2B1.1. The government also must show reliance to prove "but for" causation for restitution purposes. 

FACTS:

After a two-week trial, Mitchell Stein, a lawyer, was convicted 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.

Mr. Stein argued that the government failed to disclose Brady material to the defense before trial and knowingly relied on false testimony to make its case.

ISSUE:

Did the district court err when it denied the motions to compel discovery and for an evidentiary hearing regarding the alleged Brady and Giglio violations?

Did the district court err in sentencing defendant to 204 months' imprisonment, over $5 million in forfeitures, and over $13 million in restitution?

ANSWER:

No. and Yes.

CONCLUSION:

The Court held that the government did not violate defendant'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. The Court affirmed defendant's convictions but vacated his sentence and remanded the case for resentencing as the court's sentencing was improper.

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