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United States v. Kosinski

United States District Court, D. Connecticut

October 31, 2017

UNITED STATES OF AMERICA
v.
EDWARD KOSINSKI

          MEMORANDUM OF DECISION GRANTING IN PART AND DENYING IN PART MOTIONS IN LIMINE

          HON. VANESSA L. BRYANT UNITED STATES DISTRICT JUDGE

         I. Introduction

         On August 3, 2016, a federal grand jury sitting in New Haven, Connecticut returned an indictment against Defendant Edward Kosinski charging him with two counts of Insider Trading in violation of 17 C.F.R. Section 240.10b-5 and 15 U.S.C. Sections 78j(b) and 78ff. [Dkt. 1 (Indictment).] On September 26, 2017, the Defendant filed two motions in limine challenging two categories of evidence offered for trial. [Dkt. Nos. 40, 43]. These categories include (1) evidence of Defendant's alleged regulatory violation and (2) expert testimony by lay witnesses. Also on September 26, 2017, the Government filed one motion in limine challenging two categories of evidence: (1) evidence that the Government engaged in “selective prosecution;” and (2) evidence of Defendant's prior “good acts, ” character, reputation, and personal background.[1] [Dkt. 46.] For the reasons that follow, Defendant's motion to exclude evidence of regulatory violations is DENIED as moot, Defendant's motion to exclude expert testimony is DENIED without prejudice, the Government's motion to exclude evidence of selective prosecution is GRANTED, and the Government's motion to exclude evidence of prior good acts, character, reputation, and personal background is GRANTED in part and DENIED in part.

         II. Standard of Review

         “The purpose of an in limine motion is to aid the trial process by enabling the Court to rule in advance of trial on the relevance of certain forecasted evidence, as to issues that are definitely set for trial, without lengthy argument at, or interruption of, the trial.” Palmieri v. Defaria, 88 F.3d 136, 141 (2d Cir. 1996) (internal citations omitted). “A motion in limine to preclude evidence calls on the court to make a preliminary determination on the admissibility of the evidence under Rule 104 of the Federal Rules of Evidence.” Highland Capital Management, L.P. v. Schneider, 379 F.Supp.2d 461, 470 (S.D.N.Y. 2005) (internal citations omitted). “Evidence should be excluded on a motion in limine only when the evidence is clearly inadmissible on all potential grounds.” Id. “A district court's in limine ruling ‘is subject to change when the case unfolds, particularly if the actual testimony differs from what was contained in the . . . proffer.'” Id. (quoting Luce v. United States, 469 U.S. 38, 41 (1984)).

         III. Defendant's Alleged Regulatory Violation

         Defendant moves to exclude as irrelevant evidence that he violated certain regulations by not promptly disclosing his investments with Regado. [Dkt. 40.] The Government responds that such evidence is relevant to the offenses of indictment because it “tends to show the defendant's awareness that his insider trading was wrongful and needed to be concealed.” [Dkt. 50 at 2.]

         The Court ordered the Government to supplement its briefing stating what facts support its conclusion that Defendant committed a regulatory violation and citing the regulations violated. [Dkt. 53.] The parties indicated in their supplemental briefing, and confirmed at the October 24, 2017 hearing, that they agree upon the admissibility of the two financial forms the Government seeks to offer (Dkt. 54-1 at ¶ 006958-59) and will not offer the accompanying email correspondence into evidence (Dkt. 54-1 at ¶ 006956-57). Defendant's motion is accordingly DENIED as moot.

         IV. Expert Testimony by Lay Witnesses

         Defendant moves to preclude lay witness testimony regarding (i) the significance of trading volume in a stock, (ii) financial instruments, including stocks, put options, and other derivative securities, (iii) NASDAQ, (iv) broker-dealers and brokerage accounts, (v) the financial disclosures required by 21 C.F.R. 54.4(b), (vi) the nomenclature used in clinical trials, and (vii) allergic reactions in clinical trials. [Dkt. 43 at 1-2.] Defendant asserts these topics are outside the scope of Federal Rule of Evidence 701 and are instead proper for an expert witness, which the Government has not disclosed as requiredd. Id.

         The Government responds that the intended testimony is proper lay witness testimony, as it will merely “summarize voluminous records concerning Regado stock and the defendant's trading habits” and provide a “fact-based summary of the defendant's trading and the trading that occurred in Regado stock.” [Dkt. 49 at 5.] This summary will include defining “basic terms that are in common use, but that may not be completely understood by the jury (e.g. ‘stock, ' ‘option, ' ‘put, ' ‘stock market, ' ‘trading volume, ' ‘NASDAQ, ' ‘brokerage account, ' and similar terms).” In addition, the Government states it will elicit “facts that [lay] witnesses learned through their involvement in the REG1 clinical trial.” Id. at 6. At the October 24, 2017 hearing, the Government clarified it intends to call lay witnesses to testify about their experience as professionals working on the Regado trial. The witnesses would define terms used in clinical trials, such as “phase two” and “risk mapping, ” only insofar as they would explain the Regado trial to the jury.

         Opinion testimony by lay witnesses is only admissible if (a) rationally based on the witness's perception; (b) helpful to clearly understanding the witness's testimony or to determining a fact in issue; and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702.” Fed.R.Evid. 701. By contrast, a “witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if . . . the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue . . .” Fed.R.Evid. 702(a).

         The Second Circuit has expounded upon the distinction between lay and expert testimony: [t]he fact that [a witness] has specialized knowledge, or that he carried out [an] investigation because of that knowledge, does not preclude him from testifying [as a lay witness], so long as the testimony [is] based on the investigation and reflect[s] his investigatory findings and conclusions, and [is] not rooted exclusively in his expertise.” Bank of China, N.Y. Branch v. NBM LLC, 359 F.3d 171, 181 (2d Cir. 2004). Conversely, a lay witness may not testify ‚Äúregarding ...


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