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United States v. Flotron

United States District Court, D. Connecticut

April 15, 2018



          Jeffrey Alker Meyer United States District Judge

         This is a criminal case about an alleged conspiracy to engage in commodities fraud involving the trading of precious metals futures contracts. The parties have filed numerous motions in limine with respect to testimony and documents that they expect to introduce at trial. I have heard extensive oral argument from the parties, and I now issue the following rulings with full consideration of the arguments and requisites of the rules and precedent cited by the parties.[1]

         Government's motion in limine re pre-conspiracy conduct (Doc. #107)

         The Government moves in limine to allow certain evidence of defendant's alleged “spoofing” activity that occurred in 2007 and 2008 prior to the beginning of the charged conspiracy in July 2008. This includes evidence of 11 trading transactions from January to June 2008, general “floor” talk about spoofing prior to July 2008, and a cooperator's testimony about a specific spoofing conversation with defendant that may have taken place shortly prior to the beginning of the conspiracy period. Doc. #179 at 69-76.[2] For substantially the reasons set forth in the Government's briefing (Doc. #107 at 1-4) and at the hearing of March 29, 2018, I conclude that this evidence is proper background evidence for the jury's understanding of events occurring within the conspiracy period. See United States v. Diaz, 176 F.3d 52, 79 (2d Cir. 1999). Upon request at trial by defense counsel, I will instruct the jury as to such pre-July-2008 evidence that the jury may only consider this evidence as background evidence for their understanding of events that occurred during the conspiracy period.

         Defendant's motion in limine to preclude testimony of Special Agent Luca (Doc. #108)

         Defendant has moved in limine to preclude the proposed testimony of FBI Special Agent Jonathan Luca (Doc. #108). In response to this motion, the Government has substantially revised the proposed testimony of Agent Luca (Doc. #187). For the reasons I stated during the teleconference of April 12, 2018, I will deny the motion to preclude Agent Luca's proposed testimony subject to the Government's representations about the limited scope of questioning (including not to query beyond very basic questions as proposed by the Government about price response to supply/demand or to query concerning reasons for a market order to be cancelled).

         As to the documentary exhibits that the Government proposes to offer through Agent Luca, I conclude that the Government may do so in the manner proposed by the Government by which Agent Luca will testify essentially as a custodial witness and not about the contents of or interpretation of the content of exhibits.[3] In view of the revised limitations proposed by the Government concerning the scope and nature of Agent Luca's testimony, I do not agree with defendant that he will be unfairly prejudiced if Agent Luca is permitted to testify in a dual expert/fact witness capacity and that is subject to the limits I have described.

         Defendant's motion in limine to preclude undisclosed expert testimony (Doc. #110)

         Defendant has moved in limine to preclude any expert testimony from Government witnesses Lisa Pinheiro and Daniel Driscoll. I deny this motion as moot in light of the Government's representation that it will not elicit expert opinion testimony from either of these witnesses. I am not convinced that the numbers-crunching testimony of Lisa Pinheiro is expert testimony about which defendant has not received proper notice.

         Defendant's motion in limine re UBS compliance code and policies (Doc. #114)

         Defendant has moved in limine to preclude evidence regarding UBS compliance codes and policies (Doc. #114). The Government has now revised its proposed evidence to include solely certain pages from a UBS training module that defendant completed during the course of the conspiracy period (Doc. #177). Absent further objection to the Government's proposed revised exhibit, I will deny defendant's motion on the ground that it is relevant and appropriate for the Government to introduce evidence concerning defendant's training with respect to prohibited trading activities. Upon request by defendant, I will instruct the jury that any violation by defendant of UBS's own trading/compliance rules does not mean that defendant was in violation of law and that the jury should consider any training modules completed by defendant for the limited purpose of evaluating his state of mind with respect to any trading activities.

         Government's motion in limine re enactment of Dodd-Frank Act et al. (Doc. #185)

         The Government moves in limine to preclude defendant from introducing evidence of (a) the enactment in July 2010 of the Dodd-Frank Act's anti-spoofing provision, (b) the process by which the Commodity Futures Trading Commission (CFTC) has issued interpretive guidance about the provision, and (c) the publication in August 2014 by the CME Group of its own anti-spoofing rule. Doc. #185 at 1. Although it is true that defendant has not been charged with the substantive crime of “spoofing, ” the conspiracy charge here is based on the Government's contention that defendant's spoofing activity amounted to commodities fraud. Any knowledge and intent of defendant and his co-conspirators about the legality of spoofing will be very significant disputed issues at trial.

         In view of the professional market participant status of defendant and his co-conspirators, as well as the Government's intent to offer evidence concerning defendant's completion of a UBS compliance training module, I am convinced that the jury should also be permitted to consider that Congress specifically outlawed spoofing during the conspiracy period and the CFTC's issuance of guidance concerning the scope of the new law. It would be reasonable for the jury to conclude that defendant and his co-conspirators would be generally aware of legal and regulatory developments in their area of business expertise. Because it is the Government's burden to prove the culpable state of mind of defendant ...

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