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Case 18-1084, Document 27, 08/31/2018, 2380471, Page1 of 218

18-0819-cr ( L ) ,

18-1084-cr ( CON )

United States Court of Appeals

for the

Second Circuit



UNITED STATES OF AMERICA,

– v. –

EVAN GREEBEL,

Appellee,

Defendant,

MARTIN SHKRELI,

Defendant-Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK (BROOKLYN)

BRIEF and SPECIAL APPENDIX FOR DEFENDANT-APPELLANT

BENJAMIN BRAFMAN MARK M. BAKER MARC AGNIFILO ANDREA ZELLAN JACOB KAPLAN TENY R. GERAGOS BRAFMAN & ASSOCIATES, P.C.

Attorneys for Defendant-Appellant 767 Third Avenue, 26th Floor New York, New York 10017 (212) 750-7800

Case 18-1084, Document 27, 08/31/2018, 2380471, Page2 of 218

Table of Contents

Table of Authorities

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iv

Statement of Subject Matter

 

And Appellate Jurisdiction

 

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1

Statement of the Issues Presented for Review

 

3

Statement of the Case

 

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4

A.

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4

B.

The Indictment

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5

C.

The Trial

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1.

The

Government’s Case

 

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7

 

a.

Defendant’s Career in Finance

 

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b.

The MSMB Capital Scheme (Counts One, Two and

 

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c.

The MSMB Healthcare Scheme (Counts Four, Five and Six)

 

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1)

MSMB Healthcare

 

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2)

Retrophin

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17

 

d.

The Retrophin Misappropriation Scheme

 
 

(Count Seven)

 

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20

 

e.

The Retrophin Unrestricted Securities Scheme

 
 

(Count Eight).

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23

Case 18-1084, Document 27, 08/31/2018, 2380471, Page3 of 218

 

2.

The Court’s Charge, Jury Deliberations

 
 

and Verdict

 

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24

D.

The

Motion for Forfeiture .

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25

E

The Sentencing

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25

Summary

of Argument.

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26

Argument

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27

 

Point I The District Court’s Failure to Include the Language Approved in United States v. Berkovich, When Instructing the Jury on “No Ultimate Harm” With Respect to the Securities Fraud and Securities Fraud Conspiracy Charges, Was Unduly Prejudicial, Causing Jury Confusion Which Resulted in the Split Verdict

 

27

A.

Background

 

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29

B.

The “No Ultimate Harm” Instruction

 

33

C.

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Point II When Determining the Amounts to Be Forfeited, the District Court Erroneously Applied the Distinct Materiality Test for

 

Weighing the

Evidential

 

Sufficiency

 

of

the

Underlying

Securities Fraud Count, Which Does Not Require Any Showing

of Ill Gotten Gains.

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46

A.

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47

 

1. Government’s Motion for

 

47

2. Defendant’s Response

 

48

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Case 18-1084, Document 27, 08/31/2018, 2380471, Page4 of 218

 

3.

The Court’s Decision

 

52

B. Governing Principles

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54

 

1. Forfeiture Requires Unlawful Gains

 

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2. Securities Fraud Does Not Require Any

 
 

Intended Loss

 

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56

C. Discussion.

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59

 

1.

Monies Lawfully Acquired

 

59

 

a. Count Three

 

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61

b. Count Six

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64

 

2.

Deduction of Costs in Providing Goods

 
 

and Services

 

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65

a. Count Three

 

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66

b. Count Six

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67

 

3.

Factoring and Thereby Deducting the Extraordinary Profits Paid to

 

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Conclusion

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72

Certificate

of Compliance.

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73

Special Appendix

-iii-

Case 18-1084, Document 27, 08/31/2018, 2380471, Page5 of 218

Table of Authorities

Cases

Basic Inc. v. Levinson, 485 U.S. 224

57

Bollenbach v. United States, 326 U.S. 607 (1946)

34, 45

Blueford v. Arkansas, 132 S.Ct. 2044

39

Evans v. Michigan, 568 U.S. 313 (2013)

39

McBoyle v. United States, 283 U.S. 25 (1931)

56

United States v. Alfisi, 308 F.3d 144 (2d Cir. 2002)

38

United States v. Bajakajian, 524 U.S. 321 (1998)

69

United States v. Bass, 404 U.S. 336 (1971)

56

United States v. Berkovich, 168 F.3d 64 (2d Cir.

Passim

United States v. Bodouva, 853 F.3d 76 (2d Cir. 2017)

 

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55, 59

United States v. Capoccia, 503 F.3d 103 (2d Cir. 2007)

 

54

United States v. Cartelli, 272 F. App'x 66 (2d Cir. 2008) (Summary

 

37

United States v. Castello, 611 F.3d 116 (2d Cir. 2010)

 

69

United States v. Contorinis, 692 F.3d 136

 

(2d Cir.

2012).

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53, 55, 57, 59

United States v. Daugerdas, 837 F.3d 212

 

(2d Cir.

2016).

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Case 18-1084, Document 27, 08/31/2018, 2380471, Page6 of 218

United States v. Dinome, 86 F.3d 277 (2d Cir.1996)

34, 42

United States v. Dixon, 536 F.2d 1388 (2d Cir.1976)

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40, 58

United States v. Emerson, 128 F.3d 557(7th

55

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

 

37

United States v. Finazzo, 682 F. App'x 6 (2d Cir. 2017)

37

United States v. Gradwell, 243 U.S. 476 (1917)

56

United States v. Henry, 888 F.3d 589 (2d Cir.

38

United States v. Hollnagel, 2013 WL 5348317 (N.D. Ill, Eastern Div 2013)

50, 51, 56, 68, 69, 70

United States v. Ingram, 490 F. App'x 363 (2d Cir. 2012) (Summary

37

United States v. Kalish, 626 F.3d 165 (2d Cir.2010)

55

United States v. Koh, 199 F.3d 632 (2d Cir. 1999)

 

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37

United States v. Lange, 834 F.3d 58 (2d Cir. 2016), cert. denied sub nom. Russell v. United States, 137 S. Ct. 6771 (2017), and cert. denied, 137 S.Ct. 685 (2017)

 

37, 40-44

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

 

37, 41, 42, 43

United States v. Levis, 488 F. App'x 481 (2d Cir. 2012)

 

(summary order)

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37

United States v. Litvak (Litvak I), 808 F.3d 160

 

(2d Cir.

2015).

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40, 56, 57, 58

-v-

Case 18-1084, Document 27, 08/31/2018, 2380471, Page7 of 218

United States v. Litvak (Litvak II), 889 F.3d 56

(2d Cir.

2018).

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57, 58, 60

United States v. Mahaffy, 693 F.3d 113 (2d Cir. 2012)

 

65, 67

United States v. Marzo, 312 F. App'x 356 (2d Cir. 2008) (Summary

 

37

United States v. McIntosh, No. 11-CR-500 (SHS) 2017 WL 3396429 (S.D.N.Y. Aug. 8,

 

55

United States v. Rossomando, 144 F.3d 197 (2d Cir. 1998)

 

Passim

United States v. Rybicki, 38 F. App'x 626

 

(2d Cir. 2002) (summary order)

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37

United States v. Santos, 553 U.S. 507 (2008)

 

56

United States v. Stevens, 210 F.3d 356 (2d Cir. 2000)

 

(summary order)

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37

United States v. Various Computers & Computer Equip., 82 F.3d 582, 588 (3d

 

55

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

 

cert denied, 134 S.Ct. 2684 (2014)

 

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52, 57, 58, 63

United States v. Warshak, 631 F.3d 266 (6th Cir.

 

58

Waddington v. Sarausad, 555 U.S. 179 (2009)

 

(Souter, J., dissenting)

 

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45

Weeks v. Angelone, 528 U.S. 225

 

39

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Statutes

15

U.S.C. §78j(b).

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2, 39, 41

18

U.S.C. §981(a)(1)(C).

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25

18

U.S.C.

Passim

18

U.S.C. §1956( c)(7)(A)

 

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18

U.S.C. §1961(1)(D)

 

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55

18

U.S.C. §1343

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28

U.S.C. §1291

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2

31

U.S.C. §5313(a)

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69

31

U.S.C. §5317

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69

Rules

 

Fed. R. App. P. 4(b).

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