In the Courts

In United States v. Becker, 06-1274-cr, 2007 WL 2669604, (2d Cir. Sept. 13, 2007), consistent with its holding in United States v. McClain, 377 F.3d 219, 221-22 (2d Cir. 2004), the Second Circuit held that admission of co-conspirator plea allocutions without the opportunity for cross examination violates a defendant's Sixth Amendment confrontation right under the U.S. Supreme Court decision in Crawford v. Washington, 541 U.S. 36 (2004). However, Becker is noteworthy because of the highlighted role that the willful requirement of securities fraud played in the court's harmless error standard analysis, and its ultimate decision to affirm the lower court's judgment vacating the conviction. The court's reasoning is also instructive in arguing the willful-intent element of securities fraud, and is an artful lesson in distinguishing securities fraud actions from general criminal precedent.

After being charged in 2002, Gregg Becker was convicted of securities fraud and conspiracy to commit securities fraud, mail fraud and wire fraud during a jury trial in the Southern District of New York. The case related to Becker's actions as a licensed securities broker at the Melville, Long Island, branch of Investor Associates ('IA'), in so-called 'boiler rooms,' and related allegations of deceptive sales tactics and providing misleading information to potential clients. The evidence at trial included recorded telephone conversations between Becker and potential clients, the live testimony of two other former IA brokers as cooperating witnesses, and three former customers. The government also 'read into evidence, over the defense's objections, the transcripts of eleven plea allocutions by former IA brokers who described their intentional participation in the fraudulent scheme.' Becker, at *2. The allocutions were largely identical in their detailed descriptions of specific practices, and 'broad statements concerning the pervasiveness of the fraud ' potentially implying that all IA brokers were knowing participants in the conspiracy.' Id. Becker was convicted and his conviction was affirmed on direct appeal.