14‐733 United States v. Forbes
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT ______________
August Term, 2014
(Argued: December 11, 2014 Decided: June 23, 2015)
Docket No. 14‐733 ______________
UNITED STATES OF AMERICA,
Appellee,
‐v.‐
WALTER A. FORBES,
Defendant‐Appellant.*
______________
Before:
CABRANES, WESLEY, AND HALL, Circuit Judges.
* The Clerk of the Court is directed to amend the caption as above. 1
Appeal from the United States District Court for the District of Connecticut (Thompson, J.). Defendant‐Appellant Walter A. Forbes appeals the district court’s denial of his motion for a new trial pursuant to Federal Rule of Criminal Procedure 33. Because Forbes does not proffer any evidence that constitutes “newly discovered evidence” within the meaning of Rule 33, we AFFIRM the decision of the district court. _________________________
MASHA G. HANSFORD, Williams & Connolly LLP, Washington, D.C. (Robert M. Cary, Margaret A. Keeley, Williams & Connolly LLP, Washington, D.C.; Thomas J. Murphy, Cowdery, Ecker & Murphy, LLC, Hartford, CT, on the brief), for Defendant‐Appellant.
MARK E. COYNE, Special Attorney, United States Department of Justice, Newark, NJ, for Appellee. _________________________
WESLEY, Circuit Judge:
Walter A. Forbes appeals from a February 27, 2014 order of the United
States District Court for the District of Connecticut (Thompson, J.) denying his
motion for a new trial under Federal Rule of Criminal Procedure 33. Forbes,
former chief executive officer and chairman of the board of directors at CUC
International, Inc. (“CUC”) and former chairman of CUC’s successor, Cendant
Corp. (“Cendant”), was convicted in 2006 after a jury trial of one count of
conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and two
counts of making false statements in Securities and Exchange Commission
(“SEC”) filings, in violation of 15 U.S.C. § 78ff(a). This Court affirmed Forbes’s
conviction and his petition for a writ of certiorari was denied. United States v.
Forbes, 249 F. App’x 233, 236 (2d Cir. 2007) (summary order), cert. denied, 553 U.S.
1053 (2008). One day shy of three years after his conviction, Forbes filed a
motion for a new trial under Federal Rule of Criminal Procedure 33 on the basis
of “newly discovered evidence,” namely the testimony of Stuart Bell, former
CUC chief financial officer. Bell’s testimony was unavailable at trial because he
had invoked his Fifth Amendment privilege against self‐incrimination. In his
motion for a new trial, Forbes argued that the privilege was no longer in play—
the statute of limitations for any accounting fraud charges had run—and, thus,
Bell’s testimony qualified as newly discovered evidence under the Rule.
The district court denied Forbes’s motion for a new trial, concluding that
(1) Forbes had not made a credible proffer that Bell’s testimony was available,
and (2) even if it were available, Bell’s testimony did not constitute newly
discovered evidence within the meaning of Rule 33, according to this Court’s
decision in United States v. Owen, 500 F.3d 83 (2d Cir. 2007). Because we agree
that the reasoning in Owen is directly applicable to this case and, thus, that Bell’s
testimony does not constitute newly discovered evidence, we AFFIRM the order
of the district court denying Forbes’s Rule 33 motion.
BACKGROUND
Forbes was tried three times on charges related to accounting fraud at
CUC and Cendant, with the first two trials each resulting in a deadlocked jury.
Following the third trial, on October 31, 2006, Forbes was convicted of one count
of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and two
counts of making false statements in SEC filings, in violation of 15 U.S.C.
§ 78ff(a). The trial court sentenced Forbes principally to 151 months in prison
and ordered him to pay $3.275 billion in restitution. This Court affirmed
Forbes’s conviction on direct appeal and his petition for certioriari was denied.
Forbes, 249 F. App’x at 236, cert. denied, 553 U.S. at 1053.
The Government’s primary witness at trial was Cosmo Corigliano, who
took the reins as CFO at CUC in 1995. It is undisputed that accounting fraud
took place during Corigliano’s tenure. He testified pursuant to a plea agreement1
that Forbes and Bell, Corigliano’s predecessor as CFO at CUC, initiated the
1 Corigliano pleaded guilty to (1) conspiracy to commit mail and wire fraud and to file false statements with the SEC, in violation of 18 U.S.C. § 371; and (2) wire fraud, in violation of 18 U.S.C. § 1343. In exchange, the Government agreed not to initiate any further charges against him with regard to the accounting fraud at CUC and Cendant and, as long as Corigliano complied with the agreement and provided substantial assistance in the investigation or prosecution of another person (likely Forbes), the Government agreed to file a motion with the sentencing judge requesting a downward departure from the applicable guideline range. 4
accounting fraud and that Corigliano merely carried it out after Bell’s departure
because “[i]t was impractical to correct it or stop it” at that point because “the
company would not have been able to hit the numbers that the investment
community was expecting.” J.A. 37. Corigliano further testified that Bell
directed him to commit the accounting fraud and gave him instructions on how
to do so.
Bell did not give any material testimony at any of Forbes’s trials—he was
called as a witness for the defense at the third trial but invoked his Fifth
Amendment privilege for every question asked of him. During the first trial,
Forbes’s counsel submitted declarations stating that Bell’s counsel had informed
them that, if granted immunity, Bell would testify that he did not commit any
fraud at CUC, that Corigliano’s testimony about Bell’s involvement was
inaccurate, and that there were legitimate explanations for the accounting done
during Bell’s tenure as CFO. The Government declined to immunize Bell and the
trial court denied Forbes’s motion to compel the Government to grant Bell
immunity in order to overcome his anticipated assertion of privilege.2
2 In the first trial, a juror sent two notes asking, “Is Stu Bell alive?” and “Why are we not hearing from Stu Bell?” J.A. 11–12. 5
According to Forbes, the statute of limitations on claims against Bell with
regard to the accounting fraud ran in April 2008. On October 30, 2009, Forbes
moved for a new trial on the basis of newly discovered evidence pursuant to
Federal Rule of Criminal Procedure 33.3 The “newly discovered evidence” that
Forbes identified was the newly available testimony of Bell. Forbes’s motion
relied on the aforementioned declarations of his attorneys from 2004 to support
his argument that Bell would testify and that his testimony would exculpate
Forbes. The Government opposed the motion, arguing that Forbes had not
satisfied any of the requirements for obtaining a new trial on the basis of newly
discovered evidence. Indeed, despite Forbes’s efforts to contact Bell through his
counsel, Bell declined to provide an affidavit in support of Forbes’s Rule 33
motion.4
3 Rule 33(a) states that “[u]pon the defendant’s motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires.” While a defendant has 3 years in which to file a motion for “a new trial grounded on newly discovered evidence,” a motion for a new trial on any other basis “must be filed within 14 days after the verdict or finding of guilty.” Fed. R. Crim. P. 33(b). 4 Forbes had also sought to present Bell’s testimony at an evidentiary hearing or to
depose him in connection with Forbes’s also‐pending petition for habeas corpus, pursuant to 28 U.S.C. § 2255, which he brought on similar grounds to those asserted in his Rule 33 motion. In his reply brief in support of his Rule 33 motion, Forbes again sought leave to depose Bell. 6
The district court denied Forbes’s Rule 33 motion without a hearing or
granting leave to conduct a deposition.5 The district court found that Forbes had
“not demonstrated that Bell’s testimony is ‘newly available’, because he has not
made a credible proffer that it is available at all.” United States v. Forbes, No.
3:02cr264(AWT), slip op. at 3–4 (D. Conn. Feb. 27, 2014). The court further held
that “even if Bell’s testimony were newly available,” this Court’s decision in
Owen, made clear that “Forbes is not seeking to proffer any evidence that falls
within the definition of ‘newly discovered’ evidence.” Id. (citing 500 F.3d at 88).
Forbes timely appealed.6
DISCUSSION
A. Standard
We review for abuse of discretion a district court’s denial of a Rule 33
motion for a new trial. See United States v. Sessa, 711 F.3d 316, 321 (2d Cir.), cert,
denied, 134 S. Ct. 353 (2013). “A district court ‘abuses’ or ‘exceeds’ the discretion
accorded to it when (1) its decision rests on an error of law (such as application
5 The court also denied Forbes’s § 2255 petition. See Forbes v. United States, No. 3:09CV806(AWT), 2014 WL 799002 (D. Conn. Feb. 27, 2014). 6 Forbes separately petitioned this Court for a certificate of appealability to challenge the
denial of his § 2255 petition. That petition was denied by a different panel of this Court. See Forbes v. United States, No. 14‐777, Dkt. 62 (2d Cir. July 10, 2014) (Pooler, Lohier, Carney, Judges). 7
of the wrong legal principle) or a clearly erroneous factual finding, or (2) its
decision—though not necessarily the product of a legal error or a clearly
erroneous factual finding—cannot be located within the range of permissible
decisions.” Zervos v. Verizon N.Y., Inc., 252 F.3d 163, 169 (2d Cir. 2001) (footnotes
omitted).
Relief under Rule 33 based on newly discovered evidence may be granted
only upon a showing that “(1) the evidence [was] newly discovered after trial;
(2) facts are alleged from which the court can infer due diligence on the part of
the movant to obtain the evidence; (3) the evidence is material; (4) the evidence is
not merely cumulative or impeaching; and (5) the evidence would likely result in
an acquittal.” Owen, 500 F.3d at 88 (citing decisions from the Third, Fifth, Sixth,
Seventh, Eighth, Ninth, and Eleventh Circuits).
B. “Newly Discovered” as a Matter of Law
Relying on our decision in Owen, the district court denied Forbes’s motion
for a new trial on the basis of his failure to satisfy the first element of the
standard, finding that Bell’s testimony was not newly discovered after trial. In
Owen, Edgar Owen and two codefendants, Paul Samuels and Mark Baroody,
were charged with various crimes in connection with a marijuana distribution
conspiracy. 500 F.3d at 84. At their joint trial, each defendant exercised his right
not to testify and the jury convicted all three defendants on all counts. Id. at 86.
At Samuels’s sentencing hearing, he stated that Owens “didn’t have anything to
do with” the crimes in question. Id. at 86–87. The district court granted Owen’s
motion for a new trial pursuant to Rule 33, reasoning that because Owen could
not have forced Samuels to relinquish his Fifth Amendment privilege during the
trial, the post‐trial testimony constituted newly discovered evidence. Id. at 87.
This Court reversed, holding that Samuels’s testimony was not newly
discovered within the meaning of Rule 33. We noted that nearly every Circuit to
address the issue had concluded that when a defendant is “aware that his
codefendant could provide exculpatory testimony but is unable to obtain that
testimony because the codefendant invokes his privilege against self‐
incrimination prior to and during trial, the codefendant’s postconviction
statement exculpating the defendant is not ‘newly discovered evidence’ within
the meaning of Rule 33.” Id. at 88. We thus “join[ed] the majority of circuits to
have addressed the issue” and held that “Rule 33 does not authorize district
courts to grant new trials on the basis of such evidence since it is not newly
discovered, but merely newly available.” Id. at 89.
The basis for our decision in Owen was the plain text of Rule 33. We
explained that “[o]ur holding that previously known, but newly available,
evidence is not newly discovered within the meaning of Rule 33 is rooted in the
plain meaning of the Rule’s text.” Id. at 90. We focused in particular on the
phrase “newly discovered” and stated that “[o]ne does not ‘discover’ evidence
after trial that one was aware of prior to trial.” Id. at 89–90.
Forbes encourages us to read Owen narrowly, to exclude from the reach of
Rule 33 only “a narrow category of co‐defendant testimony,” Appellant Br. 15,
given by “‘a co‐defendant, since convicted,’” id. at 15–16 (quoting United States v.
Jacobs, 475 F.2d 270, 286 n.33 (2d Cir. 1973)). The Government, on the other hand,
reads Owen to encompass any evidence that was known to the defendant before
or during trial, but was unavailable, and that becomes newly available after trial.
To support his narrow reading of Owen, Forbes relies on a recent decision
in the D.C. Circuit, Bain v. MJJ Productions, Inc., 751 F.3d 642 (D.C. Cir. 2014).
Forbes asserts that Bain limits the meaning of “newly discovered evidence” to the
view that he now presses here. We agree that Bain adds to our understanding of
the Rule and its application here, but, unlike Forbes, we do not believe that it is
inconsistent with our decision in Owen.
Bain is set in the context of Federal Rule of Civil Procedure 60(b)(2), which
provides that a party may be granted relief from a final decision of the court on
the basis of “newly discovered evidence,” Fed. R. Civ. P. 60(b)(2), and thus also
required interpreting that phrase. The D.C. Circuit rejected a view that would
make “mere awareness of evidence during trial, standing alone, categorically
preclude[] later treating the evidence as ‘newly discovered.’” 751 F.3d at 647
(emphasis added). It noted that such a reading would prohibit the grant of a
new trial where, for example, “critical documentary evidence were known to
have existed at one time but had been presumed by all to have been destroyed in
a natural disaster . . . even if the pivotal document were later discovered
unexpectedly to have been moved before the disaster and to have survived in an
unanticipated place.” Id. We would also reject such a reading; a “lost”
document that is found after trial is newly discovered evidence since, surely a
document considered “lost” at trial time means it could not have been
introduced at trial, and the reason for its unavailability is neither the fault of its
proponent, nor attributable to a privilege or legal impediment. A later discovery
of the document (presuming that its discovery is the result of due diligence) is
new in the sense that the document’s existence is newly discovered and is
available to its proponent for use at a new trial. We do not think Owen should be
read to give “newly discovered” such a narrow meaning that it would be seen to
dictate a different result in the Second Circuit.
The Supreme Court has recognized that Rule 33 affords a defendant more
time in which to file a motion for a new trial based on newly discovered evidence
than is permitted for a motion for a new trial on any other basis in order to
“afford relief where despite the fair conduct of the trial, it later clearly appears to
the trial judge that because of facts unknown at the time of trial, substantial
justice was not done.” United States v. Johnson, 327 U.S. 106, 112 (1946); see also
Fed. R. Crim. P. 33(b). But the Court also recognized that “this privilege might
lend itself for use as a method of delaying enforcement of just sentences.”
Johnson, 327 U.S. at 112. It is the need to strike this balance—between the
“[d]etermination of guilt or innocence as a result of a fair trial, and prompt
enforcement of sentences in the event of conviction,” id. (emphasis added)—of
which our definition of “newly discovered” must take account.
Accordingly, we hold that evidence is excluded from the meaning of
“newly discovered” under Rule 33 where (1) the defendant was aware of the
evidence before or during trial, and (2) there was a legal basis for the
unavailability of the evidence at trial, such as the assertion of a valid privilege.
This second requirement reflects the delicate balance between protecting the
finality of judgments and the “interest of justice” that Rule 33 seeks to protect,
and it is consistent with our decision in Owen. See 500 F.3d at 89; Fed. R. Crim. P.
33(a) (“Upon the defendant’s motion, the court may vacate any judgment and
grant a new trial if the interest of justice so requires.”) (emphasis added). Indeed,
though the text of the Rule was our primary focus in Owen, we considered not
only whether the defendant was aware of the evidence prior to trial, but also the
reason that the evidence was not available at trial. We noted that “Owen was at
all times aware of Samuels’[s] ability to exculpate him, but was unable to benefit
from Samuels’[s] testimony because Samuels did not make it available until after
the trial was over” because he invoked a valid privilege. 500 F.3d at 91 (internal
quotation marks omitted). “In these circumstances, Samuels’[s] testimony is not
newly discovered evidence within the meaning of Rule 33.” Id. (emphasis
added).
The balance between protecting the finality of judgments and the interests
of justice is inherent in the Rule 33 analysis. We have long held that in order to
constitute newly discovered evidence, not only must the defendant show that the
evidence was discovered after trial, but he must also demonstrate that the
evidence “could not with due diligence have been discovered before or during
trial.” United States v. Alessi, 638 F.2d 466, 479 (2d Cir. 1980). Thus, if the reason
that testimonial evidence was unavailable at trial was the defendant’s failure to
call a witness that he knew could provide exculpatory testimony, a new trial on
the basis of newly discovered evidence would not be warranted. See, e.g., Brown
v. United States, 333 F.2d 723, 724 (2d Cir. 1964) (per curiam). The failure to
exercise due diligence does not provide a legal basis for the unavailability of
evidence.
Furthermore, it is the reason that the evidence was unavailable at trial that
distinguishes the situation in Owen from one where, for example, a defendant on
trial for a murder that he did not commit is aware that Witness X saw someone
else pull the trigger, but cannot locate Witness X to testify to that fact at trial. The
unavailability of Witness X is not law based: it is not the product of a
fundamental constitutional right, but rather a matter of circumstance. If the
defendant is later able to locate Witness X, provided that the other requirements
for Rule 33 are satisfied, his testimony would be newly discovered within the
meaning of Rule 33.
Here, as in Owen, the alleged newly discovered evidence is the testimony
of a witness who had invoked his Fifth Amendment privilege at trial. Forbes,
like Owen, had to be aware of the exculpatory nature of Bell’s testimony before
and during trial. Indeed, the proffers by Forbes’s attorneys—submitted to the
court during Forbes’s first trial in connection with his motion to compel the
Government to grant immunity to Bell—state that, if given immunity, Bell would
testify that he did not commit any fraud or financial wrongdoing at CUC, that
Corigliano’s testimony about Bell was inaccurate, and that there were “legitimate
explanations for the accounting done at CUC” while Bell was CFO. J.A. 13, 14.
Thus, the record is clear that Forbes was aware of the evidence before and during
trial.
And here, as in Owen, the evidence was unavailable as a result of the
invocation of the witness’s Fifth Amendment privilege. In Owen, Samuels
invoked his Fifth Amendment privilege during trial. We held that Samuels’s
subsequent post‐trial waiver of this privilege did not make his testimony “newly
discovered” within the meaning of Rule 33. Here, Bell also invoked his Fifth
Amendment privilege at Forbes’s trial. The statute of limitations as to any crimes
allegedly committed by Bell has now run, however, which means that his
privilege against self‐incrimination has also been effectively “waived.” But just
as in Owen, that waiver merely makes Bell’s testimony “newly available”—it
does not make Bell’s testimony “newly discovered” within the meaning of Rule
33.
Where, as here, a defendant is aware that a coconspirator could provide
exculpatory testimony, but the coconspirator refuses to do so on the basis of his
Fifth Amendment privilege, that testimony—made available post‐conviction by
the expiration of the statute of limitations as to that co‐conspirator’s alleged
offenses—is not newly discovered after trial and, therefore, does not constitute
newly discovered evidence within the meaning of Rule 33.
We are not convinced by Forbes’s attempts to distinguish this case from
Owen; indeed, the factual similarities of the two cases alone suggest that the same
rule should apply. In both cases, the reason the testimony was not available at
trial was because of the witness’s invocation of a valid Fifth Amendment
privilege; and, in both, the testimony’s availability post‐trial can be attributed to
the absence of that privilege. In our view, it is irrelevant how the impediment of
the privilege was removed, whether by the defendant’s waiver of the privilege or
by the mere passage of time; neither has anything to do with whether the
evidence was newly discovered after trial. And while Owen involved the
testimony of a codefendant, and this case involves the testimony of an alleged
coconspirator, this is of no import: we have already affirmed the application of
Owen in the context of a coconspirator. See, e.g., United States v. Muja, 365 F.
App’x 245, 246 (2d Cir. 2010) (summary order).
In a further attempt to avoid the consequences of our decision in Owen,
Forbes argues that the Owen “holding arose in the context of a specific problem,
recognized by a number of courts of appeal: gamesmanship of the Rule 33
safeguard by ‘a co‐defendant, since convicted.’” Appellant Br. 15–16 (quoting
Jacobs, 475 F.2d at 286 n.33). He identifies the concern motivating our decision as
the risk of a codefendant’s strategic invocation of his privilege at trial but, after
conviction and with little to lose, his change of heart to then offer testimony to
exculpate his comrade. “Such ‘aid’ from a co‐defendant can arise in virtually any
case with more than one individual charged,” Forbes warns, and “convicted co‐
defendants, who have shown a disregard for the law, are far more likely than
ordinary citizens to commit perjury to help a confederate.” Appellant Br. 16. He
claims that those same practical concerns do not exist here.
Forbes’s argument is unpersuasive. He claims that post‐conviction
testimony offered by a convicted codefendant is uniquely “rife for manipulation”
and “raises the risk of encouraging perjury.” Appellant Br. 7. The same risks are
present here. Forbes’s entire motion is predicated on the idea that Bell is no
longer prosecutable for any offense he arguably committed in connection with
the relevant accounting fraud. Therefore, Bell would similarly have “little to
lose” in devising a story that would exculpate Forbes.7
Of course, as we stated in Owen, when a witness “invokes his privilege
against self‐incrimination and refuses to testify, the defendant is denied the
benefit of any potentially exculpatory testimony the [witness] might have
provided. This is one consequence of the Fifth Amendment privilege.” 500 F.3d
at 91. Forbes’s attempts to circumvent Bell’s invocation of his Fifth Amendment
privilege through a grant of immunity were for naught. Forbes’s remaining
option was “to take the stand and convey to the jury himself any facts—
7 We reject Forbes’s argument that Bell, an unindicted coconspirator who has never been to prison and would risk marring his otherwise clean record, is any more deterred from giving false testimony by the possibility of a perjury charge than a convicted codefendant who has been—or will be—sentenced to prison. For one thing, any witness—even one already convicted of a crime—would presumably be deterred from giving false testimony by the possibility of an additional criminal conviction for perjury and, potentially, a sentence of confinement. Additionally, if we assume that Bell in fact did commit accounting fraud, he would have a large incentive to lie about that fact in order to protect his reputation, even if he could no longer be criminally charged. 18
including dealings with [the privileged witness]—that would support a not
guilty verdict.” Id. at 92. Here, Forbes did just that, but his testimony—at least
in the third trial—was insufficient to create a reasonable doubt in the minds of
the jury.
Even if true, Forbes’s assertion that Bell’s testimony would have made a
difference to the jury is irrelevant, because that testimony is not “newly
discovered” within the meaning of Rule 33. Where, as here, a defendant knew
that a witness could offer testimony as to the defendant’s role in the charged
crime, his inability to procure that testimony before or during trial because of the
witness’s invocation of his Fifth Amendment privilege cannot be redressed by
granting the defendant a new trial simply because the testimony later becomes
available as a result of the mere passage of time.
C. Denial of Rule 33 Motion Without a Hearing
Forbes also argues that the district court should have at least permitted an
evidentiary hearing to allow him to develop the factual record before denying his
Rule 33 motion. We review a district court’s denial of a post‐trial Rule 33 hearing
or discovery for abuse of discretion. See United States v. Stewart, 433 F.3d 273,
305–06 (2d Cir. 2006). Given the above discussion, concluding that Bell’s
testimony is not newly discovered as a matter of law, we need not engage in the
inquiry whether the district court erred in failing to conduct an evidentiary
hearing. Regardless of how many hearings the district court holds, or any
exculpatory evidence that could be gleaned from a deposition of Bell, the
evidence would not be “newly discovered” within the meaning of Rule 33.
Accordingly, the district court did not abuse its discretion in denying the Rule 33
motion without a hearing.
CONCLUSION
Despite a valiant effort by his able counsel, Forbes’s appeal must fail.
Because Bell’s testimony was not “newly discovered” evidence within the
meaning of Rule 33, the district court did not abuse its discretion in denying
Forbes’s motion for a new trial. Accordingly, we AFFIRM the decision of the
district court.