Second Circuit Permits Opinion Testimony About The "Illegality" Of The Defendant's Conduct

Under what circumstances can a witnesses provide an opinion that the conduct of the defendant was "illegal"? The Second Circuit recently reviewed this issue in a securities fraud prosecution and concluded that the testimony was permissible, in United States v. Mandell, _ F.3d _ (2d Cir. May 16, 2014) (Nos. 12-2090, 12-1967) (per curiam)

There are limits for a witness opinion about the legality of conduct in the case. If this type of testimony is offered, caution must be used to avoid invading the province of the jury in deciding the case and in misstating the law or encroaching upon the trial court's role in giving the jury instructions that the jury will apply. A recent securities fraud prosecution case considered by the Second Circuit briefly reviewed the limits of this type of witness opinion testimony.

Trial Court Proceedings: Witness Opinions That Certain Conduct Was "Illegal"

The case involved a securities fraud prosecution involving five private placement offerings. At trial, the court allowed "certain witnesses to testify that failing to disclose financial incentives was illegal." On appeal, Defendant Mandell challenged this ruling as reversible error.

Second Circuit Review: Not Impermissible Opinion Testimony

In summary analysis, the Second Circuit rejected the claim of error. The circuit noted, based on prior precedent, that "the mere fact that a witness opines that a defendant’s activity was 'illegal' does not necessarily mean that a district court would commit error by allowing such testimony." Mandell, _ F.3d at _ (citing United States v. Schwartz, 924 F.2d 410, 426 (2d Cir. 1991)). The Schwartz case involved violations of the Arms Export Control Act and related offenses concerning the shipment of arms to foreign purchasers. A Customs Service agent gave opinion testimony concerning his interpretation about a recorded conversation that a "transaction should be done 'the legal way'" which he concluded "referred to a method of shipping arms to an embargoed country by first sending them through a friendly country to which exports were permitted using End User Certificates designating the friendly country as the final destination." Schwartz, 924 F.2d at 425. The Second Circuit found two bases to admit this opinion testimony. First, the testimony was permissible as expert testimony used "to describe the illegal methods used by narcotics dealers because undercover government agents possess specialized knowledge beyond the ken of the jury on how drug dealers operate." Mandell, _ F.3d at _ (citing United States v. Carson, 702 F.2d 351, 369 (2d Cir.) (allowing agent expert testimony that "furtive activity appeared ... to be sales of narcotics" since "the clandestine manner in which drugs are bought and sold, is unlikely to be within the knowledge of the average layman"), cert. denied, 462 U.S. 1108, 462 U.S. 1108 (1983); see also United States v. Nersesian, 824 F.2d 1294, 1308 (2d Cir.) ("expert testimony from a properly qualified expert witness regarding the parlance of the narcotics trade and the meaning there"), cert. denied, 484 U.S. 958 (1987)). Second, the agent's testimony "that he continued his investigation in this case because he concluded that the defendants' manner of transshipment, as they described it to him, was illegal" was "relevant to explaining the direction of the investigation" and to respond to the defense question why the agent "chose to continue the investigation even though Lisbona termed his planned activities as 'legal'."

The circuit distinguished prior precedent relied upon by the defense:

Mandell’s argument as to this issue relies on United States v. Scop, in which we considered the testimony of an SEC investigator who was called by the government as an expert witness on “securities trading practices.” 846 F.2d 135, 138 (2d Cir. 1988). Because the witness “drew directly upon the language of [a] statute and [its] accompanying regulations” and testified as to whether the defendant had violated that statute, we concluded that his testimony constituted improper “legal conclusions.” Id. at 140. Here, by contrast, the witnesses at issue did not testify that the defendants violated a statute, but merely explained why, in their opinion, certain commissions had been referred to as “bonuses.” Accordingly, the district
court did not err under Scop in regard to this testimony.

Mandell, _ F.3d at _

Conclusion

The Mandell case, in summary fashion, allowed opinion testimony on the legality of the conduct. These case present close issues and often turn on the specific facts of the case and testimony. Caution is advised if this path is pursued. For a couple of examples reaching contrary results, consider:

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