Fraud

Thanks to our AFPDs here! Here's a fraud-case summary.

MARK D. LAY

Direct Appeal

Published

http://www.ca6.uscourts.gov/opinions.pdf/10a0201p-06.pdf

Defendant appealed his fraud convictions related to a hedge fund investment by the Ohio Bureau of Workers’ Compensation. The defendant argued that the jury instructions were improper and that insufficient evidence supported the jury’s verdict because, as a hedge fund adviser, the defendant had a fiduciary relationship only with the hedge fund---not with its investors. The defendant also sought a new trial based on three of the district court’s evidentiary rulings and its restitution and forfeiture determinations.

Because a hedge fund adviser can, in certain circumstances, have a fiduciary relationship with an investor, the jury instructions were correct. Sufficient evidence supported the defendant's conviction. The appellate court rejected the challenges to the district court’s evidentiary rulings and its restitution and forfeiture determinations.

Basically, the case involved fraud allegations related to hedge fund investments by the State of Ohio. The defendant was convicted of all the various counts brought against him. The majority opinion spends a great deal of effort reviewing the factual background to the defendant’s dealings with the state and the investment vehicles that caused a more than $200 million dollar loss to the state.

The most well turned phrase of the opinion is found in the dissent:

"But my point, in closing, remains a practical one: The government would make its task easier in mail- and wire-fraud cases if it would choose, as its charged communication, a blood relative of the fraud, rather than a second cousin by marriage. Reasonable jurists can disagree as to the outcome in cases like this one. But one wonders why they should have to."

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