Free Memorandum in Opposition to Motion - District Court of Connecticut - Connecticut

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UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

UNITED STATES OF AMERICA v.

WALTER A. FORBES

: : : : : :

No. 3:02CR00264 (AWT) December 12, 2005

GOVERNMENT'S OPPOSITION TO DEFENDANT WALTER A. FORBES' MOTION (1) TO STRIKE ALLEGEDLY IMPROPER REBUTTAL ARGUMENT BY THE GOVERNMENT AND (2) FOR A CURATIVE INSTRUCTION AND NOTICE OF CONTINUING WALLACH OBJECTION INTRODUCTION Forbes asks this Court to strike certain portions of the Government's rebuttal summation or to give a curative instruction regarding those rebuttal portions, based on a laundry list of arguments that are belied by the record, mischaracterize the Government's rebuttal, or are contrary to applicable law. Although Forbes' ingenious lawyers have again managed to conjure a large number of objections (as they have consistently done with the Court's instructions), Forbes is not entitled to relief merely because of the volume of his arguments. In particular, in paragraphs 6, 7, and 8 of his current motion, Forbes accuses the Government of referring during its rebuttal summation to certain testimony by Cosmo Corigliano, Steven Kernkraut, and Casper Sabatino which, according to Forbes, the Government knew or should have known was false. As

demonstrated herein, Forbes is merely resurrecting his oft-

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repeated and previously rejected arguments that any evidence presented by the Government which incriminates Forbes must be false because, according to Forbes' own testimony, he is not guilty of the charged crimes. To the extent that Forbes points to information that was not admitted into evidence which supposedly contradicts the testimony at issue, this Court properly concluded that Forbes has manifestly failed to sustain his burden of demonstrating that the challenged testimony was false. Additionally, all of the

information to which Forbes now points was available to Forbes either when the challenged testimony was elicited, or in the case of testimony from Sabatino at issue in paragraph 6 of Forbes' motion, available while Forbes' defense case was still in progress. Even when, unlike this case, the Government knowingly

elicits perjured testimony, there is no error if the evidence which demonstrates that the testimony was false is presented to the jury, or was available for presentation to the jury, during trial. United States v. McCarthy, 271 F.3d 387, 399 (2d Cir.

2001)(rejecting due process claim where defense counsel addressed the conflicting testimony on cross-examination, and "[t]he jury was entitled to weigh the evidence and decide the credibility issues for itself"), abrogation on other grounds recognized, United States v. Robinson, F.3d , 2005 WL 3277921 (2d Cir.,

Dec. 5, 2005); United States v. Joyner, 201 F.3d 61, 82 (2d Cir.

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2000) ("cross-examination and jury instructions regarding witness credibility will normally purge the taint of false testimony"); United States v. Zichettello, 208 F.3d 72, 102 (2d Cir. 2000)(where the defendants had "ample opportunity to rebut [the witness's] testimony and undermine his credibility . . . [the reviewing court would not] supplant the jury as the appropriate arbiter of the truth")(internal citations omitted). Because

Forbes was aware during the retrial of the very information on which he now predicates his various false testimony claims, his reliance on cases in which the defense was unable to bring the false nature of the challenged testimony to the attention of the jury during trial are inapposite. Motion, 1-2.1 Under those circumstances, Forbes' remedy was to use the supposed impeaching evidence to challenge the testimony of the witnesses on the witness stand and allow the jury to Cf. cases cited at Forbes'

Thus, in United States v. Wallach, 935 F.2d 445 (2d Cir. 1991), the primary case on which Forbes relies, the district court sustained the government's objection to the presentation of defense evidence which would have been used to demonstrate that an essential prosecution witness's testimony was perjured. 935 F.2d at 456. After the trial, however, the Government conceded that the witness's testimony had been perjured, thus effectively conceding that the excluded evidence should have been admitted. See United States v. Ward, 190 F.3d 483, 491 (6th Cir. 1999)("We think Wallach does not apply here, because in that case the perjured testimony was not brought to the attention of the jury, whereas here, the court gave the defendant several opportunities to cross-examine and re-cross examine the witnesses to bring out any inconsistencies in testimony to the attention of the jury."). 3

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determine whether to credit that testimony.

Unlike the cases

cited by Forbes, none of the challenged testimony at issue here was known by the Government to be false because the witnesses had expressly repudiated it at some prior time, or because the prosecutors had first-hand, personal knowledge that the testimony was false. Accordingly, this Court should deny Forbes' motion to

strike portions of the Government's rebuttal summation or to give a curative instruction regarding those portions. The

Government's responses to Forbes' individual assertions of misconduct follow. * * * * * 1. Contrary to Forbes' contention, the Government did not "suggest" that Forbes' testimony that he received DX 30549 should be discredited by the jury. In fact, the Government made

precisely the opposite point, highlighting Forbes' admission that he received that document. Tr. 3594 ("This [DX 30549] is another This time he admits that he

memo that the defendant admits. received this document.").

In the challenged portion of the

rebuttal, the Government properly argued that Forbes had admittedly received DX 30549 even though his name did not appear on the document. Id. The Government's challenged argument was a

proper response to a defense argument that none of the documents admitted into evidence incriminated Forbes. Tr. 3591, see also

Tr. 3141 (Forbes' summation: "In this day and age of e-mails and

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all of us being inundated with paper and documents by the thousands there are no documents which incriminate Walter Forbes."). Accordingly, Forbes' claim that the argument was

improper misconstrues the challenged argument and is baseless. See United States v. Clark, 613 F.2d 391, 405 (2d Cir. 1979) (rejecting a summation misconduct claim which was based on a "a strained construction not supported by the record"). 2. Forbes' complaint about the Government's rebuttal

reference to GX 617 fails for the same reason that his challenge to the rebuttal reference to DX 30549 fails: Forbes has simply mischaracterized the obvious import of the challenged argument. The Government did not contend that Corigliano had nothing to do with GX 617. Rather, the challenged argument was that Corigliano

truthfully testified that he possessed that document even though his name appears nowhere on it. Tr. 3593-94 (describing GX 617

as "a document that Mr. Corigliano prepared at the defendant's instruction"). Forbes' selective reading of the transcript in

order to create an obvious mischaracterization of the Government's argument is hardly grounds to strike that argument. 3. Contrary to Forbes' contention, the Government

never argued that Kevin Kearney had no motivation to lie. Rather, the Government accurately pointed out that Kearney was not testifying pursuant to a cooperating plea agreement, and asked the rhetorical question, "does he have a motivation beyond

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that of an ordinary witness?"

Tr. 3573.

The purpose of the

question was to contrast the motivation of a witness who has already received the benefit of an informal immunity agreement at the time of his testimony, and the very different motivation of a witness who has yet to receive the full benefit of a cooperation agreement at the time of his testimony because that witness has not yet been sentenced. See United States v. Eltayib, 88 F.3d

157, 173 (2d Cir. 1996) (where "the defendants' lawyers specifically attacked [the witness's] credibility and veracity in their summations," the prosecutor permissibly "asked the jurors to draw inferences based on their common sense that would lead to the conclusion that the witness"); United States v. Feliciano, 223 F.3d 102, 123 (2d Cir. 2000)(prosecutor permissibly "referred the jury to evidence at trial concerning [the prosecution witnesses], on the basis of which the jury could judge whether either witness had a motivation to lie"). After the challenged remark was made during the rebuttal, the Court instructed the jury that a witness such as Kearney who is testifying pursuant to an informal immunity agreement does have a motivation to testify favorably for the Government that is different from that of an "ordinary witness." Tr. 3811-12. Accordingly, the Government's rhetorical question

was answered in the affirmative by the Court, and no further curative instruction is necessary. In any event, because this

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Court "properly advised the jury that the arguments of counsel were not to be taken as evidence in the case . . . . that was

adequate prophylaxis against the danger of the jury's finding the informant to be credible only because of the prosecutor's reply summation." United States v. Suarez, 588 F.2d 352, 355 (2d Cir.

1978) (rejecting a claim that the Government's rebuttal summation was lacking in evidentiary support). Forbes also complains that there is no evidence to support the Government's contention that Kearney's testimony during this retrial in 2005 was not influenced by a settlement he reached with the SEC. To the contrary, Kearney testified that he

had already paid a substantial monetary penalty to settle the SEC lawsuit, but incurred no other adverse consequences. Tr. 1121.

Because the settlement has been concluded and Kearney had fully satisfied his obligations under the settlement, any testimony he gives at this time will not improve Kearney's position regarding that settlement. on the evidence. Accordingly, the argument was properly grounded See United States v. Rodriguez, 968 F.2d 130,

143 (2d Cir. 1992)("The government is entitled, in summation, to argue all inferences that may permissibly be drawn from the evidence admitted."); United States v. Gerry, 515 F.2d 130, 144 (2d Cir. 1975) (the prosecutor's summation statement regarding the disappearance of a witness before trial and the prosecutor's speculation that the witness was being supported by one of the

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defendants at that time "did not transgress broad limits within which counsel for both sides are entitled to argue inferences which they wish the jury to draw from evidence")(internal quotation marks omitted). 4. Contrary to Forbes' characterization of the

Government's rebuttal, the Government did not claim that Sabatino had no theoretical motive (based on his cooperation agreement) to testify favorably for the Government. Rather the challenged

remark was that, notwithstanding any theoretical motive to "please the government," Sabatino had not given false testimony that was favorable to the Government. In support of its argument

that Sabatino's testimony that was favorable to the Government was not false, the Government properly pointed out that some of Sabatino's testimony during the retrial was favorable to the defense. Tr. 3574-75. 5. Forbes contends that the Government was not

entitled to argue that Corigliano's cooperation agreement did not create a motive for him to testify truthfully during the retrial, even though the agreement expressly provided that Corigliano could forfeit all benefits under the agreement if he gave false information or testified falsely. See GX 1546, at p. 2.

According to Forbes, this argument was improper because Corigliano has given false testimony against Forbes. The Court

previously rejected this argument in its November 1, 2005 ruling,

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denying Forbes' Retrial Motion In Limine No. 13, Docket No. 1915. See also United States v. Carr, 424 F.3d 213, 228 (2d Cir. 2005)(in light of the defense attacks on the credibility of the cooperating witnesses, the "government's remarks in its rebuttal summation emphasizing that the cooperation agreements required that witnesses `tell the truth' in order to gain any benefits were also proper"). The argument was particularly permissible in

response to the defense summation that Corigliano had framed an innocent man in order to obtain a reduced sentence for himself. See United States v. Rivera, 971 F.2d 876, 883 (2d Cir. 1992) ("The prosecutor's remarks were legitimate responses to counsel's arguments that Rivera had, in essence, been framed by the cooperating witnesses," because the "challenged statements were an attempt to focus the jury's attention upon the evidence and away from defense counsel's claims.") 6. Forbes' contention that Corigliano testified

falsely about the issue of bug sweeping at CUC's offices, and that the Government committed misconduct by referring during its rebuttal to Corigliano's testimony on that subject, was properly rejected by the Court. Forbes' counsel, who have never been shy

about voicing objections during these proceedings, did not object to the Government's rebuttal remarks about that testimony when those remarks when they were made. Instead, Forbes now belatedly

argues that the statements by the Government during rebuttal were

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improper for two reasons: because there is supposedly "unrefuted documentary evidence" contradicting that testimony, and because the Government's interview of E.E.D. representative Ray Melucci demonstrated that "there were no bug sweeps of CUC in 1997 after the January 1997 sweep reflected in GX 3075." Forbes' Motion to

Strike Improper Rebuttal at 5-6 (emphasis in original). This Court previously and correctly rejected Forbes' argument on this point, Tr. 3640-48, and the Government relies on the Court's reasons in opposing this objection. reasons support this Court's ruling. Two additional

First, contrary to Forbes'

contention, GX 3075 does not refute Corigliano's testimony regarding the bug sweeping issue. Rather, that document on its

face provides a factual basis for that testimony, stating that CUC was given a a 20% discounted rate because it employed E.E.D.'s services "(3) or more times a year." GX 3075.

Second, contrary to Forbes' contention, Melucci's statements to the Government's investigators and his document production do not refute Corigliano's testimony. Melucci neither

said nor provided a document showing that E.E.D. failed to provide bug-sweeping services for CUC in 1997. On March 3, 2003,

Postal Inspector Pat Mathews and FBI Special Agent John Pittman interviewed Melucci at his home in Brooklyn, New York. During

that interview, the United States learned that: (1) Melucci ran E.E.D. out of his home; (2) running E.E.D. was not Melucci's

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full-time job; (3)

Melucci did not have a secretary; and (4) During the

Melucci stored E.E.D.'s records in his basement.

interview, Melucci told the investigators that he would gather whatever E.E.D. records pertaining to his work for CUC that he could find, but he did not state that those records were complete. During the interview, Melucci did not tell the investigators that the only bug sweeping services that E.E.D. provided for CUC were reflected in E.E.D.'s records, and he did not state that E.E.D. did not provide any bug sweeping services in 1997. Melucci provided two documents that showed that E.E.D. The

provided bug sweeping services in 1997: GX 3075 and GX 3074.

latter document, which Melucci signed, showed that CUC provided bug sweeping services for CUC on or about November 17, 1997. this Court will recall, Melucci's invoice was shown to be inaccurate during the initial trial. In light of the established As

inaccuracy in Melucci's record-keeping, as well as the lack of any professional record-keeping personnel or an automated recordkeeping system, this Court should reject Forbes' argument that an alleged absence in Melucci's records for bug sweeping services provided by E.D.D. in 1997 irrefutably proves that Cosmo Corigliano lied. See United States v. Salameh, 152 F.3d 88, 137-

38 (2d Cir. 1998) (rejecting the defense contention that the government's summation was based on evidence that the government

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knew or should have known to be false; arguments were properly based on the evidence and were within bounds of broad latitude given to the government to suggest reasonable inferences to jury); cf. United States v. Rodriguez, 968 F.2d 130, 143 (2d Cir. 1992)("The fact that a physical object is not available does not require the exclusion of relevant oral testimony describing the object if the court is persuaded that the witness has the requisite personal knowledge."). 7. This Court also properly rejected Forbes'

contention that the Government committed misconduct by referring during its rebuttal to the testimony of Kernkraut regarding CUC's quarterly conference calls. Kernkraut testified that the Tr. 302. The

quarterly conference calls started in 1995.

Government has reviewed documents establishing that there were conference calls with investors or stock analysts between June 1995 and January 1998. These include documents showing that CUC

had conference calls on April 22, 1996, September 4, 1997, and December 2, 1997. Forbes contradicted Kernkraut's testimony on this point, testifying that the conference calls did not begin until mid-1997. Tr. 2763-64. That Forbes, who has a far greater

motive to testify falsely in this case than does Kernkraut, contradicted Kernkraut hardly proves Kernkraut a liar on this point. To the contrary, as this Court instructed the jurors,

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they (not the Court, and certainly not the lawyers for the parties) are the exclusive judges of credibility.2 The defense had the opportunity to counter Kernkraut's testimony on this point with evidence other than Forbes' own highly self-serving testimony. On December 6, 2005, defense

counsel presented the Government with a transcript of the deposition of Laura Hamilton, given pursuant to a civil lawsuit.3 This Court instructed the jury in Section IV(J) of the charge ("Credibility of the Witnesses") as follows: In deciding the facts of this case, you will have to evaluate the credibility of the witnesses. You, as jurors, are the sole judges as to the credibility of the witnesses and the weight that their testimony deserves. You may accept as true everything a witness says, only part of it, or none of it. * * * * * Inconsistencies or discrepancies in the testimony of a witness, or between the testimony of different witnesses, may or may not cause you to discredit such testimony. Two or more persons witnessing an incident or a transaction may see or hear it differently. Innocent misrecollection, like failure of recollection, is not an uncommon experience. In weighing the effect of a discrepancy, however, you may wish to consider whether it pertains to a matter of importance or an unimportant detail, and whether the discrepancy results from innocent error or intentional falsehood. Tr. 3803-04. That Forbes has now produced, after the Government's rebuttal had concluded, a transcript from a deposition of Laura Hamilton in which she contradicted Kernkraut's testimony about the timing of the CUC conference calls hardly demonstrates that the Government engaged in misconduct by referring to Kernkraut's testimony on the subject. As the Government explained, Tr. 365657, it was unaware of Hamilton's deposition testimony until (continued...) 13
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In that deposition, Hamilton testified that, "[w]hile [she] was vice-president of investor relations at CUC, we did not do conference calls to investors." transcript at 59. March 16, 2005 deposition

Hamilton also testified that, "[w]hile at CUC, We didn't do conference calls."

we didn't do any analyst calls. Id. at 73.

Hamilton testified that she was vice-president of

investor relations from June 1995 until roughly January 1998. Id. at 25. Hamilton's testimony on this point is consistent with

statements that she made during her July 7, 1999 interview with representatives of the Government. Notwithstanding the conflict between Kernkraut's testimony and Hamilton's accounts regarding the conference calls, and the fact that Forbes' defense team was well aware during the retrial of Hamilton's accounts on this point, Forbes declined to present Hamilton as a witness to contradict Kernkraut and corroborate Forbes. list. Indeed, Hamilton was on the defense witness

The fact that Hamilton or anyone else might have said

anything that contradicts Kernkraut's testimony hardly means that

(...continued) Forbes' lawyers belated disclosed it to the Government after the rebuttal summation was concluded. The Government does not commit misconduct by making arguments that are based on information then known to the prosecutor. United States v. Grant, 462 F.2d 28, 35 (2d Cir. 1972)(the prosecutor permissibly argued, based on information then known to him, that a cooperating witness had not illegally sold guns after he begun cooperating with the Government, even though the prosecutor subsequently learned that the assertion was incorrect). 14

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the Government acted improperly by eliciting that testimony, or by referring to that testimony during its rebuttal. Finally, the fact that Kernkraut's testimony on any matter is not corroborated by documents or the accounts of any other persons is no basis to challenge the admissibility of that testimony, to claim that the testimony was improperly elicited, or to argue that the Government improperly relied in its rebuttal summation on such testimony. The Court instructed the jury that

the uncorroborated testimony of cooperating co-conspirators, much less innocent witnesses such as Kernkraut, is not only admissible, but may be sufficient, standing alone, to sustain the United States' burden of proof.4 Thus, Forbes has failed to sustain is burden of showing that the Government knowingly elicited false testimony from Kernkraut and referred to that testimony during its rebuttal.
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The Court instructed the jury in Section IV(O) of the charge ("Government Witness Testifying Under Plea Agreement") as follows: In this case, there has been testimony from two government witnesses who pled guilty after entering into an agreement with the government to testify--­Cosmo Corigliano and Anne Pember. * * * * The government is permitted to enter into this kind of plea agreement. You, in turn, may accept the testimony of such a witness and convict the defendant on the basis of this testimony alone, if it convinces you of every element of the offense charged beyond a reasonable doubt. Tr. 3808-09 (emphasis added). 15

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Forbes' claim should be rejected for the same reasons that a similar claim was rejected by the Ninth Circuit Court of Appeals in United States v. Zuno-Arce: Zuno-Arce presents no argument or evidence for his proposition that the prosecutor knowingly put on false evidence, except for the contradictions between Cervantes at the first trial and Godoy and Lopez at the second. This evidence does not conclusively prove that the prosecutor knew that the Lopez and Godoy testimony was false. Lawyers in criminal cases, for prosecution and defense, sometimes swim in a sea of lies, and must necessarily trust the jury to determine what is true, or whether reasonable doubt remains about what is true. Rarely will a retrial produce exactly the same evidence as the first trial, yet appellant's argument suggests invalidity of the verdict in the second trial whenever the testimony varies. Discrepancies in the testimony about the details of 1984 meetings during trials in 1990 and 1992 could as easily flow from errors in recollection as from lies. It is hard to see how the prosecutor could know who was at which meetings, or when and where they occurred, except for what people who said they were there told him. Zuno-Arce has offered no evidence whatsoever for prosecutorial misconduct except for the inference from discrepancies. Zuno-Arce, 44 F.3d 1420, 1423 (9th Cir. 1995). 8. Forbes erroneously contends that the Government

elicited false testimony from Sabatino on cross-examination to the effect that GX 9322 refreshed Sabatino's recollection that CUC engaged in unsupported topside adjustments in 1993. According to Forbes, that testimony was false, because it was contradicted by the Government's disclosure to the defense during this retrial. Forbes is incorrect, there is no contradiction.

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As the Government informed the defense in a letter to Barry Simon dated November 14, 2005, Richard Schechter, a member of the Government's trial team during the initial trial, showed GX 9322 to Sabatino before the initial trial. In response, Sabatino told

Schechter that he did not dispute that unsupported topside adjustments were made prior to 1995. November 14, 2005 letter to

Barry Simon from Michael Martinez and Craig Carpenito, Exhibit 1 to Forbes' Motion to Strike Supposedly Improper Rebuttal Summation. Sabatino also told Schechter that GX 9322 did not at

that time refresh Sabatino's recollection about participating in the unsupported topside adjustments prior to 1995. Id.

The fact that the document did not refresh Sabatino's recollection when he was shown it before the 2004 trial does not mean, however, that Sabatino testified falsely during the 2005 trial that the document refreshed his recollection then. In any

event, even though Forbes had all the information on November 14 which supports his current claim that Sabatino's testimony was false, he elected not to recall Sabatino to question him about his prior statement to Schechter which supposedly contradicted the supposed false testimony. Nor did Forbes ever bring

Sabatino's prior statement to the attention of the Court while evidence was being presented during the retrial. Thus, even Forbes apparently recognized that Sabatino's testimony that GX 9322 refreshed his recollection would not be

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undermined by his prior statement to Schechter.

Forbes' current

request to strike the Government's rebuttal argument which was properly based on the properly admitted testimony of Sabatino is yet another sandbag effort, to compensate for Forbes' strategic decision not to challenge Sabatino's testimony on this point where it should have been challenged, on the witness stand. Having failed to even attempt to impeach Sabatino with his prior statement when he had every opportunity to do so, Forbes is certainly not entitled to have this Court strike the Government's rebuttal argument on the ground that Sabatino's testimony was false. Nor was Forbes entitled to curative instruction based on the Government's disclosure about the Schecthter/Sabtatino discussion, as the Second Circuit decision in United States v. Grant, 462 F.2d 28 (2d Cir. 1972) makes clear. In that case, a

prosecution witness named Brent testified that he signed many documents at the behest of the defendant, but did not remember the circumstances in which they were signed. After Brent's

testimony ended, the Government disclosed to the defense a document signed by Brent. Rather than recalling Brent and

questioning him about that document, the defense presented another witness who testified that it had been prepared by someone other than the defendant. In summation, the defense

argued that the document showed that Brent's testimony that he

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signed documents only at the behest of the defendant was incorrect. In rebuttal, the Government permissibly argued that,

based on Brent's testimony, had he been shown the document at issue, he probably would have testified that he could not recall who prepared it. The Court of Appeals affirmed the district court's refusal to give a curative instruction regarding the Government's rebuttal summation, given the defendant's opportunity but failure to recall Brent to question him about the document. "In light of

their failure to do so, they were not entitled to a favorable instruction on what inferences the jury should draw from the letter signed by Brent." 462 F.2d at 35. That analysis applies

fully to this case, where Forbes could have recalled Sabatino and questioned him about his prior statement to Schechter, but elected not to, then sought an instruction that Sabatino's testimony on this point was incorrect. 9. Contrary to Forbes' assertion, there is nothing

inconsistent between the Government's argument that "conspirators don't attach their names and signatures to incriminating documents" and the fact that some of the cheat sheets admitted into evidence bore Corigliano' handwriting. More to the point,

the Government's challenged argument was properly responsive to defense counsel's argument regarding the purported absence of documents that incriminated Forbes. Tr. 3141. The Government

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permissibly argued, in effect, that the absence of Forbes' name or signatures on the cheat sheets did not disprove Corigliano's testimony that he showed those documents to Forbes during the conspiracy period. Tr. 3591-93. The Government's challenged

argument was plainly one made (and likely understood by the jury) to be a general one, that conspirators typically don't attach their names and signatures to incriminating documents, not that they never do. 10. Forbes' complaints about the Government's remarks

regarding Corigliano's settlement agreement with the SEC is essentially a battle over semantics, and hardly demonstrates that the Government's rebuttal was improper. Regardless of how the

settlement was characterized by the lawyers, the jury had before it abundant evidence regarding the terms of the settlement with the SEC, memorialized in DX 1060. In particular, the evidence established: how much money Corigliano paid and what other assets he conveyed to settle the SEC lawsuit; what property Corigliano retained as part of the settlement; the amount of money that Corigliano spent while the SEC lawsuit was pending, including money that Corigliano spent to pay his real estate taxes; Corigliano's disclosures to the SEC about Corigliano's residential property in the town of Old Saybrook, CT; the amount of money that Corigliano paid to various attorneys as retainers; and the length of time that it took for

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Corigliano and the SEC to reach a settlement. 47, 1972-74, 1980-89, 2019-34, 2099-2166.

Tr. 1468-76, 1945-

Forbes focuses upon

the fact that SEC forgave "an undetermined amount of interest in its settlement" with Corigliano, but Corigliano's testimony established that fact for the jury. Tr. 1982-85.

Forbes elected to characterize the SEC's decision to settle the case for less than all of Corigliano's worldly assets as a "benefit" to Corigliano. Forbes now effectively asserts

that the Government was not permitted to argue a different characterization of the SEC settlement with Corigliano. For

Forbes' self-serving characterization of the SEC settlement as a "benefit" to Corigliano to be irrefutable, however, there would have to evidence in the record that the SEC believed that it would have received a more favorable result by proceeding to trial against Corigliano, taking into account litigation risks, rather than by settling its claims on the terms that were finally reached. In other words, there would have to be evidence that

the SEC compromised its claims for less than the SEC believed that those claims were worth, and that such a compromise was a benefit to Corigliano. this record. The Government permissibly argued, in effect, that the settlement by which Corigliano forfeited over $14 million in assets was not a "benefit" to Corigliano, but was rather the Simply put, there is no such evidence in

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result of arms-length negotiations between two adverse parties in a lawsuit, with both sides accepting a compromise of their respective claims. See United States v. Simmons, 923 F.2d 934,

955 (2d Cir. 1991)(after defense counsel argued that a cooperating witness had fabricated testimony in exchange for various benefits from the Government, including placement in the Witness Protection Program, the Government permissibly replied during rebuttal that "the only `benefit' [the witness] received from entering the program was protection `so that he wouldn't wind up on the pavement somewhere'"), abrogation on other grounds recognized, Jones v. United States, 306 F.Supp.2d 142 (D.Ct. 2003); see generally United States v. Rivera, 971 F.2d 876, 884 (2d Cir. 1992)("A prosecutor is not precluded from vigorous advocacy, or the use of colorful adjectives, in summation."). 11. Forbes contends that the Government's argument

regarding GX 11007 constituted a constructive amendment of the indictment, for the reasons set forth in Forbes' Retrial Motion In Limine No. 25. By its oral ruling on November 9, 2005, this Unnumbered docket entry for November In support

Court denied that motion.

9, 2005, denying Forbes' Motion docketed at No. 1943.

of his constructive amendment argument, Forbes also relies on the arguments set forth in his Retrial Motion No. 17. By ruling

dated November 27, 2005, this Court denied that motion as well.

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Docket No. 2003.

As this Court previously and properly

concluded, during this retrial as well as during the initial trial, none of the evidence regarding E&Y's knowledge or lack of knowledge about the charged accounting fraud amounted to a constructive amendment of the indictment. Accordingly, Forbes'

challenge to this portion of the Government's rebuttal summation should be rejected. 12. Forbes contends that Government was not permitted

to argue that Kearney's testimony should be believed, and relies solely on the arguments set forth in Forbes' Retrial Motion No. 18. Although the Court has not yet issued a written ruling in

response to that motion, the Court has stated on the record that it intends to deny that motion, Tr. 11/28/05, p. 32. challenge should be rejected. 13. To the extent that the Government's passing This

mention of the fact that Pember pleaded guilty to conspiring to commit the charged fraud could be construed by the jury as an argument that Pember's guilty plea should be considered for any reason other than to assess her credibility, the Government did not intend any such inference to be drawn, and the jury is unlikely to draw such an inference. See United States v. Pitre

960 F.2d 1112, 1124 (2d Cir. 1992)(rejecting the claim that the jury would "naturally and necessarily" view the prosecutor's statement that the defense had "no plausible explanation" as a

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comment on the defendants' decision not to testify).

That remark

was immediately followed by a reference to Pember's unchallenged testimony that she thoroughly participated in the fraud. 3556. Tr.

There was no dispute in this case that Pember was a key

participant in the fraud, so any mention of the fact that Pember pleaded guilty to that participation could not have prejudiced the defense. Cf. United States v. Perez, 144 F.3d 204, 211 (2d

Cir. 1998) (rejecting the defense contention that the prosecutor's summation, in which he made a hypothetical reference to facts which were not in evidence, mischaracterized the evidence; even if comments were improper, viewed against entire argument before jury, they did not deprive the defendant of a fair trial). In any event, after the challenged rebuttal remark,

the Court instructed the jury that it may consider Pember's guilty plea only to assess her credibility, so no additional curative instruction is necessary. 14. Tr. 3810-11.

Contrary to Forbes' argument, the Government

properly characterized the evidence regarding Pember's status at CUC. Although the Government briefly garbled its message by

stating that Pember "was not an executive with the company," it immediately and correctly stated that Pember was "not an executive pictured in this photo," (GX 634). See United States

v. Torres, 901 F.2d 205, 245-246 (2d Cir. 1990)(rejecting a summation misconduct claim where the context of the challenged

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statement demonstrated that the prosecutor did not engage in impermissible vouching). The Government's description of Pember

as a "lower level employee [whom Forbes] did not even speak to" correctly described Pember as occupying a lower level at CUC than Forbes. 15. Forbes contends that the Government should not

have been permitted to refer during its rebuttal to evidence of Forbes' admitted asset transfers. In support of this contention,

Forbes relies exclusively on the arguments set forth in his Retrial Motion In Limine No. 5, and his opposition to the Government's Retrial Motion In Limine No. 1. By ruling dated

October 19, 2005, this Court denied Forbes' Retrial Motion In Limine No. 5. Docket No. 1866. By ruling dated October 13, 2005,

the Court granted the Government's Retrial Motion In Limine No. 1 insofar as it sought the admission of evidence of Forbes' asset transfers. Docket No. 1839. Accordingly, this challenge should

be rejected.

United States v. McCarthy, 473 F.2d 300, 305 (2d

Cir. 1972) (rejecting a summation misconduct claim that the Government had referred to improperly admitted evidence, because the challenged evidence was properly admitted, "[i]t follows that the prosecutor's comments which are said to have been inflammatory were comments on evidence in the record.") 16. Forbes claims that the Government argued that

Forbes created CUC's financial statements, but this is a

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mischaracterization of the argument.

The challenged remark was

expressly a response to the defense summation that Monaco was somehow "responsible" for that portion of the Cendant merger reserve that was created on the former CUC side of the company by the conspirators. Tr. 3581 ("I want to address one of defense counsel's other arguments; that is, that Mike Monaco was somehow in charge of the merger reserve after the merger.") The

Government accurately pointed to Pember's testimony that she (not Forbes) used the merger reserves to fraudulently inflate the financial statements for the CUC side of the business. 82. Tr. 3581-

The Government then accurately quoted from GX 529, a

management representation letter signed by Forbes and other members of the former CUC's management, stating to E&Y that those management personnel were responsible for the fair presentation of the company's financial statements. Tr. 3582-83.

The Government never argued that Forbes personally created the financial statements. Nevertheless, the fact that

Forbes represented that he and others were responsible for the fair presentation of the financial statements was properly admitted evidence in this case, as Forbes' effectively acknowledged by not seeking to exclude that evidence. Additionally, this Court instructed the jury after the challenged rebuttal remark that Forbes cannot be convicted on a respondeat superior theory of liability. Tr. 3697-98.

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17.

Forbes contends that the Government was not

permitted to refer in its rebuttal to GX 616, even though that document was admitted into evidence, because that document was supposedly improperly admitted. By admitting that exhibit, Because

however, the Court rejected the basis for this claim. Forbes does not suggest that the Government's argument

mischaracterized the document, his complaint should be rejected. 18. Forbes claims that the Government improperly

argued that the jury could not accept both Forbes' testimony that he had no conversations with Monaco about "splitting the audit" or retaining Pember in her accounting position, and Monaco's testimony that he had such conversations with Forbes. Tr. 3563.

According to Forbes, such an argument ignores the possibility that either Forbes or Monaco had an innocent misrecollection of the conversations, and that neither person lied. Forbes raises a

similar objection to the Government's rebuttal statements regarding the contradictions between the testimony of Forbes and Kernkraut regarding the conversations between the two of those persons. In support of this argument, Forbes provides only a "cf." cite to inapposite cases which state that a witness should not be compelled to comment on the veracity of another witness by asking if that other witness "lied" on the stand, e.g., United States v. Scanio, 900 F.2d 485, 493 (2d Cir. 1990), abrogated on

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other grounds, Ratzlaff v. United States, 510 U.S. 135 (1994). The Government never asked Forbes if either Monaco or Kernkraut was lying, however. Nevertheless, whether innocently mistaken or

not, Forbes' testimony that he did not have certain conversations with Monaco and Kernkraut was simply irreconcilable with Monaco's and Kernkraut's testimony that they did have those conversations. The Government permissibly argued to the jury that it could conclude that Forbes' testimony was false based on that contradiction, and Forbes was entitled to argue that the testimony was inconsistent for innocent reasons. There is no United States

basis, however, to strike the challenged argument.

v. Shareef, 190 F.3d 71, 79 (2d Cir. 1999) (rejecting the argument that the prosecutor engaged in improper summation by arguing that if the jury believed "Shareef's testimony, it had to conclude that other witnesses were lying.") 19. Forbes again mischaracterizes the Government's

rebuttal by claiming that the Government effectively argued that all of Kernkraut's stricken testimony related to what occurred after April 15, 1995. The Government did not purport to

characterize the totality of the portions of Kernkraut's testimony that were stricken by this Court. Rather, the

Government stated that "Steven Kernkraut's testimony of what occurred after April 15th, 1998, is not in the record." 3559. Tr.

That is an accurate assessment of a portion of this

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Court's instruction that the court "also struck the testimony by Mr. Kernkraut that on April 15, 1998 he found out that representations that he relied on that had been made to him by Mr. Forbes were essentially false." Tr. 3083-84. More

generally, however, this Court struck portions of Kernkraut's testimony that were based on his review of Cendant's disclosures, including the Restatement, that CUC had overstated its earnings for various years, because Kernkraut did not have sufficient personal knowledge of the overstatement to satisfy Fed. R. Evid. 701. The Court did not strike any of Kernkraut's testimony about

what he learned from his assessment of CUC through various means, including his numerous conversations with Forbes, and what he concluded and reported about CUC before Cendant disclosed the fraud on April 15, 1998. The Government's challenged remarks

were accurate both technically and in general. Contrary to Forbes' claim, the Government never suggested that Heckler testified about CUC's false accounting for any years before 1995. Forbes again conveniently ignores the

Government's accurate characterization of Heckler's testimony as limited to the years of 1995-1997. Tr. 3560 (stating that

Heckler "testified that for the fiscal years 1/31/96, 1/31/97, and 12/31/97, the former CUC businesses overstated their income by approximately $252 million."). Nor did the Government

remotely suggest that Heckler testified about CUC's membership

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numbers or membership renewal rates.

In any event, this Court

has already instructed the jury, both before and after the Government's challenged rebuttal, that "there is no evidence at all that the membership numbers reported by CUC or Cendant were false or inflated in any respect . . . and I instruct you that there is no issue in the case with respect to those matters." Tr. 3083-84, 3801. No additional curative instruction on that

issue is possibly necessary. Finally, Forbes contends that the Government was not entitled to rely on Kernkraut's testimony for the reasons stated in Forbes' Retrial Motions Nos. 15 and 16. By its ruling dated

November 27, 2005, the Court denied Retrial Motion No. 16. Docket No. 2004. Although the Court has not yet issued a formal

ruling on Forbes' Retrial Motion No. 15, it has stated on the record to defense counsel that "I did not accept your arguments in Forbes' Motion Number 15." Tr. 11/28/05, p. 41. Accordingly,

nothing in either of those motions supports Forbes' present challenge. 20. Forbes again mischaracterizes the Government's

rebuttal by claiming that the Government mischaracterized Kernkraut's testimony about his conversations with Forbes about the Ideon merger reserve. According to Forbes, the Government

argued that Kernkraut testified that Forbes was lying when he denied any involvement in the Ideon merger reserve. To the

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contrary, what the Government argued was that Kernkraut's testimony about Forbes' knowledge of the shifting amounts of the Ideon merger reserve "corroborates Cosmo Corigliano and shows the defendant is lying when he says that he had nothing to do with establishing the Ideon merger reserve or that he had nothing to do with increasing it." Tr. 3572. Thus, the Government's

argument was that Corigliano's testimony that Forbes was intimately involved with the fraudulent inflation of the Ideon merger reserve was corroborated by Kernkraut's testimony that Forbes was readily conversant with the shifting amount of the reserve, and Corigliano's and Kernkraut's mutually corroborating testimony, taken together, establish that Forbes was lying when he denied any involvement in the Ideon merger reserve. Tr. 3114-16 (Government's initial summation). 21. Forbes claims that the Government was not permitted to See also

reference during its rebuttal evidence regarding Forbes' severance agreement, because Forbes had objected to the admission of that agreement in his Retrial Motion In Limine No. 4. By its

ruling of October 17, 2005, the Court denied Retrial Motion In Limine No. 4 insofar as it sought to exclude the severance agreement from evidence. Docket No. 1845.

Forbes also erroneously claims that the Government improperly argued that the severance agreement was substantive evidence of Forbes' guilt, rather than evidence which impeached

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Forbes' denials of guilt.

To the contrary, the Government

invoked the severance agreement during its rebuttal solely to challenge Forbes' own testimony that he did not contemplate that he would be criminally prosecuted when he transferred assets to his wife. Tr. 3602. Had Forbes properly made a timely objection

to this remark, the Government could have emphasized that the reference to the severance agreement was for the purpose of assessing Forbes' credibility. United States v. Castillo, 14

F.3d 802, 806-807 (2d Cir. 1994)(rejecting the claim that the prosecutor had abrogated the court's limiting instructions by improperly arguing the truth of the hearsay testimony during his closing and rebuttal arguments, where, "[i]mmediately following defense counsel's objection to his closing argument, the prosecutor stated to the jury that he was not arguing that the substance of the hearsay testimony be accepted as true"). Additionally, had Forbes made a timely objection, he would have enabled the Court to give a contemporaneous instruction that clarified the matter on the spot. Id. Forbes declined to

object, however, so any possible ambiguity is attributable to his own strategic decision. 22. Forbes argues that the Government "violated

Wallach" by relying on Monaco's testimony regarding a meeting he had with Forbes in September 1997 because, according to Forbes, Monaco's testimony during the first trial regarding that meeting

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did not state that Monaco discussed Pember with Forbes.

In other

words, the Government knowingly elicited false testimony because Monaco's testimony during the two trial was not identical. law is to the contrary. The

E.g. United States v. Douglas, 874 F.2d

1145, 1160 (7th Cir. 1989), abrogated on other grounds United States v. Durrive, 902 F.2d 933 (7th Cir. 1990). This is

particularly true, where Monaco's testimony from the initial trial does not contradict his testimony at the retrial, but merely fails to include all of the information in the retrial testimony. The absence of even important inculpatory information

in a written summary of a witness's prior statement does not make the witness's trial testimony about that information false, much less knowingly false. United States v. Borkoski, 154 F.Supp.2d

262, 266-67, 270-71 (D.Conn. 2001), citing United States v. Gambino, 59 F.3d 353, 365 (2d Cir. 1995)("even a direct conflict in testimony does not in itself constitute perjury"). 23. Forbes' challenge in this paragraph of his motion

to the Government's remarks regarding the testimony of Kernkraut, citing Tr. 3572, is the same as his challenge set forth in paragraph 20 of his motion. The Government refers the Court to

its response to paragraph 20, supra. 24. Forbes contends that the Government impermissibly

pointed out during rebuttal that Corigliano's plea agreement required him to use his "best efforts" to settle with the SEC,

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but the plea agreement provides precisely that. Schedule A, ¶ 12.

GX 1546,

According to Forbes, that argument was

improper because the Court improperly limited Forbes' crossexamination of Corigliano regarding his supposed failure to use his best efforts. Since Forbes is merely referring to his failed

arguments on matters that were previously briefed at length in various motions to quash Forbes' Rule 17(c) subpoenas, he has failed to demonstrate that the Government committed misconduct by accurately characterizing a document that was properly admitted into evidence. 25. Forbes contends that the Government made arguments

based on portions of the Court's instructions on conspiracy to which Forbes objected. Forbes apparently believes that it is his

objections to proposed instructions that somehow limits the Government's summation, and not the Court's rulings that rejected those objections. Not surprisingly, Forbes cites no authority

for this self-aggrandizing contention. 26. Forbes contends that the Government was not

entitled to argue that CUC had two corrupt CFOs, Corigliano and Stuart Bell, because this Court supposedly erred by denying his Retrial Motion No. 7 and his Retrial Motion In Limine No. 23, and supposedly further erred by denying Forbes' request for a missing witness instruction regarding Bell. The Government, again, did

not commit misconduct merely because it did not toe the line of

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Forbes' arguments that were previously rejected by this Court. To the extent that Forbes complains about Kernkraut's testimony that there was fraud at CUC in 1993 and 1994, that testimony, and all testimony by Kernkraut that CUC's accounting was fraudulent, was stricken by this Court. 27. Tr. 3083-84, 3801.

Forbes challenges the Government's statement

regarding the absence of a motive for Kernkraut to falsely implicate Forbes in the charged fraud. As Forbes points out, the

Government elicited certain testimony from Kernkraut (to the effect that April 15, 1998 was "one of the worst days of [Kernkraut's] professional life," Tr. 214) in anticipation that Forbes would seek to establish Kernkraut's motive to testify falsely against Forbes. Forbes, however, never questioned

Kernkraut about that testimony, and never argued in his lengthy summation that Kernkraut had a motive to testify falsely against Forbes. Rather, to the extent that Forbes disputed any portions

of Kernkraut's testimony, he claimed that Kernkraut had a faulty memory or was otherwise honestly mistaken. Tr. 3458-63. Because

the evidence elicited by the Government was never used by Forbes in any manner to establish any motive for Kernkraut to intentionally frame Forbes, the Government's argument that Kernkraut had no motive to testify falsely was correct.

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CONCLUSION For the foregoing reasons, the Government respectfully requests that this Court deny Forbes' motion to strike portions of the Government's rebuttal argument or for a curative instruction. Respectfully submitted, CHRISTOPHER J. CHRISTIE Special Attorney U.S. Department of Justice

By:

NORMAN GROSS MICHAEL MARTINEZ CRAIG CARPENITO Special Attorneys U.S. Department of Justice

Dated: December 12, 2005 Hartford, Connecticut

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CERTIFICATE OF SERVICE The undersigned certifies that on this day I served a copy of the Government's Opposition to Defendant Walter A. Forbes' Motion (1) to Strike Allegedly Improper Rebuttal Argument by the Government and (2) for a Curative Instruction and Notice of Continuing Wallach Objection upon the following by email: Barry S. Simon Marcie Ziegler

NORMAN GROSS U.S. Department of Justice Dated: December 12, 2005 Camden, New Jersey