More From Eric Dixon at

Support Independent Investigations With Bitcoin:
Send Bitcoin Here: 171GMeYRD7CaY6tkXs8dSTjLbAtFazxhVL

Top 50 Twitter Rank of Worldwide Startup Advisors For Much of 2014
. Go to my professional site for solutions to your legal, business and strategic problems. The only lawyer who is a co-inventor of multiple, allowed-for-grant patents on blockchain technology!!! Blockchain and Digital Currency Protocol Development --
Top Strategic Judgment -- When You Need A Fixer -- Explore Information Protection and Cryptographic Security -- MUST-WIN: JUST DON'T LOSE -- SURVIVE!: Under Investigation? Being Sued? Handling Extreme Stress -- Corporate Issues -- Startup Issues -- Investor Issues -- Contracts To Meet Your Needs -- Opposition Research -- Intellectual Property, Media and Reputation Issues -- Independent, top-notch legal, strategic and personal advice -- Extensive ghostwriting, speechwriting, book writing, issue research, press and crisis management services. Listed by American Bar Association's Law Bloggers (Blawgers). Contact European Union audiences: This site uses a third party site administrator which may use cookies but this site is intended for AMERICAN clients and prospective clients only!

Tuesday, July 26, 2011

Guilty Verdicts in Sky Capital Case

The founder and one stockbroker of the international brokerage firm Sky Capital were found guilty on all counts by a Manhattan federal jury after a little more than two days of deliberations, capping off an arduous five-week trial that was as boring as it was long.

An appeal is a virtual certainty. (Update: Jeffrey Hoffman, attorney for Sky Capital founder and self-proclaimed "bad boy" Ross Mandell, vowed an appeal.  Michael Bachner, attorney for stockbroker Adam Harrington, also indicated an appeal would be at least considered.)  Unlike a trial which examines facts introduced (or allowed to be introduced) into evidence, the appeal can get into thornier, meatier (and more intellectual) questions of the propriety of the trial judge's rulings (both before and during the trial) on evidence, objections and other matters.

The verdict is troubling on several levels. First, it is a victory for some very credibility-challenged witnesses. In addition to some admittedly drug-addled former stockbrokers, this trial featured prosecution witness testimony from a motley crew of curious witnesses including a mulch-farmer--possibly-turned-professional-informant, Mark Halper, with a coincidental knack for getting shaken down by New Jersey politicial fundraisers (as if that were unusual) and shady brokerages (he was a customer of the infamous Stratton Oakmont in the mid 1990s).  The federal government really should make efforts to find and use more credible witnesses, even if they are cooperating and agreed to plead guilty.

Second, portions of this trial advanced government arguments that made fraud indistinguishable from the benign and entirely legal practice of raising capital. A consulting agreement was raised as a sign of nefarious, fraudulent activity to cover up a "crime." The government may be further emboldened by this verdict to "create" new crimes by combining its power to declare an activity -- or document -- as criminal and using its projected credibility as the team with "white hats" and "badges" to make that label stick.

The risk of entirely legal business activities being accused by the government of being, and found by a jury to be, illegal has increased significantly.

This verdict represents an executive branch victory (it contains the Justice Department) in determining what is legal, thus usurping the traditional lawmaking role of Congress. Executive branch rulemaking has thus won another battle today.

Thirdly and finally, the question of whether the government did meet its burden of proof -- proving guilt beyond a reasonable doubt -- should be addressed.  The common mistake of observers is to use the equivalent of the "preponderance of the evidence" -- in other words, it was more likely than not that these men were guilty as charged.  While each side gets to argue the standard, and the judge gives instructions (and boy, will those instructions be scrutinized on appeal!), the task is to impress upon exhausted and bored jurors the need to use the proper, intended standard of proof.  Guilt beyond a reasonable doubt is hardly the same as a "probably" standard.  In fact, in this case where a "smoking gun" was nowhere to be found (and if it was there it was so hot and boring that one may not have noticed), the intellectual (or pseudo-scholarly) outlook was that the government failed to meet its standard of proof. 

Perhaps one holding this opinion was disappointed -- dismayed -- that the government seemed to put on a questionable and somewhat surprisingly weak case (well, to paraphrase Donald Rumsfeld, you work with what you do have, not what you wish you had), yet the jury came back in a relative hurry, reaching verdict in little more than two full days of deliberations. 

What's Next?  After today's verdict, the defendants now address immediate concerns of getting released on bail pending the almost certain appeal. The government may seek civil forfeiture of assets using the verdict. Sentencing now becomes an issue; one critical issue will be the dollar amount of the fraud as this will drive the Probation Department's sentencing recommendations for both men. The battles are not over, but the focus may shift to minimizing the damage.

Finally, both men need to start preparing for life in prison. (If anyone out there is in a similar situation or has a loved one facing jail, I also work with a former-inmate-turned-prison-consultant.). The Sentencing Guidelines are not kind to unsuccessful defendants who dare to assert their innocence and put the government to meet its burden of proof at trial. 

Prison and the specter of near-permanent separation from family awaits Mandell and Harrington unless appeals are successful.  This is a life-altering, catastrophic personal defeat that will profoundly and permanently affect these defendants and their families should the ultimate sentence be more than a few years.  Whatever you think of their culpability, or whether it was in fact proven beyond a reasonable doubt, the personal impact should be recognized as extreme.

Stay tuned to this website (and to Walt Pavlo's excellent blog available at for  further analysis.

Eric Dixon is a New York lawyer who comments on various legal, economic and policy matters.

1 comment:

  1. what prison sentance did Harrington and Mandell receive on the 28 & 29 March 2012