Feds Not Giving Up On Middleman

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by Paul Bass | Apr 27, 2007 6:40 pm

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The feds asked a judge to put an accused middleman (at right in photo) in the New Haven Savings/ NewAlliance bank scam back on trial after he went free on a technicality.

U.S. District Court Judge Janet Arterton last month acquitted John Lucarelli of charges of conspiracy and securities fraud for his alleged role in arranging $4.9 million in illicit investment deals for the initial public offering (IPO) when New Haven Savings Bank went public in 2004 and became NewAlliance. Lucarelli, a local broker and Yale School of Management grad, allegedly lined up local depositors to “borrow” money

The jury found Lucarelli guilty on two counts. But then, in separate answers to special interrogatories from the judge, jurors said they didn’t believe Lucarelli had defrauded the bank’s depositors, or the bank itself.

Given that contradiction, Arterton let Lucarelli free.

Now the U.S. Attorney’s Office has filed a request with the court for a new trial.

In its memorandum supporting its request, the government wrote that it is not “conceding the arguments previously advanced.” In other words, the government doesn’t agree with the judge and the defense that the jury’s two answers were inconsistent or too murky to support a guilty verdict, or that the judge had given the jury incomplete instructions.

However, if one were to accept those positions, the right verdict is a new trial, not an acquittal of Lucarelli, the motion argues.

“The court obviously gave the interrogatories more weight than the [jury’s guilty] verdict,” the motion notes. The motion quotes a Second Circuit court opinion advising that doing so—by acquitting a defendant found guilty based on answers to special interrogatories—amounts to “usurping the role of the jury.”

The motion, submitted by U.S. Attorney Kevin O’Connor and prosecutors Michael McGarry and David Ring, also cites a 1985 federal ruling that in no way can a jury’s “express finding of guilty be considered a factual resolution in the defendant’s favor, and therefore an acquittal.” Among the other cases cited in that vein is a 1972 U.S. Supreme Court decision in Pipefitters Local 562 vs. United States.

Click here to read the government’s motion.

“The government does not and cannot argue that there is new evidence to support its motion,” John Lucarelli’s attorney, Robert B. Fiske, responded in a motion opposing a new trial. “Likewise, there has been no error of law to correct and no intervening change in the law. As the Court properly recognized, the special interrogatory answers determined conclusively that the jury found no specific intent to defraud.”

Without such an intention, a person can’t be convicted securities fraud or conspiracy, Fiske argued.

“None of the cases cited by the government to support its view that the Court has somehow usurp[ed] the role of the jury suggests that a new trial is appropriate when the jury affirmatively finds that the government failed to prove an essential element of the crimes charged.”

Click here to read Fiske’s motion.

The ongoing jockeying over this case reflects the challenge of prosecuting certain forms of white-collar crime. It’s tough to explain to a jury the specific individuals or institutions who are victims of this widespread form of securities fraud.

The man who allegedly made the big money on this scam, New York millionaire Robert Ross, cooperated with the government in this case. He testified against Lucarelli. He hasn’t been sentenced yet; his sentencing will likely be further delayed pending the outcome of the government’s latest request for a new trial.

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