White Collar Criminal Defense Group

No Third Trial For Former Bond Trader Litvak

What Happened?

After the U.S. Court of Appeals for the Second Circuit reversed former Jefferies Group bond trader Jesse Litvak’s securities fraud conviction for the second time, the government moved to dismiss the indictment against him, thus ending a five-year criminal case.

The Rundown

In 2014, Litvak was convicted in the U.S. District Court for the District of Connecticut on multiple counts of securities fraud and making false statements for defrauding a federal program designed to aid the mortgage-backed securities market after the financial crisis. He was sentenced to twenty-four months’ incarceration and a $1.75 million criminal fine, but the U.S. Court of Appeals for the Second Circuit reversed, holding that the district court had committed reversible error by excluding defense expert testimony.

The government tried Litvak again, and in 2017, a jury convicted him on one count of securities fraud for lying to a portfolio manager for the price he paid for a mortgage-backed bond. The manager testified that he believed Litvak had been acting as his agent and owed him accurate information about the bond’s price.  He was again sentenced to twenty-four months’ incarceration. In May 2018, the U.S. Court of Appeals for the Second Circuit again reversed the conviction. It held that the manager’s testimony was erroneously admitted as his subjective belief as to an agency relationship was both irrelevant and misleading to the jury. The Court ordered Litvak, who had been incarcerated since September 2017, to be freed pending retrial.

Earlier this month, the U.S. Court of Appeals for the Second Circuit denied the government’s motion for reconsideration. The government thus moved to dismiss the case against Litvak. 

For the Record

“This case has again been remanded to the Court following an evidentiary ruling by the Second Circuit. Two juries have found the defendant Jesse C. Litvak guilty of securities fraud, the Court and the Second Circuit have twice found that there was sufficient evidence to support those convictions, and the Second Circuit has twice validated the Government’s prosecution theory and held that the defendant’s misrepresentations were not immaterial as a matter of law. Nonetheless, in light of the totality of the circumstances unique to this case, the Government has concluded that the interests of justice would not be served by a third trial.” – Government’s motion to dismiss

The Take Away

After two trials, five years of litigation, and months of incarceration as a result of two convictions, Jesse Litvak’s involvement with the federal criminal system has come to an end.  

Proposed Email Privacy Act Gains Support

What Happened?

Technology companies publicly voiced their support for the Email Privacy Act, a new email privacy regulation passed by the House that would require a warrant to access all email content.

The Rundown

In May, the House of Representatives approved the Email Privacy Act as an amendment to the National Defense Authorization Act (NDAA). The 1986 Electronic Communications Privacy Act (ECPA) sets out the current state of the law, which does not require warrant protections to access email communications older than 180 days. Further, DOJ has interpreted the ECPA as not requiring warrants to access emails that have been opened. 

The House version of the Email Privacy Act now seeks to codify the Sixth Circuit’s ruling in Warshak v. United States, 631 F.3d 266 (6th Cir. 2010), which held that the Fourth Amendment requires the government to obtain a probable-cause warrant before accessing email content. In that case, the government directed Warshak’s email provider to preserve copies of his future emails, which it later subpoenaed. The Email Privacy Act will also extend to protect texts, notes, photos, and other private information in the cloud. 

More than 50 civil liberties organizations and technology companies filed a joint letter stating their support for the Email Privacy Act and urging that it be included in its current state in the final version of the NDAA. The letter noted that the version of the bill passed by the House already represents significant compromise, as it did not include a key provision that would have required the government to notify individual customers when it served a provider with a warrant for their information. Signatories to the letter included Amazon, Adobe, Facebook, Google, the ACLU, the U.S. Chamber of Commerce, and the American Library Association.

The Take-Away

The passage of the NDAA with the current version of the Email Privacy Act, while noteworthy, would likely not change current practices. As the letter notes, post-Warshak, “DOJ and FBI policies already require law enforcement officials seeking content to obtain a search warrant, and many providers will not provide their users’ content without one.” Rather, the new Act would serve to ratify Warshak and update the current state of the law, which was enacted years before the public even had access to the internet. Warshak’s codification, however, could take on more significance in light of the current administration’s opportunity to fashion a more conservative Supreme Court.