Third Circuit Rejects Claims of Brady Violation and Affirms Securities Fraud Conviction

Posted On Monday, March 1, 2021
By: James W. Kraus

On February 17, 2021, the Third Circuit affirmed the conviction of Christopher Rad of securities fraud, rejecting his claims that the prosecution had withheld evidence regarding one of its key witnesses at his trial.  The Court’s non-precedential decision affirms the District Court of New Jersey’s denial of Rad’s motion to vacate his conviction and sentence under 28 U.S.C. §2255.  Although the Court initially granted Rad’s application for a certificate of appealability, it ultimately found that even if the government had failed to disclose prior statements by one of its key witnesses, the evidence was not material.  The decision reinforces the basic but strict rule that evidence is material for purposes of a claim under Brady v. Maryland, 373 U.S. 83 (1963) only when there is a reasonable probability that its disclosure would have produced a different result.

Rad was originally indicted in 2011 for his role in the use of spam e-mails as part of a “pump and dump” stock price manipulation scheme.  The government’s theory was that Rad was the middle-man in a scheme that was executed through e-mail spamming.  The evidence at trial included testimony by James Bragg, who testified that Rad hired him to send spam e-mails with false header information from falsely registered accounts.  Bragg’s testimony was corroborated in part by numerous transcripts of Skype chats between the two.  At the conclusion of the trial, Rad was convicted of one count of conspiracy to commit securities fraud through spamming and five counts relating to unauthorized access spamming. In the §2255 motion challenging his conviction, Rad claimed, among other things, that the government had failed to make disclosures of prior statements by Bragg. 

Prior to Rad’s trial, Bragg had already entered a plea of guilty and had been sentenced in the Eastern District of Michigan and was awaiting sentencing in the District of New Jersey on a related spamming case.  At the heart of Rad’s claim regarding Bragg was that the government had failed to disclose statements made by Bragg at his Michigan sentencing hearing in which he appeared to disavow having worked with Rad.  Specifically, Bragg stated at his sentencing hearing that he did not work with someone whom Bragg referred to as “him” and did not send e-mails on that person’s behalf.  Notwithstanding the apparent ambiguity in those statements, Rad insisted that Bragg’s reference to “him” was a reference to Rad.  He argued that he could have used those statements to impeach Bragg’s trial testimony by demonstrating that Bragg had made prior statements that he and Rad had not worked together. 

The Court rejected Rad’s claims on three essential bases:  (1) Bragg’s credibility was already significantly impeached at trial by his criminal record and admission that he hoped for leniency; (2) the government acknowledged Bragg’s credibility problems at closing, and argued that the jury should not accept his testimony at face value, but instead should look to the corroborating documentary evidence; and (3) the jury found Rad not guilty of Counts II through IV of the indictment, which charged Rad with aiding and abetting Bragg’s illegal spamming activities.

In reaching its decision the Court applied the 3rd Circuit standard that a Brady violation occurs when a prosecutor suppresses evidence that is both favorable to the accused and material to the outcome of the trial, citing Dennis v. Sec’y Pa. Dep’t of Corr., 834 F.3d 263, 284-85 (3rd Cir. 2016) (en banc).  Here it found that Rad’s claim failed to meet the standard for materiality, which requires a reasonable probability that the disclosure of the disputed evidence would have produced a different result.  As a result, it refused to vacate Rad’s conviction and 71 month prison sentence.

The full text of the opinion can be found here.