On June 15, 2011, the U.S. Court of Appeals for the Second Circuit overturned the securities fraud conviction of a former Credit Suisse broker claiming that venue in the EDNY was improper. However, in the same decision, the Second Circuit affirmed the broker’s conviction on two conspiracy counts for alleged fraudulent activity relating to auction rate securities, stating that the venue in the EDNY was proper for those claims.
In particular, the government had alleged that the EDNY venue was proper because the broker and his compatriot travelled through John F. Kennedy International Airport to meet investors. The appeals court said that the government failed to offer any concrete proof of any act or transaction constituting the securities fraud violation in the EDNY. The Second Circuit was clear that the government had offered no proof to suggest such an event. Nonetheless, the Second Circuit did state that the use of the John F. Kennedy Airport to attend meetings was an overt act in furtherance of a conspiracy, and those face-to-face meetings were a regular part of the fraudulent conduct. As such, the conspiracy convictions would be upheld.
Later, once back at the trial level, EDNY Judge Weinstein suggested to the defendant that it may be in his best interest not to continue to object to venue on remand. The broker accepted the sage advice of Judge Weinstein.
This case illustrates the government’s reach over various venues where individuals may find themselves engaging in business activity. Although it is generally accepted that the district where criminal activity occurs will support venue, this case demonstrates that there are limits to the government’s “long-arm of the law” approach.