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United States v. Baylor

United States District Court, District of Columbia

August 2, 2019

UNITED STATES OF AMERICA,
v.
BRYNEE BAYLOR, Defendant.

          MEMORANDUM OPINION AND ORDER

          ELLEN S. HUVELLE UNITED STATES DISTRICT JUDGE.

         Defendant Brynee Baylor has filed a motion for new trial pursuant to Federal Rule of Criminal Procedure 33. For the reasons set forth below, defendant's motion will be denied.

         BACKGROUND

         Brynee Baylor was indicted on October 6, 2016. (Indictment, ECF No. 1.) The indictment charged Ms. Baylor with conspiracy to commit securities fraud (Count One), securities fraud (Count Two), fraud in the first degree (Counts Three through Eight), obstruction of justice (Count Nine), and failure to file federal tax returns in 2010 and 2011 (Counts Ten and Eleven). (Id.) Defendant filed a pretrial motion to sever the tax counts (Ten and Eleven), which the Court granted on December 13, 2018. (Order, ECF No. 51.)[1]

         The indictment alleged that between July 2010 and September 2012, Ms. Baylor, a former attorney, conspired to defraud investors with Frank Lorenzo, the president and CEO of the Milan Group, a client of hers.[2] The scheme consisted of representing to investors "that they could obtain extremely large profits in a short period of time with little or no risk through a purported trading program" that, in reality, did not return any money to investors. (Indictment ¶ 14.) The obstruction of justice count arose from civil litigation against Ms. Baylor that had been brought by the Securities and Exchange Commission ("SEC") in November 2011. (Id. ¶ 71.) The SEC lawsuit related to the same investment scheme that is the subject of this criminal case. See SEC v. Milan Group, 962 F.Supp.2d 182, 186-89 (D.D.C. 2013). During the course of this civil litigation, Ms. Baylor testified at depositions on May 22, 2012 and September 18, 2012. (Indictment ¶ 72.) The government alleged that Ms. Baylor obstructed justice by lying during these depositions. (Id.)[3]

         Jury selection began on April 8, 2019, the jury was sworn on April 9, and it heard testimony for approximately two weeks before beginning deliberations on April 25. The jury returned its verdict on April 29, finding Ms. Baylor guilty on seven counts: conspiracy to commit securities fraud (Count One), securities fraud (Count Two), and fraud in the first degree (Counts Three through Six and Eight). (Verdict Form, ECF No. 100.) The jury hung on one fraud charge related to investor Santos Soto (Count Seven), and acquitted Ms. Baylor of the obstruction of justice charge (Count Nine). (Id.)[4]

         After filing two motions for extension of time to file a motion for new trial, both of which were granted, defendant filed her motion for new trial on June 14, 2019. (Def. Mot. for New Trial ("Def. Mot."), ECF No. 127.) The government filed an opposition on July 3, 2019 (Gov't Opp., ECF No. 133), and defendant's reply was filed on July 12, 2019. (Def. Reply, ECF No. 136.)[5]

         ANALYSIS

         I. LEGAL STANDARD

         Federal Rule of Criminal Procedure 33 provides that "[u]pon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires." Fed. R. Crim. P. 33. A new trial is warranted '"in the interests of justice' in a variety of situations in which the substantial rights of the defendant have been jeopardized by errors or omissions during trial." United States v. Ring, 768 F.Supp.2d 302, 310 (D.D.C. 2011) (internal citation omitted). Where a motion for new trial is made on the grounds that the verdict was against the weight of the evidence, "the district judge weighs the evidence and evaluates the witnesses' credibility and decides whether a serious miscarriage of justice may have occurred." United States v. Dale, 991 F.2d 819, 838 (D.C. Cir. 1993) (internal citation and quotation marks omitted).

         II. DEFENDANT'S MOTION FOR NEW TRIAL

         Defendant's motion raises the following arguments in support of her request for a new trial: 1) the verdict was against the weight of the evidence, 2) the Court erred in its selection of which alternate juror would replace an excused juror, 3) exculpatory evidence related to Vainer Johnson was not disclosed before trial, 4) defendant's statements in depositions during the SEC litigation should have been suppressed because her Fourth Amendment rights were violated, and 5) the prosecution engaged in improper speculation during closing arguments. (Def. Mot. at 4- 9.) Each of these arguments will be addressed seriatim.

         A. Sufficiency of the Evidence

         Defendant's motion contends that "[t]he government did not meet [its] burden to prove beyond a reasonable doubt with respect to all counts that Ms. Baylor had actual knowledge she was committing these crimes." (Def. Mot. at 1 .)[6] The Court disagrees. Contrary to defendant's assertion, there was compelling evidence to support the jury's finding that Ms. Baylor had the necessary mens rea and intended to defraud investors. Defendant's theory that she was deceived by Mr. Lorenzo and others was thoroughly presented by her own trial testimony, but the jury had good reason to reject it. No. serious miscarriage of justice occurred; on the contrary, the jury heard extensive evidence to support a finding that Ms. Baylor acted with the requisite state of mind.

         Based on the evidence introduced at trial, a jury could reasonably find that investors deposited over $2 million in Ms. Baylor's law firm's IOLTA account, often based on her representations that the investment would succeed and provide extraordinarily high returns within a short period of time, that these projections had been realized in the past, that investors could get back their investment, that any fees would be taken out of the profits and not the investors' principal, and that the investors' money would not be at risk. (See Gov't Ex. 509.) None of these assurances were true. For instance, jurors heard direct evidence that defendant made these false representations on a recorded phone call conducted by undercover FBI agents. On this call, defendant told those whom she believed to be interested investors that they would receive a "250 percent return" on their funds within 30 days, that she had seen these transactions successfully completed, that she did not think "that there [was] a risk" of them losing money, that the funds were "not supposed to even be moved" because it they would be "escrowed the entire time," and that "100 percent" of the deposited funds would go into the investment with "no money ... go[ing] ... to fees." (Gov't Ex. 438-23.2T (transcript of FBI call); Gov't Ex. 438-23.2 (deposition video where the FBI call was played).) More than a half dozen investors testified at trial that Ms. Baylor had made similar promises to them. (See, e.g., Apr. 12 pm Tr. at 38-40, 53, 56-57 (investor Larry Kudla describing that he transferred funds to defendant's escrow account because he understood the money to be safe there, had been told by defendant of past successful transactions, and was told he could expect a $10 million return on a $250, 000 investment within seven days); Apr. 15 pm Tr. at 11-13 (investor Sidharth Dugar testifying that Ms. Baylor told him she had completed successful deals with the Milan Group before and that he understood the money to be safe in the escrow account).)

         The prosecution produced compelling evidence that Ms. Baylor's statements to these investors had been intentional misrepresentations. The government introduced bank statements showing that Ms. Baylor transferred investor funds out of her firm's IOLTA account soon after they were deposited, with investors never seeing their funds returned. (Gov't Ex. 444 (bank statements showing transfers out of the IOLTA account); see also, e.g., Apr. 9 pm Tr. at 73 (William Barrett testifying that his money was never returned); Apr. 11 pm Tr. at 26-27 (Gregory Young testifying the same); Apr. 15 pm Tr. at 41 (Sidharth Dugar testifying the same).) No. evidence was produced that the Milan Group had ever completed a successful transaction; instead, the prosecution introduced evidence that Ms. Baylor was specifically told by a Milan Group employee in January 2011 that the Milan Group had not "closed any deals yet." (Gov't Ex. 533 (January 18, 2011 email from John Glidden to defendant).)

         As early as fall 2010, investors were requesting their money back, but without success. (See, e.g., Gov't Ex. 31-R (September 2010 email from Gloria Wu to Ms. Baylor requesting return of funds).) Investors testified about sending Ms. Baylor a barrage of emails, concerned that the savings that they had invested had disappeared-some going as far as to hire a lawyer in an attempt to get their funds returned. (See, e.g., Apr. 12 am Tr. at 8-19 (Joseph Hunsberger testifying about his attempts to get his money back); Apr. 15 pm Tr. at 23 (Sidharth Dugar describing exchanging hundreds of emails with Ms. Baylor); Apr. 12 am Tr. at 85 (Attorney Cort Wiegand testifying about his hiring by investors Gloria and Joe Wu to try to get their money returned).)

         Yet Ms. Baylor continued to participate in the scheme throughout 2011, despite warnings such as a March 5, 2011 email (which defendant claims not to have read) sent by a disgruntled investor that included an FBI notice about prime bank fraud schemes, which described how investment programs that "purport to offer above average market returns with below market risk through the trading of bank instruments are fraudulent." (Gov't Ex. 34-R.) Defendant's several days of trial testimony and emphasis on her mother's alleged investment of $15, 000 sought to present an innocent gloss on her participation in the investment scheme. (See Ct. Ex. 3 (stipulation regarding defendant's mother's investment); Apr. 17 pm Tr. 4-94, Apr. 18 am Tr. 4- 103; Apr. 18 pm Tr. 16-87; Apr. 23 am Tr. 23-101; Apr. 23 pm Tr. 3-79 (Ms. Baylor's trial testimony).) Yet the jury was not required to credit defendant's testimony or her theory of the case. The evidence introduced by the government amply supported a finding of the necessary mens rea to sustain a conviction on each of the seven counts.

         B. Selection of Alternate Juror

         Defendant argues that the Court violated Federal Rule of Criminal Procedure 24(c)(2)(B), which provides that"[a]lternate jurors replace jurors in the same sequence in which the alternates were selected." As explained below, there was no violation of this rule. Prior to trial, the juror in seat 6 was chosen as the first alternate, and therefore, she was the proper juror to replace the regular juror who was excused on the second day of trial.

         At a hearing on December 12, 2018, the Court asked each party to select a number to serve as an alternate seat. (Dec. 12 Hr'g Tr. at 54-55.) Defendant selected seat 6, and then the government selected seat 9. (Id.) At a subsequent hearing on March 25, the government asked the Court to seat a third alternate, to which defendant did not object. (Mar. 25 ...


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