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United States of America v. George Georgiou

December 12, 2011

UNITED STATES OF AMERICA
v.
GEORGE GEORGIOU



The opinion of the court was delivered by: Robert F. Kelly, Sr. J.

MEMORANDUM

Presently before this Court is Defendant George Georgiou's ("Georgiou") Motion for Reconsideration of this Court's denial of his Motion for a New Trial Pursuant to Brady v. Maryland*fn1 and the The Jencks Act.*fn2 Also, before this Court is Georgiou's Motion to Reinstate Bail Pending Appeal, Supplemental Motion for Reconsideration ("Def.'s Supp. Mot."),*fn3 and Motion to Compel Disclosure of Evidence ("Mot. to Compel"). For the reasons set forth below, these Motions will be denied.

I. FACTS AND BACKGROUND

On February 12, 2010, following a three-week trial, a jury found Georgiou guilty of one count of conspiracy, four counts of securities fraud and four counts of wire fraud.*fn4 At trial, the Government offered the testimony of its cooperating witness, Kevin Waltzer ("Waltzer"), who, at the Government's direction, had recorded numerous conversations between himself and Georgiou in 2007 and 2008. (Trial Tr. vol. 11, 274, Feb. 8, 2010.)

On May 7, 2010, Georgiou filed a Supplemented and Amended Motion for New Trial

Pursuant to Rule 33. On August 20, 2010, Georgiou filed a Motion to Compel, seeking:

[A]n Order disclosing and unsealing, subject to the continuing confidentiality provisions of any applicable protective orders, certain documents filed in connection with the sentencing of government witness Kevin Waltzer which have yet to be produced, for disclosure of Brady material concerning Waltzer's mental health and record of substance abuse, and disclosure of, or authorization to subpoena if not in the government's possession, additional mental health and substance abuse records, as may relate to information contained in the Waltzer sentencing and/or Brady materials. (Doc. No. 206.) On September 20, 2010, Georgiou filed his Second Motion for New Trial. On that same day, this Court entered an Order denying Georgiou's Motion to Compel.

On September 29, 2010, Georgiou filed a Motion for Reconsideration of this Court's denial of the Motion to Compel. In addition, on that same date, this Court denied Georgiou's "Supplemented and Amended Motion for New Trial Pursuant to Rule 33." See Georgiou, 742 F. Supp. 2d at 613.

Those Motions focused on various allegations concerning the mental health and record of substance abuse of Waltzer.*fn5 On March 12, 2010, Waltzer was sentenced before United States District Court Judge Stewart Dalzell in Criminal Number 08-552. In connection with the sentencing, Waltzer's counsel submitted a report (the "Lizzi Report") authored by Dr. Luciano Lizzi ("Dr. Lizzi"), a psychiatrist and Clinical Professor at the University of Pennsylvania Medical School, who Waltzer had been seeing since August 2007, shortly after he began cooperating with the Government. The Lizzi Report indicated that Waltzer suffered from bipolar disorder and that he had abused cocaine and alcohol during his illegal activities between 1999 and 2006. Dr. Lizzi stated that it was his medical opinion that "these mental disorders, either individually, or in concert, so affected Mr. Waltzer's capacity to reason and control his impulses that they significantly contributed to his" criminal behavior during that time. (Def.'s 8/20/10 Mot. to Compel, Ex. B.)

Following Waltzer's sentencing, counsel for Georgiou filed a Motion of Defendant for Disclosure of Sealed Sentencing Documents as to Kevin Waltzer and for Disclosure of Brady Material, seeking the Lizzi Report, Waltzer's letter to the sentencing court and "all information, including information contained within the [Presentence Investigation Report], related to Kevin Waltzer's use of cocaine or other drugs and diagnosis or treatment for any mental disease, disorder or defect, includ[ing] bipolar disorder, including information concerning the knowledge of any member of the prosecution team about these subjects." (Def.'s 8/20/10 Mot. for Disclosure at 2.) Georgiou's Motion was subsequently submitted to Judge Dalzell. On July, 20, 2010, Judge Dalzell granted Georgiou's Motion. On August 9, 2010, Judge Dalzell amended his Order and its confidentiality provisions to allow the defense's psychiatric expert, Dr. Peter Breggin ("Dr. Breggin"), to review the sentencing materials concerning Waltzer's mental health and use of controlled substances. (Def.'s 8/20/10 Mot. to Compel, Ex. E.)

Attached to Georgiou's Second Motion for New Trial was a report by Dr. Breggin (the "Breggin Report"). In the Breggin Report, Dr. Breggin analyzed various documents relating to Waltzer's sentencing hearing, including the Lizzi Report, the Presentence Investigation Report and Waltzer's letter to the sentencing court. Dr. Breggin stated, inter alia, that "[g]iven Mr. Waltzer's bipolar disorder, cocaine abuse, alcohol abuse, and exposure to Paxil, Xanax and other psychiatric drugs in the period 1995 to 2006-2007, he would be unable to accurately testify about events involving Mr. Georgiou during that period of time. At the least[,] he is a very unreliable individual." (Breggin Report at 18, Sept. 16, 2010.)

This Court filed a sealed Memorandum and Order on November 9, 2010 ("November 9, 2010 Memorandum"), denying Georgiou's Second Motion for a New Trial and Motion for Reconsideration. Georgiou was sentenced by this Court on November 19, 2010, to a total of 240 months imprisonment and ordered to pay restitution in the amount of $55,832,398.00. Georgiou filed a third Motion for a New Trial ("Third Motion for New Trial") on December 23, 2010, and also filed a Notice of Appeal in the United States Court of Appeals for the Third Circuit on December 29, 2020, appealing our denials of his prior Motions for a new trial. Georgiou requested that the Court of Appeals stay his appeal until the Third Motion for New Trial was decided, and the Government joined in this request. We granted such requests and on March 18, 2011 denied the Motion on its merits. See United States v. Georgiou, No. 09-88, 2011 WL 995826, at *1 (E.D. Pa. Mar. 18, 2011). On April 1, 2011, Georgiou filed this instant Motion for Reconsideration of this denial.*fn6 On April 15, 2011, Georgiou filed under seal a Supplemental Motion for Reconsideration, and then filed a sealed Motion to Compel Evidence on June 1, 2011. On July 15, 2011, the Government filed a sealed Omnibus Response to these Motions, and on September 9, 2011, Georgiou filed a 73-page Reply to this Response.*fn7 Thereafter, on October 24, 2011, the Government submitted a letter response to this Court to Georgiou's Reply Memorandum, and on October 27, 2011, submitted another letter supplementing its response. Lefeber filed letter replies to these responses on November 3 and November 14, 2011.*fn8

In his Motion for Reconsideration, Georgiou first argues that this Court "used an incorrect standard of review" to find that the claims in his Third Motion for a New Trial were "procedurally barred and meritless, because they were deemed not to constitute newly discovered evidence." (Def.'s Mot. Recons. at 1.) Georgiou asserts further that:

The Government has previously conceded that its prosecution team was actually aware that its star cooperating witness [Waltzer] had made statements about his mental health treatment at his plea hearing because one of the Assistant United States Attorneys and one of the FBI agents who prosecuted Mr. Georgiou attended and participated in that hearing. Significantly, the defense repeatedly requested all Brady and other discovery materials prior to trial, even bringing a motion to compel shortly before trial, which was denied when the Government represented that all such evidence in its possession had been produced. (Id. at 2.) Georgiou's counsel, Bachner, also states in this Motion that he was recently apprised by Lefeber who Georgiou has retained to assist him with his case and appeal that:

[T]he Government received a draft PSR*fn9 detailing Kevin Waltzer's mental health diagnosis and psychiatric history on February 12, 2010 -- the exact date of the verdict in Mr. Georgiou's trial. The Government failed to notify Mr. Georgious's defense about the relevant contents of its key witness's draft PSR. (Id.) (emphasis added). Bachner states further that Lefeber informed him that: (1) she obtained an Order directing the Department of Probation to release to her the date it provided the Government with Waltzer's draft PSR; (2) that the Probation Department ("Probation") forwarded to her an email memorializing the delivery of the draft PSR to the Government and Waltzer's counsel at his sentencing; and (3) that Probation provided her with those portions of Waltzer's draft PSR pertaining to his mental health and substance abuse, for use in connection with Georgiou's post-trial motions or appeal. (Id. at 2-3.)

Lefeber maintains in Georgiou's Supplemental Motion that "both pretrial and post-trial, in all written submissions, the Government attorneys, Derek Cohen and Louis Lappen have maintained that they had no knowledge of Waltzer's mental health and substance abuse issues with the exception of Waltzer's statements to this Court at the plea allocution, which was filed under seal and also not disclosed to the Georgiou defense." (Def.'s Supp. Mot. Recons. at 2.) Lefeber asserts that "the evidence obtained in response to Judge Dalzell's recent Orders proves that the Government has blatantly misrepresented its knowledge of Waltzer's mental health and substance abuse issues as the evidence proves that the Government had full knowledge of these issues as early as February 17, 2009, when it received the Bail Report from U.S. Pretrial Services." (Id. at 2-3.) It is further asserted that on the exact date of Georgiou's verdict, February 12, 2010, the Government received a draft Presentence Investigation Report ("PSR") further detailing Waltzer's mental health diagnoses and psychiatric history. In addition, it is asserted that the Government received Waltzer's Objections to the PSR and Motion for Downward Departure which outlined in great detail Waltzer's extensive psychiatric history and substance abuse history, but that the Government never disclosed this information to the defense. (Id. at 3.) It is asserted that "upon learning of Waltzer's mental health and substance abuse issues at this sentencing in March 2010, one month after Georgiou's trial, the Georgiou defense confronted prosecutors who claim to have had no knowledge of Waltzer's mental health and substance abuse issues." (Id. at 4.) As noted earlier, Judge Dalzell later granted Georgiou's Motion ordering the release of sentencing documents relating to Waltzer's mental health and abuse issues. In addition, by Orders dated March 2, 2011 and April 5, 2011, Judge Dalzell further directed Probation and Pretrial Services to release to the defense all information in their possession regarding Waltzer's mental health and substance abuse issues.

Georgiou now contends that "[a]s a result of documents received pursuant to Judge Dalzell's Orders, the defense has obtained evidence which proves the falsity of the Government's representations regarding its knowledge of Waltzer's substance abuse and mental health issues." (Id. at 4-5.) Georgiou maintains that his Bail Report ("Bail Report") which was given to the Government as early as January 28, 2009 and/or February 17, 2009, the dates of Waltzer's initial appearance/guilty plea, "expressly states that Waltzer had a history of psychiatric and substance disorders." (Id. at 5.) Georgiou argues that the Government failed to reveal this critical information to the defense and has maintained, in all representations to the Court, that it has no knowledge of Waltzer having mental health and/or substance abuse issues, and that had this information been made available to the Georgiou defense, "a full investigation would have been made into Waltzer's extensive history of substance abuse and psychiatric disorders and the effects of abusing drugs and alcohol while on psychotropic prescription drugs for mental disorders." (Id.) Georgiou further asserts that:

[t]he records from U.S. Pretrial Services included numerous admissions from Waltzer in 2009 that he is an addict and that his life has become unmanageable due to his addiction to drugs and alcohol. See Monthly Treating Report Substance Abuse, Exhibit "B," pp.4-8. Furthermore, on January 19, 2010, one week prior to his testimony in the Georgiou trial, Waltzer tested positive for opiates at U.S. Pretrial Services. See Exhibit "C," p.4. (Id. at 6.) Georgiou maintains that these records prove that Waltzer:

(1) had a long history of alcohol and cocaine abuse;

(2) that he was self-medicating with alcohol and cocaine while on pretrial supervision during 2009-2010;

(3) that he was in treatment for alcohol and cocaine abuse as recently as 2009-2010, before and after Georgiou's trial;

(4) that he was medicated on serious psychotropic drugs for his bipolar disorder, anxiety disorder and panic attacks during defendant Georgiou's trial; and

(5) that he combined drugs and alcohol with the prescription psychiatric drugs.

(Id.)

Georgiou asserts that documents obtained from Pretrial Services in the Middle District of Florida, where Waltzer was reporting prior to his trial, entitled "Monthly Treatment Reports" ("Treatment Report") demonstrate Waltzer's drug and alcohol problems during this time. Specifically, Georgiou points to: (1) Treatment Report dated August 31, 2009 which notes that "alcohol is currently a challenge." (Id. at Ex. B, p. 3.); (2) Treatment Report dated September 30, 2009, which states that "he has many issues regarding self-medicating with alcohol and cocaine." (Id. at Ex. B, p.4.), and (3) Treatment Report dated October 30, 2009, which notes Waltzer's "willingness to admit his life has become unmanageable due to alcohol and drugs." (Id. at Ex. B, p. 5.) Georgiou argues that this evidence shows that: this Court was misled by both Waltzer and the Government in making evidentiary rulings at trial and in post-trial submissions. Had the entire history of Waltzer's mental health issues and past and present drug and alcohol abuse been made known to this Court and the defense, the defense's strategy would have been impacted in myriad ways, including but not limited to the defendant's decision to testify. Conversely, the Government was able to exploit the fact that the defense was unable to challenge Waltzer's credibility based on his mental health issues, or proffer an expert witness on the effect of his drug and alcohol use in combination with his mental health issues. (Id. at 9.)

Georgiou also asserts that his trial was "further contaminated, not merely by the concealment of Waltzer's past history of drug and alcohol abuse and psychiatric issues, but by the perjury elicited by the Government who presented Waltzer as a reformed man who no longer uses drugs, concealing Waltzer's present addictions and abuse of cocaine, alcohol and prescription drugs." (Def.'s Mot. to Compel at 6.) In addition, to making the very serious allegation that the Government attorneys knowingly elicited perjured testimony from Waltzer, Georgiou's counsel also accuses the Government of other very serious misconduct. Counsel states that:

[i]t is now clear that at the exact time Mr. Georgiou was scheduled for trial in the fall of 2009, Waltzer's life had become "unmanageable," as a result of his drug and alcohol abuse, and he was in no position to testify at Mr. Georgiou's trial. This would explain the reason for the Government's efforts to continue the trial, over the defense's objection, after the November 2009 date had been previously set by this Court, with no objection from the Government. Presumably, Waltzer used the extra time to sober up, although still heavily medicated and abusing alcohol at the time of the Georgiou trial. (Def.'s Mot. to Compel at 7-8.)

Counsel also states that the "defense believes that the Government threatened Waltzer with losing his deal with the Government unless he sobered up in time for trial in January 2010. Clearly, using and abusing illegal drugs and alcohol would be a violation of Waltzer's Plea Agreement with the Government, resulting in the loss of his cooperation deal. Without this deal, Waltzer was facing decades' imprisonment. This explains the statements Waltzer made to Dr. Lizzi (Lizzi Report II, p. 5) that he 'feared retaliation . . . of individuals in the Government seeking his imprisonment.'" (Id. at 8.)

II. STANDARDS OF REVIEW

1. Motion for Reconsideration

"The United States Court of Appeals for the Third Circuit has held that the purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Cohen v. Austin, 869 F. Supp. 320, 321 (E.D. Pa. 1994). Accordingly, a district court will grant a party's motion for reconsideration in any of these three situations: (1) the availability of new evidence not previously available; (2) an intervening change in controlling law; or (3) the need to correct a clear error of law or to prevent manifest injustice. Id. Federal courts have a strong interest in the finality of judgments; as such, motions for reconsideration should be granted sparingly. Cont'l Cas. Co. v. Diversified Indus., Inc., 884 F. Supp. 937, 943 (E.D. Pa. 1995). Dissatisfaction with the Court's ruling is not a proper basis for reconsideration. Glendon Energy Co. v. Borough of Glendon, 836 F. Supp. 1109, 1122 (E.D. Pa. 1993).

2. Motion for New Trial*fn10

Federal Rule of Criminal Procedure 33 states 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.*fn11 "Whether to grant a Rule 33 motion lies within the district court's sound discretion." United States v. Ortiz, 182 F. Supp. 2d 443, 446 (E.D. Pa. 2000) (citation and quotation marks omitted). In evaluating a Rule 33 motion, the court does not view the evidence favorably to the government, but rather, exercises its own judgment in evaluating the government's case. United States v. Johnson, 302 F.3d 139, 150 (3d Cir. 2002). Nevertheless, "[t]he burden is on the defendant to show that a new trial ought to be granted." United States v. Clovis, No. 94-11, 1996 U.S. Dist. LEXIS 20808, at *5 (D.V.I. Feb. 12, 1996).

A court must grant a motion for new trial if it finds that there were cumulative errors during the trial that, "when combined, so infected the jury's deliberations that they had a substantial influence on the outcome of the trial." United States v. Copple, 24 F.3d 535, 547 n.17 (3d Cir. 1994) (quoting United States v. Thornton, 1 F.3d 149, 156 (3d Cir. 1993)). However, even if the court "believes that the jury verdict is contrary to the weight of the evidence, it can order a new trial 'only if it believes that there is a serious danger that a miscarriage of justice has occurred -- that is, that an innocent person has been convicted.'" United States v. Silveus, 542 F.3d 993, 1004-05 (3d Cir. 2008) (quoting Johnson, 302 F.3d at 150). We will now discuss Georgiou's claims in turn.

III. DISCUSSION

1. Correct Standard of Review

As noted, Georgiou first asserts that this Court applied the incorrect standard of law in considering his newly discovered evidence claims in his Third Motion for a New Trial. Georgiou argues "[w]hile, procedurally, Brady and Jencks Act motions brought pursuant to Rule 33 are cognizable under the 'newly discovered evidence' clause of the rule, substantively, they are evaluated differently." (Def.'s Mot. Recons. at 1-2.) Georgiou contends that this Court should not have used the five-pronged "newly discovered evidence" standard of review,*fn12 but rather the three-pronged Brady*fn13 test. See United States v. Runyan, 290 F.3d 223, 246-47 (5th Cir. 2002) (stating that "when a motion for a new trial based on newly-discovered evidence raises a Brady claim, this court instead applies the three-pronged Brady test to determine whether a new trial is appropriate")

This claim, however, is wholly without merit. We need not discuss which test correctly applies because it is clear even a casual reading of our Memorandum Opinion denying Georgiou's Third Motion for a New Trial that we considered Georgiou's claims under both a "newly discovered evidence" standard and the Brady test. In our Memorandum Opinion we stated:

Georgiou also attempts to claim that the Government violated its obligation under Brady in not disclosing said electronic evidence. We first point out, however, that this Brady claim was not timely filed under Fed.R.Crim.P. 33 and could be rejected on that basis alone. We, nonetheless, address this issue on its merits below, and find that Brady was not violated.

Georgiou, 2011 WL 995826, at *15. In addition, with regard to Georgiou's claim in his Third

(a) the evidence must be in fact, newly discovered, i.e., discovered since the trial; (b) facts must be alleged from which the court may infer diligence on the part of the movant; (c) the evidence relied on, must not be merely cumulative or impeaching; (d) it must be material to the issues involved; and (e) it must be such, and of such nature, as that, on a new trial, the newly discovered evidence would probably produce an acquittal.

United States v. Cimera, 459 F.3d 452, 458 (3d Cir. 2006).

Motion for a New Trial that the Government violated its disclosure obligations under Brady by failing to produce Waltzer's statements about his "criminal activities" made in the course of his mental health treatment, we stated: "[w]e again point out that this Brady claim was not timely filed under Rule 33, and could be dismissed on this basis alone. We, nonetheless, address it on its merits." (Id. at 17, n.11.) Thus, this claim is baseless and is denied.

2. Suppression of Text Messages

Next, Georgiou asserts that this Court employed the wrong standard of review in denying his claim that the Government failed to disclose electronic evidence to the defense. (Def.'s Mot. Recons. at 4.) Georgiou states:

In the Court's Memorandum, it states, concerning the defendant's text message claim, that this "Brady claim was not timely filed under Fed. R. Crim. P. 33," and that any new evidence contained in text messages could not have satisfied the "probably produce an acquittal standard." (Mem. at 15 & n.10). (Id.) However, as we stated in the previous section, any reading of this Court's Memorandum Opinion and analysis of this claim clearly indicates that we considered this claim under the five-pronged Rule 33 "newly discovered evidence" standard and the three-part Brady test. See Georgiou, 2011 WL 995826, at *3-9.

In his Third Motion for a New Trial, Georgiou asserted that Waltzer traded PINs and/or text messages and emails with FBI Agent Corey Riley and others during his stint as an undercover, cooperating witness, but that the Government produced only a few of those communications during discovery, claiming that it either did not have certain of those communications in its custody or control, or that the defendant was not entitled to them. Georgiou argued that the Government violated its Jencks Act, and/or Brady obligations in not disclosing those messages. In our Memorandum Opinion, we determined that this claim had no merit finding that it did not meet the five-prong test in order to grant a new trial based on "newly discovered" evidence. See Cimera, 459 F.3d at 458.

Specifically, we determined that Georgiou's counsel had failed to exercise "diligence" in requesting any alleged missing electronic evidence, and that Georgiou simply speculated "that the Government somehow failed to produce communications from law enforcement agents to Waltzer instructing him how to behave during his undercover contacts with Georgiou, and communications from Waltzer to the agents concerning his observations and assessments of the undercover meetings with Georgiou." Georgiou, 2011 WL 995826, at *7. We stated that Georgiou offered little or no evidence to establish that the Government failed to produce such communications, and noted that he only offered as proof of his assertions, his attorney, Bachner's, Declaration in which Bachner claimed "to have analyzed telephone records that the Government produced in discovery and concluded that some unidentified communications were missing and that they showed a 'pattern of instructions between Waltzer and his government handlers for purposes of guiding Waltzer during the undercover sting operation against Mr. Georgiou.'" Id. We concluded that this was "pure speculation." Id.

In addition, we pointed out that the Government had repeatedly maintained that no such communications exist or ever existed, and that it produced all discoverable communications between Waltzer and the federal agents.*fn14 Id. We, thus, concluded that because Georgiou had failed to produce any evidence that such electronic communications exist or existed, it could not be found to be "newly discovered" evidence.*fn15 Id.

Moreover, we also considered this claim under the three-part Brady test and stated:

[W]ith regard to Brady's first element, we find that the alleged electronic evidence was not suppressed as Georgiou has not offered any evidence establishing that the Government suppressed such evidence. In addition, even if this evidence existed and the Government was obligated under Brady to disclose such, we find that Georgiou has failed to show that there is a reasonable probability that, had such evidence been disclosed to the defense, the result of the trial would have been different. See Bagley, 473 U.S. at 682.

Id. at 9.

Georgiou also asserts that this Court "may have misapprehended the factual basis of his claim." (Def.'s Mot. Recons. at 4.) Regarding the basis of this claim, Georgiou states that the "defense was seeking production of the communications between Waltzer and the Government that were sent via text message to see if they contained statements or instruction about his role and his efforts in the sting operation." (Id. at 7.) However, it is apparent that we did not "misapprehend" the factual basis of Georgiou's claim. We directly addressed this specific issue and stated in our Memorandum Opinion that "Georgiou simply speculates that the Government somehow failed to produce communications from law enforcement agents to Waltzer instructing him how to behave during his ...


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