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By Matthew Russell Lee, Periscope, Photos

SDNY COURTHOUSE, Oct 29 – The wider Beachwood Platinum scheme litigation came down on October 29 to Senior Health Insurance Company of Pennsylvania (SHIP) and Lincoln, with the latter seeming to have the upper hand.

  Already Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York had ordered SHIP to pay Lincoln $50,000. Still Lincoln said in an October 29 proceeding with Inner City Press in the gallery that it might make a Rule 11 motion.

  Pending that, Judge Rakoff gave Lincoln's lawyers at Skadden Arps until November to make their filings, joking that "you're probably taking Halloween off." Yes, another vampire squid. But it's among the most interesting courtroom, now spruced up, in the SDNY. And Inner City Press will continue there. Watch this site. This case is 18-cr-6658 (Rakoff).

Previously before Judge Rakoff, back on September 9 (before his current US v. Smith Pitterson, here) -- On the first, fast moving day of the re-trial for insider trader of Sean Stewart before SDNY Judge Rakoff Stewart's lawyer in the initial trial, Mark Gombiner of Federal Defenders, was in the gallery.

  In that trial that resulted in a conviction overturned by the Second Circuit, the government was allowed to use a statement by Sean's father Bob that his son chided him for not trading on insider information he gave him "on a silver platter." Not this time: Judge Rakoff has excluded it.

  One - or at least Inner City Press - is left wondering how it was that Sean Steward qualified as indigent for a free Federal Defender lawyer at the initial trial. On September 9 he had a team from Fried Frank including Steven M. Witzel, Lawrence Gerschwer, R. David Gallo and Leigh G. Rome.

  They cross examined a health care investment banker from JPM Chase - the bank was the subject of a Curcio hearing about possible conflicts of interest in an Iran sanctions violations prosecution, Inner City Press on Patreon here - and prepared, if they could stay away, for the head of FINRA's criminal prosecution unit. Inner City Press will cover as much of this case as it can. It is U.S. v. Stewart, 15-cr-00287 (JSR).

Back in August before Judge Rakoff in the criminal securities fraud trial of Joel Margulies on August 9 defense lawyer Brent Horst asked at day's end if he should bother to fly in one of his two witnesses from Missouri on Monday or if Judge Rakoff would bar the witnesses. Ultimately, the defense case consisted of text messages between Margulies and Lisa Bersham, who has pleaded guilty, about her Non Disclosure Agreement and the SEC. But not before gun evidence.

  This defense didn't work. The jury on August 13 returned guilty verdicts in less than two hours. The sentencing on those has been set for December 13. Afterward Judge Rakoff called issues surrounding the remaining severed narcotics charge "a royal waste of time," to be put on trial, pleaded to or dropped, adding "You'll let me know." Watch this site.

 On the day before the verdict there were text messages in which Bersham asked Margulies to buy and FedEx her a gun. Some of the messages concerned a stun gun for sale in Wal-Mart. Ultimately, it seems, a Smith & Wesson .380 was mailed. The police later found it in Bersham's storage locker in, where else, the South Bronx. Why not in her Upper West Side apartment? The gun, it was said, was to protect her from an irrate investor in Starship Snacks.

  The summations will be August 13 and Judge Rakoff's instructions. Then the case goes to the jury. Inner City Press will be there - watch this site.

 On the morning of Monday, August 12 the government was questioning a witness with a German accent about Margolies' e-mails to him about the supposedly possible sale of All American Pet Company and its dog food bar business to Nestle. Judge Rakoff called a sidebar.

The evidence and even summations should be finished Monday, with Judge Rakoff's jury charge on Tuesday and then deliberation. Inner City Press will continue to cover this and another trial starting Monday - and, if possible, the "Part 1" matter Judge Rakoff retired to him chambers to hear from the SDNY prosecutors on August 9. Watch this site.

 Previously Margolies' lawyer from Nashville, Tennessee was slowly cross examining a witness, about how many times she has communicated with Margulies. "I'm hard of hearing, that's why I sometimes ask you to repeat yourself," he told the witness," adding "let me lay some foundation."

  Judge Rakoff cut in from the bench: "I've told you before to just ask questions - not the whole prelude, not what's going on in your mind, not the state of the universe, but just the questions."

   It may be that thing are not going well for Margulies and his Starship Snacks.

Back on August 7 a series of letters from Deutsche Bank and Wells Fargo, account statements from Royal Bank of Canada, and contracts about caffeine infused chocolate by something called Starship Snacks were methodically introduced to the jury.

   Assistant US Attorney Christine I. Magdo, who earlier this year convicted S&P's Sebastian Pinto-Thomaz of insider trader before Judge Rakoff, flashed exhibit after exhibit on the video monitor, focusing on the meta-data showing which were docx and which were pdf.

 Surely it will all be connected for the jury, some of whom appeared inundated, at least from where Inner City Press observed as the only media in the courtroom on the morning of August 7. (Later on August 7 it would be ousted from a criminal presentment of "John Doe" by SDNY Judge John G. Koeltl, without any notice or opportunity to be heard, in a process it is unclear Judge Rakoff would follow - perhaps we'll see).

  Many of the exhibits concerned the inheritance and accounts of co-defendant Lisa Bersham, who has pleaded guilty and pushed back her sentencing before SDNY Judge Jesse M. Furman until October 17, 2019. Margulies and his lawyer and other lunched on August 7 in the 500 Pearl Street cafeteria, then waited as Judge Rakoff prepared a Fair Labor Standards Act case for trial, including demanding of the defense lawyer why he was not available in late August. (He replied he is volunteering in the Dominican Republic; asked and answered). We'll have more - on both cases.

   Also before Judge Rakoff back on July 30, the day after insider trading tipper Sebastian Pinto-Thomaz was sentenced to 14 months in prison, one of his two tippees Jeremy Millul was sentenced to five months, not to begin until January 9, 2020 so that Millul can (probably) witness the birth of his third child.

  Judge Rakoff said he had planned to sentence Millul to nine months, for general deterrence. But the arguments of Millul's Arent Fox LLP lawyer Glenn C. Colton about probable non eligibility for a camp and about ICE detention led him to reduce that by four months.

  One might wonder if there can be contingency fees for sentencing reductions.

   More seriously, Judge Rakoff cited criminologists for the proposition that jail time is the best deterrent particularly for hard to detect crimes like insider trading. He also emphasized that Millul had done it twice, in 2016 and 2018.

  Millul's lawyer said he had faced anti-Semitic attacks in France and does not want to return there. Judge Rakoff asks if his mother doesn't live in Israel and couldn't he go there. The response seemed to be that then his sons would face military service.

  Judge Rakoff said that while the US is strengthened by those who come here, if they commit crimes they may be deported. More generally he mused how criminals do not think of their families during the crime, only when they are caught.

  The second tippee Abell Oujaddou faces sentencing on September 5 at 3 pm and, since he testified for the government (but also, as noted, welshed on paying the full agreed kickback to Pinto-Thomaz), probation is predicted. Inner City Press will be there. and noted during the sentencing that Pinto-Thomaz's lawyer's argument in the trial had been to "throw his mother under the bus." The lawyer, Henry Mazurek with another client facing a jury across the hallway, said it was more complicated that that. And complicated it is.

   Sentencings in the SDNY often involve the invocation of the sins of the father, absent fathers, abusive fathers. This absent father was different than the norm: a Brazilian industrial magnate. Equally absent, even as Sebastian's mother sent to open luxury stores in Asia. Call it the Nanny Diaries.

  When Sebastian spoke, just before sentencing, it was strange to hear his voice after weeks of the trial, him sad faced in the 500 Pearl Street lobby or working his cell phone in the plaza outside. Then it was said he was looking for work in Houston. Now he is also an EMT, and offering to do community service.

  Judge Rakoff was his usual erudite self, calling the sentencing guidelines irrational and saying that these days, AUSAs probably wish more defendants went to trial rather than, like 97%, pleading out. The AUSA here, Christine I. Magdo, spoke of the need for general deterrence. Co-defendant Jeremy Millul is to be sentenced on July 29 - Inner City Press aims to be there, watch this site.

 He was barely 30 years old but was publicly traded paint company Sherwin Williams' main contact at S&P when it moved to acquire Valstar in 2016. Mysteriously a hairdresser Abell Oujaddou linked to both Sebastian and to his mother Nathalie Pinto-Thomaz made large purchases of Valspar stock and options and fell under suspicious by FINRA. A Jeremy Millul made even larger trades, of options. On April 24 the defense was barred from putting Millul's mother on the stand, to testify about another bank account and more, Inner City Press was informed.

  Late morning on April 26 the the U.S. District Court for the Southern District of New York courtroom of Judge Jed Rakoff, the jury was read the elements of the crime and told that if they did not decide today, the next day would be Tuesday. The marshall was sworn, to take them to a "private and convenient place" - an adjacent room. Where well before the 2:30 pm knock off time for the more covered college basketball prosecution upstairs, the jury decided guilty. The sentencing will be in July. We'll have more on this.

On April 25 prosecutor Christine I. Magdo called the defense shatter-shot and desperate. She showed that Sebastian Pinto-Thomaz was in the WhatsApp and Viber contracts of jewerly dealer and Valspar options trader Jeremy Millul. But as defense lawyer Henry Mazurek pointed out after the jury was gone for the day, this doesn't prove that the two men communicated over the platforms, which when installed demand or trick a user into importing all of their contacts from email, for example.

  Judge Rakoff said the jury could make a reasonable inference from the contacts information, adding that in the view of one reasonable observer Mazurek has engaged in his summation in gross speculation. Mazurek asked, Who is that reasonable observer? Rakoff shot back, you'll have to speculate. He will instruct the jury for a half hour on April 26 then they will deliberate. According to the government, the health and safety of the stock market is on the line. Watch this site - more here on Patreon.

  Earlier on April 25 the defense put on the stand an IT consultant who showed charts he's made of hairdresser and tipee Abell Ajouddou's stock trades including Citigroup, JPM Chase and Bank of America, twice, and compare the volume of his communications, cell phone and text message, with the mother (65%) and son (35%).

  The government counter-punched by noting that WhatsApp and Viber calls were not included, and that Bank of America, Sprint and Blackberry / RIM were double counted. It was a strange ending to the evidence. After summations, the jury will begin deliberating early on April 26. Watch this site, and @SDNYLIVE.

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