Attorneys representing Timothy McGinn and David Smith are calling on a federal judge to throw out the guilty verdict returned against them by a jury last month, claiming their conviction isn’t sufficiently supported by the weight of the evidence.
Absent an acquittal, Attorney William Dreyer asked the court to grant a new trial in the interest of justice. As the defense did during the trial, Dreyer argued the federal case against the business partners failed to grasp the intricacies of a complex model they employed at the Albany-based McGinn, Smith & Co.
“The allegations are based on the complete failure of the government to attempt to comprehend concepts of investment banking and the inner-workings of running a broker-dealer,” he wrote in the 16-page filing submitted late last month. “The backbone of the entire case rests on issues of disclosure.”
Dreyer also took issue with the jury’s instructions. During the trial, jurors asked Judge David Hurd to clarify whether they needed to find the partners misled both investors and federal regulators to reach a conviction for wire fraud or whether proof of misleading either one was sufficient.
Hurd ultimately told them they could base a conviction on proof of misleading either investors or federal regulators. Dreyer argues this was an error significant enough to prompt a mistrial.
Federal prosecutors believe the evidence supports the guilty verdict returned last month. Assistant U.S. District Attorney Elizabeth Coombe said Dreyer is basing his case for acquittal by ignoring the overwhelming body of evidence presented by the prosecution at trial.
“Indeed, their arguments rely on a myopic view of isolated pieces of evidence in the light most favorable to themselves,” she wrote in a response filed Friday. “When the correct legal standards are applied and the facts are viewed in totality and in the light most favorable to the government, it is clear that there was sufficient evidence to support the guilty verdicts.”
In 2010, the U.S. Securities and Exchange Commission accused the partners of McGinn, Smith & Co. of operating a complex Ponzi scheme through fraudulent debt offerings.
The civil case against the partners was followed by a 30-count criminal indictment returned in federal court in January 2011, accusing McGinn and Smith of siphoning more than $8 million from investors to fuel their lavish lifestyles. A two-count indictment returned in October accuses the two of bilking an additional $1 million.
McGinn was found guilty of conspiracy to commit mail fraud; conspiracy to commit mail and wire fraud; wire fraud; securities fraud; and filing a false tax return — 27 counts in all. Smith was convicted on 15 counts, including many of the same charges.
Both partners face up to 15 years in prison when sentenced in Utica on June 28. They were each released on $100,000 unsecured bond following the verdict.