Case 2:13-cr-00607-JFB Document 501 Filed 10/13/17 Page 1 of 93 PageID #: 13726
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`_____________________
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`No 13-CR-607 (JFB)
`_____________________
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`UNITED STATES OF AMERICA,
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`VERSUS
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`PHILLIP A. KENNER AND TOMMY C. CONSTANTINE,
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`Defendants.
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`___________________
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`MEMORANDUM AND ORDER
`October 13, 2017
`___________________
`
`
`JOSEPH F. BIANCO, District Judge:
`
`On July 9, 2015, following a nine-week
`trial, a jury convicted defendant Phillip
`Kenner
`(“Kenner”) of one count of
`conspiring to commit wire fraud, in violation
`of 18 U.S.C. § 1349 (Count One of the
`superseding indictment); four counts of wire
`fraud, in violation of 18 U.S.C. §§ 1343 and
`2 (Counts Two, Three, Four, and Seven); and
`one count of conspiracy to commit money
`laundering,
`in violation of 18 U.S.C.
`§ 1956(h) (Count Nine).1 (ECF No. 324.) In
`addition,
`the
`jury convicted defendant
`Tommy C. Constantine (“Constantine,” and
`together with Kenner, “defendants”) of one
`count of conspiring to commit wire fraud
`(Count One); five counts of wire fraud
`(Counts Two through Six); and one count of
`conspiracy to commit money laundering
`(Count Nine). Now pending before the Court
`is (1) Constantine’s motion for a judgment of
`acquittal as to all counts or, in the alternative,
`
`1 The jury also acquitted Kenner of three wire fraud
`counts (Counts Five, Six, and Eight). (ECF No. 324.)
`
`
`
`trial (ECF No. 346); and
`for a new
`(2) Kenner’s motion for a new trial (ECF No.
`416). For the reasons set forth below, the
`Court denies both motions.
`
`First, with respect to his motion for a
`judgment of acquittal pursuant to Rule 29 of
`the Federal Rules of Criminal Procedure,
`Constantine argues that there was insufficient
`evidence to convict him of either conspiracy
`charge because the government did not
`prove, beyond a reasonable doubt, that
`Constantine was a participant in any of three
`conspiracy objects—namely, defrauding
`investors in (1) a Hawaii land development
`project (“the Hawaii Project”); (2) Eufora
`LLC (“Eufora”), a prepaid credit card
`company run by Constantine; and (3) a fund
`for litigation against developer Ken Jowdy
`(“Jowdy”) (the “Global Settlement Fund” or
`“GSF”). In addition, Constantine contends
`that there was no evidence connecting him
`with the wire transfers charged in Counts
`
`
`
`1
`
`

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`Case 2:13-cr-00607-JFB Document 501 Filed 10/13/17 Page 2 of 93 PageID #: 13727
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`the superseding
`through Four of
`Two
`indictment, and he asserts that the Court
`should acquit him of the wire fraud charges
`in Counts Five and Six because the jury
`acquitted Kenner of those crimes and the
`evidence at trial showed that Constantine
`attempted to return the money at issue.
`
`The Court finds all of these arguments
`unpersuasive. As set forth in greater detail
`below,
`the witness
`testimony
`and
`documentary evidence adduced at
`trial
`sufficiently established
`that Constantine
`agreed with Kenner to participate in all of the
`objectives of the conspiracy. In particular,
`bank records show that both defendants
`routinely diverted third-party funds intended
`to finance the Hawaii Project, Eufora, and the
`GSF
`to pay
`for undisclosed personal
`expenditures, such as—in Constantine’s
`case—race cars, rent, and lawsuits unrelated
`to those investments. Although Constantine
`argues, with respect to the Hawaii Project and
`Eufora, that he did not directly solicit money
`from
`the victims of
`those schemes, a
`reasonable juror could find—after viewing
`the record in a light most favorable to the
`government and drawing all inferences in its
`favor—that Constantine’s conversion of the
`proceeds from those endeavors, coupled with
`evidence
`that defendants attempted
`to
`conceal
`their
`fraud, proved beyond a
`reasonable doubt that Constantine knowingly
`participated
`in
`those objectives of
`the
`conspiracy.
`
`As for the Global Settlement Fund,
`Constantine contends that the alleged victims
`authorized all of the contested payments and
`that a defense witness testified that he
`permitted Constantine
`to use his GSF
`contributions for Constantine’s personal
`expenses. However, although there was
`evidence at trial that the Global Settlement
`Fund’s purposive ambit was broad and
`encompassed
`goals
`beyond
`financing
`litigation against Jowdy, none of
`the
`
`
`
`2
`
`government’s witnesses testified that they
`approved using the GSF for defendants’
`individual gain.
` Moreover,
`financial
`statements show that Constantine’s personal
`expenditures from the GSF exceeded the
`defense witness’s investments.
`
`fraud
`the wire
`to
`respect
` With
`convictions, Counts Two through Four of the
`superseding
`indictment
`involved money
`transfers between Kenner and third parties.
`However, although Constantine did not
`directly participate in those transactions, a
`rational juror could find that he was culpable
`as a co-conspirator based on evidence that
`(1) the funds came from Eufora investments,
`and (2) they were a reasonably foreseeable
`consequence of Constantine and Kenner’s
`unlawful agreement to convert Eufora funds
`to their personal benefit.
`
` Counts Five and Six also pertain to a
`Eufora
`investment,
`and
`insofar
`as
`Constantine argues that he is entitled to a
`judgment of acquittal based on the jury’s
`determination that Kenner was not guilty on
`those charges, an inconsistent verdict for two
`co-defendants does not provide grounds for
`Rule 29 relief. Further, a rational juror could
`conclude that Constantine had the requisite
`intent
`to defraud based on evidence
`that (1) he subsequently used the underlying
`funds
`for
`an
`undisclosed
`personal
`expenditure, and (2) the investor who wired
`that money never received the Eufora equity
`that Constantine had promised him.
`Constantine’s
`contention
`that
`he
`subsequently attempted
`to
`return
`that
`investment is not a basis for Rule 29 relief
`because it is well-established Second Circuit
`case law that, for federal wire fraud charges,
`scienter is measured at the time of the
`transaction, and the crime is complete once
`the fraudulent communication has been sent.
`Although a juror can consider later actions to
`determine
`intent at
`the
`time of
`the
`transaction, a rational juror could certainly
`
`

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`have concluded that Constantine had the
`intent to defraud at the time of the investment
`at issue and only offered to return the money
`once the fraud was disclosed.
`
`
`denies
`Court
`the
` Accordingly,
`Constantine’s Rule 29 motion in its entirety
`because the government proved his guilt
`beyond a reasonable doubt as to all charges.
`
`
`Second, Constantine also moves, in the
`alternative, for a new trial pursuant to Federal
`Rule of Criminal Procedure 33 on the
`grounds of
`jury confusion and newly-
`discovered evidence.2
`
`Constantine argues that the Court should
`have provided the jury with a special verdict
`form that would have required them to
`specify which of the three conspiracy objects
`provided
`the basis
`for Constantine’s
`conviction. However, Constantine waived
`this
`argument
`at
`trial
`because
`he
`affirmatively withdrew his request for special
`interrogatories.
`
`In addition, assuming
`arguendo that he had not forfeited that claim,
`there was no error—much less plain error—
`by the Court because Supreme Court and
`Second Circuit precedent make clear that a
`special verdict form is not required in a multi-
`object conspiracy prosecution. Moreover,
`the newly-discovered evidence proffered by
`Constantine does not warrant Rule 33 relief
`because it existed prior to the trial, and
`Constantine could have discovered it with
`due diligence. In any event, it is highly
`improbable that use of those materials at trial
`would have affected the jury’s verdict. Thus,
`Constantine’s Rule 33 motion is also denied.
`
`Third, Kenner separately moves for a new
`trial under Rule 33, asserting that (1) the
`government withheld exculpatory evidence;
`
`2 Constantine has also filed a supplemental brief
`raising an additional ground for relief based on
`ineffective assistance of trial counsel. (ECF No. 483.)
`
`
`
`3
`
`(2) there is newly-discovered evidence; and
`(3) the government committed prosecutorial
`misconduct. All of these arguments lack
`merit.
`
`There was no violation of Kenner’s due
`process rights under Brady v. Maryland, 373
`U.S. 83 (1963), because all of the materials at
`issue were disclosed
`to Kenner, are
`cumulative of impeachment evidence that
`was introduced at trial, or were not in the
`government’s possession prior
`to
`trial.
`Further, there is no likelihood that any of
`those records would have altered the jury’s
`findings of guilt.
`
`newly-discovered
`the
`addition,
`In
`evidence encompasses financial documents
`that Kenner obtained via subpoena during the
`trial and that he introduced as evidence
`during his own testimony. Thus, they were
`fully available to the jury. The remaining
`documents were
`either
`in Kenner’s
`possession or could have been discovered
`with due diligence before trial, and to the
`extent he did not have
`those records,
`introducing them as evidence would not have
`led to acquittal given the government’s
`substantial proof of guilt.
`
`Kenner also alleges that the government
`made inappropriate statements during its
`cross-examination of him and during its
`rebuttal summation, and he asserts that the
`government suborned perjury from several of
`its witnesses.
` However,
`the contested
`remarks were not so egregious as to deprive
`Kenner of a fair trial, the Court minimized
`any
`prejudice
`by
`sustaining
`contemporaneous objections and properly
`instructing
`the
`jury
`that questions and
`summations by counsel do not constitute
`evidence, and it is unlikely that the verdict
`
`Because that argument is not yet fully submitted, the
`Court does not consider it here.
`
`

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`would have been different absent those
`remarks. Further, Kenner’s perjury claims
`merely reiterate the same credibility issues
`that his counsel vigorously explored at trial
`on cross-examination of the government’s
`witnesses and during his opening statement
`and summation. Kenner also testified in
`great detail as to these issues during the
`defense case. Therefore, any purported
`perjury was fully considered by the jury,
`which—after nine weeks of testimony and
`the
`introduction of more
`than 1,000
`exhibits—had ample opportunity to fully
`evaluate the veracity of each witness in this
`case, including Kenner.
`
`both
`to
`respect
`Finally, with
`Constantine’s and Kenner’s Rule 33 motions,
`the Court concludes, in its discretion, that a
`new trial is not warranted because there is no
`real possibility that an innocent person has
`been convicted.
`
`***
`Thus, for these reasons and those that
`follow, and after careful consideration of the
`parties’ submissions, contentions at oral
`argument, and the extensive trial record, the
`Court denies defendants’ motions in their
`entirety.
`
`I. BACKGROUND
`
`
`A. The Trial Evidence
`
`As noted, the trial in this action lasted
`approximately nine weeks, and the evidence
`consisted of
`testimony
`from over 40
`witnesses and more than 1,000 exhibits. In
`light of this voluminous record, the Court
`will limit its factual summary to the evidence
`that is relevant to the instant motions.
`
`In brief, the government advanced three
`theories of fraud at trial pertaining to the
`Hawaii Project, Eufora, and the Global
`Settlement Fund. With respect to the Hawaii
`
`
`
`4
`
`Project, the government introduced evidence
`demonstrating that Kenner defrauded several
`professional hockey players who were clients
`of his. Those witnesses testified that they
`contributed money to that endeavor based on
`Kenner’s
`representations
`that
`their
`investments would finance a real estate
`development in Hawaii; however, Kenner
`subsequently diverted his clients’ money—
`without
`their authorization—to another
`property development
`in Mexico
`that
`involved Jowdy. In addition, witnesses
`testified that Kenner used several lines of
`credit in their name to divert money in an
`unauthorized manner, and when Kenner
`failed to make interest payments, those
`accounts were closed, and his clients lost the
`collateral used to secure those lines of credit.
`Further, and unbeknownst
`to Kenner’s
`clients, bank records introduced at trial
`showed that Constantine received money
`intended for the Hawaii Project.
` The
`government also adduced evidence of forged
`consulting agreements
`that purportedly
`justified those payments, as well as an audio
`recording of a conversation between Kenner
`and Constantine indicating that they colluded
`to conceal their fraud.
`
`to Eufora
`respect
`Similarly, with
`objective, the government demonstrated at
`trial that Kenner solicited funds from several
`investors who believed that their money
`would be used to finance that company.
`However, bank
`records and
`testimony
`indicated that Constantine converted those
`investments to cover his personal expenses,
`such as legal fees, without the investors’
`authorization. Specifically, the government
`showed at
`trial
`that
`the
`transactions
`underlying the wire fraud charges in Counts
`Two
`through Six of
`the superseding
`indictment were derived
`from Eufora
`investments,
`and
`that Kenner
`and
`Constantine used that money for unapproved
`expenditures.
` Contemporaneous
`text
`
`

`

`Case 2:13-cr-00607-JFB Document 501 Filed 10/13/17 Page 5 of 93 PageID #: 13730
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`messages between Kenner and Constantine
`from the relevant period also evinced an
`agreement by defendants to use Eufora
`money for their personal benefit.
`
`Finally, several government witnesses
`testified at trial that Kenner and Constantine
`convinced them to invest in the Global
`Settlement Fund because they believed that
`their contributions would principally finance
`litigation against Jowdy. However, bank
`records and testimony again demonstrated
`that both defendants used GSF funds for
`personal expenses.
`
`In particular,
`the
`evidence showed that Constantine paid his
`rent, various
`legal expenses, and
`for
`automotive work with money from the GSF.3
`
`1. Defendants’ Background
`
`Kenner was a financial advisor to several
`investors,
`including professional hockey
`players. (See, e.g., Tr.4 at 130, 2913-14.) He
`attended Rensselaer Polytechnic Institute
`(“RPI”) for college, where he roomed and
`played hockey with government witness Joe
`Juneau (“Juneau”). (Id. at 124-26.)
`
`Constantine was the founder and Chief
`Executive Officer of Eufora, a prepaid credit
`card company.
`(See, e.g., Government
`Exhibit (“GX”)-8021-R.) Constantine was
`also a professional race car driver. (See, e.g.,
`id.; Tr. at 3667.) He and Kenner were
`longtime business partners, since at least
`2002, when they both held positions as
`officers of Eufora. (Defs.’ Exh. C-265.)
`
`
`
`
`
`3 Although Kenner has not moved for an acquittal and
`did not specifically focus on Count Seven of the
`superseding indictment in his motion for a new trial,
`the Court notes that the government also demonstrated
`with overwhelming evidence on that charge, through
`testimony and documents such as bank records, that
`Kenner defrauded
`investors by diverting
`their
`
`
`
`5
`
`2. Relevant Witness Testimony and
`Other Evidence
`
`a. The Government’s Case
`
`i. Joe Juneau
`
`1. Direct Testimony
`
`On direct examination, Juneau testified
`that, after graduating from RPI, he joined the
`National Hockey League (“NHL”) in 1992.
`(Tr. at 124, 127.) Juneau introduced Kenner
`to Derek Sanderson, an NHL connection of
`his who worked at Boston Capital, a financial
`firm, and Kenner was hired to work at Boston
`Capital. (Id. at 128-29.) Juneau testified that
`Kenner then went on to work at other
`financial
`investment
`companies
`and
`eventually
`started his own company,
`Standard Advisors, in 2002. (Id. at 132-33.)
`
`
`Kenner served as Juneau’s financial
`adviser from 1994 through 2007 or 2008. (Id.
`at 130.) Juneau testified that, during this
`period, Kenner often sent him faxes of
`investment-related documents to sign that
`only contained the signature page. (Id. at
`141-42.) Juneau also said that Kenner did not
`send him regular summaries of the status of
`Juneau’s various investments. (Id. at 142-
`43.) In or around 2002 or 2003, Kenner
`spoke with Juneau about investing in the
`Hawaii Project. (Id. at 137-38). A May 2005
`exchange between Kenner and Juneau
`indicated that Juneau had invested $100,000
`in that enterprise. (Id. at 145-46; GX-728.)
`In or around 2006, Kenner informed Juneau
`of the need to renew a line of credit with
`Northern Trust Bank (“Northern Trust”).
`
`investment funds to a real estate transaction in Sag
`Harbor, New York.
`
`4 “Tr.” refers to the transcript of the trial in this action,
`which began on May 4, 2015 and concluded with the
`jury’s verdict on July 9, 2015.
`
`

`

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`(Tr. at 139.) However, despite being
`presented at trial with a Northern Trust
`document dated December 18, 2003
`appearing
`to contain his signature and
`indicating that Juneau had agreed to open a
`line of credit with Northern Trust, Juneau
`testified
`that he could not recall ever
`authorizing that account. (Id. at 139-40; GX-
`2152.) Juneau sent Kenner an e-mail asking
`why the Northern Trust renewal document
`indicated that he had a $750,000 line of credit
`when Juneau was under the impression that
`his Hawaii Project investment was valued at
`$100,000. (Tr. at 162-67; GX-733.) Juneau
`said that he never authorized Kenner to invest
`more than $100,000 in the Hawaii Project on
`his behalf. (Tr. at 170-71.) Juneau further
`testified that he never received any return on
`his investment in the Hawaii Project. (Id. at
`22-24.)
`
`
`2. Cross-Examination
`
`
`
` On cross-examination, Juneau testified
`that he had lost money on other investments.
`(Id. at 231-36.) He also testified that he could
`not remember whether he told investigators
`from the Federal Bureau of Investigation
`(“FBI”) about the Northern Trust line of
`credit when he met with them in 2009. (Id.
`245-46.) Juneau further said that Kenner
`never prohibited him
`from contacting
`Northern Trust and that Juneau did in fact
`speak with a bank official named Aaron
`Mascarella (“Mascarella”) to inquire about
`the credit line. (Id. at 251-52; Defs.’ Exh.
`Kenner-3.) In addition, Juneau said that he
`had received an e-mail from Mascarella
`confirming that the Northern Trust line of
`credit had been paid off, and he also testified
`that he had signed a form authorizing the line
`of credit. (Tr. at 253-55; Defs.’ Exhs.
`Kenner-3 and Kenner-2152.) However,
`notwithstanding that repayment, Juneau said
`that he terminated his relationship with
`Kenner in or around the summer of 2005
`
`to
`because Kenner was unresponsive
`Juneau’s attempts to communicate with him,
`and Juneau had lost more than $2 million in
`investments based on what he “belive[d] was
`getting out of [his] portfolio for different
`private deals that never came back.” (Tr. at
`258-60.) Juneau admitted that Kenner never
`guaranteed any sort of financial return and
`that he understood the risks associated with
`investing. (Id. at 261-62.) He further
`acknowledged
`that
`he
`received
`a
`communication dated July 21, 2006 that
`indicated
`that
`there were
`positive
`developments regarding his Hawaii Project
`investment. (Id. at 296-97; Defs.’ Exh.
`Kenner-2.)
`
`In addition, on cross-examination, Juneau
`
`testified that he had met Constantine only
`once, in or around December 2004. (Id. at
`298-99.) Juneau had an approximately hour-
`long lunch with Constantine and Kenner, but
`did not recall what they discussed. (Id. at
`299.) He also admitted that he had no contact
`with Constantine after that meal until Juneau
`sued Constantine in or around 2008 or 2009.
`(Id. 307-10.) That lawsuit, which Juneau
`filed to recoup financial losses on his various
`investments, was subsequently dismissed.
`(Id. at 311.) During settlement discussions
`involving that lawsuit, Constantine sent
`Juneau an e-mail stating that Juneau had
`“been grossly ill-advised by [his] attorneys
`and their so-called experts, as well as by a
`couple of disgruntled former colleagues of
`[Kenner’s], who know absolutely nothing
`about [Constantine] or his business.” (Id. at
`322-23; Defs.’ Exh. C-2.) Juneau admitted
`that, although he never made a profit on any
`of his
`investments with Constantine,
`Constantine did return all of Juneau’s money
`(id. at 339), including a refund of his
`$100,000 investment in Eufora on or around
`July 7, 2005 via a check sent to him by
`Kenner (id. at 302-07).
`
`
`
`
`
`6
`
`

`

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`ii. Michael Peca
`
`
`1. Direct Testimony
`
`
`
`is a retired
`Michael Peca (“Peca”)
`professional hockey player. (Tr. at 370.) He
`met Kenner in or around 1996 while Peca was
`playing for the Buffalo Sabers. (Id. at 374.)
`Peca was introduced to Kenner because he
`was looking for a financial adviser to help
`him save money. (Id.) Their business
`relationship ended in 2009 after eroding over
`the preceding two years. (Id. at 375.)
`
`On direct examination, Peca testified that
`Kenner at first pursued a conservative
`investment strategy, but that changed in or
`around 2001 after Pena signed a contract with
`the New York Islanders. (Id. at 378.) Peca
`then began to invest in land development
`properties and spoke with Kenner about the
`Hawaii Project in or around 2003. (Id. at
`378-79.) Peca said he understood that the
`purpose of the Hawaii Project was to
`purchase agricultural land to build residential
`housing. (Id. at 379.) He further testified that
`he did not view the property at issue before
`agreeing to the investment, but he instead
`relied on Kenner’s description of the Hawaii
`Project. (Id. at 381.)
`
`that Kenner created an
`Peca said
`investment company called Little Isle IV
`LLC (“Little Isle IV”) to manage the Hawaii
`Project, and Peca invested $100,000 in cash
`and $1.775 million in funding obtained
`through a line of credit. (Id. at 381-82.) Peca
`opened the line of credit with Northern Trust
`and secured it via bonds that Peca transferred
`to Northern Trust from his Charles Schwab
`investment account, which represented an
`important part of his family’s financial
`savings. (Id. at 383-85.) Peca also testified
`that Kenner told him to obtain the line of
`credit from Northern Trust, which Kenner
`said would have a six-to-nine-month lifespan
`
`and then be repaid in full. (Id. at 384-85.) In
`addition, Peca
`testified
`that Kenner
`represented that the Northern Trust line of
`credit would only be used to finance vertical
`construction as part of the Hawaii Project.
`(Id. at 386-87.) Peca also signed a document
`on or about March 11, 2005, allowing Kenner
`to access his line of credit with Northern
`Trust. (Id. at 387-88; GX-2142.) On April 4,
`2005, Northern Trust bank records show that
`$1.25 million was drawn on the line of credit,
`and Peca
`testified
`that Kenner never
`informed him of that transaction. (Tr. 431;
`GX-2001.) Those funds were used to pay off
`the line of credit belonging to Owen Nolan
`(“Nolan”), another former NHL player, and
`Peca said that he never authorized Kenner to
`use his line of credit to remunerate Nolan.
`(Tr. at 431-32.)
`
`After the line of credit became active,
`Peca received monthly activity reports
`pertaining to his bond account, but not for the
`line of credit itself. (Id. at 388-89.) On direct
`testimony, Peca reviewed a Northern Trust
`bank statement covering the period from
`October 1, 2006 through October 31, 2006
`for an account held by Little Isle IV. (Id. at
`414-15; GX-2002.) That statement showed
`that, on October 19, 2006, Little Isle IV
`received a wire in the amount of $395,000
`from Peca’s line of credit account with
`Northern Trust. (Tr. at 415-417; GX-2002.)
`Other Northern Trust bank
`account
`statements reflect that, on that same day,
`$395,000 was transferred from Little Isle IV
`to Ula Makika LLC (“Ula Makika”), and
`from Ula Makika to Led Better Development
`Company LLC (“Led Better”). (Id. at 417-
`18; GX-2003.) Peca testified that he never
`authorized Kenner to transfer funds from his
`Northern Trust account to Led Better and
`believed that his line of credit would only be
`used to finance the Hawaii Project. (Tr. at
`418-19.) He also said that he later learned
`from Kenner “well after the fact,” in or
`
`
`
`7
`
`

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`Case 2:13-cr-00607-JFB Document 501 Filed 10/13/17 Page 8 of 93 PageID #: 13733
`
`around 2010, that a portion of that line of
`credit was used to loan money to Jowdy. (Id.
`at 423-25.)
`
`Moreover, on or around February 9,
`2009, Peca received a letter from Northern
`Trust indicating that his line of credit was
`near default. (Tr. at 433-34; GX-716.) Peca
`said that he immediately contacted Kenner,
`who assured him not to worry. (Tr. at 435.)
`However, Peca testified that Northern Trust
`subsequently held his account in default; as a
`result, his collateralized bonds were “pretty
`much completely wiped out,” and Peca lost
`over $1.8 million. (Id. at 435-36.) Peca
`further said that Kenner never explained to
`him what had caused the default, and Peca
`did not know what had happened to that
`money. (Id. at 436.) Peca testified that, in
`or around August 2009, he asked Northern
`Trust to send all documents pertaining to his
`line of credit account to Kenner, but when
`Peca subsequently attempted to review those
`materials, Kenner told him that someone had
`broken into his home and stolen them. (Id. at
`439-40.)
`
`With respect to Eufora, Peca testified that
`he first heard of that company in 2004 from
`Kenner.
` (Id. at 441.)
` He later met
`Constantine in 2009. (Id. at 442-43.) Peca
`said that he made several investments in
`Eufora in 2004 and 2008 for a total of
`$366,000. (Id. at 443; see also GX-751 and
`GX-752.) He wired those funds from his
`Charles Schwab account to Eufora, and Peca
`said that Kenner executed those transactions.
`(Id.)
`
`For instance, on or about April 4, 2008,
`Kenner sent a letter instruction directing that
`$100,000 be wired from Peca’s Charles
`Schwab account to Constantine Management
`Group Ltd. (“CMG”). (Id. at 444-45; GX-
`753.) At trial, Peca testified that he did not
`know whether CMG had any connection with
`
`Eufora. (Tr. at 445-46.) Peca said that, after
`he discovered that wire instruction, he asked
`Kenner in or around 2011 or 2012 about the
`purpose of that funds transfer, but Kenner did
`not provide an explanation. (Id. at 446-47,
`452.)
`
`In addition, Peca testified that he was
`familiar with the Global Settlement Fund,
`which he said was “a legal fund designed for
`a civil action against Ken Jowdy, with the
`hopes of the end game being acquiring the
`northwestern parcel of beach front property
`in” a real estate development in Mexico. (Id.
`at 420.) Peca said that, in or about 2009, he
`met with Constantine and Kenner to discuss
`strategy for the litigation against Jowdy. (Id.
`at 452.) He testified that, at that time, he had
`not received a return on his investment in the
`Hawaii Project. (Id. at 453.) Constantine
`began
`that conversation by
`introducing
`himself and explaining the purpose of the
`Global Settlement Fund. (Id. at 453-54.)
`Peca
`further
`testified
`that Constantine
`promised that he would “make [Peca] whole
`in every investment [Peca] ever made to Phil
`Kenner and” Constantine, although Peca said
`at trial that Jowdy had no connection to
`Peca’s losses in the Hawaii Project. (Id. at
`455-57.)
`
`Peca said that he contributed $250,000 to
`the Global Settlement Fund through a lawyer
`named Ronald Richards (“Richards”), whom
`Kenner introduced to Peca. (Id. at 421, 459;
`GX-754.) Peca further testified that he did
`not know what happened to that money, and
`he said that Richards informed him, in or
`around 2011, that the Global Settlement Fund
`was “gone.” (Tr. at 422, 460.) On or about
`May 18, 2009, Kenner sent Peca and his wife
`Kristin an e-mail indicating that Richards had
`received the $250,000 intended for the
`Global Settlement Fund and that, in return for
`that contribution, Peca would also receive
`additional equity in, inter alia, Eufora. (Id. at
`
`
`
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`

`Case 2:13-cr-00607-JFB Document 501 Filed 10/13/17 Page 9 of 93 PageID #: 13734
`
`463-65; GX-757.) Specifically, the e-mail
`stated that:
`
`In addition to the [GSF] paying for
`various legal fees, PR Agency fees, as
`well as other protective advances and
`settlement
`costs, you will be
`receiving
`transfer of membership
`agreements from [Constantine] for
`your acquisition of additional interest
`in Eufora, LLC, as well as your new
`LLC and operating agreements
`reflecting your ownership interest in
`the Avalon Airpark Real Estate
`Project, the Falcon 10 aircraft, and the
`two Palms Place condominium units.
`
`You may not recall [Constantine] or I
`mentioning the Palms units in=2
`Oour [sic] conversation. In any case,
`because Moreau and [Constantine]
`settled that case as part of the Global
`Settlement, he has graciously elected
`to include you as a beneficiary in the
`significant equity that exists in those
`two units as part of this transaction.
`
`As we discussed, rather than throwing
`money away only on legal fees, this
`strategy which effectively acquires
`significant assets, while providing a
`legal remedy, is by far our best
`solution.
`
`
`(GX-757.)
`
`Peca testified that he never received a
`return on any investment in Eufora, nor did
`he receive an explanation from Kenner or
`Constantine as to how Peca’s $250,000
`contribution to the Global Settlement Fund
`was spent. (Tr. at 470-71.) In addition, Peca
`said that he contributed to the Global
`Settlement Fund because of his “desperation”
`to
`recover his other
`investments, as
`Constantine had promised. (Id. at 471-72.)
`
`2. Cross-Examination
`
`
`On cross-examination, Peca testified that
`he never saw Kenner forge another person’s
`signature. (Id. at 488-89.) He also said that
`he never saw the operating agreement or any
`books and records for Little Isle IV. (Id. at
`494.) Peca further testified at trial that he was
`never aware that the line of credit he obtained
`to fund the Hawaii Project was the source of
`a loan to Jowdy for a development in Mexico.
`(Id. at 496.) However, he admitted that he
`had testified before the grand jury that he was
`aware of a short-term loan made to Jowdy
`using Little Isle IV’s capital account. (Id. at
`499.) Peca also acknowledged that he never
`requested records from Northern Trust
`pertaining to his line of credit account and
`also did not challenge Kenner when he
`refused to explain why $100,000 of Peca’s
`funds were wired to CMG. (Id. at 504-07.)
`Moreover, Peca said that Kenner would often
`just send him the signature page for a
`document that he needed to sign. (Id. at 512-
`13, 515-17.) He explained that, from to time,
`he asked Kenner to send the remainder of a
`document, but said that he generally trusted
`that everything was in order. (Id. at 517.)
`
`testified on cross-
`Moreover, Peca
`examination that, on or about November 9,
`2009, he received an e-mail from Constantine
`sent to a group of investors indicating that a
`buyer had agreed to invest in a Mexico real
`estate development project and provide the
`$15 million needed for “settlement costs.”
`(Id. at 533-34; Defs.’ Exh. C-24.) Peca
`agreed at trial that this information was
`consistent with achieving the purpose of the
`Global Settlement Fund. (Tr. at 534-35.)
`However, Peca said that this deal with an
`individual named Robert Sonnenblick
`(“Sonnenblick”) was never consummated.
`(Id. at 536.) In addition, Peca testified that,
`when he met with Constantine and Kenner in
`2009 to discuss the Global Settlement Fund,
`
`
`
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`Case 2:13-cr-00607-JFB Document 501 Filed 10/13/17 Page 10 of 93 PageID #: 13735
`
`Kenner said that he need