Connecticut Judge slams US Govt in spoofing case against ex-UBS trader

Judge Jeffrey Alker Meyer of the Connecticut District Court has slammed the United States Government over its plans to move a “spoofing” case against Andre Flotron to another venue and thus protract the proceedings against the former precious metals trader of UBS AG (SWX:UBSN).

On February 19, 2018, the Judge published his opinion in this case, blasting the requests by the US Government to allow the transfer of the case to Illinois.

In its essence, the case captioned USA v. Flotron (3:17-cr-00220) is a criminal case about allegedly fraudulent transactions involving the trading of precious metals futures contracts. The principal issue before the Judge is about where and when this case will be tried.

As per the Judge’s Opinion, seen by FinanceFeeds, the Judge concludes that a speedy trial should proceed in Connecticut on the schedule previously agreed to by the Government.

Defendant Andre Flotron is a citizen and resident of Switzerland. On September 13, 2017, while visiting his girlfriend in the United States, he was arrested in New Jersey on a federal criminal complaint that issued from the District of Connecticut. The complaint alleged defendant’s violation of federal criminal laws including conspiracy, wire fraud, commodities fraud, and “spoofing” between July 2008 and November 2013. The charges stemmed from allegedly fraudulent or manipulative practices by defendant while he was employed as a precious metals trader for UBS AG.

In October 2017, Flotron was released on a $4 million bond and strict conditions of home confinement with GPS monitoring at a residence of a custodian in New Jersey.

In the meantime, on September 26, 2017, a federal grand jury in Connecticut returned a one-count indictment charging defendant with a multi-object conspiracy to commit wire fraud, commodities fraud, and spoofing “in the District of Connecticut and elsewhere.” After further discussion, the Judge decided with the agreement of all parties to schedule this case for jury selection on April 6, 2018.

On January 30, 2018, the US Government secured the return of a seven-count superseding indictment. Count One of the superseding indictment alleges a long-running conspiracy from July 2008 to November 2013 to commit commodities fraud. The rest of the superseding indictment includes six substantive counts. Counts Two through Four allege three sets of transactions on specific dates in June 2012, February 2013, and November 2013, each constituting the alleged execution of a scheme to engage in commodities fraud. Counts Five through Seven cite the same three sets of transactions in June 2012, February 2013, and November 2013, but allege they constitute illegal spoofing transactions.

What the Judge found surprising concerned the Government’s new allegations about venue. The conspiracy in Count One is alleged to have occurred “in the District of Connecticut and elsewhere.”. By contrast, all six of the substantive counts are alleged to have occurred wholly outside Connecticut “in the Northern District of Illinois”, a venue that corresponds to the location of the commodities exchange in Chicago.

It is unusual for a grand jury in Connecticut to return an indictment charging a crime for which there is no proper trial venue in Connecticut, the Judge notes.

Understandably enough, Flotron reacted by moving to dismiss the substantive counts with prejudice on grounds of improper venue and contending that the Government had acted improperly by effectively coercing him to waive his constitutional right to venue in exchange for keeping to the agreed-upon April trial date.

Defendant argues that it was improper for a federal grand jury in Connecticut to return an indictment for crimes that occurred wholly outside Connecticut in the Northern District of Illinois. The defendant alleges that the Government’s decision to proceed as it did has coerced him to waive his constitutional venue rights as to six of the seven counts of the superseding indictment as a price for retaining his right to proceed to an expeditious trial in April.

At the same time, the Government filed a corresponding motion to dismiss without prejudice the remaining conspiracy count so that the Government may re-indict defendant on this charge along with substantive charges in the Northern District of Illinois.

The Judge believes it would be clearly contrary to the manifest public interest to allow the Government to break its agreement to proceed to trial in April so that it may start the prosecution all over again on a blank slate with new charges in the Northern District of Illinois.

“While defendant has languished in jail and now in highly restrictive conditions of “home” confinement far from his real home in Switzerland, the Government had months upon months to decide how it would frame a superseding indictment. The record does not show why the public interest requires delay of the trial so that the Government may pile on more charges against defendant”, the Judge notes.

In short, the Government does not need to delay and move the trial across the country in order to ensure that it can present the full range of evidence that a jury should have to decide if defendant acted to defraud.

Although the Judge does not question the Government’s right to charge substantive charges in conjunction with an overarching conspiracy, he notes the issue here is its “right” to belatedly add such substantive charges in violation of its agreement to proceed to a speedy trial in the venue that the Government itself chose for prosecution.

The Judge concludes that it would be contrary to the manifest public interest to allow the Government at this late date to abandon its case in Connecticut so that it may reload and re-file against defendant in Chicago. The public and the defendant alike have an interest in a speedy trial. The public and the defendant alike have an interest in the Government keeping faith with its commitment to proceed to trial in April in Connecticut.

In addition, the Judge found that the Government has acted in bad faith by moving to dismiss the remainder of its indictment.

“All this smacks of manipulation, harassment, and an unfair effort to move the goalposts for the Government’s evolving strategic convenience”, the Judge said in his Opinion.

The Government’s request to dismiss the conspiracy charge so that it may re-file broader charges elsewhere is an intentional breach of its assurances and agreement to proceed to trial against defendant in the Connecticut Court in April, he concludes.