[V]accarelli was a registered representative of The Investment Center ("TIC"), a brokerage company, and was an investment adviser associated with IC Advisory Services, Inc. ("IC Advisory"). He also was the owner and only member of LWLVACC, LLC, and conducted business through an entity named Lux Financial Services ("Lux Financial"). Using these various entities, Vaccarelli operated a financial advisory and brokerage service through which he offered investment advice and sold investments and securities to individuals and families in the Waterbury area.Between approximately 2011 and 2017, Vaccarelli defrauded approximately 15 victim investors of approximately $1.5 million by falsely representing that he would invest his clients' money in IRA rollover accounts, money market accounts, certificates of deposit ("CDs"), or other types of interest-earning investments. However, instead of investing customers' funds as he had represented, Vaccarelli deposited customer funds into his own personal account and business bank accounts, commingled those funds with his own money, and used the funds to pay both business and personal expenses, including tuition and mortgage payments. In some instances, he also used customer funds to make bogus "interest payments" to other victim-investors.Vaccarelli's victims include an elderly woman who Vaccarelli coerced into transferring approximately $300,000 in funds from a safe investment portfolio into a bank account that Vaccarelli controlled. Vaccarelli subsequently spent the money on personal expenses and to pay off another investor who threatened to sue him. Vaccarelli also stole nearly $500,000 from a trust, which was established in 1991 to care for a woman with diminished capacity. Other victims include a retired schoolteacher, a retired construction worker, and medical professionals.
[A]t trial, defense counsel argued that Mr. Vaccarelli's functioning was so impaired by his alcoholism that he could not have formed the requisite criminal intent and thus was not guilty of all charges. Mr. Vaccarelli testified at trial regarding his substance abuse disorder, as did Donna Gleissner, a licensed drug and alcohol counselor who treated Mr. Vaccarelli. Prior to trial, the Court granted the Government's motion to preclude testimony from Defendant's proposed expert witness, Dr. Howard Zonana. (Ruling Precluding Dr. Zonana [Doc. # 89].) Defendant sought to offer Dr. Zonana's testimony on, inter alia, Mr. Vaccarelli's "diagnosis of Substance Abuse -- Alcoholism" and "the effects of chronic alcoholism on individuals generally and Mr. Vaccarelli in particular." (Dr. Zonana's Supplemental Report [Doc. # 83-1] at 2.) The Court precluded Dr. Zonana's testimony under Federal Rule of Criminal Procedure 16(b)(1)(C) for failure to provide an adequate summary of his opinions and the bases for those opinions, and under Federal Rule of Evidence 403 because the risk of jury confusion outweighed the limited probative value of Dr. Zonana's testimony. (Ruling Precluding Dr. Zonana at 5, 8.)
SIDE BAR: Federal Rule of Criminal Procedure Rule 29: Motion for a Judgment of Acquittal(a) Before Submission to the Jury. After the government closes its evidence or after the close of all the evidence, the court on the defendant's motion must enter a judgment of acquittal of any offense for which the evidence is insufficient to sustain a conviction. The court may on its own consider whether the evidence is insufficient to sustain a conviction. If the court denies a motion for a judgment of acquittal at the close of the government's evidence, the defendant may offer evidence without having reserved the right to do so. . . .
Defendant's argument that there was no evidence at trial showing that Mr. Vaccarelli intended to defraud fails in light of volume of circumstantial evidence of intent to defraud introduced at trial. As the Court instructed the jury, "the ultimate facts of knowledge and criminal intent, though subjective, may be established by circumstantial evidence, based on a person's outward manifestations, his words, his conduct, his act[s] and all the surrounding circumstances disclosed by the evidence and the rational or logical inferences that may be drawn from them." (Jury Instructions at 17.) See United States v. Litan, 1995 WL 723135, at *1 (2d Cir. 1995) (rejecting defendant's argument that government failed to prove intent to defraud and noting that "there is rarely direct evidence of a defendant's state of mind," and thus "the jury's verdict may be based entirely on circumstantial evidence").Moreover, Defendant misses the mark with regard to the scope of the required "intent to defraud." Defendant's argument conflates "intent to defraud" with intent that the victims actually lose money, but those concepts are not equivalent, despite his suggestion. Rather, the Government need not have proved that Defendant intended that his victims endure financial losses in the long run in order to prove that he acted with intent to defraud. Circumstantial evidence upon which a jury may base its conclusion that the defendant acted with intent to defraud includes evidence showing that "defendant made misrepresentations to the victim(s) with knowledge that the statements were false." Guadagna, 183 F.3d at 129. Where the "necessary result of the scheme is to injure others, fraudulent intent may be inferred from the scheme itself." Id. (internal quotation and alteration omitted). Moreover, fraudulent intent may be inferred from circumstantial evidence "where the defendant's misrepresentations foreseeably concealed economic risk or deprived the victim of the ability to make an informed economic decision." United States v. Binday, 804 F.3d 558, 578 (2d Cir. 2015). Therefore, a jury may conclude that a defendant intended to defraud even in the absence of evidence that he intended for his victims to ultimately lose money.
[T]he Government introduced ample evidence to demonstrate that although "clients were told their money was going to be invested in a Senior Note Program, a Certificate of Deposit ('CD') or held in a client funds account, victim-investors' money was not invested as such, but was instead used as Vaccarelli's own bank balance." (Id. at 7 (citing exhibits and trial transcripts showing misrepresentations).) In sum, Defendant argues that neither his victims nor an objectively reasonable investor would consider his misrepresentations-about whether he would invest client funds or spend them on personal expenses or to repay other investors, and about his involvement with the Burton Trust-to be material or essential to the bargain. That argument is patently unreasonable and lacks any factual or legal support, and thus Defendant has not demonstrated that he is entitled to a judgment of acquittal on these grounds.
[E]vidence at trial plainly demonstrates that the mailings at issue were in furtherance of Defendant's scheme to defraud, and the cases he cites do not suggest otherwise. Each mailing involved a check which Defendant induced his victims to send or receive in order to purportedly invest those funds in legitimate investment vehicles. The funds sent via check by mail are precisely the funds which the victims passed along to Defendant for investment. Thus, unlike in the cases upon which Defendant relies, the success of his scheme relied in no small part on the receipt of those funds by mail. The mailings at issue here were neither compelled by law, nor after the completion of his scheme, nor inconsequential to the success of his scheme, as were the mailings in the cases he cites. These mailings were, at the very least, a "step in the plot" of Mr. Vaccarelli. Schmuck, 489 U.S. at 711. Defendant has not demonstrated that he is entitled to a judgment of acquittal on these grounds.
[T]estimony by Dr. Zonana would have had limited probative value. Ms. Gleissner testified regarding Defendant's alcoholism, his diagnosis of Substance Abuse Disorder, and his inpatient and outpatient treatment. Defendant testified at length about his abuse of alcohol and the impact on his life from his alcoholism. Thus the topic of Dr. Zonana's proposed testimony-"the effects of chronic alcoholism on individuals generally and Mr. Vaccarelli in particular"-was largely covered at trial by the testimony from Defendant and Ms. Gleissner. Especially in light of this limited probative value, Defendant has not demonstrated that the Court erred in concluding that the probative value of Dr. Zonana's testimony was substantially outweighed by its risk of jury confusion, and he is not entitled to a judgment of acquittal on these grounds.
Ladies and gentlemen, during this trial you have heard evidence regarding the provisions of the company manual of The Investment Center and the defendant's contract with The Investment Center as well as testimony from a member of The Investment Center's compliance department. You also were presented with evidence offered to show certain violations of regulations of FINRA, the Financial Institution Regulatory Authority, by Mr. Vaccarelli.You may consider the evidence you heard in this regard and give it such weight as you deem appropriate to the extent that you find it sheds light on the questions before you regarding whether the defendant engaged in a scheme to defraud and with regard to the questions of willfulness and specific intent to defraud. Mr. Vaccarelli is not on trial for violating any laws other than the federal criminal laws cited in the Superseding Indictment, a copy of which you have in your notebooks. Specifically, you may not vote to convict the defendant simply because he may have violated a company policy of The Investment Center or breached a contract with The Investment Center or because he may have violated a FINRA rule because a violation of a company policy or contract or a FINRA regulation standing alone would not constitute a crime under federal law.You may, however, consider evidence of any knowing violations of The Investment Center company policy or contract or a FINRA rule as you would consider any other evidence in determining whether Mr. Vaccarelli devised a scheme to defraud and whether he acted with the specific intent to defraud, as I have defined those terms for you.
Page 14 of the DCT Ruling[T]he Court agrees that Defendant's knowledge and evasion of TIC rules was highly relevant to his mental state in committing the charged fraud, and that evidence of his misrepresentations to TIC, which allowed him to continue working with TIC, was properly introduced to prove Defendant's scheme to defraud his victims.