| NEW YORK
NEW YORK May 16 A federal appeals court in New
York on Friday upheld Ross Mandell's conviction and 12-year
prison term for running an alleged $140 million trans-Atlantic
boiler room fraud, rejecting his claim that he could not be
prosecuted under U.S. securities laws because much of the case
The 2nd U.S. Circuit Court of Appeals also upheld the
conviction and five-year prison term of former Sky broker Adam
Harrington for his role in a scheme that prosecutors said ran
from 1998 to 2006. It sent the case back to the trial court to
modify a provision of an order of forfeiture.
Both defendants were appealing their July 2011 convictions
by a Manhattan jury for allegedly using high-pressure sales
tactics to persuade U.S. and British investors to invest in Sky
entities, only to then divert money to enrich themselves and pay
undisclosed broker commissions.
Mandell, 57, of Boca Raton, Florida, has called himself
"Wall Street's 'bad boy' broker" and who pitched a reality TV
show to tell his story. He and Harrington, 44, of Miami, have
been free on bail during their appeals.
In his appeal, Mandell said he couldn't be criminally
responsible for trades involving U.S. investors because they
occurred long ago, and the statute of limitations had run out.
The defendants also said they weren't criminally responsible
under Section 10(b) of the Securities Exchange Act of 1934 for
British trades, citing a 2010 U.S. Supreme Court case, Morrison
v. National Australia Bank.
Morrison said Section 10(b) didn't apply in civil cases to
foreign securities transactions. Last August, in a case
involving former Amerindo Investment Advisors money manager
Alberto Vilar, the 2nd Circuit said that law also didn't apply
extraterritorially in criminal cases.
But in Friday's decision, a three-judge 2nd Circuit panel
said some investors bought Sky Capital private placement shares
domestically, and some transactions required processing investor
applications and payments in the United States.
As a result, "a rational jury could have found the
'essential elements' of Mandell and Harrington's convictions
beyond a reasonable doubt," the panel said. The 2nd Circuit also
rejected several other defense arguments in the appeals.
Mandell was originally ordered to forfeit $50 million, and
Harrington $20 million.
The 2nd Circuit accepted Mandell's argument, which the
government conceded was correct under a 2012 ruling, that the
defendants be jointly and severally liable for forfeiture,
responsible for full payment regardless of their share of fault.
Matthew Brissenden, a lawyer for Mandell, was not
immediately available for comment.
Scott Splittgerber, a lawyer for Harrington, said he is
disappointed with the decision, "particularly since most of the
evidence at trial concerned foreign transactions. We will
evaluate whether to appeal to the Supreme Court."
The case is U.S. v. Mandell et al, 2nd U.S. Circuit Court of
Appeals, Nos. 12-1967, 12-2090.
(Reporting by Jonathan Stempel in New York; Editing by Bernard