United States v. Ruzicka (333 F. Supp. 3d 853, 2018)

JOHN R. TUNHEIM, Chief Judge

TABLE OF CONTENTS

BACKGROUND ...862

I. Pre-trial Motions ...863

II. Napue Order ...863

III. Motions for Acquittal ...864

IV. Verdicts ...864

V. Post-Trial Motions ...864

DISCUSSION ...864

I. Standards of Review ...864

II. Motion for a New Trial - Constructive Amendment ...865

III. Motion for a New Trial - Napue Violations ...867

A. January 2018 Interview...868

B. July 2016 Interview...869

C. Austin's Signature...869

D. Starkey's Tax Returns...870

IV. Motion for a New Trial - Miscarriage of Justice ...871

A. Austin's Credibility...871

B. Archer Consulting...872

V. Motion for a New Trial - Prosecutorial Misconduct ...874

A. Austin's Credibility...875

B. Susan Mussell...876

C. Trustee Verification Forms...877

D. Nelson's Conversations with Austin...878

E. Ownership of Northland Hearing...879

F. Korpela's Testimony on SoundPoint...880

G. Ruzicka's Ownership of Hearing Fusion...883

VI. Motion for a New Trial - Misjoinder ...883

A. Timeliness...883

B. Exculpatory Testimony...884

C. Unrelated Acts...885

VII. Motion for a New Trial - Brady Materials ...886

VIII. Motions for Acquittal ...887

A. Northland Hearing (Counts 2, 3, and 10)...887

B. Archer Consulting (Count 4)...888

C. Archer Acoustics (Counts 7 and 19)...888

D. Tax Fraud (Count 25)...889

IX. Franks Motion ...889

ORDER ...891

Defendants Jerome C. Ruzicka and W. Jeffrey Taylor have brought numerous post-trial motions seeking relief from various criminal convictions. Both were alleged to have engaged in a conspiracy to defraud hearing-aid companies Starkey Laboratories, Inc. ("Starkey"), and Sonion A.S. A jury returned a guilty verdict for Ruzicka on four counts of mail fraud, three counts of wire fraud, and one count of making and subscribing a false tax return. A jury returned a guilty verdict for Taylor on one count of mail fraud and two counts of wire fraud. The Court will consider each of their motions in turn and, for the reasons explained herein, will deny all of them.

BACKGROUND

For purposes of brevity, the Court will abstain from reciting the factual allegations contained in the Indictment. (3d Superseding Indictment ("Indictment"), Jan. 8, 2018, Docket No. 298.) The Court previously summarized the factual allegations in its order on the parties' motions in limine. United States v. Ruzicka (MILs Order ), No. 16-246, 2018 WL 385422, at *1-2 (D. Minn. Jan. 11, 2018) (Docket No. 308).

Defendants Jerome C. Ruzicka, Lawrence W. Miller, W. Jeffrey Taylor, and Lawrence T. Hagen were indicted on some or all of 25 separate counts:

Count 1: Conspiracy to Commit Mail Fraud and Wire Fraud. (Indictment ¶¶ 17-56.)

Counts 2-3: Mail Fraud stemming from the 2013 Northland Hearing restricted stock transaction. ( Id. ¶ 58.)

Count 4: Mail Fraud stemming from Archer Consulting. (Id. )

Count 5: Mail Fraud stemming from transfer of the title to a Jaguar vehicle from Starkey to Ruzicka. (Id. )

Count 6: Wire Fraud stemming from a transfer from Auric's bank account to Claris Investments' bank account. (Id. ¶ 60.)

Count 7: Wire Fraud stemming from a transfer from ExSilent to Archer Acoustics. (Id. )

Counts 8, 13-14: Wire Fraud stemming from a payment from Starkey to Archer Consulting. (Id. )

Count 10: Wire Fraud stemming from the 2013 Northland Hearing restricted stock transaction. (Id. )

Counts 9, 11-12: Wire Fraud stemming from employment bonus payments from Starkey to Miller. (Id. )

Counts 15, 17: Wire Fraud stemming from payments from Archer Consulting to Ruzicka. (Id. )

Counts 16, 18: Wire Fraud stemming from payments from Archer Consulting to Taylor. (Id. )

Count 19: Wire Fraud stemming from a transfer from Sonion to Archer Acoustics. (Id. )

Counts 20, 23: Transactions Involving Fraud Proceeds stemming from checks from Archer Consulting to a 401k account benefitting Ruzicka and Taylor. (Id. ¶ 62.)

Count 21: Transactions Involving Fraud Proceeds stemming from a check from Archer Consulting to Taylor. (Id. )

Count 22: Transactions Involving Fraud Proceeds stemming from a check from Archer Consulting to Ruzicka. (Id. )

Count 24: Making and Subscribing a False Return stemming from Ruzicka's 2010 Individual Income Tax Return, related to proceeds from the sale of SoundPoint. (Id. ¶ 64.)

Count 25: Making and Subscribing a False Return stemming from Ruzicka's 2014 Individual Income Tax Return, related to a purported loan from Starkey. (Id. ¶ 66.)

The Court will briefly summarize its previous orders and other procedural history as relevant to the current order.

I. PRE-TRIAL MOTIONS

Before trial, Ruzicka brought a motion to sever on the grounds that Rule 14 required severance of the co-defendants because Ruzicka would be unable to compel their testimony and that Rule 8 required severance of improperly joined schemes, and a motion to dismiss on the ground that the conspiracy charge was duplicitous. (Ruzicka's Mot. to Sever, Mar. 31, 2017, Docket No. 131; Ruzicka's Mot. to Dismiss, Mar. 31, 2017, Docket No. 130.) Taylor moved to join both motions. (Taylor's Request to Join, Apr. 17, 2017, Docket No. 152.) The Magistrate Judge did not address Taylor's motion to join, but denied the motion to sever because Ruzicka had not established that joinder would result in irreconcilable defenses or inadmissible evidence and recommended denying the motion to dismiss because the Indictment charged a single conspiracy. (R. & R. at 3-4, May 22, 2017, Docket No. 168; Order at 8, May 19, 2017, Docket No. 162.) The Court adopted the recommendation. (Order, June 14, 2017, Docket No. 175.)

Also before trial, the United States moved to permit the introduction of evidence about SoundPoint Audiology and Hearing Services LLC ("SoundPoint"), Audiometrix LLC, and Hearing Fusion. (Gov.'s Mem. & Mots. in Limine ("Gov. MILs") at 20-21, Dec. 14, 2017, Docket No. 244.) The Court concluded that evidence related to SoundPoint was admissible because it was inextricably intertwined with the 2010 tax-fraud count against Ruzicka. MILs Order , 2018 WL 385422, at *3-4. The Court also concluded that evidence related to Audiometrix and Hearing Fusion was admissible because it was sufficiently connected to the conspiracy count. Id.

II. NAPUE ORDER

On February 27, 2018, the Court concluded that the United States knew or should have known about two instances of false testimony by witness William Austin, the majority shareholder and CEO of Starkey: (1) Austin never told FBI agents that he shreds documents and (2) Ruzicka drafted his own amended employment contract the same day that it was signed. United States v. Ruzicka(Napue Order) , No. 16-246, 2018 WL 1064215, at *2-7 (D. Minn. Feb. 27, 2018) (Docket No. 377). The Court concluded that the United States' failure to correct these false statements would result in a constitutional violation. See Napue v. Illinois , 360 U.S. 264, 269, 79 S.Ct. 1173, 3 L.Ed.2d 1217 (1959). To avoid the violation, the United States called back two FBI agents for further testimony. In light of that additional testimony, the Court found that Austin had provided false testimony and struck his false statements. (Mem. Op. & Order at 2, Mar. 5, 2018, Docket No. 391.) On March 5, the Court issued a written order finding that the United States had remedied the Napue violation. ( Id. )

The Court subsequently instructed the jury:

At the end of trial, the Court struck two portions of William Austin's testimony because the Court concluded that these statements were false:

1. William Austin's testimony that he never shredded any descending gross income reports.

2. William Austin's testimony that he believed Defendant Ruzicka had drafted the amendment to his employment contract and that he had drafted that amendment the same day it was signed.

The Court has struck this testimony and, therefore, you may not consider it in your deliberations. However, you may consider the fact that the Court has struck portions of Austin's testimony in assessing his credibility.

(Jury Instrs. No. 41, Mar. 9, 2018, Docket No. 396.)

III. MOTIONS FOR ACQUITTAL

Before the close of trial, Ruzicka and Taylor moved for acquittal and a mistrial on various grounds, including misjoinder, and raised or renewed a number of oral motions. (Trial Tr. Vol. XXIV at 5996:9-23, July 13, 2018, Docket No. 516; Taylor's Mot. for Acquittal, Feb. 26, 2018, Docket No. 368; Taylor's Mot. for Decl. of Mistrial, Feb. 26, 2018, Docket No. 369; Ruzicka's Mot. for Acquittal, Feb. 26, 2018, Docket No. 370.) The Court denied these motions. (Minute Entry, Feb. 28, 2018, Docket No. 383; Minute Entry, Feb. 27, 2018, Docket No. 378.)

IV. VERDICTS

The jury returned not-guilty verdicts for Miller and Hagen on all counts. (Miller Verdict, Mar. 8, 2018, Docket No. 419; Hagen Verdict, Mar. 8, 2018, Docket No. 420.) The jury returned a guilty verdict for Ruzicka with respect to Counts 2-5, 7, 10, 19, and 25. (Ruzicka Verdict at 1-4, Mar. 8, 2018, Docket No. 417.) The jury returned a guilty verdict for Taylor with respect to Counts 4, 7, and 19. (Taylor Verdict at 1-3, Mar. 8, 2018, Docket No. 418.)

V. POST-TRIAL MOTIONS

Ruzicka and Taylor filed the post-trial motions that are now before the Court. At the hearing on these motions, the Court granted Taylor's motion to join three of Ruzicka's motions. (Minute Entry ("Hearing Minutes"), July 26, 2018, Docket No. 534.)

DISCUSSION

I. STANDARDS OF REVIEW

Taylor and Ruzicka each brought motions for a new trial. "Upon the defendant's motion, the court may vacate any judgment and grant a new trial if the interest of justice so requires." Fed. R. Crim. P. 33(a). The Court has broad discretion to grant a new trial under Rule 33, but it must exercise that discretion sparingly. United States v. McClellon , 578 F.3d 846, 857 (8th Cir. 2009). The Court should grant a motion for a new trial "where the evidence presented weighs heavily enough against the verdict that the court believes a 'miscarriage of justice may have occurred.' Unlike a motion for acquittal, ... a court considering a new trial motion is free to evaluate the evidence and credibility of the witnesses." United States v. Hilliard , 392 F.3d 981, 987 (8th Cir. 2004) (citation omitted) (quoting United States v. Huerta-Orozco , 272 F.3d 561, 565 (8th Cir. 2001) ).

Taylor and Ruzicka have also renewed their motions for acquittal. Rule 29 permits the Court to enter a judgment of acquittal after a guilty verdict if the evidence is insufficient to sustain the conviction. Fed. R. Crim. P. 29(a). The standard for determining whether evidence is insufficient is strict, requiring acquittal only where there is "no interpretation of the evidence that would allow a reasonable jury to find the defendant guilty beyond a reasonable doubt." United States v. Gomez , 165 F.3d 650, 654 (8th Cir. 1999) ; see also United States v. Herbst , 666 F.3d 504, 510 (8th Cir. 2012) ("Reversal is warranted only if no reasonable jury could have found guilt beyond a reasonable doubt."). The Court "consider[s] the evidence in the light most favorable to the government, drawing all reasonable inferences and resolving all evidentiary conflicts in favor of the jury's verdict." United States v. Aponte , 619 F.3d 799, 804 (8th Cir. 2010).

Finally, Ruzicka has renewed his motion for a hearing under Franks v. Delaware , 438 U.S. 154, 98 S.Ct. 2674, 57 L.Ed.2d 667 (1978). Such a hearing is required when "the defendant makes a substantial preliminary showing that a false statement knowingly and intentionally, or with reckless disregard for the truth, was included by the affiant in [a] warrant affidavit." Id. at 155-56, 98 S.Ct. 2674. However, the rule applies only to the affiant, not a nongovernmental informant, and only if the material was necessary to the finding of probable cause. Id. at 171-72, 98 S.Ct. 2674.

II. MOTION FOR A NEW TRIAL - CONSTRUCTIVE AMENDMENT

Ruzicka moves for a new trial on Counts 2, 3, and 10 because the United States constructively amended the Indictment, or, in the alternative, because the evidence proved a variance. (Ruzicka's Mot. for a New Trial ("Constructive Am. Mot."), Apr. 12, 2018, Docket No. 436.) The Court will deny the motion.

"A constructive amendment of an indictment is a direct violation of the Fifth Amendment and is reversible error per se." United States v. Thomas , 791 F.3d 889, 896 (8th Cir. 2015).

A constructive amendment occurs when the essential elements of the offense as charged in the indictment are altered in such a manner - often through the evidence presented at trial or the jury instructions - that the jury is allowed to convict the defendant of an offense different from or in addition to the offenses charged in the indictment.

Id. (quoting United States v. Whirlwind Soldier , 499 F.3d 862, 870 (8th Cir. 2007) ). The question is whether the evidence, arguments, or instructions at issue created a substantial likelihood that the defendant was convicted of an uncharged offense. Id. "The basic difference between a constructive amendment and a variance is this: a constructive amendment changes the charge, while the evidence remains the same; a variance changes the evidence, while the charge remains the same." Id. at 897 (quoting United States v. Stuckey , 220 F.3d 976, 981 (8th Cir. 2000) ). Variances are subject to the harmless error rule and require reversal only if the defendant was actually prejudiced because he was not fully appraised of the charges he would face. Id.

The Court must first determine the scope of the conduct charged in the Indictment. Ruzicka maintains that the Indictment alleged only fraud by omission, and that the United States constructively amended the Indictment by presenting two uncharged theories of fraud: abuse of authority and affirmative concealment or misrepresentation. The Indictment generally alleged that Ruzicka conspired with the other Defendants to defraud Starkey "by means of materially false and fraudulent pretenses, representations, promises, and material omissions." (Indictment ¶ 18.) More specifically, it alleged that Ruzicka secretly created Northland Hearing Centers, Inc., ("Northland Hearing"); transferred assets from Northland US, LLC ("Northland US") to Northland Hearing; issued restricted stock in Northland Hearing to himself, Starkey Chief Financial Officer Scott Nelson, and Northland Hearing President Jeffrey Longtain; and caused Starkey to pay the three stockholders for the termination of the restricted shares before they vested. (See id. ¶¶ 19, 35-43.) Even more specifically, it alleged that Ruzicka "caused Austin's signature to be forged on certain of the necessary transactional documents" related to the 2006 transaction and that Ruzicka and Nelson "caused the [2013] restricted stock payments to be booked to Northland Hearing, rather than Starkey, which had the effect of shielding the payments from Starkey employees and Austin." (Id. ¶¶ 36, 41.) Accordingly, the Court finds that the United States adequately alleged theories of affirmative concealment and misrepresentation in the Indictment.

Next, the Court must determine whether the prosecution improperly amended the Indictment or varied the Indictment during trial.

First, Ruzicka's argument that the United States evaded the force of the jury instructions by improperly advancing a theory of affirmative misrepresentation or concealment in rebuttal argument fails because the Indictment alleged both theories, and the Court's instructions to the jury contemplated the possibility of conviction based on them. The prosecution explained to the jury in its rebuttal that there were three ways to commit fraud - "if you lie," "if you conceal," and "by standing by silently and failing to disclose facts, but only if there was a duty to reveal those facts." (Trial Tr. Vol. XXVI at 6369:7-23, July 13, 2018, Docket No. 517.) The prosecution then explained, "We are not alleging a fraud by omission in this case, and so you do not need to determine if any of the defendants had a duty to disclose. We are alleging fraud by lies and concealment." (Id. at 6370:1-4.) These statements were consistent with the Court's jury instructions. True, at Defendants' request, the Court instructed the jury that a defendant can only be convicted of mail or wire fraud for omitting a material fact if there was a legal duty to disclose the information. (Jury Instrs. Nos. 26-27.) But the Court also instructed the jury that a defendant can be convicted of mail or wire fraud for employing material falsehoods or concealing material facts if the prosecution proved that he "either made an affirmative representation or took deceptive actions intended to hide information, mislead, avoid suspicion, or prevent further inquiry into a material matter." (Id. ) As such, the Court concludes that the United States did not contradict the Court's instructions to the jury.

Ruzicka's argument that the United States improperly prosecuted him for criminal abuse of authority by a corporate officer falls short for the opposite reason: the United States never advanced such a theory. Singling out several lines from the prosecution's closing argument, Ruzicka submits that references to his position of authority suggested to the jury that it could convict him based solely on misuse of his authority rather than based on the elements of fraud charged in the Indictment and instructed by the Court. The prosecution argued that "Ruzicka and his coconspirators" acted "to take advantage of [their] positions of authority, particularly Mr. Ruzicka's unique position of trust and autonomy within Starkey, to steal from Starkey" and stated that the "glue that binds" the alleged conspiracy "is the abuse of Mr. Ruzicka's position of power and prominence to pave the way for this fraud by exploiting Mr. Ruzicka's position, as well as the authority of each of the defendants and coconspirators." (Trial Tr. Vol. XXVI at 6161:14-21, 6163:3-10.) Comparable to the use of an otherwise-legal firearm in an assault, Ruzicka's authority was thus depicted as a mere implement for perpetrating fraud.

Ruzicka argues that the jury may have nonetheless been confused, based on its request that the Court "explain Occupational fraud," (Redacted Jury Question No. 2, Mar. 9, 2018, Docket No. 411), and subsequent statement that "there is a lot of animosity" in the jury room, (Redacted Jury Question No. 4, Mar. 9, 2018, Docket No. 415). But the Court promptly and properly responded to the question by explaining that "occupational fraud" is not a crime and pointing the jury to the instructions relevant to the fraud charges. (Resp. to Jury Question No. 2, Mar. 9, 2018, Docket No. 412.) Those instructions properly explained what the jury must find to reach a guilty verdict and included a paragraph stating that a duty to disclose imposed by an employment contract is not a relevant legal duty. (Jury Instrs. Nos. 26-27.) As such, the Court concludes that the jury did not convict Ruzicka based on an uncharged abuse-of-authority theory.

The Court thoroughly instructed the jury as to the elements of each charge contained in the Indictment, laboriously read the full Indictment to the jury, provided the jury with a copy of the Indictment, and asked the jury to determine Ruzicka's guilt only with respect to the charges as stated in the Indictment. The jury was fully qualified to weigh the credibility of the evidence put on by the United States to substantiate the Indictment's allegations of affirmative misrepresentation and concealment. The fact that it deliberated four days before convicting Ruzicka on some charges and acquitting him on others demonstrates that it acted with the requisite seriousness.

The Court concludes that neither a constructive amendment nor a variance occurred and will deny Ruzicka's motion for a new trial on this ground.

III. MOTION FOR A NEW TRIAL - NAPUE VIOLATIONS

Ruzicka moves for a new trial because the United States failed to correct four statements that it knew were false. (Ruzicka's Mot. for a New Trial - Napue Violations (" Napue Mot."), Apr. 12, 2018, Docket No. 437.) Additionally, Ruzicka requests an evidentiary hearing to present evidence about Austin's knowledge of Starkey's taxes. (Id. at 23-24.) Taylor joins. (Hearing Minutes.) The Court will deny the motion.

The prosecution's knowing use of false testimony to obtain a conviction is a violation of due process. Napue , 360 U.S. at 269, 79 S.Ct. 1173. When false testimony arises during the course of trial, "[t]he duty to correct false testimony is on the prosecutor, and that duty arises when the false evidence appears." See United States v. Foster , 874 F.2d 491, 495 (8th Cir. 1988) (alteration in original) (quoting United States v. Bigeleisen , 625 F.2d 203, 208 (8th Cir. 1980) ). "A new trial is required if 'the false testimony could ... in any reasonable likelihood have affected the judgment of the jury." Giglio v. United States , 405 U.S. 150, 154, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972) (alteration in original) (quoting Napue , 360 U.S. at 271, 79 S.Ct. 1173 ). To prove a Napue violation, the defendant must show "(1) the prosecution used perjured testimony; (2) the prosecution should have known or actually knew of the perjury; and (3) there was a reasonable likelihood that the perjured testimony could have affected the jury's verdict." United States v. West , 612 F.3d 993, 996 (8th Cir. 2010) (quoting United States v. Bass , 478 F.3d 948, 951 (8th Cir. 2007) ).

A. January 2018 Interview

The Court must consider (1) whether Austin's testimony that he did not tell the United States about Larry Hixson was false and (2) whether the United States knew that testimony was false. If so, the Court must decide whether the Defendants were prejudiced by the false testimony. The Court will conclude that the Defendants were not prejudiced by Austin's testimony.

At trial, Austin claimed that the United States did not ask him about Larry Hixson. (Trial Tr. Vol. XIII at 2962:11-25, July 13, 2018, Docket No. 507.) According to FBI Special Agent Brian Kinney's notes from interviews conducted just two weeks earlier, "Bill Austin stated that he did negotiate a contract with Larry Hixson and believed Hixson understood the contract. Austin stated that he was not aware that Hixson was ill and that Hixson is still alive." (Napue Mot., Ex. 1, Apr. 12, 2018, Docket No. 437-1.)

The Court need not decide whether Austin's testimony was false because the Court concludes that the Defendants were not prejudiced by Austin's testimony. West , 612 F.3d at 996. This testimony is material to the extent that the question whether Austin provided false testimony about what he told the FBI during interviews goes to his credibility as a witness. But IRS Special Agent Shannon Korpela testified during cross-examination that Austin's testimony was inaccurate in this regard and that this inaccurate statement was made while Austin was under oath. (Trial Tr. Vol. XXI at 5290:11-5292:14-5293:3:14, July 13, 2018, Docket No. 513.) Moreover, the Court instructed the jury that it had struck two other portions of Austin's testimony because it had concluded that they were false and that the jury could consider "the fact that the Court has struck portions of Austin's testimony in assessing his credibility." (Jury Instrs. No. 41.) The Court also instructed the jury:

If a person is shown to have knowingly testified falsely concerning any important or material matter, you obviously have a right to distrust the testimony of such an individual concerning other matters. You may reject all of the testimony of that witness or you may give it such weight or credibility as you may think it deserves.

(Jury Instrs. No. 7.) The jury was therefore sufficiently instructed that Austin had provided false testimony and how to weigh the falsity of that testimony when assessing Austin's credibility.

Because the Court finds that the jury had sufficient information to weigh Austin's credibility, the Court concludes that the United States' failure to correct other misstatements by Austin did not result in prejudice.

B. July 2016 Interview

The Court must decide (1) whether Austin's testimony that he never used the phrase "church and state" with reference to separating his personal and business assets was false and (2) whether the United States knew that testimony was false. Because the FBI unfortunately declines to record interviews, there is no way to know whether this statement was in fact said by Austin; it could have been merely the author's editorialization of Austin's comments. And, as discussed above, even if the United States knew that this statement was false, the Court again concludes that there was no prejudice because the falsity of the statement is material only to Austin's credibility and the jury was sufficiently instructed that Austin had otherwise provided false testimony. See West , 612 F.3d at 996. Because the Court finds that it is not clear that Austin's testimony was false, the Court concludes that the United States did not have an obligation under Napue to correct this testimony.

C. Austin's Signature

The Court must decide (1) whether Austin's testimony that he signed "hundreds of written actions" was false and (2) whether the United States knew that testimony was false. Ruzicka argues that the United States must have known that the written actions at issue were not signed by Austin because it had the relevant documents in its possession and the documents were signed by others, each using their version of Austin's signature. But mere possession of the documents would not inform the United States that these documents were not signed by Austin because, on their face, the documents purport to be signed by Austin. There is no evidence to suggest that the United States knew that these documents were not actually signed by Austin. "[N]o constitutional violation occurs when the government has no reason to believe that the testimony was false." United States v. Nelson , 970 F.2d 439, 443 (8th Cir. 1992). Because the Court finds that the United States did not know whether Austin's testimony was false, the Court concludes that the United States did not have an obligation under Napue to correct Austin's testimony that he signed "hundreds of written actions."

D. Starkey's Tax Returns

The Court must decide (1) whether Austin's testimony that he only recently learned that Starkey's tax return was separate from his individual return and that he did not participate in the preparation of Starkey's returns was false and (2) whether the United States knew that testimony was false. The Court will conclude that it is unclear that Austin's testimony was false and that the United States did not know it to be false.

Ruzicka makes three arguments about why the United States knew that Austin's statement about his and Starkey's tax returns were false. First, Ruzicka argues that "it is facially implausible for the CEO of a billion-dollar corporation with its own dedicated tax department to claim he is unaware that the corporation files a tax return." ( Napue Mot. at 20.) While it would surely be reckless for a CEO not to be aware of his business's tax obligations, particularly when the CEO holds a majority share of the company, it is not factually impossible for a CEO to be so ignorant of the business's operations. It is entirely possible that Austin is in fact that reckless. The Court cannot find that the United States knew that Austin provided false testimony about his knowledge of Starkey's tax filings simply because the Court would hope that no CEO would be so ignorant of his or her company's tax structure.

Second, Ruzicka argues that Nelson informed the United States that Austin was involved in Starkey's tax strategy. However, "[m]erely inconsistent statements do not establish use of false testimony." West , 612 F.3d at 996 ; see Napue Order, 2018 WL 1064215, at *2. On this record, the Court concludes that it has no reason to believe that the United States knows which of these contradictory statements are false.

Third and finally, Ruzicka argues that Korpela knew that Austin knew that Starkey filed a separate tax return because she had reviewed the returns. Schedule E of Austin's personal income tax returns reported his income from Starkey with information drawn from Schedule K-1 forms issued by Starkey. (See Napue Mot., Ex. 3 at 15 ("2003 Return"), Apr. 12, 2018, Docket No. 437-3; Napue Mot., Ex. 4 at 19 ("2004 Return"), Apr. 12, 2018, Docket No. 437-4.) There is no dispute that Starkey and Austin filed separate returns. However, Austin's statement relates to his personal knowledge of the filings. Austin's personal returns were prepared by Ernst & Young LLP. (2003 Return at 5; 2004 Return at 5.) The copies obtained by Ruzicka show that Austin personally signed an extension for time to file, but not that he signed under penalty of perjury that he had examined the returns for accuracy. And, while Austin presumably did sign that statement before submitting them, he could have simply perjured himself by doing so. As such, nothing in the record conclusively proves that Austin read and reviewed his tax returns, let alone that the United States knew him to be lying when he testified to the contrary.

Because the Court finds that the United States did not know whether Austin's testimony about the tax returns was false, the Court concludes that the United States did not commit a Napue violation by failing to correct this testimony. Accordingly, the Court will deny Ruzicka's motion for an evidentiary hearing. Cf. MILs Order , 2018 WL 385422, at *9-10 (denying Ruzicka's renewed Brady motion for related discovery).

* * *

Having reviewed all of arguments, the Court will deny Ruzicka's motion for a new trial on this ground.

IV. MOTION FOR A NEW TRIAL - MISCARRIAGE OF JUSTICE

Ruzicka moves for a new trial because (1) Austin's testimony was so incredible that allowing Ruzicka's conviction to stand would result in a miscarriage of justice and (2) the jury reached inconsistent verdicts with respect to the Archer Consulting charges. (Ruzicka's Mot. for New Trial - Miscarriage of Justice ("Miscarriage of Justice Mot."), Apr. 12, 2018, Docket No. 442.) The Court will deny the motion.

A. Austin's Credibility

The Court must decide whether a new trial is warranted because the United States relied on Austin's testimony to convict Ruzicka of three counts of mail and wire fraud related to Northland Hearing - Counts 2, 3, and 10. The Court concludes that, even absent Austin's testimony, sufficient evidence supported the jury's verdict.

The Eighth Circuit's decision in United States v. Hilliard is instructive as to how district courts should evaluate motions for new trials in cases where, as here, the United States' principal witness has "serious credibility problems." 392 F.3d 981, 986-88 (8th Cir. 2004). In Hilliard , the defendant was convicted of aiding and abetting the illegal transfer of firearms. Id. at 982. The district court awarded the defendant a new trial after finding that the government's two principal witnesses were not credible:

Chief Judge Bennett concluded that the trial evidence "weighs heavily enough against the verdict for the court to conclude that a miscarriage of justice may have occurred," remarking that it was "an extraordinarily close call." The court noted that the government's case-in-chief rested largely on the testimony of James and Baskerville, and that both witnesses had serious credibility problems, exemplified by their equivocal testimony and lapses in memory. He further observed that the testimony of the two witnesses was often contradictory. Recognizing that Hilliard was convicted of only one of the five charged counts even though the evidence for all five overlapped, the court opined that the weakness of the evidence may have been the reason for the inconsistent verdict.

Id. at 987 (citation omitted). The Eighth Circuit affirmed and elaborated on the district court's analysis, noting that "the district court did not take issue with the extent of the government's evidence; it found problems with the quality of the evidence." Id. The Eighth Circuit stated that the evidence was "strong enough to withstand a motion for judgment of acquittal, where the district court does not weigh evidence or consider the credibility of witnesses," but "in a new trial motion, the district court is to 'weigh the evidence and evaluate for itself the credibility of the witnesses.' " Id. (quoting Huerta-Orozco , 272 F.3d at 565 ). A motion for a new trial "may even be granted where there is 'substantial evidence to sustain the verdict.' " Id. at 987-88 (quoting United States v. Campos , 306 F.3d 577, 579 (8th Cir. 2002) ). The Eighth Circuit concluded, "It was the district court's prerogative to find the testimony of Baskerville and James so unreliable that a conviction based on that testimony could not stand and, after independently reviewing that testimony, we find no error in the district court's conclusion." Id. at 988.

The Court finds Austin's testimony not credible. During trial, the Court had the opportunity to observe Austin's demeanor and testimony. Austin's testimony on direct examination was internally inconsistent, and the Defendants' thorough cross-examination revealed additional flaws in his recollection. His testimony was repeatedly contradicted by numerous witnesses and documents. Indeed, the Court has already concluded that Austin provided false testimony on at least two occasions. Napue Order, 2018 WL 1064215, at *2-6. The Court concludes that Austin's testimony is so unreliable that Ruzicka's convictions on the Northland charges stemming from the Northland transactions cannot stand if sufficient other evidence does not support the convictions. Hilliard , 392 F.3d at 988.

However, the Court concludes that sufficient other evidence supports the jury's verdict in this regard. Ruzicka focuses on evidence showing that Austin must have known about the 2006 stock issuance to Ruzicka, Nelson, and Longtain. (Miscarriage of Justice Mot. at 4-5.) The evidence - notably Nelson's testimony - establishes that Austin did know about the 2006 transaction. (Trial Tr. Vol. XVIII at 4406:24-4408:24, July 17, 2018, Docket No. 525); see United States v. Ruzicka(Victim Order) , No. 16-246, 2018 WL 3647226, at *5-7 (D. Minn. Aug. 1, 2018). But Ruzicka's three convictions related to Northland all involve allegations related to the subsequent 2013 payments for termination of the restricted stock. (See Indictment ¶¶ 38-43; Ruzicka Verdict at 1-2.) The jury could have found that Austin knew about the 2006 issuance of the stock but still have convicted Ruzicka based on a finding that he fraudulently concealed the 2013 termination payments. Nelson testified that Austin did not know about the 2013 payments and that Ruzicka and Nelson intentionally booked the transaction to Northland Hearing rather than Starkey to hide the transaction from Austin. (Trial Tr. Vol. XVIII at 4258:25-4262:17, 4276:25-4280:4.) The Court finds Nelson's testimony credible.

As such, the Court concludes that sufficient evidence supported the jury's guilty verdict for wire and mail fraud stemming from the Northland Hearing transactions even absent Austin's testimony and will deny Ruzicka's motion as to Counts 2, 3, and 10.

B. Archer Consulting

The Court must decide whether a new trial is warranted because the jury found Ruzicka guilty of just one of a dozen counts related to Archer Consulting (Count 4). Because an inconsistent verdict alone cannot justify a new trial, the Court must consider whether sufficient evidence supported the verdict. The Court will conclude that it does.

Admittedly, the jury's verdict as to Count 4 is striking in its inconsistency. Setting aside the conspiracy count, the United States brought 12 separate counts related to Archer Consulting against both Ruzicka and Taylor. (Indictment ¶¶ 58, 60, 62.) The jury acquitted the two on 11 of the 12 - including three related to the initial funds transfers from Starkey to Archer Consulting. (Ruzicka Verdict; Taylor Verdict.) Moreover, the conduct for which the jury convicted the Defendants on Count 4 (mail fraud based on mailing check # 1113 from Archer Consulting to Paychex Retirement Services) is effectively indistinguishable from that for which the jury acquitted the Defendants on Count 23 (a transaction involving fraud proceeds based on Paychex cashing the check six days later). (See Trial Tr. Vol. XXI at 5191:1-5193:10, 5205:3-5206:18; Gov. Ex. 339.) These contradictions are difficult to logically reconcile.

But logic is of no moment here, because any attempt to parse the verdict "would be based on either on pure speculation, or would require inquiries into the jury's deliberations that courts generally will not undertake." United States v. Opare-Addo , 486 F.3d 414, 417 (8th Cir. 2007) (quoting United States v. Powell , 469 U.S. 57, 66, 105 S.Ct. 471, 83 L.Ed.2d 461 (1984) ). "Inconsistent verdicts may result from an inclination to be merciful or confusion on the part of the jury." Id. at 416-17 (citing Powell , 469 U.S. at 65, 105 S.Ct. 471 ). For this reason, when considering "what are characterized as inconsistent verdicts," the Court must ask only "whether the government presented sufficient evidence to support the conviction." Id. at 416 (citing Nesbitt v. Hopkins , 86 F.3d 118, 121 (8th Cir. 1996) ).

In his renewed motion for acquittal, Ruzicka argues that there is not sufficient evidence to support his conviction on Count 4 because the mailing at issue took place after the alleged fraud was complete - which, according to Ruzicka, was as soon as the money from Starkey hit Archer Consulting's bank account. (See Ruzicka's Renewed Mot. for J. of Acquittal at 2-5, Apr. 12, 2018, Docket No. 444.) The United States contends that the mailing was not after-the-fact because - even if Ruzicka and Taylor controlled the Archer Consulting account - the scheme to defraud Starkey and Sonion was not complete until the funds passed through to Ruzicka and Taylor personally.

No one disputes that getting money from Starkey was part of the fraudulent scheme alleged: the three counts based on the transfers from Starkey to Archer Consulting, Counts 8, 13, and 14, were each for wire fraud. (Indictment ¶ 60.) But the full nature of the scheme is difficult to discern from the other charges brought against the Defendants. Counts 20 through 23 allege that transfers from Archer Consulting to Paychex and to the Defendants were transactions involving fraud proceeds. (Id. ¶ 62.) Yet Count 4 alleges that a transfer from Archer Consulting to Paychex - effectively the same transaction charged in Count 23 - was mail fraud. (Id. ¶ 58.) And Counts 15 through 18 allege that transfers from Archer Consulting and from Paychex to the Defendants were wire fraud. (Id. ¶ 60.)

At the hearing on these motions, the United States acknowledged these apparent contradictions and admitted that there "isn't a particular reason" for why the charges were brought in this haphazard fashion. Instead, the United States points to case law showing that mailings of fraud proceeds that further a fraudulent scheme may be charged as either mail fraud or a transaction involving fraud proceeds. United States v. Seward , 272 F.3d 831, 837 (7th Cir. 2001) ; United States v. Morelli , 169 F.3d 798, 806 n.9 (3d Cir. 1999) ("A [mail]ing could constitute [mail] fraud even though it involved money that had already been obtained as a result of fraud."). But the fact that the United States was free to select from two charges offers no insight into why it selected the charges it did.

Even if the charging scheme is as perplexing as the jury's verdict, however, the narrative portion of the Indictment alleges that the fraudulent scheme was completed when Ruzicka and Taylor got paid. Specifically, the Indictment alleges that "Ruzicka was making secret payments to himself and Taylor via fraudulent commissions paid to a sham vendor." (Indictment ¶ 22.) "Via" means "by way of" or "through the medium or agency of." Merriam-Webster's Collegiate Dictionary 1310 (10th ed. 2001). This allegation therefore shows that the payments from Starkey to Archer Consulting were merely means to an end. The Indictment also alleges that the two men "split the proceeds" after Starkey paid fraudulent invoices. (Id. ¶ 25.) This reaffirms that dividing the spoils - including by transferring funds from Archer Consulting to Paychex - was more than mere "post-fraud accounting" to which Ruzicka and Taylor were "indifferent." Schmuck v. United States , 489 U.S. 705, 714, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989). Thus, even if the transfer was not an "essential element" of the scheme, it was incident to one. Id. at 710-11, 109 S.Ct. 1443.

As such, the Court concludes that sufficient evidence supported the jury's guilty verdict for mail fraud stemming from the Archer Consulting mailing and will deny Ruzicka's motion as to Count 4.

* * *

Accordingly, the Court will deny Ruzicka's motion for a new trial on this ground.

V. MOTION FOR A NEW TRIAL - PROSECUTORIAL MISCONDUCT

Ruzicka moves for a new trial because of prosecutorial misconduct, arguing that prosecutors for the United States presented false and misleading questioning, argument, and testimony throughout the trial and particularly in rebuttal argument. (Ruzicka's Mot. for a New Trial - Misconduct ("Misconduct Mot."), Apr. 12, 2018, Docket No. 438.) The Court will deny the motion.

Ruzicka "must first show that the comments were improper and then that they prejudiced [Ruzicka's] rights in obtaining a fair trial. A prosecutor's comments are improper if they 'are likely to inflame bias in the jury and to result in a verdict based on something other than the evidence.' " United States v. Crawford , 523 F.3d 858, 861 (8th Cir. 2008) (citation omitted) (quoting United States v. Mullins , 446 F.3d 750, 759 (8th Cir. 2008) ). Prosecutors "may not suggest that evidence which was not presented at trial provides additional grounds for finding [the] defendant guilty." United States v. Segal , 649 F.2d 599, 604 (8th Cir. 1981) (alteration in original)

(quoting United States v. Garza , 608 F.2d 659, 662-63 (5th Cir. 1979) ). But "[s]o long as prosecutors do not stray from the evidence and the reasonable inferences that may be drawn from it, they, no less than defense counsel, are free to use colorful and forceful language in their arguments to the jury." United States v. Robinson , 110 F.3d 1320, 1327 (8th Cir. 1997). If the comments are improper, the Court next examines "(1) the cumulative effect of the misconduct, (2) the strength of the properly admitted evidence of the defendant's guilt, and (3) any curative actions taken by the trial court." Crawford , 523 F.3d at 861 (quoting United States v. Yu , 484 F.3d 979, 986 (8th Cir. 2007) ).

A. Austin's Credibility

The Court must decide whether the prosecution misled the jury in its rebuttal argument by (1) misrepresenting the Court's Napue Order or Jury Instructions and (2) improperly vouching for Austin's credibility. The Court will conclude that the prosecution's statements were not improper and did not prejudice Ruzicka.

Prior to closing statements, the Court clarified the extent to which the parties could argue about the falsity of Austin's testimony. At the charge conference, the Court stated, "I find it very difficult to figure out what's knowingly and what's not knowingly about [Austin's] testimony.... You can argue what you wish relative to this in your closing arguments." (Trial Tr. Vol. XXV at 6062:18-21, July 17, 2018, Docket No. 527.) The Court added: "I think that the testimony itself has been stricken from the record, so I don't think that you can talk about the substance of the testimony, but I do think that it's fair game to argue that it bears on his credibility or not that these statements - the Court has found these statements to be false." (Id. at 6063:18-23.)

Ruzicka identifies two allegedly misleading statements made by the prosecution during its rebuttal. First, Ruzicka alleges that the prosecution misled the jury by stating that there was no judicial finding that Austin provided false testimony:

Now the defense attorneys have repeatedly told you that there is a judicial finding that Mr. Austin lied. I want you to look at this instruction. There is one word you don't see there, right? You don't see the word "lied." You don't see the word "knowingly" false.

(Trial Tr. Vol. XXVI at 6366:17-21.) The prosecution's statement referenced Instruction 41, which stated that "the Court struck two portions of William Austin's testimony because the Court concluded that these statements were false." (Jury Instrs. No. 41.) Moreover, the Court expressly allowed the prosecution to argue whether Austin provided false testimony intentionally. (Trial Tr. Vol. XXV at 6062:18-21.) The Court concludes that the prosecution's representation of Instruction 41 was not improper.

Second, Ruzicka alleges that the prosecution improperly vouched for Austin's credibility by stating:

There are two things that the Court did determine were false, and you will look at those two things and those facts, and you have to ask yourselves[,] how do they chalk up in terms of the four days of testimony that you heard from Bill Austin[?] He testified for four days, and there are two things that are the subject of this instruction[.]

(Trial Tr. Vol. XXVI at 6366:22-6367:3.) Again, there was nothing improper about this statement. As reflected in the Court's Napue Order and in Instruction 41, the prosecution was correct that the Court found only two of Austin's statements to be false. "Improper vouching occurs when a prosecutor refers to facts outside the record, implies that the witness's testimony is supported by facts not available to the jury, gives an implied guarantee of truthfulness, or expresses a personal opinion regarding witness credibility." United States v. Beaman , 361 F.3d 1061, 1065 (8th Cir. 2004). The prosecution did none of these things in its rebuttal. It merely asked the jury to weigh the Court's finding that Austin made two false statements in light of his four days of testimony. Accordingly, the Court concludes the prosecution did not improperly vouch for Austin's credibility.

Even if the statements were improper, the Court concludes that its instructions to the jury cured any resulting prejudice. See Crawford , 523 F.3d at 861. Following closing arguments, the Court instructed the jury to follow the Court's instructions:

The lawyers have quite properly referred to some of the applicable rules of law in their closing arguments to you. However, if any difference appears to you between the law as stated by counsel and the law as stated by the Court in these instructions, you, of course, must follow the instructions given to you by the Court.

(Jury Instrs. No. 2.) The Court thoroughly instructed the jury on how it may weigh witness credibility, including a statement on how the jury may consider false testimony:

If a person is shown to have knowingly testified falsely concerning any important or material matter, you obviously have a right to distrust the testimony of such an individual concerning other matters. You may reject all of the testimony of that witness or you may give it such weight and credibility as you may think it deserves.

(Jury Instr. No. 7; see also Jury Instr. No. 6.) The Court then instructed the jury on the falsity of two statements made by Austin and the fact that the jury could not consider the substance of those statements. (Jury Instrs. No. 41.) Accordingly, even if the prosecution's statements were improper, the Court finds that any potential prejudice was remedied by the Court's instructions.

B. Susan Mussell

The Court must decide whether the prosecution improperly stated in its rebuttal argument that Susan Mussell, Starkey's former general counsel, was the subject of an internal investigation and the federal investigation. The Court will conclude that the prosecution's statements about Susan Mussell were not improper.

Mussel drafted a memorandum on September 22, 2015, stating that the 2013 Northland transaction was disclosed in Starkey company records. (Misconduct Mot., Ex. 1 at 2-3, Apr. 12, 2018, Docket No. 438-1.) The United States attacked Mussel's credibility in its rebuttal argument by stating:

Now Mr. Conard has brought up the memo drafted by Susan Mussell several times, and you have this in evidence. It's drafted after Mr. Ruzicka was terminated, and as you have heard from the agents, Susan Mussell was both the subject of the internal investigation, and she was a target of the federal investigation as well.

(Trial Tr. Vol. XXVI at 6372:23-6373:3.)

Ruzicka argues that no evidence was presented to substantiate argument that Mussell was the target of either Starkey's investigation or the federal investigation. Kinney testified that the United States received "volumes of documentation regarding what [Starkey's] allegations were of." (Trial Tr. Vol. IV at 853:23-24, July 13, 2018, Docket No. 500.) When asked "who was alleged by Starkey to have committed some wrongdoing," Kinney responded by identifying subjects of the federal investigation, including "possibly Susan Mussell." (Id. at 859:13-22) Kinney explained that "[t]he subject is the person who is alleged that has done the wrongdoing." (Id. at 852:23-24.) Kinney's testimony makes clear that (1) Starkey alleged that Mussell had "committed some wrongdoing" and (2) Mussell was a possible subject of the federal investigation. Accordingly, the prosecution's comments were supported by Kinney's testimony.

Ruzicka argues that the United States "grasps at straws" to justify the statements. (Reply Supp. Misconduct Mot. at 3, June 13, 2018, Docket No. 483.) First, Ruzicka argues that the United States used the phrase "the agents" in closing argument even though Kinney alone testified about Mussell as a subject of the investigation. True, but such a slip of the tongue is not enough to render the comments improper in this case. Second, Ruzicka argues that Kinney identified Mussell as a "subject" of the investigation rather than a "target." In the criminal-investigation context, "target" and "subject" are not synonymous terms. However, the Court did not instruct the jury on the distinction between a "target" and a "subject," and Kinney did not testify about it. In common parlance, "target" and "subject" have similar meanings. The Court has no reason to believe that the jury knew of the jargonistic distinction in how the terms are used by law-enforcement agencies and, even if it did, the Court would not conclude that calling Mussell a "target" rather than a "subject" "inflame[d] bias in the jury." Crawford , 523 F.3d at 861. Both of Ruzicka's arguments are semantic and unpersuasive.

Accordingly, the Court concludes that the comments about Mussell were not improper.

C. Trustee Verification Forms

The Court must decide whether the United States made improper statements about signatures on Employee Stock Ownership Plan ("ESOP") valuation reports. The Court will conclude that the prosecution's statements about who signed the ESOP reports were not prejudicial.

In its rebuttal argument, the prosecution stated:

So, for example, remember all of the questions about these trustee certifications relating to the ESOP.

Every year Scott Nelson certified that he had reviewed the valuations with the trustee, and the questioning was designed to suggest that because of these certifications Mr. Austin must have known about the Northland stock transaction.

When Scott Nelson ultimately testified, though, he acknowledged the fact that there were two trustees for the ESOP, Jerry Ruzicka and Bill Austin, and he acknowledged that when he signed that record, he was affirming the fact that he had reviewed the valuation with Jerry Ruzicka.

(Trial Tr. Vol. XXVI at 6374:13-6375:1.)

Ruzicka argues that these statements were misleading because Nelson only signed the valuations in 2004 and 2005, and later valuations were signed by Mussell. Ruzicka argues that the importance of the signatures is to suggest that Austin was provided the valuation report every year. Ruzicka is correct that Mussell signed the ESOP valuations after 2005. (Compare Misconduct Mot., Exs. 3-4, Apr. 12, 2018, Docket Nos. 438-3, 438-4, with Exs. 5-6, Apr. 12, 2018, Docket Nos. 438-5, 438-6, and Ex. 7, Apr. 12, 2018, Docket No. 440.) However, whether Mussell or Nelson signed the certification does not inform whether the signatory actually reviewed the valuation with Austin. In fact, Nelson testified that he "generally" provided the verification to Ruzicka and "[did]n't recall giving one to Bill." (Trial Tr. XVIII at 4208:3-14.) Nelson elaborated that Austin "would ask [him] occasionally what the share value was, but not a copy of the document." (Id. at 4208:17-18.) Whether Austin was knowledgeable about the contents of the valuation documents was a fact determination left to the jury. Accordingly, the Court concludes that Nelson's signature - or Mussell's - on the certifications is at best weak evidence that Austin was informed of the contents of the valuation, and concludes that any misstatement about who signed the documents was not prejudicial.

Moreover, the Court took curative action to correct any misstatements. The Court instructed the jury, "If any reference by the Court or by counsel to matters of testimony or exhibits does not coincide with your own recollection of that evidence, it is your recollection which should control during your deliberations and not the statements of the Court or counsel." (Jury Instrs. No. 5.) The certifications were in evidence and could be evaluated by the jury, who would have seen the discrepancy between the prosecution's closing argument and the evidence.

Accordingly, the Court concludes that Ruzicka was not prejudiced by the prosecution's statement that Nelson signed the ESOP forms "every year."

D. Nelson's Conversations with Austin

The Court must decide whether the prosecution made improper statements about a conversation Nelson had with Austin about Northland Hearing. The Court will conclude that the prosecution's characterization of Nelson's testimony was not prejudicial.

Nelson's testimony during cross-examination was that he spoke with Austin in or around 2006 about both the transfer of assets from Northland US to Northland Hearing and the issuance of restricted stock to Ruzicka, Nelson, and Longtain. (Trial Tr. Vol. XVIII at 4406:14-4408:24.) On redirect, Nelson testified that he only had one meeting with Austin about Northland Hearing, that it was at Starkey headquarters, that it was in 2006, and that the two discussed the asset transfer but not the restricted stock. (Trial Tr. Vol. XIX at 4666:23-4670:17, July 17, 2018, Docket No. 526.) Nelson further testified that, in 2015, he had a conversation with Austin at the Beach Road House. (Id. at 4677:3-4678:6.) At closing, the prosecution stated:

Now, I mentioned to you a moment ago about the fact that Mr. Conard during his closing argument showed you some of the transcripts, some of the things that people said during their testimony but not all, including some portions of the testimony of Scott Nelson, and you'll recall that Mr. Conard showed you some language where Scott Nelson was talking about a conversation with Bill Austin about restricted stock.

What you need to be clear about is the fact that when Mr. Conard asked this question, he asked about the conversation at the Beach Road house, and as Mr. Nelson clarified on redirect examination, the conversation at the Beach Road house happened in September of 2015.

The only other conversation that Scott Nelson acknowledged ever having with Bill Austin about the ownership of Northland was the conversation wherein Scott Nelson said he talked to Bill Austin about moving Northland LLC into Starkey, moving the assets that Bill Austin owned into another company that Bill Austin owned.

(Trial Tr. Vol. XXVI at 6370:14-6371:7.) In support of this statement, the prosecution showed a portion of the cross-examination transcript showing that Nelson had a conversation with Austin at the Beach Road House, but omitted several lines of transcript where Nelson stated that the conversation occurred in 2006.

The Court need not decide whether this omission was improper because the Court concludes that it was not prejudicial. Whether Austin knew about the 2006 issuance of the restricted stock is essential only to the conspiracy count. As discussed above, the jury could find Ruzicka guilty on the Northland counts even if Austin knew about the issuance of the restricted stock so long as the jury concluded that Austin did not know about the 2013 payments for termination of the restricted stock. Nelson testified that Austin did not know about the latter transaction. (Trial Tr. Vol. XVIII at 4258:25-4262:17.) This evidence adequately supports the verdict even if the jury believed Nelson's initial testimony that Austin knew about the issuance rather than his subsequent recantation. And, as discussed above, the Court gave an instruction regarding conflicts between the parties' arguments and the jury's recollection of the evidence. (Jury Instrs. No. 5.)

Accordingly, the Court concludes that Ruzicka was not prejudiced by the omission of portions of Nelson's testimony during rebuttal argument.

E. Ownership of Northland Hearing

The Court must decide whether the prosecution improperly used leading questions to elicit false testimony from Longtain and FBI Special Agent Matthew Snell that Ruzicka's ownership interest in Northland Hearing was not publicly disclosed. This testimony relates to forms filed with the Arizona and Connecticut Secretaries of State disclosing certain information about Northland Hearing. The Court will conclude that the prosecution did not commit misconduct by asking Longtain and Snell about their knowledge of the disclosure forms.

On cross-examination, Longtain was questioned about whether the forms showed that Ruzicka, Nelson, and Longtain were officers of Northland Hearing. (Trial Tr. Vol. VIII at 1688:20-1690:3, July 17, 2018, Docket No. 524.) Next, when asked if, "where ownership is required to be listed, you three are listed as owners," Longtain responded, "I believe so." (Id. at 1689:21-1690:3.) On redirect, the prosecution demonstrated to Longtain that the forms disclosed that Ruzicka, Nelson, and Longtain were officers of Northland Hearing but did not disclose whether they were owners of the company. (Id. at 1732:16-1734:10.) These questions merely clarified that the document did not disclose whether Ruzicka, Nelson, and Longtain were owners. The Court concludes that this questioning of Longtain was not improper.

On cross-examination, Snell was asked whether Arizona requires public filing of an annual report. (Trial Tr. Vol. XVII at 3956:1-4, July 13, 2018 Docket No. 511.) Snell responded, "I don't know ... whether it's a public filing." (Id. ) On redirect, Snell was asked whether he knew if the document was publicly available. Snell stated, "As I discussed speaking with Mr. Conard, I don't know. He explained that it was available upon request for a certified copy, but whether it was publicly available and viewable on the website, I do not know." (Id. at 4108:23-4109:1.) Ruzicka claims that Snell must have known that the record was publicly available due to his wealth of experience in white-collar investigations. However, this wealth of experience does not mean that Snell or the prosecution is well-acquainted with the disclosure laws of Arizona. Ruzicka opened this door when he asked Snell during cross-examination about his knowledge of whether the document was publicly available. The prosecution was entitled to follow up with Snell to clarify his knowledge, and he provided the same answer both times. The Court concludes that the questioning of