Prosecutors Trying to Get Martoma Wackiness into Evidence By Hook or by Crook

by Brooks Pierce

So I’m at my desk the other day, minding my own business, when I read on the Twitter, “Ex-SAC Trader Expelled from Harvard Law School” or some such.  The article explained the 1999 expulsion of Mathew Martoma, who is currently on trial for insider trading in the Southern District of New York.  The piece didn’t quite do justice to the story’s utter craziness.

According to the government’s motion to admit evidence of this episode, here’s the short story of  what apparently happened:  In 1999, Martoma applied for clerkships with a number of judges on the U.S. Court of Appeals for the D.C. Circuit.  Those jobs are hard to get, so he allegedly gave himself a boost.   Apparently he:

  • changed grades on his transcript to get three interviews,
  • was caught doing that,
  • faked emails to cover up the transcript,
  • was caught doing that, and (not to be deterred)
  • fabricated an entire computer forensics company to cover up the fake emails.

Harvard eventually had enough and kicked him out.  Dealbreaker covers the story in hilarious detail here.  What I’m more concerned about for this post is, does this episode amount to admissible evidence in Martoma’s insider trading trial?  Let’s look at the Federal Rules of Evidence:

Rule 404(b)

If you were prosecuting Martoma, you’d obviously love the opportunity to ask questions about this Harvard transcript goat rodeo before the jury.  I mean, somebody who would do that may not worry so much about breaking insider trading rules, right?  But as a threshold matter, is this even relevant under Rule 401?  If it’s not, it’s not admissible.  Also, unfortunately for the prosecutors,  you can’t get evidence admitted that just shows somebody is generally a bad guy.  Rule 404(b)(1) says explicitly that “[e]vidence of a crime, wrong, or other act is not admissible to prove a person’s character in order to show that on a particular occasion the person acted in accordance with the character.”

So the government is trying a different tack.  Rule 404(b)(2) says that evidence may “be admissible for another purpose, such as proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident.”  Basically, in the event Martoma tries to introduce electronic evidence showing that he did not have access to material, nonpublic information here – in particular a PowerPoint presentation representing the secret results of a highly anticipated drug test – the prosecutors want to be ready.  They’ll want to argue then that Martoma’s electronic evidence is suspect and could have been faked just like he faked those emails and fabricated that company back in 1999.

The prosecutors note that if the Harvard evidence were deemed to be unfairly prejudicial, that prejudice could be cured with a limiting instruction to the jury explaining the evidence’s proper purpose.  Uh huh.

Rule 608

But I suspect the government’s motion in limine has another, unstated goal.  If Martoma testifies on his own behalf – and as a criminal defendant, he’s obviously not obligated to – he becomes subject to Rule 608 regarding a Witness’s Character for Truthfulness or Untruthfulness.  Under Rule 608(b), the prosecutors could ask Martoma about specific instances of conduct that do not rise to the level of criminal convictions.  But they would have to wait until Martoma’s cross-examination and the matter at issue would have to be probative of his character for untruthfulness.  A judge could allow the prosecutor to explore this Harvard business.

The motion’s real goal may be to remind Martoma that if he testifies, the Harvard extravaganza could be lurking just around the corner.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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