Issues For Appeal
Mandell's lawyer, Jeffrey Hoffman, said after the verdict that "there are very significant issues for appeal," citing a U.S. Supreme Court ruling last year in Morrison v. National Australia Bank that U.S. securities laws don't protect foreign investors who buy stocks on overseas exchanges in a civil case.
"The judge has ruled that Morrison did not apply," Hoffman said. "We think ultimately that the Second Circuit Court of Appeals and the Supreme Court will say that Morrison applies equally to civil as well as criminal cases."
Four other men were arrested and charged in the case and have pleaded guilty. Two of them, Robert Grabowski and Michael Passaro, both former Sky Capital brokers, agreed to cooperate with the U.S. and testified against Mandell and Harrington.
"There is a mountain of evidence that these men defrauded investors of Sky Capital stock," Goldstein told jurors in closing arguments on July 20.
Urged To Lie
She said Mandell urged his brokers to repeatedly lie to investors by offering investments in purported initial public offerings in companies that in reality only had a handful of employees.
Goldstein cited several recordings made by the Federal Bureau of Investigation and played for the jury during the trial, including one in which Mandell was heard telling brokers, "You have to lie, you have to paint a rosy picture. That's your choice."
In another conversation, cited by Goldstein, Mandell warned his brokers they couldn't tell the truth about their investment schemes, saying, "If Sky goes belly up, we're all going to be embroiled in a big scandal," adding, "There will be no one, no one that's safe."
Prosecutors argued during closing arguments that Mandell and Harrington were motivated in the scheme by greed. Company records indicate Mandell paid himself a salary of more than $7.3 million and charged more than $440,000 in personal expenses to the company's American Express card.