WASHINGTON — Convicted bid-rigger Michael Welty and two co-defendants are moving for a new trial, claiming the government suppressed evidence in the form of an email that could have allowed Welty to challenge some of the government's claims against him.
Welty and two other former UBS AG bankers, Peter Ghavami and Gary Heinz, were convicted in August 2012 as part of a wide-ranging U.S. Department of Justice antitrust investigation into the rigging of guaranteed investment contract bids. Welty was deemed guilty of three counts of conspiracy to commit wire fraud. Welty's lawyers argue in documents filed with the U.S. District Court for the Southern District of New York that an email from CDR Financial Products Inc. executive Douglas Goldberg to Jeffrey Ziglar at UBS rebuts the testimony of a key government witness. The suppression of the email violated Welty's right to due process of law under the Fifth Amendment to the U.S. Constitution, they say. Ghavami and Heinz have signed on to the motion.
"Mr. Welty is entitled to a new trial because the government failed to disclose, before or during his August 2012 trial, evidence that goes to the heart of his defense," Welty's memorandum states. The U.S. Supreme Court ruled in Brady v. Maryland that the prosecution must disclose evidence favorable to a criminal defendant.
The email was sent with regard to an escrow transaction that CDR had brokered for the Idaho Health Facilities Authority on March 16, 2005. CDR sent bid specifications to individuals at five firms, including Welty at UBS.
Welty sent CDR an email stating that UBS was "out" and that its "indication" was "not an offer."
Then Ziglar sent an email to CDR, copying Welty that said, "For the record no trade has been done with UBS on this deal."
But UBS banker Mark Zaino testified for the prosecution that Welty and his alleged co-conspirators meant "bid" when they used the word "indication" in conversations audiotaped and played for the jury.
Welty's lawyers are requesting an evidentiary hearing and the chance to question Goldberg and others. They argue that the testimony at such a hearing would help convince the court that a new trial is warranted. While it is not certain the inclusion of the evidence would have changed the verdict, the possibility is real enough to warrant a new trial, Welty's team wrote.
Justice Department lawyers responded by saying the motion is without merit and does not meet the standard set by the Supreme Court in the Brady case.
"Welty is not entitled to a new trial based on his claimed Brady violation, because the Supreme Court has made it clear that a new trial is not required whenever "a combing of the prosecutors' files after the trial has disclosed evidence possibly useful to the defense but not likely to have changed the verdict."
The DOJ said that the Goldberg email does not contradict Zaino's testimony, and is only a small part of the case.
"The evidence supporting Welty's conviction was overwhelming and included substantial evidence that was not dependent upon the meaning of the word indication," the government reply states.
On Feb. 3 Welty's lawyers filed a response to the government, restating their desire for an evidentiary hearing and accusing the prosecution of taking away from the jury the power to decide the significance of the evidence. Welty has filed a motion to be released from custody pending his appeal to the U.S. Appeals Court for the Second Circuit following the successful December appeal of General Electric bankers Dominick Carollo, Steven Goldberg, and Peter Grimm. The three were all convicted as part of the same investigation as Welty. The court has not ruled on that motion or the motion for a new trial.
