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United States v. Gurry

United States District Court, D. Massachusetts

March 15, 2019




         On September 11, 2018, a grand jury returned the Second Superseding Indictment (“SSI”) against Michael Babich, Alec Burlakoff, Michael Gurry, Richard Simon, Sunrise Lee, Joseph Rowan, and John Kapoor, charging them with engaging in a racketeering conspiracy in violation of 18 U.S.C. § 1962(d). [ECF No. 419]. Trial on the charges against Defendants Michael Gurry, Richard Simon, Sunrise Lee, Joseph Rowan, and John Kapoor (collectively, “Defendants”) began on January 28, 2019. [ECF No. 703]. On March 1, 2019, counsel for Ms. Lee made an oral motion for a mistrial, which was supplemented by a written motion (“Motion for Mistrial”). [ECF No. 765]. For the following reasons, which are consistent with the reasons stated by this Court on March 1, 2019, and again on March 5, 2019, the Motion for Mistrial is DENIED.

         I. BACKGROUND

         On March 1, 2019, during direct examination of witness Alec Burlakoff, the Government sought to admit a document marked for identification as Exhibit 664, which was an email discussing Ms. Lee that was sent to Mr. Babich under a pseudonym (“Exhibit 664” or “the Exhibit”). Trial Tr. Mar. 1, 2019, 197:2-10. The email purported to provide links to websites showing Ms. Lee's involvement with an escort service. Id. at 197:25-198:2. Counsel for Ms. Lee objected to the admission of the document and requested a sidebar. Id. at 197:11-15.

         At sidebar, the Government argued that the document was relevant and “highly probative” because Mr. Babich and Mr. Burlakoff discussed Exhibit 664, concluded that the information on Ms. Lee's resume was inconsistent with the information provided in Exhibit 664, and discussed the information with Dr. Kapoor. Id. at 197:24-198:9. Counsel for Ms. Lee argued that Exhibit 664 was “highly inflammatory, ” “not probative of anything at all, ” and “meant to slander Ms. Lee.” Id. at 198:10-12. He added that Mr. Babich had investigated the email at the time and discovered that the likely person behind the pseudonym was Ms. Lee's ex-boyfriend. Id. at 198:15-19. The Court prohibited Exhibit 664 from being admitted on the ground that it was inflammatory, id. at 200:5-8, but ruled that the Government could ask the witness about inaccuracies that may have been on Ms. Lee's resume and about the corporate culture at Insys to the extent relevant to Insys' decision to hire Ms. Lee and reasons why Insys might choose to hire an individual not qualified for the job, id. at 199:22-24, 200:2-3.

         The direct examination resumed, and the Government asked Mr. Burlakoff, over the Defendants' objection, whether Mr. Babich had received salacious information about Ms. Lee. Id. at 200:17-24. The Court struck the Government's follow-up question about whether Mr. Babich was provided information that Ms. Lee was running an escort service and convened a second sidebar. Id. at 201:7-14. At sidebar, the Court provided further clarification and specifically identified what information the Government could reference on direct examination as relevant to the issues being tried and not unduly prejudicial. See id. at 201:16-23. The Court reiterated that Exhibit 664 would not be admitted but that the Government was permitted to question Mr. Burlakoff about information contained in the Exhibit in light of his earlier testimony. Id. at 202:20-22.

         Still at sidebar, counsel for Ms. Lee renewed his objection that the information was not admissible because it was unfairly prejudicial. Id. at 203:12-15 (“It's a smear campaign by somebody with a grudge . . . It's not admissible. It's 403.”), 204:9-12 (stating that any relevance “does not in any way outweigh the prejudice to her”). The Government argued that the information was relevant because it showed notice to executives at Insys and demonstrated that Ms. Lee was unqualified to hold her position. Id. at 204:2-8. The Court allowed limited testimony on the basis of notice but not for the truth and reiterated the relevance of the testimony. See id. at 202:22-24; see also 204:15-16 (“If [Insys] hired her and they keep [Ms. Lee] on because of this skill set, it's relevant.”), 205:10-14 (“There's no evidence whether it's credible or not. If they have a discussion about it and . . . whether it's true or not, Mr. Kapoor says I don't care what [Ms. Lee] does as long as she can sell my drug, that's relevant.”); 207:1-5 (providing limiting instruction). The Court instructed the Government “to keep the salacious aspect to an absolute minimum.” Id. at 206:3-9.

         Ms. Lee's counsel requested a limiting instruction focusing on the hearsay. Id. at 206:10-12. Once back before the jury, the Court gave a limiting instruction that strongly emphasized that the jury should only consider the information from Exhibit 664 for the effect it may have had on the company and not for the truth.[1] Id. at 206:16-207:21. The Court offered to renew the instruction at the request of counsel if it became necessary during the course of the testimony. Id. at 207:14-15.

         Mr. Burlakoff went on to testify that he met Ms. Lee in a strip club where she worked; that Mr. Babich told him about an email he received about Ms. Lee; and that he, Mr. Babich, and Ms. Lee investigated the email and concluded that it came from Ms. Lee's ex-fiancé. Id. at 207:23-208:15. Mr. Burlakoff agreed that the email made disparaging remarks about Ms. Lee, questioned her hiring, and provided the websites identified in the email for Mr. Babich to review. Id. at 208:19-209:5. Mr. Burlakoff explained that, at Mr. Babich's instruction, he visited one of the websites and observed topless photos of Ms. Lee. Id. at 209:11-210:1. Finally, Mr. Burlakoff testified that Mr. Babich brought this information to Dr. Kapoor, who allowed Ms. Lee to remain at Insys because of her success to-date but required that she take the photos down. Id. at 210:3-22.

         At the conclusion of direct examination for the day, counsel for Ms. Lee moved for a mistrial “based on admission of the salacious evidence.” Id. at 218:12-17. Specifically, counsel for Ms. Lee argued that admission of the evidence “was done for the purpose of prejudicing [Lee]” and “was the subject of pretrial motions in limine and a motion for severance.” Id. at 218:14-16. Further, he stated that he did not believe that the evidence would have been admitted if Ms. Lee was on trial by herself, rather than being trial along with four other defendants. Id. at 218:16-17.

         The Court denied the motion from the bench, but granted leave to renew the motion in writing. Id. at 218:20-22. In denying the oral motion from the bench, the Court stated:

The company's response to [the] information [in the e-mail] is relevant. It may well come in if [Ms. Lee] was tried alone because her qualifications for the job would also be at issue. . . . I think the way we handled it, the information came in in as unprejudicial a way as was warranted. So I thought that I tried to keep the inflammatory part of it down.

Id. at 218:23-219:5.

         Counsel for Ms. Lee submitted the pending Motion for Mistrial on March 3, 2019, which raised the issue of propensity evidence for the first time. [ECF No. 765]. After reviewing the briefing submitted, the Court again denied the request for a mistrial on March 5, 2019 and offered to give an instruction on propensity evidence. Trial Tr. Mar. 5, 2019, 24:3-6. The Court consulted with Defendants' counsel about the content and timing of the instruction. Id. at 24:7- 25:4. The Court gave the jury an instruction before trial ...

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