BROOKLYN, N.Y. (CN) - After exculpatory evidence led the Second Circuit to vacate his securities conviction, a former Merrill Lynch financial adviser wants punitive damages.
Timothy O'Connell filed the federal complaint on Nov. 12 against the United States and the several federal prosecutors who went after him 10 years ago in what became known as the "squawk box" cases.
Working closely with the Securities and Exchange Commission, the government accused O'Connell and five others of using intercom speakers found on brokers' trading desks to pass along confidential information that supposedly gave day traders at A.B. Watley an edge on the market, according to the complainst. The government also accused brokers with Bank of America, Smith Barney and Lehman Brothers of involvement in the scheme, O'Connell says.
Though a jury acquitted O'Connell in 2007 on 38 counts, he was convicted of witness tampering and of making a false statement, according to the complaint.
O'Connell say the jury was hung on the conspiracy to commit securities fraud charge, so the government elected retry all six defendants on that count in 2009.
After the second trial ended in convictions, O'Connell says he and his co-defendants learned that the government had withheld 30 transcripts of investigative SEC depositions, taken in December 2004.
Contending that information in the transcripts contradicted the testimony of key government witnesses regarding the confidentially of the allegedly misappropriated information, the defendants moved for yet another trial.
O'Connell says "there is no question" that prosecutors knew about the missing transcripts in both trials.
"A prosecutor's suppression of or failure to disclose evidence favorable to an accused upon request violates due process where the evidence is material either to guilt or to punishment, irrespective of good faith or bad faith of the prosecution," the 20-page complaint states.
In August 2013, the Second Circuit vacated the brokers' conspiracy convictions and "chastised the prosecutors for having withheld clearly exculpatory evidence," according to the complaint.
The error is known as a Brady violation, named for the 1963 U.S. Supreme Court case Brady v. Maryland.
"The Second Circuit was highly critical of the prosecutors' failure to disclose the deposition transcripts both because of the substantive impact on the outcome of trial and because of the substantial waste of resources by the parties and the court," O'Connell says. "In addition, the Second Circuit questioned whether prosecutors should subject Plaintiff and his co-defendants to a third trial in light of their inexcusable Brady violations."
O'Connell says he accepted a deferred prosecution agreement to avoid a third trial, and the criminal action against him was terminated in December 2013. The false-statement conviction against O'Connell was overturned on appeal as well, according to the complaint.
"Plaintiff served time in prison and home confinement with electronic monitoring in connection with defendants' prosecution of criminal action and has suffered additional harm in the form of attorneys' fees, costs, and severe damage to his reputation," the complaint states. "He is the only one of the six defendants in the criminal action to serve prison time. His life, his livelihood, and his reputation have been substantially affected by defendants' misconduct and continued malicious prosecution of the conspiracy to commit securities fraud and related securities fraud charges."
O'Connell seeks punitive damages for malicious prosecution and negligence. He is represented by Brian Brick with Bern Ripka in Manhattan.
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