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The 2D U.S. Circuit Court of Appeals has vacated an attorney’s conviction on five counts related to an insurance fraud scheme because a cooperating witness’s lay opinion as to the attorney’s knowledge of an auto accident insurance scheme was improperly allowed. U.S. v. Kaplan, No. 05-5531-cr. In 2001, Solomon Kaplan took over 1,200 personal injury cases from attorney Alexander Galkovich, who had been arrested by the FBI and charged with filing false and fraudulent insurance claims and coaching clients to lie to insurance companies as part of a scheme run by Dr. Joseph Sherman and his brother, Yevgeny Sherman. According to prosecutors, the Sherman brothers and their associate, Gennady Medvedovsky, needed a lawyer to replace Galkovich. The Shermans and Medvedovsky, the prosecutors charged, essentially used Kaplan as a straw man for the sale of the law office ostensibly run by Galkovich to benefit themselves. The four allegedly agreed that Kaplan would stay away from the office and show up only to sign checks and attend important meetings. Galkovich began cooperating with the FBI and recorded conversations with the four. The Shermans, Medvedovsky and Kaplan were tape recorded in one meeting offering Galkovich some ideas on how to explain the phony law office transfer. The four were arrested by the FBI in March 2002. The Shermans and Medvedovsky pleaded guilty later that year, but Kaplan elected to go to trial. In August 2005, he was convicted on five counts of participating in the insurance fraud scheme. He was sentenced to 27 months in prison and ordered to pay $200,000 in restitution. The 2d Circuit vacated, citing erroneous admission of testimony by Judge Deborah Batts of the U.S. District Court for the Southern District of New York. Galkovich told the jury that when he asked Kaplan if he was familiar with “car accident cases, with the process of settlement and what it takes to settle,” Kaplan “explained that he had experience with these kind of cases.” The prosecutor then asked Galkovich what he understood “these kind of cases” to mean. Galkovich replied that this was a reference to “car accident cases where people exaggerated their injuries, where it was crucial to have a narrative report that exaggerated the injuries, that these [medical] reports were bought for the best of prices . . . and that you could settle these cases for very good money in a short period of time.” Galkovich then told the jury, “I wanted to know how much he knew about the fraudulent office that he was participating in” and “I think he knew exactly what he was getting into.” Writing on behalf of the 2d Circuit, Judge Wilfred Feinberg said the court was “unable to conclude” that Galkovich’s opinion was “rationally based on his own perceptions” as required by Federal Rule of Evidence 701. Without an adequate foundation, Galkovich’s opinion on Kaplan’s knowledge was inadmissible, he said. Batts also erred on admitting testimony by Galkovich on Kaplan’s alleged knowledge as to how blatant and obvious the fraud at the law office was. However, Feinberg said, “much of the testimony concerning knowledge of the fraud was so speculative or flawed in other respects that it had little or no probative value.” So the limited probative value of the testimony was “substantially outweighed by the risk of unfair prejudice” to Kaplan. The error was far from harmless. “As a result,” Feinberg said, “and because Kaplan’s knowledge of the fraud was the centrally disputed issue in the case, Galkovich’s lay opinion testimony was vitally important � just the sort of evidence that might sway a jury confronted with a marginal circumstantial case.”

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