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Stefan Brodie’s roller-coaster ride through the federal courts just took another plunge. The Montgomery County, Pa., businessman was convicted by a jury on charges of violating a federal embargo on trading with Cuba, but was later cleared by the trial judge who entered a judgment of acquittal after finding that Brodie honestly believed he was doing nothing illegal. Now the 3rd U.S. Circuit Court of Appeals has reinstated the conviction, finding that the evidence at trial was strong enough to support the government’s charges. The case is U.S. v. Brodie. “We conclude that because each of the interconnected inferences urged by the government is reasonable on the evidence as a whole, the district court erred in entering the judgment of acquittal, and accordingly we will vacate that judgment and reinstate the jury verdict,” 3rd Circuit Judge D. Michael Fisher wrote. The ruling means that Brodie now faces a new trial on the charges because the trial judge, Eastern District of Pennsylvania Judge Mary A. McLaughlin, had also ruled that his original trial was unfair. In ordering a new trial, McLaughlin found that one of the two prosecutors “got carried away” during his closing argument by repeatedly using the terms “lies,” “double lie,” and “pack of lies,” and that the improper arguments were made even worse when a second prosecutor “vouched” for the first prosecutor’s character in the government’s rebuttal argument. In the indictment, handed up in 2000, the government charged that Brodie and his brother, Donald Brodie, both executives of Bro-Tech Corp. in Bala Cynwyd, and one of its salesmen, James Sabzali, violated the Trading With the Enemy Act and the Cuban Assets Control regulations by selling water purification resins to Cuba. As McLaughlin described it, there was no dispute at trial about whether the sales to Cuba took place. Instead, McLaughlin said, the only issue at trial was “whether the defendants knowingly and willfully violated the TWEA and the CACRs.” The primary defense was that Stefan Brodie, the president and CEO of Bro-Tech, consulted with attorneys at various times during the alleged conspiracy and informed Bro-Tech’s sales force that any sales to Cuba had to be shipped from the United Kingdom. In its verdict, the jury convicted all three men and the corporation of a conspiracy charge, but acquitted two of the men on a significant number of underlying counts. But McLaughlin later overturned the verdict against Stefan Brodie, entering a judgment of acquittal for him on the conspiracy charge — the only count he was convicted of. McLaughlin found there was insufficient evidence from which the jury could have concluded beyond a reasonable doubt that Stefan Brodie had knowingly and willfully participated in the conspiracy. But McLaughlin later overturned the verdict count he was convicted of. McLaughlin found there was insufficient evidence from which the jury could have concluded beyond a reasonable doubt that Stefan Brodie had knowingly and willfully participated in the conspiracy. The government’s evidence, McLaughlin said, showed that Brodie did not know it was illegal under the CACRs for the British branch of his company, Purolite International, to trade with Cuba if the company incorporated in the United States was not involved. She also found that, to the extent the government had proven that the U.S. entity was actually involved in particular transactions, the evidence also showed that Stefan Brodie was unaware of such involvement. In a later ruling, McLaughlin said that while the evidence was strong enough to support the convictions of Donald Brodie, the corporation and Sabzali, all of the defendants deserved a new trial due to the inflammatory remarks in the government’s closing arguments. Last year, Donald Brodie and the corporation pleaded guilty. The Brodie brothers also filed a legal malpractice suit against Morgan Lewis & Bockius in which they claim that their criminal prosecutions stemmed from the bad advice given to them by Morgan Lewis partner Edward S.G. Dennis, a former U.S. attorney and top official in the Justice Department. The suit, filed in Philadelphia Common Pleas Court, alleges that Stefan Brodie sought advice from Morgan Lewis in 1993 on whether a British branch of the company, Purolite International, should cut off trade with Cuba. The suit says Morgan Lewis advised Brodie to continue trading and said that halting trade between Britain and Cuba, if done to comply with the American embargo, would violate British law. In its formal answer to the suit, Morgan Lewis contended that the Brodies didn’t follow the trade policy advice that Morgan Lewis attorneys had provided in a 1993 memo or their advice that there should be no U.S. involvement in transactions with Cuba. “Any harm to plaintiffs was the result of their own conduct, as acknowledged by the company and plaintiff Don Brodie in pleading guilty to knowingly and willfully violating” federal law and regulations, the document states. Stefan Brodie’s acquittal by McLaughlin has now been overturned by the 3rd Circuit. Brodie argued on appeal that the evidence at his trial was “consistent with the fact that [he] did not know that any transactions with Cuba were being carried out unlawfully through the United States. Rather, he believed that all transactions with Cuba were being handled lawfully by entities in Canada and the United Kingdom without United States involvement.” But Fisher found that prosecutors presented several critical pieces of evidence that contradicted Brodie’s defense, and that the jury could have relied on that evidence in deciding to convict. Fisher, in an opinion joined by 3rd Circuit Judges Theodore A. McKee and Edward R. Becker, rejected Brodie’s argument that the trading was legal because it was conducted by foreign branches of the Brodies’ company. “To the extent that the defendant … believed it was lawful for the U.K. entity to trade with Cuba so long as the U.S. entity was not involved, his interpretation of the law was incorrect, because as written, the CACRs prohibit entities which are ‘owned or controlled’ by American citizens from trading with Cuba,” Fisher wrote. But Fisher found it was unnecessary to tackle the vexing legal question of whether such a mistaken understanding would negate a finding of specific intent and support the acquittal. Instead, viewing all the evidence and drawing reasonable inferences in the government’s favor, Fisher found that “a reasonable jury could find that [Stefan Brodie] actually knew of, or was willfully blind to, the involvement of the U.S. entity in the transactions.” Assistant U.S. Attorney Joseph Poluka argued that since Stefan Brodie was president of the company, the jury had the right to infer that he knew of the sales to Cuba, and that the U.S. entity was involved in those sales. Fisher agreed, finding that McLaughlin, in refusing to give any weight to that evidence, had “usurped the role of the jury.” “In our view, it would be reasonable for a jury to give weight — indeed, substantial weight — to the fact that the defendant was the president of The Bro-Tech Corp.; this, in turn, would support the critical inference that he knew of the sales to Cuba and of the U.S. entity’s involvement therein,” Fisher wrote. Fisher noted that while Bro-Tech Corp. had offices and operations in various parts of the world, it was not a large company. As a result, Fisher said, the $2.1 million illegal sales to Cuba “were not so minuscule as to reasonably escape the notice of the company’s president.” The evidence also showed, Fisher said, that Stefan Brodie was “an active participant in company affairs” and not “a corporate figurehead whom a jury might more readily infer was ignorant of the actions of his fellow officers and subordinates.” Fisher also found there was evidence that Stefan Brodie had participated in using “code words” to avoid disclosing that the company was trading with Cuba. “The government evidence shows a corporate culture pervaded by the use of code words for Cuba, and such naturally gives rise to an inference of concealment,” Fisher wrote.

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