United States of America v. Mark Cocchiola

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 08-1976
UNITED STATES OF AMERICA
v.
MARK COCCHIOLA,
Appellant
No. 08-2116
UNITED STATES OF AMERICA
v.
STEVEN VENECHANOS,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Nos. 2-05-cr-00533-1, 2-05-cr-00533-2)
District Judge: Honorable Stanley R. Chesler
Submitted Under Third Circuit LAR 34.1(a)
December 14, 2009
Before: SLOVITER, JORDAN and WEIS, Circuit Judges
(Filed December 23, 2009 )

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The District Court had jurisdiction under 18 U.S.C. § 3231.1
This court has jurisdiction over the challenges to defendants’
convictions under 28 U.S.C. § 1291, and over Cocchiola’s
challenge to his sentence under 18 U.S.C. § 3742(a).
2
OPINION
SLOVITER, Circuit Judge.
Appellants Mark Cocchiola and Steven Venechanos challenge procedural aspects
of their criminal trial in which they were convicted by a jury of conspiring to commit and
committing multiple financial crimes. Cocchiola also challenges the sentence he received
from the District Court. We will affirm.1
I.
Cocchiola and Venechanos (“defendants”) were key players in Suprema
Specialties, Inc. (“Suprema”), a company that manufactured and processed cheese for sale
to supermarkets, other retail establishments, and food service industry distributors.
Suprema was a New York corporation with headquarters in Paterson, New Jersey, and
with wholly-owned subsidiaries in several locations throughout the United States.
The superseding indictment details an intricate scheme in which defendants, along
with others, inflated Suprema’s sales and misrepresented its inventory through, among
other things, fraudulent accounting practices and mislabeled products. As a result,
Suprema was able to borrow large sums of money from Fleet Bank (now Bank of

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3
America) and the other banks that participated in its “revolving loan agreements.”
Venechanos App. at 57.
In addition, defendants made false representations to the Securities and Exchange
Commission (“SEC”) in the annual and quarterly reports that Suprema filed. These
misrepresentations were also passed on to investors and other members of the public
through press releases. Lastly, in connection with a November 2001 Suprema stock
offering, defendants made false representations to the SEC, some of which were
disseminated to potential investors.
Approximately three months after this stock offering, Suprema filed a voluntary
petition for reorganization under Chapter 11 of the Bankruptcy Code, which was soon
converted to a Chapter 7 liquidation. Bank of America filed documentation to prove that
it lost over $75 million from the revolving loan agreement. Suprema’s investors were
also victims of the scheme, as Suprema stock became almost worthless after the company
liquidated.
The Government charged defendants with conspiracy, seventeen counts of bank
fraud, nine counts of making false statements in reports required to be filed with the SEC,
six counts of wire fraud, and four counts of mail fraud. Cocchiola was charged with an
additional count of wire fraud.
Both defendants pled not guilty and proceeded to trial. The jury heard twenty-two
days of testimony and convicted both defendants on all counts. The District Court

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Venechanos states in his brief that he “joins with and2
incorporates each and every issue contained in the . . . brief
submitted on behalf of . . . Cocchiola.” Venechanos Br. at 48.
However, he did not submit a transcript from his sentencing
hearing, his PSR, or a reply brief with a discussion of sentencing.
Assessing whether he may be entitled to re-sentencing is
impossible on the record before us. See United States v. Harris,
932 F.2d 1529, 1533 (5th Cir. 1991) (defendants cannot join
arguments of co-defendants on appeal where determinations are
fact specific as to each). Accordingly, we agree with the
Government that Venechanos waived his ability to challenge his
sentence.
Cocchiola filed a letter with this court under Federal Rule3
of Appellate Procedure 28(i), in which he joined most of the
assertions in Venechanos’ brief. Cocchiola declined, however, to
join Venechanos’ arguments concerning prosecutorial misconduct.
4
sentenced Venechanos to 96 months imprisonment and Cocchiola to 180 months
imprisonment. Defendants jointly challenge several rulings made at trial. Cocchiola
challenges his sentence. Also, Venechanos asserts that he was deprived of a fair trial due2
to misconduct by the prosecutors.3
II.
Because we write primarily for defendants, who are well aware of the relevant
facts, we refer to those facts only as necessary in discussing their contentions.
Defendants contend that they were denied a fair trial when the District Court granted the
Government’s motion in limine to exclude defendants’ expert witness, Frederick Martens,
who was to testify on “(1) the structure of an organized crime family within the Italian
mafia, (2) the elements of a mafia bust-out scheme, and (3) [a co-conspirator’s]

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5
connection to the Bonanno crime family.” Cocchiola App. at 119-20. Martens’ proposed
testimony would have explained to the jury the way in which “bust-out” schemes
commonly involve infiltration by criminals into “position[s] of authority within a
legitimate company to implement a fraudulent billing and invoicing scheme” with the
assistance of various shell companies, for the purpose of looting the assets of the
company and driving it into bankruptcy. Cocchiola App. at 120. Defendants assert that
this testimony would have been significant because the fraud that occurred at Suprema
was a classic “bust-out” scheme perpetrated without the knowledge of Cocchiola and
Venechanos. Defendants argued that expert testimony about “bust-out” schemes
generally would be “helpful to the jury in terms of understanding” that defendants were
ignorant of the wrongdoing at Suprema. Cocchiola App. at 157.
The Government filed a motion in limine to exclude Martens’ testimony, arguing
that there was no evidentiary basis to connect the case to organized crime, and that, in any
event, testimony about “bust-out” schemes was irrelevant to the ultimate issue, which was
defendants’ knowledge of and participation in the fraudulent scheme. The Government
further argued that even if Martens’ proposed testimony were relevant, its probative value
would be substantially outweighed by its potential to confuse the jury.
The District Court granted the Government’s motion in limine, referring to Federal
Rule of Evidence 702. It first determined that there was “insufficient evidence and,
indeed, no admissible evidence which establishe[d] any relationship between the subject

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6
matter of [the] lawsuit and organized crime.” Cocchiola App. at 3-4. The District Court
also concluded that Martens’ proposed testimony would not “assist the trier of fact to
understand the evidence or to determine a fact in issue,” Cocchiola App. at 6, and that
such testimony would likely confuse the jury.
Defendants argue that the District Court’s ruling was erroneous, and that the
unjustness of the decision was enhanced when the Government “exploited [the] lack of
evidence,” Cocchiola Br. at 25, by stating to the jury in its rebuttal summation, “[t]here’s .
. . no evidence really to tell us what a bust-out is . . . .” Cocchiola App. at 360. The
admission of expert testimony vel non falls within the broad discretion of the trial court,
and we will reverse only for an abuse of discretion. See Pineda v. Ford Motor Co., 520
F.3d 237, 243 (3d Cir. 2008).
We have no basis to disturb the District Court’s ruling. We agree with the District
Court that a description of “bust-out” schemes generally would be unlikely to affect
whether the jury believed defendants were either guilty participants in such a scheme or
unwitting scapegoats. Also, the District Court’s concern with the potential for confusion
that testimony about the mafia could engender was reasonable.
The argument that the Government exploited the lack of evidence on “bust-out”
schemes is also unavailing because even without Martens’ testimony, defendants
provided evidence and vehemently argued that defendants may have been victims of a
“bust-out” scheme. For example, defendants made clear from the outset that they

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In United States v. Fioravanti, this court held that a jury4
instruction is unduly coercive when it encourages jury members
who are in the minority during deliberations to reconsider their
views in light of their minority status. 412 F.2d 407, 416 (3d Cir.
1969).
We instead urged district courts to employ the following
charge:
It is your duty, as jurors, to consult with one another, and to
deliberate with a view to reaching an agreement if you can
do so without violence to individual judgment. Each of you
must decide the case for yourself, but do so only after an
impartial consideration of the evidence in the case with your
fellow jurors. In the course of your deliberations, do not
hesitate to re-examine your own views, and change your
opinion, if convinced it is erroneous. But do not surrender
your honest conviction as to the weight or effect of evidence
solely because of the opinion of your fellow jurors, or for
the mere purpose of returning a verdict.
Id. at 420 n. 32 (quoting W. Mathes & E. Devitt, Federal Jury
Practice and Instructions, § 79.01 (1965)).
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intended to prove that the fraud was hidden from them as much as it was hidden from the
banks and investors. Defendants repeatedly questioned witnesses about the roles of
others in the fraud. After hearing such evidence and argument, the jurors were qualified
to determine, without the aid of expert testimony, whether the fraud was driven by
outsiders and thus whether defendants’ theory of the case was credible.
Defendants next contend that the District Court abused its discretion in giving a
Fioravanti instruction in response to a note from the jurors to the Court stating that, after
deliberating for five days, they were “hopelessly deadlocked.” Cocchiola App. at 386.4

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8
After receiving the note, the District Court summoned the parties to the courtroom to
discuss their respective positions. Defense counsel moved for a mistrial. They argued
that the note made clear “that further deliberations would not move [the jury’s]
position[].” Cocchiola App. at 11.
Unsurprisingly, the Government disagreed. It suggested in lieu of declaring a
mistrial that the Court give a supplemental Fioravanti charge, which the Court did. Even
if defense counsels’ failure to object was not a waiver of their objections, see United
States v. Graham, 758 F.2d 879, 883 (3d Cir. 1985), defendants have no cause for
complaint. The supplemental instruction the District Court gave was in essence identical
to Third Circuit Model Criminal Jury Instruction § 9.05. That model instruction was
drafted after Fioravanti and takes into consideration the concerns regarding jury coercion
this court articulated in that case. See United States v. Brennan, 326 F.3d 176, 193 (3d
Cir. 2003) (holding that a supplemental instruction similar to that in the instant case did
not “even [come] close to being coercive.”).
Both defendants challenge the District Court’s “willful blindness” instruction
which allowed the jury to convict if it believed that the “evidence prove[d] beyond a
reasonable doubt that a defendant deliberately closed his eyes to what would otherwise
have been obvious to him.” Venechanos App. at 127. Defendants contend that there was
insufficient evidence to warrant such an instruction and that the government’s theory was
that defendants were guilty based on their direct knowledge of and participation in

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The instructions included the following:5
[Y]ou may not find that a defendant knew that these
representations about Suprema were false if you find only
that the defendant . . . should have known that these
representations were false or that a reasonable person would
have known of a high probability of this fact. It is not
enough that a defendant may have been stupid or foolish or
may have acted out of inadvertance or accident. You must
find that the defendant . . . was actually aware of a high
probability that these representations about Suprema were
false, deliberately avoided learning about it and did not
actually believe they were true.
Venechanos App. at 128
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Suprema’s fraudulent activities. The defendants further assert that giving such an
instruction erroneously “permits a civil standard of mental state such as negligence” to
suffice for a criminal conviction. Venechanos Br. at 39. We disagree.
The Government did seek to prove actual knowledge by defendants, but it also
presented evidence that could allow a jury to infer that defendants deliberately ignored the
fraudulent dealings occurring at Suprema. The record before us thus contains sufficient
evidence to warrant a willful ignorance instruction. Moreover, the Court’s instruction
cautioned the jury not to convict based on a mens rea of negligence.5
In another claim that the District Court abused its discretion in connection with the
jury instructions, defendants challenge the failure to give their requested instruction that if
the jury found that they acted in subjective good faith, they must be found not guilty. The
Government objected to this requested instruction, arguing that the instructions as a

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whole incorporated a description of the mens rea the jury was required to find in order to
convict. The District Court agreed, finding that “in the context of this case” giving a
good faith instruction would not “make [the necessary intent] any clearer, and in fact,
[would] end[] up being pure surplus.” Supp. App. at 3728a-27. We agree.
In United States v. Leahy, we addressed this issue and held that “a district court
does not abuse its discretion in denying a good faith instruction where the instructions
given already contain a specific statement of the government’s burden to prove the
elements of a ‘knowledge’ crime.” 445 F.3d 634, 651 (3d Cir. 2006) (citing United States
v. Gross, 961 F.2d 1097, 1102-03 (3d Cir. 1992)). The jury instructions in this case
defined “knowingly” – clarifying that acts done “because of . . . ignorance or mistake”
could not suffice for a conviction. Supp. App. at 4235-36. Because this issue was
squarely presented in Leahy, the District Court’s refusal to provide a “good faith”
instruction under governing precedent was not an abuse of discretion.
Next, Venechanos argues that he was deprived of a fair trial because the
Government did not provide defendants material from the hard drive of one of the
Government’s most important witnesses, Arthur Christensen. Christensen had deleted
“anything that was personal in [his] computer” in mid-December 2001 – more than a
month before the Government obtained access to his computer. Supp. App. at 1771.
Venechanos argues that the prosecution had an affirmative obligation under Brady v.
Maryland, 373 U.S. 83 (1963), to expend the resources necessary to “see what exactly

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Venechanos complains that the Government’s failure to6
disclose whatever evidence was deleted from Christensen’s hard
drive hindered his ability to cross examine Christensen. But this is
unconvincing because Venechanos’ counsel questioned
Christensen at length about deleting files from his hard drive.
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had been deleted” so as to determine whether it contained exculpatory evidence.6
Venechanos Br. at 29. This contention lacks merit.
Brady and its progeny establish that a criminal defendant’s due process rights are
violated when prosecutors fail to provide defense counsel with evidence that is material
either to the defendant’s guilt or punishment. See Brady, 373 U.S. at 87; see also United
States v. Agurs, 427 U.S. 97 (1976); United States v. Perdomo, 929 F.2d 967, 969-70 (3d
Cir. 1991). However, the requirement that the Government disclose the material evidence
in its possession is fundamentally different from placing an affirmative obligation on
prosecutors to ferret out any potentially exculpatory evidence. Cf. United States v.
Graham, 484 F.3d 413, 416-18 (6th Cir. 2007) (government has no duty to investigate
evidence under control of its cooperating witness); United States v. Merlino, 349 F.3d
144, 154 (3d Cir. 2003) (no duty to learn information possessed by governmental
agencies with no involvement in investigation). Venechanos did not seek the personal
materials deleted from Christensen’s computer before or during trial, and prosecutors had
no reason to believe such materials would have been relevant to Venechanos’ guilt or
punishment. Indeed, Christensen testified that all the deleted material was personal and
Venechanos never explained the way in which this evidence may have been exculpatory.

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The District Court sentenced both defendants under the7
1998 version of the Guidelines under this court’s decision in
United States v. Bertoli, 40 F.3d 1384, 1404 (3d Cir. 1994). That
decision is not at issue on this appeal. Accordingly, all citations to
the Guidelines in this opinion are to the 1998 Manual.
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See, e.g., United States v. Rouse, 410 F.3d 1005, 1010 (8th Cir. 2005) (holding that there
is no Brady violation where “defendants can only speculate” that the withheld evidence
contained exculpatory information). Under these circumstances, we decline to establish
the novel proposition that Brady requires the Government to forensically reconstruct
material deleted from a hard drive before prosecutors have access to the computer.
We turn to Cocchiola’s challenge to the District Court’s calculation of his
sentence. Cocchiola argues that the District Court erred in imposing an eighteen-level
upward adjustment based on the finding that the victims’ monetary loss associated with
his offenses amounted to over $80 million, and imposing a four-level upward adjustment
based on the finding that he derived over $1,000,000 in gross proceeds from an offense
which affected a financial institution.7
The District Court calculated the $80 million sum by adding Bank of America’s
loss of $75,215,510 in the revolving loan agreement to the $43 million loss to investors
after Suprema declared bankruptcy just months after the 2001 stock offering. The District
Court stated that, because it could safely assume that at least $5 million of the loss to
investors was caused by defendants’ unlawful conduct, it did not need “to engage in
anything resembling analysis of loss causation as might be required in civil [10b-5]

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13
litigation.” Supp. App. at 4417.
Cocchiola does not dispute the amount of loss, but rather the portion of that loss
which is attributable to criminal acts. He argues “[o]nly money the banks lost from the
portions of loans which were fraudulently obtained should have been used to determine
the upward adjustment for loss under USSG § 2F1.1(b)(1)” and “only that portion of the
loss which was ‘unlawfully taken’ may be used to determine the offense level . . . .”
Cocchiola Br. at 54, 57. We disagree.
The banks’ net loss was undisputedly over $75 million in the loan transaction, and
there is evidence that the banks would not have provided loans to Suprema but for the
fraudulent activity. Cocchiola asserts that “there was no evidence concerning how much
of that $75 million actually involved money that had been ‘unlawfully taken.’” Cocchiola
Br. at 52-53. Even assuming that Suprema entered into the revolving loan agreement
before fraudulent activity began, the fraud went on for approximately eight years.
Cocchiola offered no information by which the District Court could decipher what part of
the $75 million was attributable to legitimately induced loans. Accordingly, under the
Sentencing Guidelines, the District Court’s loss calculation was not error. See U.S.S.G. §
2F1.1 cmt. n.9 (stating that, for offenses involving fraud, “the loss need not be determined
with precision . . . . [t]he court need only make a reasonable estimate of the loss, given the
available information.”) (emphasis added).
As for the $43 million securities loss, the District Court was correct to conclude

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that the 2001 stock offering would never have occurred but for the fraud. Mitchell
Pinheiro, an executive at Janney Montgomery, the investment firm which underwrote that
stock offering, testified that his firm “would not have performed the underwriting for”
Suprema in 2001 had it known of the fraud. Supp. App. at 568.
Finally, Cocchiola argues that his sentence was too harsh because he did not derive
more than $1 million in gross receipts from his offense, as some of the proceeds were not
“attributable to the fraud.” Cocchiola Br. at 62. The definition of “gross receipts from
the offense” under U.S.S.G. §2F1.1(b)(7)(B) “applies ‘even if the defendant receives the
million dollars in an indirect manner.’” United States v. Bennett, 161 F.3d 171, 192 (3d
Cir. 1998) (quoting United States v. Monus, 128 F.3d 376, 397 (6th Cir. 1997)).
Cocchiola collected $2.5 million from the sale of Suprema stock, the price of
which was enhanced by bank fraud. Moreover, he received a salary of $250,000 per year
for fiscal years 1999-2001 and bonuses totaling over $1.5 million for those years, all from
a company that was supported largely by illegal loans. Cocchiola seems to argue that the
District Court was required to parse each of his gross receipts to determine its precise
source. He cited and we found no decisions requiring as much.
III.
For the above-stated reasons, we will affirm the District Court’s judgments and
sentence.

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