Petition for Writ of Certiorari — Michael Hild, Petitioner v. United States
Supreme Court briefMar 23, 2026
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No. ______
IN THE
Supreme Court of the United States
_________
MICHAEL HILD,
Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.
________
On Petition for a Writ of Certiorari to the
United States Court of Appeals for the Second Circuit
________
PETITION FOR A WRIT OF CERTIORARI
________
BRIAN A. JACOBS
Counsel of Record
JOSHUA P. BUSSEN
MORVILLO ABRAMOWITZ GRAND
IASON & ANELLO P.C.
565 Fifth Avenue
New York, NY 10017
(212) 856-9600
bjacobs@maglaw.com
Counsel for Petitioner
i
QUESTIONS PRESENTED
Whether the framework from Cuyler v. Sullivan,
446 U.S. 335 (1980)—where this Court held that a
defendant alleging ineffective assistance of counsel
based on a lawyer’s conflict of interest need not
demonstrate outcome-determinative prejudice to
obtain relief—applies only when a defense lawyer
represents multiple clients with conflicting interests,
or instead applies to other conflicts, such as personal
conflicts of interest?
If the Sullivan framework applies to personalinterest conflicts, whether—as endorsed by the
Second Circuit below—a defendant seeking to prove
an actual conflict must show that his counsel
possessed a secret desire for conviction?
ii
LIST OF PARTIES AND PROCEEDINGS
Petitioner is Michael Hild. Respondent is the United
States.
Related proceedings:
United States of America v. Hild, No. 23-6136CR, U.S. Court of Appeals for the Second
Circuit. Judgment entered July 30, 2025.
United States v. Hild, No. 19-CR-602 (RA), U.S.
District Court for the Southern District of New
York. Judgment entered Jan. 31, 2023.
iii
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ....................................... i
LIST OF PARTIES AND PROCEEDINGS ............... ii
TABLE OF CONTENTS ........................................... iii
TABLE OF APPENDICES ....................................... vi
TABLE OF CITED AUTHORITIES ....................... viii
PETITION FOR A WRIT OF CERTIORARI .............1
OPINIONS BELOW ....................................................1
JURISDICTIONAL STATEMENT .............................1
INTRODUCTION ........................................................1
CONSTITUTIONAL PROVISIONS INVOLVED ......6
STATEMENT OF THE CASE ....................................7
I.
LEGAL FRAMEWORK ................................7
II.
FACTUAL BACKGROUND .........................8
A. Live Well Financial and Mr. Hild’s
Conviction ..............................................8
B. Trial Counsel’s Undisclosed Conflict
Comes to Light .....................................10
iv
III.
THE PROCEEDINGS BELOW .................14
A. The District Court’s Decision ..............14
B. The Second Circuit’s Decision .............17
REASONS FOR GRANTING THE WRIT ................18
I.
THE SECOND CIRCUIT’S DECISION
DEEPENS A LONGSTANDING SPLIT
AMONG FEDERAL AND STATE
COURTS .....................................................18
A. Federal and State Courts Are Deeply
Divided .................................................20
B. The Second Circuit Endorses a New
Standard ...............................................28
II.
THE DECISION BELOW IS WRONG ......30
A. The Second Circuit’s Decision
Contradicts Sullivan ............................30
B. Sullivan Should Govern All Conflicts .33
C. Mr. Hild Satisfied the Sullivan
Standard ...............................................36
III.
THE QUESTIONS PRESENTED ARE
EXCEPTIONALLY IMPORTANT .............37
A. The Standard Endorsed by the
Second Circuit Has Great Practical
Significance for Defendants.................37
v
B. The Second Circuit’s Decision
Creates Perverse Incentives ................38
C. Potential Negative Ramifications of
the Second Circuit’s Standard Are
Far Reaching ........................................40
IV.
THIS CASE IS AN IDEAL VEHICLE .......41
A. The Issue Was Squarely Presented in
a Counseled Appeal .............................41
B. The District Court’s Rejection of
Dusing’s
Affidavit
Eliminates
Factual Disputes ..................................42
C. The Opportunity for Review on Direct
Appeal Is Rare......................................42
CONCLUSION ..........................................................44
vi
TABLE OF APPENDICES
Page
APPENDIX A — AMENDED SUMMARY
ORDER OF THE UNITED STATES
COURT OF APPEALS FOR THE SECOND
CIRCUIT, FILED OCTOBER 15, 2025.............. 1a
APPENDIX B — OPINION OF THE UNITED
STATES COURT OF APPEALS FOR THE
SECOND CIRCUIT, FILED JULY 30, 2025 ... 11a
APPENDIX C — SUMMARY ORDER OF THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT, DECIDED
JULY 30, 2025................................................... 39a
APPENDIX D — ORDER OF THE UNITED
STATES DISTRICT COURT, SOUTHERN
DISTRICT OF NEW YORK, FILED
FEBRUARY 27, 2023 ........................................ 49a
APPENDIX E — OPINION AND ORDER OF
THE
UNITED
STATES
DISTRICT
COURT, SOUTHERN DISTRICT OF NEW
YORK, FILED DECEMBER 7, 2022................ 54a
APPENDIX F
—
ORDER
DENYING
REHEARING OF THE UNITED STATES
COURT OF APPEALS FOR THE SECOND
CIRCUIT, FILED FEBRUARY 3, 2026 ......... 140a
vii
APPENDIX G — ORDER OF THE UNITED
STATES COURT OF APPEALS FOR THE
SECOND CIRCUIT, FILED FEBRUARY 3,
2026 ................................................................. 142a
APPENDIX H
—
ORDER
DENYING
REHEARING OF THE UNITED STATES
COURT OF APPEALS FOR THE SECOND
CIRCUIT, FILED JANUARY 30, 2026 .......... 143a
APPENDIX I
—
ORDER
DENYING
REHEARING OF THE UNITED STATES
COURT OF APPEALS FOR THE SECOND
CIRCUIT, FILED DECEMBER 22, 2025 ...... 145a
APPENDIX J
—
ORDER
DENYING
HEARING OF THE UNITED STATES
COURT OF APPEALS FOR THE SECOND
CIRCUIT, FILED OCTOBER 15, 2025.......... 147a
APPENDIX K — JUDGMENT OF THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT, FILED
JULY 30, 2025................................................. 149a
viii
TABLE OF CITED AUTHORITIES
CASES
Page(s)
Acosta v. State,
233 S.W.3d 349 (Tex. Crim. App. 2007) ............... 26
Blackmon v. United States,
146 A.3d 1074 (D.C. 2016) .................................... 24
Bright v. State,
No. SC2023-1735, 2026 WL 532058 (Fla. Feb. 26,
2026) ...................................................................... 24
Brooks v. State,
340 So. 3d 410 (Ala. Ct. Crim. App. 2020)............ 23
Burger v. Kemp,
483 U.S. 776 (1987) ................................................. 8
Chester v. Comm’r of Pa. Dep’t of Corr.,
598 F. App’x 94 (3d Cir. 2015) .............................. 21
Commonwealth v. Cousar,
154 A.3d 287 (Pa. 2017) ........................................ 23
Cruz v. United States,
188 F. App’x 908 (11th Cir. 2006) ......................... 21
ix
Cuyler v. Sullivan,
446 U.S. 335 (1980) ............ 2, 7, 8, 16, 30, 32, 35, 36
Echols v. State,
127 S.W.3d 486 (Ark. 2003) .................................. 24
Emmons v. Bryant,
864 S.E.2d 1 (Ga. 2021) ......................................... 24
Holloway v. Arkansas,
435 U.S. 475 (1978) ..............................31, 32, 33, 37
In re Dusing,
701 S.W.3d 393 (Ky. 2024) .................................... 14
In re Order on Prosecution of Criminal Appeals by
Tenth Judicial Circuit Public Defender,
561 So. 2d 1130 (Fla. 1990) ................................... 40
Johnson v. State,
No. W2014-00053-CCA-R3-PC, 2014 WL 7401989
(Tenn. Crim. App. Dec. 29, 2014).......................... 26
Lafler v. Cooper,
566 U.S. 156 (2012) ............................................... 35
Lomax v. State,
163 S.W.3d 561 (Mo. Ct. App. 2005) ..................... 25
Massaro v. United States,
538 U.S. 500 (2003) ............................................... 43
x
Mickens v. Taylor,
535 U.S. 162 (2002) ........................ 2, 5, 8, 32, 34, 35
Millette v. State,
183 A.3d 1124 (R.I. 2018) ...................................... 26
Noe v. United States,
601 F.3d 784 (8th Cir. 2010) ................................. 22
Off. of Pub. Advoc. v. Superior Ct.,
566 P.3d 235 (Alaska 2025)................................... 40
Pennsylvania v. Finley,
481 U.S. 551 (1987) ............................................... 43
People v. Adams,
No. 262201, 2006 WL 2924602 (Mich. Ct. App. Oct.
12, 2006)................................................................. 25
People v. Doolin,
198 P.3d 11 (Cal. 2009) ......................................... 23
People v. Garcia,
116 N.E.3d 1082 (Ill. App. Ct. 2018)..................... 25
People v. Lopez,
553 P.3d 203 (Colo. 2024) ...................................... 24
Reynolds v. Hepp,
902 F.3d 699 (7th Cir. 2018) ................................. 27
Rowland v. Chappell,
876 F.3d 1174 (9th Cir. 2017) ............................... 20
xi
State v. Alvarado,
481 P.3d 737 (Idaho 2021)..................................... 23
State v. Carlson,
440 P.3d 364 (Alaska Ct. App. 2019) .........19, 23, 24
State v. Fontenelle,
227 So. 3d 875 (La. Ct. App. 2017) ....................... 25
State v. Martinez,
297 P.3d 653 (Utah Ct. App. 2013) ....................... 26
State v. Oteng,
No. 19AP-763, 2020 WL 7706789 (Ohio Ct. App.
2020) ...................................................................... 26
State v. Phillips,
711 S.E.2d 122 (N.C. 2011) ................................... 23
State v. Regan,
177 P.3d 783 (Wash. Ct. App. 2008) ..................... 27
Strickland v. Washington,
466 U.S. 668 (1984) ................ 1, 2, 4, 5, 7, 32, 33, 38
Taylor v. State,
51 A.3d 655 (Md. 2012) ................................... 19, 25
Tormasi v. Att’y Gen. New Jersey,
No. 23-1452, 2025 WL 688925 (3d Cir. Mar. 4,
2025) ...................................................................... 27
xii
Tueros v. Greiner,
343 F.3d 587 (2d Cir. 2003) ................................... 28
United States v. Cronic,
466 U.S. 648 (1984) ................................................. 7
United States v. DeCologero,
530 F.3d 36 (1st Cir. 2008) .................................... 22
United States v. Fuller,
312 F.3d 287 (7th Cir. 2002) ................................. 21
United States v. Garza,
429 F.3d 165 (5th Cir. 2005) ................................. 20
United States v. Hild,
147 F.4th 103 (2d Cir. 2025) ................................... 1
United States v. Hild,
644 F. Supp. 3d 7 (S.D.N.Y. 2022) .......................... 1
United States v. Hild,
No. 23-6136-CR, 2025 WL 2924205 (2d Cir. Oct. 15,
2025) ........................................................................ 1
United States v. Livingston,
425 F. Supp. 2d 554 (D. Del. 2006) ....................... 22
United States v. Malpiedi,
62 F.3d 465 (2d Cir. 1995) ..................................... 28
United States v. Rivernider,
828 F.3d 91 (2d Cir. 2016) ..................................... 28
xiii
United States v. Stitt,
441 F.3d 297 (4th Cir. 2006) ........................... 21, 35
United States v. Stitt,
459 F.3d 483 (4th Cir. 2006) ................................. 21
United States v. Tucker,
12 F.4th 804 (D.C. Cir. 2021) ................................ 22
United States v. Williamson,
859 F.3d 843 (10th Cir. 2017) ......................... 19, 22
United States v. Wright,
745 F.3d 1231 (D.C. Cir. 2014) ............................. 22
Whiting v. Burt,
395 F.3d 602 (6th Cir. 2005) ................................. 20
Wood v. Georgia,
450 U.S. 261 (1981) ........................................... 8, 33
Zapata v. Commonwealth,
516 S.W.3d 799 (Ky. 2017) .................................... 25
xiv
STATUTES & RULES
28 U.S.C. § 1254 ......................................................... 1
28 U.S.C. § 2253 ....................................................... 43
Federal Rule of Criminal Procedure 29 ................... 14
Federal Rule of Criminal Procedure 33 ................... 14
CONSTITUTIONAL PROVISIONS
U.S. Const. amend. VI ............................................ 1, 6
OTHER AUTHORITIES
ABA Model Rule 1.7 ................................................. 38
N.Y. Rules of Prof’l Conduct R. 1.7 .......................... 38
PETITION FOR A WRIT OF CERTIORARI
Michael Hild respectfully petitions for a writ of
certiorari to review the judgment of the United States
Court of Appeals for the Second Circuit.
OPINIONS BELOW
The Second Circuit’s Amended Summary Order
(Pet. App. 1a–10a) is reported at United States v. Hild,
No. 23-6136-CR, 2025 WL 2924205 (2d Cir. Oct. 15,
2025). The Second Circuit’s Opinion (Pet. App. 11a–
38a) is reported at United States v. Hild, 147 F.4th
103 (2d Cir. 2025). The District Court’s opinion and
order denying Mr. Hild’s motions for a judgment of
acquittal, or, in the alternative, for a new trial (Pet.
App. 54a–139a) is reported at United States v. Hild,
644 F. Supp. 3d 7 (S.D.N.Y. 2022). The Second
Circuit’s denial of panel rehearing and rehearing en
banc (Pet. App. 140a–141a) is unreported.
JURISDICTIONAL STATEMENT
The judgment of the Second Circuit was entered on
July 30, 2025. The Second Circuit denied panel and
en banc rehearing on February 3, 2026. This Court
has jurisdiction pursuant to 28 U.S.C. § 1254(1).
INTRODUCTION
Among “the most basic of counsel’s duties” is “the
duty of loyalty.” Strickland v. Washington, 466 U.S.
668, 692 (1984). The Sixth Amendment guarantees
criminal defendants the right to the assistance of
counsel. U.S. Const. amend. VI. This guarantee
2
includes the right to conflict-free counsel. An attorney
must zealously advocate their client’s interests alone.
When a lawyer violates this tenet, any conviction
cannot “be regarded as fundamentally fair.” Mickens
v. Taylor, 535 U.S. 162, 167 n.1 (2002).
This is a case in which the defendant’s trial counsel
concealed a personal-interest conflict—his own
contentious family court litigation where he was a
defendant—that caused him to cut short the
defendant’s criminal trial, including by declining to
call certain witnesses. Despite finding counsel’s
conduct “deeply troubling” and declining to credit his
self-serving denials, the District Court held that no
“actual conflict” existed under Cuyler v. Sullivan, 446
U.S. 335 (1980), because counsel still wanted the
defendant acquitted. Instead, it applied the more
demanding framework of Strickland v. Washington,
466 U.S. 668 (1984), to deny relief.
Mr. Hild discovered after conviction that his lead
counsel, Benjamin Dusing, had been embroiled in
contentious Kentucky family court litigation as a
defendant throughout Mr. Hild’s trial. That litigation
resulted in findings of domestic abuse, contempt
sanctions, a seven-day jail sentence, court-mandated
psychiatric counseling, and attempted bribery of a
witness. During Mr. Hild’s trial, Dusing—who later
threatened to “blow up” a judge, staff attorneys, and
opposing counsel—was juggling multiple filings and
deadlines in his personal legal battles where critical
hearings were scheduled for May 4, 2021. To ensure
Mr. Hild’s trial concluded before that date, Dusing
3
rushed through the defense: he declined to call expert
witnesses, introduced virtually no defense exhibits,
and called only one witness other than Mr. Hild.
Dusing’s paralegal later confirmed that Dusing
stated, while planning the defense case, that he
“wouldn’t be able to make his [May 4 family court]
hearing if we call all these witnesses.” After rushing
through the case, the jury returned its guilty verdict
one business day before Dusing’s Kentucky hearing.
Dusing was subsequently suspended from the practice
of law in both Kentucky and Ohio, with the Kentucky
Supreme Court finding “troubling and egregious”
violations including witness bribery, threats to
intimidate judicial participants, and false statements
to the court.
Despite these extraordinary circumstances—and
despite expressly declining to credit Dusing’s selfserving affidavit—the District Court denied Mr. Hild’s
motion for a new trial, holding that he could not
establish an “actual conflict of interest” under
Sullivan because Dusing and Mr. Hild both “wanted
to see Hild acquitted.” Having found no actual
conflict, the court applied Strickland’s more
demanding framework and denied relief. The Second
Circuit endorsed this decision in full, and Mr. Hild’s
44-month prison sentence was allowed to stand.
The Second Circuit’s decision widens an already
deep split over when to apply Sullivan’s presumption
of prejudice. Nearly 50 years ago, Sullivan recognized
the constitutional requirement of an attorney’s
undivided loyalty. In most ineffective assistance
4
cases, this Court imposes a high bar: defendants must
prove that their attorneys’ objectively unreasonable
performance prejudiced the outcome. Strickland v.
Washington, 466 U.S. 668 (1984). Sullivan, however,
carved out a critical exception: If “an actual conflict of
interest
adversely
affected
[the]
lawyer’s
performance,” the Court presumes the conflict
prejudiced the result. Id. at 692 (internal quotation
marks omitted).
The lower courts have been unable to apply
Sullivan uniformly. At least eight jurisdictions limit
Sullivan to its facts, applying it only when defense
counsel represents multiple clients with conflicting
interests. For all other conflicts, these courts require
defendants to meet Strickland’s higher bar. At least
twenty-two jurisdictions apply Sullivan to a wide
variety of conflicts, including when a lawyer pursues
his own interests at his client’s expense. Other
jurisdictions have recognized the split but declined to
join the fray.
The decision below—holding that a defendant
cannot establish an “actual conflict” unless he proves
his attorney harbored a secret incentive for
conviction—creates a new fracture in the
jurisprudence. No other court has imposed such a
requirement.
This Court should grant certiorari to resolve
Sullivan’s scope. Mickens v. Taylor recognized the
“open question” of Sullivan’s scope but did not decide
5
it. 535 U.S. at 176. Since then, a deep and
irreconcilable split has developed.
Courts
limiting
Sullivan
to
multiple
representations are wrong. Courts (such as the
Second Circuit) applying a higher standard than
Sullivan are wrong. This Court has explained that
conflicts permeate every decision an attorney makes,
creating a high risk of prejudice. And because
conflicts affect everything a lawyer does, “it is difficult
to measure the precise effect on the defense of
representation corrupted by conflicting interests.”
Strickland, 466 U.S. at 692. The normal Sixth
Amendment framework is “inadequate” to address
these conflicts, but Sullivan provides the “needed
prophylaxis.” Mickens, 535 U.S. at 176.
The questions presented are exceptionally
important. The District Court recognized that this
case sits at “the intersection of the Sixth Amendment
right to conflict-free counsel and the modern reality
. . . that other obligations, personal and professional,
inevitably arise.” Both the ABA Model Rules and
state ethics codes recognize that a lawyer’s “personal
interests” can create conflicts requiring disclosure and
informed consent. Yet the decision below provides no
meaningful protection for defendants whose attorneys
prioritize personal matters over their clients’ liberty.
This case is an ideal vehicle. The issue was
squarely raised and fully litigated below. The District
Court’s decision to discredit trial counsel’s affidavit
eliminates typical factual disputes that complicate
6
ineffective assistance claims, leaving a clean record
establishing the conflict caused the attorney to curtail
the defense.
This Court should grant certiorari, hold that
Sullivan applies to personal-interest conflicts and
does not require a showing that defense counsel had
an incentive for the client to be convicted, and reverse.
CONSTITUTIONAL PROVISIONS INVOLVED
The Sixth Amendment to the United States
Constitution provides:
In all criminal prosecutions, the
accused shall enjoy the right to a
speedy and public trial, by an impartial
jury of the State and district wherein
the crime shall have been committed,
which district shall have been
previously ascertained by law, and to
be informed of the nature and cause of
the accusation; to be confronted with
the witnesses against him; to have
compulsory process for obtaining
witnesses in his favor, and to have the
Assistance of Counsel for his defence.
U.S. Const. amend. VI.
7
STATEMENT OF THE CASE
I.
LEGAL FRAMEWORK
In most Sixth Amendment cases, this Court
applies the standard established in Strickland v.
Washington: A defendant is entitled to relief if
“counsel’s representation fell below an objective
standard of reasonableness” and “there is a
reasonable probability” of a different outcome “but for
counsel’s unprofessional errors.” 466 U.S. at 687–88,
694.
In other circumstances, where the risks to the
Sixth Amendment right are more pronounced, this
Court has carved out exceptions to Strickland. If an
attorney “fails to subject the prosecution’s case to
meaningful adversarial testing,” the attorney’s
deficient performance is prejudicial per se. United
States v. Cronic, 466 U.S. 648, 659 (1984). A “similar,
though more limited, presumption of prejudice”
applies to conflicts of interest. Strickland, 466 U.S. at
692. Under Sullivan, if a defendant shows that an
“actual conflict of interest adversely affected his
lawyer’s performance,” courts presume the lawyer’s
conflict prejudiced the outcome. 446 U.S. at 350. The
presumption reflects that divided loyalties create a
high risk of prejudice. It is precisely because it “is
difficult to measure the precise effect on the defense
of representation corrupted by conflicting interests”
that this presumption is needed. Strickland, 466 U.S.
at 692.
8
This Court has applied Sullivan four times. In
Sullivan, counsel simultaneously represented codefendants charged with murder in separate trials.
Sullivan, 446 U.S. at 337–38. In Wood v. Georgia, the
Court applied Sullivan to a “third-party fee
arrangement.” 450 U.S. 261, 270 (1981). And in
Burger v. Kemp, two lawyers at the same firm
represented co-defendants in separate trials. 483 U.S.
776, 783–84 (1987).
Most recently, in Mickens v. Taylor, a defendant’s
lawyer had previously represented the murder victim.
535 U.S. at 164. The Court assumed without deciding
that Sullivan applied. In dicta, the Court noted that
federal courts “applied Sullivan unblinkingly to all
kinds of alleged attorney ethical conflicts.” Id. at 174
(quotation marks omitted).
The Court noted
Sullivan’s language did not “clearly establish, or
indeed even support, such expansive application,” and
“[n]ot all attorney conflicts present” the same “high
probability of prejudice.” Id. at 175. But the Court
reserved the issue of Sullivan’s scope and labeled it
“an open question.” Id. at 176.
II.
FACTUAL BACKGROUND
A.
Live Well Financial and Mr. Hild’s
Conviction
Petitioner Michael Hild founded Live Well
Financial (“Live Well”) in 2005 and served as CEO.
9
(CA2 A-138, 151.)1 Live Well was a mortgage broker
and banker that facilitated home equity conversion
mortgages (“HECMs”), commonly known as reverse
mortgages. (Pet. App. 60a.) In around 2011, Live
Well began securitizing reverse mortgages into bonds
that could be sold to investors. (Pet. App. 59a–60a.)
In 2014, Live Well purchased a portfolio of HECMIO bonds (“interest only” bonds) for about $55 million,
financed in part through repurchase (“repo”)
agreements with lenders. (Pet. App. 60a.) The
amount of credit extended was determined by the
value of the bonds, which lenders generally valued
using a third-party pricing service called Interactive
Data Corporation (“IDC”). (Pet. App. 62a–63a.)
The government alleged that beginning in
September 2015, Mr. Hild and others at Live Well
began submitting inflated bond prices to IDC using a
methodology they called “Scenario 14.” (Pet. App.
64a.) The government’s theory was that Live Well
concealed from lenders both that it was supplying
prices to IDC and that the prices published by IDC did
not reflect market values. (Pet. App. 64a–65a.)
Mr. Hild asserted that the prices provided to IDC
were a good-faith effort to value the extraordinarily
difficult-to-price bonds. (Pet. App. 23a.) The HECM1 “CA2 A-138, 151” refers to pages A-138 and A-151 of the Second
Circuit Appendix. See Appendix, Volume 1 of 5, United States of
America v. Hild, No. 23-6136-CR (2d Cir. Filed Dec. 14, 2023),
Dkt. No. 35. Other filings on the docket of the Second Circuit are
cited as “CA2 Dkt. No. __.”
10
IO bonds were complex instruments requiring
significant expertise to value; even experts disagreed
on pricing inputs and assumptions. (CA2 A-111.) The
market for the bonds was highly illiquid, with only a
few market participants and no reliable way to
determine a sale price at any given time. (CA2 A-113,
179, 372–73.) Even the government’s cooperating
witnesses agreed that Scenario 14 was “an effort [] to
get
it
right”
from
“an
intrinsic
value
standpoint.” (CA2 A-189; see also CA2 A-452.)
Mr. Hild was charged in a five-count indictment
with conspiracy to commit securities fraud, conspiracy
to commit wire and bank fraud, securities fraud, wire
fraud, and bank fraud. (CA2 A-24.) He maintained
his innocence and proceeded to trial, asserting, among
other things, that Scenario 14 reflected a good-faith
effort to determine accurate values for the bonds in an
illiquid market. (CA2 A-522.) After a 14-day trial in
April 2021, a jury found Mr. Hild guilty on all counts.
B.
Trial Counsel’s Undisclosed Conflict
Comes to Light
Following conviction, Mr. Hild discovered that his
lead trial counsel, Benjamin Dusing (and co-counsel
Brandy Katy Lawrence, a relatively inexperienced
junior attorney), had been operating under
undisclosed conflicts of interest that compromised his
defense.
During trial, Dusing was simultaneously a
defendant in contentious custody disputes in
Kentucky family court—disputes that culminated in
11
findings of domestic abuse, contempt sanctions, a jail
sentence, psychiatric counseling, and ultimately
Dusing’s suspension from the practice of law.
Lawrence served as Dusing’s personal attorney in the
Kentucky litigation (where he at times represented
himself pro se) while simultaneously serving as cocounsel in Mr. Hild’s case. With multiple Kentucky
hearings scheduled for May 4, Dusing and Lawrence
rushed through the defense to conclude trial before
that date, declining to call expert witnesses and
introducing virtually no defense exhibits despite
marking hundreds for potential use.
Dusing’s
paralegal later confirmed that Dusing stated he
“wouldn’t be able to make his [May 4] hearing if we
call all these witnesses.” (Pet. App. 110a.) Trial
concluded one business day before the Kentucky
hearing. (Pet. App. 93a.)
On March 9, 2021—just over a month before jury
selection in Mr. Hild’s trial—the Kentucky family
court sanctioned Dusing for making frivolous motions,
held him in contempt, and sentenced him to “7 days in
jail.” (CA2 A-1140, 1146–47.)
On April 5, 2021—eight days before jury
selection—the Kentucky court awarded sole custody
to the mother based on findings that Dusing had
“perpetuated violence” and “physical and emotional
abuse,” and had attempted to bribe an expert witness.
(Pet. App. 91a; CA2 A-1149–50, 1156–57, 1161–62.)
This ruling triggered deadlines, precipitating a “flurry
of activity” for Dusing throughout Mr. Hild’s trial.
(Pet. App. 91a.)
12
On April 13, 2021—the first day of jury selection
in Mr. Hild’s trial—the mother in one of the Kentucky
cases filed the first of four sanctions motions against
Dusing and Lawrence based on their conduct in the
Kentucky matter, all of which were noticed for a
hearing on May 4, 2021. (Pet. App. 91a–92a.)
On April 15, 2021—the day Dusing crossexamined the government’s key cooperating
witness—Dusing also filed, pro se, a 45-page motion
to vacate the April 5 custody order in Kentucky, in
which he broadly accused the Kentucky court of
corruption. (CA2 A-1168–74.) That motion was also
noticed for the May 4 hearing. (CA2 A-1212.)
On April 16, 2021, as Dusing continued his crossexamination of the key cooperator, the mother in the
Kentucky case filed a second sanctions motion against
Dusing, arguing that he had misled the court in
filings. (Pet. App. 92a; CA2 A-1213.)
On April 19, 2021, Lawrence—acting as Dusing’s
personal counsel in the Kentucky matter—filed a
motion in Kentucky seeking to continue all
proceedings.
(Pet. App. 92a.)
The motion
acknowledged that the Kentucky proceedings had
been “a distraction” from Mr. Hild’s trial and argued
that counsel would suffer “serious prejudice” in
Kentucky absent a continuance. (Pet. App. 92a.)
About a week later, on April 27, 2021, the defense
case in Mr. Hild’s trial began. The Kentucky court
had still not ruled on the motion for a continuance of
13
the May 4 hearing.
Dusing’s paralegal—whose
proffered testimony the District Court credited—
explained that Dusing was “well-aware of the
proceedings in Kentucky” and had stated, while
planning Mr. Hild’s defense case, that he “wouldn’t be
able to make his [May 4] hearing if we call all these
witnesses.” (Pet. App. 109a–10a; CA2 A-906–09.)
Mr. Hild’s defense case proceeded rapidly, in an
apparent effort by Dusing and Lawrence to conclude
before May 4. Despite the complexity of the HECMIO bonds—which the government’s own witnesses
agreed were “among the most complex in fixed
income”—Dusing declined to call an expert witness.
(CA2 A-111, 113, 179, 372–73.) He did so despite
consulting Allen Davis, a bond expert who had
prepared a report supporting the defense theory that
intrinsic value was an appropriate measure for the
illiquid bonds. (Pet. App. 111a–12a, 120a.)
Dusing did not introduce a single exhibit during
the direct examination of Mr. Hild (and introduced
only limited exhibits on redirect), and the government
seized on this dearth of defense exhibits in
summation. (CA2 A-618–19.) Dusing called only one
other witness besides Mr. Hild and introduced only
one insignificant exhibit through that witness.
On April 29, 2021, the day closing arguments
began in Mr. Hild’s case, the Kentucky court finally
issued an order denying Dusing’s application for a
continuance. (Pet. App. 93a.) The jury returned its
14
guilty verdict on April 30, 2021—one business day
before the May 4 Kentucky hearing. (Pet. App. 93a.)
Dusing was later suspended from practice in both
Kentucky and Ohio. (Pet. App. 94a–95a.) In February
2022, the Kentucky Supreme Court temporarily
suspended Dusing, finding probable cause to believe
he posed “a substantial threat of harm to his clients or
the public or that he is mentally disabled and lacks
the mental fitness to continue to practice law.” (CA2
A-869.) Ohio followed in March 2022. (CA2 A-872.)
In September 2024, the Kentucky Supreme Court
imposed a three-year suspension for “troubling and
egregious” violations, including witness bribery,
threats to intimidate participants in judicial
proceedings, filing frivolous motions, and making
false statements to the court. In re Dusing, 701
S.W.3d 393, 394 (Ky. 2024).
III.
THE PROCEEDINGS BELOW
A.
The District Court’s Decision
After the jury returned a guilty verdict in April
2021, Mr. Hild hired new counsel and, on July 27,
2021, moved for a judgment of acquittal or
alternatively a new trial pursuant to Federal Rules of
Criminal Procedure 29 and 33. In his Rule 33 motion,
Mr. Hild argued that Dusing and Lawrence labored
under an undisclosed “actual conflict of interest” both
before and during his trial in April 2021. (Pet. App.
56a.)
15
The government opposed and submitted a 76-page
affidavit from Dusing, together with affidavits from
Lawrence and a third lawyer, Jeffrey Otis, who was
involved in the Kentucky litigations. (CA2 A-13.)
Dusing asserted that he was “not aware of much of the
activity” in the Kentucky litigation during Mr. Hild’s
trial, including that the May 4 hearing had been
scheduled, that Otis “handled all of the court filings”
in Kentucky, that Dusing did not “cut short” Hild’s
case, and that the decision not to notice an expert was
made because no expert was “willing to give the
desired opinion and [because of] Mr. Hild’s
[un]willingness to pay.”
(CA2 A-674, 724.)
Lawrence’s affidavit was similar. (CA2 A-797–804.)
On December 7, 2022, the District Court issued a
64-page opinion denying Mr. Hild’s motion. The court
acknowledged that the case “presents a challenging
question at the intersection of the Sixth Amendment
right to conflict-free counsel and the modern reality.”
(Pet. App. 55a.) The District Court largely accepted
Mr. Hild’s factual recitation regarding Dusing’s
conduct. (Pet. App. 90a–95a.)
Critically, the court expressly declined to rely on
Dusing’s affidavit “in light of Dusing’s deeply
troubling conduct in the Kentucky matter—which
included threatening to ‘blow up’ a judge, staff
attorneys, and opposing counsel—and his subsequent
suspension from the practice of law in two states.”
(Pet. App. 94a–95a.) The court also “credit[ed]” the
proffered testimony of Dusing’s former paralegal, who
explained Dusing had stated he “wouldn’t be able to
16
make his [May 4] hearing if we call all these
witnesses.” (Pet. App. 110a–11a.)
The District Court acknowledged that the case is
“distinguishable from the run-of-the-mill case where
a lawyer has multiple obligations” and that the
circumstances were “unusual and troubling.” (Pet.
App. 56a (quotation marks omitted).) Nevertheless,
the District Court denied Mr. Hild’s motion. (Pet.
App. 58a.)
The District Court recognized that this Court has
established a framework under Sullivan in which
prejudice is presumed when a defendant shows “(1) an
actual conflict of interest” that (2) “adversely affected
[the] lawyer’s performance.” (Pet. App. 96a (quoting
Sullivan, 446 U.S. at 348).) But the District Court
concluded that Mr. Hild had not demonstrated an
“actual conflict” triggering this framework. The court
stated (incorrectly), that to establish an “actual
conflict,” the lawyer must have “an actual adverse
interest in the outcome” of the client’s case. (Pet. App.
106a (quotation marks omitted) (emphasis added).)
Under this formulation, the District Court found
that Mr. Hild could not establish an actual conflict
because “Dusing and Hild’s incentives regarding the
outcome of Hild’s trial were still aligned—they both
wanted to see Hild acquitted.” (Pet. App. 103a.) The
court elaborated that “[w]hile the timing of Hild’s trial
may have posed a scheduling conflict for Dusing, it did
not cause a divergence in their interests regarding the
outcome of Hild’s trial such that Dusing would have
17
had any incentive for the jury to return a guilty
verdict.” (Pet. App. 106a (emphasis added).) Having
found no actual conflict, the court applied Strickland’s
more burdensome standard and held that Mr. Hild
failed to establish deficient performance or prejudice.
(Pet. App. 118a–24a.)
The District Court sentenced Mr. Hild to 44
months’ imprisonment. (Pet. App. 20a.) Based on the
“challenging” and “novel” nature of the legal issue and
the lack of precedent, the District Court granted Mr.
Hild bail pending appeal over the government’s
objection. (Pet. App. 52a–53a.)
B.
The Second Circuit’s Decision
Mr. Hild appealed. On July 30, 2025, the Second
Circuit issued an opinion and separate summary
order. (Pet. App. 11a–38a; Pet. App. 39a–48a.)
Believing initially it could simply pass on Mr.
Hild’s ineffective assistance claim, the Second Circuit
“decline[d] to reach this claim, which is best raised on
collateral review.” (Pet. App. 47a.) In response, Mr.
Hild petitioned for rehearing, arguing that under
Second Circuit precedent, the court was required to
address his claim because it had been fully developed
below. (CA2 Dkt. No. 79.)
Seemingly recognizing its error, the panel issued
an Amended Summary Order—revising its prior order
only slightly to address the ineffective assistance
claim on the merits—which now reads: “We affirm the
district court on Hild’s remaining ineffective
18
assistance claims for the reasons stated in that
thorough and careful decision.” (Pet. App. 9a.) That
same day, the panel denied Mr. Hild’s petition for
panel rehearing but did not address his petition for
rehearing en banc. (Pet. App. 147a–48a.)
Mr. Hild then filed a second petition for panel
rehearing and rehearing en banc, arguing that the
Amended Summary Order conflicted with binding
precedent on the standard for an actual conflict of
interest. (CA2 Dkt. No. 82.) The Second Circuit
denied Mr. Hild’s petitions for rehearing and
rehearing en banc (Pet. App. 145a) and issued the
mandate (CA2 Dkt. No. 84). Mr. Hild then moved for
clarification because it was unclear whether the
Second Circuit had denied both of his petitions. (CA2
Dkt. No. 85.) The Second Circuit recalled the
mandate as issued “prematurely due to an
administrative error” (CA2 Dkt. No. 86) and issued
another order denying rehearing by the panel and en
banc (Pet. App. 143a) but then vacated that order (Pet.
App. 142a) and then, on February 3, 2026, issued yet
another order denying both of Mr. Hild’s petitions for
panel and en banc rehearing (Pet. App. 140a–41a).
REASONS FOR GRANTING THE WRIT
I.
THE SECOND CIRCUIT’S DECISION
DEEPENS A LONGSTANDING SPLIT
AMONG FEDERAL AND STATE COURTS
The decision below endorses a new standard for
resolving claims of an actual conflict that no other
19
court has adopted and that conflicts with this Court’s
Sixth Amendment precedent. Whereas Sullivan
requires only the showing of an actual conflict and
adverse effect on performance, the standard endorsed
by the Second Circuit requires defendants to prove
that their attorneys secretly wanted them to be found
guilty. This decision deepens a longstanding split
among the lower courts regarding Sullivan’s scope.
Since Mickens, federal and state courts have grown
increasingly divided over when to apply Sullivan.
See, e.g., United States v. Williamson, 859 F.3d 843,
854 n.3 (10th Cir. 2017) (noting the confusion created
by Mickens regarding Sullivan’s scope and that, “postMickens, the circuit courts are divided on how to
interpret” Sullivan) (collecting cases); State v.
Carlson, 440 P.3d 364, 384 (Alaska Ct. App. 2019) (“In
the years since Cuyler was decided, disagreement has
arisen in the federal courts regarding whether the
Cuyler standard applies to all alleged conflicts of
interest or only to the types of conflicts that were
primarily at issue in [Sullivan] . . . .”) (collecting
cases); Taylor v. State, 51 A.3d 655, 669 n.13 (Md.
2012) (“[P]articularly since Mickens, there is no clear
rule across jurisdictions.”).
The division among the lower courts is
clear. Several federal courts of appeals—the Fifth,
Sixth, Ninth, and Eleventh Circuits—generally
limit Sullivan to cases involving multiple clients with
competing interests. Other courts—including the
Third, Fourth, and Seventh Circuits—reject this
narrow view and apply Sullivan to various conflicts,
20
including
personal-interest
conflicts.
Other
Circuits—including the First, Eighth, Tenth, and D.C.
Circuits—have not definitively addressed the issue or
have expressed uncertainty about extending Sullivan
beyond multiple representations. State courts are
similarly split.
A.
Federal and State
Deeply Divided
Courts
Are
Following Mickens, at least eight jurisdictions
limit Sullivan to its facts and apply its presumedprejudice framework only when a lawyer represents
multiple
clients
with
conflicting
interests.
Conversely, at least twenty-two jurisdictions apply
Sullivan broadly to a variety of conflicts. Whether a
defendant ultimately satisfies this standard on given
facts, these courts agree Sullivan provides the
appropriate framework.
The Fifth, Sixth, Ninth, and Eleventh Circuits
have generally limited Sullivan to only those cases in
which a lawyer represents multiple clients with
competing interests. For all other cases, Strickland
governs:
•
United States v. Garza, 429 F.3d 165, 172
(5th Cir. 2005)
•
Whiting v. Burt, 395 F.3d 602, 618–19 (6th
Cir. 2005)
•
Rowland v. Chappell, 876 F.3d 1174, 1192
(9th Cir. 2017)
21
•
Cruz v. United States, 188 F. App’x 908, 913
(11th Cir. 2006)
Conversely, the Third, Fourth, and Seventh
Circuits apply Sullivan broadly:
•
Chester v. Comm’r of Pa. Dep’t of Corr., 598
F. App’x 94, 105–07 (3d Cir. 2015) (noting
that although the “case does not involve
either multiple representation or prior
representation, . . . the Sullivan/Mickens
principles still guide our analysis of the
theoretical division of loyalties issue
presented”)
•
United States v. Stitt, 441 F.3d 297, 304 (4th
Cir. 2006) (“According to the Government,
all non-multiple representation conflict of
interest claims must meet the Strickland
prejudice requirement. The Supreme Court
has never so held, and we have repeatedly
rejected this approach.”)2
•
United States v. Fuller, 312 F.3d 287, 291–
92 (7th Cir. 2002) (applying Sullivan (but
finding standard not satisfied) in case where
defendant alleged lawyer was advancing his
2 After releasing its opinion in Stitt, the Fourth Circuit identified
a jurisdictional defect in the appeal. See United States v. Stitt,
459 F.3d 483, 484–85 (4th Cir. 2006).
22
own interest in
malpractice suit)3
preventing
a
future
Other Circuits—including the First, Eighth,
Tenth, and D.C. Circuits—have acknowledged that
Mickens left an open question but have not
definitively weighed in on whether the Sullivan
framework applies to attorney personal-interest
conflicts:
•
United States v. DeCologero, 530 F.3d 36, 77
n.24 (1st Cir. 2008)
•
Noe v. United States, 601 F.3d 784, 790 (8th
Cir. 2010)
•
United States v. Williamson, 859 F.3d 843,
854–57 (10th Cir. 2017)
•
United States v. Wright, 745 F.3d 1231, 1233
(D.C. Cir. 2014) (Kavanaugh, J.)4
State courts are similarly split. California, Idaho,
North Carolina, and Pennsylvania courts generally
3 See also United States v. Livingston, 425 F. Supp. 2d 554, 560–
61 (D. Del. 2006) (defendant “established an actual conflict of
interest based on [his attorney’s] self-interest in concealing from
Defendant his own incompetency and the fact that he provided
Defendant with erroneous legal advice”).
4 Cf. United States v. Tucker, 12 F.4th 804, 818 (D.C. Cir. 2021)
(assuming without deciding that there was an actual conflict
when attorney’s daughter was employed by prosecutor’s office
but finding no effect on attorney’s performance under Sullivan’s
second prong).
23
limit Sullivan to only those cases in which a lawyer
represents multiple clients with competing interests:
•
People v. Doolin, 198 P.3d 11, 41 (Cal. 2009)
•
State v. Alvarado, 481 P.3d 737, 748–49
(Idaho 2021)
•
State v. Phillips, 711 S.E.2d 122, 137 (N.C.
2011)
•
Commonwealth v. Cousar, 154 A.3d 287,
310 (Pa. 2017)
Conversely, at least 19 state courts—Alabama,
Alaska, Arkansas, Colorado, the District of Columbia,
Florida, Georgia, Illinois, Kentucky, Louisiana,
Maryland, Michigan, Missouri, Ohio, Rhode Island,
Tennessee, Texas, Utah, and Washington—have
applied Sullivan to resolve a variety of conflicts.5
•
Brooks v. State, 340 So. 3d 410, 460–62 (Ala.
Ct. Crim. App. 2020) (noting Sullivan is not
limited to “joint representation” cases)
•
State v. Carlson, 440 P.3d 364, 384 (Alaska
Ct. App. 2019) (“Alaska courts apply the
5 Some jurisdictions expressly reject the narrow interpretation of
Sullivan. Others do not address the split in jurisprudence
directly but apply the Sullivan framework even when the claim
does not involve multiple representations. In the large majority
of cases, the courts deny relief under the Sullivan framework.
24
[Sullivan] standard”
interest claims)6
to
all
conflict-of-
•
Echols v. State, 127 S.W.3d 486, 493 (Ark.
2003) (noting Sullivan applies whenever a
defendant shows that his counsel “actively
represented conflicting interests”)
•
People v. Lopez, 553 P.3d 203, 211 (Colo.
2024) (applying actual conflict analysis in
cases where trial counsel was being
prosecuted by the same office as the
defendant)
•
Blackmon v. United States, 146 A.3d 1074,
1078 (D.C. 2016) (analyzing for actual
conflict defendant’s allegation that trial
counsel was conflicted after counsel
admitted giving erroneous advice)
•
Bright v. State, No. SC2023-1735, 2026 WL
532058, at *9 n.11 (Fla. Feb. 26, 2026) (“We
have applied actual-conflict principles when
a defendant alleges a conflict based on the
defense attorney’s personal interests.”)
•
Emmons v. Bryant, 864 S.E.2d 1, 9–10 (Ga.
2021) (analyzing under Sullivan alleged
6 Alaska courts apply an even stricter standard than Sullivan in
cases “involving ‘egregious’ conflicts of interest such as the joint
representation of co-defendants.” Carlson, 440 P.3d at 384.
25
conflict of attorney failing to assert his own
ineffectiveness on appeal)
•
People v. Garcia, 116 N.E.3d 1082, 1094 (Ill.
App. Ct. 2018) (similar to Alaska)
•
Zapata v. Commonwealth, 516 S.W.3d 799,
803 (Ky. 2017) (“There is no doubt an actual
conflict existed in this case. Zapata’s counsel
was placed in the untenable position of
defending her own interests which were
adverse to her clients.”)
•
State v. Fontenelle, 227 So. 3d 875, 885–86
(La. Ct. App. 2017) (“Although most conflict
of interest cases involve representation of
multiple defendants, a conflict of interest
may arise between a single defendant and
his attorney.”)
•
Taylor v. State, 51 A.3d 655, 669 n.13 (Md.
2012) (“We join those states continuing to
apply Sullivan to various types of
conflicts . . . .”)
•
People v. Adams, No. 262201, 2006 WL
2924602, at *2 (Mich. Ct. App. Oct. 12, 2006)
(applying Sullivan framework to determine
whether an actual conflict arose because
trial counsel’s son was suspected of a similar
crime)
•
Lomax v. State, 163 S.W.3d 561, 564 (Mo.
Ct. App. 2005) (noting alleged conflict of
26
lawyer putting his own financial interests
and the wishes of the party paying his legal
fees over the needs of the client could qualify
as an actual conflict)
•
State v. Oteng, No. 19AP-763, 2020 WL
7706789, at *8–9 (Ohio Ct. App. 2020)
(noting that an actual conflict may exist
where there is a pending criminal or ethical
case against defense counsel)
•
Millette v. State, 183 A.3d 1124, 1131–32
(R.I. 2018) (analyzing Sullivan for alleged
conflict of defense counsel “cover[ing] up”
another lawyer’s unauthorized practice of
law)
•
Johnson v. State, No. W2014-00053-CCAR3-PC, 2014 WL 7401989, at *1, *4–6
(Tenn. Crim. App. Dec. 29, 2014) (noting
actual conflicts may arise “from personal
difficulties
in
the
attorney-client
relationship, which may challenge counsel’s
dedication to the cause of the defendant”)
•
Acosta v. State, 233 S.W.3d 349, 352–56
(Tex. Crim. App. 2007) (rejecting narrow
interpretation of Sullivan and holding
Sullivan applies to attorney self-interest
claims)
•
State v. Martinez, 297 P.3d 653, 655–60
(Utah Ct. App. 2013) (analyzing whether
27
attorney feeling intimidated by defendant
qualified as an actual conflict)
•
State v. Regan, 177 P.3d 783, 786–87 (Wash.
Ct. App. 2008) (applying Sullivan to “any
situation where defense counsel represents
conflicting interests” (internal quotation
marks omitted) (emphasis in original))
The patchwork quilt of jurisprudence has led to
differing results not only between jurisdictions, but
also within the same geographic areas. Federal courts
apply their own precedent in federal appeals and
another standard when reviewing state-court habeas
petitions. See Reynolds v. Hepp, 902 F.3d 699, 708–
09 (7th Cir. 2018) (“Since before Mickens, we have at
least assumed that Sullivan extends to financial
conflicts of interests. Mickens makes it very difficult,
though, to take that step in a habeas corpus challenge
to a state conviction . . . .”); see also Tormasi v. Att’y
Gen. New Jersey, No. 23-1452, 2025 WL 688925, at *5
(3d Cir. Mar. 4, 2025).
In this case, the Second Circuit introduced a new
fracture in the precedent. Not one court has held, as
the Second Circuit endorsed, that a defendant cannot
establish an “actual conflict of interest” under
Sullivan unless he proves that his attorney harbored
a secret desire for conviction.
28
B.
The Second Circuit Endorses a New
Standard
The decision below endorses a higher standard
than even those courts that have adhered to a
restrictive interpretation of Sullivan. It creates a new
constitutional rule unknown to any other court: that a
defendant cannot establish an “actual conflict of
interest” unless he proves that counsel possessed a
personal incentive for conviction.
The Second Circuit has previously applied
Sullivan beyond the multiple representation context.
See, e.g., United States v. Rivernider, 828 F.3d 91, 109
(2d Cir. 2016) (applying Sullivan where lawyer was
accused of coercing the defendant to plead guilty). In
United States v. Malpiedi, 62 F.3d 465 (2d Cir. 1995),
the court faithfully applied Sullivan and stated that
“the applicable standard requires only the
demonstration of a conflict inconsistent with a
plausible trial strategy or tactic.” Id. at 470.
Malpiedi explained that a defendant need not
show “that the alternative strategy or tactic not
adopted by a conflicted counsel was reasonable, that
the lapse in representation affected the outcome of the
trial, or even that, but for the conflict, counsel’s
conduct of the trial would have been different.” Id. at
469. “Rather, it is enough to show that a conflict
existed that was inherently in conflict with a plausible
line of defense or attack on the prosecution’s case.” Id.
at 469–70 (quotation marks omitted); see also Tueros
v. Greiner, 343 F.3d 587, 594 (2d Cir. 2003)
29
(Sotomayor, J.) (“[I]t may well be unreasonable not to
extend Sullivan’s definition of an ‘actual conflict’ to a
lawyer whose conflict was defined by representing the
divergent interests of a defendant and an important
subpoenaed witness.”).
In the proceedings below, however, the Court
applied a new, heightened standard. The District
Court held, and the Second Circuit summarily
affirmed, that a defendant cannot establish an “actual
conflict of interest” unless he proves that his attorney
harbored a secret incentive for the defendant to be
found guilty.
The District Court wrote that Mr. Hild failed to
satisfy the Sullivan standard because he did not show
that Dusing “had an actual adverse interest in the
outcome of Hild’s trial.” (Pet. App. 103a (quotation
marks omitted) (emphasis added), 106a (stating that
there was no “divergence in their interests regarding
the outcome of Hild’s trial such that Dusing would
have had any incentive for the jury to return a guilty
verdict” (emphasis added)).) The District Court also
explained (inaccurately) that the “types of conflicts”
that have been held to be actual conflicts are those
where the attorney and client did not both want to see
the defendant acquitted. (Pet. App. 103a (incorrectly
stating that, “unlike the types of conflicts that the
Second Circuit [has] found to be actual conflicts,
Dusing and Hild’s incentives regarding the outcome of
Hild’s trial were still aligned [because] they both
wanted to see Hild acquitted”).) The Second Circuit
30
then adopted the District Court’s opinion in full. (Pet.
App. 9a.)
No other court—state or federal—that has
addressed this issue has ever required proof that
counsel wanted the client to lose. See supra pp. 7–8,
20–27.
II.
THE DECISION BELOW IS WRONG
A.
The Second Circuit’s
Contradicts Sullivan
Decision
The rule adopted below cannot be reconciled with
the structure of this Court’s Sixth Amendment
precedent. Under Sullivan, a defendant establishes a
constitutional violation by showing (1) that counsel’s
interests diverged from the defendant’s and (2) that
the conflict adversely affected the representation. 446
U.S. at 348. The decision below effectively adds a
third requirement not found in Sullivan or any
decision of this Court (or any other court): that
counsel possessed a personal incentive for the
defendant’s conviction. Nothing in Sullivan suggests
that a conflict must rise to the level of an attorney
desiring the client’s conviction.
Put simply, Sullivan requires: (1) divergence of
interests between attorney and client; and (2) an
adverse effect on representation. The rule adopted
below effectively requires: (1) divergence of interests;
(2) adverse effect on representation; and (3) proof that
counsel possessed a personal incentive for conviction.
This additional requirement fundamentally alters the
31
Sullivan framework and effectively eliminates its
presumption of prejudice in cases involving personalinterest conflicts.
The standard adopted below undercuts the entire
purpose of Sullivan. Sullivan presumes prejudice
precisely because divided loyalty may cause counsel to
refrain
from
pursuing
plausible
strategic
alternatives—even when counsel still hopes the client
will ultimately prevail. This Court has recognized
that the “evil” of conflicted representation “is in what
the advocate finds himself compelled to refrain from
doing.” Holloway v. Arkansas, 435 U.S. 475, 490
(1978) (emphasis in original). A conflicted attorney
may refrain from challenging evidence, exploring plea
options, or examining witnesses whose testimony
might benefit one interest over another. Id. at 489–
90. These failures to act leave no footprints in the
record, making it “difficult to judge intelligently the
impact of a conflict on the attorney’s representation.”
Id. at 490–91.
Yet, under the standard endorsed here by the
Second Circuit, the attorney’s ultimate desire to see
the client acquitted would immunize all such
omissions from Sullivan scrutiny, regardless of how
significantly the conflict impacted counsel’s strategic
choices.
An attorney may genuinely hope for their client’s
acquittal while simultaneously refraining from calling
a favorable witness, pursuing a more aggressive crossexamination, or advancing an argument that would
32
have advanced the client’s defense all because doing
so would conflict with counsel’s competing interests.
This was precisely the concern in Sullivan, where
counsel’s decision to rest without presenting evidence
was influenced by a desire to avoid “exposing [defense]
witnesses for the other two trials that were coming
up.” 446 U.S. at 339 (quotation marks omitted).
Requiring proof that counsel harbored a secret
desire for conviction imposes a burden that is virtually
impossible to meet. This Court has acknowledged
that it is already difficult to show that a conflict
affected performance. Holloway observed that even
when a record is available “it would be difficult to
judge intelligently the impact of a conflict.” 435 U.S.
at 490–91. If proving even the objective effect of a
conflict
presents
“characteristically
difficult”
evidentiary challenges, Mickens, 535 U.S. at 203
(Souter, J., dissenting), the Second Circuit’s demand
that defendants prove counsel’s subjective desire for a
guilty verdict is utterly unattainable. Indeed, this
standard invented below for actual conflicts under
Sullivan effectively raises the bar beyond even what
Strickland requires for ineffective assistance claims.
See Strickland, 466 U.S. at 688, 694 (employing an
objective, outcome-focused inquiry on deficient
performance and reasonable probability of a different
result—not that counsel subjectively wanted the
defendant to lose).
33
B.
Sullivan
Conflicts
Should
Govern
All
Both the standard applied by courts that limit
Sullivan to its facts and the standard applied by the
Second Circuit below are wrong. Sullivan should be
applied to resolve all actual conflicts of interest.
Sullivan is an important bulwark against the
grave risks that conflicts of interest pose. Conflicts of
interest directly threaten “the most basic of counsel’s
duties.” Strickland, 466 U.S. at 692. When faced with
a conflict, lawyers must choose whether to advocate a
client’s “interests single-mindedly,” or whether to
advance that other interest at the client’s expense.
Wood, 450 U.S. at 271–72.
When a lawyer suffers from a conflict, it is
“difficult to measure the precise effect” of that conflict
on the lawyer’s performance. Strickland, 466 U.S. at
692. The evil in conflicted representation is “what the
advocate finds himself compelled to refrain from
doing.” Holloway, 435 U.S. at 490–91 (emphasis in
original). Because omissions may leave no trace,
courts cannot reliably apply Strickland, which
requires evaluating how a lawyer’s deficient
performance prejudiced the proceedings.
This case exemplifies the hidden effects of
“refraining.” The District Court’s reliance on Dusing’s
adequate performance—observing he was “a zealous
and articulate advocate” who engaged in “robust
cross-examination” (Pet. App. 58a)—misses the point
34
and illustrates why Sullivan exists.
Dusing’s
problematic acts were omissions, not commissions. It
was not his “robust cross-examination” that
prejudiced Mr. Hild, but his failure to call witnesses
and cut short defense witness direct examinations.
These omissions are invisible to a court observing only
what happened at trial, which is precisely why
Sullivan presumes prejudice when a conflict
adversely affects performance.
Applying Sullivan to all conflict claims also
prevents absurd results from basing relief on the type
of conflict. A defendant does not care if the attorney’s
allegiance to other clients or the attorney’s own
interests negatively affected the representation. The
defendant’s rights were violated due to conflicted
representation—the result matters, not the type of
conflict. See Mickens, 535 U.S. at 172 n.5 (“[T]he
Sullivan standard is not properly read as requiring
inquiry into actual conflict as something separate and
apart from adverse effect.”).
For example, if Hild had a co-defendant and
Dusing avoided calling an expert because that
testimony would hurt the co-defendant, there would
be no dispute—even under the strictest Sullivan
interpretation—that an actual conflict negatively
affected performance. Yet jurisdictions adhering to
the strict interpretation would deny relief if the
conflict stemmed from the attorney’s personal
interests. This focus on the type of conflict makes no
sense. As Mickens explained, Strickland is generally
“inadequate” in conflict-of-interest cases, Sullivan’s
35
presumption of prejudice provides a much “needed
prophylaxis.” Mickens, 535 U.S. at 176. Once a
defendant proves that “an actual conflict of interest
adversely affected his lawyer’s performance,” the
court should presume prejudice regardless of the type
of conflict at issue. Sullivan, 446 U.S. at 348.
Sullivan, however, does not require automatic
reversal in every case. The District Court’s concern
that finding an “actual conflict” would “open the
floodgates” to claims “every time a lawyer has a family
vacation” is entirely baseless. Sullivan has been on
the books for nearly 50 years, and no parade of
horribles has occurred. See Lafler v. Cooper, 566 U.S.
156, 172 (2012). In jurisdictions applying Sullivan to
attorney-interest conflicts, relief is denied in most
cases either because the court finds only a potential
conflict or no connection between the conflict and the
claimed adverse impact. See supra pp. 20–27. As
courts have recognized, this test “does not lack teeth.”
Stitt, 441 F.3d at 304.
Thus, Sullivan’s presumption carefully balances
the real risk that a conflict poses with other values
including the finality of convictions. Sullivan’s
presumption also creates positive incentives for the
criminal justice system and the legal profession.
Because Sullivan lowers the threshold for remedying
conflicts of interest, Sullivan encourages trial courts
“to inquire into a potential conflict” and “replac[e] a
conflicted attorney” at the earliest possible
opportunity. Mickens, 535 U.S. at 173.
36
C.
Mr. Hild Satisfied the
Standard
Sullivan
Under the correct standard—which requires only
a showing that “an actual conflict of interest adversely
affected his lawyer’s performance,” Sullivan, 446 U.S.
at 348, Mr. Hild established all necessary elements.
First, Dusing did not disclose to Mr. Hild before or
during trial that there were hearings scheduled for
May 4 in Dusing’s Kentucky litigation or that he
planned to cut short Mr. Hild’s trial, and Mr. Hild did
not provide informed consent to any conflict in writing
or otherwise. (CA2 A-669, A-845–46.)
Second, Dusing’s and Mr. Hild’s interests diverged
with respect to a course of action. Mr. Hild’s interests
pulled in favor of a strong defense case with additional
defense witnesses and exhibits. Dusing’s interests
pulled in favor of finishing trial quickly so that he
could attend to the Kentucky litigation and the May 4
hearing.
Third, Dusing’s interests in the Kentucky
litigation negatively “affected [his] performance.”
Sullivan, 446 U.S. at 348. The fact that the District
Court refused to rely on Dusing’s affidavit and
generally accepted Mr. Hild’s factual assertions is
particularly significant for this point.
Dusing’s
affidavit conflicted with Hild’s and Dusing’s
paralegal’s statements. Dusing claimed the May 4
hearing was “simply not on [his] mind” and that he did
not cut short the defense (CA2 A-715, A-729), while
37
his paralegal confirmed that Dusing explicitly stated
he “wouldn’t be able to make his [May 4] hearing if we
call all these witnesses” (Pet. App. 110a; CA2 A-907–
08). When the District Court declined to credit
Dusing’s affidavit—while crediting the paralegal’s
proposed testimony and declining to hold a hearing—
it resolved this factual dispute in Mr. Hild’s favor.
The credited evidence thus establishes that Dusing
curtailed Mr. Hild’s defense case precisely because of
his conflicting Kentucky obligations—the very
showing that Sullivan requires. This conduct is
precisely the type of “refraining” that Holloway
recognized as the “evil” of conflicted representation.
Mr. Hild’s motion thus met the Sullivan standard.
Yet, under the incorrect standard applied below, this
did not constitute an “actual conflict” because Dusing
and Mr. Hild both wanted to see Hild acquitted.
III.
THE QUESTIONS PRESENTED
EXCEPTIONALLY IMPORTANT
ARE
The questions presented go to the heart of the
Sixth Amendment’s guarantee of conflict-free counsel.
This Court should grant certiorari because the issue
is exceptionally important and arises with increasing
frequency in modern legal practice.
A.
The Standard Endorsed by the
Second Circuit Has Great Practical
Significance for Defendants
The standard announced below—requiring proof
that counsel harbored an incentive for conviction—
38
has profound practical consequences.
Under
Sullivan, a defendant demonstrating an actual
conflict that adversely affected counsel’s performance
is entitled to a presumption of prejudice because “it is
difficult to measure the precise effect on the defense
of representation corrupted by conflicting interests.”
Strickland, 466 U.S. at 692. The Second Circuit’s
standard eliminates this presumption by demanding
proof of something that will virtually never exist: an
attorney who secretly wants his client convicted.
The practical effect is that defendants whose
attorneys prioritize conflicting personal matters over
their defense are left without meaningful remedy.
They must instead satisfy Strickland’s demanding
two-prong test, proving both deficient performance
and prejudice. Yet Sullivan exists precisely because
this Court recognized that such proof is often
impossible to marshal where conflicts have corrupted
the representation. Here, Mr. Hild was unable to
overcome this insurmountable burden and, unless
this Court intercedes, will be required to serve 44
months in prison rather than receiving a new trial.
B.
The Second Circuit’s Decision
Creates Perverse Incentives
The decision below creates perverse incentives for
defense attorneys facing competing personal
obligations. Both the ABA Model Rules and state
ethics codes recognize that a lawyer’s “personal
interests” can create conflicts requiring disclosure and
informed consent. See ABA Model Rule 1.7(a)(2); N.Y.
39
Rules of Prof’l Conduct R. 1.7(a)(2). Yet the decision
below provides no meaningful protection for
defendants whose attorneys prioritize conflicting
personal matters over their clients’ liberty.
Under the Second Circuit’s standard, an attorney
who prioritizes conflicting personal matters faces no
Sullivan consequence—so long as he can plausibly
claim he still “wanted” acquittal. This is precisely
what Dusing attempted here, submitting a 76-page
affidavit claiming the Kentucky hearing “was simply
not on [his] mind.” (Pet. App. 94a.) The District Court
declined to credit that affidavit—but even discredited,
self-serving denials are sufficient under this standard
to defeat a Sullivan claim because the defendant still
cannot prove counsel wanted a conviction.
This framework invites attorneys to gamble with
their clients’ liberty. An attorney with competing
loyalties can cut corners, secure in the knowledge that
any resulting conviction will be insulated from
Sullivan review. The attorney need only maintain the
pretense of wanting acquittal, regardless of how
thoroughly competing interests have compromised
the representation.
The presumed-prejudice rule exists because
conflicts compromise representation in ways that may
be impossible to reconstruct after the fact. By
eliminating this protection for personal-interest
conflicts, the Second Circuit has removed the primary
deterrent against attorneys who would subordinate
their clients’ interests to their own.
40
C.
Potential Negative Ramifications of
the Second Circuit’s Standard Are
Far Reaching
The Second Circuit’s endorsed standard would
have far-reaching consequences. Courts across the
country have recognized that conflicts arise whenever
competing obligations force counsel to choose between
a client’s interests and other demands, even when
counsel harbors no desire for an adverse outcome.
For example, state courts have held that excessive
caseloads create conflicts because overburdened
attorneys “must choose between the rights of their
clients.” See, e.g., Off. of Pub. Advoc. v. Superior Ct.,
566 P.3d 235, 249 & n.53 (Alaska 2025) (“[A] public
defender agency’s inability to provide effective
assistance because of a lack of attorneys or hours can
amount to a conflict of interest.”); see also In re Order
on Prosecution of Criminal Appeals by Tenth Judicial
Circuit Public Defender, 561 So. 2d 1130, 1135 (Fla.
1990) (same). The finding of a conflict in these cases
is a safety valve that protects indigent defendants.
No basis exists to say the public defenders in these
cases wanted any client convicted.
Yet courts
recognized conflicts because attorneys had to choose
between competing demands. The standard adopted
below would eviscerate these protections: an
overburdened public defender could not establish a
conflict because the attorney still nominally “wants”
each client to succeed.
41
IV.
THIS CASE IS AN IDEAL VEHICLE
This case is an ideal vehicle for resolving the
questions presented. The issues were squarely raised
and decided below. The District Court’s extraordinary
decision to discredit trial counsel’s affidavit
eliminates the typical factual disputes that complicate
actual-conflict claims, leaving a clean record
establishing the conflict that caused Dusing to curtail
the defense. Further, the opportunity to address this
question on direct appeal is rare.
A.
The Issue Was Squarely Presented
in a Counseled Appeal
Mr. Hild squarely presented the question of
whether his claim should be analyzed under Sullivan
or Strickland in both courts below. Before sentencing,
the parties submitted extensive briefing and evidence.
The District Court held oral argument and found that
further development of the record through a hearing
(which Mr. Hild requested) was not needed to rule on
the motion. (Pet. App. 95a–96a.)
On appeal, both parties urged the Second Circuit
to resolve the merits. Mr. Hild sought a reversal and
new trial, pointing out the incorrect standard applied
by the District Court. The government did not argue
that the record was insufficient. To the contrary, it
urged the Second Circuit to address the merits and
affirm, arguing that the District Court correctly found
no actual conflict and that Dusing provided effective
assistance. (CA2 Dkt. No. 46.)
42
Thus, the record is fully developed and the
questions presented are teed up squarely for
resolution.
B.
The District Court’s Rejection of
Dusing’s
Affidavit
Eliminates
Factual Disputes
A unique feature of this case eliminates the typical
factual disputes that complicate actual conflict claims:
the District Court expressly declined to credit
Dusing’s affidavit.
In most ineffective assistance cases, the attorney’s
own account creates disputed factual issues making
appellate resolution difficult. Here, the District Court
declined to rely on Dusing’s affidavit “in light of [his]
deeply troubling conduct in the Kentucky matter—
which included threatening to ‘blow up’ a judge, staff
attorneys, and opposing counsel—and his subsequent
suspension from the practice of law in two states.”
(Pet. App. 94a–95a.)
With Dusing’s affidavit discredited, the record is
unusually clear. This clean record makes this case an
ideal vehicle for addressing the legal question of what
standard governs personal-interest conflicts.
C.
The Opportunity for Review on
Direct Appeal Is Rare
This Court’s review is further warranted because
the opportunity to address the standard for personalinterest conflicts on direct appeal—rather than in
43
collateral proceedings—arises relatively infrequently.
Ineffective assistance claims are typically raised in
habeas petitions, not on direct appeal, because trial
records often lack the necessary information. See
Massaro v. United States, 538 U.S. 500, 504–05
(2003). This case is a rare exception: Mr. Hild raised
his claim before sentencing, the parties developed a
full evidentiary record, and the District Court issued
a lengthy opinion.
Defendants raising similar claims often face
significant procedural obstacles. For example, in
collateral proceedings, petitioners must obtain a
certificate of appealability to appeal the denial of a
§ 2255 motion—a gatekeeping requirement.
28
U.S.C. § 2253(c)(2). There is no constitutional right to
counsel in habeas proceedings, and many § 2255
petitioners proceed pro se. See Pennsylvania v. Finley,
481 U.S. 551, 555 (1987).
This case offers an unusually clear opportunity to
clarify Sullivan’s holding and scope. Waiting for a
case to arise in collateral posture may effectively
immunize the question from review—not because it
lacks importance, but because procedural obstacles
could prevent suitable cases from reaching this Court.
44
CONCLUSION
The petition for a writ of certiorari should be
granted.
Respectfully submitted,
BRIAN A. JACOBS
Counsel of Record
JOSHUA P. BUSSEN
MORVILLO ABRAMOWITZ GRAND
IASON & ANELLO P.C.
565 Fifth Avenue
New York, NY 10017
(212) 856-9600
bjacobs@maglaw.com
Counsel for Petitioner
APPENDIX
i
TABLE OF APPENDICES
Page
A PPENDIX A — A MENDED SUMMARY
ORDER OF THE UNITED STATES COURT
OF APPEALS FOR THE SECOND CIRCUIT,
FILED OCTOBER 15, 2025 . . . . . . . . . . . . . . . . . . . 1a
A P P E N DI X B — O P I N ION O F T H E
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT, FILED
JULY 30, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11a
A PPENDIX C — SUMMARY ORDER OF
T H E U N I T ED S TAT E S C OU RT OF
APPEALS FOR THE SECOND CIRCUIT,
DECIDED JULY 30, 2025 . . . . . . . . . . . . . . . . . . . . 39a
APPENDIX D — ORDER OF THE UNITED
STATES DISTRICT COURT, SOUTHERN
DI S T R IC T OF N E W YOR K , F I L ED
FEBRUARY 27, 2023 . . . . . . . . . . . . . . . . . . . . . . . . 49a
APPENDIX E — OPINION AND ORDER OF
THE UNITED STATES DISTRICT COURT,
SOUTHERN DISTRICT OF NEW YORK,
FILED DECEMBER 7, 2022 . . . . . . . . . . . . . . . . . 54a
A P P E N DI X F — O R D E R D E N Y I N G
REHEA RING OF THE U NIT ED
STAT ES COU RT OF A PPEA LS FOR
T H E S E C ON D C I R C U I T, F I L E D
FEBRUARY 3, 2026 . . . . . . . . . . . . . . . . . . . . . . . . 140a
ii
Table of Appendices
Page
A PPEN DI X G — OR DER OF T H E
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT, FILED
FEBRUARY 3, 2026 . . . . . . . . . . . . . . . . . . . . . . . . 142a
A P P E N DI X H — OR DE R DE N Y I NG
REHEA RING OF THE U NIT ED
STAT ES C OU RT OF A PPE A LS FOR
T H E S E C ON D C I R C U I T, F I L E D
JANUARY 30, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . 143a
A P PEN DI X I — OR DER DEN Y I NG
REHEARING OF THE UNITED STATES
COU RT OF A PPEA LS FOR T H E
SECOND CIRCUIT, FILED DECEMBER
22, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145a
APPENDIX J — ORDER DENYING HEARING
OF THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT,
FILED OCTOBER 15, 2025 . . . . . . . . . . . . . . . . . 147a
APPENDIX K — JUDGMENT OF THE UNITED
STATES COURT OF APPEALS FOR THE
SECOND CIRCUIT, FILED JULY 30, 2025 . . . 149a
1a
Appendix
A
APPENDIX A —
AMENDED
SUMMARY
ORDER OF THE UNITED STATES COURT
OF APPEALS FOR THE SECOND CIRCUIT,
FILED OCTOBER 15, 2025
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
No. 23-6136-cr
UNITED STATES OF AMERICA,
Appellee,
v.
MICHAEL HILD,
Defendant-Appellant.
Filed October 15, 2025
PRESENT:
GUIDO CALABRESI,
MICHAEL H. PARK,
ALISON J. NATHAN,
Circuit Judges.
Appeal from a judgment of the United States District
Court for the Southern District of New York (Abrams, J.).
UPON DUE CONSIDERATION, IT IS HEREBY
ORDERED, ADJUDGED, AND DECREED that the
judgment of the district court is AFFIRMED.
2a
Appendix A
Defendant-Appellant Michael Hild appeals from a
January 31, 2023 judgment of the United States District
Court for the Southern District of New York (Abrams,
J.) convicting him of securities fraud, wire fraud, and
bank fraud, as well as conspiring to do so. The evidence
at trial established that Hild and his co-conspirators at
Live Well Financial, Inc., where he was Chief Executive
Officer, engaged in a multi-year scheme to fraudulently
inflate the value of a portfolio of bonds used as collateral
to secure cash loans.
On appeal, Hild asks us to reverse his conviction as
based on legally insufficient evidence. In the alternative,
he argues that he is entitled to a new trial based on
erroneous jury instructions, newly discovered evidence,
Brady violations, the district court’s alleged failure to
recuse, and ineffective assistance of counsel. We address
Hild’s sufficiency and charging error challenges in an
opinion filed today and his remaining challenges in this
summary order. We assume the parties’ familiarity with
the underlying facts, procedural history, and issues on
appeal.
I.
Newly Discovered Evidence
Hild argues that we should grant him a new trial
based on newly discovered evidence. He brings two claims
to this effect, both of which we reject.
“We review the denial of a Rule 33 motion for a new
trial for abuse of discretion.” United States v. James,
712 F.3d 79, 107 (2d Cir. 2013). “A district court abuses
3a
Appendix A
its discretion when (1) its decision rests on an error of
law (such as application of the wrong legal principles) or
a clearly erroneous factual finding, or (2) its decision—
though not necessarily the product of a legal error or
a clearly erroneous factual finding—cannot be located
within the range of permissible decisions.” In re Bank of
Am. Corp. Sec., Derivative, & Emp. Ret. Income Sec. Act
(ERISA) Litig., 772 F.3d 125, 132 (2d Cir. 2014) (cleaned
up).
To prevail on a Rule 33 motion based on a claim of
newly discovered evidence, the defendant must show
“(1) that the evidence is newly discovered after trial; (2)
that facts are alleged from which the court can infer due
diligence on the part of the movant to obtain the evidence;
(3) that the evidence is material; (4) that the evidence is
not merely cumulative or impeaching; and (5) that the
evidence would likely result in an acquittal.” James, 712
F.3d at 107 (cleaned up).
A.
Coupon Payments
Hild’s first claim of newly discovered evidence concerns
affidavits from victim lenders that the Government
submitted in support of its proposed order of restitution
two years after trial. These affidavits show that the
lenders have received millions in coupon payments for
holding the bonds that Live Well offered as collateral.
As the district court concluded, Hild’s claim fails, at
a minimum, on the third and fifth prongs of the analysis.
At bottom, the amount of the lenders’ coupon payments
is not material to the issues at trial. The prosecution did
4a
Appendix A
not have to prove actual harm, so whether the lenders
lost money is legally irrelevant for Hild’s convictions. See
Kousisis v. United States, 145 S. Ct. 1382, 1392, 1396-97,
221 L. Ed. 2d 781 (2025); United States v. Litvak, 808 F.3d
160, 178 (2d Cir. 2015). As this evidence was not material,
it was not likely to result in an acquittal.
B. Bloomberg Evidence
Hild’s second claim of newly discovered evidence points
to evidence suggesting that one of his co-conspirators,
Dan Foster, influenced the Bloomberg market pricing
referenced at trial.1
The district court found that Hild failed to show that
evidence of Foster’s involvement in Bloomberg’s pricing
methodology “could not with due diligence have been
discovered before or during trial.” United States v. Alessi,
638 F.2d 466, 479 (2d Cir. 1980). It explained that “nearly
a month before trial,” the Government disclosed notes of
its interview of Foster, indicating “that that Foster may
well have influenced Bloomberg’s pricing.” United States
v. Hild, 2024 U.S. Dist. LEXIS 121673, at *11 (S.D.N.Y.
July 10, 2024). The notes read as follows:
Also still does consulting for Baird. Advising
Bloomberg for HECM questions. Secondly,
they give list of bonds that they request weekly
quotes on. DF provides quotes on HMBS,
IOs, floaters, inverse Ios. Multiple people do
this for Bloomberg; DF’s is not used directly
1. Foster cooperated with the Government but did not testify
at trial.
5a
Appendix A
by Bloomberg. Does not know details of their
process.
Id. (emphasis added by the district court).
With these notes in hand, the court reasoned, Hild
could have “with due diligence” uncovered the evidence
at issue. Id. at *12.
We see no abuse of discretion in the court’s conclusion.
Taking each of Hild’s arguments in turn, it is not true that
the district court’s interpretation “cannot be squared with
the plain text.” Appellant Supp. Br. at 19. The notes do
not state, as Hild suggests, that Bloomberg did not rely
on Foster’s notes at all, such that they could not have
put his trial counsel on notice of the so-called Bloomberg
evidence. Nor do the notes suggest that “Foster had only
just begun advising Bloomberg in 2021,” that is, after the
2018-19 period that was the subject of testimony at trial,
as opposed to since 2017. Id. (cleaned up). To the contrary,
the notes say that Foster “still does consulting for Baird.
Advising Bloomberg for HECM questions,” Hild, 2024
U.S. Dist. LEXIS 121673, at *11 (emphasis added by the
district court), which signals he had been doing this work
for some time.
Further, although Hild argues that the Foster
notes were “buried” in the Government’s 18 U.S.C.
§ 3500 production, Appellant Supp. Br. at 19, the notes
were disclosed several weeks before trial, on March 19,
2021, seemingly one day after being typed up. And they
“appeared within a production of . . . nine documents,
6a
Appendix A
none of which was longer than three pages.” Hild, 2024
U.S. Dist. LEXIS 121673, at *12 n.4. Finally, that Foster
“could have avoided the subpoena . . . or refused to testify
under the Fifth Amendment (as he did in the civil case)” is
not a persuasive basis for finding that, in doing nothing at
all, Hild acted with due diligence. Appellant Supp. Reply
Br. at 8.
Therefore, the district court did not abuse its
discretion in denying Hild’s Rule 33 motion on either of
his claims of newly discovered evidence. 2
II. Brady Claim
As an alternative argument to his second newly
discovered evidence claim, Hild contends that, if the
Foster notes were indeed sufficient to put his trial
counsel on notice of the Bloomberg evidence, then the
Government violated its disclosure obligations under
Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed.
2d 215 (1963). This argument lacks merit.
As before, “[w]e review the denial of a Rule 33 motion
. . . for abuse of discretion.” James, 712 F.3d at 107. “To
make out a Brady violation, a [defendant] must show
2. To the extent Hild argues that the district court also
abused its discretion by denying his request for an extension of
time to develop evidence of Foster’s involvement with Bloomberg,
we are similarly unpersuaded. The district court has discretion to
extend the applicable three-year filing deadline. Fed. R. Crim. P.
33(b)(1); id. 45(b)(1). But when a party moves for such an extension,
good cause is required. Id. 45(b)(1). Given the above, the district
court’s conclusion that Hild failed to show good cause given his
lack of due diligence was not an abuse of discretion.
7a
Appendix A
that material exculpatory or impeachment evidence was
suppressed by the state, either willfully or inadvertently.
In other words, true Brady material must be (1) favorable,
(2) suppressed, and (3) prejudicial.” Jimenez v. Stanford,
96 F.4th 164, 199 (2d Cir. 2024) (cleaned up).
Hild contends that the Government suppressed the
Foster notes by failing to disclose them prominently and
separately from its § 3500 production. However, “[t]he
government’s duty to disclose generally does not include a
duty to direct a defendant to exculpatory evidence within
a larger mass of disclosed evidence.” United States v. Kirk
Tang Yuk, 885 F.3d 57, 86 (2d Cir. 2018) (cleaned up). Nor
did the Government “bury[] [the Foster notes] within a
production of a voluminous, undifferentiated open case
file,” which may also violate Brady. Id. Rather, as we just
explained, the notes “appeared within a production of
. . . nine documents, none of which was longer than three
pages.” Hild, 2024 U.S. Dist. LEXIS 121673, at *12 n.4.
Hild’s reliance on United States v. Gil, 297 F.3d 93 (2d
Cir. 2002), is misplaced. In Gil, we found a Brady violation
where a particular exculpatory memo was, inter alia, (1)
delivered to the defense “not even one full business day
before trial,” (2) “among five reams” of documents, and
(3) “listed on page twelve of a 41-page index designating
over 600 exhibits.” Id. at 106. “Although the . . . memo was
produced before trial,” we explained, “the defense was not
in a position to read it, identify its usefulness, and use it.”
Id. Hild’s counsel was not in a comparable position.
Accordingly, the district court was right to reject
Hild’s Brady claim.
8a
Appendix A
III. Recusal
Hild further argues that the district court abused
its discretion in failing to recuse because Judge Abrams’
spouse is a partner at Davis Polk & Wardwell LLP, a firm
that represented two victim lenders and Interactive Data
Corporation’s parent company. We disagree.
We review the denial of a recusal motion for abuse of
discretion. LoCascio v. United States, 473 F.3d 493, 495 (2d
Cir. 2007). A federal judge must “disqualify [her]self in any
proceeding in which [her] impartiality might reasonably
be questioned.” 28 U.S.C. § 455(a). Furthermore, judges
must recuse themselves if their “spouse . . . has a financial
interest in the subject matter in controversy or in a party
to the proceeding, or any other interest that could be
substantially affected by the outcome of the proceeding.”
Id. § 455(b)(4).
In deciding to remain on the case, the district court
reasoned that § 455 did not require recusal because her
husband was not personally involved in the representation.
This is consistent with our precedent and the Advisory
Committee’s opinion regarding the nature of large modern
law firms like Davis Polk. See Pashaian v. Eccelston Props.,
Ltd., 88 F.3d 77, 83 (2d Cir. 1996); Committee on Codes
of Conduct Advisory Opinion No. 107: Disqualification
Based on Spouse’s Business Relationships, in 2B Guide
to Judiciary Policy, at 207 (June 2009).
What Hild really complains about here is the perceived
inconsistency in Judge Abrams not recusing in this case
despite having recused herself in a previous case for
similar reasons. But that case is not before this Court and
9a
Appendix A
to find an abuse of discretion because a district judge seems
to have chosen differently in superficially similar factual
circumstances does not answer the question whether “an
objective, informed observer could reasonably question
the judge’s impartiality.” United States v. Bayless, 201
F.3d 116, 126 (2d Cir. 2000).
Therefore, we perceive no abuse of discretion in the
district court’s declining to recuse. 3
IV. Ineffective Assistance of Counsel
Hild’s final argument is that he is entitled to a
new trial because his counsel’s failure to connect the
Foster notes to the Bloomberg evidence amounted to
constitutionally ineffective assistance at trial. That claim
was not briefed below, so we decline to reach it here.
Instead, it is best raised on collateral review. See Massaro
v. United States, 538 U.S. 500, 504, 123 S. Ct. 1690, 155
L. Ed. 2d 714 (2003) (observing that “in most cases,” a
§ 2255 motion “is preferable to direct appeal for deciding
claims of ineffective assistance”). We affirm the district
court on Hild’s remaining ineffective assistance claims for
the reasons stated in that thorough and careful decision.
***
3. Since we largely reject Hild’s claims of conviction error,
we also reject his argument that the “cumulative prejudice” of
the alleged errors deprived him of a fair trial. United States v.
Certified Env’t Servs., Inc., 753 F.3d 72, 95 (2d Cir. 2014).
10a
Appendix A
Accordingly, we AFFIRM the judgment of the district
court.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
/s/ Catherine O’Hagan Wolfe
11a
Appendix
B
APPENDIX B — OPINION
OF THE
UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT,
FILED JULY 30, 2025
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
No. 23-6136
UNITED STATES OF AMERICA,
Appellee,
v.
MICHAEL HILD,
Defendant-Appellant.
Filed July 30, 2025
Appeal from the United States District Court
for the Southern District of New York
No. 1:19-cr-602-1, Ronnie Abrams, Judge.
Before: Calabresi, Park, and Nathan, Circuit Judges.
Defendant-Appellant Michael Hild appeals from
a judgment of conviction entered in the United States
District Court for the Southern District of New York
(Abrams, J.). After a two-and-a-half-week trial, Hild was
convicted by a jury of securities fraud, wire fraud, and
bank fraud, as well as conspiracy. The evidence at trial
12a
Appendix B
established that Hild and his co-conspirators at Live Well
Financial, Inc., where he was Chief Executive Officer,
engaged in a multi-year scheme to fraudulently inflate the
value of a portfolio of bonds used as collateral to secure
cash loans.
On appeal, Hild asks us to reverse his conviction as
based on legally insufficient evidence. In the alternative,
he argues that he is entitled to a new trial because
Ciminelli v. United States, 598 U.S. 306, 143 S. Ct. 1121,
215 L. Ed. 2d 294 (2023), decided after his trial, invalidated
one of the theories of fraud on which the jury was
instructed. We conclude that sufficient evidence supports
Hild’s conviction and that he is not otherwise entitled to
a retrial. Accordingly, we AFFIRM the judgment of the
district court.1
Nathan, Circuit Judge:
In 2021, a jury convicted Defendant-Appellant
Michael Hild of securities fraud, wire fraud, bank fraud,
and conspiracy. The evidence at trial established that Hild
and his co-conspirators at Live Well Financial, Inc., where
he was Chief Executive Officer, engaged in a multi-year
scheme to fraudulently inflate the value of a portfolio of
bonds used as collateral to obtain cash loans. The scheme
allowed Live Well to grow its bond portfolio exponentially,
from approximately 15 bonds with a stated value of about
$50 million in 2014 to approximately 50 bonds with a stated
value of over $500 million by the end of 2016.
1. We address Hild’s remaining claims in a summary order
filed today.
13a
Appendix B
Hild now appeals his conviction, challenging the
sufficiency of the evidence and arguing, in the alternative,
that a new trial is warranted because the jury was
erroneously instructed on a now-invalid theory of fraud.
As to the sufficiency of the evidence, Hild contends that
the Government’s proof falls short of showing that he was
responsible for any fraudulent statement or that he acted
with fraudulent intent. We conclude that the Government’s
evidence was legally sufficient for a jury to find that
Hild induced lenders into loaning money to Live Well by
misrepresenting the value of his collateral and that he did
so with the intent to defraud.
As to the charging error, Hild argues that he is entitled
to a new trial because the jury was instructed on a right-tocontrol theory of fraud, which was subsequently invalidated
by the Supreme Court in Ciminelli v. United States, 598 U.S.
306, 143 S. Ct. 1121, 215 L. Ed. 2d 294 (2023). But although
the jury instructions were indeed erroneous, no retrial is
warranted because Hild was convicted on a theory of fraud
that remains valid post-Ciminelli. Thus, we reject Hild’s
challenges and AFFIRM the judgment of the district court.
BACKGROUND
I.
Facts2
This case concerns a scheme by Live Well Financial,
Inc. (Live Well) to secure cash loans by fraudulently
2. The factual background presented here is derived from
the testimony and other evidence presented at trial, and we view
the evidence in the light most favorable to the Government. See
United States v. Brock, 789 F.3d 60, 63 (2d Cir. 2015).
14a
Appendix B
inflating the value of the bonds used as collateral. Live
Well was a private company that originated, serviced, and
securitized government-guaranteed reverse mortgages
know n as Home Equity Conversion Mor tgages. 3
Defendant-Appellant Michael Hild founded Live Well in
2005 and, at all relevant times, was its Chief Executive
Officer and largest shareholder.
At the heart of Live Well’s fraudulent scheme is
a derivative of a particular kind of mortgage-backed
security, known as a Home Equity Conversion Mortgage
“interest only” bond. These bonds entitle the holder to
receive a portion of the interest payments, but not the
principal payments, from a pool of reverse mortgages.
Since holders receive regular interest payments, the bonds
are attractive to investors because they provide a steady
stream of income.
A.
The Stifel Transaction
At Hild’s direction, Live Well first purchased Home
Equity Conversion Mortgage “interest only” bonds in
2014, acquiring a portfolio of roughly 15 bonds for about
$55 million from a company called Stifel Financial. With
the purchase of the portfolio, Hild also hired three Stifel
3. Reverse mortgages are a special type of mortgage loan
designed to provide liquidity to senior homeowners whose net
worth is primarily tied up in their home equity. To securitize
these loans means to pool the loans into bonds, called a mortgagebacked security, that can be sold to investors for profit. Pooling
similar reverse mortgages into bonds allowed Live Well to sell
the mortgages in bulk as opposed to one-by-one.
15a
Appendix B
employees (and eventual co-conspirators) to manage the
portfolio. With Darren Stumberger at the helm, these
employees were referred to as the “trading desk.”
Live Well financed the acquisition and growth of its
bond portfolio largely through loans. Many of its lenders
were securities dealers whose lending arrangements were
structured as bond repurchase agreements, also known as
“repo agreements.” A repo agreement is a collateralized
loan in which title of the collateral is transferred to the
lender. The borrower (Live Well) sells an asset (the bonds)
to the lender with a promise to buy it back, typically after
30 days, at a price with interest. At the end of the period,
lenders generally “roll” the loan forward, but they could
alternatively end the agreement and demand repayment.
In the event of a default, the repo lender is entitled to keep
and sell the collateral to satisfy the borrower’s debt.
Typically, the loan amount was determined by
discounting the value of the underlying bond by 10% to
30%. This “haircut” ensured that the lenders remained
sufficiently collateralized if the value of the bonds
decreased, and it priced in the risk of a lender having to
sell the bonds. As the prices of the collateral fluctuated,
either party could request that the loan amount be
adjusted. If the value decreased, lenders could require
partial repayment of the loan amount via a “margin call,”
and if the value increased, Live Well could request to
borrow more via a “reverse margin call.”
Since lenders generally lacked the expertise to value
the bonds themselves, their loan agreements with Live
16a
Appendix B
Well required that the prices be set by an independent
third party.4 This is where Interactive Data Corporation
(IDC) came in. For example, Live Well’s contract with
one of its lenders, Mirae Asset Securities Inc., required
that the amount of the loan be adjusted based on “the
aggregate Market Value of all Purchased Securities.”
Gov’t Exhibit (GX) 603, at 3. “Market Value,” in turn,
was defined as:
the price for such Securities on [a given] date
obtained from (i) Interactive Data Corporation
(“IDC”) or (ii) if no quotation is available from
IDC, then a generally recognized source agreed
to by the parties or the most recent closing
bid quotation from such a source, plus accrued
Income to the extent not included therein. . . .
Id. at 11.
At the time of the Stifel transaction, IDC lacked the
capability to value the bonds and so relied on “broker
quotes” to provide pricing. Live Well itself provided broker
quotes, which were estimates as to what the bonds could
be sold for in the market. In other words, IDC published
prices provided by Live Well, which were in turn used in
repo agreements to calculate the size of the loans Live
Well could secure from most of its lenders.
4. There was one exception to this rule, since one of Live
Well’s lenders, Nomura, had a trading desk that determined the
bond prices based on the market.
17a
Appendix B
This arrangement was meant to be temporary, and, by
January 2015, IDC had developed its own pricing model
to value the bonds. But Live Well was displeased with that
model. Among other issues, it caused a daily decline in
the bond prices, leading to margin calls from the lenders.
Having to constantly repay the loans caused financial
strain for the company, so Hild directed the trading desk
to “rectify this problem.” App’x at 74. By early 2015, Live
Well and IDC agreed that they would return to the old
“broker quote” system, in which Live Well supplied prices,
and IDC published those prices “verbatim.” Id. at 75.
B. Shift to Scenario 14 Pricing
Later that year, Live Well began to develop its own
internal models to project the value of the bonds. One such
model was Scenario 14. Because Scenario 14 was based on
assumptions that deviated from factors “in the market,”
its prices were typically higher than those for which the
bonds could be sold. App’x at 81. Hild and other Live Well
employees believed that the market underpriced the bonds
because it failed to capture their “intrinsic” value. Id. at
130. And so, Scenario 14 was conceived as an “academic
exercise,” which reflected that sentiment. Id. at 303.
But it soon became much more than that. In September
of 2015, on the heels of a steep decline in the bond prices,
Hild instructed that Scenario 14 prices be submitted to
IDC. Under the Scenario 14 methodology, the value of
the bonds soared, with Live Well’s portfolio appreciating
by about 20 percent or $11 million. But since such a
substantial increase in a single day would set off “alarm
18a
Appendix B
bells,” in Hild’s own words, he directed his employees to
phase in the methodology gradually using a “glide path.”
Id. at 121.
Because most of Live Well’s repo agreements relied
on IDC, Scenario 14 pricing allowed the company to enter
into loan agreements where the loan amount would exceed
the purchase price of the bond, producing an immediate
windfall for Live Well. Eric Rohr, who was Live Well’s
Chief Financial Officer (CFO) until 2019, broke down the
process as follows: Live Well would identify a particular
bond it wished to buy, model the bond using Scenario
14, submit the Scenario 14 valuation to IDC, and then
approach the lenders, who would look up the price on
IDC’s database and use that price to set the terms of the
repo agreement. In a simultaneous transaction, Live Well
would then go out and buy the bond at a lower price than
the Scenario 14 valuation, deliver the bond to the lenders,
and receive a cash loan. Whatever was left over after the
purchase price was paid off would then be swept into Live
Well’s operating accounts. By the end of 2015, this process
had resulted in an increase in the value of the company’s
portfolio of over $47 million.
C.
Liquidity Crisis and Unraveling
In January 2017, one lender, Wedbush, asked to speak
with a Live Well dealer for more information about how
the bonds were being valued. In a recorded call, Hild
and his co-conspirators discussed how to address the
request, which raised concerns because having a broker
price the bond could result in the lenders discovering
19a
Appendix B
that IDC was publishing Scenario 14 prices. The options
discussed ranged from finding a “slimy” dealer willing to
represent that IDC’s prices were correct to attempting to
convince Wedbush of Live Well’s methodology. App’x at 96.
Wedbush also sought to reduce Live Well’s credit line and
to stop lending against certain bonds, which triggered a
liquidity crisis at Live Well, since selling the bonds was not
enough for the company to pay down its debt. According
to Rohr, defaulting on its debt to Wedbush would create
cross-defaults with other lenders, likely leading Live Well
to insolvency.
Faced with this liquidity crisis, Hild ordered the
trading desk to hike up the bond prices above Scenario 14
values. No market rationale was supplied for this increase.
With the new “Scenario 4” methodology, the trading
desk gradually—to avoid raising “red flags”—marked up
the portfolio by over $36 million. App’x at 348. Some six
months later, however, Live Well reversed the Scenario
4 price increases, returning its quotes to about Scenario
14 values.
It was at this point that Live Well’s scheme began to
unravel. That same year, Live Well received a subpoena
from the Securities and Exchange Commission (SEC),
which led to a two-year investigation. And, over time,
more lenders grew wary about how the bonds were valued.
In 2018, for example, an investment bank informed the
Industrial and Commercial Bank of China that the bonds
had been priced at 50 percent above market value. As
lenders discovered these discrepancies, they attempted
to scale back the size of their loans, but Live Well did not
have the money to cover its obligations.
20a
Appendix B
By 2019, amidst one lender’s efforts to call in its debt,
Glen Haddock, who had replaced Rohr as CFO, began
to suspect that Live Well’s valuations were inflated. In
investigating the matter, Haddock learned for the first
time that Live Well had been supplying prices to IDC and
that it had been modeling the bonds based on assumptions
that he believed were unrealistic. Convinced that Live Well
was overstating the value of its bond portfolio, Haddock
ultimately refused to sign the company’s financial
statements, effectively forcing Live Well to shutter.
II. Procedural History
Not long after Live Well ceased operations, Hild was
charged in a five-count indictment with conspiracy to
commit securities fraud, in violation of 18 U.S.C. § 371;
conspiracy to commit wire and bank fraud, in violation of
18 U.S.C. § 1349; securities fraud, in violation of 15 U.S.C.
§§ 78j(b) & 78ff and 17 C.F.R. § 240.10b-5; wire fraud, in
violation of 18 U.S.C. § 1343; and bank fraud, in violation
of 18 U.S.C. § 1344.
Hild maintained his innocence and proceeded to trial.
After two and a half weeks of trial, the jury found him
guilty on all counts. Hild then moved for a judgment of
acquittal challenging the sufficiency of the evidence and,
in the alternative, for a new trial, pursuant to Federal
Rules of Criminal Procedure 29 and 33. The district court
denied both motions and sentenced Hild to 44 months’
imprisonment. Hild timely appealed.
While his appeal was pending, Hild filed a second
Rule 33 motion, alleging, as relevant, that the Supreme
21a
Appendix B
Court’s decision in Ciminelli v. United States, 598 U.S.
306, 143 S. Ct. 1121, 215 L. Ed. 2d 294 (2023), which he
asserted renders his jury instructions invalid, requires a
new trial. The district court declined to reach the issue,
deferring decision to our Court in his pending appeal. Hild
subsequently amended his notice of appeal to include the
Ciminelli challenge.
DISCUSSION
On appeal, Hild asks us to reverse his conviction for
lack of sufficient evidence. In the alternative, he asserts
that he is entitled to a new trial based on charging error.
We conclude that sufficient evidence supports Hild’s
conviction and that he is not otherwise entitled to a retrial.
I.
Sufficiency of the Evidence
Hild first argues that the evidence adduced at trial was
insufficient as a matter of law to support his conviction.
He contends that the Government failed to prove (1) that
he misrepresented the value of the bonds, or (2) that he
had fraudulent intent. We disagree.
We review preserved sufficiency-of-the-evidence
challenges de novo, but “defendants face a heavy burden,
as the standard of review is exceedingly deferential.”
United States v. Baker, 899 F.3d 123, 129 (2d Cir. 2018)
(quotation marks omitted). A jury’s verdict must be upheld
“if, crediting every inference that could have been drawn
in the government’s favor and viewing the evidence in the
light most favorable to the prosecution, any rational trier
22a
Appendix B
of fact could have found the essential elements of the crime
beyond a reasonable doubt.” United States v. Capers, 20
F.4th 105, 113 (2d Cir. 2021) (cleaned up). In a conspiracy
case, the deference accorded a jury’s verdict is “especially
important” because “a conspiracy by its very nature is a
secretive operation, and it is a rare case where all aspects
of a conspiracy can be laid bare in court with the precision
of a surgeon’s scalpel.” United States v. Landesman, 17
F.4th 298, 320 (2d Cir. 2021) (quotation marks omitted).
Each count of Hild’s indictment required that the jury
find that (1) Hild had engaged in an act to defraud (or had
conspired to do so), and (2) that he had done so with the
intent to perpetrate a fraud. As to the act to defraud, a
§ 78j(b) securities fraud conviction requires a “material
misrepresentation (or a material omission if the defendant
had a duty to speak)” or the use of a “fraudulent device”
“in connection with the purchase or sale of a security.”
United States v. Gramins, 939 F.3d 429, 444 (2d Cir. 2019)
(quotation marks omitted). And to sustain a conviction
for bank fraud, the Government must prove a “scheme
or artifice” to (1) defraud a financial institution, or (2)
obtain money or property under the “custody or control”
of a financial institution “by means of false or fraudulent
pretenses, representations, or promises.” 18 U.S.C.
§ 1344; see also United States v. Bouchard, 828 F.3d 116,
124, 126 (2d Cir. 2016). The wire fraud statute is similar,
also requiring the jury find a “scheme or artifice” with
“money or property as an object” of the scheme. Kousisis
v. United States, 605 U.S. 114, 145 S. Ct. 1382, 1390, 221
L. Ed. 2d 781 (2025) (quotation marks omitted) (quoting
18 U.S.C. § 1343; and then Ciminelli, 598 U.S. at 312).
23a
Appendix B
All three statutes require that the defendant’s conduct
be intentional. See, e.g., United States v. Litvak, 808 F.3d
160, 178 (2d Cir. 2015) (affirming that scienter for a § 78j(b)
securities fraud conviction “embrac[es] intent to deceive,
manipulate or defraud” (quotation marks omitted)); United
States v. Calderon, 944 F.3d 72, 85 (2d Cir. 2019) (“[B]
oth wire fraud and bank fraud require the Government
to prove that the defendant had an intent to deprive the
victim of money or property.”).
Hild challenges the sufficiency of the evidence on both
of these fronts. On his theory, the proof at trial established
that Scenario 14 pricing represented a “good-faith effort
to determine accurate values for the bonds in the context
of a highly illiquid market.” Appellant Br. at 25. Live Well
was not required to submit prices at which the bonds could
be immediately bought and sold in the market, and there
was no proof that market participants would not have paid
Scenario 14 prices if Live Well’s methodology had been
disclosed. On the contrary, Hild and his co-conspirators
believed that market participants would have paid
Scenario 14 prices and only kept the methodology under
wraps to preserve Live Well’s business advantage. Thus,
Hild asserts, the Government did not prove that he caused
any fraudulent statement to be made or that he acted with
fraudulent intent.
None of Hild’s arguments are persuasive. As to the
fraud itself, a rational juror could certainly find that
the Government proved beyond a reasonable doubt that
Hild obtained loans based on the false or deceptive claim
that IDC’s prices reflected market prices. See Gramins,
24a
Appendix B
939 F.3d at 444 (requiring, inter alia, a “material
misrepresentation (or a material omission if the defendant
had a duty to speak)” “in connection with the purchase or
sale of a security” for a § 78j(b) securities fraud conviction);
Calderon, 944 F.3d at 85 (“[T]o sustain a conviction under
[the wire and bank fraud statutes], the Government
must prove that the defendant in question engaged
in a deceptive course of conduct by making material
misrepresentations.” (emphasis omitted)). Indeed, plenty
of evidence was presented at trial that Hild deceived Live
Well’s lenders by (1) negotiating loan agreements based
on the understanding that IDC would provide the market
price of the bonds—that is, the prices at which the bonds
could be immediately bought and sold—while (2) feeding
prices to IDC that were well above the market price.
To begin, the jury had an ample basis to conclude
that Hild agreed to borrow from the lenders based on
market prices as quoted by IDC. Live Well’s borrowing
agreements with the lenders pegged the loan amount to
the “market value” of the securities, defined as the price
for such securities obtained from IDC or, alternatively, “a
generally recognized source agreed to by the parties or
the most recent closing bid quotation from such a source.”
App’x at 203, 228. Rohr explained that a bid is “what
someone is willing to pay for an asset . . . to complete its
sales transaction,” i.e., a market price. Id. at 293. Because
the contracts packaged these options as a “market value”
and provided “most recent closing bid quotation” as an
alternative, the jury could infer that Live Well billed the
loan agreements as based on market prices.
25a
Appendix B
Consistent with this evidence, trial testimony
generally showed that market prices were the whole
ballgame for repo agreements, dictating how much cash
was lent, who could make margin calls, whether Live Well
could cover its debt, and how much lenders could recoup
if Live Well defaulted. As one lender explained:
From a repo perspective, we’re not an investor
looking at intrinsic value and not thinking of
that over the life of this investment we’re going
to get back X return, I’m more interested in
the liquidity, where can I sell it on the market.
What does the market pay for this bond today?
App’x at 204.
Indeed, both Stumberger and Rohr further testified
that lenders relied on IDC to provide bond valuations
intended to approximate market rates. So too did the
lenders. Based on this evidence, the jury could find that
the lenders agreed to extend credit to Live Well with the
expectation that IDC would provide the market price of
its collateral.
In resisting this conclusion, Hild points to language
in IDC’s subscription agreement cautioning that quoted
prices “may not conform to actual purchase or sale prices
in the marketplace.” Appellant Br. at 29. But, as the
district court observed, in context, the agreement makes
clear that IDC’s rates represent an attempt to capture
“’what the holder [of a security] would receive in an
orderly transaction . . . under current market conditions,’”
26a
Appendix B
that is, a market price. App’x at 646. And even if this
language could be read to suggest that Hild never falsely
stated that IDC prices were market prices, there was
sufficient evidence for the jury to conclude that, based on
Hild’s omissions and misstatements, lenders reasonably
expected that IDC’s rates were tied to the market. See
United States v. Autuori, 212 F.3d 105, 115 (2d Cir. 2000)
(explaining that a scheme to defraud “is characterized
by a departure from community standards of fair play
and candid dealings” (quotation marks omitted)); see also
United States v. Trapilo, 130 F.3d 547, 550 n.3 (2d Cir.
1997) (“The scheme exists although no misrepresentation
of fact is made.” (quotation marks omitted)).
In addition, the Government’s proof also permitted a
reasonable jury to find that the Scenario 14 and later the
Scenario 4 prices that Hild caused Live Well to submit to
IDC differed substantially from market prices. For one,
Live Well kept records demonstrating the differences
between market prices and Scenario 14 prices. And,
according to an SEC chart shown at trial, with the onset
of Scenario 14, there were bigger (upward) gaps between
the prices at which Live Well bought bonds and their
subsequent IDC valuation. The jury also heard multiple
recorded phone calls in which Hild and his co-conspirators
discussed the disparity. As the district court observed,
that Live Well routinely purchased bonds at one price,
and immediately generated cash via the loans that were
based on much higher IDC prices further supports this
conclusion. Plus, Stumberger and Rohr both testified
that Live Well’s internal valuation was well above market
value. As to Scenario 4, the jury heard testimony that Hild
27a
Appendix B
implemented arbitrary price increases beyond Scenario
14, which were, as established, already above market, to
survive the 2017 liquidity crisis.
Against this backdrop, whether Live Well could have
sold the bonds at Scenario 14 prices had its methodology
been disclosed is immaterial. Even assuming market
participants would have bought into the Scenario 14
methodology, the fact of the matter is that it was not
disclosed. Thus, the market was not transacting at
Scenario 14 prices. And yet, the jury learned that Hild
secured loans based on lenders’ belief that IDC prices
were market prices, when they were actually markedup Scenario 14 prices. In sum, sufficient evidence was
presented for a reasonable jury to find that Hild induced
Live Well’s lenders to extend credit by deceiving them as
to the value of his collateral.
As to the intent to defraud, Hild’s arguments fare no
better. “[D]irect proof of defendant’s fraudulent intent is
not necessary”; rather, “[i]ntent may be proven through
circumstantial evidence.” United States v. Guadagna,
183 F.3d 122, 129 (2d Cir. 1999). And “[w]here the false
representations are directed to the quality, adequacy or
price of the goods themselves, the fraudulent intent is
apparent because the victim is made to bargain without
facts obviously essential in deciding whether to enter the
bargain.” United States v. Binday, 804 F.3d 558, 578 (2d
Cir. 2015) (emphasis added) (quotation marks omitted),
abrogated on other grounds by, Ciminelli, 598 U.S. at 31316. Here, the jury was presented with more than enough
evidence to find that Hild knowingly caused Live Well to
28a
Appendix B
submit above-market bond prices to IDC, fully aware that
the lenders understood those prices (and thus the terms
of their loans) to reflect market values, and that he did so
to increase Live Well’s liquidity.
At trial, Stumberger and Rohr testified that Hild
directed them to increase the prices submitted to IDC to
boost the company’s ability to borrow from lenders. And
even beyond the evidence of the scheme, which may itself
speak to a defendant’s fraudulent intent, see Guadagna,
183 F.3d at 130, there was plenty of circumstantial
evidence of Hild’s state of mind. In one recorded call, Hild
himself described Scenario 14 as a “self-generating money
machine.” App’x at 305 (quotation marks omitted). And in
the call regarding Wedbush’s request for a third-party
quote, Stumberger remarked that the lender did not care
about Live Well’s estimation of the bonds’ purportedly
“intrinsic” value, but rather “about the market,” to which
Hild responded “[t]here’s no debating that.” Id. at 96-97.
On that call, he and his co-conspirators also discussed
how to best avoid detection, including the possibility of
recruiting a “slimy” broker to help prevent Wedbush from
learning of the discrepancy between their valuations of
the bonds and their market price. Id. at 96. As the district
court concluded, it is reasonable to infer from these
statements that Hild knew that supplying above-market
Scenario 14 prices to IDC “was at best misleading, and
that he understood the need to prevent the lenders from
learning of the fraud.” United States v. Hild, 644 F. Supp.
3d 7, 30 (S.D.N.Y. 2022); see also Binday, 804 F.3d at 578
(explaining that fraudulent intent may be proven “by
showing that [the] defendant made misrepresentations
29a
Appendix B
to the victim(s) with knowledge that the statements were
false” (quotation marks omitted)).
In addition to these statements, on various occasions,
Hild directed Live Well employees to take steps to prevent
discovery of the scheme. To avoid setting off “alarm bells”
when adopting the Scenario 14 prices, Hild instructed that
the trading desk implement those prices incrementally, on
a “glide path.” App’x at 83. The same conduct was repeated
during the liquidity crisis in 2017. Hild also directed that
Live Well buy whole tranches of bonds, so that no one in the
market could see that the prices for Live Well’s bonds did
not match the prices from comparable bonds in a tranche.
And when lenders began to ask questions about the value
of Live Well’s collateral, Hild disclaimed any knowledge of
why IDC’s valuations might be significantly higher than
those of a different company that had more recently begun
pricing the bonds. He also transferred approximately $17
million from his own account to an account in the name of
his wife’s business. Together, Hild’s statements, his efforts
to conceal the Scenario 14 scheme, and his co-conspirators’
testimony were sufficient for a reasonable jury to find that
Hild acted with the “conscious knowing intent to defraud.”
Guadagna, 183 F.3d at 129 (quotation marks omitted).
Nothing in United States v. Connolly, 24 F.4th 821 (2d
Cir. 2022), on which Hild principally relies, compels the
opposite conclusion. In Connolly, bankers were charged
with inducing their coworkers to make false or misleading
statements in submitting hypothetical borrowing rates
to the British Bankers Association. See id. at 824. The
Association’s guidelines stipulated that rate submissions
30a
Appendix B
should reflect “the rate at which [the bank] could borrow
funds, were it to do so.” Id. at 835 (emphasis omitted). The
evidence did not show that the defendants’ bank could
not borrow at the interest rates stated in the defendants’
submissions. See id. at 835-36. Rather, the Government
argued that these submissions were false or misleading
because they deviated from the rates produced by
the bank’s pricing model and considered the bank’s
own financial interests. See id. at 836. In reversing
the bankers’ convictions, we found that, “viewed as a
whole,” the trial evidence did not sufficiently support
the Government’s theory of fraud because there was no
“one true interest rate” at which the bank could borrow
funds. Id. at 837. We also held that there was no “trick,
deceit, chicane or overreaching,” McNally v. United
States, 483 U.S. 350, 358, 107 S. Ct. 2875, 97 L. Ed. 2d
292 (1987) (quotation marks omitted), because the bank’s
submissions “did not implicitly represent that there had
been no consideration of [its] existing trades,” Connolly,
24 F.4th at 842.
In Hild’s view, that the Government in Connolly was
required to prove falsity by showing that the bankers’
submissions reflected rates at which their bank could
not have borrowed, see 24 F.4th at 842-43, means that
in this case it had to show that Live Well’s submissions
to IDC reflected prices at which the bonds could not
have been resold if its methodology were disclosed.
But as we have already explained, whether Live Well
could have sold the bonds at Scenario 14 prices had its
methodology been disclosed is immaterial. And while it
is true here, as it was in Connolly, see id. at 843, that the
31a
Appendix B
mere unfairness of Hild’s actions would not be sufficient
to establish fraudulent conduct or intent, that is not
what the Government’s theory boils down to. Unlike in
Connolly, the Government sufficiently established that
there was at least an implicit understanding that Live
Well’s repo agreements were based on market prices,
to be determined by IDC, and that, despite being aware
of this fact, Hild caused quotes to be submitted that he
knew could not be obtained in the market to keep Live
Well flush with cash.
Plus, the Government did not rely exclusively on Live
Well’s submissions to IDC to establish that Hild engaged
in a scheme to defraud. It also presented evidence that
Hild secured the repo loans by misrepresenting the value
of Live Well’s assets in the company’s financial statements.
These statements listed Live Well’s largest asset, the
Home Equity Conversion Mortgage “interest only” bond
portfolio, as valued at “exit price”—meaning the price for
which a buyer and seller would transact. App’x at 326. And
yet, Live Well was using the inflated Scenario 14 prices to
value the portfolio. The lenders relied on these financial
statements in determining how much credit to extend
to Live Well. Based on this evidence, a reasonable jury
could further conclude that Hild made false or deceptive
statements in Live Well’s financial statements to obtain
the loans.
Accordingly, we find that Hild’s convictions were based
on legally sufficient evidence.
32a
Appendix B
II. Yates Error
In the alternative, Hild argues that he is entitled to a
new trial because Ciminelli v. United States, 598 U.S. 306,
143 S. Ct. 1121, 215 L. Ed. 2d 294 (2023), which was decided
after his trial, invalidated one of the theories of fraud on
which the jury was instructed. Although we agree that,
under Ciminelli, the district court erred in instructing
the jury on a right-to-control theory of wire fraud, we
conclude that Hild is not entitled to new trial because
he was convicted on a theory of fraud that remains valid
post-Ciminelli, and the court’s error did not otherwise
taint his convictions.
Under Yates v. United States, 354 U.S. 298, 77 S. Ct.
1064, 1 L. Ed. 2d 1356 (1957), “a jury verdict constitutes
legal error when a jury, having been instructed on two
disjunctive theories of culpability, one valid and the other
invalid, renders a guilty verdict in circumstances that
make it impossible to tell which ground the jury selected.”
United States v. Laurent, 33 F.4th 63, 86 (2d Cir. 2022)
(citing Yates, 354 U.S. 298). We review unpreserved Yates
claims for plain error. See id. To meet this standard, Hild
must show that: “(1) there is an error; (2) the error is clear
or obvious, rather than subject to reasonable dispute;
(3) the error affected [his] substantial rights; and (4) the
error seriously affects the fairness, integrity or public
reputation of judicial proceedings.” United States v.
Moore, 975 F.3d 84, 90 (2d Cir. 2020).
As explained, the wire fraud statute requires a
“scheme or artifice to defraud” with “money or property
33a
Appendix B
as an object of [the] fraud.” Kousisis, 145 S. Ct. at 1390
(quotation marks omitted) (quoting 18 U.S.C. § 1343; and
then Ciminelli, 598 U.S. at 312). The “money or property”
requirement “limit[s] the ‘scheme or artifice to defraud’
element because the ‘common understanding’ of the words
‘to defraud’ when the statute was enacted referred ‘to
wronging one in his property rights.’” Ciminelli, 598
U.S. at 312 (quoting Cleveland v. United States, 531 U.S.
12, 19, 121 S. Ct. 365, 148 L. Ed. 2d 221 (2000)). Prior to
Ciminelli, we considered qualifying “property rights”
to include “intangible interests,” “such as the right to
control the use of one’s assets.” Calderon, 955 F.3d at
88 (quotation marks omitted). Thus, a defendant could
violate § 1343 “simply by scheming to deprive a victim of
potentially valuable economic information necessary to
make discretionary economic decisions.” Kousisis, 145 S.
Ct. at 1398 (cleaned up) (quoting Ciminelli, 598 U.S. at
310). But Ciminelli rejected this “right-to-control” theory,
reasoning that it “cannot be squared with the text of the
federal fraud statutes,” 598 U.S. at 314, which “criminalize
only schemes to deprive people of traditional property
interests,” id. at 309.
In instructing the jury on wire fraud, the district
court explained, without objection from Hild, that
the Government must “prove that the alleged scheme
contemplated depriving another of money or property,”
and that “a person is not deprived of money or property
only when someone directly takes his money or property,”
but also “when he is deprived of a right to control that
money or property.” App’x at 630 (emphasis added). Since
these instructions define “property” to include the “right
34a
Appendix B
to control” property in the manner Ciminelli now forbids,
they constitute a “clear or obvious” error. United States
v. Marcus, 628 F.3d 36, 42 (2d Cir. 2010) (quotation marks
omitted). This conclusion applies with equal force to the
wire fraud conspiracy count, which expressly incorporated
by reference the erroneous jury instruction. See United
States v. Jackson, 180 F.3d 55, 72 (2d Cir. 1999) (setting
aside a conspiracy conviction that incorporated the
erroneous instruction on the substantive count), overruled
on other grounds on reh’g, 196 F.3d 383 (2d Cir. 1999). 5
However, this Yates error did not, as is required for
us to vacate a conviction on plain error review, affect
Hild’s substantial rights. To show an erroneous jury
instruction affected his substantial rights, the defendant
must show “a reasonable probability that the jury would
not have convicted him absent the error.” Marcus, 628
F.3d at 42. In the context of Yates errors, we have also
described this test as requiring us “to determine whether
the defendant was prejudiced by the error by asking
whether the erroneous jury instruction was harmless
beyond a reasonable doubt.” United States v. Capers, 20
F.4th 105, 123 (2d Cir. 2021) (quotation marks omitted);
see also United States v. Laurent, 33 F.4th 63, 87 n. 10
(2d Cir. 2022) (explaining that there “does not appear to
be an appreciable differen[ce] between these standards”
(quotation marks omitted)). Here, there is no reasonable
5. Hild argues that Ciminelli renders the instructions as to
bank fraud and bank fraud conspiracy erroneous as well. We need
not decide that question, since even assuming that were the case,
we conclude that the Yates error did not affect his substantial
rights for the reasons explained below.
35a
Appendix B
probability that the jury would have acquitted Hild if
they had not been instructed on a right-to-control theory
of fraud.
Hild argues that the Government advanced two
theories at trial: One was a right-to-control theory of
fraud, which posited that Hild deceived lenders as to
IDC’s independence and so deprived them of the ability to
make an informed economic decision about what to do with
their money. And the other was a traditional property
theory of fraud, which contended that Hild deceived
lenders as to the value of the bonds to secure loans and
so deprived them of their money. And because the jury
rendered a general verdict, it is impossible to know on
which theory he was convicted.
It is true that the Government elicited testimony that
Live Well did not disclose, and that lenders did not know,
that Live Well was puppeteering IDC’s prices and would
not have extended loans if they had. Hild is also right that
the Government emphasized that he misled the lenders
into believing that they were receiving third-party pricing
for Live Well’s collateral.
But the Government’s primary theory at trial was, by
a long shot, a traditional fraud theory: that Hild cheated
lenders out of their money by overstating the market value
of Live Well’s collateral (by way of IDC) and, to a lesser
extent, of its assets (through its financial statements).
And, although the two theories are not quite “one and the
same,” Gov’t Br. at 25, the evidence supporting any rightto-control theory “form[ed] part of a single narrative”
36a
Appendix B
in service of the traditional fraud theory, United States
v. Eldridge, 2 F.4th 27, 39 (2d Cir. 2021), vacated and
remanded on other grounds, 142 S. Ct. 2863 (2022).
The point of emphasizing that lenders expected IDC
to be independent, for example, was often to show that
lenders expected its prices to reflect market values, since
the owner of the collateral has an incentive to artificially
inflate its value, and so that, in relying on IDC, the
lenders were extending credit to Live Well based on
what they believed were market prices. And showing that
Live Well successfully kept lenders in the dark about its
role in supplying prices to IDC for so long was part of
establishing how Hild managed to trick them as to the
value of his collateral to get their money. It was because
the lenders did not know that Live Well was effectively
pulling the strings at IDC that Hild managed to turn
Scenario 14 (and later Scenario 4) into a “self-generating
money machine.” App’x at 305 (quotation marked omitted).
In this sense, the two theories of liability, to the extent
there were two theories, were inextricably intertwined.
For this reason, there is no reasonable probability that
the jury solely convicted Hild on a right-to-control theory.
Or, put differently, it is beyond a reasonable doubt that
the jury convicted Hild on a traditional theory of fraud.
The outcome of this case might be different if, for
instance, the Government had argued to the jury that it
need not prove that Hild inflated the value of his collateral
to secure the loans because it could convict on a right-tocontrol theory alone. Cf., e.g., United States v. Skelos, 707
F. App’x 733, 737-38 (2d Cir. 2017) (vacating convictions
37a
Appendix B
due to Yates error where, among other things, the
Government expressly argued that the later-invalidated
theory was sufficient to carry its burden on an element of
the crime). Or if the evidence supporting each theory of
liability was sufficiently distinct so as to raise reasonable
doubts as to whether the jury would have convicted Hild
absent the Yates error. But that is simply not the case.
Hild derives no support from the remaining cases
on which he relies. In United States v. Silver, 864 F.3d
102, 124 (2d Cir. 2017), we found that the use of certain
overbroad jury instructions, later invalidated by the
Supreme Court, warranted vacatur of the defendant’s
convictions. But, unlike here, most of the acts proved by
the Government in that case no longer clearly fell within
the ambit of the statutory definition that had been clarified.
See id. at 119-124. And in United States v. Bruno, 661 F.3d
733, 739-40 (2d Cir. 2011), we vacated several convictions
based largely on the Government’s concession, so that
opinion contains little reasoning that bears on whether the
erroneous instruction affected Hild’s substantial rights.
In any event, the district court in Bruno had instructed
the jury solely on a theory of fraud that was subsequently
rejected by the Supreme Court. See id. at 740, 742. Since
Hild’s jury was instructed on a still-valid theory of fraud,
as well as the now-invalid right-to-control theory, Bruno
sheds no light on his circumstances.
Further, to the extent Hild argues that his securities
fraud convictions should be vacated due to “spillover
prejudice” from the erroneous jury instructions, that
argument is meritless. “Prejudicial spillover occurs where
38a
Appendix B
‘the jury, in considering one particular count or defendant,
was affected by evidence that was relevant only to a
different count or defendant.’” United States v. Sullivan,
118 F.4th 170, 211 (2d Cir. 2024) (emphasis added). Since
the alleged right-to-control evidence explains how Hild
mispresented the value of the bonds, that evidence was
relevant with respect to the securities fraud counts.
Therefore, we find that neither the Yates error nor any
purported prejudicial spillover entitles Hild to a new trial.
CONCLUSION
The judgment of the United States District Court for
the Southern District of New York is AFFIRMED.
39a
Appendix C ORDER OF THE
APPENDIX C — SUMMARY
UNITED STATES COURT OF APPEALS FOR
THE SECOND CIRCUIT, DECIDED JULY 30, 2025
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
No. 23-6136-cr
UNITED STATES OF AMERICA,
Appellee,
v.
MICHAEL HILD,
Defendant-Appellant.
PRESENT:
GUIDO CALABRESI,
MICHAEL H. PARK,
ALISON J. NATHAN,
Circuit Judges.
Decided July 30, 2025
Appeal from a judgment of the United States District
Court for the Southern District of New York (Abrams, J.).
UPON DUE CONSIDERATION, IT IS HEREBY
ORDERED, ADJUDGED, AND DECREED that the
judgment of the district court is AFFIRMED.
40a
Appendix C
Defendant-Appellant Michael Hild appeals from a
January 31, 2023 judgment of the United States District
Court for the Southern District of New York (Abrams,
J.) convicting him of securities fraud, wire fraud, and
bank fraud, as well as conspiring to do so. The evidence
at trial established that Hild and his co-conspirators at
Live Well Financial, Inc., where he was Chief Executive
Officer, engaged in a multi-year scheme to fraudulently
inflate the value of a portfolio of bonds used as collateral
to secure cash loans.
On appeal, Hild asks us to reverse his conviction as
based on legally insufficient evidence. In the alternative,
he argues that he is entitled to a new trial based on
erroneous jury instructions, newly discovered evidence,
Brady violations, the district court’s alleged failure to
recuse, and ineffective assistance of counsel. We address
Hild’s sufficiency and charging error challenges in an
opinion filed today and his remaining challenges in this
summary order. We assume the parties’ familiarity with
the underlying facts, procedural history, and issues on
appeal.
I.
Newly Discovered Evidence
Hild argues that we should grant him a new trial
based on newly discovered evidence. He brings two claims
to this effect, both of which we reject.
“We review the denial of a Rule 33 motion for a new
trial for abuse of discretion.” United States v. James,
712 F.3d 79, 107 (2d Cir. 2013). “A district court abuses
41a
Appendix C
its discretion when (1) its decision rests on an error of
law (such as application of the wrong legal principles) or
a clearly erroneous factual finding, or (2) its decision—
though not necessarily the product of a legal error or
a clearly erroneous factual finding—cannot be located
within the range of permissible decisions.” In re Bank of
Am. Corp. Sec., Derivative, & Emp. Ret. Income Sec. Act
(ERISA) Litig., 772 F.3d 125, 132 (2d Cir. 2014) (cleaned
up).
To prevail on a Rule 33 motion based on a claim of
newly discovered evidence, the defendant must show
“(1) that the evidence is newly discovered after trial; (2)
that facts are alleged from which the court can infer due
diligence on the part of the movant to obtain the evidence;
(3) that the evidence is material; (4) that the evidence is
not merely cumulative or impeaching; and (5) that the
evidence would likely result in an acquittal.” James, 712
F.3d at 107 (cleaned up).
A.
Coupon Payments
Hild’s first claim of newly discovered evidence concerns
affidavits from victim lenders that the Government
submitted in support of its proposed order of restitution
two years after trial. These affidavits show that the
lenders have received millions in coupon payments for
holding the bonds that Live Well offered as collateral.
As the district court concluded, Hild’s claim fails, at
a minimum, on the third and fifth prongs of the analysis.
At bottom, the amount of the lenders’ coupon payments
42a
Appendix C
is not material to the issues at trial. The prosecution did
not have to prove actual harm, so whether the lenders
lost money is legally irrelevant for Hild’s convictions. See
Kousisis v. United States, 605 U.S. 114, 145 S. Ct. 1382,
1392, 1396-97, 221 L. Ed. 2d 781 (2025); United States v.
Litvak, 808 F.3d 160, 178 (2d Cir. 2015). As this evidence
was not material, it was not likely to result in an acquittal.
B. Bloomberg Evidence
Hild’s second claim of newly discovered evidence points
to evidence suggesting that one of his co-conspirators,
Dan Foster, influenced the Bloomberg market pricing
referenced at trial.1
The district court found that Hild failed to show that
evidence of Foster’s involvement in Bloomberg’s pricing
methodology “could not with due diligence have been
discovered before or during trial.” United States v. Alessi,
638 F.2d 466, 479 (2d Cir. 1980). It explained that “nearly
a month before trial,” the Government disclosed notes of
its interview of Foster, indicating “that that Foster may
well have influenced Bloomberg’s pricing.” United States
v. Hild, 2024 U.S. Dist. LEXIS 121673, at *11 (S.D.N.Y.
July 10, 2024). The notes read as follows:
Also still does consulting for Baird. Advising
Bloomberg for HECM questions. Secondly,
they give list of bonds that they request weekly
1. Foster cooperated with the Government but did not testify
at trial.
43a
Appendix C
quotes on. DF provides quotes on HMBS,
IOs, floaters, inverse Ios. Multiple people do
this for Bloomberg; DF’s is not used directly
by Bloomberg. Does not know details of their
process.
Id. (emphasis added by the district court).
With these notes in hand, the court reasoned, Hild
could have “with due diligence” uncovered the evidence
at issue. Id. at *12.
We see no abuse of discretion in the court’s conclusion.
Taking each of Hild’s arguments in turn, it is not true that
the district court’s interpretation “cannot be squared with
the plain text.” Appellant Supp. Br. at 19. The notes do
not state, as Hild suggests, that Bloomberg did not rely
on Foster’s notes at all, such that they could not have
put his trial counsel on notice of the so-called Bloomberg
evidence. Nor do the notes suggest that “Foster had only
just begun advising Bloomberg in 2021,” that is, after the
2018-19 period that was the subject of testimony at trial,
as opposed to since 2017. Id. (cleaned up). To the contrary,
the notes say that Foster “still does consulting for Baird.
Advising Bloomberg for HECM questions,” Hild, 2024
U.S. Dist. LEXIS 121673, at *11 (emphasis added by the
district court), which signals he had been doing this work
for some time.
Further, although Hild argues that the Foster
notes were “buried” in the Government’s 18 U.S.C.
§ 3500 production, Appellant Supp. Br. at 19, the notes
44a
Appendix C
were disclosed several weeks before trial, on March 19,
2021, seemingly one day after being typed up. And they
“appeared within a production of . . . nine documents,
none of which was longer than three pages.” Hild, 2024
U.S. Dist. LEXIS 121673, at *12 n.4. Finally, that Foster
“could have avoided the subpoena . . . or refused to testify
under the Fifth Amendment (as he did in the civil case)” is
not a persuasive basis for finding that, in doing nothing at
all, Hild acted with due diligence. Appellant Supp. Reply
Br. at 8.
Therefore, the district court did not abuse its
discretion in denying Hild’s Rule 33 motion on either of
his claims of newly discovered evidence. 2
II. Brady Claim
As an alternative argument to his second newly
discovered evidence claim, Hild contends that, if the
Foster notes were indeed sufficient to put his trial
counsel on notice of the Bloomberg evidence, then the
Government violated its disclosure obligations under
Brady v. Maryland, 373 U.S. 83, 83 S. Ct. 1194, 10 L. Ed.
2d 215 (1963). This argument lacks merit.
2. To the extent Hild argues that the district court also
abused its discretion by denying his request for an extension of
time to develop evidence of Foster’s involvement with Bloomberg,
we are similarly unpersuaded. The district court has discretion to
extend the applicable three-year filing deadline. Fed. R. Crim. P.
33(b)(1); id. 45(b)(1). But when a party moves for such an extension,
good cause is required. Id. 45(b)(1). Given the above, the district
court’s conclusion that Hild failed to show good cause given his
lack of due diligence was not an abuse of discretion.
45a
Appendix C
As before, “[w]e review the denial of a Rule 33 motion
. . . for abuse of discretion.” James, 712 F.3d at 107. “To
make out a Brady violation, a [defendant] must show
that material exculpatory or impeachment evidence was
suppressed by the state, either willfully or inadvertently.
In other words, true Brady material must be (1) favorable,
(2) suppressed, and (3) prejudicial.” Jimenez v. Stanford,
96 F.4th 164, 199 (2d Cir. 2024) (cleaned up).
Hild contends that the Government suppressed the
Foster notes by failing to disclose them prominently and
separately from its § 3500 production. However, “[t]he
government’s duty to disclose generally does not include a
duty to direct a defendant to exculpatory evidence within
a larger mass of disclosed evidence.” United States v. Kirk
Tang Yuk, 885 F.3d 57, 86 (2d Cir. 2018) (cleaned up). Nor
did the Government “bury[] [the Foster notes] within a
production of a voluminous, undifferentiated open case
file,” which may also violate Brady. Id. Rather, as we just
explained, the notes “appeared within a production of
. . . nine documents, none of which was longer than three
pages.” Hild, 2024 U.S. Dist. LEXIS 121673, at *12 n.4.
Hild’s reliance on United States v. Gil, 297 F.3d 93 (2d
Cir. 2002), is misplaced. In Gil, we found a Brady violation
where a particular exculpatory memo was, inter alia, (1)
delivered to the defense “not even one full business day
before trial,” (2) “among five reams” of documents, and
(3) “listed on page twelve of a 41-page index designating
over 600 exhibits.” Id. at 106. “Although the . . . memo was
produced before trial,” we explained, “the defense was not
in a position to read it, identify its usefulness, and use it.”
46a
Appendix C
Id. Hild’s counsel was not in a comparable position.
Accordingly, the district court was right to reject
Hild’s Brady claim.
III. Recusal
Hild further argues that the district court abused
its discretion in failing to recuse because Judge Abrams’
spouse is a partner at Davis Polk & Wardwell LLP, a firm
that represented two victim lenders and Interactive Data
Corporation’s parent company. We disagree.
We review the denial of a recusal motion for abuse of
discretion. LoCascio v. United States, 473 F.3d 493, 495 (2d
Cir. 2007). A federal judge must “disqualify [her]self in any
proceeding in which [her] impartiality might reasonably
be questioned.” 28 U.S.C. § 455(a). Furthermore, judges
must recuse themselves if their “spouse . . . has a financial
interest in the subject matter in controversy or in a party
to the proceeding, or any other interest that could be
substantially affected by the outcome of the proceeding.”
Id. § 455(b)(4).
In deciding to remain on the case, the district court
reasoned that § 455 did not require recusal because her
husband was not personally involved in the representation.
This is consistent with our precedent and the Advisory
Committee’s opinion regarding the nature of large modern
law firms like Davis Polk. See Pashaian v. Eccelston Props.,
Ltd., 88 F.3d 77, 83 (2d Cir. 1996); Committee on Codes
of Conduct Advisory Opinion No. 107: Disqualification
47a
Appendix C
Based on Spouse’s Business Relationships, in 2B Guide
to Judiciary Policy, at 207 (June 2009).
What Hild really complains about here is the perceived
inconsistency in Judge Abrams not recusing in this case
despite having recused herself in a previous case for
similar reasons. But that case is not before this Court and
to find an abuse of discretion because a district judge seems
to have chosen differently in superficially similar factual
circumstances does not answer the question whether “an
objective, informed observer could reasonably question
the judge’s impartiality.” United States v. Bayless, 201
F.3d 116, 126 (2d Cir. 2000).
Therefore, we perceive no abuse of discretion in the
district court’s declining to recuse. 3
IV. Ineffective Assistance of Counsel
Hild’s final argument is that he is entitled to a new
trial because he received constitutionally ineffective
assistance at trial. We decline to reach this claim, which
is best raised on collateral review. See Massaro v. United
States, 538 U.S. 500, 504, 123 S. Ct. 1690, 155 L. Ed.
2d 714 (2003) (observing that “in most cases,” a § 2255
motion “is preferable to direct appeal for deciding claims
of ineffective assistance”).
3. Since we largely reject Hild’s claims of conviction error,
we also reject his argument that the “cumulative prejudice” of
the alleged errors deprived him of a fair trial. United States v.
Certified Env’t Servs., Inc., 753 F.3d 72, 95 (2d Cir. 2014).
48a
Appendix C
***
Accordingly, we AFFIRM the judgment of the district
court.
FOR THE COURT:
Catherine O’Hagan Wolfe,
Clerk of Court
/s/ Catherine O’Hagan Wolfe
49a
Appendix
D UNITED STATES
APPENDIX D — ORDER
OF THE
DISTRICT COURT, SOUTHERN DISTRICT OF
NEW YORK, FILED FEBRUARY 27, 2023
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
No. 19-CR-602 (RA)
UNITED STATES OF AMERICA,
v.
MICHAEL HILD,
Defendant.
Filed February 27, 2023
ORDER
RONNIE ABRAMS, United States District Judge:
Following a fourteen-day jury trial, Defendant
Michael Hild was convicted of committing securities
fraud, wire fraud, and bank fraud, as well as conspiring
to do so. The Court previously denied Hild’s motions for a
judgment of acquittal or, in the alternative, for a new trial,
and Hild has filed a notice of appeal. At his sentencing
on January 27, 2023, the Court reserved ruling on Hild’s
motion for bail pending the Second Circuit’s decision on
his appeal, and has now received submissions from the
parties. Because the Court finds that each of the factors
for release pending appeal are met, for the reasons set
forth below, the motion is granted.
50a
Appendix D
In United States v. Randell, 761 F.2d 122, 125 (2d Cir.
1985), the Second Circuit interpreted the Bail Reform Act,
see 18 U.S.C. § 3143, et seq., to find that district courts may
grant bail pending appeal where they determine:
(1) that the defendant is not likely to flee or pose
a danger to the safety of any other person or
the community if released;
(2) that the appeal is not for purpose of delay;
(3) that the appeal raises a substantial question
of law or fact; and
(4) that if that substantial question is determined
favorably to defendant on appeal, that
decision is likely to result in reversal or an
order for a new trial on all counts on which
imprisonment has been imposed.
761 F.2d at 125. The Randell Court clarified that, although
“read literally,” the statute states that a judicial officer
must find that the appeal “raises a substantial question
of law or fact likely to result in reversal or an order for a
new trial,” id. at 124 (quoting 18 U.S.C. § 3143(b)(2)), the
Act “cannot reasonably be construed to require the district
court to predict the probability of reversal,” id. Rather,
once a court finds that a “substantial question” of law is
presented by the appeal—such as one that is “novel,” or
“which has not been decided by controlling precedent”—
it then need only determine whether that question is “so
integral to the merits of the conviction” that “a contrary
51a
Appendix D
holding is likely to require reversal of the conviction or a
new trial.” Id. at 125. It is not necessary, in other words,
for a court to find that “its own judgment is likely to be
reversed.” Id. at 124.
The first two Randell factors are plainly met here. Hild
is not a flight risk, nor a risk of danger to the community,
as demonstrated by the Presentence Investigation Report,
and the Court finds that his appeal has not been made
solely for the purposes of delay. Indeed, in its submission,
the government does not contest the defense’s position on
either of the first two factors.
Hild has indicated that he anticipates arguing on
appeal that his Rule 33 motion should have been granted
based on his trial counsel, Benjamin Dusing, purportedly
having an actual conflict of interest given his involvement
with unrelated litigation in Kentucky during Hild’s trial
in New York. Under Hild’s theory, rather than viewing
Dusing’s alleged ineffectiveness through the familiar
lens of Strickland v. Washington, 466 U.S. 668 (1984),
the Court should have considered his involvement with
the Kentucky litigation to be an “actual conflict,” thus
requiring review under the more lenient standard of
Cuyler v. Sullivan, 446 U.S. 335 (1980).
To be sure, the Court remains deeply troubled by
Dusing’s shocking and shameful behavior in connection
with the Kentucky litigation, which even included threats
of violence against opposing counsel and the court’s staff,
as well as the resulting professional sanctions levied
against him in multiple jurisdictions. And although the
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Appendix D
Court disagrees with the contention that the Kentucky
litigation presented an “actual conflict” to be analyzed
under Cuyler, as it noted in its opinion denying Hild’s
posttrial motions, the issue does present a “challenging
question at the intersection of the Sixth Amendment right
to conflict-free counsel and the modern reality . . . that
other obligations, personal and professional, inevitably
arise, even when ensuring a fair trial for the accused.”
Dkt. 140, Opinion at 2; see also id. at 2, 39 (describing Hild
as raising “a novel legal argument” and noting that there
is “little relevant case law” directly considering the issue).
The Court therefore concludes that Hild’s appeal presents
a “substantial question” under the third Randell factor.
Finally, under the fourth factor—although the
Court remains assured of the reasoning adopted in its
opinion—because the question presented by Hild on appeal
is arguably “integral to the merits of the conviction,” if
the Second Circuit were to issue a “contrary appellate
holding,” such a decision would likely require reversal of
the conviction or a new trial. Randell, 761 F.2d at 125; see
also United States v. Smilowitz, 2019 WL 1493578, at
*2 (S.D.N.Y. Apr. 4, 2019) (granting bail pending appeal
while noting that “the Court stands by this ruling, and is
confident the Circuit—if it decides to reach the question
. . . will agree”); United States v. Rittweger, 2005 WL
3200901, at *4 (S.D.N.Y. Nov. 30, 2005) (granting bail
pending appeal while reiterating that the decision being
appealed “fits comfortably within the standards set by
the Court of Appeals”).
For the foregoing reasons, Hild’s motion for bail
pending appeal is granted. Hild shall be bound by the
53a
Appendix D
same conditions of bail previously set by this Court. The
Clerk of Court is respectfully directed to terminate the
motion pending at docket entry 152.
SO ORDERED.
Dated: February 27, 2023
New York, New York
/s/ Ronnie Abrams
Hon. Ronnie Abrams
United States District Judge
54a
APPENDIX E —Appendix
OPINIONEAND ORDER OF
THE UNITED STATES DISTRICT COURT,
SOUTHERN DISTRICT OF NEW YORK,
FILED DECEMBER 7, 2022
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
No. 19-CR-602 (RA)
UNITED STATES OF AMERICA,
v.
MICHAEL HILD,
Defendant.
Filed December 7, 2022
OPINION & ORDER
RONNIE ABRAMS, United States District Judge:
Following a fourteen-day jury trial, Defendant
Michael Hild was convicted of committing securities
fraud, wire fraud, and bank fraud, as well as conspiring
to do so. The evidence established that Hild and his
co-conspirators at Live Well Financial (“Live Well”), a
company he founded and for which he operated as Chief
Executive Officer, engaged in a multi-year scheme to
fraudulently inflate the value of a portfolio of bonds used as
collateral to secure cash loans. Although the loan amounts
were nominally based on prices provided by a third party,
55a
Appendix E
the evidence demonstrated that Live Well had directly
supplied valuations to that third party, unbeknownst
to its lenders, basing them on its own internal pricing
methodology rather than on what the bonds could readily
be sold for in the market. As a result, Live Well was able
to purchase the bonds at one price, provide the third
party its own inflated valuations, and then use those
inflated bond values as collateral to take out loans worth
significantly more than the price for which the bonds could
be sold. This arrangement resulted in a substantial cash
windfall for Live Well, defeated the design of the loan
agreements with the lenders, and left the loans critically
undercollateralized.
After he was convicted, Hild filed motions for a
judgment of acquittal, or, in the alternative, for a new trial.
His motions advance arguments regarding sufficiency of
the evidence, prejudicial error related to certain opinion
testimony, and ineffective assistance of counsel under
the standard governed by Strickland v. Washington, 466
U.S. 668 (1984)—each involving issues by now familiar in
this district.
Hild also raises a novel legal argument, however,
which presents a challenging question at the intersection
of the Sixth Amendment right to conflict-free counsel and
the modern reality—all too familiar to those who work in
the legal profession—that other obligations, personal and
professional, inevitably arise, even when ensuring a fair
trial for the accused. Namely, can a scheduling ‘conflict,’ in
the colloquial sense, together with the preoccupation and
workload that accompany it, rise to the level of an “actual
56a
Appendix E
conflict” under the framework of Cuyler v. Sullivan,
446 U.S. 335, 348 (1980), and its progeny, requiring a
limited “presumption of prejudice” upon a motion for a
new trial? Or, in the alternative, should such a scheduling
‘conflict’ instead be viewed under the Strickland rule,
requiring a defendant to demonstrate both that counsel’s
representation fell below a reasonable professional
threshold, and that such error prejudiced the outcome?
Specifically, Hild claims that his trial counsel,
Benjamin Dusing and Brandy Katy Lawrence, labored
under an “actual conflict of interest” leading to a lapse in
his representation because, at the time of his trial, they
were involved in ongoing litigation in Kentucky related
to the custody of Dusing’s daughter. Hild argues that,
because a hearing in the Kentucky litigation was scheduled
on a date that could have overlapped with the end of his
trial in New York, and because Dusing and Lawrence
were “preoccupied” with this litigation, the Court should
view his motion under Sullivan’s more lenient framework,
thereby warranting him a new trial.
Hild and Dusing have submitted declarations with
competing narratives regarding whether, and the degree
to which, the Kentucky litigation affected Hild’s defense
at trial. For the purposes of the present motion, however,
the Court assumes each of Hild’s such allegations to be
true. And in light of some of the unusual and troubling
circumstances present here, the Court does not take
issue with Hild’s characterization of this case as one
distinguishable “from the run-of-the-mill case where
a lawyer has multiple obligations.” Oral Arg. Tr. 9. At
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Appendix E
the time of Hild’s trial, Dusing was confronting the loss
of custody over his daughter, stood accused of domestic
abuse, and ultimately faced serious professional sanctions
given his violent and erratic behavior. (Indeed, he was
subsequently suspended from practicing law in two states.)
Such circumstances may well have taken a psychological
toll, and could understandably have left Dusing deeply
concerned about events in Kentucky while at trial in New
York. But in another sense, balancing multiple obligations
and personal and professional priorities is the norm of
the profession. Where the issue complained of is divided
attention, rather than divided loyalties, Strickland stands
ready to remedy any attorney’s failure to effectively
advocate for the accused at trial, regardless of why
his representation “fell below an objective standard of
reasonableness.” Williams v. Taylor, 529 U.S. 362, 390–91
(2000).
The Supreme Court has cautioned against “expansive
application” of the rare “Sullivan exception” for an
actual conflict, such that it would swallow the Strickland
rule. Mickens v. Taylor, 535 U.S. 162, 175–76 (2002).
To grant Hild the remedy he seeks would do just that.
The Court therefore concludes that, where an attorney
with otherwise undivided loyalties “shirks his ethical
obligation to dutifully represent his client” due to another
obligation—be it a vacation, caring for an ailing loved one,
attending a child’s play, another client’s trial, or a hearing
such as Dusing’s—“Strickland provides the appropriate
analytic framework.” United States v. O’Neil, 118 F.3d
65, 72 (2d Cir. 1997).
58a
Appendix E
Once viewed through the well-established Strickland
lens, the Court concludes that Dusing’s representation
of Hild at trial was not constitutionally deficient. To the
contrary, over the course of a two-and-a-half-week trial,
the Court observed Dusing’s representation first-hand
and found him to be a zealous and articulate advocate—at
the very least on par with other white-collar litigators
who regularly practice in this district. Dusing presented
a clear defense theory that was similar in many respects
to the theory set forth in Hild’s post-trial briefing and he
advanced that theory by way of robust cross-examination,
and through the testimony of his client, which spanned
multiple days. The Court is unconvinced that such
representation fell outside the “wide range of reasonable
professional assistance” so as to constitute Strickland
error. 466 U.S. at 684. Even assuming it did, Hild fails to
demonstrate that, but for any alleged error, “the result of
the proceeding would have been different.” Id.
Accordingly, for the additional reasons that follow,
Hild’s motions are denied in their entirety.
BACKGROUND
Hild’s Rule 29 motion relies on arguments regarding
the sufficiency of the evidence presented at trial, whereas
his Rule 33 motion largely relies on events occurring
outside the trial record to establish purported ineffective
assistance of counsel.
Accordingly, this opinion will proceed, first, by
describing the facts established at trial, see infra at 5–14,
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Appendix E
and applying the operative standard for Hild’s Rule 29
motion, see infra at 15–26; second, by describing the events
giving rise to Hild’s argument in his Rule 33 motion of
ineffective assistance of counsel (due to an alleged “actual
conflict” or otherwise), see infra at 27–30, and applying
the law to those claims, see infra at 30–53; and, finally,
by addressing Hild’s arguments in the alternative for a
new trial, see infra at 53–64.
I.
Evidence Presented at Trial
A.
Founding of Live Well and Reverse Mortgage
Servicing
Live Well was established in 2005, and, at all relevant
times, Hild was its CEO, Tr. 1247, 1867, and largest
shareholder, Tr. 1904–05; see also GX321. Hild founded
Live Well to pursue a business opportunity in the
burgeoning reverse mortgage space. Tr. 1785–88. Reverse
mortgages, or Home Equity Conversion Mortgages
(“HECMs”), are a financial product designed to provide
liquidity to senior homeowners whose net worth is
primarily tied up in their home equity. Tr. 57–58, 578–79,
1788. HECMs permit individuals to receive monthly
cash income by using their home equity as collateral. Tr.
579. For many years, Live Well operated as a traditional
and reverse mortgage broker and servicer: it reviewed
applications from borrowers, approved loans, and then
serviced those loans. Tr. 946, 1790–91, 1814.
Beginning in approximately 2011, Live Well began
securitizing reverse mortgages into bonds called HECM
60a
Appendix E
mortgage-backed securities (“HMBSs”). Tr. 947. After
it began to sell these securities, it “[g]rew dramatically.”
Tr. 1806. Packaging the mortgages as bonds allowed Live
Well to generate revenue more quickly by selling pools
of similar reverse mortgages to investors in bulk, rather
than one-by-one. Tr. 947–49. Key among these bonds was
a subcategory called HECM “interest only” (“HECM IO”)
bonds, which are made up of derivatives of HECMs that
include only the interest portion of the loan rather than the
entire reverse mortgage. Tr. 59, 60, 950–52; see also Tr.
1814. The HECM IO bonds are particularly attractive to
investors because holders of those bonds receive regular
interest payments. Tr. 1818.
B. Expansion Into Purchasing HMBSs & the
Stifel Transaction
In 2014, Live Well expanded beyond securitization
of reverse mortgages into the purchase of HMBSs.
Tr. 58–59, 951–52, 1817. Hild stated that the goal of
purchasing these bonds and holding them as investments
was to diversify the company’s revenue and reduce its
susceptibility to cyclical changes in the mortgage space.
Tr. 1814.
At Hild’s direction, the company acquired a portfolio
of fifteen HECM IO bonds worth $55 million from Stifel
Financial, a small investment bank that had previously
held and traded in HMBSs (the “Stifel Transaction”).
Tr. 57, 72–73, 951–53. In addition to the bond portfolio,
Live Well also hired three Stifel employees—Darren
Stumberger, Ernie Calabrese, and Dan Foster—who had
61a
Appendix E
managed the portfolio at Stifel, to continue their work
at Live Well. Tr. 969. Stumberger, described by Hild as
the “reverse mortgage bond guru,” Tr. 1815–17, was a
particularly important hire due to his expertise in the
area, see id.; see also Tr. 73–74, 969.
Live Well did not have the cash on hand to buy the
bonds outright, and it thus financed the acquisition using
a combination of cash, “warehouse loans” it had access to
through its mortgage business, and loans collateralized
by the underlying bonds, the latter of which were
referred to as “repo financing.” Tr. 76–77, 731–32, 952.
The repo financing agreements were loans structured as
repurchase agreements in which Live Well sold the bonds
to lenders and agreed to buy them back at a specific price
after a short period had passed, typically thirty to sixty
days. Tr. 76–77, 261; see also Tr. 1826. At the end of the
period, lenders would generally “roll” the loan forward,
Tr. 674–75, but they could alternatively end the lending
agreement and demand repayment of the loan amount, Tr.
572–75. In the case that Live Well was unable to repay the
loan at the end of the term, the lenders would keep the
collateral (the HECM IO bonds), which they could either
hold or sell to repay the defaulted loan. Tr. 76–77.
Typically, the loan amount was determined by
discounting the value of the underlying bond by 10% to
30%. Tr. 86. This discount, often called a “haircut,” ensured
that the lenders remained sufficiently collateralized if
the bonds decreased in value, and priced in the risk of a
lender having to sell the bonds. Tr. 81, 588–89; s
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