Former CEO of defunct reverse mortgage lender Live Well Financial Michael Hild has been denied a motion for a new trial, with presiding Judge Ronnie Abrams of the Southern District Court of New York (SDNY) upholding a guilty verdict reached by a jury last year and a 44-month prison sentence handed down in January.
However, Hild remains free pending an appeal with the Second Circuit Court of Appeals, according to court documents reviewed by RMD. Following Judge Abrams’ decision to deny the motion for a new trial, Hild’s counsel filed a court notice with the Second Circuit to consolidate the currently pending appeal with a new appeal against the denial of a new trial.
Restitution to the victims of the scheme — primarily consisting of financial institutions that lent to Live Well based on company-supplied bond values — will be handled by Magistrate Judge Katharine Parker, also from SDNY.
In the latest court filing, Judge Abrams detailed the legal standard she used to ultimately decide against granting the new trial motion. In June, Hild renewed his request for a new trial by saying that supplemental documents detailing coupon payments that the federal government obtained from lenders, submitted to the court over the restitution issue, constituted “new evidence” that warranted a new trial.
“[Hild] argues that these materials confirm that the lenders who held the […] bonds at issue regularly received tens of millions of dollars in coupon payments,” Abrams wrote. “This fact, Hild argues in turn, undermines the government’s principal arguments at trial that the bonds were overvalued by Live Well, corroborates Hild’s arguments at trial that the bonds were properly valued and the lenders fully secured, and impeaches the testimony of lender representatives who told the jury that they would not hold the bonds and any coupon payment proceeds would not cover the loans made.”
While saying that the argument “appears compelling at first blush,” Abrams ultimately disagreed, saying that a motion for a new trial should be granted only when new evidence is discovered after trial and that evidence is likely to result in an acquittal, she explained.
“The balance between protecting the finality of judgments and the interests of justice is inherent in the [new trial] analysis,” Abrams wrote, citing precedent.
The issue on trial was also not about material losses — or even profits — the lenders may have endured as a result of the company-provided bond values, but to demonstrate “simply whether Hild knowingly caused the bonds to be marked at prices that were not obtainable in the market in order to receive inflated loans from the lenders — something that was well supported by the evidence adduced at trial,” Abrams wrote.
Hild also raised a recent U.S. Supreme Court decision, Ciminelli v. United States, that could call into question some of the instructions his own trial jury received in reaching its verdict since those instructions included a theory that the Supreme Court ultimately invalidated.
However, since Hild has a pending appeal before the Second Circuit, Abrams will leave that ultimate determination to the Second Circuit itself.
“Although Ciminelli’s holding appears to be at odds with certain instructions given to the jury at Hild’s trial, given his ongoing appeal, whether those instructions constitute plain error, and whether any error was nevertheless harmless, are questions now appropriately before the Second Circuit,” Abrams wrote.
In May, Judge Abrams sentenced former Live Well CFO Eric Rohr to time served on all five counts against him, which allows him to avoid prison time. Rohr will also be under supervised release for three years on each count, with all counts to run concurrently, in line with government recommendations due to his cooperation and assistance.
Former portfolio manager and head of Live Well’s bond trading section Darren Stumberger was originally scheduled to be sentenced in August, but that sentencing has been delayed to late September.
Rohr and Stumberger both pleaded guilty and cooperated with federal authorities in the case. Upon the news of Hild’s arrest by the Federal Bureau of Investigation (FBI) in 2019, the U.S. Department of Justice immediately specified that Rohr and Stumberger had already pled guilty to the charges against them and had already begun their cooperation with federal authorities.
Editor’s note: This story has been updated to include details of the filing of an additional appeal against the new trial denial to be consolidated with the prior appeal before the Second Circuit.