Due-Diligence Boundaries and Materiality under Rule 33: Lessons from United States v. Hild (2d Cir. 2025)

Introduction

United States v. Hild is an appeal decided by the United States Court of Appeals for the Second Circuit on 30 July 2025. Michael Hild, former CEO of Live Well Financial, challenged his conviction for securities, wire, and bank fraud arising from a scheme to inflate the value of bond collateral. While a published opinion of the Court simultaneously decided the sufficiency-of-the-evidence and jury-instruction issues, this Summary Order (which lacks precedential force under Local Rule 32.1.1) disposed of four additional arguments:

• Two Rule 33 motions for a new trial based on “newly discovered evidence.”
• An alleged Brady violation tied to the same evidence.
• A motion for recusal grounded in the trial judge’s spouse’s law-firm affiliation.
• A claim of ineffective assistance of counsel (declined without prejudice).

Although summary orders do not constitute binding precedent, Hild is doctrinally important because it clarifies the outer limits of “due diligence” for Rule 33 motions and re-affirms that actual financial loss is not material to proving fraud where loss is not an element of the offense. It also offers fresh guidance on Brady disclosures in the era of digital document dumps and on the recusal implications of a judge’s spouse’s large-firm partnership.

Summary of the Judgment

The Second Circuit affirmed the district court’s judgment in all respects:

1. Newly Discovered Evidence – Coupon Payments
   Lenders’ post-trial receipt of coupon payments was neither material nor likely to secure an acquittal because actual loss is unnecessary to establish fraud under Kousisis v. United States (2025) and United States v. Litvak (2015).
2. Newly Discovered Evidence – Bloomberg Pricing Influence
   Notes revealing that co-conspirator Dan Foster provided pricing inputs to Bloomberg had been produced weeks before trial in a nine-document § 3500 packet. Because reasonable diligence could have unveiled the information, the Rule 33 test was unmet.
3. Brady Claim
   The Government satisfied its disclosure duty; it is not obliged to spotlight exculpatory material already produced in a manageable set of documents.
4. Recusal
   Judge Abrams was not required to step aside merely because her spouse is a Davis Polk partner; no personal participation or financial stake was shown.
5. Ineffective Assistance
   Deferred to a future 28 U.S.C. § 2255 motion under Massaro.

Analysis

Precedents Cited

Hild synthesises several strands of Second Circuit and Supreme Court authority:

• New-Trial Standards – United States v. James, 712 F.3d 79 (2d Cir 2013) and United States v. Alessi, 638 F.2d 466 (2d Cir 1980) supply the five-factor test for newly discovered evidence and the due-diligence requirement.
• Materiality in Fraud – The Court leans on the Supreme Court’s fresh decision in Kousisis v. United States, 145 S. Ct. 1382 (2025), confirming that actual loss is unnecessary; misrepresentation suffices.
• Bloomberg Evidence & Brady – United States v. Kirk Tang Yuk, 885 F.3d 57 (2d Cir 2018) and United States v. Gil, 297 F.3d 93 (2d Cir 2002) frame the Government’s duty to avoid “document dumps.” The Court held Gil inapplicable where production is narrow and timely.
• Recusal – Pashaian v. Eccelston Props., 88 F.3d 77 (2d Cir 1996) and the Code of Conduct Advisory Opinion 107 supply the operative lens for spouse-related disqualification.

Legal Reasoning

1. Rule 33 Motions
   • The Court meticulously applied the five-factor James test.
   • Materiality Prong: Coupon payments to lenders could not negate the scheme; the offense focuses on misrepresentation, not loss.
   • Due-Diligence Prong: Foster’s notes were disclosed a month pre-trial in a “thin” production; counsel’s inaction defeated due-diligence.
   • The decision narrows defendants’ capacity to “bootstrap” post-judgment industry data into a new-trial motion where the substance could have been uncovered earlier.
2. Brady
   • The Court distinguished “buried” evidence from evidence available but not highlighted. Because the Foster notes were (i) within nine short documents, (ii) delivered weeks before trial, and (iii) indexed, no suppression occurred.
   • Reinforces that the prosecution need not interpret or spotlight its own disclosure.
3. Recusal
   • § 455(a) (appearance of impartiality) and § 455(b)(4) (spouse’s financial interest) require personal participation or a direct financial stake.
   • Firm-wide relationships in megafirms are not enough absent a showing of potential outcome-based benefit.
   • Court rejected arguments based on perceived inconsistency with the judge’s past recusal decisions, focusing instead on the objective observer test.
4. Ineffective Assistance
   • Consistent with Massaro, such claims are better suited for collateral review where a full factual record may be developed.

Impact

Hild may be non-precedential, but its analytical value will likely:

• Raise the Evidentiary Bar for Rule 33 motions by emphasising proactive pre-trial investigation and a narrow reading of materiality.
• Guide Prosecutors on how much organisation is required for Brady compliance—suggesting that concise, identifiable disclosure packets meet the standard.
• Influence Recusal Motions in jurisdictions with large law-firm ecosystems, reinforcing that familial associations alone seldom mandate disqualification.
• Inform White-Collar Defense Strategies: Counsel must mine § 3500 and discovery files early; waiting to “discover” facts post-verdict is disfavoured.

Complex Concepts Simplified

Rule 33 Motion

A post-trial request in federal court for a new trial, usually based on newly discovered evidence or trial errors. Must be filed within 3 years (fraud cases) unless extended for “good cause.”

Materiality (in Fraud)

A misstatement is material if a reasonable lender/investor would consider it important. Actual loss or harm is not part of the element unless a specific statute requires it.

Brady Obligations

Under Brady v. Maryland, prosecutors must disclose evidence favorable to the accused that is material to guilt or punishment. The duty is satisfied if the evidence is made available—prosecutors are not librarians for the defense.

Due Diligence

The reasonable steps a defendant and counsel should take to uncover evidence before and during trial. Evidence discoverable with ordinary diligence cannot later qualify as “newly discovered.”

Recusal (28 U.S.C. § 455)

A judge must step aside when her impartiality might reasonably be questioned or where family members have a direct financial stake. Mere employment at a large firm without personal involvement generally is insufficient.

Ineffective Assistance (Strickland Standard)

To succeed a defendant must show (1) deficient performance by counsel and (2) resulting prejudice. Typically addressed in post-conviction proceedings where a fuller factual record is possible.

Conclusion

United States v. Hild reinforces critical procedural boundaries in white-collar criminal litigation. The Court’s refusal to credit post-verdict “discoveries” that could have been pursued earlier tightens the Rule 33 escape hatch, while its straightforward application of Kousisis underscores that fraud hinges on deception, not loss. Moreover, the decision streamlines prosecutors’ Brady burdens and provides a pragmatic lens on judicial recusal in an era of sprawling, multi-office law firms. For practitioners, Hild is a cautionary tale: diligence is demanded pre-trial; discovery obligations have reasonable limits; and strategic inefficacy claims belong in collateral, not direct, review. Even without precedential heft, the Order will likely inform best practices in the Second Circuit and beyond.