Cuban, who is known for his courtside presence at Mavericks games and who has been repeatedly fined for criticizing NBA officials, may have defied juror expectations by being cool, calm and funny as a witness, Melsheimer said.
“The jury wanted to believe him,” he said. “I think they started out wanting to believe him.”
Like Slotnick, Melsheimer contrasted his client’s testimony with the Faure recording, which he called a “major weakness” in the government’s case.
“He’s the alleged victim to the fraud,” Melsheimer said. “If there was a fraud committed, it was committed against Guy Faure.”
While it may have been true that the SEC couldn’t compel Faure to testify, he could have come from Canada voluntarily, Melsheimer said.
“You would think that someone who’s the victim of a fraud would want to show up and testify and get redress for their injury,” he said.
At trial, Cuban’s lawyers presented evidence of a spike in trading volume that they said supported a claim the pending PIPE transaction was already known to investors. Citing that evidence, Cuban’s final witness, Erik Sirri, a former SEC official, said he believed the information was public before Cuban traded.
The share volume evidence was “a fairly clever way to give the jury a way to hang their hat on something,” Bourelly said.
“If you like the guy and want to find a way to see his side of the story, he gives you ample evidence to do it,” Bourelly said of Cuban.
Attorneys for the SEC also relied on the prerecorded testimony of former Mamma.com Chairman David Goldman. They called Owen, the investment banker, and Cuban as witnesses.
“We respect the jury’s decision,” John Nester, an SEC spokesman, said in an e-mailed statement yesterday. “While the verdict in this particular case is not the one we sought, it will not deter us from bringing and trying cases where we believe defendants have violated the federal securities laws.”
Nester declined to make Folena and co-trial counsel Kevin O’Rourke available for comment today.
Stephen A. Best, a lawyer for Cuban, said in an e-mailed statement yesterday that he believes the verdict “sends a message” that theSEC shouldn’t have brought the case.
“It’s not like winning a Mavs championship,” Cuban said after the verdict. His team won the NBA title in 2011. “They weren’t trying to use facts to convince the jury, they were trying to deceive the jury.”
George Canellos, co-director of the SEC’s enforcement division, said in an e-mailed statement that Cuban’s comments were “without merit and uncalled for.”
“Our lawyers acted in the finest traditions of government counsel and entirely appropriately in strongly advocating the position of the government in this matter,” Canellos said.
Bourelly, who wasn’t involved in the case, said the SEC must have believed it had a prosecutable case and at least circumstantial evidence of a violation.
“It’s hard as a government enforcer to walk away from a matter like that if you feel you’ve got sufficient evidence to go forward,” he said. “You can’t bring every case, so you try to bring some of the high-profile ones for deterrent effect. The problem is it backfires.”
Slotnick, the New York criminal defense lawyer, said Cuban paid far more to defend himself than the $750,000 loss he avoided by selling his Mamma.com stake.
While the regulator’s most-heavily publicized cases typically involve greater sums of money and broader schemes, Slotnick said, this case got attention because of Cuban’s fame. He called the trial a “one-off” and said the SEC won’t be damaged by it.
Bradley Bondi, a former SEC lawyer who’s now a partner at Cadwalader Wickersham & Taft LLP, said a loss for the SEC’s trial unit can be humbling.
The verdict “may be the result of jury nullification for a home-turf Maverick as opposed to a true loss on the merits,” he said.
The case is Securities and Exchange Commission v. Cuban, 08-cv-02050, U.S. District Court, Northern District of Texas (Dallas).
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