347 F.3d 471 (2nd Cir. 2003), 03-1102, U.S. v. Svoboda

Docket Nº:03-1102
Citation:347 F.3d 471
Party Name:U.S. v. Svoboda
Case Date:October 24, 2003
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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347 F.3d 471 (2nd Cir. 2003)

UNITED STATES of America, Appellee,

v.

Richard A. SVOBODA, Defendant,

Michael A. Robles, Defendant-Appellant.

No. 03-1102.

United States Court of Appeals, Second Circuit

October 24, 2003.

Argued June 17, 2003.

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Alan M. Dershowitz, Esq., Cambridge, Massachusetts (Nathan Z. Dershowitz, Esq., Dershowitz, Eiger & Adelson, P.C., New York, New York, on the brief), for Defendant-Appellant.

Steven R. Peiken, Assistant United States Attorney, Southern District of New York, New York, New York (James B. Comey, United States Attorney, Jason Sabot and Gary Stein, Assistant United States Attorneys, on the brief), for Appellee.

Before: LEVAL, RAGGI, Circuit Judges, and SCULLIN, 1 Chief District Judge.

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SCULLIN, Chief District Judge.

Michael A. Robles appeals from a judgment of conviction entered in the United States District Court for the Southern District of New York, the Honorable Richard M. Berman, J., presiding. On October 3, 2002, after a thirteen-day jury trial, Robles was convicted of one count of conspiracy to commit securities and tender offer fraud (Count 1) pursuant to 18 U.S.C. § 371 and thirteen individual securities and tender offer fraud counts (Counts 2-6, 9-11, 13 and 15-18) 2 pursuant to 15 U.S.C. §§ 78j(b) & 78ff, 17 C.F.R. §§ 240.10b-5 & 240.14e-3(a), and 18 U.S.C. § 2. 3 On appeal, Robles principally contends that (1) the district court erred in giving a conscious avoidance instruction with respect to the conspiracy charge and (2) venue was improper in the Southern District of New York as to all counts. For the reasons set forth below, we affirm.

I. BACKGROUND

At trial, the Government sought to prove that Robles and his long-time friend Richard Svoboda 4 engaged in a conspiracy to commit securities and tender offer fraud for profit between approximately November 1994 and December 1997. During that period, Svoboda was employed in Dallas, Texas, as a "credit policy officer" at Nations Bank, a financial institution engaged, inter alia, in commercial lending. As a credit policy officer, Svoboda was charged with structuring and approving loans to corporate clients. In the course of his duties at Nations Bank, Svoboda was privy to confidential information about Nations Bank's clients, such as earnings information and merger and acquisition plans. Svoboda testified that he obtained confidential information about certain securities and tender offers through his position at Nations Bank; that he passed the information to Robles, who, in turn, used the insider information to make trades; and that he and Robles shared the profits realized from their illicit trading. Svoboda further testified that he and Robles discussed and agreed upon the details of the above-described scheme and that Robles was fully aware that he was trading on the basis of unlawfully obtained insider information. Robles, however, took the stand in his own defense and denied knowledge of the unlawful source of Svoboda's information.

At the close of evidence, the Government requested a conscious avoidance instruction; i.e., an instruction to the effect that the Government could satisfy its obligation to prove Robles' knowledge of the unlawful source of the information by proving that he deliberately avoided acquiring that knowledge. Over Robles' objection, the district court granted the

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Government's request and included a conscious avoidance instruction in the jury charge. 5

II. DISCUSSION

A. The Conscious Avoidance Instruction

The instant case requires us to determine whether and under what circumstances the doctrine of conscious avoidance may be employed in a conspiracy prosecution. Robles' principal contention on appeal is that the conscious avoidance doctrine cannot be employed in the course of establishing a conspiratorial agreement between two persons. We disagree.

1. Proof of a conspiratorial agreement

Robles was convicted of conspiracy to engage in insider trading under 18 U.S.C. § 371, the general federal conspiracy statute, which provides that

[i]f two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both.

18 U.S.C. § 371. A conspiracy conviction under § 371 requires proof of three essential elements: (1) an agreement among two or more persons, the object of which is an offense against the United States; (2) the defendant's knowing and willful joinder in that conspiracy; and (3) commission of an overt act in furtherance of the conspiracy by at least one of the alleged co-conspirators. See, e.g., United States v. Pinckney, 85 F.3d 4, 8 (2d Cir. 1996) (citing United States v. Montour, 944 F.2d 1019, 1024 (2d Cir. 1991)); see also 2 Wayne R. LaFave, Substantive Criminal Law § 12.2 (2d ed.2003); 1 L. Sand et al., Modern Federal Jury Instructions 19-3 ("that the defendant knowingly and willfully became a member of the conspiracy"). 6

"The gist of conspiracy is, of course, agreement." United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1191

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(2d Cir. 1989); see Iannelli v. United States, 420 U.S. 770, 777, 95 S.Ct. 1284, 43 L.Ed.2d 616 (1975) ("Conspiracy is an inchoate offense, the essence of which is an agreement to commit an unlawful act.") (citations omitted). " 'A conspiracy need not be shown by proof of an explicit agreement but can be established by showing that the parties have a tacit understanding to carry out the prohibited conduct.' " United States v. Samaria, 239 F.3d 228, 234 (2d Cir. 2001) (quotation omitted). In either case, "the evidence must be sufficient to permit the jury to infer that the defendant and other alleged coconspirators entered into a joint enterprise with consciousness of its general nature and extent." Beech-Nut Nutrition Corp., 871 F.2d at 1191 (citing United States v. Alessi, 638 F.2d 466, 473 (2d Cir. 1980)).

Conspiracies are secretive by their very nature, and it is thus well-settled that the elements of a conspiracy may be proved by circumstantial evidence. See Samaria, 239 F.3d at 234 (citation omitted); see also United States v. Desena, 260 F.3d 150, 154 (2d Cir. 2001) ("The elements of a conspiracy may be proved by circumstantial evidence.") (citation omitted).

In certain conspiracy prosecutions, the Government often seeks to prove that a particular defendant joined a preexisting conspiracy. See, e.g., United States v. Reyes, 302 F.3d 48, 53 (2d Cir. 2002); United States v. Ciambrone, 787 F.2d 799, 806 (2d Cir. 1986). In other cases, the question is whether a conspiracy existed at all and, if so, whether a particular defendant was a party to the alleged conspiratorial agreement. See, e.g., Beech-Nut Nutrition Corp., 871 F.2d at 1191-93 (discussing evidence of single versus multiple conspiracies); United States v. Gaviria, 740 F.2d 174, 183 (2d Cir. 1984). Of course, the nature of the evidence used to establish the existence of a conspiratorial agreement may vary slightly, depending on the circumstances of the case. In the case of a preexisting conspiracy, the critical evidentiary question is often whether the defendant joined in the charged conspiracy (1) with some knowledge of the conspiracy's unlawful aims and (2) with the intent of helping the scheme succeed. See Reyes, 302 F.3d at 53 (citations omitted). In other cases, the evidentiary question is frequently whether there is proof that the defendant (1) had knowledge of the unlawful aims of the charged scheme and (2) evinced, by his actions, an intention to further or promote its unlawful aims. See Beech-Nut Nutrition Corp., 871 F.2d at 1191 (a conspiratorial agreement may be inferred where there is " 'some indication that the defendant knew of and intended to further the illegal venture' ") (quoting United States v. Zambrano, 776 F.2d 1091, 1095 (2d Cir. 1985)). The difference is not one of legal substance but only of evidentiary emphasis depending on the circumstances of the case. In either case, the fundamental legal question is the same: whether the evidence establishes beyond a reasonable doubt that a particular defendant entered into an agreement with others with knowledge of the criminal purpose of the scheme and with the specific intent to aid in the accomplishment of those unlawful ends.

2. The conscious avoidance doctrine

"The conscious avoidance doctrine provides that a defendant's knowledge of a fact required to prove the defendant's guilt may be found when the jury 'is persuaded that the defendant consciously avoided learning that fact while aware of a high probability of its existence.' " Samaria, 239 F.3d at 239 (quoting United States v. Finkelstein, 229 F.3d 90, 95 (2d Cir. 2000)). "In such circumstances, a conscious avoidance instruction to the jury 'permits a

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finding of knowledge even where there is no evidence that the defendant possessed actual knowledge.' " Id. (quoting United States v. Ferrarini, 219 F.3d 145, 154 (2d Cir. 2000)).

3. The application of the conscious avoidance doctrine in the conspiracy context

Relying on dictum in one of our opinions, United States v. Reyes, 302 F.3d 48, 54 (2d Cir. 2002), Robles contends that "the doctrine of conscious avoidance cannot be used at all in the context of a two-person conspiracy." Appellant's Brief at 21. We disagree. The Reyes decision does not mean what Robles reads into it. Even if it did, it would not support his argument.

In Reyes, we upheld the defendant's conviction by the jury...

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