U.S. v. Jensen
| Citation | 532 F.Supp.2d 1187 |
| Decision Date | 25 January 2008 |
| Docket Number | No. C 06-00556-2 CRB.,C 06-00556-2 CRB. |
| Court | U.S. District Court — Northern District of California |
| Parties | UNITED STATES of America, Plaintiff, v. Stephanie JENSEN, Defendant. |
Adam A. Reeve, San Francisco, CA, for Plaintiff.
Jan Nielsen Little, Keker & Van Nest, LLP, San Francisco, CA, for Defendant.
ORDER DENYING MOTION FOR NEW TRIAL
Defendant Stephanie Jensen moves this Court for a new trial, arguing that there are five justifications for overturning the jury's guilty verdict; (1) the Court's jury instruction for "willful" was erroneous; (2) the Books & Records statute is void for vagueness; (3) Congress precluded conspiracy liability for a Books & Records charge; (4) the Court failed to instruct the jury that, to be convicted, Jensen had to know the backdated documents affected Brocade's financial statements; and (5) there is a reasonable probability that newly discovered evidence would lead to a different outcome on retrial. For the reasons set forth below, Jensen's motion is DENIED.
On December 5, 2007, a jury convicted Stephanie Jensen of falsifying Brocade's books, records, and accounts in violation of 15 U.S.C. § 78m(b)(2)(A), id. § 78m(b)(5), id. § 78ff(a), and of conspiracy to falsify books, records, and accounts in violation of 18 U.S.C. $ 371.
Federal Rule of Criminal Procedure 33 empowers the Court to "vacate any judgment and grant a new trial if the interest of justice so requires." "The district court need not view the evidence in the light most favorable to the verdict; it may weigh the evidence and in so doing evaluate for itself the credibility of the witnesses." United States v. Alston, 974 F.2d 1206, 1211 (quotation omitted). "If the court concludes that, despite the abstract sufficiency of the evidence to sustain the verdict, the evidence preponderates sufficiently heavily against the verdict that a serious miscarriage of justice may have occurred, it may set aside the verdict, grant a new trial, and submit the issues for determination by another jury." Id. at 1211-12 (quotation omitted).
Jensen's primary argument for a new trial is that the Court erred when it instructed the jury that "[t]o prove that Ms, Jensen acted willfully, the government must prove beyond a reasonable doubt that Ms. Jensen intentionally falsified or caused to be falsified books, records or accounts, knowing the falsification to be wrongful." According to Jensen, "willfully" should have been defined as "knowing' one's conduct is unlawful," Ratzlaf v. United States, 510 U.S. 135, 137, 1:14 S.Ct. 655, 126 L.Ed.2d 615 (1994).
Willful is a word of many meanings and its construction is often influenced by its context. See, e.g., id. at 141, 114 S.Ct. 655; Spies v. United States, 317 U.S. 492, 498, 63 S.Ct. 364, 87 L.Ed. 418 (1943). The context of this case — as in others defining the word "willful" — is statutory. That is to say, the Court's objective in divining the meaning of "willful" is to "make[] sense of the statute that Congress enacted." Bryan v. United States, 524 U.S. 184, 202, 118 S.Ct. 1939, 141 L.Ed.2d 197 (1998) (Scalia, J., dissenting). The relevant statute for our purposes is 15 U.S.C. § 78ff.
Section 78ff(a), the penalty provision of the Securities Exchange Act of 1934, provides:
Any person who willfully violates any provision of this chapter (other than section 78dd-1 of this title), or any rule or regulation thereunder the violation of which is made unlawful or the observance of which is required under the terms of this chapter, or any person who willfully and knowingly makes, or' causes to be made, any statement in any application, report, or document required to be filed under this chapter or any rule or regulation thereunder or any undertaking contained in a registration statement as provided in subsection (d) of section 78o of this title, or by any selfregulatory organization in connection with an application for membership or participation therein or to become associated with a member thereof, which statement was false or misleading with respect to any material fact, shall upon conviction be fined not more than $5,000,000, or imprisoned not more than 20 years, or both, except that when such person is a person other than a natural person, a fine not exceeding $25,000,000 may be imposed; but no person shall be subject to imprisonment under this section for the violation of any rule or regulation if he proves that he had no knowledge of such rule or regulation.
(Emphasis, added). As with any other exercise in statutory interpretation, the Court must "look first to the statutory language and then to the legislative history if the statutory language is unclear." Blum v. Stenson, 465 U.S. 886, 896, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). In ascertaining the plain language of the statute, the Court "must, look to the particular statutory language at issue, as well as the language and design of the statute as a whole." Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 239, 124 S.Ct. 1741, 158 L.Ed.2d 450 (2004) (quotation omitted).
Thankfully, the Court's task is made easier by the fact that the Ninth Circuit hag already' interpreted the meaning of "willfilly" as Congress used that term in § 78ff(a). In United States v. Tarallo, 380 F.3d 1174 (9th Cir.2004), a defendant appealed his conviction on the ground that the district court erred by tiling to instruct the jurors that § 78ff(a)'s use of the word "willful" requires that the government prove the defendant knows his conduct is unlawful. See id. at 1186. The Ninth Circuit rejected the defendant's argument, holding that "`wilfully' as it is used in §. 78ff(a) means intentionally undertaking an act that one knows to be wrongful;`wilfully' in this context does not require that the actor know specifically that the conduct was unlawful." Id. at 1188 (emphasis added and emphasis in original).
The Ninth Circuit's reasoning was based on the structure and language of § 78ff as a whole. The court observed that § 78ff(a) consists of three distinct parts. See id. at 1187, 1188; see also William B. Herlands, Criminal Law Aspects of the Securities Exchange Act of 1934, 21 Va. L.Rev. 139, 141 (1934). First, the statute contains a "general provision" that governs violations of "any provision" of the Securities Exchange Act, or "any rule or regulation" the violation of which is made unlawful or the observance of which is required by the express terms of the Act. This general provision — which governs in this case, as in Tarallo — imposes criminal liability on a finding of willfulness. Second, the statute contains, a "specific provision" that governs false or misleading misstatements of material facts contained in documents, applications, or reports which are required to be filed under the Act or any rule or regulation. The specific provision imposes criminal liability upon a finding of willfulness and knowledge. Third, § 78ff contains a provision concerning punishment upon conviction, which precludes imprisonment in the case of a violation of any rule or regulation if the defendant proves that he had no knowledge of such rule or regulation.
Putting these three provisions together, the Ninth Circuit concluded that the general provision can be triggered even where the defendant' does not know that his actions were unlawful. According to the log ¶ is of Tarallo, the general provision's use of the word "willfully" cannot mean "with knowledge that one's conduct violated a provision or rule or regulation," or else Tarallo, 380 F.3d at 1188 (emphasis in original).
Jensen argues that Tarallo's logic is flawed because, it misreads the intent standard established by § 78ff's imprisonment provision. According to Jensen, the imprisonment provision only precludes imprisonment where the defendant proves they lacked knowledge of "a specific rule or regulation." Motion at 15 (emphasis in original). By contrast, Jensen reads the general provision as requiring proof that the defendant knew her "conduct was unlawful." Id. (emphasis in original). Under Jensen's interpretation, it would be consistent to require proof that the defendant knew her conduct, was unlawful for conviction and to require the defendant to show that she had no knowledge of a specific rule or regulation for sentencing purposes.
Jensen is correct that her interpretation would resolve the conflict identified by Tarallo, and the interpretation is at least plausible. Of course, the problem is that her, argument is directed at the wrong court, The Ninth Circuit has unambiguously held that "willful," as used in § 78ff's general provision, requires merely proof that the defendant knew her conduct was wrongful and this Court cannot avoid that plain dictate absent en banc review at the circuit. Although Jensen is welcome to pursue this issue on appeal, the Tarallo court's interpretation of "willful" is consistent with the unanimous view of other circuit courts, as well as the view set forth in the leading treatise on the meaning of § 78ff. See, e.g., United States v. O'Hagan, 139 F.3d 641, 647 (8th Cir.1998) ( ; William B. Herlands, Criminal Law Aspects of the Securities Exchange Act of 1984, 21 Va. L.Rev. 139, 147-48 (1934) (citations omitted) ...
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