U.S. v. Yeager

• Decision Date: 17 March 2008
• Docket Number: No. 06-20593.,No. 06-20691.,No. 06-20321.,06-20321.,06-20593.,06-20691.
• Citation: 521 F.3d 367
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Scott YEAGER, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Rex Shelby, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Joseph Hirko, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

521 F.3d 367

UNITED STATES of America, Plaintiff-Appellee, v. Scott YEAGER, Defendant-Appellant.

United States of America, Plaintiff-Appellee, v. Rex Shelby, Defendant-Appellant.

United States of America, Plaintiff-Appellee, v. Joseph Hirko, Defendant-Appellant.

No. 06-20321.

No. 06-20593.

No. 06-20691.

United States Court of Appeals, Fifth Circuit.

March 17, 2008.

Joseph Douglas Wilson (argued), San Francisco, CA, James Lee Turner, Asst. U.S. Atty., Houston, TX, Van Simmons Vincent, Nashville, TN, for U.S.

Samuel J. Buffone (argued), Ryan Morland Malone, Ropes & Gray, Washington, DC, J.A. Canales, Canales & Simonson, Corpus Christi, TX, for Yeager.

Susan L. Hays (argued), Dallas, TX, Edwin J. Tomko, Curran Tomko Tarski, Dallas, TX, for Shelby.;

Lawrence Saul Robbins (argued), Alan D. Strasser, Matthew Robert Segal, Robbins, Russell, Englert, Orsek & Untereiner, Washington, DC, Barnes H. Ellis, Stoel & Rives, Portland, OR, for Hirko.

Before HIGGINBOTHAM, GARZA and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

This is a consolidated interlocutory appeal of an order denying a motion to dismiss a government indictment under the doctrine of collateral estoppel.¹ In 2005, Defendants F. Scott Yeager, Joseph Hirko, and Rex Shelby ("Defendants") were tried on various counts for their actions while employed at Enron Broadband Services ("EBS"). The jury acquitted Defendants on some of these counts but hung on others, after which the United States ("Government") again indicted Defendants on some of the mistried counts. Contending that the acquitted counts collaterally estopped the Government from pursuing the mistried counts, Defendants moved to dismiss the indictment. The district court denied the motion. For the reasons below, we AFFIRM.

I.

This case arises from the collapse of Enron Corporation ("Enron") and its subsidiaries. Defendants were senior executives at EBS, Enron's broadband and telecommunications unit. In November'2004, Defendants were indicted on various counts of: (1) conspiracy to commit securities and wire fraud, (2) securities fraud, (3) wire fraud, (4) insider trading, and (5) money laundering.²

In 1998, Enron began developing an "intelligent" telecommunications network and associated software. The indictment alleged that Defendants purposely sought to deceive the public by making false statements about EBS's progress and financial condition. According to the indictment, Defendants made false claims in various press releases beginning in 1999 and at Enron's annual analyst conference in January 2000. The indictment also charged Defendants with selling millions of dollars of Enron stock while making these false statements.

In July 2005, the jury acquitted Defendants on some counts but could not reach a verdict on others. Yeager was acquitted of the conspiracy, wire fraud, and security fraud counts. Hirko was acquitted of some of the insider trading and money laundering counts; and Shelby was acquitted of some of the insider trading counts. Because the jury hung on the remaining counts, the district court declared a mistrial on those counts. The district court also granted Shelby's Rule 29 motion for judgment of acquittal on the money laundering counts and the wire fraud counts.³

In November 2005, the Government obtained new indictments against Defendants. These post-trial indictments recharged Shelby and Hirko with all of the mistried counts and recharged Yeager with some of the mistried insider trading and money laundering counts. The indictments recharged Yeager with five counts of insider trading and eight counts of money laundering; Hirko with one count of conspiracy, one count of securities fraud, and five counts of insider trading; and Shelby with one conspiracy count, one securities fraud count, and four counts of insider trading. Shelby and Hirko moved to dismiss all of the recharged counts, except for the conspiracy counts against Hirko and Shelby and the 2001 insider trading counts against Hirko. Yeager moved to dismiss all of the mistried insider trading and money laundering counts.⁴ Defendants contend that their previous acquittals collaterally estopped the Government from pursuing these charges. The district court denied their motion.

II.

Whether collateral estoppel bars a subsequent criminal prosecution is a question of law that we review de novo. United States v. Brackett, 113 F.3d 1396, 1398 (5th Cir.1997).

III.

The Fifth Amendment's guarantee against double jeopardy incorporates the collateral estoppel doctrine. Ashe v. Swenson, 397 U.S. 436, 443-44, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1970). Collateral estoppel "means simply that when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit." Id. at 443, 90 S.Ct. 1189. As traditionally understood, the Double Jeopardy Clause precludes multiple prosecutions and multiple punishments for the same offense. See United States v. Odutayo, 406 F.3d 386, 392 (5th Cir.2005). Ashe, however, limits successive prosecution of defendants, not for the same offenses but for different offenses.⁵ After an acquittal, Ashe bars the government from prosecuting defendants on a different charge "if one of the facts necessarily determined in the former trial is an essential element of the subsequent prosecution." Brackett, 113 F.3d at 1398. Defendants asserting collateral estoppel carry the burden to make this showing. Dowling v. United States, 493 U.S. 342, 350, 110 S.Ct. 668, 107 L.Ed.2d 708 (1990) ("The Court of Appeals have unanimously placed the burden on the defendant to demonstrate that the issue whose relitigation he seeks to foreclose was actually decided in the first proceeding.").

To determine whether collateral estoppel bars a subsequent criminal prosecution, courts must conduct a two-step analysis. Bolden v. Warden, W. Tenn. High Sec. Facility, 194 F.3d 579, 584 (5th Cir. 1999). "Initially, we must decide which facts necessarily were decided in the first proceeding. Then we must consider whether the facts necessarily decided in the first trial constitute essential elements of the offense in the second trial." Id. Here, Defendants assert collateral estoppel bars the Government from pursuing all of the current charges against them, except for the conspiracy counts against Hirko and Shelby and the 2001 insider trading counts against Hirko.⁶ We engage in this two-step analysis as to each defendant's claims below.⁷

A. Rex Shelby

Shelby was acquitted of the four insider trading counts related to his sale of Enron stock in the summer of 2000 ("Summer 2000 Insider Trading Counts"). The jury hung on the conspiracy to commit securities and wire fraud count, the securities fraud count, the four wire fraud counts, the four insider trading counts related to trades he conducted between January and March 2000 ("Early 2000 Insider Trading Counts"), and all the money laundering counts. After the jury rendered its verdict, the district court granted Shelby's Rule 29 motion for judgment of acquittal on the money laundering counts and the wire fraud counts. Shelby now contends that, under collateral estoppel, these acquittals preclude the Government from retrying him on the securities fraud count and the Early 2000 Insider Trading Counts. This argument is unpersuasive.⁸

1. Jury Acquittals

Based on his review of the record, Shelby claims that the jury necessarily came to one of three potential conclusions when it acquitted him of the Summer 2000 Insider Trading Counts: (1) he did not withhold material information from the public, (2) there was no scheme to defraud, or (3) he lacked the intent to defraud. Because any one of these findings would bar the Government from prosecuting him on the securities fraud count and the Early 2000 Insider Trading Counts, Shelby seeks dismissal of these counts.

After an extensive examination of the record, we conclude that the jury could have acquitted Shelby of the Summer 2000 Insider Trading Counts on another basis: it determined that he did not "use" undisclosed, material information when he made the sales. Shelby testified that he sold shares of his Enron stock in 2000 because he was uncomfortable with being in the stock market and that he relied on his friend David Berberian's advice as to when to sell. Moreover, in the summer of 2000, Shelby immediately exercised options that vested and promptly sold the shares that he received. Because Shelby sold those shares as soon as possible, the jury could have concluded that Shelby conducted the summer 2000 trades due to his discomfort with the stock market.⁹

Shelby argues that the jury could not have acquitted him on this basis because the jury instructions did not explain the relevance of "using" insider information to insider trading. According to Shelby, the elements of insider trading do not include the word "uses," and the district court's explanation of the word "uses" does not immediately follow its instruction on the elements of insider trading.

We reject Shelby's selective reading of the jury instructions. In the jury instructions related to insider trading, the, district court stated that "the law forbids [a person possessing insider information] from using that insider information in buying or selling the securities in question." the district court further explained that "[a] person`uses' material, non-public information in connection with a stock purchase or sale if that information is a factor in his decision to purchase the stock." Therefore, these instructions were clear that the jury had to acquit Shelby of insider trading if it did not find that Shelby both: (1) had insider information and (2) was motivated by this information when he traded.

Because we find that the jury could have acquitted Shelby of the Summer 2000 Insider Trading Counts by concluding that these trades were not motivated by insider information, collateral...