Opposition Brief — Drobny v. United States

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FILED

y) DEC 12 1004

No. 84-549

AREXANDER L. STEVAS

T CLERK

Iu the Supreme Court of the United States

OCTOBER TERM, 1984

IRVING M. DROBNY, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FORA WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

REX E. LEE

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

DANIEL L. GOELZER

General Counsel

PAUL GONSON

Solicitor

JACOB H. STILLMAN

Associate General Counsel

RICHARD A. KIRBY

Assistant General Counsel

STEPHEN M. DETORE

Attorney

Securities and Exchange Commission

Washington, D.C. 20549

QUESTIONS PRESENTED

1. Whether petitioner was properly convicted of

aiding and abetting a violation of Section 10(b) of

the Securities Exchange Act of 1934, 15 U.S.C. 78)

(b), and SEC Rule 10b-5, 17 C.F.R. 240.10b-5, when

his co-defendant’s fraud, which petitioner was found

to have aided and abetted, rather than petitioner’s

own fraudulent acts, caused the securities transaction

at issue.

2. Whether the trial court committed plain error

in instructing the jury that knowledge could be in-

ferred from proof that petitioner “deliberately closed

his eyes to what would otherwise be obvious to him”

without also instructing that petitioner must have

been aware of “the high probability” of the existence

of the securities fraud.

(I)

TABLE OF CONTENTS

Page

a ecasnenignsioninanionanbons 1

RETEST ERTS 1

Statute and regulation involved ...........22--202022.00.-e eee 2

a ccnbbuunniininienennunine 2

a a sanesaniobtasobonenonense 8

A a ianiibansinmanbepinmomnen 15

TABLE OF AUTHORITIES

Cases:

A. T. Brod & Co. v. Perlow, 375 F.2d 393 ................ 9

Brennan V. Midwestern United Life Insurance Co.,

417 F.2d 147, cert. denied, 397 U.S. 989 ............ 12

Cupp Vv. Naughten, 414 U.S. 141 ....2- eee. 15

Davie ¥. Davie, SEG F.2a 1206................................... 9

Griego V. United States, 298 F.2d 845 _...0000 oo. 13

Hooper v. Mountain States Securities Corp., 282

F.2d 195, cert. denied, 365 U.S. 814 ..........0000...... 10

Jannes V. Microwave Communications, Inc., 461

SESE oo aS ie ee 10

Lewelling v. First California Co., 564 F.2d 1277.... 9

Nye & Nissen v. United States, 336 U.S. 613........ 10

Ohashi v. Verit Industries, 536 F.2d 849, cert. de-

I a css nnaesencnene 9

Pereira v. United States, 347 U.S. 1 -................n.... 10

SEC V¥V. Holechuh, 604 F.2d 180................................. 12

Superintendent of Insurance Vv. Bankers Life &

I I ccssinsncecuassies 9,10

United States v. Aulet, 618 F.2d 182........0000000 0... 14

United States v. Bright, 517 F.2d 584 0.0.0.0... 14

United States v. Cincotta, 689 F.2d 238, cert. de-

i scndoesnnsaneunennsanens 14

United States v. Diecidue, 603 F.2d 535, cert. de- |

a iconneeniadonuanniannen 10

United States v. Dozier, 522 F.2d 224, cert. denied,

ee SNE Sie BRCM DP ee Te 14

Cases—Continued : Page

United States v. Glick, 710 F.2d 639, cert. denied,

Ne. 68-464 (Jan. 33, 1064) ................................. 14

United States v. Gullett, 713 F.2d 1208, cert. de-

nied, No. 83-482 (Jan. 16, 1984) -.......................... 13

United States v. Hathaway, 584 F.2d 386, cert. de-

ANI MI IID iteicnsnecescisicsindaalachsineapnstaninibanincomsrsieniasites 10-11

United States v. Jewell, 532 F.2d 697, cert. denied,

i caceetidaeencenalimenidiiiosineinies 18, 14

United States v. Johnson, 319 U.S. 508 .................. 11

United States v. Joyce, 542 F.2d 158, cert. denied,

I eka uiciasiniihacchjanahideabiandigdcrieitibanndiahansepnsopilecenen 13

United States v. Kershman, 555 F.2d 198, cert. de-

IS a enrnitnanet 13

United States v. Lovasco, 431 U.S. 783 -................... 8

United States v. Massa, 740 F.2d 629 ...................... 13

United States v. Morales, 577 F.2d 769 _................. 14

United States v. Petullo, 709 F.2d 1178 .._................ 13

United States v. Riedel, 126 F.2d 81 ........................ 12

United States v. Sampson, 371 U.S. 765 .................... 12

United States v. Suttiswad, 696 F.2d 645 —............ 14

United States v. Tzakis, 736 F.2d 867 ~..................... 10

United States v. Valle-Vaidez, 554 F.2d 911_.......... 14

Statutes, regulation and rules:

Securities Exchange Act of 1934, 15 U.S.C. 78a ez

seq.:

£30), 16 UBS. Fae) «....~26~-.1..... 2, 8, 10, 12

I I A iain aeatisnteienicinttniengennnti 2

EES MIS 2h ee eID one a ty noe an 2,10

(Bk | 8 RRR nen eee mena Cee” 2, 8, 9, 10

Fed. R. Crim. P.:

a a cule iadenionians 14

RRR SERRE Renee Reece me TT APR SIT 14

he Le 1 TT ee

In the Supreme Court of the United States

OCTOBER TERM, 1984

No. 84-549

IRVING M. DROBNY, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. 1-

14) is reported at 734 F.2d 1023.

JURISDICTION

The judgment of the court of appeals was entered

on May 24, 1984. A petition for rehearing was de-

nied on July 5, 1984 (Pet. App. 16-17). On Septem-

ber 5, 1984, Justice White extended the time within

which to file the petition for a writ of certiorari to

and including October 3, 1984 (Pet. App. 18), and

the petition was filed on that date. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

(1)

——————————

STATUTE AND REGULATION INVOLVED

Section 10(b) of the Securities Exchange Act of

1934, 15 U.S.C. 78j(b), and SEC Rule 10b-5, 17

C.F.R. 240.10b-5, are reproduced at Pet. App. 19-21.

STATEMENT

Following a jury trial in the United States District

Court for the Western District of Texas, petitioner

was convicted on one count of aiding and abetting a

fraudulent securities transaction, in violation of Sec-

tions 10(b) and 32 of the Securities Exchange Act of

1934, 15 U.S.C. 78j(b), 78ff, and SEC Rule 10b-5, 17

C.F.R. 240.10b-5, and 18 U.S.C. 2. He was sentenced

to a four-year term of imprisonment.’

1. The evidence at trial showed the existence of a

scheme by which petitioner’s co-defendant Frederix

DeVeau purchased a controlling interest in the stock

of Jet Industries, Inc., and thereafter used Jet’s as-

sets to pay for that stock and for other non-corporate

purposes. DeVeau initially acquired a controlling in-

terest in a shell corporation (Pet. App. 2; R. 102-

105).*: Misrepresenting himself as president of a suc-

cessful company, and as an experienced engineer and

businessman, he began negotiations with the control-

ling shareholders of Jet (R. 400-406).° DeVeau of-

1 Petitioner’s co-defendant Frederix DeVeau was convicted

on the securities fraud count and on six other counts; he was

sentenced to a total of 20 years’ imprisonment. DeVeau and

petitioner were both acquitted of a charge of conspiracy.

2“R.” refers to the trial transcript. “Tr.” refers to the

separately-paginated transcript of the closing arguments and

jury instructions.

’ Jet was a small, publicly held Texas-based company en-

gaged in manufacture of electric cars (R. 392-395, 678-680).

Although Jet had a substantial amount of cash, the company

fered to buy the controlling block of Jet stock if he

could become its chief executive officer (R. 614-616,

682-683, 720). He agreed to pay $1,190,000 for the

block of stock with a cash down payment of $600,000

and the balance to be paid with a promissory note se-

cured by the Jet stock (R. 752-753; GX 37). DeVeau

failed to disclose that he had a prior criminal record

and that he intended to use Jet’s assets te pay for the

stock and to pay personal debts (R. 617-619, 664).

He falsely represented that he would buy the steck

with money from a “family trust,” or with funds bor-

rowed on the strength of his own credit (R. 619, 625-

626, 629-630).

DeVeau, who had no funds of his own (R. 98-99,

1321-1322), carried out his plan by obtaining the

short-term loan of the cash down payment with as-

surances of prompt repayment. DeVeau borrowed

$300,000 from a bank and three investors on a short-

term basis and enlisted the aid of petitioner, a Chi-

cago lawyer who was heavily in debt,’ to raise the

was losing money and was actively seeking new management

(R. 395-399).

* The transaction contemplated that the sellers would retain

an interest in the company and its management, in addition

to their security interest in the stock (R. 636-637, 688, 707).

The sales agreement required DeVeau to covenant, inter alia,

that he would “exercise due diligence to see that the affairs of

Jet Industries, Inc., are carried on in a reasonable, business-

like manner” (GX 87, Exh. 1, at 3).

*In April 1982, when DeVeau’s purchase of Jet stock oc-

curred, petitioner owed approximately $900,000 to Chicago

banks (R. 1847). Petitioner was the beneficial owner of a

large block of stock of the shell corporation DeVeau previ-

ously had acquired. That stock, which was worthless, had

been pledged as collateral for a loan that was in default by

late 1981. Pet. App. 3.

balance (R. 1436-1440). In return for DeVeau’s

promise of a $200,000 finder’s fee (R. 1688), peti-

tioner obtained a cashier’s check for $300,000 from

an associate, Joseph Rosin, for DeVeau to use in mak-

ing the down payment on the stock. Petitioner prom-

ised Rosin that he would negotiate the check only if

he received another cashier’s check for $300,000 plus

a $30,000 fee at the stock closing (R. 352-354). Peti-

tioner nevertheless signed the check over at the April

8, 1982 closing without arranging to recover the

money (R. 1690-1695). Immediately after the clos-

ing, petitioner and DeVeau were elected as Jet direc-

tors, and a short time later DeVeau became chairman

of the board (R. 416, 821).

On April 13, five days after the closing of the stock

purchase, DeVeau, with petitioner’s help, arranged to

pay all of the short term advances he had used to

make up the down payment. DeVeau repaid the por-

tion of the down payment raised from the bank and

from outside investors by misappropriating funds

Jet had set aside for operating expenses (R. 215-

217, 221-222, 689-691). When petitioner learned

that day that DeVeau had no money to repay the loan

from Rosin, he and DeVeau devised a means of ob-

taining the $330,000. They visited DeVeau’s banker,

and, at petitioner’s insistence, the bank issued a

$330,000 cashier’s check in exchange for petitioner’s

personal check (R. 227-228). According to the

banker, he provided the cashier’s check because peti-

tioner falsely represented that he was a Chicago bank

director, that he had credit in Chicago, and that he

would cover his personal check before it passed

through collection channels (R. 224-228, 235-236).

Petitioner immediately used the cashier’s check to re-

pay Rosin (R. 358-359). Contrary to his representa-

tions to DeVeau’s banker, petitioner made no effort to

place covering funds in his account (R. 1820-1824).

On April 21, DeVeau paid $330,000 of Jet’s money to

his banker to cover petitioner’s insufficient-funds

check (R. 238-240, 244-245).

With petitioner’s help, DeVeau prevented the sell-

ers and the Jet board of directors from discovering

that Jet funds were being used to repay DeVeau’s

down payment. One of the sellers testified that peti-

tioner had represented even before the closing that he

was investing the $300,000, rather than supplying

short-term financing (R. 688). After April 13, the

date petitioner obtained the $330,000 cashier’s check

from DeVeau’s banker, petitioner represented to at

least one Jet director that Rosin had not been repaid

his $300,000 contribution to the down payment; and

for months thereafter petitioner continued to deny

that that contribution had been repaid {R. 454-455).

In May 1982, petitioner informed the Jet board of

directors that he was holding $1,000,000 of Jet money

in trust to shield the money from attachment by cred-

itors (R. 436-487, 438-439, 697-698, 1207-1208). In

fact, petitioner never held those funds; instead, they

were controlled by DeVeau, who used them to cover

petitioner’s $330,000 insufficient-funds check and to

pay $165,000 of petitioner’s finder’s fee (Pet. App.

5-6; R. 239-243, 693-695, 775-784; GX 30, 60, 71-

73).

*DeVeau had promised petitioner a $200,000 finder’s fee

for producing the $300,000 at the time of the closing (Pet.

App. 4; R. 1687-1688, 1692-1693). Petitioner testified th

$100,000 of the $165,000 payment he received was a persona

loan from DeVeau (R. 1733-1737). On its face, however, the

cashier’s check for $100,000 states that Jet Industries, not

DeVeau, purchased the check (GX 70B).

During the trial, petitioner attempted to establish

that he, like other participants in the DeVeau take-

over of Jet, was merely an innocent victim. He de-

nied that he had intended to assist the fraud when he

wrote a worthless check in exchange for repayment

of half of the down payment for the Jet stock (R.

1707-1708). In addition, he disclaimed any knowl-

edge that DeVeau was using Jet funds either to re-

pay the down payment or to pay petitioner’s fee for

raising the $300,000 (R. 1708-1709). Petitioner ad-

mitted lying to Jet directors and shareholders about

the repayment of the $300,000 he had raised for the

down payment and about the location of Jet funds

(R. 1744-1746, 1837-1840), but maintained that he

was not trying to hide DeVeau’s looting of the com-

pany’s assets (R. 1747-1748, 1837-1838).

There was evidence at trial that could have led the

jury to reject petitioner’s testimony. A month before

the closing, a Jet shareholder who had introduced

DeVeau to Jet’s management had warned petitioner

that DeVeau could not lawfully use Jet assets to pur-

chase Jet stock (R. 412-413). By the time of the

closing, a number of the participants in the transac-

tion knew that, even if DeVeau did have a “family

trust,” the money from that trust was not available

to buy Jet stock (R. 199-201, 407-408, 618-619, 663-

664). Two participants in the Jet deal had informed

petitioner of DeVeau’s earlier inability to raise money

to purchase the Jet stock (R. 410-411, 1436-1438,

1481-1482, 1669, 1685).’ One witness recounted a

7In February 1982, DeVeau had tried to raise a $300,000

down payment for the Jet stock by pledging a Jet-owned cer-

tificate of deposit. On discovering this, the sellers broke off

the negotiations (R. 622-628, 664-665). Petitioner admitted

at trial thathe had been aware of the prior negotiations;

conversation in which petitioner admitted that on

April 13 he had believed that DeVeau was using Jet

assets to pay for the Jet stock (R. 1486-1490, 1510).

2. Petitioner was prosecuted on the basis of his

overall complicity in the fraudulent scheme. The

trial court’s instructions allowed the jury to consider

whether petitioner had knowingly participated with

DeVeau in a “common plan” to defraud the sellers of

Jet stock (Tr. 259-260). The court’s “aiding and

abetting” charge stated that the jury could find peti-

tioner guilty if he substantially and willfully assisted

DeVeau’s fraudulent scheme (Tr. 261-262). The

court instructed the jury that it could infer knowledge

of the fraudulent scheme on petitioner’s part if it

found “willful blindness” to the existence of facts

(Tr. 247). The court cautioned the jury that “[a]

showing of negligence or mistake is not sufficient to

support a finding of willfullness or knowledge” (Tr.

247). Petitioner’s only objection to those instructions

concerned the “willful blindness” language (Tr. 115-

116). He contended that the charge effectively con-

verted the required mental state “from knowledge to

something else which really [comes to] negligence”

(Tr. 115).

3. The court of appeals affirmed petitioner’s con-

viction (Pet. App. 1-14). The court rejected petition-

er’s challenge to the adequacy of the trial court’s

“willful blindness” instruction. The court noted that

its precedents did not require that a “deliberate ig-

norance” instruction be accompanied by an instruc-

tion that the jury could find knowledge only if it

although he denied knowing that DeVeau had been unable to

raise enough money, petitioner described DeVeau’s previous

attempts to close the transaction as “the Perils. of Pauline”

(R. 1669, 1685, 1828-1830, 1832-1823).

found that the defendant was aware of a “high prob-

ability” of the existence of a fact (id. at 10-11). The

court also concluded that, contrary to petitioner’s

claim, there was ample evidence from which a jury

could conclude that petitioner knew that DeVeau was

covering petitioner’s insufficient-funds check with Jet

funds (id. at 11-13).°

ARGUMENT

1. Petitioner contends (Pet. 11-20) that as a mat-

ter of law his conduct did not occur “in connection

with” a purchase or sale of securities, as required by

Section 10(b) of the Securities Exchange Act of 1934

and SEC Rule 10b-5. He asserts that the only mis-

conduct of which he was convicted consisted of the

April 18th transaction in which he exchanged his

insufficient-funds personal check for the $330,000

eashier’s check, which was subsequently covered with

Jet funds. Petitioner contends that this conduct

could not have violated Section 10(b) because it did

not precede or cause the April 8th closing of the

fraudulent securities transaction. Petitioner acknowl-

edges (Pet. 12 n.14) that he failed to raise this claim

in the court of appeals and that the court did not ex-

plicitly address the question; accordingly, the claim

is not now appropriate for review by this Court. See,

e.g., United States v. Lovasco, 431 U.S. 783, 788 n.7

(1977). In any event, petitioner’s contention lacks

merit.

Petitioner was convicted of aiding and abetting

DeVeau’s fraudulent schemé to acquire the stock of

Jet Industries, Inc., in order to loot its assets. Even

assuming, as petitioner contends, that the “in connec-

8 The court of appeals also affirmed DeVeau’s convictions.

It rejected DeVeau’s claim that his trial should have been

severed from that of petitioner. Pet. App. 7-10.

9°

tion with” language requires that fraudulent conduct

precede and cause the purchase or sale of securities,°

petitioner was properly convicted, since DeVeau’s

scheme unquestionably caused the April 8th securities

transaction. It is sufficient that DeVeau’s scheme was

“in connection with” a purchase or saie of a security

and that petitioner rendered knowing and substantial

assistance to that fraud.

The indictment did not allege that the April 13th

check transaction constituted the entire scheme to de-

fraud; rather, it identified that transaction as only

one of several means used to further the scheme. As

charged in the indictment and proved at trial, the

fraudulent scheme consisted of several successive

steps, including DeVeau’s misrepresentation of his

background and plan to divert Jet funds; DeVeau’s

purchase of Jet stock financed in part by petitioner;

DeVeau’s conversion of Jet assets to repay petitioner

and others for funds temporarily advanced to pur-

chase the Jet stock; DeVeau’s use of other Jet cash

® Contrary to petitioner’s contention, a scheme to defraud

in connection with the purchase or sale of securities does not

invariably cease at the time a stock closing occurs. Rule 10b-5

prohibits both “‘a garden type variety of fraud’” and

“*[nJovel or atypical methods.’” Superintendent of Insur-

ance V. Bankers Life & Casualty Co., 404 U.S. 6, 10-11 n.7

(1971) (quoting A.T. Brod & Co. v. Perlow, 375 F.2d 393, 397

(2d Cir. 1967)). The courts of appeals have properly recog-

nized that certain deceptions that take place after a stock

closing, including those that induce ratification of a completed

transaction (Lewelling v. First California Co., 564 F.2d 1277,

1280 (9th Cir. 1977)), that aim at withholding the purchase

price for securities (Davis v. Davis, 526 F.2d 1286, 1290 (5th

Cir. 1976) ), or that affect a still-executory term of a securi-

ties contract (Ohashi v. Verit Industries, 586 F.2d 849, 853

(9th Cir.), cert. denied, 429 U.S. 1004 (1976)), retain their

connection with the purchase or sale.

for non-corporate purposes; and DeVeau’s conceal-

ment, with petitioner’s active assistance, of the flow

of Jet assets toward non-corporate purposes (Indict-

ment, Count 2, para. 3 (incorporating by reference

Count 1, paras. 16-26) ). Petitioner can hardly main-

tain that this fraudulent scheme was not “in connec-

tion with” a purchase of securities. See Superintend-

ent of Insurance v. Bankers Life & Casualty Co., 404

U.S. 6, 12-18 (1971) (‘in connection with” language

requires “deceptive practices touching [the] sale of

securities”); Jannes v. Microwave Communications,

Inc., 461 F.2d 525, 527-529 (7th Cir. 1972) (stock

purchase aimed at controlling and looting corporation

may form the basis for a Rule 10b-5 claim) ; Hooper

v. Mountain States Securities Corp., 282 F.2d 195,

204 (5th Cir. 1960), cert. denied, 365 U.S. 814

(1961) (same).

The district court’s instructions on complicity un-

der 18 U.S.C. 2 properly allowed the jury to consider

the extent of petitioner’s knowledge of, and coopera-

tion in, DeVeau’s criminal enterprise. See Nye &

Nissen v. United States, 336 U.S. 613, 618-619 |

(1949). On the basis of such instructions, the jury

could have found from the evidence that petitioner

was guilty of violating Section 10(b) as an aider and

abettor, even without evidence directly connecting him

with each element of the offense charged in the indict-

ment. An aider and abettor need merely associate

himself with a criminal venture and knowingly seek

to make the venture succeed. Nye & Nissen v. United

States, 336 U.S. at 619; see also Pereira v. United

States, 347 U.S. 1, 11-12 (1954). He need not have

participated in every phase of the scheme. United

States v. Tzakis, 736 F.2d 867, 873 (2d Cir. 1984);

United States v. Diecidue, 603 F.2d 535, 557 (5th

Cir. 1979), cert. denied, 445 U.S. 946 (1980) ; United

States v. Hathaway, 534 F.2d 386, 399 (1st Cir.),

cert. denied, 429 U.S. 819 (1976). And see United

States v. Johnson, 319 U.S. 508, 518 (1948) (uphold-

ing conviction for aiding and abetting tax fraud on

the basis of defendants’ aid in concealing income of

tax evader, even though defendants did not share in

making false return).

Petitioner aided and abetted DeVeau’s fraudulent

scheme in connection with the purchase of securities

if at some point during the scheme—whether during

the events leading up to the closing, during the loot-

ing of Jet, or during the concealment of the scheme

from the sellers and directors of Jet—he knowingly

aided the scheme. Petitioner played an active role at

each of these stages by, inter alia, obtaining half of

the funds used by DeVeau in the closing, permitting

DeVeau to cover his insufficient-funds check with Jet

assets, and lying to Jet’s directors about the location

of Jet assets. Even if, as petitioner asserts, his

knowledge of the scheme did not antedate the closing,”

10 Petitioner suggests (Pet. 8-9) that the government at

trial and the court of appeals conceded that the record would

not support a finding that he knew before the closing that

DeVeau would repay him from Jet assets. According to peti-

tioner, the prosecution and the court predicated liability ex-

clusively on petitioner’s knowledge, on or after April 13, that

DeVeau would cover his personal check with Jet money. The

government made no such concession. Indeed, it argued ex-

pressly that petitioner knew prior to the closing that DeVeau

would repay him with Jet funds (Tr. 234-235; emphasis

added) :

Now, I ask you, ladies and gentlemen of the Jury, the

evidence, we submit, has shown that [petitioner] knew

all along that what he was getting was Jett [sic] money.

* * * But, even if you are not convinced of that that he

actually knew, I suggest to you that the records certainly

he nevertheless knowingly aided the overall scheme in

a significant manner. On April 13, when petitioner

kited his personal check, thus giving DeVeau addi-

tional time to acquire covering funds from Jet assets,

he substantially assisted the scheme. Given the ample

evidence of petitioner’s guilty knowledge (see pages

6-7, supra), his participation in this critical episode

was enough to sustain his conviction. Moreover, de-

ceptive schemes include attempts to avoid detection

and to hide the continued operation of the scheme.

See SEC v. Holschuh, 694 F.2d 136, 143-144 & n.24

(7th Cir. 1982); United States v. Riedel, 126 F.2d

81, 83 (7th Cir. 1942). Thus, petitioner’s knowing

concealment of the ongoing conversion of Jet funds

after the closing—including, inter alia, his April

13th activities—also provided a sufficient basis for

the conclusion that he aided and abetted DeVeau’s

overall scheme. Cf. United States v. Sampson, 371

U.S. 75, 78-81 (1962) (in mail fraud prosecution,

lulling letters mailed after victims were defrauded

were for purposes of executing fraud); Brennan v.

Midwestern United Life Insurance Co., 417 F.2d 147,

155 (7th Cir. 1969), cert. denied, 397 U.S. 989

(1970) (an aider and abettor can be liable under Sec-

tion 10(b) for lulling defrauded investors).

supports the conclusion that he covered his eyes and said,

all right, Fred, give me the money. I don’t care where it

comes from. Give me the money.

The court of appeals focused on the period between April 13

and April 26, because petitioner argued on appeal that there

was insufficient evidence that he knew Jet funds were used to

cover his April 13th check. But the court also observed that

the only evidence indicating that petitioner ever thought he

would receive his finder’s fee and repayment for the advance

of $300,000 from a source other than Jet assets came from

petitioner’s own testimony—a source the jury was entitled to

reject (Pet. App. 13).

2. Petitioner testified at trial that he did not know

DeVeau would use Jet funds to repay his short-term

loan. The trial court instructed the jury that it could

infer knowledge on petitioner’s part if petitioner “de-

liberately closed his eyes to what would otherwise

have been obvious to him” (Pet. App. 10 n.2). Peti-

tioner asserts that the trial court erred in failing to

temper this “willful blindness” instruction either with

language that would permit such an inference only

if the jury found a “high probability” of petitioner’s

awareness of the facts supposedly ignored or with lan-

guage requiring acquittal if the jury believed peti-

tioner’s claim of ignorance. He contends that review

of this claim is warranted because of a purported con-

flict in the circuits.

Petitioner did not ask the trial court to instruct the

jury in the terms he now urges.” Therefore, the

court’s failure to give the instruction may be chal-

lenged only as “plain error” under Fed. R. Crim. P.

11 At trial, petitioner objected to the “willful blindness” in-

struction on narrow grounds, claiming only that to give the

instruction at all would allow the jury to convict him on proof

of mere negligence (Tr. 115-116). Every court of appeals that

has considered instructions on “willful blindness,” “conscious

avoidance,” or “deliberate ignorance” has rejected the argu-

ment that such instructions permit the jury to convict on the

basis of negligence. See, e.g., United States v. Massa, 740

F.2d 629, 648 (8th Cir. 1984); United States v. Gullett, 718

F.2d 1203, 1212 (6th Cir. 1988), cert. denied, No. 83-4382

(Jan. 16, 1984) ; United States v. Petullo, 709 F.2d 1178, 1181

(7th Cir. 1983); United States v. Kershman, 555 F.2d 198,

200-201 (8th Cir.), cert. denied, 484 U.S. 892 (1977) ; United

States v. Joyce, 542 F.2d 158, 161 (2d Cir. 1976), cert. denied,

429 U.S. 1100 (1977) ; United States v. Jewell, 582 F.2d 697,

704 & n.21 (9th Cir.) (en banc), cert. denied, 426 U.S. 951

(1976) ; Griego v. United States, 298 F.2d 845, 849 (10th Cir.

1962).

52(b). See Fed. R. Crim. P. 30. No court has held

that failure to give the instruction petitioner now

embraces would constitute plain error.” Indeed, sev-

eral courts of appeals have noted that failure to give

such an instruction does not constitute plain error.

United States v. Glick, 710 F.2d 639, 642-644 (10th

Cir. 1983), cert. denied, No. 83-454 (Jan. 23, 1984);

United States v. Cincotta, 689 F.2d 238, 243-244 (1st

Cir.), cert. denied, 459 U.S. 991 (1982); United

States v. Dozier, 522 F.2d 224, 228 (2d Cir.) (on

petition for rehearing), cert. denied, 423 U.S. 1021

(1975); see also United States v. Suttiswad, 696 F.2d

645, 651-652 (9th Cir. 1982). Accordingly, there is

no conflict among the circuits on this issue.

Moreover, the court’s failure to use the “high prob-

ability” language did not prejudice petitioner. In

evaluating any challenge to the wording of a partic-

12 The cases petitioner relies on in support of his claim that

a court must include the “high probability” or similar lan-

guage in its instructions do not indicate that omission of such

language would be plain error in the circumstances of this

case. In United States v. Morales, 577 F.2d 769 (2d Cir.

1978), the court stated, “[o]f course, this is not to suggest

that this language is indispensable in every case” (id. at 775

n.6). In United States v. Valle-Valdez, 554 F.2d 911 (9th Cir.

1977), the court reviewed the absence of the “high probabil-

ity” language to determine whether it was harmless error,

since the defendant had made a timely objection (id. at 914).

The court observed that lack of an objection on “sufficiently

specific Grounds” had led the court in the past to employ the

“plain error” standard. 554 F.2d at 914 n.4 (citing United

States v. Jewell, 532 F.2d 697, 704 n.21 (9th Cir.) (en banc),

cert. denied, 426 U.S. 951 (1976)). In United States v. Aulet,

618 F.2d 182, 190-191 (2d Cir. 1980), the discussion relied on

by petitioner is dictum; the court found that the challenged

instruction included “[a]ll of these elements.” And in United

States v. Bright, 517 F.2d 584 (2d Cir. 1975), defense counsel

had specifically requested balancing language. See id. at 588.

ular jury instruction, it is necessary to consider the

charge as a whole. Cupp v. Naughten, 414 U.S. 141,

146-147 (1973). Here the trial court instructed the

jury that the evidence must demonstrate that “the

act was committed voluntarily and purposely, with

the specific intent to do something the law forbids;

that is to say, with bad purpose either to disobey or

disregard the law” before the jury could find that pe-

titioner acted “willfully” (Tr. 246). The court ex-

plicitly informed the jury that it could not convict on

the basis of a showing of negligence or mistake (Tr.

247). In the context of the charge as a whole, the

“willful blindness” instruction created no genuine

danger that the jury would convict petitioner on the

basis of either negligence or recklessness.

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

REx E. LEE