United States v. Nicholas Bachynsky

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
FEB 18, 2011
No. 08-17058 JOHN LEY
CLERK
D.C. Docket No. 04-20250-CR-AJ
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
NICHOLAS BACHYNSKY,
a.k.a. Reporter Doe,
a.k.a. Nick,
Defendant - Appellant.
Appeal from the United States District Court
for the Southern District of Florida
(February 18, 2011)
Before EDMONDSON, PRYOR and BARKSDALE,* Circuit Judges.
PER CURIAM:
*
Honorable Rhesa Hawkins Barksdale, United States Circuit Judge for the Fifth Circuit, sitting by
designation.
Nicholas Bachynsky appeals his convictions for: conspiracy to commit
securities fraud; and securities and wire fraud. He claims: insufficient evidence for
the conspiracy conviction; evidentiary errors, including disclosure of his prior
criminal convictions; and error in refusing his proposed jury instructions.
AFFIRMED.
I.
Following convictions in 1989 for racketeering and defrauding the IRS,
Bachynsky lost his medical license in Florida, New York, and Texas. This appeal
concerns his involvement in a subsequent fraudulent business scheme.
In 2001, Bachynsky arranged with Richard Anders to establish Helvetia
Pharmaceuticals, which was purportedly intended to study, develop, and obtain
government approval for an experimental treatment called intracellular hyperthermia
(ICHT). The company’s ICHT therapy and its founders had a very suspect history:
ICHT used the drug 2-4 dinitropehanal (DNP), a toxic substance banned for medical
use by the FDA; Anders had felony convictions and was permanently barred by the
Securities and Exchange Commission from trading securities or raising investment
capital; and, as noted, Bachynsky, in addition to having lost his medical license in
2
three States, had convictions in 1989 for racketeering and conspiracy to defraud the
IRS, for which he was imprisoned.
Before starting Helvetia, Bachynsky had experimented with DNP for the better
part of his medical career. His experiments showed DNP not to be a successful
treatment drug: in all of his research, only two patients’ lives were prolonged and no
one was cured. Worse, four patients died during his DNP research in Mexico during
the late 1990s.
Nevertheless, in approximately 2000, Anders and Bachynsky began business
planning using ICHT technology for cancer treatments, even though neither owned
the rights to the patent application. To further this plan, Bachynsky and Anders
enlisted Mahaffey, experienced in business-plan drafting, to develop a plan for a
company that would market ICHT therapy. Mahaffey warned Bachynsky: because
of his criminal history, he could launch, but could not manage, the company.
Operating under the name Helvetia, Bachynsky and Anders distributed versions
of the business plan to potential investors, even though it contained false and
misleading information and material omissions: among other things, Bachynsky
represented falsely that Helvetia owned the exclusive rights to ICHT; he also did not
disclose his 1989 convictions and loss of medical license.
3
In 2001, Bachynsky and Anders set up corporate operations for Helvetia in
Florida. There, they conferred with Friedman, an attorney who expressed concerns
about their prior convictions. He informed them: they could not serve as corporate
officers, directors, or control persons; they could own no more than five percent of
the outstanding shares of stock; and they could not involve themselves in raising
capital for the company.
Anders and Bachynsky had Helvetia incorporated in 2001 as a Delaware
corporation, authorized to do business in Florida. Later that year, Bachynsky left for
Europe to operate Helvetia’s clinics. There, he formed two Swiss companies to
support Helvetia’s operations. Bachynsky also made return trips to Florida to solicit,
and receive payments from, investors. Bachynsky played an important role in this
respect, because Anders would call upon him to provide technical information to
potential investors and instill investor confidence through his status as a physician.
During these solicitations, Bachynsky knowingly distributed fraudulent business
plans to investors, and provided fraudulent information about both the results of his
experimental studies with ICHT in Mexico and the status of his medical license.
In 2002, federal investigators received information from Helvetia investors
regarding misrepresentations about its operations. Bachynsky, Anders, Laurence
Dean, and Arthur Scheinert were indicted in 2004. Dean and Scheinert pleaded guilty
4
that September to: one count of conspiracy to commit securities fraud, in violation
of 18 U.S.C. § 371; and one count of mail fraud, in violation of 18 U.S.C. § 1341.
Following a third superseding indictment in 2007 against Anders and Bachynsky,
Anders pleaded guilty in January 2008 to one count of securities fraud, in violation
of 15 U.S.C. §§ 78(b), 78ff(a), and 18 U.S.C. § 2.
Pursuant to that indictment, Bachynsky was charged with: one count of
conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371; seven counts
of mail fraud, in violation of 18 U.S.C. §§ 1341, 2; five counts of wire fraud, in
violation of 18 U.S.C. §§ 1343, 2; 13 counts of securities fraud, in violation of 15
U.S.C. §§ 78j(b), 78ff(a), and 18 U.S.C. § 2; and 11 counts of money laundering, in
violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), 2. The Government dismissed the money-
laundering counts prior to trial.
Following a jury trial, Bachynsky was convicted on five counts (conspiracy to
commit securities fraud; three for wire fraud; and securities fraud). The jury acquitted
him on 13 counts; all others were dismissed at the close of the Government’s case in
chief. Bachynsky was sentenced, inter alia, to 168 months’ imprisonment.
II.
Challenged on appeal are the district court’s: denying defendant’s motion for
judgment of acquittal for the conspiracy charge (the securities and wire-fraud
5
convictions are not so challenged); not applying SEC Regulation S-K’s standards for
material disclosures; not conducting a pre-trial Daubert hearing; allowing testimony
by a Special Assistant United States Attorney; ruling the Government did not violate
Rule 16 in failing to disclose defendant’s pre-trial statements; and not instructing the
jury on ambiguities in securities law and an entrapment-by-estoppel defense.
In addition to claiming reversible error on each issue, defendant claims
cumulative reversible error. Because there is no error for any of the above-described
issues, there can be no cumulative error. See, e.g., United States v. Baker, 432 F.3d
1189, 1223 (11th Cir. 2005) (noting cumulative error requires an accumulation of
non-reversible errors by trial court).
A.
Bachynsky claims the district court erred in denying his motion for judgment
of acquittal due to insufficient evidence for his conspiracy conviction. As noted, he
does not similarly contest his securities and wire-fraud convictions.
In order to preserve an insufficient-evidence claim: after the Government rests
its case, and before submission of the case to the jury, including after any rebuttal
evidence by the Government, defendant must move for judgment of acquittal on that
claim. See FED. R. CRIM. P. 29(a); see United States v. Edwards, 526 F.3d 747, 754-
56 (11th Cir. 2008). Because defendant did so, his insufficient-evidence claim is
6
reviewed de novo, viewing the evidence in the light most favorable to the
Government, and determining whether a rational juror could have found defendant
guilty beyond a reasonable doubt. United States v. Gari, 572 F.3d 1352, 1359 (11th
Cir. 2009). “The jury is free to choose between or among the reasonable conclusions
to be drawn from the evidence presented at trial, and the court must accept all
reasonable inferences and credibility determinations made by the jury.” United States
v. Sellers, 871 F.2d 1019, 1021 (11th Cir. 1989) (citations omitted).
The elements for proving a conspiracy under 18 U.S.C. § 371 are: (1) an
agreement between two or more persons to achieve an unlawful objective; (2)
knowing and voluntary participation in the agreement; and (3) an overt act by a
conspirator in furtherance of the agreement. United States v. Hasson, 333 F.3d 1264,
1270 (11th Cir. 2003). There was ample evidence upon which a rational juror could
have found defendant conspired with Anders (and others) to defraud investors
through false and misleading statements about Helvetia. The record is replete with
investors being induced to invest in Helvetia as the result of Bachynsky’s role in the
conspiracy.
In that regard, Bachynsky’s relations with investor Daley are sufficient alone
to prove his conviction: Bachynsky represented he was a doctor and medical director
for Helvetia; in a meeting with Daley, Anders and Bachynsky falsely represented to
7
him that drug trials in Mexico with the cancer drug had been successful; Bachynsky
gave Daley a copy of Helvetia’s business plan which included misrepresentations
concerning the success of ICHT and DNP and Helvetia’s exclusive control of the
accompanying technology; Bachynsky did not reveal Anders had been convicted of
securities fraud and barred from selling securities; and defendant similarly did not
disclose his 1989 convictions and loss of medical license. Bachynsky knew none of
this information was correct and succeeded in procuring $10,000 from Daley. Daley
testified he would not have invested in Helvetia had he known of Bachynsky’s 1989
convictions and loss of medical license, Anders’ fraud conviction, and the lack of
studies showing DNP and ICHT to be safe or effective.
In short, there was sufficient evidence for a rational juror to find, beyond a
reasonable doubt, that Bachynsky knowingly entered into an agreement with Anders
to make false material representations and omissions in order to solicit money from
would-be investors. That Bachynsky was guilty of conspiracy was a reasonable
finding based upon the evidence. That, according to Bachynsky, he was somehow
duped by Anders, or misled by his attorney, or left in the dark concerning Helvetia’s
corporate records and business plans is to no avail. “It is not necessary that the
evidence exclude every reasonable hypothesis of innocence or be wholly inconsistent
with every conclusion except that of guilt . . . .” United States v. Bell, 678 F.2d 547,
8
549 (5th Cir. Unit B 1982); see also United States v. Garcia, 447 F.3d 1327, 1338
(11th Cir. 2006).
B.
Bachynsky challenges the court’s permitting the Government to present
evidence concerning his not disclosing his 1989 convictions. Over his objection, the
Government was permitted to ask investor witnesses: whether, prior to investing,
they knew of the convictions and resulting loss of medical license; and whether they
would have invested had those convictions been disclosed.
Defendant contends: there was no duty, general or otherwise, to disclose his
12-year-old convictions; and there is no duty to disclose when the SEC’s Regulation
S-K only requires disclosure of convictions from the past five years and material to
an investor’s evaluation of the company. Because defendant had a general duty to
disclose those convictions, we do not reach his contention concerning a specific duty
to disclose.
Challenges to evidentiary rulings are reviewed for abuse of discretion. E.g.,
Baker, 432 F.3d at 1202. A court abuses its discretion when its decision “rests upon
a clearly erroneous finding of fact, an errant conclusion of law, or an improper
application of law to fact”. Id. “The abuse of discretion standard has been described
as allowing a range of choice for the district court, so long as that choice does not
9
constitute a clear error of judgment.” United States v. Kelly, 888 F.2d 732, 745 (11th
Cir. 1989); see FED. R. EVID. 103(a) (no reversible error unless evidentiary ruling
affects party’s substantial rights).
Bachynsky was convicted for securities fraud, in violation of the Securities
Exchange Act, 15 U.S.C. §§ 78j(b), 78ff(a), and 17 C.F.R. § 240.10b-5. The purpose
of that Act is to protect investors against fraud; accordingly, an individual or entity
making a disclosure in furtherance of the sale of securities has a duty to make those
disclosures complete and accurate. See S.E.C. v. Texas Sulphur Gulf Co., 401 F.2d
833, 860-61 (2d Cir. 1968).
Along that line, § 10(b) is the Act’s central antifraud provision, with Rule 10b-
5 further defining unlawful conduct under that section. To prove a § 10(b) violation,
the Government must show “a misstatement or omission of material fact, made with
scienter”. S.E.C. v. Fehn, 97 F.3d 1276, 1289 (9th Cir. 1996) (internal citation and
quotation marks omitted).
The duty to disclose “is a general one, and arises whenever a disclosed
statement would be ‘misleading’ in the absence of the ‘disclos[ure] of [additional]
material facts’ needed to make it not misleading”. Id. at 1290 n.12 (emphasis in
original). As the Supreme Court has stated, “[c]onduct itself can be deceptive”;
therefore, liability under § 10(b) or Rule 10b-5 does not require “a specific oral or
10
written statement”. Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148,
158 (2008).
A fact is material if there is a substantial likelihood a reasonable investor would
consider it important in making an investment decision. Basic, Inc. v. Levinson, 485
U.S. 224, 231-32 (1988). Accordingly, “materiality depends on the significance the
reasonable investor would place on the withheld or misrepresented information”. Id.
at 240.
1.
To solicit new investors, Bachynsky held himself out as both a legitimate
businessman and a licensed and qualified medical expert. Disclosure that he had
prior convictions and had lost his medical license, not to mention his failure to
disclose knowledge of Anders’ prior securities-fraud prohibitions, were all material
facts that, needless to say, “would have been viewed by the reasonable investor as
having significantly altered the ‘total mix’ of information made available”. Id. at
231-32.
Therefore, such failure to disclose affected Helvetia’s potential investors.
Accordingly, the district court did not abuse its discretion in admitting evidence
concerning Bachynsky’s omissions in that regard. See also Breard v. Sachnoff &
Weaver, Ltd., 941 F.2d 142, 144 (2d Cir. 1991) (failure to disclose prior fraud
11
conviction in initial offering memorandum could be considered reckless as a matter
of law); cf. S.E.C. v. Merch. Capital, LLC, 483 F.3d 747, 771-72 (11th Cir. 2007)
(noting clear error for court not to consider prior convictions or violations of court
orders).
12
2.
Nevertheless, defendant contends he was not required to disclose his 1989
convictions because, as noted, Regulation S-K requires disclosure of a prior
conviction only when it is within five years and material to an investment decision.
17 C.F.R. § 229.401(f)(2), (g)(1). Defendant contends Regulation S-K is relevant
because it is promulgated by the SEC, which has authority over the enforcement of
federal securities laws, see United States v. Matthews, 787 F.2d 38, 44 (2d Cir. 1986);
and, according to the Third Circuit, disclosure obligations under Regulation S-K
“extend considerably beyond those required by Rule10b-5”. Oran v. Stafford, 226
F.3d 275, 288 (3d Cir. 2000).
Defendant’s reliance upon Regulation S-K is misplaced and ignores that its
application is predicated upon an SEC filing. The regulation contains the disclosure
requirements for the nonfinancial statement portion of filings with the SEC: it
governs registration statements, annual reports, and “any other documents required
to be filed under the Exchange Act, to the extent provided in the forms and rules
under that Act”. 17 C.F.R. § 229.10(a)(2); see also Slayton v. American Exp. Co.,
604 F.3d 758, 768 (2d Cir. 2010). Bachynsky fails to show Regulation S-K should
apply in a context outside of SEC filings, to a point in time such as this, i.e.,
13
Bachynsky’s material misrepresentations at the time of solicitation.
C.
Defendant next challenges the denial of his motion for a pre-trial Daubert
hearing (based upon Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) and
Federal Rule of Evidence 702 (requiring court to consider whether expert testimony
is scientifically or technically valid and will assist trier of fact)). Defendant contends
the hearing would have prevented the admission of irrelevant and prejudicial
testimony by one of the Government’s expert witnesses, Dr. Sokol. The denial of a
Daubert hearing is reviewed for abuse of discretion, United States v. Hansen, 262
F.3d 1217, 1233 (11th Cir. 2001), as are rulings on the admissibility of expert
testimony, Allison v. McGhan Medical Corp., 184 F.3d 1300, 1306 (11th Cir. 1999).
1.
Bachynsky’s pre-trial Daubert motion, on whether the reasoning or
methodology underlying Dr. Sokol’s testimony was reliable, was denied without
prejudice. At trial, defendant objected to the relevance of Dr. Sokol’s testimony,
contending he lacked expertise with DNP. The court considered the objection, but
qualified Dr. Sokol as an expert in the fields of oncology and clinical pharmacology.
14
There is no requirement that a Daubert hearing always be held. See United
States v. Frazier, 387 F.3d 1244, 1264 (11th Cir. 2004); Hansen, 262 F.3d at 1234.
As is well known, the trial court’s obligation under Federal Rule of Evidence 702 is
to serve as the gatekeeper for the admission of scientific expert testimony. In
qualifying an expert witness, the court must consider whether:
(1) the expert is qualified to testify competently regarding
the matters he intends to address; (2) the methodology by
which the expert reaches his conclusions is sufficiently
reliable as determined by the sort of inquiry mandated in
Daubert; and (3) the testimony assists the trier of fact,
through the application of scientific, technical, or
specialized expertise, to understand the evidence or to
determine a fact in issue.
Frazier, 387 F.3d at 1260 (quoting City of Tuscaloosa v. Harcros Chems., Inc., 158
F.3d 548, 562 (11th Cir. 1998)); see FED. R. EVID. 702. In short, the court is to
“ensure that speculative, unreliable expert testimony does not reach the jury”.
McCorvey v. Baxter Healthcare Corp., 298 F.3d 1253, 1256 (11th Cir. 2002). In that
regard, it is understandably given “considerable leeway” in evaluating the testimony’s
reliability. Rink v. Cheminova, Inc., 400 F.3d 1286, 1291 (11th Cir. 2005) (quoting
Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999)).
There was no abuse of discretion. First, a Daubert hearing was not required
because the Government proffered sufficient information to allow the court to qualify
Dr. Sokol as an expert in areas of oncology and clinical pharmacology, and because
15
defendant presented no evidence contesting Dr. Sokol’s testimony or scientific
knowledge. See Hansen, 262 F.3d at 1234 (a court should conduct a Daubert
inquiry when the opposing party presents conflicting expert testimony). Second,
Bachynsky objected to the relevance of Dr. Sokol’s testimony because he lacked
personal experience with DNP. The district court considered this objection and
determined the testimony was relevant because it assisted the jury in evaluating the
truthfulness and accuracy of Bachynsky’s and Helvetia’s human-safety claims. See
Daubert, 509 U.S. at 591-92 (noting a liberal standard for relevance to whether expert
testimony will aid jury in resolving the facts).
2.
Bachynsky further contends the Daubert hearing was necessary because it
would have prevented Dr. Sokol’s testifying erroneously that Bachynsky admitted to
a felony in 1986. Pursuant to defendant’s objection, the court struck that testimony
and instructed the jury to disregard it.
An instruction to disregard evidence withdrawn from the
jury is sufficient grounds for an appellate court to uphold
a trial court’s denial of a motion for mistrial unless the
evidence is so highly prejudicial as to be incurable by the
trial court’s admonition. Such a level of prejudicial effect
exists where there is a significant possibility . . . that . . .
the stricken statement had a substantial impact upon the
verdict of the jury.
16
United States v. Sawyer, 799 F.2d 1494, 1505-06 (11th Cir. 1986) (quoting United
States v. Tenorio-Angel, 756 F.2d 1505, 1512 (11th Cir. 1985) (internal quotation
marks omitted)).
There is no indication of any “significant possibility” of highly prejudicial
evidence. Again, pursuant to defendant’s objection, the district court immediately
struck the testimony and instructed the jury to disregard it; and the court denied
defendant’s motion for a mistrial, pursuant to the jury’s having previously received
evidence on Bachynsky’s 1989 convictions and medical license revocations.
Defendant asserts the jury’s being told erroneously about a 1986 felony, in
addition to hearing about his 1989 convictions, was more prejudicial than evidence
on the 1989 convictions alone. The record indicates, however, that the testimony was
not prejudicial: the court gave a limiting instruction, see United States v. Trujillo,
146 F.3d 838, 844 (11th Cir. 1998) (court’s curative instruction to jury assuaged
potential prejudice caused by improper testimony); and defendant was acquitted on
most counts, see United States v. Mills, 138 F.3d 928, 936 (11th Cir. 1998) (not-guilty
verdict on most counts indicates jury’s consideration was not tainted by improperly
admitted evidence).
D.
17
Defendant asserts the court erred by permitting Special Assistant United States
Attorney Sindler-Fuchs (SAUSA) to testify about the following statement made by
FBI Special Agent Andjich to defendant. In April 2001, Bachynsky contacted that
Agent to arrange for a voluntary interview concerning an unrelated fraud
investigation involving Kunen. Bachynsky was neither a target nor a suspect in that
investigation; however, his girlfriend was an investor in Kunen.
At the meeting with Agent Andjich, the SAUSA, and an AUSA, Bachynsky
disclosed that he and Anders were working on an effort to market DNP as a cancer-
therapy drug. He informed them he was helping to create the Helvetia company and
had enlisted the help of an attorney to assist him in selling shares to investors.
According to the SAUSA’s challenged testimony, Agent Andjich replied: “Doc . .
. . Why would you do this? Why would you want to do this? You’re only going to
end up in prison . . . again.”
Defendant claims: that testimony was inadmissible hearsay; and it was
impermissibly prejudicial. Defendant further contends the court erred by failing to
give a limiting instruction concerning the nature of the statement; and, as a result,
jurors were left unaware Agent Andjich’s statement was admitted only for purpose
of notice and not for the truth of the matter stated.
1.
18
The district court did not abuse its discretion in admitting the SAUSA’s
testimony about the Agent’s statement. See, e.g., United States v. Brown, 441 F.3d
1330, 1359 (11th Cir. 2006) (“We review a district court’s hearsay ruling for abuse
of discretion.”). The hearsay bar does not pertain to statements used to show future
effect upon the listener; and, as the district court correctly noted, the SAUSA’s
testimony was presented to show Bachynsky was on notice regarding the legal
ramifications of his decision to work with Anders in forming Helvetia. See United
States v. Hawkins, 905 F.2d 1489, 1495 (11th Cir. 1990).
2.
As for defendant’s challenge to the lack of a limiting instruction, Federal Rule
of Evidence 105 states: “When evidence which is admissible . . . for one purpose but
not admissible . . . for another purpose is admitted, the court, upon request, shall
restrict the evidence to its proper scope and instruct the jury accordingly.” FED. R.
EVID. 105 (emphasis added). Because defendant did not make that request, review
is only for plain error. United States v. Miranda, 197 F.3d 1357, 1360 n.4 (11th Cir.
1999) (“Since the court had no duty to give a limiting instruction in the absence of
a request, we may reverse only if we conclude that the court’s failure to give the
instruction constituted plain error.”) Defendant cites ambiguity from the district
court’s statement (“I’ll be happy to give that limiting instruction again.”), made
19
outside the presence of the jury, as justification for not renewing a request for a
limiting instruction. Ambiguity, however, is irrelevant; rather, the question is
whether Bachynsky could have renewed his request for the instruction. See id. at
1360 n.3. Bachynsky could have, but did not, do so.
Moreover, even assuming the district court erred, any error did not, for plain-
error review purposes, affect Bachynsky’s substantial rights. “[I]t has generally been
held that failure to give [limiting instructions] amounts to plain error where . . . the
government’s case is weak and the statement is extremely damaging.” United States
v. Sisto, 534 F.2d 616, 624 (5th Cir. 1976) (quoting United States v. Lipscomb, 425
F.2d 226, 227 (6th Cir. 1970)). Unlike in Sisto, the SAUSA’s testimony was not the
only evidence before the jury for deciding whether Bachynsky’s conduct was
intentional.
E.
Defendant maintains the court erroneously denied his mistrial motion, made
outside the presence of the jury, based on the Government’s not disclosing, prior to
trial, the following comments Bachynsky made during the above-described April
2001 meeting with the SAUSA, among others. The comments at issue are
Bachynsky’s questioning Agent Andjich, the SAUSA, and the AUSA about his new
business scheme: “Well, what do you think? Should I do this?”
20
Defendant demands a new trial because of the impact his comments might have
had upon his trial strategy. Federal Rule of Criminal Procedure 16(a)(1)(A) provides:
Upon a defendant’s request, the government must disclose
to the defendant the substance of any relevant oral
statement made by the defendant, before or after arrest, in
response to interrogation by a person the defendant knew
was a government agent if the government intends to use
the statement at trial.
FED. R. CRIM. P. 16(a)(1)(A) (emphasis added).
The court ruled Rule 16 was never triggered, based on finding Bachynsky’s
statement was not the result of an interrogation. As a precautionary measure,
however, the court did not permit testimony regarding Bachynsky’s above-quoted
questions at the April 2001 meeting.
Denial of a motion for a mistrial is reviewed for abuse of discretion. United
States v. Abraham, 386 F.3d 1033, 1036-37 (11th Cir. 2004); see also United States
v. Perez-Oliveros, 479 F.3d 779, 782 (11th Cir. 2007) (reviewing the appeal of
alleged Government violations of Rule 16). The Government’s failure to disclose
statements by defendant requires a mistrial when the “defense strategy may have been
determined by the failure to [disclose] . . . .” United States v. Noe, 821 F.2d 604, 607
(11th Cir. 1987) (internal citation and quotation marks omitted). There was no abuse
of discretion.
21
First, there is no indication that Bachynsky’s statement was made as part of a
Government interrogation. Uncontested is the fact that Bachynsky approached the
Government. Even though the meeting was held at the United States Attorney’s
office, “[t]he term ‘interrogation’ does not include instances, such as this, in which
the defendant initiated the conversation”. United States v. Otero, No. 90-1839, 1990
WL 157043, at *1 (7th Cir. 18 Oct. 1990).
Second, the verbal exchange never rose to the level of an interrogation: words
or actions initiated by law enforcement officials “reasonably likely to elicit an
incriminating response from the suspect”. Pennsylvania v. Muniz, 496 U.S. 582, 601
(1990). Even in a custodial setting (which this was not), “absent words or actions
designed to elicit an incriminating response from a defendant, any statements made
by the defendant are considered voluntary”. Otero, 1990 WL 157043, at *1 (citing
Muniz, 496 U.S. at 603-04). Defendant has failed to show any form of interrogation
during this April exchange. Instead, he only presents questions posed by him to the
Government.
F.
Last, defendant contends the district court erred by refusing his requested
instructions on: ambiguities in securities law, concerning disclosure provisions
related to criminal backgrounds; and an entrapment-by-estoppel defense. While a
22
district court’s refusal to give a requested instruction is reviewed for abuse of
discretion, we review de novo whether the evidence sufficiently supports a proposed
theory-of-the-defense instruction. United States v. Richardson, 532 F.3d 1279, 1289-
90 (11th Cir. 2008).
23
1.
The contention regarding the claimed ambiguity in the law is based upon
defendant’s view of disclosure requirements and the above-discussed SEC Regulation
S-K. See generally United States v. Heller, 830 F.2d 150, 154-56 (11th Cir. 1987)
(“[W]hen the law is vague or highly debatable, a defendant—actually or
imputedly—lacks the requisite intent to violate it.”). Defendant contends: an
ambiguity in the law touches upon intent to violate the law; and, here, the instructions
were inadequate because they did not address the matter of ambiguity—rather, they
only provided general provisions of good faith, mistake of fact, and advice of counsel.
There was no reversible error. Defendant is entitled to an instruction “relating
to a theory of the defense for which there is any foundation in the evidence . . . .”
United States v. Palma, 511 F.3d 1311, 1315 (11th Cir. 2008) (emphasis in original).
Defendant, however, fails to support his claim. See United States v. Billue, 994 F.2d
1562, 1568 (11th Cir. 1993) (“The trial court has authority to refuse to instruct the
jury on a defense where the evidence used to support it, if believed, fails to establish
a legally cognizable defense.”).
As the district court properly noted, “there’s no factual basis in the record . .
. for the jury to possibly find that there was good-faith reliance on any ambiguity in
24
these regulations, or a contradiction between what they purportedly say and what
[defendant’s attorney]’s advice was on their effect”. And, contrary to defendant’s
assertion, there is no imputed lack of intent to violate these regulations because, as
discussed supra, Regulation S-K does not govern the material statements made by
defendant to Helvetia investors. Moreover, defendant points to no conflicting expert
testimony or conflicting judicial opinions indicating legal uncertainty concerning
disclosure requirements and the securities fraud laws under which he was charged.
See, e.g., Heller, 830 F.2d at 154-55 (defendant entitled to legal uncertainty theory
after showing conflicting expert testimony and lack of applicable IRS statements).
2.
Concerning not instructing on entrapment-by-estoppel, defendant relies upon
a May 2001 meeting between Anders and federal agents, where Anders admitted to
certain wrongdoing concerning unrelated funds invested under the above-referenced
Kunen fraudulent-investment scheme. The meeting was conducted under a direct-use
immunity agreement between Anders and the Government as part of its investigation
of Kunen.
At that meeting, Anders admitted to investigators he had lied to Bachynsky for
months concerning funds for that investment. Anders further disclosed to Agent
Andjich, the AUSA, and the SAUSA that he was actively selling investment
25
opportunities with Helvetia, and recounted to them the financial worth of his
investments to date.
Before leaving, and after hearing all Anders was doing with respect to Helvetia
and Kunen, the Agent said: “Just keep doing what you’re doing”. Following that
meeting, Anders apparently repeated this information to Bachynsky and informed him
(and later co-defendant Dean) that the FBI said “everything was okay” for Anders and
Bachynsky to continue their Helvetia work.
As noted, whether there is sufficient evidence to constitute a triable issue of
entrapment by estoppel is a question of law, see United States v. Collazo, 885 F.2d
813, 814 (11th Cir. 1989), with the evidence being viewed in the light most favorable
to defendant, see United States v. Williams, 728 F.2d 1402, 1404 (11th Cir. 1984).
Along that line, to justify an entrapment-by-estoppel defense, defendant “must
actually rely on a point of law misrepresented by an official of the state; and such
reliance must be objectively reasonable . . . .” United States v. Eaton, 179 F.3d 1328,
1332 (11th Cir. 1999). Not only does an entrapment-by-estoppel defense require a
full disclosure by the party seeking to rely on official advice, see United States v.
Tallmadge, 829 F.2d 767, 774 (9th Cir. 1987); but, in order to rely upon a point of
law misrepresented by a government official, the statement must come from the
official directly and not through an intermediary, see Eaton, 179 F.3d at 1332 (“For
26
a statement to trigger an entrapment-by-estoppel defense, it must be made directly to
the defendant, not to others.”).
Obviously, the record lacks support for an entrapment-by-estoppel defense.
First, Bachynsky did not show that he fully disclosed relevant information to a
Government official. And, even if he did, he failed to show information came directly
from a Government official; instead, it came from an intermediary—Anders.
III.
For the foregoing reasons, the judgment is AFFIRMED.
27