United States v. Gramins

21-5
United States v. Gramins
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUM-
MARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FED-
ERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
12th day of October, two thousand twenty-two.
Present:
DEBRA ANN LIVINGSTON,
Chief Judge,
BARRINGTON D. PARKER,
EUNICE C. LEE,
Circuit Judges.
_____________________________________
UNITED STATES OF AMERICA,
Appellee,
v. 21-5
MICHAEL GRAMINS,
Defendant-Appellant,
ROSS SHAPIRO, TYLER PETERS,
Defendants.
_____________________________________
For Appellee: DAVID E. NOVICK (Heather L. Cherry, Jonathan N.
Francis & Sandra S. Glover, on the brief), Assistant
United States Attorneys for Leonard C. Boyle, Acting
United States Attorney for the District of Connecticut
1
For Defendant-Appellant: KANNON K. SHANMUGAM (Melina M. Meneguin Lay-
erenza, Aimee W. Brown & Matteo Godi, on the brief),
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Wash-
ington, D.C. & New York, N.Y.
Marc L. Mukasey, on the brief, Mukasey Frenchman
LLP, New York, N.Y.
Appeal from a judgment of the United States District Court for the District of Connecticut
(Chatigny, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Defendant-Appellant Michael Gramins (“Gramins”) was convicted by a jury of one count
of conspiracy to commit wire fraud and securities fraud in violation of 18 U.S.C. § 371. 1 After
trial, the district court denied Gramins’s motions for acquittal and to dismiss the indictment but
granted Gramins’s motion for a new trial under Federal Rule of Criminal Procedure 33. See
United States v. Shapiro, 2018 WL 2694440 (D. Conn. June 5, 2018). We reversed and remanded
the case to the district court with instructions to proceed to sentencing. See United States v.
Gramins, 939 F.3d 429, 434 (2d Cir. 2019) (“Gramins I”). On remand, the district court declined
to reconsider its rulings and, again, denied Gramins’s motions for acquittal and to dismiss. Ap-
pellant’s App’x 1028–49. On December 17, 2020, the district court issued its judgment sentenc-
ing Gramins to two years of probation, with the first six months to be spent in home confinement.
1
The indictment also charged Gramins and his codefendants, Ross Shapiro and Tyler Peters, with
two counts of securities fraud in violation of 15 U.S.C. §§ 78j(b), 78ff, and 17 C.F.R. § 240.10b-5, and six
counts of wire fraud in violation of 18 U.S.C. § 1343. The jury convicted Gramins on the conspiracy
count, failed to reach a verdict on one count of securities fraud and one count of wire fraud, and acquitted
him on all remaining counts. The jury acquitted Shapiro on all counts, except for the conspiracy charge,
on which it failed to reach a verdict. The jury acquitted Peters on all counts.
2
Id. at 1146. Gramins now submits this second appeal, which challenges the sufficiency of the
government’s evidence and the district court’s jury instructions. We described the facts and the
procedural history of this case at length in Gramins I, 939 F.3d at 434–43. We assume the parties’
familiarity with that factual background, the procedural history, and the issues on appeal, which
we discuss only as necessary to explain our decision to affirm.
I. Sufficiency of the Evidence
Gramins challenges the sufficiency of the government’s evidence on two essential elements
of the crime for which he was convicted: the materiality of his misrepresentations and his mental
state. 2 “A defendant bears a heavy burden when he tries to overturn a jury verdict on sufficiency
grounds, as we draw all reasonable inferences in the government’s favor and defer to the jury when
there are competing inferences.” United States v. Gatto, 986 F.3d 104, 113 (2d Cir. 2021) (inter-
nal quotation marks and citation omitted). “A challenge to the sufficiency of the evidence fails
if ‘any rational trier of fact could have found the essential elements of the crime beyond a reason-
able doubt.’” Id. (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979)). “We review the suf-
ficiency of the evidence de novo.” Id. (citation omitted).
A. Materiality
Gramins first argues that no rational jury could have concluded that his misrepresentations
were material. See Gramins I, 939 F.3d at 440 (noting that materiality is an element of both
securities fraud and wire fraud). Irrespective of the type of fraud at issue, the different
2
When, as here, “a conspiracy has multiple objectives, a conviction will be upheld so long as
evidence is sufficient to show that an appellant agreed to accomplish at least one of the criminal objectives.”
United States v. Desnoyers, 637 F.3d 105, 110 (2d Cir. 2011); see also Griffin v. United States, 502 U.S.
46, 56–57 (1991). Because we conclude that the evidence was sufficient for a rational jury to convict
Gramins of conspiracy to commit securities fraud, we do not address his arguments regarding wire fraud.
3
“specifications of the materiality inquiry target the same question: would the misrepresentation
actually matter in a meaningful way to a rational decisionmaker?” United States v. Calderon,
944 F.3d 72, 86 (2d Cir. 2019) (emphases in original). When considering a securities transaction,
a misstatement is material if there is “a substantial likelihood that a reasonable investor would find
the . . . misrepresentation important in making an investment decision.” United States v. Vilar,
729 F.3d 62, 89 (2d Cir. 2013). In other words, there must be “a substantial likelihood that the
disclosure of the omitted fact would have been viewed by the reasonable investor as having sig-
nificantly altered the total mix of information made available.” United States v. Landesman, 17
F.4th 298, 341 (2d Cir. 2021) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 231–32 (1988)).
“Determination of materiality under the securities laws is a mixed question of law and fact that the
Supreme Court has identified as especially well suited for jury determination.” Gramins I, 939
F.3d at 446 (internal quotation marks and citation omitted); see also Washington v. Recuenco, 548
U.S. 212, 219 (2006) (citing Neder v. United States, 527 U.S. 1, 20 (1999)) (similar for wire fraud).
Our decision in Gramins I describes a portion of the evidence as to materiality in this case.
We observed there that “[t]he government sought to prove materiality in part with testimony from
four of Nomura’s counterparties[.]” Gramins I, 939 F.3d at 440. “Before the jury, these coun-
terparties described the [trades], in which Gramins or one of his associates had lied to them, and
explained how those lies had impacted their investment decisions.” Id.; see also id. at 440–41,
445–46. After summarizing the government’s evidence at trial, we concluded that our decisions
in United States v. Litvak, 808 F.3d 160, 175–76 (2d Cir. 2015) (“Litvak I”) and United States v.
Litvak, 889 F.3d 56, 66 (2d Cir. 2018) (“Litvak II”)
establish that this sort of testimony from a broker-dealer’s counterparties can con-
stitute sufficient evidence of materiality to support a conviction for securities fraud.
In other words, a rational jury could have found, on the basis of counterparty
4
testimony that the defendants’ misrepresentations were important to those counter-
parties’ investment decisions, that those misrepresentations were material. The
district court therefore properly applied our holdings in Litvak I and II in denying
Gramins’s motion for judgment of acquittal.
Gramins I, 939 F.3d at 446–47 (internal citations omitted). Although Gramins argues that this
reasoning is dicta, we find it persuasive and thus decline to depart from it here.
Gramins also contends that to satisfy the materiality requirement, the government was re-
quired to prove that “absent [his] misrepresentation[s],” the counterparties “would have declined
to transact,” not simply that they might have “negotiate[d] a better price.” Appellant’s Reply Br.
3. We rejected a virtually identical argument—that “misstatements cannot, as a matter of law,
be material” if they “affect[ ] only the negotiation over price”—in Litvak II, 889 F.3d at 67. As
we explained in that opinion,
[w]hen the broker-dealer seeks a profit for its role in procuring and selling a security
desired by a buyer, the profit becomes part of the price paid by the buyer. The
value of the security may be the most important factor governing the decision to
buy, but the price must be considered in determining whether the purchase is
deemed profitable. The broker-dealer’s profit is part of the price and lies about it
can be found by a jury to significantly alter the total mix of information available.
Id. (internal quotation marks, footnote, and alterations omitted); see also Litvak I, 808 F.3d at 175–
78 (rejecting argument that such misrepresentations are immaterial as a matter of law). Because
Gramins’s argument conflicts with this binding precedent, the district court correctly rejected it.
B. Mens Rea
Next, Gramins challenges the sufficiency of the evidence as to his mental state. To sus-
tain Gramins’s conspiracy conviction, the government had to prove that Gramins “willfully and
knowingly became a member of the conspiracy, with intent to further its illegal purposes—that is,
with the intent to commit the object of the charged conspiracy.” United States v. Archer, 977
5
F.3d 181, 190 (2d Cir. 2020) (internal quotation marks omitted). In other words, the government
was required to show that Gramins had “at least the degree of criminal intent necessary for the
substantive offense itself[.]” Id. (quoting United States v. Feola, 420 U.S. 671, 686 (1975)). To
establish intent for securities fraud, Gramins must have “acted willfully and knowingly and with
the intent to defraud.” Landesman, 17 F.4th at 321 (quoting United States v. Rosen, 409 F.3d
535, 549 (2d Cir. 2005)). While the parties dispute whether “willfulness” in this case demands
proof of Gramins’s awareness of the general unlawfulness of his conduct under the securities laws
as opposed to merely the general wrongfulness of his conduct, we need not address this question,
as the evidence was sufficient to sustain the conviction even under the more demanding standard.
On Gramins’s view, willfulness in the securities fraud context requires “a realization on
the defendant’s part that he was doing a wrongful act under the securities laws, in a situation where
the knowingly wrongful act involved a significant risk of effecting the violation that has occurred.”
United States v. McGinn, 787 F.3d 116, 124 (2d Cir. 2015) (quoting United States v. Cassese, 428
F.3d 92, 98 (2d Cir. 2005). 3 At trial, the government introduced several pieces of evidence from
which a rational jury could conclude that Gramins harbored the requisite intent for securities fraud
under this standard. To begin, the government elicited testimony from three former Nomura jun-
ior traders, all of whom admitted that they engaged in deceptive practices by lying in negotiations
over securities transactions and took measures to hide their deception from counterparties. The
government also introduced Nomura’s compliance manuals—which Gramins certified he had
read—that specifically reference Rule 10b-5, the SEC rule that prohibits “manipulative,
3
The district court’s jury instruction on willfulness tracked the definition outlined in Cassese, in
conformity with the standard for which Gramins now advocates. See Appellant’s App’x 911-12; see also
id. at 822 (instructing that “[w]illfully” refers to “the intent to do something the law forbids; that is, with a
bad purpose to disobey or disregard the law”).
6
fraudulent, and deceptive practices in connection with either the purchase or sale of securities.”
Gov’t App’x 153 (General Compliance Manual); id. at 187 (Fixed Income Compliance Manual).
In addition, the record reflected that Gramins’s FINRA training and licensure exams necessitated
his review of the rules and regulations that prohibit deceptive conduct in securities trading. Fur-
thermore, Jonathan Raiff, Nomura’s Head of Global Markets for the Americas, testified that both
before and after the Litvak indictment, Nomura’s policies disallowed traders from making material
misrepresentations in the course of a principal-to-principal transaction.
When viewed in the light most favorable to the government, this evidence was sufficient
to permit a rational jury to determine that Gramins knew his misrepresentations were wrongful
and carried with them a significant risk of running afoul of the securities laws. See Cassese, 428
F.3d at 98. To be sure, the record contains evidence from which the jury might have arrived at
the contrary conclusion that Gramins lacked the requisite intent to commit securities fraud. But
on a sufficiency challenge, such fact issues fall well within the purview of the jury. United States
v. Coppola, 671 F.3d 220, 239 (2d Cir. 2012) (“[T]he task of choosing among permissible com-
peting inferences is for the jury, not a reviewing court.” (citation omitted)). Just as we stated in
the context of the jury’s consideration of the evidence bearing on materiality, both sides “had the
right” to advance competing theories of intent, “[a]nd the jury had the right to accept whichever
theory . . . it found more persuasive in light of the testimony and other evidence before it at trial.”
Gramins I, 939 F.3d at 446.
Gramins also contends that the evidence was insufficient to establish the existence of a co-
conspirator who shared the intent to commit securities fraud. See United States v. Torres, 604
F.3d 58, 65 (2d Cir. 2010) (“In order to convict a defendant of the crime of conspiracy, the gov-
ernment must show that two or more persons entered into a joint enterprise for an unlawful
7
purpose, with awareness of its general nature and extent.”). To forward this argument, Gramins
urges the Court to set aside the evidence of intent that pre-dates the Litvak indictment because the
junior traders “each unequivocally testified that they had no knowledge their pre-Litvak conduct
was unlawful.” Appellant’s Br. 40. Even if the Court were to isolate the single post-Litvak
trade, there is sufficient evidence to support Gramins’s participation in a conspiracy with Michael
Romanelli (“Romanelli”), the Nomura salesperson who worked with Gramins on this trade.
Gramins insists that his communications with Romanelli both over the phone and on instant
message concerning this trade are reflective of their efforts to comply with the law as they under-
stood it post-Litvak. But the jury was under no obligation to accept Gramins’s argument con-
cerning his good faith and, instead, could reasonably have understood Gramins’s and Romanelli’s
strategizing as reflecting a joint effort to manipulate a counterparty’s bid while shielding their
deceptive conduct. See Coppola, 671 F.3d at 239. To this point, Gramins transmitted an instant
message to Romanelli and a buy-side trader affirmatively misrepresenting a seller’s offer.
Shortly thereafter, Gramins and Romanelli spoke on the phone about how best to “maximize the
situation,” despite their concerns that the buyer may “get suspicious.” Appellant’s App’x 1203-
04. And, since Romanelli was a securities professional privy to the same compliance and training
materials as others at Nomura, the jury was entitled to draw the reasonable inference that he was
aware that this deception posed a risk of violating the securities laws.
II. Jury Instructions
Finally, Gramins argues that his conviction should be vacated and remanded for a new trial
because the district court did not adequately instruct the jury regarding the intent-to-harm require-
ment for wire fraud. We “review a claim of error in jury instructions de novo, reversing only
where, viewing the charge as a whole, there was a prejudicial error.” United States v. Moseley,
8
980 F.3d 9, 20 (2d Cir. 2020). A jury instruction is “erroneous if it misleads the jury as to the
correct legal standard or does not adequately inform the jury on the law.” United States v. Silver,
864 F.3d 102, 118 (2d Cir. 2017). When, as here, “a defendant did not object to the instruction,”
we review it only for “plain error.” United States v. Prado, 815 F.3d 93, 100 (2d Cir. 2016).
Under that standard, the defendant must show:
(1) there is an error; (2) the error is clear or obvious, rather than subject to reason-
able dispute; (3) the error affected the [defendant’s] substantial rights, which in the
ordinary case means it affected the outcome of the district court proceedings; and
(4) the error seriously affects the fairness, integrity or public reputation of judicial
proceedings.
Id. (citation omitted).
Gramins has not shown that the district court plainly erred in its wire-fraud instruction.
His primary contention is that the district court failed to instruct the jury that intent to harm, in
addition to intent to deceive, is a required element of wire fraud. See Gatto, 986 F.3d at 113
(explaining that to convict a defendant of wire fraud “there must be ‘proof that defendants pos-
sessed a fraudulent intent,’” meaning that “defendants must either intend to harm their victim or
contemplate that their victim may be harmed” (quoting United States v. Starr, 816 F.2d 94, 98 (2d
Cir. 1987)); see also United States v. Jabar, 19 F.4th 66, 76 (2d Cir. 2021) (“Because an intent to
deceive alone is insufficient to sustain a wire fraud conviction, ‘misrepresentations amounting only
to a deceit must be coupled with a contemplated harm to the victim.’” (internal alterations and
citation omitted)). In its wire-fraud instruction, the district court stated that “intent to defraud”
had “the same meaning” as set forth in its securities-fraud instruction. Appellant’s App’x 825.
9
In its securities-fraud instruction, the district court stated that “intent to defraud” means to “delib-
erately use deception to induce another to act to his detriment.” Id. at 822. 4
This was not “clear or obvious” error. Prado, 815 F.3d at 100. By instructing the jury
that the government was required to prove beyond a reasonable doubt that Gramins and his co-
conspirators intended “to induce [their counterparties] to act to [their] detriment,” the district court
either captured the intent-to-harm requirement or arguably did so. Appellant’s App’x at 822.
Whether there is any difference between “intend[ing] to harm [a] victim or contemplat[ing] that
[a] victim may be harmed,” see Gatto, 986 F.3d at 113, and intending to deceive the victim into
acting detrimentally to its interests is, at minimum, “subject to reasonable dispute,” Prado, 815
F.3d at 100. Thus, Gramins has failed to satisfy the plain-error standard.
Gramins also takes issue with the district court’s instruction that “[a] defendant’s honest
belief that ultimately no one would lose money, or even that everyone would make a profit, is not
a defense to securities fraud,” Appellant’s App’x 882, without expressly stating that this is not the
case for wire fraud. Gramins argues that because the wire-fraud instruction directed the jury to
refer to the securities-fraud instruction’s intent-to-defraud element, the failure to clarify the no-
ultimate-harm charge risked confusing the jury as to the intent-to-harm element of wire fraud.
We disagree. As the instruction itself makes clear, the district court expressly limited the no-
ultimate-harm charge instruction to securities fraud. Therefore, the district court did not fail to
adequately instruct the jury concerning wire fraud.
* * *
4
The district court was not required to have so instructed the jury on securities fraud. See Litvak
I, 808 F.3d at 179 (“‘[I]ntent to harm’ is not a component of the scienter element of securities fraud under
Section 10(b)”).
10
We have considered Gramins’s remaining arguments and conclude they lack merit. We
therefore AFFIRM the district court’s judgment.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
11