United States v. Blackwell

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 06a0326p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
UNITED STATES OF AMERICA,
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No. 05-4588
v.
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ROGER D. BLACKWELL, -
Defendant-Appellant. -
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Appeal from the United States District Court
for the Southern District of Ohio at Columbus.
No. 04-00134—James L. Graham, District Judge.
Argued: July 25, 2006
Decided and Filed: August 29, 2006
Before: MOORE, CLAY, and GRIFFIN, Circuit Judges.
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COUNSEL
ARGUED: William C. Wilkinson, THOMPSON HINE, Columbus, Ohio, for Appellant. J.
Michael Marous, ASSISTANT UNITED STATES ATTORNEY, Columbus, Ohio, for Appellee.
ON BRIEF: William C. Wilkinson, Scott A. Campbell, O. Judson Scheaf, III, Michele L. Noble,
THOMPSON HINE, Columbus, Ohio, for Appellant. J. Michael Marous, ASSISTANT UNITED
STATES ATTORNEY, Columbus, Ohio, for Appellee.
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OPINION
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CLAY, Circuit Judge. Defendant, Roger D. Blackwell, appeals a December 15, 2005 final
judgment of the United States District Court for the Southern District of Ohio, convicting Defendant
of one count of conspiracy to commit insider trading in violation of 18 U.S.C. § 371, one count of
conspiracy to obstruct an agency proceeding in violation of 18 U.S.C. § 371, fourteen counts of
insider trading in violation of 15 U.S.C. §§ 78j and 78ff, one count of obstructing an agency
proceeding in violation of 18 U.S.C. § 1505, and two counts of making false statements in a federal
matter in violation of 18 U.S.C. § 1001; sentencing Defendant to seventy-two months imprisonment;
and fining Defendant $ 1,000,000. For the reasons set forth below, we AFFIRM Defendant’s
convictions and sentence.
1
No. 05-4588 United States v. Blackwell Page 2
I.
BACKGROUND
Defendant is a former professor at Ohio State University’s School of Business, as well as the
president of Roger Blackwell and Associates (“RBA”) and an investor in Black Jack Enterprises.
Between 1991 and 2004 he was married to Kristina Stephan-Blackwell (“Stephan-Blackwell”). The
events in this case arise out of the conduct of Defendant and Stephan-Blackwell in 1999, while
Defendant was a member of the board of directors of a small natural foods company, Worthington
Foods (“WF”). In July 1999, Kellogg Company (“Kellogg”) initiated negotiations for a buyout of
WF. The buyout occurred in October 1999. Between July and October 1999, however, several of
Defendant’s friends and family members invested in WF stock. The following is a list of persons
linked to the Blackwells, who bought stock between July and October 1999:
• Gertrude and Alfred Stephan (“the Stephans”), the parents of Stephan-Blackwell;
• Dale and Christian Blackwell, the father and son of Defendant, respectively;
• Kelley L. Hughes (“Hughes”), RBA’s director of marketing;
• Kevin L. Stacey (“Stacey”), the husband of Hughes;
• Arnold L. Jack (“Jack”), a long-time friend of Defendant and co-owner of Black Jack
Enterprises;
• Justin Voss (“Voss”), a long-time friend and business associate of Defendant; and
• Jack Kahl (“Kahl”), a long-time friend and business associate of Defendant.
The increased buying activity in WF stock between July and October 1999 led to an
investigation. On December 15, 1999, the National Association of Securities Dealers (“NASD”)
sent Kellogg a questionnaire on the Kellogg-WF buyout, requesting information on relationships
between persons who bought stock between July and October 1999 and persons who knew about
the buyout. Pursuant to the NASD inquiry, Kellogg forwarded the list of persons who bought stock
to Defendant, and requested that he inform them of any relationships he had with such persons.
Defendant responded to the inquiry by stating: “I supplied no information about the transaction to
any of the people on the list or any one else. When asked by anyone about Worthington Foods
during this period, I replied that I was not able to comment about the company’s stock, as is my
standard practice.” (J.A. at 4882.)
On March 16, 2000, the NASD sent a follow-up questionnaire to Kellogg. The follow-up,
among other things, explicitly requested that Defendant supply information on his relationships to
the Blackwells, Jack, Black Jack Enterprises, Hughes, Stacey and a statement as any circumstances
under which they might have learned of the buyout. Defendant responded, explaining his
relationships to them, but denying that he informed them of the buyout. Defendant stated, and still
maintains, that he promoted WF because he believed in its value, but never disclosed the buyout.
On November 2, 2000, the Securities and Exchange Commission (“SEC”) issued a subpoena,
requiring Defendant to produce various documents and appear to testify before the SEC. Defendant
eventually testified before the SEC on January 9, 2001, claiming that he did not disclose any
information about the Kellogg-WF buyout to any person. In January 2002, the SEC sent a written
inquiry to Defendant. Defendant responded on January 18, 2002, reiterating his position that he
never disclosed any information about the Kellogg-WF buyout. In February 2002, Stephan-
No. 05-4588 United States v. Blackwell Page 3
Blackwell and her parents testified before SEC. They denied that Blackwell had given them insider
information on the buyout.
In early 2003, Defendant and Stephan-Blackwell began to have marital difficulties. They
separated and Stephan-Blackwell moved to New York, where she began dating Terry Lundgren.
In the spring of 2004, Stephan-Blackwell’s attorney contacted the government about the instant case.
Sometime thereafter Stephan-Blackwell learned that the government was considering pressing
charges against her for perjury and insider trading. In the summer of 2004, Stephan-Blackwell and
the government worked out an immunity deal, in which Stephan-Blackwell and her parents would
receive immunity in exchange for Stephan-Blackwell’s admission to conspiracy, perjury, and insider
trading and testimony against Defendant. Stephan-Blackwell and Defendant finalized their divorce
at approximately the same time. Several months later, Stephan-Blackwell and Lundgren became
engaged.
In this same time period, Kahl also approached the government about his involvement in the
instant case. On May 27, 2004, pursuant to a proffer of immunity, Kahl admitted to the FBI that
Defendant tipped him on the Kellogg-WF buyout. Subsequently, Kahl testified before the grand
jury. Specifically, Kahl testified that he spoke with Defendant around 12:30 p.m. on his (Kahl’s)
birthday, September 20, 1999, and that Defendant informed him that Kellogg was going to buy out
WF and that Kahl should buy WF stock.
On August 26, 2004, a grand jury indicted Defendant, Hughes, Stacey, Jack, Voss, and Black
Jack Enterprises on charges of insider trading in violation of 15 U.S.C. §§ 78j and 78ff, conspiracy
to commit insider in violation of 18 U.S.C. § 371, obstruction of agency proceedings in violation
of 18 U.S.C. § 1505, conspiracy to obstruct agency proceedings in violation of 18 U.S.C. § 371, and
making false statements in violation of 18 U.S.C. § 1001.
At trial Stephan-Blackwell, Mary Hiser, Jack Kahl, Dwight Twomley, and Michelle
Destefano testified for the government. Stephan-Blackwell testified that she informed her parents,
the Stephans, and her cousin, Sigrid McFetridge, of the buyout and encouraged them to buy WF
stock after discussing the propriety of doing so with Defendant. She further testified that she and
Defendant gave her parents money to buy WF stock. Stephan-Blackwell also testified that both she
and Blackwell lied to the NASD and SEC about the tipping, and that she coached her mother to lie
to the SEC. She further testified that she deleted emails to Jack Kahl, Sigrid McFetridge, Gertrude
Stephan, and Justin Voss on November 8, 2002, after receiving a SEC subpoena, in order to protect
herself and Defendant. According to Stephan-Blackwell, Defendant was aware of the deletions and
condoned them. Additionally, she and Blackwell formulated a plan to withhold information and
obscure their relationships with parties who bought WF stock.
Significantly, during Stephan-Blackwell’s trial testimony, Defendant allegedly mouthed “I
hate you” to Stephan-Blackwell. Finding that such conduct would constitute witness intimidation,
the district court allowed Defendant to be cross-examined on this issue, during which Defendant
denied mouthing anything to Stephan-Blackwell.
Mary Hiser, Defendant’s assistant at RBA, testified that she was responsible for opening mail
and emails at RBA and that no mail or emails had been sent to RBA about the buyout. Hiser further
testified that on November 10, 2000 she noticed that four entries had recently been deleted on
November 8, 2000 from RBA’s database: (1) Sigrid McFetridge; (2) John Kahl;1 (3) Alfred Stephan;
and (4) Justin Voss. Hiser printed a copy of the record of deletion because she knew that RBA’s
files had been subpoenaed. The record was entered into evidence.
1
There is some debate over to whom John Kahl refers. Jack Kahl’s full name is John, but John is also his son’s
name.
No. 05-4588 United States v. Blackwell Page 4
Jack Kahl testified that Defendant Blackwell informed him of the buyout, and that he bought
WF stock on the morning of his birthday, September 20, 1999, based on the tip. Kahl could not
remember the exact date that Defendant tipped him but believed it was around his birthday.
Twomley, WF’s CEO and chairman of the board in 1999, testified regarding WF, the buyout,
and Defendant’s knowledge of it as a board member. Twomley further testified that there were
rumors, mainly among WF employees, in the summer of 1999 that a bigger company would buy out
WF.
Michelle DeStefano, an FBI agent involved in investigating the defendants, testified that
subpoenaed phone records evidenced numerous phone calls between the defendants between July
and October 1999.
Thereafter, defendants Jack, Voss, Hughes, Stacey, and Blackwell, as well as non-
defendants, Dale Blackwell (Defendant’s father), Professor Jarrell, and John Adams testified for the
defense. All the defendants denied wrongdoing. Specifically, they all denied that Defendant
Blackwell informed them of the buyout. Jack, an attorney, and Voss, who has a Ph.D. in economics
and formerly was a professor at George Washington University, additionally testified that they had
extensive stock market experience and bought WF stock because it appeared to be a good deal.
Professor Jarrell, former chief economist for the SEC, testified that WF stock was
undervalued in September 1999, and thus that it was a good buy. He further testified that
sophisticated investors would recognize that WF was undervalued and a potential target for a
buyout. Professor Jarrell also explained “leakage theory.” According to Professor Jarrell,
information on mergers and buyouts will often “leak” to the public without insider trading.
Companies about to buy out or be bought out give off signals indicating that a future buyout will
occur. Sophisticated investors, especially analysts, and research companies looking for these
signals, often learn of buyouts before they are publically announced. Similarly, family members
and close friends may notice an insider’s increased activity levels and presume that a merger, or
some other large transaction, is about to occur. Finally, Adams testified that he saw rumors of the
buyout on Yahoo.
Based on the testimony described above, a jury convicted Defendant of insider trading,
conspiracy to commit insider trading, conspiracy to obstruct an agency proceeding, and obstruction
of an agency proceeding. A juror’s interview in a Columbus magazine, published several months
after trial, states that three jurors believed they saw Defendant mouth “I hate you” to Stephan-
Blackwell and that Defendant’s denial of such actions destroyed his credibility. Defendant moved
for a new trial based on the “lip reading incident,” which the district court denied.
II.
DISCUSSION
Defendant challenges his conviction on the following grounds: (1) the trial court denied him
a meaningful opportunity to present a defense by excluding evidence and limiting cross-
examination; (2) the government withheld exculpatory, material evidence in violation of Brady v.
Maryland; (3) insufficient evidence exists to support his convictions for conspiracy, false statements,
and obstruction of an agency proceeding; (4) the conspiracy indictment materially varied from the
evidence at trial, allowing the introduction of prejudicial evidence and depriving him of the
opportunity to prepare an adequate defense; (5) the trial court’s jury instructions were improper;
(6) three jurors violated Defendant’s right to confront witnesses by “testifying” that Defendant
mouthed “I hate you” to Stephan-Blackwell during jury deliberations; and (7) cumulative errors
rendered Defendant’s trial fundamentally unfair in violation of due process.
No. 05-4588 United States v. Blackwell Page 5
Defendant challenges his sentence on the following grounds: (1) the $1,000,000 fine was
excessive; (2) the condition on Defendant’s supervised release, prohibiting him from profiting from
writing about his crimes, violates the First Amendment; (3) the district court improperly enhanced
his sentence by miscalculating “loss amounts” attributable to Defendant’s conduct; and (4) the
district court failed to consider all of the relevant § 3553 factors.
We find that all of Defendant’s claims on appeal are wholly without merit. Each issue is
discussed separately below.
A. Meaningful Defense
Defendant argues that he was denied the right to present a meaningful defense in violation
of the Fifth and Sixth Amendments of the United States Constitution when the district court
excluded testimony from defense witnesses Professor Jarrell, Jehn, Adams, and Cusato, and when
the district court limited his cross-examination of prosecution witnesses Stephan-Blackwell and
Kahl. For the reasons set forth below, we find that Defendant was not denied the right to present
a meaningful defense.
1. Standard of Review
The parties in this case dispute the standard of review. Defendant argues that this Court
applies de novo review to constitutional challenges to evidentiary decisions whereas the government
argues that this Court applies the abuse of discretion standard of review to all evidentiary decisions.
While the government is correct that we review all challenges to district court evidentiary rulings,
including constitutional challenges, under the abuse of discretion standard, see United States v.
Schraene, 331 F.3d 548, 564 (6th Cir. 2003); United States v. Mick, 263 F.3d 553, 566 (2001);
United States v. Middleton, 246 F.3d 825, 837 (6th Cir. 2001), the abuse of discretion standard is
not at odds with de novo interpretation of the Constitution inasmuch as district court does not have
the discretion to rest its evidentiary decisions on incorrect interpretations of the Constitution, see
United States v. Johnson, 440 F.3d 832, 842 (6th Cir. 2006); see also United States v. Baker, — F.3d
—, 2006 WL 2346312, at *2 (6th Cir. 2006) (“[T]hese two standards of review are not in fact
inconsistent because it is an abuse of discretion to make errors of law or clear errors of factual
determinations.”)
2. The Right to a Meaningful Defense
“Whether rooted directly in the Due Process Clause of the [Fifth Amendment] or in the
Compulsory Process or Confrontation Clause of the Sixth Amendment, the Constitution guarantees
criminal defendants ‘a meaningful opportunity to present a complete defense.’” Holmes v. South
Carolina, — U.S. — , 126 S. Ct. 1727, 1732 (May 1, 2006) (quoting Crane v. Kentucky, 476 U.S.
683, 690 (1986)). “While the Constitution thus prohibits the exclusion of defense evidence under
rules that are designed to serve no legitimate purpose or that are disproportionate to the ends they
are asserted to promote . . . the Constitution permits judges to exclude evidence that is repetitive
. . . only marginally relevant or poses an undue risk of harassment, prejudice, [or] confusion of the
issues.” Id. (internal citations and quotations omitted). Accordingly, “‘[t]he accused does not have
an unfettered right to offer [evidence] that is incompetent, privileged, or otherwise inadmissible
under standard rules of evidence.’” Montana v. Egelhoff, 518 U.S. 37, 42 (1996) (quoting Taylor
v. Illinois, 484 U.S. 400, 410 (1988)); see also United States v. Scheffer, 523 U.S. 303, 308 (holding
that rules of evidence only infringe on a defendant’s right to present a defense where they are
arbitrary or disproportionate or infringe on a weighty interest of the accused). Moreover, even
where a district court erroneously excludes defense evidence,“[w]hether the exclusion of
[witnesses’] testimony violated [defendant’s] right to present a defense depends upon whether the
No. 05-4588 United States v. Blackwell Page 6
omitted evidence [evaluated in the context of the entire record] creates a reasonable doubt that did
not otherwise exist.” Washington v. Shriver, 255 F.3d 45, 57 (2d Cir. 2001).
3. Defendant Was Not Denied the Right to Present a Meaningful Defense
a. Exclusion of Professor Jarrell’s Testimony
The exclusion of portions of Professor Jarrell’s testimony was not an abuse of discretion, and
accordingly, did not deny Defendant the right to present a meaningful defense. Defendant offered
Professor Jarrell’s testimony to support an alternative theory of events: that Defendant’s friends and
family learned about the merger through “leakage” and not insider trading. Importantly, Professor
Jarrell was allowed to testify about leakage theory. Professor Jarrell explained that information
about a buyout may “leak” not only through an insider’s improper disclosure but also through non-
insiders’ observations of company activity in the period leading up to a buyout. The only portion
of Professor Jarrell’s testimony that the district court excluded was testimony relating to the
existence of trading by persons with relationships to WF directors other than Defendant, and
correspondingly, a chart demonstrating such trading (“the Jarrell Chart”). The district court
reasoned that the testimony and chart were not relevant and thus were inadmissible.
We believe that the district court’s holding was correct. Federal Rule of Evidence 402
permits the introduction only of relevant evidence. Federal Rule of Evidence 401 defines relevant
evidence as “evidence having any tendency to make the existence of any fact that is of consequence
to the determination of the action more probable or less probable than it would be without the
evidence.” Fed. R. Evid. 401. As the district court held, the excluded testimony did not make
“leakage” any more likely than tipping, and thus did not make Defendant’s innocence “more
probable . . . than it would be without the evidence.” Fed. R. Evid. 401. Professor Jarrell was not
proffering testimony that the existence of trading around other WF officials made leakage a more
probable explanation than tipping. Instead, Professor Jarrell planned to testify that the trading
around other WF officials could have been caused by leakage. It is equally plausible, however, that
the other directors tipped their relations. As the district court correctly explained, “Maybe they
should have prosecuted these other people, too. Just because they didn’t prosecute everybody,
[doesn’t make the testimony] relevant.” (J.A. at 2297.)
We might have reached a different conclusion regarding relevancy if Defendant was prepared
to offer proof that the sheer existence of trading around all directors made leakage a more likely
theory than insider trading. Neither the record, briefs, nor arguments on appeal, however, indicate
that Defendant was prepared to offer evidence that trading around numerous WF officials makes
leakage a more plausible theory of information dissemination than insider trading. Although
Defendant contends that leakage was more likely than insider trading, Defendant does not contend
that the sheer existence of trading around other directors is proof of this. Instead, Defendant argues
that the trading around the other directors was leakage, and thus the chart leads to the inference that
the trading around Defendant was leakage. (Def.’s Br. 22 (“The jury was not permitted to learn that
Leakage is not just an ‘ivory tower’ theory. It occurred around almost every WF official . . .”).) As
explained above, Defendant simply offered evidence that the trading around other WF officials was
leakage, and consequently, the evidence does not permit an inference that the trading around other
officials indicated that his family and friends learned about the merger through leakage.
Furthermore, we reject Defendant’s argument, which we duly note was newly crafted on
appeal, that Professor Jarrell’s testimony was relevant to demonstrate other sources of tipping – the
other WF directors – thereby decreasing the likelihood that Defendant tipped his family and friends.
While the existence of other sources of tipping surely was relevant to Defendant’s case, Professor
Jarrell was not qualified to testify about these sources inasmuch as he lacked personal knowledge
of them. Experts may rely on knowledge outside their own personal knowledge when testifying on
No. 05-4588 United States v. Blackwell Page 7
“scientific, technical, or other specialized knowledge.” United States v. Bond, 12 F.3d 540, 566 (6th
Cir. 1994). They must rely on personal knowledge, however, when testifying on all other subjects.
See Fed. R. of Evid. 601, 701; United States v. Scheffey, 57 F.3d 1419, 1428 (6th Cir. 1995).
Testimony on the activities of WF employees does not require specialized knowledge, and
consequently, is subject to 701’s personal knowledge requirement.
b. Exclusion of the Testimony of Jehn, Adams, and Cusato
Similarly, the exclusion of the testimony of Jehn, Adams, and Cusato did not deny Defendant
the right to present a meaningful defense. The district court excluded three types of evidence from
Jehn, Adams, and Cusato: (1) Jehn’s statement that he had heard that Yahoo contained rumors about
a Kellogg buyout of WF; (2) Adam’s statements recounting his conversation with Jehn about buyout
rumors; and (3) statements from all three men that a WF employee tipped them off on the buyout.
The first two sets of statements were properly excluded under the rule against hearsay while the
exclusion of the third set of statements constituted harmless error. Because neither the Fifth nor
Sixth Amendment prohibit the exclusion of hearsay unless such exclusion infringes on a weighty
interest of the accused, see Scheffer, 523 U.S. at 330 n.17, nor require this Court to reverse a
conviction for harmless evidentiary error, the exclusion of the testimony of Jehn, Adams, and Cusato
did not deprive Defendant of a meaningful opportunity to present a defense.
First, both Jehn’s statement that he heard that a Yahoo message board contained a rumor
about the buyout and Adams’ statements recounting his conversation with Jehn were properly
excluded under the rule against hearsay. Under the rule against hearsay, a witness may not testify
as to “statement[s] other than one made by the declarant while testifying at trial or hearing, offered
in evidence to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801 and 802.
Jehn’s testimony about the Yahoo statement was a recounting of a statement made outside of court
and was offered to prove the matter asserted in that out of court statement, the existence of a rumor
on Yahoo. Thus, Jehn’s statement was hearsay. Similarly, Adams’ testimony regarding his
conversation about rumors with Jehn was a recounting of statements made outside of court offered
to prove the matter asserted in the statement, that Adams and Jehn both heard rumors of the buyout.
Accordingly, Adams’ testimony was hearsay.
Defendant attempts to argue that the Yahoo statement was not hearsay by arguing that it was
not offered to prove the truth of the buyout, but simply the existence of rumors. Defendant’s
argument misses the point; the fact that the statement was offered to prove the existence of a rumor
on Yahoo is exactly what makes it hearsay. The out of court statement repeated by Jehn asserted
the existence of a rumor on Yahoo, not the existence of a buyout. Thus, the statement is hearsay
even if offered to prove the existence of the Yahoo rumor. It would be double hearsay if offered to
prove the existence of the buyout. Importantly, Adams, who actually saw the rumor on Yahoo, was
permitted to testify that there was a rumor on Yahoo about the buyout.
We further note that this testimony was not offered for the purpose of demonstrating the
reason that Jehn bought WF stock, nor would it have been admissible for this purpose. Although
the testimony would not have been hearsay if offered to prove Jehn’s motivation, Jehn’s motivation
was not relevant to any issue at trial. Blackwell was not charged with tipping Jehn. Blackwell
simply offered Jehn’s testimony to support to support his theory that the persons he allegedly tipped
could have learned of the buyout from other sources.
Second, the exclusion of the testimony of Jehn, Adams, and Cusato that they were tipped on
the buyout from a WF employee was harmless, and thus, did not deprive Defendant of the right to
present a defense. Washington, 255 F.3d at 57. Dale Twomley testified that rumors of a buyout
were circulating among WF employees and Adams testified that a rumor was posted on a Yahoo
message board. Thus, the jury was aware that persons other than Defendant possessed information
No. 05-4588 United States v. Blackwell Page 8
about the buyout and conceivably tipped Defendant’s family and friends. The exclusion of
cumulative testimony does not impair the right to present a meaningful defense. Holmes, — U.S.
— , 126 S. Ct. at 1732.
c. Limitation on the Cross-examination of Kahl
The district court’s limitation on Defendant’s cross-examination of Kahl did not deprive
Defendant of a meaningful opportunity to defend himself. The defense theory was that Kahl
changed the date of the tip after his WF stock order tickets and phone records established that
Defendant could not have tipped Kahl on September 20, 1999. The order tickets showed that Kahl
bought WF stock the morning of the 20th before speaking with Defendant. Defendant raises two
specific ways in which the district court limited his ability to question Kahl about the discrepancy
between the date Kahl gave before the grand jury – September 20, or his birthday – and the date
Kahl gave at trial – probably in the days before his birthday. First the district court sustained an
objection to a question from defense counsel asking Kahl what date Kahl stated before the grand
jury. Second, the district court sustained an objection to defense counsel’s attempt to have Kahl to
lay a foundation for Kahl’s order tickets for his WF stock, which contained the date and time at
which Kahl bought WF stock.
Both of the district court’s rulings were correct legal applications of standard, justifiable
rules of evidence, and accordingly, did not deprive Defendant of the right to present a meaningful
defense. See Egelhoff, 518 U.S. at 42. The district court sustained the first objection because the
question was repetitive. Defendant’s attorney had already asked Kahl this question, and received
an honest answer, on seven occasions. The district court sustained the second objection because
Kahl had never seen the order tickets. Normally, Kahl’s stock broker took care of the details of his
stock transactions. Kahl therefore had no personal knowledge of the ticket and was not the proper
witness to question about it. Fed. R. Evid. 602. Significantly, Defendant later called a stock broker
to testify about the order tickets and was able to introduce the order tickets at that time.
Furthermore, Defendant exaggerates the discrepancy between Kahl’s grand jury testimony
and trial testimony. In reality, any discrepancy was minor and did not truly discredit Kahl’s
testimony. Defendant cites the following language to emphasize how “sure” Kahl was of the
September 20 date in his grand jury testimony:
Q: So is there any doubt in your mind that you were talking to Roger Blackwell
on the telephone on your birthday in 1999.
A. There is no doubt.
(J.A. at 4279.) However, read in context it is clear that the “no doubt” refers to the fact that the
person on the other end of the phone was Defendant and not the date of the conversation. The above
quoted question and answer in context read as follows:
Q: In addition to that over the years of your friendship with Roger Blackwell,
have you spoken with him in person and on the telephone on many
occasions.
A: Oh, yeah.
Q: As a consequence of those discussions with Roger Blackwell, did you learn
to recognize his voice?
A: Yes.
No. 05-4588 United States v. Blackwell Page 9
Q: So is there any doubt in your mind that you were talking to Roger Blackwell on the
telephone on your birthday in 1999.
A. There is no doubt.
(J.A. at 4277-78.) Additionally, other comments by Kahl before the grand jury evidence he did not
recall details. (See J.A. at 4279-80 (“You, know, this is – I’m trying to re-put this thing together.
Because the hard facts I remember well. The rest of it is all fuzz. But I believe he was calling to
wish me a happy birthday and started kidding around that I ought to eat more veggie burgers.”).)
Inasmuch as the district court’s limitations on Defendant’s cross-examination of Kahl were both
proper and harmless, they did not violate Defendant’s right to present a meaningful defense.
d. Limitations on the Cross-examination of Stephan-Blackwell
Finally, the district court’s limitations on Defendant’s cross-examination of Stephan-
Blackwell did not deprive Defendant of a meaningful opportunity to defend himself because the
limitations were harmless. Defendant argues that the district court erred in limiting Defendant’s
questions to Stephan-Blackwell on (1) the timing of her immunity agreement; (2) her own
understanding of her immunity agreement; (3) and her relationship with Terry Lundgren. According
to the Defendant, these questions were necessary to prove bias and attack Stephan-Blackwell’s
credibility. In particular, Defendant aimed to challenge Stephan-Blackwell’s claim that she lied to
the SEC to protect Blackwell because she loved him.
Information on all three of these issues came out during Stephan-Blackwell’s cross-
examination, rendering her bias more than apparent. On cross-examination, Stephan-Blackwell
admitted that she was dating Lundgren in 2003, at which time she was still lying to the SEC about
her involvement in this case. She further admitted that she approached the government about
immunity only after she separated from Defendant and that shortly after she received immunity she
became engaged to Lundgren. Moreover, Defendant raised all these issues in his closing. Because
the limitations placed on Defendant’s cross-examination of Stephan-Blackwell did not deprive
Defendant of the ability to attack Stephan-Blackwell’s credibility and reveal any potential bias, the
limitations cannot be said to have deprived Defendant of the opportunity to defend himself. Boggs
v. Collins, 226 F.3d 728, 739 (6th Cir. 2000) (holding that Defendant’s right to cross-examine a
witness for bias or motivation to lie is not grounds for reversal where “the jury had enough
information, despite the limits placed on otherwise permitted cross-examination, to assess the
defense theory of bias or improper motive.”).
e. Cumulative Effect of the District Court’s Evidentiary Rulings
In addition to arguing that each of the district court’s evidentiary rulings amounted to
independent violations of his right to present a defense, Defendant also argues that the cumulative
effect of the district court’s evidentiary errors violated his right to present a meaningful defense.
We disagree. Despite Defendant’s numerous challenges to the district court’s evidentiary rulings,
only two of those rulings can possibly be considered erroneous: the district court’s limitations on
the cross-examination of Stephan-Blackwell and the district court’s exclusion of testimony that a
WF employee tipped Jehn, Adams, and Cusato. Taken together, these rulings were not so
prejudicial that they denied Defendant of a meaningful opportunity to present a defense.
In asking whether Defendant was ultimately denied a meaningful defense, we look to
whether the improperly excluded evidence (or limited cross-examination) would have created a
reasonable doubt as to Defendant’s guilt. Washington, 255 F.3d at 57. In the instant case,
permitting Defendant to present testimony that a WF employee tipped Jehns, Adams, and Cusato
about the buyout and to cross-examine Stephan Blackwell about the precise date she signed the
immunity agreement would not have created a reasonable doubt as to Defendant’s guilt. First, the
No. 05-4588 United States v. Blackwell Page 10
testimony that a WF employee tipped Jehns, Adams, and Cusato was not particularly probative. The
existence of this tipper did not truly cast doubt on Defendant’s guilt inasmuch as Defendant offered
no evidence connecting the WF tipper to the persons Defendant allegedly tipped. Second, while
Defendant was unable to establish the precise date on which Stephan-Blackwell signed the immunity
agreement, Defendant was able to establish the relevant time frame in which Stephan-Blackwell
signed the immunity agreement: after leaving Defendant and beginning a relationship with another
man. Third, there was extensive evidence of Defendant’s guilt, including testimony from
Defendant’s good friend, Kahl, that Defendant tipped him, testimony from Defendant’s ex-wife that
Defendant tipped her, and the sheer number of family and friends of Defendant who bought WF
stock in the relevant time period. Therefore, we find that even viewing the alleged evidentiary errors
cumulatively, Defendant was not denied the opportunity to present a meaningful defense.
B. Brady Claim
The government belatedly provided three documents to Defendant that form the basis for
Defendant’s Brady Claim: (1) a letter to the Stephans’ attorney, James E. Phillips, setting forth the
government’s understanding of the Stephans’ immunity agreement (“the Stephans’ immunity
letter”); (2) the FBI’s notes from an interview with Sigrid McFetridge (“the McFetridge Report”);
and (3) the FBI’s notes from an interview with Benoit, the vice-president of Kellogg (“the Benoit
Report”). According to Defendant, the government’s belated production of the Stephans’ immunity
letter and the McFetridge Report rendered him unable to effectively cross-examine Stephan-
Blackwell by depriving him of knowledge of the interlocking nature of the Stephans’ immunity
agreement with Stephan-Blackwell’s testimony and the nature of Stephan-Blackwell’s role in
McFetridge’s trading. Specifically, the Stephans’ immunity letter made it clear that their immunity
was dependant on Stephan-Blackwell’s cooperation, which, according to Defendant, gave Stephan-
Blackwell an additional incentive to lie. The McFetridge Report states that Stephan-Blackwell
tipped McFetridge, encouraged her to buy WF stock, and coached her to lie to law enforcement.
Defendant argues that the belated production of the Benoit report deprived him of the exculpatory
statements by Benoit regarding the interest of several large companies in WF prior to the Kellogg
buyout. Defendant also makes the perfunctory argument that the documents would have altered his
voir dire strategy and opening statement, and caused him to subpoena the Stephans before the
Stephans left the country. We are not convinced by any of Defendant’s arguments.
1. Standard of Review
We review a district court’s decision to deny a mistrial for delayed disclosure of evidence
for abuse of discretion. United States v. Davis, 306 F.3d 398, 420 (6th Cir. 2002).
2. Brady v. Maryland
“Brady v. Maryland requires disclosure only of evidence that is both favorable to the accused
and ‘material either to guilt or innocence.’” United States v. Bagley, 473 U.S. 667, 675 (1985)
(quoting Brady v. Maryland, 473 U.S. 83, 87(1963)). Evidence is favorable to the accused if it
exculpates the accused or enables the accused to impeach witnesses. Id. at 676. Evidence is
material to guilt or innocence “if there is a reasonable probability that, had the evidence been
disclosed to the defense, the result of the proceeding would have been different. A ‘reasonable
probability’ is a probability sufficient to undermine confidence in the outcome.” Id. at 682.
3. No Brady Violation Occurred
No Brady violation occurred in this case. The Defendant received all three documents during
trial. United States v. Blood, 435 F.3d 612, 627 (6th Cir. 2006) (“Brady generally does not apply
to delayed disclosure of exculpatory information, but only to a complete failure to disclose” and []
a “[d]elay only violates Brady when the delay itself causes prejudice”) (quotation marks and citation
No. 05-4588 United States v. Blackwell Page 11
omitted). Furthermore, the district court expressly granted Defendant the opportunity to re-cross
examine Stephan-Blackwell and took no action to prevent Defendant from calling Benoit as a
witness. Accordingly, Defendant had the opportunity to examine both Stephan-Blackwell and
Benoit in light of the disclosed documents and any prejudice resulting from Defendant’s failure to
do so is not attributable to the government’s violation of the principles set forth in Brady. See
United States v. Delgado, 350 F.3d 250 (6th Cir. 2003) (citing United States v. Corrado, 227 F.3d
528, 538 (6th Cir. 2000)).
Defendant’s argument that the belated disclosure of the documents prejudiced the entire
defense, including voir dire and the opening statement is meritless. First, Defendant presents his
argument on this issue in a perfunctory manner, providing no explanation of how the disclosed
material would have altered his defense. Second, the pertinent information in the disclosed
documents was, for the most part, already available to Defendant. See Bagley, 473 U.S. at 676
(holding that there is no Brady violation unless a reasonable probability exists that the disclosed
evidence would have altered the result of trial). Defendant was already aware that the Stephans’
immunity interlocked with the testimony of Stephan-Blackwell prior to trial. In fact, Defendant
mentioned the interlocking nature of the immunity agreement in his opening statement and cross-
examined Stephan-Blackwell on this issue. Thus, if Defendant had wanted to subpoena the Stephans
because of the interlocking nature of the immunity agreements, he would have done so. Second, the
record indicates that Defendant maintained that Stephan-Blackwell was responsible for tipping her
cousin, Sigrid McFetridge, prior to the disclosure of the McFetridge report. Accordingly, we fail
to see how McFetridge’s admission of the tipping would have altered Defendant’s trial strategy.
Importantly, Stephan-Blackwell admitted that she tipped McFetridge at trial. The McFetridge
Report was therefore cumulative. Third, it was also Defendant’s trial strategy from the beginning
to prove that WF was an obvious potential target for a buyout by a larger company. Professor Jarrell
testified as much. There is thus no possibility that the earlier disclosure of the Benoit Report would
have altered Defendant’s trial strategy. Consequently, we hold that Defendant’s Brady claim is
meritless.
C. Sufficiency of the Evidence
1. Preservation
Although Defendant’s statement of the issues raises insufficiency generally, Defendant only
makes actual insufficiency arguments in his brief on appeal as to the conspiracy convictions, the
obstruction of an agency proceeding conviction, and the false statement convictions. Therefore, all
other sufficiency challenges are waived, see Layne, 192 F.3d at 566, and we address only the
conspiracy, obstruction of an agency proceeding, and false statement convictions. We find that there
was sufficient evidence to convict Defendant on all counts.
2. Standard of Review
This Court reviews a “challenge to the sufficiency of the evidence by considering the
evidence in the light most favorable to the prosecution to determine whether a rational trier of fact
could have found that the essential elements of the crime were proven beyond a reasonable doubt.”
United States v. Spearman, 186 F.3d 743, 746 (6th Cir. 1999). “‘Circumstantial evidence alone is
sufficient to sustain a conviction and such evidence need not remove every reasonable hypothesis
except that of guilt.’” Id. (quoting United States v. Vannerson, 786 F.2d 221, 225 (6th Cir. 1986)).
“Furthermore, it is well-settled that uncorroborated testimony of an accomplice may support a
conviction in federal court.” Id.
No. 05-4588 United States v. Blackwell Page 12
3. Sufficient Evidence Exists to Convict Defendant of Conspiracy
Defendant contends that there is insufficient evidence of both conspiracy to insider trade and
conspiracy to obstruct justice. His primary argument is seemingly that the act of “tipping” does not
evidence a conspiracy to insider trade inasmuch as a conspiracy requires proof of an agreement to
act jointly for a common purpose and the act of tipping does not evidence an agreement.
Unfortunately for Defendant, there is sufficient evidence of at least two such agreements to trade
on insider information: one with the Stephan family and one with Kelley Hughes and Kevin Stacey.
Similarly, there is sufficient evidence of an agreement between Defendant, Stephan-Blackwell, and
the Stephans to obstruct an agency proceeding.
a. The Law of Conspiracy
Section 371 of Title 18 of the United States Code makes it illegal for “two or more persons
[to] conspire either to commit any offense against the United States, or to defraud the United States,
or any agency thereof in any manner or for any purpose.” To prove conspiracy, the government
must establish: (1) the existence of an agreement to violate the law; (2) knowledge and intent to join
the conspiracy; and (3) an overt act constituting actual participation in the conspiracy. See, e.g.,
United States v. Jamieson, 427 F.3d 394, 402 (6th Cir. 2005); United States v. Martinez, 430 F.3d
317, 330 (6th Cir. 2005). “A tacit or material understanding among the parties to a conspiracy is
sufficient to establish the agreement [, and] conspiracy may be inferred from circumstantial evidence
which may reasonably be interpreted as participation in a common plan.” United States v. Walls,
293 F.3d 959, 967 (6th Cir. 2002) (internal citations omitted).
b. Conspiracy to Commit Insider Trading
First, there is sufficient evidence of an agreement to trade on insider information between
Defendant, Stephan-Blackwell, and the Stephans. Defendant, knowing that tipping was illegal,
encouraged Stephan-Blackwell to share the tip with the Stephans. Defendant then gave the Stephans
money to buy WF stock, which the Stephans subsequently used to purchase WF stock. Based on
this evidence, a reasonable juror, viewing the evidence in the light most favorable to the prosecution,
could conclude beyond a reasonable doubt that Defendant, Stephan-Blackwell, and the Stephans
agreed to work together to help the Stephans trade on insider information.
Second, there is sufficient evidence that Defendant agreed with Hughes and Stacey to trade
on inside information. Hughes, a friend and employee of Defendant, bought huge amounts of WF
stock in the three month period after Defendant learned of the buyout and before the buyout
occurred. She made these purchases, in part, with a $30,000 loan from the Defendant. These facts
permit the inference that Hughes, Stacey, and Defendant agreed to work together to help Hughes
violate the law, and a reasonable juror, viewing the evidence in the light most favorable to the
prosecution, could conclude the existence of such an agreement was proven beyond a reasonable
doubt.
c. Conspiracy to Obstruct An Agency Proceeding
Third, there is also sufficient evidence that Defendant agreed with Stephan-Blackwell and
the Stephans to obstruct an agency proceeding. Stephan-Blackwell testified that she and Defendant
agreed not to volunteer information on and to “obscure” relationships with persons who bought WF
stock. Thereafter, Stephan-Blackwell coached the Stephans to lie and deleted contacts from RBA’s
database with Defendant’s knowledge. Knowing that Stephan-Blackwell had deleted the
information, Defendant nonetheless failed to correct the deletions before giving the documents to
the SEC. Based on this information a reasonable juror could find beyond a reasonable doubt that
Defendant, Stephan-Blackwell, and the Stephans agreed to work together to obstruct agency
proceedings. Accordingly, Defendant’s conspiracy convictions should stand.
No. 05-4588 United States v. Blackwell Page 13
4. Sufficient Evidence Exists to Convict Defendant of Making False Statements
The government presented sufficient evidence to allow a reasonable juror to convict
Defendant on both counts of making false statements. Section 1001 of Title 18 prohibits any person
from (1) “knowingly and wilfully”; (2) “mak[ing] any materially false, fictitious, or fraudulent
statement or representation”; (3) “in any matter within the jurisdiction of the executive, legislative,
or judicial branch of the Government of the United States.” Defendant admits that he both testified
before the SEC, and had his lawyer send a letter to the SEC stating that he never disclosed any
information about the Kellogg-WF buyout. Stephan-Blackwell and Kahl testified that Defendant
informed them of the buyout. Accordingly, a reasonable juror could find that Defendant lied, with
the requisite intent, to the SEC on two occasions: once when testifying, and once when his attorney
wrote to the SEC.
5. Sufficient Evidence Exists to Convict Defendant of Obstructing an Agency
Proceeding
Similarly, the government presented sufficient evidence to allow a reasonable juror to
conclude that Defendant’s involvement in his wife’s deletions of RBA’s contact list directly after
receiving an SEC subpoena constituted obstruction of an agency proceeding. Section 1505 of Title
18 renders obstruction of an agency proceedings illegal. It states:
Whoever, with intent to avoid, evade, prevent, or obstruct compliance, in whole or
in part, with any civil investigative demand duly and properly made under the
Antitrust Civil Process Act, willfully withholds, misrepresents, removes from any
place, conceals, covers up, destroys, mutilates, alters, or by other means falsifies any
documentary material, answers to written interrogatories, or oral testimony, which
is the subject of such demand; or attempts to do so or solicits another to do so . . .
shall be fined under this title, imprisoned not more than 5 years . . . or both.
Thus, to be convicted of obstruction of agency proceedings, a defendant must have 1) intended to
interfere with the proceedings and 2) withheld, misrepresented, removed from any place, concealed,
covered up, destroyed, mutilated, altered or falsified any documentary material, answers to written
interrogatories, or oral testimony. See id. Inasmuch as a reasonable jury could find that Defendant,
acting with the requisite intent, misrepresented RBA’s contact list to the SEC, it could find that
Defendant obstructed an agency proceeding. First, Stephan-Blackwell testified that she and
Defendant agreed to obscure their relationships to WF stock buyers, thereby providing a reasonable
juror with evidence of Defendant’s intent to interfere. Second, Stephan-Blackwell testified that
Defendant was present when she deleted the RBA records and that Defendant did not object. As the
government correctly points out, Defendant, knowing of the deletions, essentially misrepresented
the contact list to the SEC by failing to correct them. See United States v. Laurins, 857 F.2d 529,
536 (9th Cir. 1988) (holding that the submission of false documents to IRS violated § 1505). Thus,
there was sufficient evidence to allow a jury to find that Defendant’s involvement in the deletions
amounted to obstruction of an agency proceeding.
D. Variance
1. Standard of Review
This Court reviews de novo whether the indictment varied from the proof presented at trial.
United States v. Solorio, 337 F.3d 580, 589 (6th Cir. 2003). A variance does not constitute
reversible error unless it affects a substantial right of the defendant. Id. at 590. In this case,
Defendant’s substantial rights were not affected.
No. 05-4588 United States v. Blackwell Page 14
2. Defendant’s Substantial Rights Were Not Affected
A variance occurs when an indictment alleges one large conspiracy but the evidence at trial
establishes multiple conspiracies. Kotteakos v. United States, 328 U.S. 750, 756 (1946). A variance
constitutes reversible error if it affects a substantial right of the defendant. Id. at 757, 766. A
defendant’s substantial rights are affected if the defendant is convicted on evidence “unrelated to
his own alleged activity.” United States v. Geibel, 369 F.3d 682, 693 (2d Cir. 2004). Accordingly,
the inquiry into whether a variance constitutes reversible error focuses on whether a danger exists
that the defendant was convicted based on evidence of a conspiracy in which the defendant did not
participate (“guilt transference”). United States v. Mack, 837 F.2d 254, 258 (6th Cir. 1988).
Typically, the danger of guilt transference “can be cured with a cautionary instruction to the jury that
if it finds multiple conspiracies, evidence relating to one conspiracy cannot be considered in
examining another conspiracy.” Id. However, the more evidence presented at trial that is unrelated
to the defendant’s conduct, or a conspiracy in which the defendant took part, the less likely
instructions are to cure the danger of guilt transference. With this in mind, courts have considered
the number of conspiracies the evidence establishes, the number of non-conspiratorial co-defendants
tried with defendant, and the size of the conspiracy alleged in the indictment in determining whether
a variance was prejudicial. Kotteakos, 328 U.S. at 766 (contrasting the two conspiracies established
in Berger v. United States, 295 U.S. 78 (1935), with the 8 conspiracies established in that case);
Geibel, 369 F.3d at 693.
We need not decide whether a variance occurred in the instant case, because assuming a
variance did occur, it did not affect Defendant’s substantial rights. As discussed above, a variance
only affects a defendant’s substantial rights if it creates a danger of improper guilt transference from
one defendant to another. In this case, there was no danger of improper guilt transference to
Blackwell from any other defendant, i.e., Voss, Jack, Hughes, and Stacey. The trial court instructed
the jury that it could not consider evidence of one defendant’s actions, including Voss, Jack, Hughes,
and Stacey, against another defendant, including Blackwell, unless the jury first found the
defendants to be co-conspirators, stating:
However, statements of any conspirator which are made before its existence or after
its termination, or which were not made in furtherance of the conspiracy, may be
considered as evidence only against the person marking [sic] the statement.
Likewise, if acts were done or statements were made by someone whom you do not
find to be a member of the conspiracy, they may be considered by you as evidence
only against the person who did the acts or made the statement.
(J.A. at 3839-40.) We presume the jury followed these instructions. See, e.g., Roberts v. Carter,
337 F.3d 609, 615 (6th Cir. 2003). Accordingly, we must conclude that the jury did not improperly
“transfer guilt” to Blackwell from the other defendants without first finding that the defendant in
question conspired with Blackwell.
Relatedly, Defendant argues that the prosecution intentionally varied the indictment from
the proof at trial in order to render otherwise inadmissible evidence admissible. Specifically,
Defendant argues that the testimony of Stephan-Blackwell and Kahl, regarding Defendant’s tipping
of the Stephans and Kahl respectively,2 was propensity evidence used to support other substantive
insider trading charges. According to Defendant, the indictment alleged a single conspiracy listing
Stephan-Blackwell and Kahl as co-conspirators for the sole purpose of rendering this propensity
evidence admissible.
2
Defendant was not charged with tipping the Stephans or Kahl.
No. 05-4588 United States v. Blackwell Page 15
We find Defendant’s argument to be without merit. In the first place, Stephan-Blackwell’s
testimony establishes the existence of a conspiracy and would have been admissible to prove the
smaller conspiracy had there been no variance. Next, the testimony of both Stephan-Blackwell and
Kahl regarding Defendant’s tipping practices was relevant to the false statement and obstruction of
an agency proceeding charges. Their testimony proved that, contrary to Defendant’s SEC and trial
testimony, Defendant tipped individuals on Kellogg’s planned buyout of WF.
E. Jury Instructions
Defendant argues that the district court’s jury instructions constitute reversible error.
Specifically, Defendant offers the following arguments as grounds for reversal: (1) the instructions
on multiple conspiracies misled the jury by allowing it to convict Defendant of conspiracy if the jury
found agreement between Defendant and any alleged co-conspirator; (2) the instructions on
conspiracy omitted the phrases “That is the key” and “unindicted co-conspirators”; (3) the
instructions included language not found in the Sixth Circuit pattern jury instructions; (4) certain
limiting instructions on SEC testimony were confusing; and (5) the district court failed to give the
so-called “two inference” jury instruction. For the reasons set forth below, we reject Defendant’s
arguments.
1. Preservation
Defendant failed to preserve several of the alleged errors in the jury instructions for this
Court’s review. Specifically, Defendant’s brief on appeal fails to offer any argument in support of
his contentions that the omission of the phrases “That is the key” and “unindicted co-conspirators,”
and the use of language not set forth in pattern jury instructions rendered the jury instructions
improper. Similarly, Defendant fails to explain in what way the limiting instructions on SEC
testimony were confusing. Accordingly, we decline to review these issues. Layne, 192 F.3d at 566.
Defendant’s remaining arguments – that the instruction on multiple conspiracies were
improper and that the district should have given the “two inference” jury instruction – are, however,
preserved for our review. Defendant objected to jury instructions on these grounds in the trial court,
United States v. Carmichael, 232 F.3d 510, 523 (6th Cir. 2000), and developed them in his brief on
appeal, Layne, 192 F.3d at 566.
2. Standard of Review
This Court “review[s] jury instructions as a whole to determine if they adequately inform the
jury of the relevant considerations and provide a basis in law for aiding the jury in reaching its
decision and will reverse a jury verdict on account of instructional error only in situations where the
instruction, viewed as a whole is confusing, misleading, and prejudicial.” Romanski v. Detroit
Entm’t, LLC, 428 F.3d 629, 641 (6th Cir. 2005) (internal quotation marks and citation omitted).
3. Multiple Conspiracy Instructions
The district court’s charge on multiple conspiracies was a correct statement of law and was
not confusing, misleading, or prejudicial. The district court clearly stated that the jury must find that
Defendant participated in the conspiracy alleged in the indictment to convict Defendant of
conspiracy; however, the district court also made clear that the jury need not find that Defendant
conspired with all co-conspirators alleged in the indictment to determine that Defendant participated
in that conspiracy. The trial court’s instructions read in pertinent part as follows:
Now, the government is not required to prove that all of the people named in the
indictment were members of the scheme or the conspiracy, so long as you find that
No. 05-4588 United States v. Blackwell Page 16
at least two persons, one of them being the defendant, were participants in the
conspiracy alleged in the indictment.
To convict any one of the defendants of a conspiracy charge, the government must
convince you beyond a reasonable doubt that the defendant was a member of the
conspiracy charged in the indictment. The government must prove beyond a
reasonable doubt that the defendant knowingly and intentionally became a member
of the single conspiracy alleged in the indictment as opposed to some other
conspiracy. Proof that the defendant was only a member of some other conspiracy
is not enough to convict. However, proof that a defendant was a member of some
other conspiracy would not prevent you from returning a guilty verdict if the
government also proved that the defendant was also a member of the conspiracy
charged in the indictment.
(J.A. at 3839, 3849.)
The first portion of this instruction is a correct statement of law. A jury need not find that
a defendant conspired with all the alleged co-conspirators in order to convict a defendant of
conspiracy. See United States v. Sandy, 605 F.2d 210, 217 (6th Cir. 1979) (holding the acquittal of
several jointly tried co-defendants in a conspiracy case was not grounds for reversing the conviction
of a co-defendant and alleged co-conspirator); see also United States v. Thomas, 348 F.3d 78, 84 n.3
(10th Cir. 2003) (discussing similar cases).
Similarly, the second part of this instruction is not erroneous and, in fact, mirrors in
substance, the Sixth Circuit Pattern Jury Instructions:
(3) To convict any one of the defendants of the conspiracy charge the government
must convince you beyond a reasonable doubt that the defendant was a member of
the conspiracy charged in the indictment. If the government fails to prove this, then
you must find the defendant not guilty of the conspiracy charge, even if you find that
he was a member of some other conspiracy. Proof that the defendant was only a
member of some other conspiracy is not enough to convict. (4) But proof that a
defendant was a member of some other conspiracy would not prevent you from
returning a guilty verdict if the government also proved that the defendant was a
member of the conspiracy charged in the indictment.
Sixth Circuit Pattern Jury Instructions § 3.08(3)-(4) (2005). As a comparison of the two instructions
evidences, only one sentence of the second portion of the trial court’s instruction differs from the
pattern jury instructions. Thus, without more, we cannot say that the trial court’s instruction was
either misleading or erroneous.
4. Two Inference Instructions
Similarly, the district court’s decision not to give Defendant’s “two inference” instruction
does not constitute reversible error. The district court’s actual instruction contained language
substantially similar to the proposed instruction. Defendant proposed the following instruction to
follow the district court’s explanation of the difference between direct and circumstantial evidence:
Circumstantial evidence alone is insufficient to convict a defendant if the
circumstantial evidence would support either of two reasonable probabilities – that
a defendant is innocent or that the same defendant is guilty of a particular crime
charged. Stated differently, if, based on circumstantial evidence alone, you could
find a defendant either innocent or guilty, then you must find that defendant
innocent. Circumstantial evidence that requires the jury to make a leap of faith or
No. 05-4588 United States v. Blackwell Page 17
engage in speculation or conjecture in order to sustain a conviction is not valid
circumstantial evidence, and it may not be used to find a defendant guilty.
(J.A. at 367.) In defining the reasonable doubt burden of proof, the district court instructed the jury:
Of course a defendant is never to be convicted on mere suspicion or mere conjecture
. . . . So if the jury views the evidence in the case as reasonably permitting either of
two conclusions, one of innocence, and the other of guilt, then of course the jury
should adopt the conclusion of innocence.
(J.A. at 3774.) Both instructions informed the jury that where two reasonable conclusions exist –
innocence or guilt – the jury may not convict the defendant. Thus, Defendant’s proposed instruction
would not have added any value to the jury charge.
Moreover, the instruction proposed by Defendant was itself erroneous. First, the proposed
instruction’s undue focus on circumstantial evidence improperly implies that the circumstantial
evidence is weaker than direct evidence. See United States v. Prince, 214 F.3d 740, 746 (6th Cir.
2000) (holding that direct and circumstantial evidence are to be given the same weight when
reviewing the sufficiency of the evidence). Additionally, the proposed instruction improperly states
that “if, based on circumstantial evidence alone, you could find a defendant either innocent or guilty,
then you must find that defendant innocent.” (J.A. at 367.) By omitting any reference to reasonable
probability, this statement improperly raises the burden from beyond a reasonable doubt to beyond
all possible doubt. Consequently, this Court has held similar instructions erroneous. In United
States v. Scott,3 578 F.2d 1186, 1191-92 (6th Cir. 1978) (quoting United States v. Holland, 348 U.S.
121, 139-40 (1954)), the Court rejected an instruction reading “where the Government’s evidence
is wholly circumstantial it must be such as to exclude every reasonable hypothesis [as opposed to
probability] other than that of guilt.” Inasmuch as a district court does not err in refusing to give an
incorrect jury instruction, we hold that the district court’s failure to give Defendant’s proposed “two
inference” jury instruction was not improper.
F. Jury Interrogatories
Defendant argues that the alleged errors discussed in the previous two sections, namely the
variance and jury instructions, were compounded by the district court’s refusal to use jury
interrogatories or a “special verdict form,” requiring the jury to find each element of conspiracy
separately before convicting Defendant of conspiracy. We disagree.
1. Standard of Review
This court reviews a district court’s decision to use jury interrogatories for an abuse of
discretion. Safeco Ins. Co. v. City of White House, TN, 191 F.3d 675, 681 (6th Cir. 1999). In this
case, the district court did not abuse its discretion in declining to use jury interrogatories.
2. The District Court Did Not Abuse Its Discretion
“In general, special verdicts are not favored [in criminal cases] and ‘may in fact be more
productive of confusion than of clarity.’” United States v. Wilson, 629 F.2d 439, 444 (6th Cir. 1980)
(quoting 8A Moore’s Federal Practice and Procedure § 31.02(3)). The general rule against special
verdicts in criminal cases has long been considered to prevent the courts from:
3
Although two lines of case law exist on this issue, the earlier and ultimately prevailing view is contained in
Scott. 578 F.2d at 1192 (tracing the conflict in the case law).
No. 05-4588 United States v. Blackwell Page 18
invad[ing] the province of the jury and infring[ing] on its power to deliberate free
from legal fetters; on its power to arrive at a general verdict without having to
support it by reason or by report of its deliberations; and on its power to follow
instructions of the court.
Id. at 443 (citation omitted). In other words, the rule against special verdicts seemingly stems from
the common law right of the jury to nullify without being reversed by the king’s judges. See id.
(discussing numerous cases and articles); see also United States v. Reed, 147 F.3d 1178, 1180 (9th
Cir. 1998) (“This rule is fashioned to protect the rights of the criminal defendants by preventing the
court from pressuring the jury to convict.”). Thus, this rule seemingly exists to protect the rights of
the defendant.
While we question the applicability of a rationale against special verdicts to protect
defendants in cases where the defendant requests the special verdict, we also recognize that there
is no real reason, and no case law support, for abandoning the general rule in this case. First,
Defendant has cited no authority for the proposition that a judge’s failure to use jury interrogatories
or a special verdict constitutes reversible error. Specifically, Defendant relies on two types of cases:
one in which courts of appeals uphold the district court’s decision to use a special verdict, see Reed,
147 F.3d at 1181-82; United States v. Stonefish, 402 F.3d 691, 699 (6th Cir. 2003); United States
v. Walker, 97 F.3d 253, 255-56 (8th Cir. 1996), and one in which courts of appeals require lower
courts to submit facts to the jury that will be used to increase a defendant’s sentence beyond the
statutory maximum for the more general crime set forth in the indictment, see, e.g., United States
v. Randolph, 230 F.3d 243, 252 (6th Cir. 2000) (discussing United States v. Dale, 178 F.3d 429 (6th
Cir. 1999)). This Court’s refusal to reverse a judgment for the use of a special verdict cannot be
equated with a requirement that lower courts use special verdicts. In fact, the specific holding of
Stonefish was that the use of a special verdict did not constitute plain error. Such a holding should
not be interpreted as an endorsement of special verdicts. The sentencing line of cases is equally
inapplicable. They address the implications of a defendant’s right to have a jury decide all facts that
increase his or her sentence beyond the statutory maximum. See Dale, 178 F.3d at 422-33
(collecting cases). Interrogatories regarding the existence of such facts must be submitted to the
jury. Id. Defendant, however, did not request the finding of specific facts, separate from the
elements of his crime, that would increase his statutory minimum. Even if he had, however,
Randolph makes it clear that the failure to use a special verdict form does not constitute reversible
error. 230 F.3d at 252. Instead, the failure to use the special verdict form simply limits the sentence
the trial court may impose. Id.
Second, Defendant’s concerns regarding the necessity of a special verdict are adequately
addressed through an assessment of the sufficiency of the evidence and variance. Defendant is
purportedly concerned with the multiple conspiracy issue: whether the jury found that he was
involved in the conspiracies alleged in the indictment or some other conspiracy. Although the
evidence presented at trial admits the possibility of multiple insider trading conspiracies as opposed
to one large insider trading conspiracy, the evidence presented against Defendant would place him
squarely within the insider trading conspiracy alleged in the indictment. In other words, there is a
possibility that the jury determined that Defendant conspired with only some of the alleged co-
conspirators, namely Stephan-Blackwell and her parents, and that Hughes and Stacey formed their
own separate conspiracy. Even if this were true, however, Defendant would nonetheless be guilty
of the conspiracy alleged in the indictment. Accordingly, we will not vacate Defendant’s conviction
simply because the district court declined to use jury interrogatories or a special verdict to determine
with which persons Defendant conspired.
No. 05-4588 United States v. Blackwell Page 19
G. The Juror Lip-Reading Incident
Defendant claims that his conviction should be reversed due to alleged juror misconduct
during the jury’s deliberations. Shortly after Defendant’s trial, the Columbus Monthly published an
interview with a juror in Defendant’s case, Joanne Toftner. According to the story in the Columbus
Monthly, Toftner stated that three jurors witnessed Defendant mouth “I hate you” to Stephan-
Blackwell while Stephan-Blackwell was testifying for the prosecution. The three jurors purportedly
informed the other jurors of their recollections of the incident during deliberations. Toftner is
further quoted as stating that, in light of the fact that three jurors witnessed Defendant mouth “I hate
you,” Defendant’s denial of the incident on cross-examination “virtually sealed [his fate] from my
perspective.” (J.A. at 972.) Believing that the Columbus Monthly article constituted “new
evidence,” Defendant moved for a new trial on the ground that the juror’s conduct violated his Sixth
Amendment right to confront witnesses against him. The district court denied the motion, finding
that the article was not “new evidence.”
Defendant’s claim on appeal essentially encompasses what he believes to be two distinct
district court errors: (1) the decision to allow the prosecution to cross-examine Defendant on the
mouthing incident; and (2) the district court’s denial of Defendant’s motion for a new trial in light
of newly discovered evidence, the Columbus Monthly article. We affirm both rulings of the district
court.
1. Standard of Review
Both a district court’s evidentiary ruling and a district court’s decision denying a defendant
a new trial based on newly discovered evidence are reviewed for abuse of discretion. Schraene, 331
F.3d at 564; Morales v. Am. Honda Motor Co., 151 F.3d 500, 506 (6th Cir. 1998). “An abuse of
discretion occurs when the district court relies on clearly erroneous findings of fact, improperly
applies the law, [] uses an erroneous legal standard,”or where the district court’s decision is clearly
arbitrary. In re Brown, 342 F.3d 620, 633 (6th Cir. 2003) (citation omitted); see Tisdale v. Fed.
Express Corp., 415 F.3d 516, 525 (6th Cir. 2005).
2. Cross-Examination
“[S]poliation evidence, including evidence that defendant attempted to bribe and threaten[]
a witness, is admissible to show consciousness of guilt.” United States v. Mendez-Ortiz, 810 F.2d
76, 79 (6th Cir. 1986) (collecting cases). Furthermore, a district court is permitted to allow evidence
of threats to a witness to be admitted even if the district court is not certain that such threats
occurred. United States v. Mattox, 944 F.2d 1223, 1230 (6th Cir. 1991). Witness intimidation may
take many forms. To determine whether conduct or a statement actually constitutes an attempt to
intimidate requires factual determinations that the district court is in the best situation to assess. A
certain relationship between two parties could render the statement “I hate you” a form of
psychological intimidation. We decline to second guess the district court’s conclusion that, in the
circumstances presented in this case, mouthing “I hate you” constituted an attempt at witness
intimidation. Accordingly, we hold that the district court did not abuse its discretion in allowing the
cross-examination.
3. Motion for a New Trial
Similarly, the district court did not abuse its discretion in denying Defendant’s motion for
a new trial based on newly discovered evidence pursuant to Rule 33. To prevail on a motion for a
new trial based on newly discovered evidence pursuant to Rule 33 of the Federal Rules of Criminal
Procedure, a defendant must establish: “(1) the new evidence was discovered after the trial; (2) the
evidence could not have been discovered earlier with due diligence; (3) the evidence is material and
not merely cumulative or impeaching; and (4) the evidence would likely produce an acquittal.”
No. 05-4588 United States v. Blackwell Page 20
United States v. Glover, 21 F.3d 133, 138 (6th Cir. 1994) (citing United States v. O’Dell, 805 F.3d
637, 640 (6th Cir. 1986)). In this case, Defendant presented no new evidence likely to produce an
acquittal, and accordingly, was not entitled to a new trial based on new evidence. A juror’s conduct
during deliberations is not evidence likely to produce acquittal at a new trial because it would not
be admissible. Rule 402 of the Federal Rules of Evidence permits only “relevant” evidence, which
is defined by Rule 401 as “evidence having any tendency to make the existence of any fact that is
of consequence to the determination of the action more likely than not.” Inasmuch as juror conduct
has no tendency to make Defendant more or less guilty, it is not relevant to a trial on Defendant’s
guilt.
Despite the fact that Defendant styled his motion as one for a new trial pursuant to Rule 33
on the basis of newly discovered evidence, we presume that Defendant intended to move for a new
trial in the interests of justice more generally, offering his “new evidence” as evidence of the need
for a new trial rather than as evidence in support of his innocence. Even if we construe Defendant’s
motion as one for a new trial in the interests of justice, however, Defendant would not be entitled
to relief. Confrontation Clause violations are subject to harmless error analysis and do not constitute
reversible error unless they “had substantial and injurious effect or influence in determining the
jury's verdict.” Doan v. Brigano, 237 F.3d 722, 736 (6th Cir. 2001), overruled on other grounds by
Wiggins v. Smith, 539 U.S. 510 (2003). Assuming without deciding that actions of the three jurors
in the instant case violated Defendant’s Sixth Amendment right to confront witnesses against him,
the violation was harmless. Defendant’s ex-wife and best friend both testified that Defendant tipped
them on the buyout and then lied about it, and numerous friends and relations of Defendant bought
enormous amounts of stock in the three month period after Defendant learned of the buyout and
before the buyout actually occurred. In light of the overwhelming evidence of Defendant’s guilt,
we do not believe that the alleged juror misconduct had a substantial and injurious effect on the
jury’s verdict.
To show that the juror misconduct was not harmless, the Defendant improperly relies on the
Columbus Monthly article, which quotes one juror as stating that, after discussing Defendant’s denial
of mouthing “I hate you,” Defendant’s “‘fate was virtually sealed from my perspective,’” (J.A. at
972). First, Federal Rule of Evidence 606(b) prohibits the introduction of this statement or any
similar statement to impeach the jurors’ verdict. Although a juror may testify about extraneous,
prejudicial information brought into the deliberations, the juror may not testify about his or her own
mental processes, i.e., how the jury reached his or her verdict. Doan, 237 F.3d at 732. The quote
relied upon to prove prejudice clearly states that the denial affected the juror’s personal
“perspective.” (J.A. at 972.) Thus, the statement constitutes inadmissible evidence of a juror’s
mental impressions. Moreover, the statement does not provide any basis for holding a hearing on
the issue of prejudice because no jurors’ mental impressions are admissible to prove such prejudice.
Fed. R. Evid. 606(b). In other words, although federal courts may consider juror testimony to
determine whether an error actually occurred, federal courts must determine whether error was
harmless from the perspective of the rational juror, not from the perspective of the individual jurors
in a particular case. See Doan, 237 F.3d at 736 (applying traditional harmless error analysis to juror
misconduct case). Second, the article actually suggests that the incident was not prejudicial. The
juror also informed the Columbus Monthly that “the jury found the testimony and evidence to be
‘pretty straightforward’” and that “she and other members of the jury found Jack Kahl’s testimony
compelling.” (J.A. at 972.) These comments indicate that the jurors’ misconduct, if any, was
harmless because the jurors would have convicted Defendant regardless of whether any misconduct
actually occurred.
No. 05-4588 United States v. Blackwell Page 21
H. Cumulative Error
Defendant argues that even if each of the alleged errors discussed above does not
individually constitute reversible error, the cumulative effect of such errors rendered his trial
fundamentally unfair in violation of due process. Because we believe that Defendant received a fair
trial, we affirm the district court’s order of conviction.
As this Court has held on previous occasions, “[e]rrors that might not be so prejudicial as
to amount to a deprivation of due process when considered alone, may cumulatively produce a trial
setting that is fundamentally unfair.” Walker v. Engle, 703 F.2d 959, 963 (6th Cir. 1983); see also
United States v. Hines, 398 F.3d 713, 719 (6th Cir. 2005) (citing Walker). In the instant case,
however, the cumulative prejudice of trial errors did not render Defendant’s trial fundamentally
unfair. As discussed in conjunction with Defendant’s other arguments on appeal, the only errors that
even arguably occurred at Defendant’s trial were the exclusion of witness testimony about rumors,
a slight variance between the indictment and the proof at trial, improper limits on the cross-
examination of Stephan-Blackwell, and potential juror misconduct in the form of improper
testimony during deliberations. Defendant’s remaining allegations of error are meritless.
Considering only the exclusion of the rumor testimony, the alleged variance, the limits on Stephan-
Blackwell’s cross-examination, and the alleged juror misconduct, we do not find any prejudice
rendering Defendant’s trial fundamentally unfair. As previously discussed, the testimony regarding
rumors was cumulative of other testimony, the limitations on the cross-examination of Stephan-
Blackwell did not impair Defendant’s ability to conduct his defense, any variance was harmless
because jurors are presumed to follow instructions, and any juror misconduct was unlikely to have
truly affected the guilty verdict. Moreover, as should be clear at this point, the evidence of
Defendant’s guilt was overwhelming. His ex-wife and his good friend both testified that he tipped
them and lied to the SEC. Additionally, numerous friends and relations of Defendant bought
enormous amounts of stock in the three month period between Defendant’s learning of the pending
buyout and its occurrence. Accordingly, we affirm Defendant’s convictions.
I. Defendant’s Fine
Defendant challenges his fine on three grounds: (1) that the district court imposed a sentence
that was excessive because it was eight times the maximum guideline amount; (2) that the district
court improperly considered Defendant’s financial resources in assessing the fine; and (3) that the
fine was disproportionate in violation of the Eighth Amendment.
1. Preservation and Standard of Review
This Court reviews the district court’s imposition of a fine as a part of a defendant’s sentence
for abuse of discretion. See United States v. Gibson, 409 F.3d 325, 342 (6th Cir. 2005) (citation
omitted). Where Defendant fails to preserve a challenge to a fine, however, it is reviewed for plain
error. Bostic, 371 F.3d at 873. “To establish plain error, a defendant must show (1) that an error
occurred in the district court; (2) that the error was plain, i.e., obvious or clear; (3) that the error
affected defendant’s substantial rights; and (4) that this adverse impact seriously affected the
fairness, integrity or public reputation of the judicial proceedings.” Abboud, 438 F.3d at 583.
In this case, Defendant preserved his challenges to the district court’s assessment of a fine
outside the guideline range by objecting to the government’s recommended fine of $ 908,000 (based
on amount of loss) in the Pre-Sentence Report, and objecting to an upward departure at the
sentencing hearing. Defendant has not, however, preserved his Eighth Amendment challenge to the
fine or his challenge premised on the district court’s allegedly improper consideration of his
financial resources in assessing the fine. Accordingly, we review Defendant’s challenge to the
No. 05-4588 United States v. Blackwell Page 22
district court’s assessment of a fine outside the guideline range for abuse of discretion and
Defendant’s remaining challenges for plain error and find no abuse of discretion or plain error.
2. The District Court Did Not Abuse Its Discretion or Commit Plain Error
The district court did not abuse its discretion or commit plain error in imposing a $1,000,000
dollar fine on Defendant. The comments to the Sentencing Guidelines indicate that an upward
departure may be warranted where two times the amount of loss resulting from the offense exceeds
the maximum guideline fine. U.S. Sentencing Guidelines Manual § 5E1.2, comment 4 (2006). In
this case, the district court determined that the resulting loss was approximately $908,000. Inasmuch
as twice $908,000 equals $1,816,000 and $1,816,000 exceeds the maximum recommended fine
($125,000), the district court did not abuse its discretion in departing upward. Moreover, the amount
the district court departed upward was perfectly reasonable. It accounted for the estimated loss
resulting from Defendant’s conduct. Next, 18 U.S.C.§ 3572(a) permits a district court to consider
a defendant’s financial resources in assessing fines. Therefore, the district court committed no error,
let alone plain error, in considering Defendant’s ability to pay. Finally, the $1,000,000 dollar fine
is not excessive in violation of the Eighth Amendment. A punitive fine violates the Eighth
Amendment’s “Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant's
offense.” United States v. Bajakajian, 524 U.S. 321, 334 (1998). The fine in this case is not
disproportionate to the gravity of the offense inasmuch as it is equal to the loss caused by the
offense. Therefore, the district court did not commit plain error in imposing it. Accordingly, we
affirm the district court’s imposition of the fine.
J. Term of Supervised Release
1. Preservation and Standard of Review
Defendant failed to preserve this issue for review by objecting to its imposition at sentencing.
Therefore this Court reviews for plain error. United States v. Kingsley, 241 F.3d 828, 836 (6th Cir.
2001).
2. The Imposition of the Term Was Not Plain Error
Defendant has not established that the district court's imposition of a special condition
prohibiting Defendant from “profit[ting] in any way from the production of books, movies, or any
other media products that may occur as a result of his involvement in the instant offense” for the
duration of his supervised release was plain error. Assuming, without deciding, that the imposition
of the term in this case constituted error, we do not find that the error was “plain” or obvious.
Although this Circuit has not directly spoken on this issue, at least one Circuit has upheld the
imposition of an identical provision. United States v. Terrigno, 838 F.2d 371, 374 (9th Cir. 1988).
At a minimum, the Ninth Circuit’s decision indicates that reasonable minds could differ as to the
legality of the disputed condition, and any error was therefore not “plain.” We therefore affirm the
district court’s imposition of the disputed term.
K. Amount of Loss Calculation
1. Standard of Review
We review the district court’s calculation for clear error, United States v. Guthrie, 144 F.3d
1006, 1011(6th Cir. 1998). Finding no clear error, we affirm the district court’s amount of loss
determination.
No. 05-4588 United States v. Blackwell Page 23
2. The Amount of Loss Calculation Was Not Clearly Erroneous.
The district court’s determination that the loss amount caused by Defendant’s conduct was
$ 908,853.02 was not clearly erroneous. The sole basis for Defendant’s contention that $ 908,853.02
constitutes a clearly erroneous amount is that it includes loss amounts attributable to persons
acquitted of insider trading, Voss and Jack, and persons not named in the indictment. First, the
district court was not prohibited from including amounts attributable to the trading of Voss and Jack
simply because they were acquitted. The acquittal simply means the jury did not find that Voss and
Jack committed insider trading beyond a reasonable doubt. The district court in this case, however,
only needed to determine the amount of loss by a preponderance of the evidence. See United States
v. Davidson, 409 F.3d 304, 310 (6th Cir. 2005) (holding that the same evidentiary standards apply
post-Booker); United States v. Rothwell, 387 F.3d 579, 582 (6th Cir. 2004) (holding that the district
court determines the amount of loss under the preponderance of the evidence standard).
Accordingly, the district court’s inclusion of the amount attributable to Voss’ and Jack’s trading is
not clear error. Second, the district court is not prohibited from considering facts not included in
the indictment. See United States v. Booker, 543 U.S. 220, 249-255 (2005). Thus, it did not commit
clear error simply because it included loss amounts attributable to the trading of persons not named
in the indictment. Therefore, we affirm the district court’s amount of loss calculation.
L. Section 3553 Analysis
Finally, Defendant asks this Court to vacate his 72 month sentence and remand for
resentencing on the ground that the district court failed to consider all the relevant § 3553 factors.
Specifically, Defendant contends that the district court failed to consider the following factors
despite Defendant’s submission of a sentencing brief, arguing that the factors constituted grounds
for a lower sentence: (1) Defendant’s personal history; (2) the lack of any need to protect the public;
(3) the lack of any need to deter Defendant; and (4) the allegation that Defendant did not commit
his crime for personal monetary gain. For the reasons set forth below, we affirm the imposition of
a 72 month period of incarceration.
1. Preservation and Standard of Review
We review Defendant’s claim for plain error because Defendant failed to object to the district
court’s § 3553 analysis at the sentencing hearing, despite the fact that the district court provided
Defendant with the opportunity to object. United States v. Bostic, 371 F.3d 865, 873 (6th Cir. 2004).
“To establish plain error, a defendant must show (1) that an error occurred in the district court;
(2) that the error was plain, i.e., obvious or clear; (3) that the error affected defendant’s substantial
rights; and (4) that this adverse impact seriously affected the fairness, integrity or public reputation
of the judicial proceedings.” Abboud, 438 F.3d at 583.
2. The District Court Did Not Commit Plain Error
The job of the district court is to impose “‘a sentence sufficient, but not greater than
necessary, to comply with the purposes’ of section 3553(a).” Foreman, 436 F.3d 63, 640 (6th Cir.
2006)(quoting 18 U.S.C. § 3553). In reaching a sentence that complies with the purposes of
§ 3553(a), the district court must consider the Sentencing Guidelines range and all relevant § 3553
factors. Id. While a district court need not explicitly reference § 3553 or recite a list of factors, it
must provide a reasoned explanation for its choice of sentence and its explanation must be
sufficiently thorough to permit meaningful appellate review. Id. Additionally, “[w]here a
defendant raises a particular argument in seeking a lower sentence, the record must both reflect both
that the district judge considered the defendant’s argument and that the judge explained the basis
for rejecting it.” United States v. Vonner, — F.3d — , 2006 WL 1770095, at * 6 (6th Cir. June 29,
2006); United States v. Richardson, 437 F.3d 550, 554 (6th Cir. 2006).
No. 05-4588 United States v. Blackwell Page 24
This Court will only uphold a sentence if it is reasonable. Reasonableness contains two
facets: substantive and procedural. See United States v .Webb, 403 F.3d 373, 383 (6th Cir. 2005);
United States v. Jones, 445 F.3d 865 (6th Cir. 2006) (Moore, J., dissenting on the ground that the
majority opinion conflicted with prior Circuit precedent). In reviewing for reasonableness, this
Court employs a presumption of substantive reasonableness. United States v. Williams, 436 F.3d
706, 708 (2006) (holding presumption of reasonableness exists, but still noting that a district court
must consider the § 3553 factors). That is, this Court presumes that the district court imposed a
sentence of the appropriate length. However, this Court will not presume that a district court
employed the proper procedures – a reasoned consideration of all relevant § 3553 factors – in
reaching it sentence. Webb, 403 F.3d at 383; Foreman, 436 F.3d at 644. In other words, the
presumption of reasonableness does not “mean that a guidelines sentence will be found reasonable
in the absence of evidence in the record that the district court considered all of the relevant section
3553(a) factors.” Id.
In this case, the district court did not commit plain error in sentencing Defendant to 72
months incarceration. First, contrary to Defendant’s contentions, the district court did consider
Defendant’s personal history, the lack of any need to protect the public, and the lack of any need to
deter Defendant from committing insider trading in the future. The district court explicitly
considered Defendant’s personal history, but simply found that it did not warrant a lighter sentence.
The court explained:
[Defendant] was not only a noted expert in his field, but also a gifted teacher, and
was revered by his students, many of whom have modeled their careers after his own
and have taken his advice and counsel as valuable tools to be used by them in the
conduct of their own careers, and by engaging this illegal activity, and engaging in
the obstruction of justice to cover it up, he has tainted forever his credibility. And
one wonders just what effect that’s going to have on the many students who have
placed their trust and confidence in his counsel and advice. This is indeed an
unfortunate consequence of his offense conduct.
(J.A. at 3947.) Thereafter, the district court expressly recognized that there was no need to deter
Defendant or protect the public from Defendant but that a need did exist to deter others from
committing similar crimes. The court stated:
The need for the sentence in this case to afford adequate deterrence, and it is not
deterrence of Professor Blackwell, I doubt he will ever again engage in activities of
this kind, or indeed have the opportunity to do so, but it’s to deter other similarly
situated from engaging in this kind of conduct that’s a primary sentencing factor.
(J.A. at 3949.) Additionally, the court recognized that this was a serious offense that did indeed
have victims, including Defendant’s friends and family, holders of WF stock who sold to insiders,
and Ohio State University. Inasmuch as future crimes by others would also presumably have
victims, the court clearly believed there was a need to protect the public or at least our economic and
justice systems. (J.A. at 3946, 3949 “[Defendant’s] offense strikes at the heart of the integrity of a
main part of the free enterprise system.” and “[Defendant’s obstruction of justice] seriously
undermine[d] respect for the system of justice.”)
Next, although the district court failed to consider Defendant’s contention that he did not
commit his crimes for personal monetary gain in imposing 72 months of incarceration, we cannot
say that this failure constituted plain error. To establish plain error, Defendant must show not only
that an obvious error occurred, but also that the error affected the integrity of the judicial
proceedings. Abboud, 438 F.3d at 583. The district court’s failure to consider Defendant’s
contention that he did not commit his crimes for personal monetary gain in imposing 72 months of
No. 05-4588 United States v. Blackwell Page 25
incarceration was an obvious error inasmuch as the black letter law of this Circuit requires district
courts to consider all factors brought to their attention by a defendant. Vonner, — F.3d — , 2006
WL 1770095, at *6; Richardson, 437 F.3d at 554. Furthermore, we do not believe that this error was
remedied by the district court’s consideration of Defendant’s lack of financial motivation in
calculating the advisory guidelines and in assessing Defendant’s fine. Consideration of Defendant’s
motive in calculating the guidelines range or in assessing the fine is not an adequate substitute for
consideration of Defendant’s motive in assessing the proper period of incarceration. If considering
Defendant’s motive in assessing the guidelines range were an adequate substitute for considering
Defendant’s motive in determining the proper period of incarceration, the guidelines would become
de facto mandatory. Additionally, Defendant’s financial motives may bear differently on the proper
fine than the length of incarceration. Most importantly, however, in arguing that his non-financial
motive was relevant to the § 3553 analysis, Defendant was arguing not only that he receive a lighter
fine, but also that his incarceration be shorter, and this argument was never considered by the
district court.
This error, however, did not affect the fairness, integrity or public reputation of the judicial
proceedings. The trial court’s error was procedural, not substantive. Importantly, the district
reached a substantively reasonable sentence by thoroughly and thoughtfully considering Defendant’s
personal history and the nature of Defendant’s illegal actions. While the district court skipped a
procedural step in reaching the sentence in question, in the circumstances of this case, that misstep
did not affect the outcome. Therefore, we affirm the district court’s imposition of 72 months of
incarceration.
III.
CONCLUSION
For the foregoing reasons, we AFFIRM Defendant’s convictions and sentence.