Sufficiency of the evidence for conspiracy to commit mail fraud convictions; Jury instructions on mail fraud; Denial of defendants’ request for a jury instruction about an affirmative defense of “anti-saturation”; Sufficiency of the evidence for conspiracy to commit securities fraud convictions; “Security”; Securities & Exch. Comm’n v Edwards

The court held that there was sufficient evidence for the jury to find defendants guilty of conspiracy to commit mail fraud and securities fraud arising from a pyramid scheme. The government established that the scheme’s investment packages constituted investment contracts that qualified as “securities.” And the court rejected their challenges to the jury instructions on mail fraud. Defendants-Maike, Barnes, and Hosseinipour were leading figures in a company (referred to as I2G) the FBI concluded was a pyramid scheme. They argued there was insufficient evidence to convict them of conspiracy to commit mail fraud. The court disagreed, finding the government “presented abundant proof that the defendants knowingly participated in (and in Maike’s case devised) a fraudulent scheme.” It concluded that “I2G’s business plan—and its elaborate system of fees and rules for distributor compensation—was undisputedly a ‘plan or course of action.’ And the government presented overwhelming evidence that the defendants employed that plan to deprive others—namely, lower-level distributors—of money by means of lies and fraudulent representations.” As to the district court’s jury instructions, its “narrow substitution—'pyramid scheme’ for ‘scheme to defraud,’ as respectively defined by the court—did not allow the jury to elide the question whether the defendants participated in a fraudulent scheme with fraudulent intent.” The court held that “the relevant instructions, considered as a whole, were duplicative enough to require the jury to consider that question.” As to the denial of defendants’ requested jury instruction on the affirmative defense of “anti-saturation,” the court concluded such an instruction “would only have confused the jury[.]” As to the sufficiency of the evidence for the conspiracy to commit securities fraud convictions, it rejected their claim the government failed to establish that “I2G’s Emperor packages were securities.” The Supreme Court has ruled that it is for the jury to decide whether an “instrument is a security[.]” The government argued that the “packages were investment contracts.” The court noted that “[w]hether ‘a particular scheme is an investment contract’ depends on ‘whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.’” The court held that the “jury had ample grounds to find that the Emperor packages were securities and thus that the defendants were guilty of conspiracy to commit securities fraud.” Affirmed except that, as described in an unpublished opinion, it vacated the denial of Hosseinipour’s Rule 33 motion for a new trial and remanded “for the limited purpose of deciding that motion anew.”