United States v. Salman
3:11-cr-00625
N.D. Cal.Dec 17, 2013Background
- Defendant Bassam Y. Salman was convicted by a jury (Sept. 2013) of one count of conspiracy and four counts of securities fraud based on trades allegedly made on material non‑public information passed through a chain from Citigroup banker Maher Kara to his brother Michael Kara to Salman.
- Indictment focused on several trades (notably in USPI and Biosite) executed shortly before public buyout/tender announcements that produced large profits.
- Prosecution presented evidence of familial relationships, timing and success of trades, use of a brother‑in‑law’s brokerage account to execute trades, and statements that Maher was the source of tips.
- Salman moved under Fed. R. Crim. P. 33 for a new trial arguing (1) the deliberate‑ignorance jury instruction was improper, (2) jury instructions on the personal‑benefit element lowered the government’s burden, and (3) insufficient evidence supported knowledge of Maher Kara’s breach and benefit.
- The district court (Judge Edward M. Chen) denied the motion, finding the instructions proper, supported by Ninth Circuit precedent, and the evidence sufficient circumstantially to prove knowledge and personal benefit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Deliberate‑ignorance instruction | Gov: instruction tracks Ninth Circuit model and was warranted by evidence of suspicious source, timing, profits, and use of third‑party account. | Salman: instruction lowered mens rea/willfulness and required affirmative "deliberate actions," not mere omissions (citing Global‑Tech). | Court: instruction proper; Ninth Circuit treats conscious avoidance as equivalent culpability and failure to investigate can be a deliberate action. |
| 2. Personal‑benefit instruction | Gov: sufficient to require that defendant knew tipper obtained some personal benefit; need not know precise rule or specific benefit. | Salman: court should have instructed jurors that defendant had to "know" inside information was disclosed in exchange for a personal benefit (argues instruction diluted burden). | Court: no error—the court separately and explicitly instructed that gov must prove Salman knew Maher personally benefitted; Instruction 37 only addressed the degree of specificity required about the benefit. |
| 3. Sufficiency of evidence re: knowledge of breach/benefit | Gov: circumstantial evidence (family ties, admissions, timing, profits, use of Bayyouk account) permitted inference of knowledge of breach and personal benefit. | Salman: no direct evidence he knew Kara breached duty or received a benefit; verdict unsupported. | Court: circumstantial evidence adequate; willfulness/knowledge may be inferred; no new trial. |
| 4. Weight of the evidence / new trial standard | Gov: evidence supports verdict; standard for new trial is stringent and exceptional. | Salman: verdict was a miscarriage of justice because evidence did not establish essential elements. | Court: denied motion; evidence did not preponderate against the verdict and instructions were legally correct. |
Key Cases Cited
- United States v. Inzunza, 638 F.3d 1006 (9th Cir.) (district court may weigh evidence on Rule 33 motion)
- United States v. Kellington, 217 F.3d 1084 (9th Cir.) (standard for new trial based on weight of evidence)
- United States v. Jewell, 532 F.2d 697 (9th Cir.) (deliberate ignorance/ conscious avoidance doctrine)
- United States v. Svoboda, 347 F.3d 471 (2d Cir.) (conscious‑avoidance instruction appropriate where suspicious source, timing, and profits suggest high probability of inside information)
- United States v. Heredia, 483 F.3d 913 (9th Cir.) (affirming model deliberate‑ignorance instruction and distinguishing recklessness)
- Global‑Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011) (discusses willful blindness requirement; court found it consistent with prior conscious‑avoidance doctrine)