United States v. Bassam Salman , 618 F. App'x 886 ( 2015 )

FILED
NOT FOR PUBLICATION JUL 06 2015
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 14-10204
Plaintiff - Appellee, D.C. No. 3:11-cr-00625-EMC-1
v. MEMORANDUM*
BASSAM YACOUB SALMAN, aka
Bessam Jacob Salman,
Defendant - Appellant.
Appeal from the United States District Court
for the Northern District of California
Hon. Edward M. Chen, District Judge, Presiding
Argued and Submitted June 9, 2015
San Francisco, California
Before: CHRISTEN and WATFORD, Circuit Judges, and RAKOFF, Senior
District Judge.**
Defendant-Appellant Bassam Yacoub Salman appeals his conviction,
following jury trial, for one count of conspiracy to commit securities fraud in
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Jed S. Rakoff, Senior District Judge for the U.S. District
Court for the Southern District of New York, sitting by designation.
violation of 18 U.S.C. § 371 and four counts of securities fraud in violation of 15
U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5, 240.10b5-1 and 240.10b5-2,
and 18 U.S.C. § 2. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we
affirm.1
Salman’s convictions arose from an insider-trading scheme involving his
extended family. The underlying facts and procedural history are set forth in the
opinion filed concurrently with this memorandum disposition. As relevant here, the
Government presented evidence at trial that Salman caused his brother-in-law,
Karim Bayyouk, to trade on material non-public information that Salman received
from other members of his family using a brokerage account in which Salman had
an undisclosed interest. On May 31, 2007, attorneys from the Securities and
Exchange Commission (“SEC”) interviewed Bayyouk, who falsely denied having
received information from anyone before making the relevant trades. A recording
of that interview (the “Bayyouk Interview”) was played for the jury at Salman’s
trial. Salman now claims the admission of the Bayyouk Interview violated the
Confrontation Clause, and, in any event, should have been excluded under Federal
1
The panel granted Salman’s motion to file a supplemental brief addressing
the effect, if any, of the Second Circuit’s opinion in United States v. Newman, 773
F.3d 438 (2d Cir. 2014). That issue is addressed in a separate opinion filed
concurrently with this memorandum disposition.
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Rules of Evidence 401–403. He further argues that the district court erred in giving
a “deliberate ignorance” instruction and that the cumulative effect of the district
court’s errors rendered his trial fundamentally unfair.2
In Crawford v. Washington, 541 U.S. 36 (2004), the Supreme Court held
that the Confrontation Clause of the Sixth Amendment bars the use of testimonial
out-of-court statements by a witness who does not appear at trial unless the witness
is unavailable and the defendant had a prior opportunity for cross-examination. Id.
at 68. It is well established, however, that this Clause “does not bar the use of
testimonial statements for purposes other than establishing the truth of the matter
asserted.” Id. at 59 n.9; see also United States v. Mitchell, 502 F.3d 931, 966 (9th
Cir. 2007). Here, it is undisputed that the Bayyouk Interview was chiefly
introduced to show that Bayyouk lied to the SEC. Salman notes, however, that on
summation, the prosecutor, in response to Salman’s argument that his transactions
with Bayyouk were somehow related to the restaurant business in which they both
had an interest, made the following argument:
First and most important, to test this defense, I want you to please
consider what Karim Bayyouk said about his trading with Mr. Salman.
2
With respect to several of Salman’s claims, the parties disagree as to the
applicable standard of review. Because we find that the district court did not err
regardless of which standard is applied, we need not resolve these disputes.
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He never said his trading with Mr. Salman was business-related. Far
from it. Mr. Bayyouk told the SEC that his trading had nothing to do
with business, let alone business with Bassam Salman.
(Emphasis added.)
Although he did not object at trial, Salman now contends that the final
sentence quoted above demonstrates that the Government relied on some of
Bayyouk’s statements for their truth.
When viewed in context, however, it is clear that in making the above
argument, the prosecutor was relying on the Bayyouk Interview, not for
what Bayyouk actually said, but rather for what he failed to say.3 The thrust
of the Government’s argument was that, if the transactions had been
legitimate and business-related, then Bayyouk would have simply told the
SEC as much. The fact that he failed to do so suggests that they were not.
This was a non-testimonial use of the Bayyouk Interview, and therefore does
not offend the Confrontation Clause.
3
In fact, at no point during the interview did Bayyouk tell the SEC that “his
trading had nothing to do with business, let alone business with Bassam Salman.”
Thus, there was no underlying statement on which the Government could have
relied for its truth. Although the sentence that Salman identifies may have
mischaracterized the evidence to some extent, that does not transform the
Government’s non-hearsay use of the Bayyouk Interview into a Confrontation
Clause violation.
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Second, Salman argues that the admission of the Bayyouk Interview
was erroneous because it is irrelevant. Federal Rule of Evidence 401
provides that evidence is relevant if “it has any tendency to make a fact more
or less probable than it would be without the evidence” and “the fact is of
consequence in determining the action,” and Federal Rule of Evidence 402
requires that irrelevant evidence be excluded. In this case, however, the fact
that Bayyouk lied strongly suggests that he knew the trading to be improper,
which, in the circumstances, reasonably suggests in turn that Salman
indicated to him it was improper. Therefore, Bayyouk’s false statements
tended to establish Salman’s consciousness of guilt, and their admission was
not in error. See United States v. Hackett, 638 F.2d 1179, 1185–86 (9th Cir.
1980).
Third, Salman contends that, even if the Bayyouk Interview was
relevant, the district court should have excluded it because its probative
value was “substantially outweighed” by the danger of “unfair prejudice.”
Fed. R. Evid. 403. Salman argues that it was unfair to taint him with
Bayyouk’s false statements, particularly because Bayyouk could have
learned that the trading was improper as a result of the SEC investigation
and not because of anything that Salman told him at the time the transactions
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took place. Salman was, however, free to the argue to the jury that any
inference about his own state of mind was unwarranted. Evidence is not
unfairly prejudicial merely because it damages the defendant’s case. See
United States v. Bowen, 857 F.2d 1337, 1341 (9th Cir. 1988) (“[T]he more
probative the evidence is, the more damaging it is apt to be.”). Because the
Bayyouk Interview was probative and posed little danger of unfair prejudice,
its admission was not erroneous.
Fourth, Salman argues that the district court erred by giving a
deliberate ignorance instruction. As a general matter, a party is entitled to a
particular instruction “if it is supported by law and has foundation in the
evidence.” Jones v. Williams, 297 F.3d 930, 934 (9th Cir. 2002). Deliberate
ignorance involves “(1) a subjective belief that there is a high probability a
fact exists; and (2) deliberate actions taken to avoid learning the truth.”
United States v. Yi, 704 F.3d 800, 804 (9th Cir. 2013). In deciding whether
to give a deliberate ignorance instruction, the district court must determine
whether, viewing the evidence in the light most favorable to the party
requesting the instruction, “the jury could rationally find willful blindness
even though it has rejected the government’s evidence of actual knowledge.”
United States v. Heredia, 483 F.3d 913, 922 (9th Cir. 2007) (en banc).
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Salman contends that a deliberate ignorance instruction was not
warranted because the Government presented no evidence that he took any
deliberate action to avoid learning the source of Michael Kara’s tips. He
relies on Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011),
in which the Supreme Court noted that the doctrine of deliberate ignorance
(also referred to as willful blindness), has two basic requirements, “(1) the
defendant must subjectively believe that there is a high probability that a fact
exists and (2) the defendant must take deliberate actions to avoid learning of
that fact,” and that “these requirements give willful blindness an
appropriately limited scope that surpasses recklessness and negligence.” Id.
at 2070. Salman urges that Global-Tech established that mere failure to
investigate is insufficient to find deliberate ignorance.
Salman’s reliance on Global-Tech is misplaced. In that case, the
Supreme Court did not alter the standard for deliberate ignorance; rather, it
imported the well-established criminal standard into the civil context of a
claim for inducement to patent infringement. Id. at 2068–69; cf. United
States v. Goffer, 721 F.3d 113, 128 (2d Cir. 2013) (stating that Global-Tech
“did not alter or clarify the [deliberate ignorance] doctrine” and “simply
describes existing case law”). Consistent with this understanding, our post-
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Global-Tech cases make clear that, at least under circumstances where a
reasonable person would make further inquiries, “[a] failure to investigate
can be a deliberate action.” United States v. Ramos-Atondo, 732 F.3d 1113,
1119 (9th Cir. 2013); see also Yi, 704 F.3d at 805 (citing Global-Tech and
holding that deliberate ignorance instruction was warranted where jury could
infer that defendant “engaged in a deliberate pattern of failing to read
documents”).
In this case, there were ample reasons why a person in Salman’s
position would seek to discover the source of the information. The
Government’s evidence showed that Salman was investing large sums of
money on short notice, in companies in which he had never invested
previously. Moreover, the information was both highly accurate and
inherently proprietary in nature, suggesting that it came from a source with
inside access to the various companies. Finally, Salman knew the Kara
family well, and therefore the jury could reasonably infer that he was aware
of Maher’s employment at Citigroup and of the Kara brothers’ close
relationship. Thus, if the jury believed that Salman did not actually know
that the information was coming from Maher Kara, then it could rationally
have concluded that the reason he did not know was that he deliberately
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refrained from asking. Accordingly, the district court did not err in giving
the deliberate ignorance instruction.
Finally, because there was no error, there can be no cumulative error.
See Mancuso v. Olivarez, 292 F.3d 939, 957 (9th Cir. 2002), overruled on
other grounds by Slack v. McDaniel, 529 U.S. 473, 482 (2000).
AFFIRMED.
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