efficiency say mr pirro and i are planning to divide the common issues in the case of course well we're ready to answer any question that the court has but mr pirro plans to focus on the issues around the failure to charge and prove knowledge of benefit and on the conspiracy issues i plan to focus on three points that like to summarize st then go into more detail on the st is that the section thirteen million four hundred and thirty three thousand and forty eight convictions have to be reversed because the government's interest here is purely regulatory not economic and under cleveland a regulatory interest is not property for the fraud statutes nd is the nd point is that the most straightforward way to deal with the section six hundred and forty one dollars conversion issue is that it has to be reverse because the government failed to prove any interference much less serious interference which is required with c m s is use of the supposedly converted rate sending information and then rd whatever else is true mr on a mr huber are entitled to a new trial because the district courts refusal to sever the visit him charges against mr blaize act the separate charges reduced and egregiousness joinder in violation of rule eight b that cannot be harmless because the government exploited it to bolster the stre suspect credibility of one witness fogel on whom it's an entire case against all on it uber rested i could turn st to the property issue i think the core point with respect to the property issue is that there's no getting around the supreme court's decision in cleveland here the interest that the government asserts is an interest in the smooth functioning of the rate setting c m s process that is one hundred percent regulatory issues they make no claim that there is any need to maintain confidentiality for in order to preserve an economic interest of the government it's a classic regulatory program exercising sovereign power in cleveland it was the state's police power here it's the federal government's commerce power to regulate rates in this area has never had any economic value before the rates were finally set in the government that's correct your honor has to have economic value in the hands of the government but have economic value to others that's for sure but that but that's precisely the argument that's a great one of the arguments that the supreme court rejected in cleveland and it said twice at the beginning of its analysis and again at the end that the question is whether it had economic value in the hands of the government the license is in cleveland clearly had economic value in the hands of the recipients of the licenses but no economic value in the hands of the government in fact here i think it's a for sure i following from cleveland because in cleveland the state of louisiana at least received it received a revenue stream from the licensees in the form of what about us for thirty cases where for example the seem situation of public contracts were for example you know a submarine contract going to be awarded to electric boat in a week instead of newport news if you leaked out the week before it certainly is economic value to hedge funds to trade in or to motor newport news house was a situation different from the us it's different in a fundamental way in that situation the disclosure of the information deprives the government of money because  is that the problem with that disclosure is then the bidders can adjust their bids and they won't be in as much money for the government contract as they otherwise would the government makes less money the statute says that it's a it covers a scheme to defraud money or property but here you don't have money you don't have property and so there is those are quite distinguishable what you have and what the governor is claiming is a loss of control in the confidential information but if one looks at page twenty three of the cleveland decision one will see that  made exactly the same argument it said the kind of fraud at issue causes us to lose control over the regulatory process control is one of the worst that the government argued in favor louisiana's position and what the court said on page twenty three is the intangible right of control is not a property right for purposes of these fraud statutes it is the government's sovereign power it's not property right and i mean i just think as i said no getting around what the what the supreme court held in cleveland you have to show to prove property i don't think carpenter the government cites carpenter but that doesn't help them because there's a categorical distinction between confidential business information and confidential government information of this kind the whole point and carpenter was that the the confidential business information had economic value to the wall street journal what was published in the herd on the street column and it allowed the journal to sell more newspapers and that was an economic value confidentiality protected economic value here confidentiality protection regulatory interests and those are exactly the kinds of interests that are outside the scope of the fraud statutes and as one last point if i could then move to the conversion issue the supreme court in cleveland said that it wasn't just rejecting the regulatory argument because it doesn't line up with what anybody understands as property was because it would be a sweeping expansion of the scope of federal law in a manner that there's no indication that congress intend you'd have that sweeping expansion here but it would be worse because in addition to all the problems that were identified in cleveland you're creating a situation in which any an authorized release of confidential government information for example by a  which is a very considerable problem now with respect to conversion it seems to me we've we've identified four separate reasons why that that conviction has to be reversed the clearest and most straightforward one i assume it is that the the government didn't show interference with its regulatory interest now that they have to show serious interference it's an element of the offense but they didn't prove any interference the the disclosure of this information didn't have any effect on the rate setting process the two thousand and twelve radiation oncology were there so many rules to keep it private to keep confidential or they take such great efforts to keep all this confidential so that they certainly have that they certainly have a regulatory interest in it being confidential but that's not the test under sixty six section six hundred and forty one this is a statute that focuses on stealing embezzling pro morning or converting money or things of value and the and the and the the what the government has to show show to demonstrate that one of those things has occurred here a conversion is that it has to show it's serious interference that prevents its it to use the thing of value in the way that it wants to use it and there's no proof of that here the radiation oncology rule was issued on time in exactly the form that it was intended to issue and i think it's important to take a house that back in and just think about what exactly they say here  the thing of value and it's that what we're talking about is a prediction or a rumor about what c m s is going to do with respect to this particular rate setting function is particular rate that they're going to set prediction that turned out to be wrong immaterial respects in an atmosphere in which there's an intense interest by lots of people in the public on what what's going to happen here and there's a lot of discussion about it and other public commentary about it and and so and that's and of course this is a r that's going to be put in a notice of proposed rule making which will have the consequence of triggering lobbying about it and there and it's not unlawful to lobby in advance of the notice of proposed rulemaking either and lobbying does occur in rulemaking their interest that they're claiming is that there's going to be more lobbying in advance of the issuance of the nose a proposed rule making that will be more targeted and i understand why they would want to avoid that but it is not it is not serious interference with their use of the information there is zero proof here and they don't and then actually try to argue that there's proof here what they argue instead is that hypothetically they have a generalized interest in avoiding this kind of disruption well i think that that can't possibly satisfy the element of the their book that their need to prove the element of the crime in this case and so on and their case really comes down to on conversion is this and i think they actually say something like this i think it's page ninety one and two of their brief that they say that the serious interference is complete at the moment of disclosure at the moment of disclosure that the serious an offense has occurred as a matter of law because at that point they can no longer dictate when the disclosure curse now a couple of things about that i don't think anybody who's understanding the word conversion what it means in common parlance would think that's conversion nd point is that if you look at the case one looks at the cases that we've cited in pages thirty six dollars of the seven of our opening brief made collins cumin there are couple of others that's not the test the test is whether it's an interference with control that prevents the owner from using it in the manner the owner wants to and here they use that information to set the rate without any fear it's the same rate they want to set otherwise on time no interference they want to set the timing of the debate right want to set the timing of the lobbying and the time discussion and that's pretty important for an agency so i think it's i'm not saying it doesn't matter what we're saying is that it's not the crime of conversion when that information was disclosed and i think it's important to understand the implications of that might have a different value to the person who's doing the converting it doesn't have to be the same value to convert and victim doesn't know it does not but what it does have to do is prevent the victim's use of the information for the for for its intended purpose and it doesn't do that here the intended purpose of this information is to assist in the rate setting function right but this is a conversion requires them to sort of engage in a dialogue about rate setting because potentially sooner that's a hypothetical interest but beyond that your honor i think it's important to consider the implications of that view of section six hundred and forty one and it's this and that view if the convergence complete upon disclosure of an authorised information  of confidential information our unauthorized disclosure of confidential information that every single time a government federal government employee discloses confidential information in an authorized manner it's a crime every single time by definition on their theory as i said it's complete at the time of disclosure so every time a whistleblower contacts a journalist or url whistleblower with an agency contacts a member of congress about something that the whistleblower thinks is going wrong that's a crime and  you know for those of us of serving the government know how much information in the government is labeled confidential and every disclosure is a crime under their theory so and so and it's just unimaginable that congress intended such an extraordinary sweep in this statute not to mention the fact that it would wreak havoc for example every disclosure of confidential in five of classified information would be a crime of conversion of the statute for sure but there's already a finally were to kill a good scheme a federal criminal statutes that provide the classified information is a crime was disclosed in some circumstances but there isn't a general criminal probation against the disclosure of classified information and that whole system would be thrown completely out of whack because every one of those so whatever else is true here there was an ingredient violation of rule eight b by joining the visine counts which are counts only against mr plays act with the rest of this with the rest of this cat case with the rest of the only common participant in the scheme was place at the company we mentioned these are the things they did not overlap in terms of time and that's why i raised that that's not accurate as well that well in the trades that were the basis for the claim against mr i think it's accurate in the sense respectfully on in that the that trades that were there st the transfer letter the trades were in two thousand and thirteen based on information based on two thousand and thirteen information which is why i think there's no connection but beyond noise that was still the key player using his role as political intelligence consultant and his connections with c m s to nokia's research sources i'm quoting from the government's brief so there was considerable overlap in what was going on with the information right respectfully no your honor the only point of overlap is plays at himself it was different information with respect to the deerfield traits in the visine traits it was a different it was two thousand and twelve radiation oncology unit their field this was get this wrong spoke spoke up and spoke conspiracy i mean it was that was just two hours i think that's quite a limiting the district judge said at the he refused to sever on that ground at the beginning so they might they might be able to be connected up but then by the end of the trial he held that the government failed to establish that and when we asked for a mistrial or limiting instruction he said well there was no common scheme there was no haven't spoken spirity he failed to connect it up but i'm not going to give you the limiting instruction anyway and you know the government might if it is there have been a limiting struction which you know at the beginning of the case the government said there could be a limiting instruction to change its mind at the end of it by the end of the trial and maybe if they if the of evidence in a missed joiner situation like this one has been upheld as harmless error on the burdens of course on the government on that and if i could i will wrap up if i could just make one point which i think is critical to understand why this can't be harmless error that government for for months and months and months right up to the time of trial had all kinds of other problems facing some very serious jail time his credibility was their whole case and it was extremely suspect and what's critical is to look at the way the government used the visine evidence and its closing argument and this is seen most vividly at page one thousand and thirty two of the joint appendix what they did was use the visit visine evidence to bolster phobos credibility there was a person from his in name playford he's the person who testified at the trial what he testified to was that an understanding that place x information was being received in unlawful way and the government said not once not twice but four or five same thing happened over in this other hedge fund so you can believe fogle seems to me in that situation there is no way to conclude that that's harmless or oh i mean i think an argument could be made that some of the evidence was still coming and even if it had been coconspirator evidence no overarching conspiracies and could have come in on that ground for a for be evidence but that would be admissible only against only against mr blaize act because of the mr plays acts more of an opportunity and then that they could argue that i suppose that it had some marginal relevance to some overall scheme but there wasn't an overall scheme that's what the district judge found at the end of the trial there was an overall scheme and even if there were no prejudice of introducing that evidences in the way that i just described overwhelmingly strong and outweigh its marginal relevance but the test is different here because we're talking about establishing harmless error and so the burden is on the government to show harmless error beyond a reasonable doubt  fraudulent unless the temper breached a fiduciary duty for personal benefit the court emphasized that this personal benefit requirement is essential as a limiting principle to guide investors and avoid chilling analysts from  out information necessary to the efficient security markets ten b five languages broader than the title eighteen fraud statutes and nothing in dirk's or its progeny suggests that fraud could possibly mean something different in other statutes yet after decades of itself agreeing and indeed arguing to the supreme court that the meaning of fraud is consistent across the federal code when it comes to insider trading now the government seeks to imprison traders for quote unquote fraud that the f c c could not sue them for that argument by the government contravenes the controlling authorities and it would also defeat the policy rationale under one roof carpenter how do you get a carpenter where the situation they didn't say you have to graft upon where mail from title eighteen the insider trading elements respectful your honor no so st of all two points st of all the reason the court deadlocked on ten b five and carpenter had to do with whether the question was whether any fraud was in connection with securities in the supreme court took up that issue and o'hagan and agreed that it was it was that was the briefing in the case that the issue was was about a dispute about whether there was an in connection the fraud was in connection with the purchase or sale of securities and and the government's brief in the case argued that as to fraud the element was the same for all of the statues secondly the carpenter opinion itself fully supports our argument and in number of ways the court makes clear that what is fraud is when a person acquires information through a fiduciary relationship and is not free to exploit that information for his own personal benefit those are the words in the case the court cites several of forty's and all of them are completely consistent with the notion that the theft of information has to be for some kind of personal benefit or personal profit there's a case called the shine that the court cites an old supreme court case interpreting a criminal embezzlement which was about an employee stealing money from his employer the court also cites new york state case law for the proposition that where an employee exploits information  to his or sorry where an agent of exploits the principles information for his own personal profit he has to account to the principal for the profits the entire common law theory behind this doctrine that that set forth in the carpenter case is the notion that you can't use your fiduciaries information to profit from it even if there's no direct harm to the video share in the last authority the court cites is from the restatement of agency which actually has a comment that the court cites on the use of confidential information which uses two examples one of which is an insider trading example where confidential corporate information is used by someone to trade and profit most of the cases in exactly that somebody disclosing information to tip or disclosing information for a benefit usually a financial one but i'm curious so i imagine i pathetic we've got to do have to have an idea about how to get fund targets greedy individuals people who are willing to disclose nonpublic information of the corporation for money the keirsey he fund goes after disgruntled employees those who feel they've been passed over treated poorly and who might be willing to disclose information because they're pissed off at their employer your view is that the dron group is engaged in securities fraud but the curious group is not not necessarily your honor and just if i could make one thing clear i'm not really arguing the salomon case so my point is that carpenter focuses on these not know i think probably not and indeed that's actually not that far off from the actual facts of the darks case because in the dirks case the initial tipper was a fired employee of this corporation and he gave the information to this fellow dirk's fully intending that dirk's would share it with his clients and they would profit from and indeed they didn't and they made you know something like seventeen million dollars and so yet the court a personal benefit and the court said as the court said in dirk's it's this is an essential limiting principle the soundman court picked up on that as well this holds that the disclosure of confidential information is not enough and that dirk's created a simple and clear guiding principle for determining to be liability which is the personal benefit test and the government's theory would turn that on its head by simply enabling the government to use these there are statutes to prosecute people who are not violating the securities fraud statute anything in the text of the statutes that suggests this additional element well the insider trading laws to be a judge made law that's evolved over time that's what makes it so fun for there's nothing in the text that would otherwise indicate that it would be a crime for a remote to trade on information from a consultant who has information that can't may come from from the government there's nothing in the statute that would possibly indicate in the one that you want to additional element to be instructed on additional element no your honor the element is the scheme to defraud and the question is how is the scheme t defraud defined and it's well settled in that that district courts are required to provide particular guidance on what is a scheme to defraud in different contexts so an insider trading it's been settled for forty years that whether it's mail or wire fraud or ten b that you have to have these elements to prosecute remote tippi the government never challenge that until around the time of this case indeed not only did the government never challenge it when they used mail and wire fraud with securities fraud in the eighty's and early ninety's these elements were part of the instructions they did even a newman in the stewart case in the waters case they argued to the supreme court that the elements are the same whether using mail or wire fraud to tenby the elements of fraud what is fraud so this is just it's not an extra element it's just like in an is case you have to explain to the jury that there has to be a bribe for example that's just we have a couple of other examples in our brief of other types of fraud where it's well settled that courts have to provide additional guidance and that's what we're talking about here  the court specifically held that the ten p five fraud in this context is of the same species as the male and wire fraud in carpenter and again talked about it in terms of  this and that legislative history the alleged hit leslie history says we were trying to broadening to trying to broaden the powers prosecutors to prosecute securities fraud cases so we're taking up the purchase and sale requirement is there anything in that legislative history  suggests the are right about the turks components being elements of of these two statutes i would actually respond in a fine way i think the legislative history strongly supports that the purpose of the statute was not to eliminate those elements in insider trading because the and the statute had nothing to do with changing any elements in insider trading in fact it's clear as your honor pointed out that the purpose of the statute was an act in the wake of enron was to make it easier to prosecute certain kinds of accounting fraud and other for rodd's without having to dealing with the in connection with and indeed the legislative history and talks about the fact that at that time there was a case called s e c versus zan for court of appeals had ruled that the in the purchase or sale requirement was very narrow and didn't cover the case the supreme court later reversed that but in the interim the statute was in acted precisely to deal with that problem and also the legislative history talks about how in these kind of complex accounting fraud cases they don't want prosecutors to have to worry about proving a mailing or a wire the u s attorney's bulletin which is cited i believe in mr owens briefs as well as the amicus brief one of the amicus briefs also says nothing about oh you know here you go you have a statute will help you prosecute insider trading cases to the contrary it talks about the in connection with requirement the mail and wire fraud requirement the fact the penalty went up a little bit and it also talks about the allowing prosecutors to focus on the scheme to defraud rather than technical books or record books and records or in internal controls violation issue so the statute had absolutely nothing to do with insider trading moreover in terms of textual analysis this statute is if anything a little narrow or than ten b five i mean these statutes are all very similar to the ten was based on mail in wire fraud and one thousand three hundred and forty eight was based on a mailing wire fraud and so they should all be interpreted consistently when it comes to this type of fraud i know i'm way over but i just like to spend a couple minutes on  there wasn't no agreement to para obstruct or defeat the lawful functions of c m s it is undisputed not only that c m s went to bat its business irrespective of the defendant's conduct  but nothing deerfield did had or was intended to have any impact or much less negative impact on see mrs work it obstructing c m as you say they have to intend to interview well there  there has to be proven agreement and that the per the intent of the agreement is to impair obstruct or defeat the lawful functions of the agency that's the government's burden so i'm i'm just pointing out  only was there no such interference c m s went about doing its job nor is there any suggestion that it would have been part of the defendant's goals to to obstruct c m s if anything that would have been contrary to their aims  it's obviously not illegal to obtain leaks about potential policy changes or to lobby in favor of them and i think one thing that that i do want to stress that c m s is a different agency from some of the types of agencies involved in the cases in this area so it's an inherently political agency and the policies it's making are basically about how to divide out federal funds there it's not a law enforcement agency whose activities are going to be forwarded by the disk premature disclosure of investigatory information it's not an agency like the f d a that has to make scientific decisions and that would be tainted by under two political in for an influence on the contrary its mission cannot be performed without a dialogue with the public in many stakeholders and the record is replete with numerous examples of that we shouldn't have any control over when that dialogue takes place conversation that mr blaize x starts out by saying that of course he's not asking for what mr rosen's recommendation is going to be and then he provides an some information which mr rosen last e mail i was comfortable doing this and he said something like i'm sorry and he says i'm like i'm uncomfortable talking about this information with you know he said that he said that he agreed with mr that as mr boies that recognize that he couldn't share what his own recommendations would be but he thanked him for the information and then he forwarded on to c m s and so there's just and i would add that that if that type of an e mail were criminal then there are numerous other criminals out there who talk to c m s on a regular basis and lobby c m s and and that would raise serious st amendment concerns that would raise serious concerns about democratic discourse along the lines that that chief justice roberts spoke about in the mcdonnell case and it would the court has to interpret the statute more narrowly to avoid constitutional problems one last point if i may because of that concern the copeland case talks about that the in re grand jury proceeding case that we've cited and the statute is has usually been used to go after things like people bribing government officials to falsify good morning your honor i represent mr place and and i will focus on the insufficiency of the evidence at trial to prove the the the case even as charged the government had to prove beyond a reasonable doubt for all the counts charged that mr blake received confidential information from an unauthorized c m s insider the evidence failed to prove this with regard to any of the rules in the government's case came down to he s share data and its public use files specifically to allow the public to quote have similar if not the same data that c m s uses in its rate setting process so the public could replicate the changes to the rates that c m s is proposing in other words the public in the industry were supposed to be able to figure out where c m s was going and what was happening and have input into those there was a lot of exchange back and forth place a gave information to c m s c m s people gave some information to him but authorized information someone had to read that this data that was all out there and published for the public it was complicated somebody had to read and understand it that was mr placing he'd worked at c m s and understood the data and information that it used and like many health care consultants he tried to project for his client's regulatory changes his predictions were sometimes accurate and sometimes not critically the oven showed their own each rule lasik predicted correctly only the portion of the rule determined by published data or recommendations and that he was wrong about the other parts on radiation oncology there was no evidence that warrigal actually gave lasik any information about it the evidence established that world really didn't know anything about the rule he didn't work on the rule he was on no email lists no meetings about the rule there was no evidence that he discussed it after this  out all the time throughout this this whole process he was he also was not in a position to know what was confidential for example he got it wrong that's one thing he says information was confidential and nonpublic but blasi didn't tell him that blaz told him i'm talking to people at c m s where i was at c m s nowhere in the record is there any admission in an e mail or even to even made to fogel that place except the word nonpublic or confidential all he talked about was his from c m s so it's fogel's inference for those assumption that information was confidential and he was wrong about that we can see that he was wrong when he says that he got inside see him the e s r d prediction was based on inside confidential c m s data in fact that that out it was public that bloom testified only on cross examination did all this come out that that that data was published all the way through the end of december two thousand and twelve which is what the rule was based on it was posted on c m s is public website all of it so so father was wrong on that just like samuels was wrong when he said we had a lot of we had confidential information what was confidential the kidney care slide presentation no it wants to characterize it but what actually happened that i couldn't find before and as you clearly understand i cannot share with you our recommendations because lasik had already told him that but he's just responding in his initial in his initial e mail to rosen blaise exactly this is who i am and i'm not asking you for your recommendations but i'd like to give you some information about myriad genetics which it has ninety percent profit margins here's a such a study deerfield has has done you should know this you should consider this in your analysis rosen wrote back thank you very much i'm sending this on  house well i think it was someone at c m s and as you know i cannot discuss my recommendations but that's it that was the whole exchange nobody thought there was anything wrong with this nobody until the government brought this case that there was anything wrong with this this was sent and household larry hart testified that he understood that happen he didn't see anything wrong with it this was a this just a lobbying effort there wasn't even a request for information so that was really nothing that was really that that claim about neil rosen was was turned upside down from what the government thought it showed when in the testimony came out so i'd like to go through the rules radiation oncol there was no evidence as i said that more on the anything about this so the government's theory was that world must have to play sick about the radiation oncology cuts because lasik correctly predicted the precise cuts in treatment time of thirty minutes fact to be proven that world gave lasik the time cuts must be logically based on the facts proven his specific prediction and the may th meeting in either fact can support that inference on the specificity of the cuts on the one hand you have no evidence that we're all knew anything about that on the other hand you have the exact treatment time cuts were recommended by the major medical societies and their recommendations were published and circulated health care industry including on radiology dot org available to all at least as early as mid april well before place six prediction c m s simply adopted those recommendations actually gotten the rule right why did they short that's what they do i mean there is a hedge fund they short stocks  short but that wasn't that wasn't as much as they could have me i mean they try they they they trade in large they have a large volume hedge fund so if they make two million dollars is not a huge amount but on any particular trade the testimony was that they were a little disappointed on how much they made because actually and this is crucial place a got half the rule wrong the rule the part of the rule that wasn't based on published recommendations because aside from those public recommendations his predict he predicted that the cuts those cuts which were published and recommended and was really a foregone conclusion that those particular cuts would be adopted because they were the medically necessary times he predicted that they would apply to all sites but c m s only applied the new rule to freestanding sites not hospital based sites which were actually the majority of sites now this wrinkle had major market significance for his clients fogel was particularly concerned to this information and hounded him for maybe a month it's on the record to get back to him on whether this rule would apply to all sites one place that finally did he was dead wrong no one gave him a copy of the rule they couldn't have if he had the inside scoop he would have no without more still it's rank speculation what they talked about at all they could have talked about baseball they could have talked about nothing maybe well just signed him and there was a meeting at c m s that day where all of the high level people people who plays it everything he was a capitol hill staffer and any discussion even of the most general kind like c m s is really going to topple treatment times this year would have referred to the a c r recommendations they were published they were they the they were the guide the guiding force behind this behind this rule change the how how the jury convict you basic of these counts is a mystery because the government's only theory was that world gave basically the confidential information again the evidence showed that place it correctly predicted that part of the rule determined by published data and was wrong about the other part congress authorized a reduction in payments of up to twelve percent c m s imposed the full reduction based on publicly available data that it collected on declining drug use this data and there's a lot of evidence this data was available and seen as his own public use doubt and i posted publicly all the way through the end of the doesn't say that that he said it was confidential he assumed it was but it was not it had all been published an e mail showed lasik and you start where this is that eighty three thousand so my main point is that the got there was no direct evidence at all that any particular person gave any piece pacific piece of confidential information to mr place like it was all based on inferences from facts that could not prove those inferences because there was on the one hand published data that lasik had every reason to know about and certainly didn't know about and and then there was very flimsy evidence like that he met with someone no evidence of what they discussed that day to support the government's inference and where the evidence is even equal there is insufficient evidence to convict here it was not even equal it was more likely if you look at all the evidence that mr play six predictions came from the published data and he put two dollars and two dollars together he knew this little bit this little that his job was to put it all together and make a prediction oh for apollo christopher world you are so however you resolve the common legal issues that you were discussing earlier this morning i'm here to discuss a separate challenge raised by my client that independently requires reversal of his conviction the government had to establish two propositions in order to prove its case against chris was that he knew what the rate the twenty two dollars already ation oncology cut was going to be and he tipped it that we get into the details in a moment but as to both  the evidence the government points to in the five pages of its brief on this it's one of two to one of seven of the red brief the evidence the government points to adds up at most to  it's possible but maybe and possibilities do not suffice to sustain a criminal conviction let me start with world's knowledge or rather lack thereof the government has no plausible theory for how the world learned what the two thousand and twelve radiation oncology cut was in the st place it had a theory at the beginning of the trial but that's the theory there were learned about reimbursement rule changes from his work on the claims monitoring project collapsed on cross examination of the very  witness so instead on appeal another government or use that will have access to the two thousand and twelve radiation oncology code what it really means is that world knew people who knew and that is not the same thing as knowing the information yourself and it's particularly implausible in the context of the evidence as a whole your honour's that we're actually actually knew about it so consider what the government is not in dispute and we laid some of this out on the st page of our reply brief world did not work on on its own terms main source is not a phrase that comes from the mouth of any witness about world it's the government's phrase in fact if you do or do a phrase search of the trial transcript you'll find the phrase main source appearing exactly once in connection with st world  th and john one was very very clear he testified multiple times that by by presenting information at the key c p meeting he was making it public so he said for example that a for a for ninety three of the appendix presentation like that essentially making this information public wouldn't you response yes and moreover worl knew this because he was at the presentation as is clear at page four hundred and ninety eight of the appendix  so i think it's very telling that the only example of information the governor has any evidence that plays ever got from world is information that was already public and it's very important as my my colleagues on this side of of the days have already made clear to recognize that this case is about the interaction between c m s and the political intelligence profession and information sharing is going on all of the time so for political teligent a consultant to have have sources or talk to people to attend information there's nothing wrong with that and that wasn't the theory of guilt of the government advance their theory was narrower it was about predisposition information to make this very clear on page eight of their opposition brief on appeal  and so what they need is an example of world actually providing pretty decisional information the content of proposed or final rules before their public release and they don't have a single example of that  you know on on that sort of on the world side if you like but on the blaze that side as well i think it's also important to recognize the place that had many sources of information including legitimate sources we have a lot of examples of that which we  you have twenty minutes thank you may please the court sorry for the united states of america now the evidence was certainly sufficient here to permit irrational juror to conclude there was misappropriation of highly confidential market moving reimbursement rate numbers for the purpose of trading in the market and i'd like to begin with the some of the sufficiency issues that have been raised and then move to the heavier legal issues it was clear that he had access to folks who were briefed on the radiation oncology rule the proposed rule and that's for example government except exhibit one thousand four hundred dollars it's an october two thousand and eleven email from bla  act to his partner samuels describing the access that mr worldwide now then i just want to just walk briefly through the chronology here in late april of two thousand and twelve the happy group which has held this information internally for some time without leaks releases the briefing papers internally within c m s to over one hundred people the initial tip here is not well the information is within habsi it is after that once it's been released in the briefing papers it happens on may th which is when warren meets with boys act for lunch range as a lunch with warhol at c m s on june nd place axons in to c m s it's not clear there was time to actually have a lunch with world but he had time to connect with him long enough to then hear the news that he immediately reports back to deerfield which is he checked in on radar and no news yet blaise act learns that the f c c is investigating him who does he tell apple he called it c m s warrant to check and see if authorities were sniffing around when he's confronted by agents moral it begins by lying about his relationship with police that he says that he only discussed sports it's only when he's confronted with the sign in information from c m s that he acknowledges he spoke about the agency generally and the significance of one of the significant points of this february th two thousand and thirteen briefing deck it's a briefing deck that was supposed to be for john bloom it was presented to john and the evidence is very clear that worl is information that's in that deck and say well that could have come from from some public source that you know that information could have been accessed elsewhere or it was made public at some point but john bl testified that he viewed that as highly confidential and that it gave a roadmap for how the agency was thinking about the proposed change in the rules or also when he was confronted by agents i'd like to touch briefly on the miss joinder issue next this is a case that involved not just a common defendant between the two schemes it's the same victim the same species of information there is commonality in information between the two schemes the two thousand and thirteen home health data for example those tips were were given both to focal and to play for so there's commonality there and it is the same timeframe so there was there was instruction well i think that issue you only reach if if you determine that there was in fact a mis jointer and then the question is whether the mis jointer was harmless we submit this is there's really no good argument that this was powerful evidence against all the defendants in the deerfield scheme one of the defenses that they raised a principle defense was well the information from lay's act was all public was public information was coming from address the property issue mr verrilli has has argued that cleveland controls this case and in their briefs the defendants also cited the nd case those cases have nothing to do with this one those cases involve as yet an exercise to government authority to do something here there is property that already exists confidential highly market moving information and it would be property in the hands of blue cross blue shield its property in the hands m s and there was an argument that there is no economic potential for economic harm to c m s here through the release of this information of course there is c m s c m s is an agency that is paying medical service providers such setting the rates for how the government is going to pay medical service providers from from government coffers so if can't do its job which is to effectively promulgated rules through a fair process that has equal participation by all stakeholders this is not a case in which that concern is raised of course there's no there's no st amendment claim that's raised by these defendants they don't have a st amendment interest here this is not a case in which there is public dissemination of the information and i think the court's discretion and jeter case makes this distinction well here the defendants of course are disclosing the information and using the information secretly to profit for private gain if there were a public dissemination concern right then there might be some st amendment issues that come into play they're not in play here likewise merely disclosing information it's not clear that that necessarily is misappropriation just the disclosure no we think it's a serious interference to disclose there has to be a misuse right and i it's not clear that dirk's the darks case the supreme court observed that there was no misappropriation in that case so it is signaled that you know facts that involve a whistleblower it's not clear that the wire fraud statute would necessarily r but that's not this case it's really not this case on on the serious interference point argument is that serious interference is inherent in the disclosure for trading purposes of highly sensitive economic information going to the core of the agency's function that's the argument i believe it's supported by the cases none of the cases that discuss confidential information under six hundred and forty one discuss this serious and for interference element because it's in its it's inherent in the nature of the conversion that there was i mean again we think that we didn't have to prove more then that there was a misappropriation for training purposes of confidential information going to the core of the agency's function that was our position we think that's still correct we did nonetheless prove that there was interference with the agency's function in a broader sense and that was corrupting the fair process that's used to get to these rules the reimbursement rate rules now it is true that we didn't prove that the entire system collapsed but i will observe that that mr bloom testified for example that in response to the two thousand and twelve leaks they did tighten their controls they did have to tighten the channels through which they just they they discussed this information internally within the agency and blong and hartsfield and all testified that that was a harm in itself to the agency because now personal benefit i'd like to address that next the instruction that judge kaplan gave for the wire fraud and the one thousand three hundred and forty eight counts was that the jury must find quote a fraudulent appropriation to one's own use of the money or property entrusted to one's care by someone else that's transcript three thousand nine hundred and sixty nine in any other misappropriation case under that instruction would suffice there's really no debate about that so if oral had given the information to blaze act to sell to someone instead of trade on the market that instruction would suffice so that's our point extent there is a difference the dirks test for personal benefit should not be imported into one thousand three hundred and forty three dollars and there are some reasons for that i mean there i think the court was there's a peculiar history to the dirks personal benefit notion as well that arises from an agency rule the katie roberts case agency decision interpreting agency role at the in the backdrop of section twen transacting and it's a duty not to gain personal advantage by using inside confidential information that's where the personal benefit element arises from in jerks and and the securities fraud title eighteen they said the government will rarely if ever have constant charge an insider trading offense under title fifteen when it can prevail without proving the traditional insider trading elements by charging identical conduct as wire past even if it has a broader scope in some ways it doesn't you know if there's some conduct presumably it can't reach that's under ten b for example ten b has a different has a different scienter the government can charge both one or the other or both i would also note that this issue came up in some variant in the o'hagan case there was discussion between justice thomas and justice ginsburg about the fact that the concern that the wire fraud statute or that the f c c might not be able to reach some conduct that the criminal statute could both sides agreed that was not a proper consideration in construing the statute at issue what's your view required under section b which is the connection with the securities but i still think that it's carpenter is very clear that this kind of conduct is prosecutable under the wire fraud statute even if section ten b doesn't reach it despite the best of intentions federal laws may have helped create an environment in which greed was inflated and integrity devalued now that doesn't capture just accounting fraud and capture its insider trading make one more point mr pirro has argued that the government for many years has been arguing that has been taking a position contrary to what it's taking now about personal benefit and that is simply not true the government's position historically and soundman in every case has been yes personal benefit in the dark sense should be construed to mean the same thing as personally use in the misappropriation sense when it's a misappropriation case that has been the government's consistent position now the courts haven't fully accepted that but that's the government's position and it hasn't been accepted in the ten b context we acknowledge that if the court will permit me i would like to briefly address some of the knowledge issues that i expect my colleagues will raise when they stand up again because one of the big arguments that is made in the briefs is that judge kap instruction the court required knowledge that the information was used in an authorised manner and in a way that seriously interfered with the government's right to use and control that property that's transcript three thousand nine hundred and forty five and then for the wire fraud in the and forty eight instructions the court instructed the defendant must have acted knowingly and willfully with knowledge of the fraudulent scheme and with the specific intent to defraud with the fraud having just been disposed to find to mean fraudulently misappropriating to one's own use confidential c m s information and trusted to one's care and that's thirty three thousand nine hundred and sixty nine so the court did instruct that huber and alone in particular had to know about the breach in order to be convicted and they did know they did know the relevance of these rows and part of the relevance of these niles rosen emails is that huber and all and focal all trying to get information out of mr rosen sure they might have been trying to lobby him to maybe but the way they're discussing it amongst themselves they're trying to get this information and they get shut down they all know they're getting shut down because he is a c effectively a c m s employs a c m s contractor for these purposes so huber no longer very well aware that c m s employees are not permitted to disclose this highly confidential information about reimbursement rates focus testament money of course also supports that they also knew that the disclosure were deliberate rather than negligent or reckless in any way and that's because of the repeated nature of the disclosures and that i think is is highlighted by the radiation oncology print ology that i went through earlier the  going in repeatedly to get follow up information from oral humor and on also knew that place that sources were former colleagues and friends at c m s they did know that about the sources and they would know what he did for a living so they would have interest anticipated the trading i think the last topic i would like to have briefly is the klein conspiracy count and this is the one that was addressed by mr pirro i think that the house and the pelts cases are are absolutely cover this situation and the notion that the statute was vague in any sense as applied to these defendants is is simply can't be supported in light of that longstanding precedent now haas did involve in a couple of the counts of bribery and falsification of documents but as this court explained in pelts later it also involved counts that did not have those additional plus factors was simply conduct that was almost identical to the conduct here which is the leaking of sensitive information from a government agency for the purpose of trading and pelts likewise involved a similar situation leaking of government c information about a target of an investigation for the purpose of trading and both of those cases pelts in particular makes clear you don't have to prove that the defendants intended to stop the agency from taking the action that it was going to take that is not the obstruction of lawful lawful purpose that they're talking about here or obstruction of government function the obstruction of a government function is similar to what it is here the misappropriation of confidential information highly market moving confidential information that's in goes to the core of the agency's function in promulgating rules in a way that doesn't disrupt the market because we do have other arguments today for sure i was like really if i could one point on each of the three issues i spoke about my opening on property the government's made this argument well that the fact that the information exists means it's property but under cleveland the in the confidential or not it has to have economic value this court said the same thing in fountain it's said to establish property under the wire for a mail fraud statutes monetary loss is the critical indeed perhaps threshold consideration monetary loss so there would have to be to the government i mean there's no question it's information and economic value certainly due to the government yes to the hedge funds but i thought you said it also has to have economic value to the government is the record that's the precise holding of cleveland your honor and it's exactly why in fountain this court said monetary loss to the government is the critical indeed perhaps threshold consideration in the stand watching property under these statutes and there's a reason that the that the this court leaking that information would never be actionable if there might be actual money or some other offense but it is not a it's a not a scheme to defraud the government property it can't be under the clear definition here and i think there's a there's a paragraph and in cleveland this just critical it's a tellingly the government nowhere alleges that cleveland a fraud of the state of any money to which the state was entitled by law if cleveland at the fraud of the state of property the nature of that property cannot be economic and then therefore it cannot qualify as property under the statute it's just right there plain as day in addition the government wasn't able offer any limiting princip and they just said well it's not this case but with respect to the st amendment kinds of implications and frankly beyond that the just the huge sweeping expansion of scope of federal power whether or not there's a st amendment issue here it could certainly exert a chilling effect as well as having all the adverse consequences of a sweeping expansion identified in cleveland now with respect to serious interference conversion point the government's admitted  that they're there test is that if confidential government information is disclosed serious in from interference occurs at the moment of disclosure but the test on of the cases that we've cited in our brief and soon it has to be the test of what another gigantic sweeping expansion of federal law is it has to be serious interference with the thing of value that is allegedly converted us to be serious interference in this case with their prediction about c m s rates ending information and that is not what they claim is serious value is it is is the value that seriously interfered with they claim a collateral effect on the regulatory process it's not serious interference with the thing of value and that's the crime under six  that's serious that collateral serious interference which shouldn't count we submit is there's zero proof that there was any such interference here rule issued on time form they wanted proof that it had any serious general interfering effects it had this interference neither of them were employees of c m s they hadn't and they had no reason to think they had any understanding of how c m s operated or how this could become being an instance of serious  eight b says you can have it join or if it's the same act or trans action or series of acts or transactions constituting an offense or series of offenses it has to be the same act or transaction you can't be some overlap has to be the same after transaction that's the text of the rule and there's no argument here that this is the same act or transaction and if you want looks at the cases from the circuit that the government is cited and stars in the other ones and stuff here was that your court found a common scheme or conspiracy little scheme or a conspiracy the very thing touch kaplan said didn't exist here and the other two it was virtually the same as a common scheme because they were the same participants working two schemes designed to yes but the court the district court said that the government failed to establish a common scheme or plan here that's what judge kaplan found at the end of the evans he let this go forward without severing because he thought the government might prove a common scheme and at the end of the case when we move for a mistrial or for limiting instruction he said well the government has failed to prove a common scheme he found that and so that's why the miss jointer is clear here and then you get the prejudice and then respectfully i would submit that judge ronnie your dialogue with the government demonstrates why he was prejudiced went right to fall going how important focus testimony was and all of those issues that your questions identified and that's the whole point his very quickly just a few points st with respect to the dialogue we've been having about the st amendment i want to be clear on two things number one it's not just publication of information we're talking also about just the constitutional principle of democratic discourses as as is discussed in mcdonnell and the government talks about all these defendants didn't have a st amendment interest in the clarke fee martina's case supreme court case cited in the briefs it's the court holds that this is a constitutional avoidance can of statutory construction and that the court has to adopt by construction to avoid the problem whether or not these constitutional problems pertain to the particular defendant it's a tool for choosing between competing interpretations and the litigant is is invoking his statutory rights he doesn't have to be invoking his personal constitutional rights secondly with respect to the personal benefit issue i think the government actually effectively conceded the point in a way when eddy's invoked the dirt's case and said that that whistleblower wouldn't have been violating the wire fraud statute  and said that that reasoning applies to the wire fraud statute now the government can't can't have it both ways in at regard and i think it's very clear that ten p five is modeled on mail fraud so the fact that mail fraud was an act earlier is neither here nor there and the o'hagan discussion that my adversary referenced actually i think supports the point that the court was looking at mail fraud is similar to to ten pertains to the title eighteen fraud counts you'll search those instructions in vain to find anything specific regarding the knowledge of the remote hippies and what they had to know and it's abetting requires actively participating in a criminal venture with full knowledge of the circumstances constituting the charge offense and full of awareness of its scope you will search the record in vain to find anything remotely approaching testimony that the purpose of that interaction was to influence mr rosen and if you read the e mail in its entirety it's entirely consistent with that and the hatch haas and pelts cases both involve bribes  involve a bribe to a law enforcement agency to get premature disclosure of information about a pending lawsuit finally i just urge the court to keep in mind that if the government's position on the title eighteen is vindicated here evade the requirements under the insider trading law the securities laws and it will be able to prosecute people for conduct that the f c c which is the expert agency in this area charged with from as its presentation here that the government's case for that for that fact has come down to the february nd slide deck that it still claims is confidential st the slide deck had no information about the actual rule nothing had confidential he acknowledged that every single thing in the slide deck was public and if you read those pages you see what it is it's the statute the regulations last years wrong the g a o report public materials so just putting together a bunch of statutes and regulations into was like dec and putting a confidential label on it doesn't make it actually confidential if one had his way every single thing uttered in c m s would've been confidential but it wasn't really confidential because they were released he released things himself he released a more substantive slide back on march th to the public decide to release it and released it the truth is what happened in this case the government's whole case on the deerfield counts that it depended on its claim that world was the tipper and that in turn depended on these two slide decks that all fell apart on their st witness on cross examination of bloom when he admitted that every single thing in both of those slide decks had been made public before world ever gave them to play sick now on the view just a quick point on the visine counts no that cannot prove that the source was an authorized because it was testimony that high level people were authorized to give information back and forth and bloom testified that he decided on his own to reveal a lot of information to the kidney care presentation there was no rule saying when he could do that and who else could do that so we don't know who the source was if it was somebody high level at the head of a policy group that could have been authorized so those counts were really blatantly insufficient in the center for medicare leadership on the on the knowledge point which again there are two separate propositions the government has to establish knowledge and tip and on the knowledge point i think i think the government is trying a new theory of knowledge at all aren't we but it's no more successful than any of the other ones i think what counsel is saying is that habsi was briefed on the radiation oncology rule in late april of two thousand and twelve and the rule is not released out of happy into the wider c m s of the appendix she makes very clear in looking at one of the government's exhibits which is an h h s briefing paper in other words a briefing on the radiation oncology rule to the department of health and human services not just outside of happy but outside of c m s entirely right so the rule was that was had had been briefed to others beyond happy well before may th moreover however like every other briefing paper that mentions radiation oncology like every other document in this case the mention of radiation oncology christe world is not on that briefing paper and that goes to the nd problem with the government's new theory of knowledge which is that there was no point at which the rule was released into the wider c m s world is blown testified it was kept closely within what he called the clearance chain and world was not in the clearance chain just very quickly on a few other points the government ma that world has just signed i just created a written record of the fact that he met with blazing and especially in light of the fact that there is no evidence the world knew the radiation oncology information not at all in this