Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-08-01072/USCOURTS-ca7-08-01072-0/pdf.json

Parties Involved:
John A. Boultbee
Appellant
United States of America
Appellee

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 07-4080, 08-1030, 08-1072, 08-1106

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

CONRAD M. BLACK, PETER Y. ATKINSON, JOHN A.

BOULTBEE, and MARK S. KIPNIS,

Defendants-Appellants.

____________

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 05 CR 727—Amy J. St. Eve, Judge.

____________

ARGUED JUNE 5, 2008—DECIDED JUNE 25, 2008

____________

Before POSNER, KANNE, and SYKES, Circuit Judges.

POSNER, Circuit Judge. At the end of a four-month trial,

the jury convicted the defendants of mail and wire fraud

in violation of 18 U.S.C. § 1341 and Black in addition of

obstruction of justice in violation of 18 U.S.C. § 1512(c). The

judge sentenced him to 78 months in prison, Atkinson

and Boultbee to 24 and 27 months, and Kipnis to probation with six months of home detention.

The defendants were senior executives (Black was the

CEO) of an American company called Hollinger InterCase: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
2 Nos. 07-4080, 08-1030, 08-1072, 08-1106

national, which through subsidiaries owns a number of

newspapers here and abroad. It was controlled by a

Canadian company, since defunct, called Ravelston,

which in turn was controlled by Black, who owned 65

percent of its shares. (In between Hollinger and Ravelston

was a holding company that we can ignore.) Black effectively controlled Hollinger through his majority stake in

Ravelston. He owned some stock in Hollinger, but a

much higher percentage of the stock of Ravelston, in

which Atkinson and Boultbee also owned stock. So it

was in his and their financial interest to funnel income

received by Hollinger to Ravelston. This was done by

Hollinger’s paying large management fees to Ravelston.

Hollinger had a subsidiary called APC, which owned a

number of newspapers that it was in the process of selling.

When it had only one left—a weekly community newspaper in Mammoth Lake, California (population 7,093

in 2000, the year before the fraud)—defendant Kipnis,

Hollinger’s general counsel, prepared and signed on

behalf of APC an agreement to pay the other defendants,

plus David Radler, another Hollinger executive and a

major shareholder in Ravelston, a total of $5.5 million in

exchange for their promising not to compete with APC

for three years after they stopped working for Hollinger.

The money was paid. Neither Hollinger’s audit committee, which was required to approve transactions

between Hollinger’s executives and the company or its

subsidiaries because of conflict-of-interest concerns, nor

Hollinger’s board of directors, was informed of this

transaction. Or so the jury was entitled to find; the evidence was conflicting.

That Black and the others would start a newspaper in

Mammoth Lake to compete with APC’s tiny newspaper

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 3

there was ridiculous. But the defendants argue that really

the $5.5 million represented management fees owed

Ravelston and that they had characterized the fees as

compensation for granting covenants not to compete in the

hope that Canada might not treat the fees as taxable

income. Although Hollinger is a large, sophisticated, public

corporation, no document was found to indicate that the

$5.5 million in payments was ever approved by the

corporation or credited to the management-fees account on

its books. The checks were drawn on APC, though the

evidence was that the defendants had no right to management fees from that entity, and were backdated to the year

in which APC had sold most of its newspapers. The

purpose of the backdating was—or so the jury could

find—to make the compensation for the covenants not to

compete seem less preposterous. And while management

fees were supposed to be paid to Ravelston as well as from

a management-fee account, the payments were made to the

defendants personally and came from the proceeds of a

newspaper sale, facts that increase the implausibility of

supposing that these direct payments to the defendants

were a means of discharging a debt owed them by

Hollinger. It is true that Radler, who pleaded guilty and

testified for the government, said that he thought the

audit committee had approved the so-called management

fees. But the members of the committee testified otherwise and the jury was entitled to believe them.

There is more. The defendants failed to disclose the

$5.5 million in payments in the 10-K reports that they

were required to file annually with the Securities and

Exchange Commission. And they caused Hollinger to

represent to its shareholders falsely that the payments

had been made “to satisfy a closing condition.”

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
4 Nos. 07-4080, 08-1030, 08-1072, 08-1106

There was still more evidence of the fraud, but there is

no need to go into it. The jury convicted the defendants

of a second, similar fraud, on equally compelling evidence; there is no need to extend the opinion with a discussion of that either.

The evidence established a conventional fraud, that is,

a theft of money or other property from Hollinger by

misrepresentations and misleading omissions amounting

to fraud, in violation of 18 U.S.C. § 1341. United States v.

Orsburn, 525 F.3d 543, 545-46 (7th Cir. 2008). But the jury

was also instructed that it could convict the defendants

upon proof that they had schemed to deprive Hollinger

and its shareholders “of their intangible right to the

honest services of the corporate officers, directors or

controlling shareholders of Hollinger,” provided the

objective of the scheme was “private gain.” That instruction is the focus of the appeals.

Section 1346 of the federal criminal code, added in 1988

in order to overrule McNally v. United States, 483 U.S. 350

(1987), defines “scheme or artifice to defraud” in section

1341 to include a scheme or artifice to “deprive another

of the intangible right of honest services.” The defendants

do not deny that Hollinger was entitled to their honest

services. They were senior executives of Hollinger and

owed the corporation fiduciary obligations, implying

duties of loyalty and candor. It is not as if Black had

merely been using his power as controlling shareholder

to elect a rubber-stamp board of directors or to approve

a merger favorable to him at the expense of the minority

shareholders. He was acting in his capacity as the CEO

of Hollinger when he ordered Kipnis to draft the

covenants not to compete and when he duped the audit

committee and submitted a false 10-K. On his own theory,

the fees that he collected, which the jury was entitled to

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 5

find were never owed to him, were management fees

rather than dividends. The defendants’ unauthorized

appropriation of $5.5 million belonging to a subsidiary

of Hollinger was a misuse of their positions in Hollinger

for private gain, which is just the kind of conduct that

we said in United States v. Bloom, 149 F.3d 649, 655-57

(7th Cir. 1998), was the essence of honest services fraud.

See also United States v. Hausmann, 345 F.3d 952, 955-57

(7th Cir. 2003); United States v. Rybicki, 354 F.3d 124, 141-42

(2d Cir. 2003) (en banc).

So if the jury found such a misappropriation, this

would mean that the defendants, having both deprived

their employer of its right to their honest services and

obtained money from it as a result, were guilty of both

types of fraud. United States v. Turner, 465 F.3d 667, 678-

79 (6th Cir. 2006); United States v. Caldwell, 302 F.3d 399,

408 (5th Cir. 2002). Nothing is more common than for

the same conduct to violate more than one criminal statute. But the section 1346 instruction, which we quoted,

did not require that the jury find that the defendants

had taken any money or property from Hollinger; all it

had to find to support a conviction for honest services

fraud was that the defendants had deliberately failed to

render honest services to Hollinger and had done so to

obtain a private gain. The defendants do not deny that

they sought a private gain. But they presented evidence

that it was intended to be a gain purely at the expense of

the Canadian government. They argue that for the

statute to be violated, the private gain must be at the

expense of the persons (or other entities) to whom the

defendants owed their honest services—a group not

argued to include the Canadian government.

They are making a no harm-no foul argument, and such

arguments usually fare badly in criminal cases. Suppose

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
6 Nos. 07-4080, 08-1030, 08-1072, 08-1106

your employer owes you $100 but balks at paying, so

you help yourself to the money from the cash register. That

is theft, e.g., State v. Winston, 295 S.E.2d 46, 51 (W. Va.

1982); Edwards v. State, 181 N.W.2d 383, 387-88 (Wis.

1970); State v. Self, 713 P.2d 142, 144 (Wash. App. 1986),

even though if the employer really owes you the money

you have not harmed him. You are punishable because

you are not entitled to take the law into your own hands.

Harmlessness is rarely a defense to a criminal charge;

if you embezzle money from your employer and replace

it (with interest!) before the embezzlement is detected,

you still are guilty of embezzlement.

The application of this principle to honest services mail

and wire fraud is straightforward. As explained in United

States v. Orsburn, supra, 525 F.3d at 546, section 1346

was added “to deal with people who took cash from

third parties (via bribes or kickbacks). United States v.

Holzer, 816 F.2d 304 (7th Cir. 1987), supplies a good example. Judge Holzer accepted bribes from litigants. What

he took from his employer, the state’s judicial system,

was the honest adjudication service that the public thought

it was purchasing in exchange for his salary.” See also

United States v. Sorich, 523 F.3d 702, 707-08 (7th Cir. 2008);

United States v. Thompson, 484 F.3d 877, 884 (7th Cir. 2007);

Man-Seok Choe v. Torres, 525 F.3d 733, 737 (9th Cir. 2008);

United States v. Kemp, 500 F.3d 257, 279-80 (3d Cir. 2007);

United States v. Rybicki, supra, 354 F.3d at 139-42. Similarly,

if the defendants in this case deprived their employer,

Hollinger, of the honest services they owed it, the fact

that the inducement was the anticipation of money from

a third party (the anticipated tax benefit) is no defense.

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 7

This case is different from those we have cited because

Canada was not bribing the defendants with the offer of a

tax benefit. But the distinction is unrelated to anything

in the text or purpose of section 1346. The grant of a tax

benefit is a purposive act, which confers a benefit on

the grantor just as a voluntary transfer of money or property to him does; in fact it is a voluntary transfer of

money. The defendants do not argue that they were

trying to defraud Canada; they argue that their

recharacterization of management fees as compensation for

granting covenants not to compete was proper under

Canadian tax law, even if the receipt of the payments

violated American law. Canada, they contend in effect,

was willing to “pay” the defendants in the form of a tax

benefit in order to advance Canadian policy.

And if the defendants were trying to defraud Canada,

that augmentation of their wrongdoing would not help

their case. Suppose a third party gives a bribe to a buyer

for a department store, and the buyer pockets the bribe

but does not carry out his side of the bargain, which

was that he would purchase supplies from the principal

of the person who bribed him. The buyer has deprived

his employer (the department store) of his honest services, and has done so for private gain, but he has conferred

no benefit on a third party. Judges who accept bribes

invariably argue that they didn’t allow the bribes to

influence their decisions. But a judge who accepts

bribes deprives the judiciary of his honest services even

if, as contended by Francis Bacon, the most famous of

corrupt judges, he does nothing for the person who bribed

him. Such a case does not differ materially from that of

the “honest” recipient of a bribe—the recipient who,

committed to honor among thieves, performs his side of

the illegal bargain.

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
8 Nos. 07-4080, 08-1030, 08-1072, 08-1106

Notice, too, how honest services fraud bleeds into money

or property fraud. In the procurement case, the eagerness

of the seller’s agent to make a sale might enable the

purchasing agent to negotiate a better price, to the financial benefit of his employer; instead he takes the “better

price” in the form of a bribe. In this case, had the defendants disclosed to Hollinger’s audit committee and

board of directors that the recharacterization of management fees would net the defendants a higher after-tax

income, the committee or the board might have decided

that this increase in the value of the fees to them warranted a reduction in the size of the fees. If $10 in tax-free

income is worth $15 to the recipient in taxed income,

the employer who learns about the tax break may

require the employee to accept in tax-free income less

than $15 in taxed income.

This is not to say that every corporate employee must

advise his employer of his tax status. But the defendants

had a duty of candor in the conflict-of-interest situation

in which they found themselves. Instead of coming

clean they caused their corporation to make false filings

with the SEC, and they did so for their private gain. Such

conduct is bound to get a corporation into trouble with

the third party and the SEC.

Even if our analysis of honest services fraud is wrong,

the defendants cannot prevail. There is no doubt that

the defendants received money from APC and very

little doubt that they deprived Hollinger of their honest

services; whether they also got (or hoped to get) a tax

break from the Canadian government was not an issue

at trial, as the defendants acknowledged, albeit backhandedly, when they said in their reply brief in this

court that the theory “that defendants ‘misused’ their

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 9

positions at [Hollinger] for personal gain in the form of

Canadian tax benefits” was “the very theory the government propounded up to the eve of trial” (emphasis

added). It was not the government’s theory at trial.

The defendants point out that Yates v. United States,

354 U.S. 298 (1957), held that if the instructions permit

the jury to convict of a nonexistent crime, the fact that

they also permit it to convict of a genuine crime will not

save a conviction declared in a general verdict. United

States v. Sorich, supra, 523 F.3d at 706. That is different

from a case in which two correct theories of illegality are

presented in the instructions and there is sufficient evidence to convict only on one; the jury is assumed to have

followed the instruction on the government’s burden of

proof and therefore to have rejected the insufficiently

supported theory. Griffin v. United States, 502 U.S. 46, 59-

60 (1991); Tenner v. Gilmore, 184 F.3d 608, 611 (7th Cir.

1999). But a jury that is given an illegal instruction cannot be assumed not to have followed it, since juries are

neither authorized nor competent to make judgments of

law.

An error in jury instructions is subject to the harmlesserror doctrine. E.g., Pope v. Illinois, 481 U.S. 497, 502-03

(1987); United States v. Ramsey, 406 F.3d 426, 432 (7th

Cir. 2005). Submitting an illegal theory to the jury may

or may not be subject to it; it is an issue on which the

courts of appeals are divided. Compare United States v.

Cappas, 29 F.3d 1187, 1192-93 (7th Cir. 1994), and United

States v. Holly, 488 F.3d 1298, 1305-06 n. 3 (10th Cir. 2007),

with Lara v. Ryan, 455 F.3d 1080, 1085 (9th Cir. 2006), and

United States v. Edwards, 303 F.3d 606, 641-42 (5th Cir.

2002). But giving an instruction that omits a qualification required to make it unambiguously correct is difCase: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
10 Nos. 07-4080, 08-1030, 08-1072, 08-1106

ferent from submitting a case to a jury on an erroneous

theory of criminal liability. The prosecution did not ask

the jury to convict the defendants because their private

gain was at Canada’s expense. The government’s honest

services theory was straightforward. It was that the

defendants had abused their positions with Hollinger

to line their pockets with phony management fees disguised as compensation for covenants not to compete. Had

the jury believed that the payments for the covenants not

to compete were actually management fees owed the

defendants, as the defendants argued, it would have

acquitted them.

If the jury had been given a special verdict that

separated the two types of fraud, and had indicated on

the verdict that the defendants were not guilty of an

honest services fraud, the challenge to the instruction

would be moot. The defendants were not required to

request a special verdict. But there is a wrinkle in this

case that shows they forfeited their objection to the instruction: the government requested a verdict that would

require the jury to make separate findings on money or

property fraud and on honest services fraud. The defendants objected—they wanted a general verdict. In effect,

they wanted to reserve the right to make the kind

of challenge they are mounting in this court.

They are reduced to arguing that the judge after receiving the verdict should have told the jury to determine whether it had found both a money or property

fraud and an honest services fraud. That procedure was

tentatively approved by the Third Circuit in United States

v. Riccobene, 709 F.2d 214, 228 n. 19 (3d Cir. 1983), although

that court has since made clear that it is better to give

the jurors the interrogatories on the same form as the

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 11

verdict. United States v. Hedgepeth, 434 F.3d 609, 613-

14 (3d Cir. 2006). Questioning the jurors after they

have handed down their verdict is not a good procedure

and certainly not one that a district judge is required to

employ; nor has the Third Circuit so suggested. The

defendants’ proposal could if adopted create a nightmare in which the jury renders a general verdict; the

jurors are polled and think they’re about to be released

from their term of indentured servitude—here four

months—and be free to get on with their lives; and then

they are told they must take an exam so that the judges

and lawyers can know exactly how they evaluated

the various theories presented to them in the instructions. Must they resume deliberations? And if they disagree, what then—an Allen charge?

We turn to the obstruction of justice charge against Black.

The charge is that he concealed or attempted to conceal

documents “with the intent to impair the [documents’]

integrity or availability for use in an official proceeding.”

18 U.S.C. § 1512(c)(1). There was evidence that Black

knew that the alleged frauds were being investigated by

a grand jury and by the SEC. In the midst of these proceedings Black with the help of his secretary and his

chauffeur removed 13 boxes of documents from his

office, put them in his car, was driven home, and helped

carry them from the car into his house. He later returned

them, but no one knows whether the boxes he returned

contained all the documents that had been in them when

he removed them from his office. It is true that copies

were available to the government before the boxes were

removed, but it was material to the investigation whether

Black had had copies in his office. For that would mean

that he had received them, in which event his denials of

knowledge of their contents would be undermined.

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
12 Nos. 07-4080, 08-1030, 08-1072, 08-1106

Anyway, the statute does not require proof of materiality, United States v. Ortiz, 367 F. Supp. 2d 536, 542-44

(S.D.N.Y. 2005), affirmed without opinion, 220 Fed. App’x

13 (2d Cir. 2007), for the excellent reason that being able

to deny the materiality of a document is the usual reason

for concealing the document. All that need be proved is

that the document was concealed in order to make it

unavailable in an official proceeding. See, e.g., United

States v. Senffner, 280 F.3d 755, 762 (7th Cir. 2002); United

States v. Lessner, 498 F.3d 185, 197-98 (3d Cir. 2007); United

States v. Tampas, 493 F.3d 1291, 1300-01 (11th Cir. 2007). The

evidence of that was ample. Black’s secretary testified

that Black intended to remove the documents to a temporary office that she would set up for him in her home

because he had to vacate his office at Hollinger within

10 days. But this testimony was inconsistent with his

having put the boxes in his car (not hers, which was at the

scene) and taken them home. There was also evidence

that in removing the boxes he tried to avoid the surveillance cameras in the building—unsuccessfully.

Three more issues need to be discussed. The first is

whether an “ostrich” instruction should have been

given. The reference of course is to the legend that

ostriches when frightened bury their head in the sand. It

is pure legend and a canard on a very distinguished

bird. Zoological Society of San Diego, Birds: Ostrich,

www.sandiegozoo.org/animalbytes/t-ostrich.html (visited

June 12, 2008) (“When an ostrich senses danger and

cannot run away, it flops to the ground and remains still,

with its head and neck flat on the ground in front of it.

Because the head and neck are lightly colored, they blend

in with the color of the soil. From a distance, it just looks

like the ostrich has buried its head in the sand, because

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 13

only the body is visible”). It is too late, however, to correct this injustice.

An ostrich instruction tells the jury that to suspect that

you are committing a crime and then take steps to avoid

confirming the suspicion is the equivalent of intending

to commit the crime. E.g., United States v. Giovannetti, 919

F.2d 1223, 1228 (7th Cir. 1990). Suppose you think

you’ve rented your house to a drug gang, but to avoid

confirming your supposition you make sure not to drive

near the house, where you might observe signs of drug

activity. That would be the equivalent of knowledge that

you had rented the house to the gang. It would be a

case of physical avoidance of confirmation of one’s suspicions but there is also psychological avoidance, which is

the type alleged here and which requires the jury’s

“distinguishing between a defendant’s mental effort of

cutting off curiosity, which would support an ostrich

instruction, and a defendant’s simple lack of mental

effort, or lack of curiosity, which would not support an

ostrich instruction.” United States v. Carrillo, 435 F.3d 767,

780 (7th Cir. 2006). It is the distinction between willful

ignorance and ordinary ignorance.

The defendants argue that either they knew they

were taking money that they were not entitled to, or they

were entitled to it; there is no middle ground. But there is.

Remember that the defendants received the payments in

question not from Hollinger but from APC, which the

evidence showed did not owe them any management fees.

If you receive a check in the mail for $1 million that you

have no reason to think you’re entitled to, you cannot

just deposit it and when prosecuted for theft say you

didn’t know you weren’t entitled to the money—that it

might have been a random gift from an eccentric billionCase: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
14 Nos. 07-4080, 08-1030, 08-1072, 08-1106

aire. You would have strongly suspected that you

weren’t entitled to the money and you would therefore

have a duty to investigate. By shutting your eyes you

tacitly confessed your all-but-certain knowledge that you

were stealing the money. United States v. Orsburn, supra,

525 F.3d at 545 (“The embezzled funds were roughly twice

the couple’s legitimate income, and they spent it all.

Michael could hardly avoid noticing this sudden improvement in the couple’s fortunes even if he never

looked at bank statements”); United States v. Rogers, 289

F.2d 433, 438 (4th Cir. 1961); 3 Wayne R. LaFave, Substantive Criminal Law § 19.2(g), pp. 71-72 (2d ed. 2003).

The defendants argue that the judge gave an inadequate

limiting instruction with respect to the jury’s use of the

false filings with the SEC. The instruction, although correct,

was abrupt: “You have heard evidence in this case regarding the disclosures of non-competition payments in

Hollinger International’s quarterly and annual reports

and proxy statements in 2001 and 2002. The defendants in

this case are not charged with securities fraud.” It was

important for the jury to understand that it could use

the false filings to infer that the defendants had been

trying to conceal their receipt of the payments but that

the filings themselves were not charged as crimes.

The defendants proposed a misleading instruction as an

alternative. It substituted for the second sentence (“The

defendants in this case are not charged with securities

fraud”) the following: “The defendants are not charged

with making false or misleading statements in these

filings, and you may not conclude that a defendant is

guilty of mail or wire fraud based on any alleged false

statements or omissions in any of these filings.” The

defendants were “charged,” in the sense of accused, of

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
Nos. 07-4080, 08-1030, 08-1072, 08-1106 15

making false statements in these filings. And the jury was

entitled to base a judgment of guilt “on any alleged false

statements or omissions in any of these filings,” provided

that the false statement or omission was material to the

alleged mail or wire fraud. At argument, the lawyer who

had proposed the instruction told us at first that he

had made other, oral submissions as well. But when

reminded that he had said in his brief that he

had “proposed a series of limiting instructions, culminating with this request for the final charge”—the

proposed instruction that we quoted—he backed off.

If one party submits an instruction that is accurate but

could be made clearer, and the other party submits a

misleading instruction, the judge can go with the first

instruction. Not that the cases require “that a submitted charge be technically perfect to alert the court to

the need for a particular charge.” Bueno v. City of Donna,

714 F.2d 484, 490 (5th Cir. 1983); see also Wilson v. Maritime Overseas Corp., 150 F.3d 1, 9-10 (1st Cir. 1998). But

given the number and skill of the defendants’ lawyers, the

misleading character of their proposed instruction

cannot be regarded as a merely “technical” failing, as

opposed to an effort to mislead. Nor was the judge’s

instruction erroneous; it was merely terse.

Defendant Kipnis, the least culpable of the defendants,

as indicated by the light sentence he received (though any

felony conviction is likely to be devastating for a lawyer),

complains that he should have been acquitted because

he knew nothing about the management fees and had

nothing to gain from the fraud. The last point has no merit,

since Black controlled Hollinger and therefore held

Kipnis’s fate in his hands. The first two points are really

just one point, with respect to which the ostrich instrucCase: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16
16 Nos. 07-4080, 08-1030, 08-1072, 08-1106

tion was decisive. It was he who prepared the agreement

that purported to grant covenants not to compete in

exchange for $5.5 million. He knew that the covenants

made no sense, since APC was on its way out of the

newspaper business and the other grantors of the covenants not to compete were not about to leave Hollinger

to start a newspaper in Mammoth Lake. The jury was

entitled to infer that Kipnis suspected a fraud, which

he facilitated by his preparation of the agreement, but

asked no questions lest his suspicion rise to a certainty.

He buried his head in the sand.

The defendants raise some other points in their 161

pages of briefs, but none that has sufficient merit to require discussion. The judgments are

AFFIRMED.

USCA-02-C-0072—6-25-08

Case: 08-1072 Document: 56 Filed: 06/25/2008 Pages: 16