[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 13-11976

________________________

D.C. Docket No. 6:09-cv-01963-JA-GJK

U.S. SECURITIES AND EXCHANGE COMMISSION,

 Plaintiff - Appellee,

versus

BIG APPLE CONSULTING USA, INC.,

MJMM INVESTMENTS, LLC,

MARC JABLON,

MARK C. KALEY,

 Defendants - Appellants, 

MATTHEW MAGUIRE, et al.,

 Defendants.

_______________________

Appeals from the United States District Court

for the Middle District of Florida

________________________

(April 9, 2015)

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Before CARNES, Chief Judge, TJOFLAT and SILER,∗ Circuit Judges.

SILER, Circuit Judge: 

The Securities and Exchange Commission (SEC) brought this civil 

enforcement action against defendants Big Apple Consulting USA, Inc. (Big 

Apple), MJMM Investments, LLC (MJMM), Marc Jablon (Jablon), and Mark C. 

Kaley (Kaley) (collectively, the defendants) for violations of the Securities Act of 

1933 (Securities Act), 15 U.S.C. § 77a et seq., and the Securities Exchange Act of 

1934 (Exchange Act), 15 U.S.C. § 78a et seq. The SEC also brought the action 

against Matthew Maguire (Maguire) and Keith Jablon (Keith), but those 

defendants are not involved in this appeal. The district court granted summary 

judgment in favor of the SEC as to some of the claims, and the remainder of the 

claims proceeded to trial. A jury found in favor of the SEC as to the remaining 

claims against all defendants.

On appeal, the defendants assert six claims of error involving both the 

district court’s partial grant of summary judgment in favor of the SEC and the 

district court’s rulings in the jury trial. For the reasons explained below, we affirm. 

 ∗ The Honorable. Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, 

sitting by designation.

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FACTUAL BACKGROUND

a. The Players

Big Apple and its wholly owned subsidiary, MJMM, provided investor 

relations and public relations services to microcap companies. Management 

Solutions International, Inc. (MSI), another wholly owned subsidiary of Big Apple, 

offered a variety of services, including marketing, business planning, and ecommerce website development and maintenance. Jablon was president and CEO 

of Big Apple, as well as CEO of MSI. Jablon and Maguire cofounded MJMM; 

Maguire also served as the vice president of Big Apple. Kaley was president of 

MJMM and an officer of Big Apple. Kaley was also an attorney. Keith is Jablon’s 

brother and was vice president of MSI. 

The SEC’s allegations stem from the defendants’ relationship with 

CyberKey Solutions, Inc. (CyberKey), previously known as CyberKey Corp., and 

its CEO James Plant (Plant). CyberKey sold customizable USB drives that could 

be loaded with encryption software to secure content stored on the drives. 

Beginning on July 5, 2005, CyberKey’s stock traded on a website called Pink 

Sheets, which displays the bid and ask prices for over-the-counter securities (i.e., 

securities that are not listed on a U.S. exchange). On June 15, 2005, Kaley 

executed a consulting agreement with CyberKey on behalf of MJMM, in which 

MJMM agreed to provide services intended to promote CyberKey’s business. 

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According to the agreement, MJMM would “diligently market and promote 

[CyberKey] to brokers . . . and [ ] introduce [CyberKey] and its principals to 

[MJMM’s] current and future network of brokerage firms and market makers.”

Although CyberKey signed the agreement with MJMM, the parties understood that

Big Apple and its subsidiaries would provide all the services detailed in the 

consulting agreement. 

Under the terms of the original consulting agreement, CyberKey paid

MJMM $50,000 per month either in cash or in “free-trading shares”1 of CyberKey, 

which was calculated based on the previous ten-day average closing bid price. 

This sort of exchange was typical for Big Apple; at least ninety-five percent of Big 

Apple’s clients paid in stock. The consulting agreement between MJMM and 

CyberKey was extended twice––once on November 14, 2005 and again on October 

9, 2006. Kaley signed both agreements. The October 2006 extension required 

CyberKey to pay $80,000 per month or a number of CyberKey shares calculated 

based on a fifty percent discount of the ten-day average closing bid price of 

CyberKey stock. Thus, assuming a constant closing bid price in CyberKey stock 

over the previous ten-day period, MJMM received CyberKey stock that had a 

market value of $160,000 in exchange for $80,000 worth of services. During the 

 1 “Free-trading shares” are not subject to restrictions such as a waiting period and can be readily 

sold in the market; however, the subsequent offer or sale of the shares is not necessarily exempt 

from registration requirements. See 15 U.S.C. § 77e.

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entire period that CyberKey contracted with MJMM, CyberKey paid exclusively in 

stock for services provided. MJMM also negotiated the option to purchase 

additional CyberKey stock at a significant discount, initially forty percent in July

2006 and increasing to fifty percent shortly thereafter. Ultimately, MJMM 

received approximately 77 million CyberKey shares for services rendered, and at 

the direction of Jablon and Kaley, MJMM purchased a total of approximately 648 

million more shares by exercising options on a regular basis. 

As part of its public relations services to CyberKey and other clients, Big 

Apple operated a telephone call room that contacted registered securities brokers 

and dealers to disseminate public information in order to create interest in client 

companies and their stock. Maguire supervised the call room on a day-to-day 

basis, but Jablon bore ultimate oversight and was both aware of and authorized all 

the policies and procedures used in the call room. Big Apple staffed the call room 

with as many as fifty employees, who used internally-drafted press releases and 

“bullet sheets” to draw attention among the broker-dealer community to its clients. 

b. The Department of Homeland Security Contract

At first, there was no demand for CyberKey stock, but that changed when

Plant began reporting fabricated contracts. First, Plant falsely informed Big 

Apple––on three separate occasions––that CyberKey had been awarded a valuable 

contract with a fictitious part of the government called the “Military Post 

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Exchange” (MPX). The purported contract allegedly was valued at $15 million, 

then increased to $19 million, and then to $23.9 million. Both Jablon and Kaley 

were aware of this claimed purchase order. On each occasion that Plant raised the 

MPX contract price, the MSI staff drafted a press release that covered details such

as the dollar figure of the order and the number of units requested, and each time

MSI held the release pending its distribution by CyberKey. On November 11, 

2005, approximately four hours after MSI drafted the latest press release 

announcing a $23.9 million MPX order for 185,000 units and while awaiting

Plant’s approval to publish the release, MSI abruptly revised the press release to

reflect a $24.49 million order from the Department of Homeland Security (DHS)

for 150,000 units (the DHS contract). Any announcement of the MPX contract 

was abandoned without explanation. 

The newly-announced, fictitious DHS contract was a game changer. Jablon 

characterized it as “[o]ne in a million,” and both he and Kaley thought the contract 

would significantly increase demand for CyberKey stock. 

Plant showed Jablon and Kaley a document he purported was the DHS 

contract, and it contained several obvious inconsistencies. Neither Jablon nor 

Kaley looked closely at the contract. Although the contract was supposedly with 

DHS, a federal entity, the eight-page document contained multiple references to 

the State of Connecticut, including a mailing address in the state, a state e-mail 

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address for the purchasing contact, and several contract terms that expressly 

identified the “State of Connecticut” or “the State” as the counter-party. In fact, 

only the cover page and the header of each page of the document referred to the 

DHS. Further, the contract’s stated value—$24,494,412.15—differed from the 

amounts Plant had previously reported to the defendants relating to the original

MPX deal. The contract award date was also internally inconsistent. On the first

and second pages of the contract, the award date was listed as October 31, 2005, 

but two pages later it was listed as August 12, 2005. 

CyberKey publicized the DHS contract in a December 8, 2005 press release 

that announced “the Company [had received] a multi-million [d]ollar purchase 

order from the Department of Homeland Security . . . [for over] 150,000 units.” 

MSI drafted the press release and Big Apple was listed as the primary contact,

along with the telephone number 1-866-THE-APPL(E). Incoming brokers’ calls 

were routed to Big Apple’s sales floor, and investors’ calls were routed to MSI’s 

investor relations team. Over the next fifteen months, the defendants conceived, 

drafted, edited, or reviewed numerous press releases emphasizing the $25 million 

DHS contract or aspects related to it. The defendants also drafted press releases 

announcing the first two shipments of USB devices to DHS and CyberKey’s 

receipt of two $4.2 million payments from DHS. 

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During this time, Big Apple used its call room to aggressively promote 

CyberKey to broker-dealers; Big Apple routinely designated CyberKey the “on 

focus” client, making it a priority in salespeople’s calls. For example, out of a 

given sixty day period, CyberKey was “on focus” for thirty to forty-five of those 

days. The defendants prepared or approved the preparation of “bullet sheets” 

detailing talking points about CyberKey and circulated them to its salespeople in 

the call room. Generally, Big Apple and MJMM did not disclose to brokers or 

investors that compensation for representing CyberKey came in the form of stock. 

c. The Scheme Unravels

Additional signs of Plant’s dishonesty surfaced in the coming months. In 

January 2006, Plant sent CyberKey’s first financial statement for public release,

and, according to Jablon, the financial statements looked like they “were prepared 

by a third grader [and] there was a lot missing.” Despite landing the fabricated

DHS contract and supposedly being in receipt of the first $4.2 million payment, 

CyberKey’s checking account held a balance of around $6,000. Plant explained 

CyberKey’s cash shortage was due to the nature of the DHS contract, which was 

“front-loaded” and that CyberKey would make all its money “on the back end.” 

Jablon unsuccessfully attempted to have a third-party auditor review CyberKey’s 

financials, but Plant kept “pushing it off.” Plant regularly went “AWOL” and 

would be unreachable for days or even a week at a time. Kaley and Keith flew to 

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San Diego for several meetings with Plant and potential buyers, but shortly before 

each meeting was scheduled to occur, Plant would indicate the meeting was 

rescheduled or canceled. 

During the summer of 2006, because of Plant’s repeated problematic 

behavior, Jablon asked his brother Keith to draft a list of problems that employees 

were having with Plant so that Jablon could discuss the issues with Plant. This 

became known as the “broken promises” memorandum. The memorandum

detailed thirteen separate “missed promises” made by Plant. After Jablon received

the broken promises memorandum from Keith, he emailed it to Kaley. 

On August 3, 2006, the National Association of Securities Dealers (NASD), 

now known as the Financial Industry Regulatory Authority (FINRA), sent a fax to 

Plant informing him that it was reviewing CyberKey’s trading activity. NASD 

requested that CyberKey provide it with the “documents and information”

concerning: (1) the DHS contract; (2) an explanation of how the DHS contract was 

negotiated; (3) a list of CyberKey’s contacts at DHS; and (4) details of CyberKey’s 

relationship with Big Apple. Plant e-mailed the fax to Jablon and Kaley, and they 

advised Plant to have his securities attorney handle the matter. Jablon and Kaley

did not follow up on the status of the inquiry.

Five days later, after speaking with Plant, a DHS official called an employee 

at MSI, Kelson Monks (Monks), to inquire about CyberKey’s claimed relationship 

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with DHS. The DHS official informed Monks that he was unable to locate the 

purchase order relating to a press release CyberKey had recently issued, and the 

DHS official faxed a confirmation of the conversation seeking any identifying 

information about the DHS contract from CyberKey. The press release in question 

announced that DHS had added a $600,000 order for biometric drives to an 

existing $25 million order. Monks sent the fax from the DHS to Kaley and Jablon, 

but they did not respond to the request and opted to let Plant handle the matter. 

On February 5, 2007, the SEC issued an order suspending the trading of 

CyberKey stock due to concerns as to the accuracy of assertions made by 

CyberKey and others in press releases and public statements to investors. From 

February 20, 2007, the date that CyberKey’s trading suspension was temporarily

lifted, to March 20, 2007, the date CyberKey was de-listed and could no longer be 

traded, MJMM was a heavy seller of its holdings in the stock. Over the course of 

the defendants’ relationship with CyberKey, Big Apple and MJMM sold more than 

a combined 720 million CyberKey shares for approximately $7.8 million. During 

the time that CyberKey was a client, it was one of the top five most actively traded 

stocks on Pink Sheets. 

The SEC brought suit against Plant for his role in the scheme. Plant was 

also indicted and convicted on charges of securities fraud. In 2009, he was 

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sentenced to ninety-seven months imprisonment in connection with the criminal 

charges. 

PROCEDURAL BACKGROUND

The SEC filed its complaint in federal court and alleged that not later than 

August 8, 2006, the defendants “knew, or were severely reckless in not knowing, 

that CyberKey did not have a $25 million purchase order from the DHS or any 

other [f]ederal government agency, and thus had very little legitimate revenue at 

all.” Nonetheless, the defendants “persisted in promoting CyberKey and selling 

hundreds of millions of unregistered CyberKey shares to unsuspecting investors.” 

The SEC asserted that the defendants violated various sections of the Securities 

Act and the Exchange Act. 

After the Supreme Court decided Janus Capital Group, Inc. v. First 

Derivative Traders, 131 S. Ct. 2296, 2302 (2011), which defined what it means to 

“make” a false statement under SEC Rule 10b-5(b),2 the district court granted the 

SEC’s motion to amend its complaint. In turn, the SEC withdrew its claims that 

defendants violated § 10(b) of the Exchange Act and Rule 10b-5, and replaced 

them with claims that defendants violated § 20(e) of the Exchange Act by aiding 

and abetting CyberKey’s and Plant’s violations of § 10(b) and Rule 10b-5. 

 2 17 C.F.R. § 240.10b-5. Rule 10b-5 is promulgated under § 10(b) of the Exchange Act. 

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Ultimately, the SEC’s amended complaint asserted that: (i) all defendants 

violated § 17(a) of the Securities Act and aided and abetted violations of § 10(b) of 

the Exchange Act and SEC Rule 10b-5, in violation of § 20(e) of the Exchange 

Act; (ii) Big Apple, MJMM, and Marc Jablon violated § 5(a) and (c) of the

Securities Act; (iii) Big Apple and MJMM violated § 15(a) of the Exchange Act; 

and (iv) Jablon and Kaley aided and abetted the § 15(a) violations, in violation of 

§ 20(e) of the Exchange Act. The district court granted summary judgment in 

favor of the SEC as to claims (ii), (iii), and (iv). 

Only the claims under (i)––that the defendants violated § 17(a) of the 

Securities Act and aided and abetted violations of § 10(b) of the Exchange Act and 

SEC Rule 10b-5, in violation of § 20(e) of the Exchange Act––proceeded to trial. 

At the conclusion of the SEC’s case, the defendants orally moved for judgment as 

a matter of law under Fed. R. Civ. P. 50(a). They argued that the SEC presented 

insufficient evidence to establish actual knowledge, which they maintained was 

required to establish a violation of § 20(e) of the Exchange Act. The district court 

reserved ruling, and the defendants orally renewed their motion after presenting 

their defense, adding an argument that in light of the Supreme Court’s decision in 

Janus, the § 17(a) claims should not have gone to the jury. 

The jury returned a verdict finding that the defendants violated each of the 

three subsections of § 17(a) and that the defendants violated § 20(e), marking on 

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the verdict form that the defendants acted with both actual knowledge and severe 

recklessness. After trial, the defendants orally renewed their Rule 50(b) motion 

and argued that the jury was improperly instructed that it could find the defendants 

liable if they acted with deliberate ignorance. Big Apple, MJMM, and Jablon filed 

a written Rule 50(b) motion, in which they argued that the evidence was 

insufficient to support that the defendants acted with deliberate indifference and 

that the instruction misstated the law by not focusing on the defendants’ subjective 

beliefs. Kaley, proceeding pro se, also filed a Rule 50(b) motion arguing that the 

evidence was insufficient to support the claims asserted against him. The court 

denied both motions. 

Defendants raise six errors on appeal. They claim the district court erred by:

(1) submitting the § 17(a) claims to the jury in light of the Supreme Court’s 

decision in Janus; (2) instructing the jury that § 20(e) violations may be established 

by showing actual knowledge or severe recklessness; (3) improperly instructing the 

jury with regard to deliberate ignorance; (4) granting partial summary judgment in 

favor of the SEC; (5) excluding certain evidence and expert testimony; and (6) 

denying Kaley’s sufficiency of the evidence claim in his Rule 50(b) motion. 

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ANALYSIS

1. Primary Violations of § 17(a) of the Securities Act

We review the district court’s rulings concerning questions of law de novo. 

SEC v. Merch. Capital, LLC, 483 F.3d 747, 754 (11th Cir. 2007).

The defendants argue that the decision in Janus—a case that defined the 

word “make” as it relates to SEC Rule 10b-5(b)’s prohibition against “mak[ing] 

any untrue statement of a material fact”—extends to claims brought under § 17(a)

of the Securities Act. In Janus, the Court considered whether an LLC mutual fund 

investment adviser could be held liable in a private action under Rule 10b-5(b) for 

misleading statements contained in its clients’ prospectuses, which the adviser was 

involved in preparing. 131 S. Ct. at 2299. The Court answered in the negative and 

explained that “[o]ne who prepares or publishes a statement on behalf of another is 

not its maker.” Id. at 2302. Rather, “the maker of a statement is the person or 

entity with ultimate authority over the statement, including its content and whether 

and how to communicate it.” Id. According to the defendants’ logic, because they 

did not have ultimate authority over the content of CyberKey’s press releases, they 

could not be considered “makers” of any material misstatements and thus could not

be liable under the provisions of § 17(a), which they assert are “largely coextensive 

in scope” to those of Rule 10b-5. We disagree.

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Our conclusion is driven by an adherence to the statutory text. Section 17(a) 

of the Securities Act makes it:

unlawful for any person in the offer or sale of any securities . . . by the 

use of any means or instruments of transportation or communication 

in interstate commerce or by use of the mails, directly or indirectly

(1) to employ any device, scheme, or artifice to defraud, or

(2)to obtain money or property by means of any untrue statement 

of a material fact or any omission to state a material fact necessary 

in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; or

(3)to engage in any transaction, practice, or course of business 

which operates or would operate as a fraud or deceit upon the 

purchaser.

15 U.S.C. § 77q(a). Though Rule 10b-5 regulates a different activity, i.e., the 

“purchase or sale” of securities rather than their “offer or sale,” it borrows much, 

though not all, of its language from § 17(a). That is not by coincidence. See

Hooper v. Mountain States Sec. Corp., 282 F.2d 195, 201 n.4 (5th Cir. 1960), cert. 

denied, 365 U.S. 814 (1961); United States v. Persky, 520 F.2d 283, 287 (2d Cir. 

1975). Rule 10b-5 makes it:

unlawful for any person, directly or indirectly, by the use of any 

means or instrumentality of interstate commerce . . .

(a) To employ any device, scheme, or artifice to defraud,

(b) To make any untrue statement of a material fact or to omit to 

state a material fact necessary in order to make the statements 

made, in the light of the circumstances under which they were 

made, not misleading, or

(c) To engage in any act, practice, or course of business which 

operates or would operate as a fraud or deceit upon any person, 

in connection with the purchase or sale of any security.

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17 C.F.R. § 240.10b-5. The overlap is most pronounced in Rule 10b-5 subsections 

(a) and (c), which, like § 17(a) subsections (1) and (3), prohibit schemes to defraud 

and fraudulent courses of business, respectively. However, subsections (1) and (3)

in § 17(a) and subsections (a) and (c) in Rule 10b-5 do not use the word “make” or 

even address misstatements. The Court in Janus interpreted what it means to 

“make” a misrepresentation under subsection (b) of Rule 10b-5. Thus, any 

attempts by the defendants to import the Court’s narrow holding to the entirety of 

§ 17(a) is untenable on its face. See SEC v. Garber, 959 F. Supp. 2d 374, 380 

(S.D.N.Y. 2013) (“Janus would not affect claims under Section 17(a)(1) . . . .”). 

Indeed, the Court recognized in Cent. Bank of Denver N.A. v. First Interstate 

Bank of Denver, N.A., 511 U.S. 164, 191 (1994), that, despite foreclosing private 

aiding and abetting liability under § 10(b), “secondary actors in the securities 

markets . . . who employ[] a manipulative device . . . on which a purchaser or seller 

of securities relies may be liable as a primary violator under SEC Rule 10b-5, 

assuming all of the requirements . . . are met.” See also Stoneridge Inv. Partners, 

LLC v. Scientific-Atlanta, Inc., 552 U.S. 148, 166 (2008) (citing Cent. Bank, 511 

U.S. at 191) (“[T]he implied right of action in § 10(b) continues to cover secondary 

actors who commit primary violations.”). Therefore, the reality remains that even 

a person like the mutual fund investment adviser in Janus, who is not the “maker”

of an untrue statement of material fact, nonetheless could be liable as a primary 

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violator of Rule 10b-5(a) and (c). See SEC v. Pentagon Capital Mgmt. PLC, 725 

F.3d 279, 287 (2d Cir. 2013) (“[S]ubsection (b) . . . was the only subsection at 

issue in Janus.”); Garber, 959 F. Supp. 2d at 380 (“Janus does not extend to 

claims based on schemes to defraud under Rule 10b-5(a) and (c).”). Given that 

§ 17(a)(1) and (3), on which Rule 10b-5(a) and (c) are modeled, do not contain the 

word “make” or address misstatements, and given that the Court in Janus did not 

alter the potential for liability under Rule 10b-5(a) and (c), it would be incongruous 

to remove the potential for liability under § 17(a)(1) and (3).

The defendants’ primary contention is that because § 17(a)(2) is the 

analogue to Rule 10b-5(b), therefore the Court’s holding in Janus should apply to 

§ 17(a)(2). Recall, § 17(a)(2) renders it “unlawful for any person in the offer or 

sale of any securities . . . to obtain money or property by means of any untrue 

statement of a material fact or any omission to state a material fact.” (Emphasis 

added.) “When a word is not defined by statute, we normally construe it in accord 

with its ordinary or natural meaning.” See Smith v. United States, 508 U.S. 223, 

228 (1993). The Supreme Court has also recognized that “[t]he use of different 

terms within related statutes generally implies that different meanings were 

intended.” United States v. Bean, 537 U.S. 71, 76 n.4 (2002). We have not yet 

addressed the definition of “by means of” in § 17(a)(2), but we agree with the First 

Circuit that “the text suggests that . . . it is irrelevant for purposes of liability 

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whether the seller uses his own false statement or one made by another individual.” 

See SEC v. Tambone, 550 F.3d 106, 127 (1st Cir. 2008).

3 While the First Circuit’s 

decision in Tambone was rendered prior to the Court’s decision in Janus, its point 

is well-taken. SEC v. Tambone, 597 F.3d 436 (1st Cir. 2010) (en banc). “In short, 

the drafters of Rule 10b–5 had before them language that would have covered the 

‘use’ of an untrue statement of material fact . . . They declined to do so. Instead, 

the drafters—who faithfully tracked section 17(a) in other respects—deliberately 

eschewed the expansive language of section 17(a)(2).” Id. at 444. Likewise, we 

also agree with the Securities and Exchange Commission’s recent opinion, which 

held “Janus’s limitation on primary liability under Rule 10b-5(b) does not apply to 

claims arising under Section 17(a)(2).” In the Matter of John P. Flannery and 

James D. Hopkins, Admin. Proc. File No. 3-14081, at 15 (Dec. 15, 2014).4

 

One final aspect of the Court’s decision in Janus solidifies our conclusion 

that the Court’s definition of “to make” in Rule 10b-5 does not apply to § 17(a)(2). 

Janus involved a private action under Rule 10b-5. “[N]either Rule 10b-5 nor 

§ 10(b) expressly creates a private right of action, [though the Supreme] Court has 

held that ‘a private right of action is implied under § 10(b).’” Janus, 131 S. Ct. at

2301 (quoting Superintendent of Ins. of N.Y. v. Bankers Life & Cas. Co., 404 U.S. 

 3 The First Circuit vacated this decision by granting en banc review on an unrelated issue. SEC 

v. Tambone, 573 F.3d 54 (1st Cir. 2009). It subsequently reinstated the § 17(a)(2) analysis from 

the panel decision in its en banc opinion. See SEC v. Tambone, 597 F.3d 436, 450 (1st Cir. 

2010) (en banc). 

4 Available at https://www.sec.gov/alj/aljdec/2011/id438bpm.pdf.

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6, 13, n.9 (1971)). For that reason, the Court remained “mindful” that it had to 

“give ‘narrow dimensions . . . to a right of action Congress did not authorize when 

it first enacted the statute and did not expand when it revisited the law.’” Id. at 

2302 (quoting Stoneridge, 552 U.S. at 167). Unlike Rule 10b-5, however, there is 

no private right of action under § 17(a). Currie v. Cayman Res. Corp., 835 F.2d 

780, 784–85 (11th Cir. 1988). Accordingly, there is not the same concern 

regarding the expansion of a judicially-created private cause of action.

We therefore decline the defendants’ invitation to supplant the language of 

§ 17(a)(2) with words taken from another authority, particularly with words 

“beyond the four corners of the [Securities] Act.” Gustafson v. Alloyd Co., Inc., 

513 U.S. 561, 595 (1995) (Thomas, J., dissenting); see also Pinter v. Dahl, 486 

U.S. 622, 653 (1988) (“The ascertainment of congressional intent with respect to 

the scope of liability created by a particular section of the Securities Act must rest 

primarily on the language of that section.”). We conclude that “obtain[ing] money 

. . . by means of any untrue statement” under § 17(a)(2) of the Securities Act 

encompasses a broader range of conduct than “mak[ing]” such a statement as 

defined in SEC Rule 10b-5(b). Finally, even if we accepted the defendants’

position that these two phrases are equivalent, which we do not, the defendants 

ignore the fact that the jury found the defendants violated not only § 17(a)(2), but 

also § 17(a)(1) and (3), which are in no way directly or indirectly affected by the 

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Janus decision. As stated in the district court’s instructions to the jury, to show a 

violation of § 17(a), “[i]t is not necessary that the SEC prove that the [d]efendants 

engaged in all three types of conduct” set forth in subsections (1) – (3). Instead, as 

properly instructed, “[a]ll that the SEC needs to prove to prevail is that the 

[d]efendants engaged in any one of the types of conduct.” 

2. § 20(e) of the Exchange Act Liability

The defendants next contend that the SEC needed to prove that the 

defendants had “actual knowledge” of CyberKey’s and Plant’s violations of 

§ 10(b) and Rule 10b-5 in order to be found liable under § 20(e) of the Exchange 

Act, 15 U.S.C. § 78t(e). Section 20(e) of the Exchange Act was adopted as part of 

the Private Securities Litigation Reform Act of 1995 (PSLRA), and at the time 

relevant to this case, it authorized the SEC to bring an action against any person 

who “knowingly provides substantial assistance” to a primary violator of the 

Exchange Act. 15 U.S.C. § 78t (2000)

5

, amended by 15 U.S.C. §78t(e) (2010).

6 

The defendants insist “both the history and the express language of Section 20(e) 

demonstrate conclusively that actual knowledge is required” to sustain a claim 

under § 20(e). Therefore, they argue that the district court erred when it relied on 

 5 The relevant statute was originally codified in subsection (f) and was later changed to 

subsection (e). 

6 As explained later in this section, Congress amended §20(e) in 2010 to include the language “or 

recklessly.” However, we analyze the amendment as was in effect at the time the underlying 

facts occurred in this case. Thus, a citation to 15 U.S.C. § 78t(e) refers to the pre-2010 

amendment, unless the citation is followed by the year 2010. 

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21

Woods v. Barnett Bank of Ft. Lauderdale, 765 F.2d 1004, 1010 (11th Cir. 1985)

for the proposition that “[s]evere recklessness can satisfy the scienter requirement 

in an aiding and abetting case[.]” 

The SEC’s amended complaint asserts two separate violations of § 20(e). 

The first claim––that all the defendants aided and abetted Plant’s and CyberKey’s 

violations of § 10(b) of the Exchange Act and Rule 10b-5, in violation of § 20(e) of 

the Exchange Act––proceeded to trial. The second § 20(e) claim––that Jablon and 

Kaley aided and abetted Big Apple’s and MJMM’s violations of § 15(a) of the 

Exchange Act––was resolved in favor of the SEC by summary judgment. In its 

order granting summary judgment, the district court concluded that Jablon and 

Kaley were liable under § 20(e) of the Exchange Act because they “were at least 

severely reckless in providing substantial assistance to Big Apple’s and MJMM’s 

§ 15(a) violations.” At trial, the district court instructed the jury that it could find 

that the defendants acted “knowingly” for purposes of § 20(e) if the defendants

“knew or were severely reckless in not knowing that James Plant and CyberKey 

Solutions, Inc. were fraudulently disseminating false statements that CyberKey had 

obtained a $25 million DHS contract.” (Emphasis added.) While argument 

relating to the district court’s summary judgment ruling is sparse, we will review 

both rulings. The question is whether § 20(e) of the Exchange Act, as in effect at 

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the time of this case, required proof of “actual knowledge” of the underlying fraud,

or whether a showing of severe recklessness would also suffice.

We review both jury instructions and the district court’s grant of summary 

judgment under these circumstances de novo. United States v. Campa, 529 F.3d 

980, 992 (11th Cir. 2008); Patton v. Triad Guar. Ins., 277 F.3d 1294, 1296 (11th 

Cir. 2002). 

Contrary to the defendants’ claim, the language of § 20(e) of the Exchange 

Act does not contain the phrase “actual knowledge.” Congress required proof of

“actual knowledge” in order to impose liability in other sections of the Exchange 

Act. See, e.g., 15 U.S.C. § 78u-5(c)(1)(B) (“[T]he plaintiff fails to prove that the 

forward looking statement—(i) . . . was made with actual knowledge by that 

person that the statement was false or misleading[.]” (emphasis added)). Thus, had 

Congress intended to require actual knowledge to establish culpability under 15 

U.S.C. § 78t(e), it could have done so expressly, as it did with other provisions in 

the Exchange Act. 

Moreover, § 20(e) itself does not include a definition of the term 

“knowingly.” The Exchange Act likewise does not provide a standard definition 

for the term “knowingly.” Where the term “knowingly” is defined, the definition 

applies only to a particular section or subsection of the Exchange Act. For 

example, one section of the Exchange Act defines “knowingly” as requiring

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“actual knowledge,” see, e.g., 15 U.S.C. § 78u-4(f), while another section defines 

“knowing” as being “aware” or having “a firm belief.” 15 U.S.C. § 78dd-2(h)(3).

Thus, we look to the legislative history of § 20(e) for guidance. In 1994, the 

Supreme Court held that private plaintiffs could not pursue aiding and abetting 

claims through § 10(b) of the Exchange Act. Cent. Bank of Denver, N.A. v. First 

Interstate Bank of Denver, N.A., 511 U.S. 164, 191 (1994). The Court’s decision 

in Central Bank cast doubt on whether the SEC could pursue aiding and abetting 

claims under § 10(b). Thereafter, Congress enacted § 20(e) of the Exchange Act as 

an independent authority for the SEC to pursue aiding and abetting claims. 

Congress acted to “revers[e] the Supreme Court’s Central Bank decision as it 

applies to the SEC.” 141 Cong. Rec. S17965-03 (daily ed. Dec. 5, 1995) 

(statement of Senator Reid). See also 141 Cong. Rec. S17933-04 (daily ed. Dec. 5, 

1995) (statement of Sen. D’Amato) (“The conference report also reinstates the 

SEC’s authority—which the Supreme Court put into question in the Central Bank 

of Denver case—to bring actions against defendants who knowingly aid and abet 

securities fraud.”). The legislative history of § 20(e) “consistently make[s] clear 

that the amendment’s purpose is to negate any effect Central Bank might have had 

on the SEC’s authority to bring [enforcement] actions against” those who aid and 

abet primary violators of the Exchange Act. SEC v. Fehn, 97 F.3d 1276, 1288 (9th 

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Cir. 1996).7 Thus, Congress enacted § 20(e) to preserve the status quo that existed

prior to the Court’s decision in Central Bank.

Congress clearly contemplated and condoned the pre-Central Bank approach 

taken by most federal courts. For example, the Senate recognized that:

Prior to 1994, courts in every circuit in the country had recognized the 

ability of investors to sue aiders and abettors of securities frauds . . . 

[M]ost courts required that an investor show that a securities fraud 

was committed, that the aider and abettor gave substantial assistance 

to the fraud, and that the aider and abettor has some degree of scienter 

(intent to deceive or recklessness toward the fraud).

S. Rep. No. 104-98, at 48–49 (1995) (emphasis added); see also 141 Cong. Rec. 

S9199-03 (daily ed. Jun. 28, 1995) (“Until last year, this private cause of action 

[against aiders and abettors] was available in every circuit in America, provided 

that the assistance was substantial and had some element of deception or 

recklessness.”). 

One such pre–Central Bank approach was our decision in Woods v. Barnett 

Bank of Ft. Lauderdale, 765 F.2d 1004 (11th Cir. 1985). In Woods, we applied a 

three-part test for aiding and abetting liability, which required: (1) a primary 

violation by another party; (2) a “general awareness” by the accused aider-abettor 

“that his role was part of an overall activity that is improper”; and (3) that “the 

accused aider-abettor” must have “knowingly and substantially assisted the 

 7 Although we disagree with the ultimate outcome reached by the Ninth Circuit in SEC v. Fehn

with respect to the requisite scienter necessary to sustain aiding and abetting liability, its analysis 

of the legislative history underlying § 20(e) is sound.

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violation.” Id. at 1009-10. In Woods, we further concluded that “[s]evere 

recklessness can satisfy the scienter requirement in an aiding and abetting case.” 

Id. at 1010. Every other circuit to consider the issue adopted a similar test and 

acknowledged that severe recklessness could suffice. See, e.g., Cleary v. 

Perfectune, Inc., 700 F.2d 774, 777 (1st Cir. 1983); Armstrong v. McAlpin, 699 

F.2d 79, 91 (2d Cir. 1983); Abbott v. Equity Group, Inc., 2 F.3d 613, 621 (5th Cir. 

1993); Herm v. Stafford, 663 F.2d 669, 684 (6th Cir. 1981); Camp v. Dema, 948 

F.2d 455, 459 (8th Cir. 1991); First Interstate Bank of Denver, N.A. v. Pring, 969 

F.2d 891, 903 (10th Cir. 1992), rev’d on other grounds sub nom. Cent. Bank of 

Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994); Dirks 

v. SEC, 681 F.2d 824, 844–45 (D.C. Cir. 1982), rev’d on other grounds, 463 U.S. 

646 (1983). “[W]e apply the presumption that Congress was aware of these earlier 

judicial interpretations and, in effect, adopted them.” Keene Corp. v. United 

States, 508 U.S. 200, 212 (1993). Moreover, § 20(e)’s language is almost identical 

to the third prong of the test applied in Woods, which demonstrates Congress’s 

intent to act in a manner consistent with existing precedent, not opposed to it. 

Compare 15 U.S.C. § 78t(e) (“knowingly provides substantial assistance”), with 

Woods, 765 F.2d at 1009 (“knowingly and substantially assisted the violation”). 

“When Congress codifies a judicially defined concept, it is presumed, absent an 

express statement to the contrary, that Congress intended to adopt the 

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interpretation placed on that concept by the courts.” Davis v. Michigan Dep’t of 

Treasury, 489 U.S. 803, 813 (1989). 

In 2010, after the events giving rise to this case concluded, Congress passed 

the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank 

Act), which amended § 20(e) of the Exchange Act and added the phrase “or 

recklessly” to satisfy the scienter requirement in aiding and abetting cases. DoddFrank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203 

(2010); 15 U.S.C. § 78t(e) (2010). The defendants argue that Congress’s 

amendment to include recklessness “remove[s] all doubt” that, prior to the DoddFrank Act, “actual knowledge” was required under § 20(e). We disagree.

The amendment to § 20(e) was intended to correct the holding of “[a] 

growing number of courts” who concluded “that knowingly means actual 

knowledge, rather than recklessness.” H.R. Rep. No. 111-687(I), at 80 (2010). 

The amendment “clarif[ies] that recklessness is sufficient for bringing an aiding 

and abetting action.” Id.; see also H.R. Rep. No. 111-517, at 870 (2010) (Conf. 

Rep.) (stating that the amendment to § 20(e) “makes clear that the intent standard 

in SEC enforcement actions for aiding and abetting is recklessness”). Any 

arguments concerning the retroactivity of the amendment to § 20(e) are misplaced

because “concerns about retroactive application are not implicated when an 

amendment that takes effect after the initiation of a lawsuit is deemed to clarify 

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relevant law rather than effect a substantive change in the law.” Cortes v. Am. 

Airlines, Inc., 177 F.3d 1272, 1283 (11th Cir. 1999). 

The defendants next cite SEC v. Yun, 327 F.3d 1263 (11th Cir. 2003), in 

support of their argument that § 20(e) requires proof of actual knowledge, but this

argument also misses the mark. In Yun, the SEC brought suit under § 10(b) of the 

Exchange Act against certain individuals using the tipper-tippee “misappropriation 

theory” of insider trading. Id. at 1267. “The misappropriation theory . . . imposes 

liability on ‘outsiders’ who trade on the basis of confidential information obtained 

by reason of their relationship with the person possessing such information, usually 

an insider.” Id. at 1269. 

In Yun, we rejected the SEC’s contention that “it did not have to prove that 

[the tipper] divulged the information for her own benefit; [and instead] all it had to 

show was that [the tipper] acted with ‘severe recklessness.’” Id. at 1274 (emphasis 

added). Since we had already concluded that “intent to benefit” was an element 

under the classical theory of liability, we were asked to decide whether the SEC 

similarly was required to prove the tipper’s “intent to benefit” as a separate 

element under the misappropriation theory of liability. Id. We answered in the 

affirmative. Id. at 1275–76. The SEC had sought to forgo being required to 

establish a separate element under the misappropriation theory––that the tipper 

expected to receive a benefit. Id. By contrast, the jury in the present case was 

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instructed that it could find liability under § 20(e) of the Exchange Act by finding 

that the defendants knew or were severely reckless in not knowing that Plant and 

CyberKey violated § 10(b) of the Exchange Act and Rule 10b-5. 

Finally, even if we were to assume that § 20(e) requires proof of “actual 

knowledge,” the defendants would still be liable as to the § 20(e) claim submitted 

to the jury. That is, any error in the jury instructions is harmless because the jury 

found that the defendants acted both with actual knowledge and with severe 

recklessness. The district court instructed the jury several times that the scienter 

interrogatories concerning § 20(e) did not require them to mark only one level of 

scienter, but instead that they could mark both or either. 

Ultimately, we conclude that the district court did not err when it found that 

severe recklessness was sufficient to constitute acting “knowingly” under § 20(e) 

of the Exchange Act. 

3. Deliberate Ignorance Jury Instruction

The defendants next contend that the district court erred by including a 

“deliberate ignorance” instruction and by failing to include language in the 

deliberate ignorance instruction that would focus on the defendants’ subjective 

beliefs. 

During trial, the defendants objected to the inclusion of a deliberate 

ignorance instruction because “it is [a] criminal jury instruction, [and] has no 

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application in a civil case.” The defendants also maintained that the “deliberate 

ignorance” instruction was an incorrect legal standard, but they could not cite “any 

authority to [contradict] the substantive merits.” Now, the defendants also argue

that the wording of the deliberate ignorance instruction failed to “focus on the

[d]efendants’ subjective beliefs and deliberate actions.” (Emphasis omitted.) 

Because the defendants objected below, we review the inclusion of a 

deliberate ignorance instruction de novo. See United States v. Campa, 529 F.3d 

980, 992 (11th Cir. 2008). “If the instructions accurately reflect the law, the 

district court enjoys ‘wide discretion as to the style and wording employed in its 

instruction[s].’” Id. (citation omitted). Because the defendants did not object to 

the language of the instruction as it relates to the subjective beliefs of the 

defendants, we review the language of the deliberate ignorance instruction for 

plain error. Ford ex rel. Estate of Ford v. Garcia, 289 F.3d 1283, 1287–88 (11th 

Cir. 2002); Fed. R. Civ. P. 51. “In addition, we have announced that reversal for 

plain error in the jury instructions . . . will occur only in exceptional cases where 

the error is so fundamental as to result in a miscarriage of justice.” Farley v. 

Nationwide Mut. Ins. Co., 197 F.3d 1322, 1329 (11th Cir. 1999) (internal quotation 

marks omitted). Here, the defendants failed to object to the language of the 

deliberate ignorance instruction until after a verdict had been reached and all but 

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admitted in their motion for judgment as a matter of law that “plain error” review 

applies to the “wording of the jury instructions.” 

We have long recognized that “the knowledge element of a violation of a 

criminal statute can be proved by demonstrating either actual knowledge or 

deliberate ignorance.” United States v. Prather, 205 F.3d 1265, 1270 (11th Cir. 

2000); see United States v. Arias, 984 F.2d 1139, 1143 (11th Cir. 1993) (noting 

that deliberate ignorance is “the equivalent of knowledge” (internal quotation 

marks omitted)). We have also explained that “deliberate ignorance . . . is based 

on the alternative to the actual knowledge requirement at common law that if a 

party has his suspicion aroused but then deliberately omits to make further 

enquiries, because he wishes to remain in ignorance, he is deemed to have 

knowledge.” United States v. Rivera, 944 F.2d 1563, 1570 (11th Cir. 1991)

(internal quotation marks omitted). “To act ‘knowingly,’ therefore, is not 

necessarily to act only with positive knowledge, but also to act with an awareness 

of the high probability of the existence of the fact in question.” Id. (citation 

omitted). 

While our precedent relates to deliberate ignorance in criminal cases, it 

follows that the standard should similarly apply in civil cases, in which the burden 

of proof is lower and protections surrounding defendants are lessened. In reaching 

this conclusion, “we draw guidance from the well-developed law of aiding and 

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abetting liability in criminal cases; for if the conduct of an aider and abettor is 

sufficient to impose criminal liability, a fortiori it is sufficient to impose civil 

liability in a government enforcement action.” SEC v. Apuzzo, 689 F.3d 204, 212 

(2d Cir. 2012). Indeed, the Supreme Court has recently recognized that a 

deliberate ignorance instruction is also appropriate in civil actions. See GlobalTech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2069 (2011) (“[W]e can see no 

reason why the doctrine [of deliberate ignorance] should not apply in civil 

lawsuits . . . .”).

To the extent the defendants also suggest that the facts of this case were 

insufficient to warrant a deliberate ignorance instruction, we conclude that there 

was more than sufficient evidence to support the instruction. It is true that the 

deliberate ignorance instruction should only be given where there is evidence that 

“the defendant purposely contrived to avoid learning the truth.” United States v. 

Stone, 9 F.3d 934, 937 (11th Cir. 1993) (internal quotation marks omitted). 

Moreover, we have concluded that “a district court should not instruct the jury on 

‘deliberate ignorance’ when the relevant evidence points only to actual 

knowledge.” Rivera, 944 F.2d at 1571 (emphasis omitted). But the evidence 

presented at trial is consistent with the SEC’s theory that the defendants acted with 

deliberate ignorance of what would otherwise be obvious fraud and/or that they 

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acted with severe recklessness to assist in fraud that was so obvious that they must 

have been aware of it. 

At trial, the evidence showed that the defendants were aware of Plant’s 

evasiveness and, at times, bizarre behavior. The defendants were aware of the 

purported MPX contract. They helped draft press releases about the MPX 

contract, which increased in value three times and suddenly was dropped 

altogether without explanation. The evidence showed that the defendants were

aware of the “one in a million” contract CyberKey allegedly acquired with DHS 

and that the DHS contract was riddled with problematic language and internal

inconsistencies. The defendants were aware of Plant’s claim that CyberKey 

received a $4.2 million payment from DHS, but CyberKey only held $6,000 in its 

bank account. The defendants received inquiries from NASD and DHS about the 

DHS contract but did nothing to follow up on the legitimacy of the DHS contract. 

As the district court found, the SEC also submitted evidence that the defendants 

had a motive to deliberately ignore Plant’s and CyberKey’s fraud because the 

defendants were paid in CyberKey stock and purchased CyberKey stock at deep 

discounts. In sum, we agree with the district court that “the SEC presented 

sufficient evidence for the jury to determine that [the] [d]efendants were aware of a 

high probability that the DHS contract was fraudulent and that they took deliberate 

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actions to avoid learning that fact. Therefore, instructing the jury on deliberate 

ignorance was proper.” 

Next, the defendants argue that even if providing a deliberate ignorance 

instruction was proper, the instruction “should have advised the jury to focus on 

the [d]efendants’ subjective beliefs and deliberate actions.” (Emphasis added.) 

We reiterate that we review for plain error and will only reverse if “the error is so 

fundamental as to result in a miscarriage of justice.” Farley, 197 F.3d at 1329. 

The jury instruction in the present case is consistent with our precedent. It 

stated:

[T]he SEC may prove a [d]efendant acted knowingly or recklessly by 

proving, by a preponderance of the evidence, that a [d]efendant 

deliberately closed his eyes to what would otherwise have been 

obvious to him. No one can avoid liability under the securities laws 

by deliberately ignoring what is obvious. You may infer knowledge 

of the existence of a fact if a [d]efendant was aware of a high 

probability of the existence of that fact and purposely contrived to 

avoid learning all the facts. If you find by a preponderance of the 

evidence that a [d]efendant intentionally avoided knowledge or 

enlightenment, you may find that [d]efendant acted knowingly or 

recklessly.

The court reiterated this instruction when the jury asked: “Is the definition of . . . 

‘actual knowledge,’ . . . the same as . . . ‘acted knowingly’ on page 36 of the 

instructions?” Page thirty-six of the instructions provided the deliberate ignorance 

instruction. The court responded: “My answer to you is actual knowledge may be 

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established by proving by a preponderance of the evidence that a defendant 

deliberately closed his eyes to what would otherwise have been obvious to him.”8

 

We agree with the defendants that the deliberate ignorance instruction, also

referred to as the “willful blindness” instruction, contains “two basic requirements: 

(1) the defendant must subjectively believe that there is a high probability that a 

fact exists and (2) the defendant must take deliberate actions to avoid learning of 

that fact.” Global-Tech, 131 S. Ct. at 2070. However, the instruction adequately 

conveyed these two principles, and there was no plain error. 

The deliberate ignorance instruction clearly communicated the “deliberate” 

component that the defendants insist was missing. The instruction stated that the 

SEC may establish knowledge by proving by a preponderance of the evidence that 

a particular defendant “deliberately closed his eyes,” “purposely contrived to avoid 

learning the facts,” and “intentionally avoided knowledge or enlightenment.” 

(Emphasis added.) 

The thrust of the defendants’ argument relates to the subjective component 

of the deliberate ignorance instruction. They maintain that the instruction should 

have included terminology similar to the Eleventh Circuit’s criminal pattern 

 8 The district court could have clarified the instruction by stating the jury could find the 

defendants acted “with knowledge” by behaving with deliberate ignorance, rather than stating 

that the jury could find that the defendants acted with “actual knowledge” through deliberate 

ignorance. However, any error by phrasing the language as “actual knowledge” was harmless 

because the evidence, though circumstantial, strongly supported finding that the defendants acted 

“knowingly” by being deliberately ignorant of the facts. See United States v. Perez-Tosta, 36 

F.3d 1552, 1565 (11th Cir. 1994). 

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instruction on deliberate ignorance, which reads: “If a Defendant’s knowledge of a 

fact is an essential part of a crime, it’s enough that the Defendant was aware of a 

high probability that the fact existed – unless the Defendant actually believed the 

fact didn’t exist.” Eleventh Cir. Pattern Jury Instr. Crim. No. 8 “Deliberate 

Ignorance as Proof of Knowledge” (2010). But a district court is not required to 

use magic language to convey the law. Instead, “[w]e will only reverse the lower 

court because of an erroneous instruction if we are left with a substantial and 

ineradicable doubt as to whether the jury was properly guided in its deliberations.” 

McCormick v. Aderholt, 293 F.3d 1254, 1260 (11th Cir. 2002) (internal quotation 

marks omitted). 

While the deliberate ignorance instruction in the instant case did not include 

the “actual belief” language, the instruction did focus on the individual defendant’s 

subjective belief. The instruction indicated that the jury could find that a defendant 

acted with knowledge if the “[d]efendant intentionally avoided knowledge or 

enlightenment.” The “actual belief” language the defendants now insist should 

have been included is simply the converse of the instruction given. In other words,

a defendant who did not actually believe there was fraud would not be 

“intentionally avoid[ing] knowledge or enlightenment” because he would have 

nothing to believe he was avoiding. Even though the language championed by the 

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defendants would polish an otherwise sufficient instruction, the omission of the 

language does not rise to the level of reversible error.

To further support their position that “actual belief” language should have 

been included in the deliberate ignorance instruction, the defendants cite United 

States v. Kaiser, 609 F.3d 556 (2d Cir. 2010). In Kaiser, the Second Circuit 

concluded that the “conscious avoidance” instruction given by the lower court was 

in error because it did not contain “either the ‘high probability’ or ‘actual belief’ 

language that [the court] ha[s] long held is essential for an accurate conscious 

avoidance instruction.” Id. at 566. The instruction was also confusing without the 

“high probability” language. Id. As an initial matter, Kaiser is not binding on us.

Moreover, the district court here included the “high probability” language that was 

absent in Kaiser. Finally, we have not had a long history of emphasizing “actual 

belief language,” nor have we ordered that such holdings be circulated to attorneys 

to reinforce such a requirement, both of which have occurred in the Second Circuit. 

Id. In short, Kaiser is simply unpersuasive and inapplicable to the circumstances 

in this circuit and this case. 

The defendants also imply that the deliberate ignorance instruction may have 

resulted in liability based on negligent conduct, but such a concern is misplaced. 

The defendants cite an instruction relating to severe recklessness in this case, not 

deliberate ignorance. The instruction stated:

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a [d]efendant’s claim that he acted in good faith, without more, does 

not preclude you from finding that he acted recklessly. Therefore, 

even if you find that a [d]efendant believed the representations of 

CyberKey Solutions and James Plant concerning the existence of a 

purchase order from the Department of Homeland Security, you may 

still find the SEC has established that a [d]efendant aided and abetted 

CyberKey Solutions’ and James Plant’s [fraud] if his belief was based 

upon nothing more than a severely reckless disregard for the truth, 

provided that all of the other elements of the violation have been 

proven. 

While such an instruction may be improper as it relates to deliberate ignorance, the 

defendants requested that the deliberate ignorance instruction be included in the 

instruction explaining the substantive charge. The district court purposely included 

the deliberate ignorance instruction with the severe recklessness instruction so that 

the “scienter [was linked] to the correct claim.” Moreover, the court also cautioned 

in the same substantive instruction: 

It is not enough to establish severe recklessness to show that the 

[d]efendants acted accidently or made a mistake, nor is it enough to 

show that the [d]efendants were simply negligent or even inexcusably 

negligent. 

Both knowledge––proven through establishing deliberate ignorance––and severe 

recklessness––through proof of severe, reckless disregard for the truth––satisfied 

the scienter requirement. Thus, the instructions were not misleading simply

because they discussed language related to deliberate ignorance and severe 

recklessness––in separate paragraphs––of the same substantive instruction. 

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Finally, the defendants maintain that the Supreme Court’s decision in 

Global-Tech––in which the Court held that a deliberate ignorance (willful 

blindness) instruction can be applied in civil cases––somehow bolsters their claim 

that the jury instruction failed to include the subjective component of deliberate 

ignorance. 131 S. Ct. at 2069 (“[W]e can see no reason why the doctrine [of 

willful blindness] should not apply in civil lawsuits . . . .”). The Court in GlobalTech concluded that the test for deliberate ignorance used by the Federal Circuit 

departed from the appropriate standard of deliberate ignorance by: (1) permitting a 

finding of knowledge when there is “merely a ‘known risk’” and (2) “demanding 

only ‘deliberate indifference’ to that risk.” Id. at 2071. The deliberate ignorance 

instruction in the instant case contains neither of these phrases, nor any phrases 

akin to them. Instead, the deliberate instruction in the instant case included both 

elements explicitly recognized by the Supreme Court: “(1) the defendant must 

subjectively believe that there is a high probability that a fact exists and (2) the 

defendant must take deliberate actions to avoid learning that fact.” Id. at 2070

(emphasis added). The instant instruction stated in relevant part: “[y]ou may infer 

knowledge of the existence of a fact if [(1)] a [d]efendant was aware of a high 

probability of the existence of that fact and [(2)] purposely contrived to avoid 

learning all the facts.” (Emphasis added.) Accordingly, the district court did not 

err in its instruction to the jury on deliberate ignorance. 

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4. Summary Judgment as to § 5(a) and 5(c) of the Securities Act

We review the district court’s decision to grant summary judgment de novo. 

Ave. CLO Fund, Ltd. v. Bank of Am., NA, 723 F.3d 1287, 1293 (11th Cir. 2013). 

As a preliminary matter, the defendants contest only the district court’s 

finding that they had acted as underwriters and dealers with respect to “the 

registration requirements of Section 5” of the Securities Act. (Emphasis added.) 

Therefore, any claims raised by Big Apple or MJMM as to their § 15(a) violations

of the Exchange Act for failing to register with the SEC are deemed abandoned. 

See Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 681 (11th Cir. 2014) 

(“We have long held that an appellant abandons a claim when he either makes only 

passing references to it or raises it in a perfunctory manner without supporting 

arguments and authority.”); Access Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 

1330 (11th Cir. 2004) (“Any issue that an appellant wants [us] to address should be 

specifically and clearly identified in the brief . . . . Otherwise, the issue—even if 

properly preserved at trial—will be considered abandoned.”). Regardless, any 

argument that can be discerned from the defendants’ briefs as to § 15(a) fails as a 

matter of law for the same reasons as it fails under § 5. 

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On summary judgment, the district court found Big Apple, MJMM, and 

Jablon––the relevant defendants9 as to this claim––liable for the sale of 

unregistered shares of CyberKey in violation of § 5(a) and (c) of the Securities Act. 

Subsections (a) and (c) of § 5 prohibit the “sale” and “offer for sale” of any 

securities unless a registration statement is in effect or there is an applicable 

exemption from registration. 15 U.S.C. §§ 77e(a), (c). “In order to establish a 

prima facie case for a violation of § 5 of the Securities Act, the SEC must 

demonstrate that (1) the defendant directly or indirectly sold or offered to sell 

securities; (2) through the use of interstate transportation or communication and the 

mails; (3) when no registration statement was in effect.” SEC v. Calvo, 378 F.3d 

1211, 1214 (11th Cir. 2004). The defendants do not dispute that the SEC has 

established a prima facie case for its § 5 claims. 

“Once participation in an unregistered sale has been shown, the petitioners 

have the burden of proving an exemption to the registration requirements.” 

Zacharias v. SEC, 569 F.3d 458, 464 (D.C. Cir. 2009) (citing SEC v. Ralston 

Purina, 346 U.S. 119, 126 (1953)). There are two methods to establish an 

exemption from the registration requirements of § 5, but only one exemption is at 

issue in this appeal. Section 4(1) of the Securities Act exempts “transactions by 

any person other than an issuer, underwriter, or dealer.” 15 U.S.C. § 77d(1) 

 9 Kaley was not a defendant on this claim. Thus, this section of the opinion referring to 

“defendants” excludes Kaley. 

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(emphasis added). The defendants maintain that they qualify for an exemption 

under § 4(1). Although the SEC concedes that Big Apple, MJMM, and Jablon 

were not issuers, it argues––as the district court found––that the defendants were 

underwriters and/or dealers. Therefore, the defendants do not qualify for the 

relevant exemption. We agree. 

a. Underwriters

The definition of “underwriter” in the Securities Act “is expansive.” SEC v. 

Platforms Wireless Int’l Corp., 617 F.3d 1072, 1086 (9th Cir. 2010). An 

“underwriter” is “any person who has purchased from an issuer with a view to, or 

offers or sells for an issuer in connection with, the distribution of any 

security . . . .” 15 U.S.C. § 77b(a)(11) (emphasis added). In its motion for 

summary judgment, the SEC argued and the district court found that the relevant 

defendants were underwriters “because they obtained CyberKey stock with a view 

to distribution.” (Emphasis added.) Because the burden of proving entitlement to 

the § 4(1) exemption rests with the defendants, they must at least point to some 

evidence that their receipt of the unregistered CyberKey shares was not made 

“with a view to” distribution. See Ackerberg v. Johnson, 892 F.2d 1328, 1336 (8th 

Cir. 1989). 

Whether the relevant defendants’ receipt of the unregistered shares was 

made “with a view to” distribution focuses on their investment intent at the time of 

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acquisition. Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 213 (3d Cir. 2006). 

Thus, there is a distinction between acquiring shares from the issuer with an 

investment purpose and acquiring shares for the purpose of reselling them. 

Ackerberg, 892 F.2d at 1336. “Because it is difficult to discern a party’s intent at 

the time of purchase with respect to downstream sales of unregistered shares, 

courts and commentators have typically focused on the amount of time a security 

holder holds on to shares prior to reselling them.” Berckeley, 455 F.3d at 213; see 

also Ackerberg, 892 F.2d at 1336. Courts have generally agreed that a two-year 

holding period is sufficient to negate the inference that the security holder did not 

acquire the securities with a “view to distribute.” See Berckeley, 455 F.3d at 213; 

Ackerberg, 892 F.2d at 1336; SEC v. Olins, No. C-07-6423 MMC, 2010 WL 

900518, at *2 (N.D. Cal. Mar. 12, 2010) (citing cases). 

Here, defendants claim that they “held onto [CyberKey] stock for months, if 

not half a year, maybe even longer.” Six months falls well short of the two-year 

“rule of thumb” to determine whether the securities were received with a view to 

distribution. Ackerberg, 892 F.2d at 1336; see also Berckeley, 455 F.3d at 213. 

The evidence asserted by the SEC paints an even bleaker picture for the 

defendants. As the SEC expert explained: 

MJMM had acquired 301.8 million CyberKey [ ] shares as of 

November 9, 2006, and by December 7, 2006, all of these shares were 

sold. On December 7, 2006, MJMM had net sales totaling 304.3 

million shares. By the end of the year, MJMM sold more than 75% of 

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the 200 million CyberKey [ ] shares it acquired after June 30, 2006, 

and it sold the remaining shares by January 23, 2007 . . . [O]n 

Decmber 7, 2006, MJMM paid an average price of $0.0152 per share 

to acquire 6.6. million shares of [] stock [by exercising its contractual 

discount] and, on the same day, it was paid an average price of $0.026 

per share to sell 6.0 million shares of [stock]. 

In Gilligan, Will & Co. v. SEC, 267 F.2d 461, 467–68 (2d Cir. 1959), the Second 

Circuit determined that shares sold more than ten months after being converted 

from debentures had not been “held for investment” and thus, were bought “with a 

view to distribution.” Similar to the present case, profit was a motivating factor as 

to the timing of sale. See id. at 468 (“[T]he intention to retain the debentures only 

if Crowell-Collier continued to operate profitably was equivalent to a ‘purchase

with a view to distribution.’” (alterations omitted)). 

Defendants’ citation to the testimony of Maguire, who had authority to trade 

stock held by Big Apple and its subsidiaries, is similarly unavailing. Maguire 

testified that “each week [he] had an operational [expense] number” he needed to 

match, through stock selling activity, in order to meet Big Apple’s operational 

needs. He made “daily decisions [as to] which stocks to sell,” and in selecting 

which stocks to sell in a given week, he considered the current price, liquidity, 

public information, and at times, purchase price. Jablon’s testimony reveals the 

significance of liquidity as a selling factor. He stated that the decision whether to 

hold stock or to sell “[d]epend[ed] on market liquidity,” and in the case of 

CyberKey, there were instances where the defendants purchased CyberKey stock 

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“and held onto [the] stock for months, if not half a year.” But the only reason for 

holding the stock as long as six months was because “there wasn’t liquidity or 

enough liquidity” in the stock, which meant the defendants “would lose money on 

[the] investment” if they tried to sell. Kaley unequivocally acknowledged that

aside from liquidity, “the price [at which the defendants] acquired the shares” was 

a “factor taken into consideration.” Sales of stock occurred “[w]hen market 

conditions were right”; instructively, if a stock was “acquired at a penny [and 

thereafter traded] at half a penny,” it would “not be the most opportune time to 

sell[.]” Regardless, the testimony of Maguire, Jablon, and Kaley makes apparent 

that the defendants gave no consideration to how long they held the stock or any 

other factors that would indicate that they were holding stock for investment 

purposes, and, instead, exhibited an overarching concern that they profit from their 

selling activity. 

Indeed, the defendants’ brief itself does not indicate that they were interested 

in investment; rather, they claim that they received CyberKey stock with a “more 

practical view to being paid for services rendered.” But this does nothing to 

bolster their claim that they did not receive stock with an eye to distribution. Quite 

the contrary, at least ninety-five percent of Big Apple’s clients paid in stock, 

including CyberKey. It is difficult to fathom how Big Apple could operate by 

receiving stock not with a “view toward” distribution in order to maintain its own 

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operating costs. The defendants also argue that they have submitted evidence that 

establishes CyberKey had no input into when MJMM or Big Apple sold its shares 

and that it was not Big Apple’s policy to sell stock it received from its customers 

immediately. Yet, this also does not negate the overwhelming evidence that the 

defendants received stock with an view toward distribution. The definition of an 

underwriter does not require the immediate distribution of stock received or that 

the issuer of the stock dictate when the defendants sell the stock; it only requires 

that the defendants receive the stock with a view to distribution. 

While the defendants claim an exemption from registration only under § 4(1) 

of the Securities Act, they attempt to borrow language and reasoning from the 

other exemption to § 5 registration requirements. They claim that Rule 144’s safe 

harbor provision, which is also an exemption to the § 5 registration requirements,

only requires a six-month holding period, indicating that the link between the 

holding time of a security and whether the security was received “with a view to 

distribution” is tenuous. 17 C.F.R. § 230.144(d). Further, Rule 144 emphasizes 

the difficulties associated with ascertaining the mental state of a purchaser of 

securities. 17 C.F.R. § 230.144. However, the defendants admittedly do not 

qualify for the Rule 144 exemption. Moreover, as the district court reasoned, Rule 

144 contains other requirements that safeguard investors, which are not found in 

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§ 4(1). Accordingly, we decline to extrapolate the changes to Rule 144 to the 

exemption of § 4. 

Simply put, Big Apple, MJMM, and Jablon fail to point to any genuine 

issues of fact regarding their investment intentions. 

b. Dealers10

A “dealer” is “any person who engages either for all or part of his time, 

directly or indirectly, as agent, broker, or principal, in the business of offering, 

buying, selling, or otherwise dealing or trading in securities issued by another 

person.” 15 U.S.C. §77b(a)(12).11 We conclude, as the district court found, that 

Big Apple and MJMM were dealers, and, therefore, they do not qualify for the 

§ 4(1) exemption to securities registration. 

To qualify as a “dealer,” a person must be in the “business of” buying and 

selling securities. We think the centerpiece to this definition is the word 

“business,” which is defined as “[a] commercial enterprise carried on for profit, a 

particular occupation or employment habitually engaged in for livelihood or gain” 

Black’s Law Dictionary 239 (10th ed. 2009) (emphasis added). Central to this 

 10 It is unclear whether the district court held that only Big Apple and MJMM were dealers or 

intended to conclude that Jablon was also a dealer. Having already concluded that the district 

court accurately found Jablon was an underwriter, we will not address whether Jablon was a 

dealer.

11 The district court and the parties in this case refer to the definition of dealer under 15 U.S.C. § 

78c(a)(5)(A). This likely is because the district court analyzed the definition of dealer as it 

related to the SEC’s § 15(a) claims and generally applied that analysis to the § 5 exception. 

Because the definition of dealers in 15 U.S.C. § 77b(a)(12) and 15 U.S.C. § 78c(a)(5)(A) are 

very similar, the district court’s analysis was sound. 

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definition is profit or gain. While evidence of merely some profits from buying 

and selling securities may alone be inconclusive proof, the defendants’ entire

business model was predicated on the purchase and sale of securities. Big Apple 

and its subsidiaries depended on acquiring client stock and selling that stock to 

support operations and earn a profit. In their brief, the defendants do not contest 

that they received most of their compensation by obtaining and selling their 

clients’ stocks. Nor could they, as testimony from Maguire, Jablon, and Kaley 

reveals that the defendants placed a high priority on generating a profit from 

trades. 

As further evidence of their dealer status, Big Apple and MJMM purchased 

CyberKey stocks at deep discounts pursuant to its contractual agreement with 

CyberKey and then sold those stocks for profit. Furthermore, Big Apple and 

MJMM have not pointed to any evidence to suggest otherwise. Accordingly, it is 

indisputable that Big Apple and MJMM were “in the business of . . . buying [and] 

selling securities . . . issued by” CyberKey and, therefore, they do not meet the 

§ 4(1) exemption to the registration requirement. 15 U.S.C. § 77b(a)(12); 15 

U.S.C. § 77d(1). 

5. Evidentiary Rulings

We review a district court’s evidentiary rulings for an abuse of discretion. 

Goodman-Gable-Gould Co. v. Tiara Condo. Ass’n, Inc., 595 F.3d 1203, 1210 

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(11th Cir. 2010). Our review of the exclusion of expert testimony is “very 

limited.” McCorvey v. Baxter Healthcare Corp., 298 F.3d 1253, 1257 (11th Cir. 

2002). We will not reverse a jury verdict based on a district court’s evidentiary 

ruling “unless [it] is manifestly erroneous.” Gen. Elec. Co. v. Joiner, 522 U.S. 

136, 142 (1997) (internal quotations omitted). 

The defendants argue that the district court abused its discretion when it 

excluded: (1) expert testimony by Stanley Wunderlich (Wunderlich); (2) evidence 

concerning internal communications at DHS; (3) Youtube video exhibits; (4) the 

SEC complaint against CyberKey and Plant and their answer to the complaint; and 

(5) evidence of Keith’s health condition. The defendants also assert that the 

district court erred when it allowed the SEC to mischaracterize a portion of the 

SEC expert’s opinion during closing argument. 

The district court properly excluded the testimony of the defendants’ expert 

witness, Wunderlich. Wunderlich, a principal in a New York City-based

consulting firm, would have opined that investor/public-relations firms customarily 

rely upon information given to them by their clients and do not customarily seek

independent verification of such information. Wunderlich’s opinion suffered 

several flaws that rendered his testimony inadmissible. He admitted that he could 

not actually testify as to an industry practice, but instead could only opine what he 

would have done based on the facts as he understood them. His opinion also failed 

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to consider the important fact that Big Apple and MJMM received client stock as 

compensation and traded that stock while promoting the client. His qualifications 

were also questionable because he did not have a strong connection with the 

National Investor Relations Institute, whose standards Wunderlich purported to 

interpret. 

Still, even assuming Wunderlich’s experience rendered him qualified, we 

have held that “an expert may be qualified . . . [but that] does not mean that 

experience, standing alone, is a sufficient foundation rendering reliable any 

conceivable opinion the expert may express.” United States v. Frazier, 387 F.3d 

1244, 1261 (11th Cir. 2004). When a witness relies “solely . . . on experience, then 

[he] must explain how that experience leads to the conclusion reached, why that 

experience is a sufficient basis for the opinion, and how that experience reliably 

applied to the facts.” Id. (quoting Fed. R. Evid. 702) (internal quotation marks 

omitted). Wunderlich failed to provide sufficient justification as to how his 

personal experience could be reliably applied to the facts. Accordingly, the district 

court properly performed its “gatekeeping function” by excluding Wunderlich’s 

testimony. Id. 

The district court also properly excluded DHS documents that would have 

shown that DHS experienced difficulties confirming the nonexistence of 

CyberKey’s fictitious DHS contract. The district court concluded that since the 

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defendants did not attempt to contact DHS, any evidence concerning what the DHS 

knew was irrelevant. We agree. The issues at trial related to whether the 

defendants knew that CyberKey did not have a contract with DHS. The fact that 

DHS may have experienced difficulties confirming the non-validity of the DHS 

contract does not make it “less probable” that the defendants knew that the DHS 

contract was fabricated. Fed. R. Evid. 401. Such evidence would only be relevant 

if the defendants knew or attempted to discover what DHS knew.

The defendants next claim that the court erred by excluding YouTube videos 

that they believe demonstrated Plant’s persuasiveness. Prior to trial, the SEC 

objected to the admissibility of the videos on three grounds: (1) the defendants had 

failed to comply with the Fed. R. Civ. P. 26 disclosure requirements, and therefore,

the evidence should be excluded pursuant to Fed. R. Civ. P. 37; (2) the videos were 

irrelevant; and (3) the videos had not been authenticated. The court found that 

while the defendants had failed to comply with the disclosure requirements, the 

late disclosure could be cured because the trial had been delayed. Therefore, the 

court agreed to admit the evidence so long as the videos were relevant and 

authenticated. The court concluded that only one of the videos was relevant. In 

the admissible video, Plant discussed the development of CyberKey’s products for 

government use and alluded to a contract with DHS. However, the other videos 

contained only general information about CyberKey and Big Apple and were 

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therefore irrelevant to the issues at trial. The court concluded that as to the 

admissible video, the SEC would be allowed to conduct any necessary discovery 

and would be awarded reasonable fees and costs related to such discovery due to 

the defendants’ late disclosure. 

The district court did not abuse its discretion by excluding all but one of the 

proposed videos as irrelevant and by admitting one of the videos so long as the 

defendants allowed the SEC to pursue discovery. As an initial matter, the 

defendants do not provide a detailed description of the excluded videos. The 

defendants also chose not to introduce the video that the court ruled was admissible

because of the costs associated with allowing the SEC to pursue discovery related 

to the video. The defendants’ primary argument is that the videos would have 

shown how persuasive Plant was and would have lent credence to the defendants’ 

theory that they were simply “dupe[d]” by Plant’s scheme. However, that the 

defendants chose not to introduce the one video the district court deemed relevant 

to such an argument is of no concern to us. The exclusion of the remainder of the 

videos was well within the discretion of the district court. For example, it was 

undisputed that Big Apple appeared to be an otherwise legitimate business, and,

therefore, the district court did not err by excluding a video of a Big Apple 

advertisement as irrelevant. See Fed. R. Evid. 401. 

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While the defendants baldly state that the district court erred by excluding 

the SEC complaint against Plant and CyberKey, their answer to that complaint, and 

evidence of Keith’s health condition, they failed to flesh out such arguments, 

except by referring to them in a footnote. “We have long held that an appellant 

abandons a claim when he either makes only passing references to it or raises it in 

a perfunctory manner without supporting arguments and authority.” Sapuppo, 739 

F.3d at 681. The defendants’ fleeting footnote explaining in one sentence that such 

evidence “could be relevant” is insufficient to properly assert a claim on appeal. 

Finally, the defendants contend that the district court improperly permitted 

the SEC to mischaracterize testimony by the SEC’s expert witness. Because the 

defendants did not object to the SEC’s statements during closing argument, we 

review for plain error. United States v. Edouard, 485 F.3d 1324, 1343 (11th Cir. 

2007). 

Prior to trial, the district court found that the one of the proposed opinions of 

the SEC’s expert, Robert Lowry, was a legal conclusion. Lowry sought to opine 

that a broker-dealer is required to investigate red flags relating to information 

reported to them from their clients. During trial, Lowry opined, without objection, 

that under the standard practice, “[i]t is not reasonable [for a broker-dealer] to rely 

solely on the information provided by the [client] company.” During closing 

argument, the SEC referred to Lowry’s testimony, again without objection. The 

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SEC’s closing argument clearly referred to Lowry’s opinion about the standard of 

practice a broker-dealer should meet, not an improper legal conclusion. Moreover, 

“we presume that the jurors followed the court’s instructions,” which provided the 

law in this case. Brown v. Jones, 255 F.3d 1273, 1280 (11th Cir. 2001). 

Accordingly, we find no plain error. 

Separately, Kaley argues that the district court improperly permitted Lowry 

to testify that Kaley’s conduct was “not reasonable.” Specifically, Kaley claims 

that Lowry’s testimony that Kaley did not act reasonably is a “legal conclusion” 

that implies Kaley could be found liable for merely acting negligently. As Kaley 

did not object or request a limiting instruction, we again review for plain error. 

Sapuppo, 739 F.3d at 681. As already indicated, Lowry did not testify that the 

defendants acted with any particular mental state, but rather, he opined that the 

defendants failed to conduct reasonable due diligence under industry standards. 

This does not amount to a legal conclusion, and there was no error. 

6. Sufficiency of the Evidence as to Kaley

Finally, Kaley, proceeding pro se, claims that the district court erred when it 

denied his motion for judgment as a matter of law. Kaley insists that there was 

insufficient evidence for the jury to find that he acted knowingly and recklessly in 

violation of § 17(a)(1) of the Securities Act and § 20(e) of the Exchange Act. We 

disagree.

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Shortly after the trial concluded, Kaley’s counsel withdrew from 

representing him. Kaley subsequently filed a “pro se motion for directed verdict 

and judgment as a matter of law.” His arguments primarily focused on the 

sufficiency of the evidence relating to the scienter requirements of both statutes. 

His motion was non-compliant with the district court’s order, which had instructed 

that the defendants’ motion for judgment as a matter of law be limited to the issue 

of the deliberate ignorance instruction. The district court nevertheless concluded 

that “there was more than enough evidence for a reasonable jury to at least infer 

actual knowledge . . . based on deliberate ignorance.” While it is unclear whether 

Kaley’s argument was properly preserved, we will likewise address his sufficiency 

of the evidence argument. 

However, to the extent Kaley challenges the sufficiency of the evidence to 

support his participation in the fraudulent scheme or other elements of the claims 

against him, such claims are not preserved for our review. “A Rule 50(b) motion is 

a renewal of a Rule 50(a) motion. This Court repeatedly has made clear that any 

renewal of a motion for judgment as a matter of law under Rule 50(b) must be 

based upon the same grounds as the original request for judgment as a matter of 

law made under Rule 50(a) at the close of the evidence and prior to the case being 

submitted to the jury.” Doe v. Celebrity Cruises, Inc., 394 F.3d 891, 903 (11th Cir. 

2004) (citation omitted). During trial, Kaley, through his counsel, only moved for 

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a Rule 50(a) judgment as a matter of law on the basis of the insufficient evidence 

to prove the defendants’ scienter, not based on the sufficiency of evidence relating 

to other elements of the claim. In order to ensure that opposing counsel is not 

“ambushed” by a sufficiency of the evidence argument, a party may renew its Rule 

50(a) motion after trial “under Rule 50(b), but a party cannot assert grounds in the 

renewed motion that it did not raise in the earlier motion.” Celebrity Cruises, 394 

F.3d at 903 (internal quotation marks omitted). Accordingly, to the extent Kaley 

now attempts to challenge the sufficiency of the evidence to support his 

participation in the fraudulent scheme, such an argument is not preserved for our 

review.12

“We review de novo the district court’s rulings on motions under Rule 50 of 

the Federal Rules of Civil Procedure, examining the trial evidence in the light most 

favorable to the non-moving party.” Celebrity Cruises, 394 F.3d at 902.

Sufficient evidence supported the jury’s determination that Kaley acted with 

actual knowledge and severe recklessness in violation of §17(a)(1) of the Securities 

Act and § 20(e) of the Exchange Act. In his brief, Kaley maintains that the SEC’s 

stipulation that Plant “concocted his scheme with an intent to deceive . . . precludes 

an inconsistent and contrary position that Kaley violated § 17(a) or § 20(e).” But 

just because Plant intended to deceive the defendants does not mean they were 

 12 The district court also did not address any other sufficiency of the evidence claims in its posttrial order addressing the defendants’ Rule 50(b) motions. 

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actually deceived. That Kaley also acted with deliberate ignorance of the truth 

and/or severe recklessness is not “contrary” to Plant’s intentional fraud. 

Moreover, Kaley equates circumstantial evidence with no evidence. He 

further fails to recognize that we must view the evidence in the light most 

favorable to the SEC, as it is the non-moving party. Celebrity Cruises, 394 F.3d at 

902. For example, Kaley argues that Plant’s repeated last-minute re-scheduling of 

meetings with potential buyers is consistent with CyberKey being a small company 

entering the market. While this may be one way of viewing the evidence, Plant’s 

repeated last-minute cancellation of meetings could also corroborate the SEC’s 

theory that Kaley and the other defendants repeatedly turned a blind eye to the red 

flags of fraud in an effort to profit from the acquisition and sale of CyberKey 

stock. Kaley also maintains that the internal inconsistencies in the DHS contract 

were not obvious and were only obvious to the SEC expert who was “playing 

Monday morning quarterback.” Again, the jury was capable of viewing the DHS 

contract and determining whether the inconsistencies were indeed obvious. The 

jury was likewise able to listen to the SEC expert to determine whether he was 

merely testifying with the benefit of hindsight or whether such inconsistencies 

should have been apparent to the defendants. 

Kaley also argues there was no evidence that he doubted Plant’s honesty and 

reliability and maintains it was clear error for the district court to rely on the 

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“broken promises” memorandum drafted by Keith as evidence of Kaley’s scienter. 

Kaley complains he only saw the broken promises memorandum after it was 

drafted and that the memorandum did not include any evidence of his subjective or 

objective beliefs about Plant’s honesty. Again, Jablon emailed Kaley the broken 

promises memorandum in the summer of 2006, but Kaley did nothing to 

investigate whether Plant and CyberKey were committing fraud. The jury could 

infer that Kaley viewed the broken promises memorandum and turned a blind eye 

to Plant’s fraud or, at least, that Kaley was severely reckless. While Kaley 

understandably views the evidence in the light most favorable to himself, the jury 

was free to do otherwise. Accordingly, there was sufficient evidence of Kaley’s 

scienter for the jury to find him liable under § 20(e) and § 17(a)(1). 

CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the district court. 

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