IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-51034

UNITED STATES OF AMERICA, 

 Plaintiff - Appellee

v.

MICHAEL BAKER, 

 Defendant - Appellant

Appeal from the United States District Court 

for the Western District of Texas

Before WIENER, SOUTHWICK, and COSTA, Circuit Judges.

WIENER, Circuit Judge:

Treating the petition for rehearing en banc as a petition for panel 

rehearing, the petition for rehearing en banc is DENIED. The following is 

substituted in place of our opinion. 

Defendant-Appellant Michael Baker was the Chief Executive Officer of 

ArthroCare, a publicly traded medical-device company. Baker, along with the 

company’s other senior executives, engaged in a “channel-stuffing” scheme 

that involved sending excess products to a distributor that did not need those 

products. ArthroCare reported those shipments as legitimate sales, which 

inflated the company’s revenue numbers in its financial reports. Baker hid this 

scheme from ArthroCare’s board and auditors, and he made false statements 

United States Court of Appeals

Fifth Circuit

FILED

April 26, 2019

Lyle W. Cayce

Clerk

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to the SEC and to investors about the company’s business model and 

relationships with its distributors. When it was uncovered that the statements 

were false and that some of these sales were not legitimate, ArthroCare 

restated its earnings and revenues, causing its stock price to drop. 

This is the second time Baker has been convicted. He was first convicted 

in 2014, but this court vacated that conviction based on erroneous evidentiary 

rulings. At the second trial, after seven days of testimony—including from the 

other ArthroCare executives involved in the scheme—a jury convicted Baker 

on charges of wire fraud, securities fraud, making false statements to the SEC, 

and conspiracy to commit wire fraud and securities fraud. 

Baker appealed, raising challenges to the district court’s evidentiary 

rulings and jury instructions. Finding no reversible error, we AFFIRM.

I. FACTS AND PROCEEDINGS

A. Factual Background

Michael Baker was the CEO of ArthroCare, a publicly traded medicaldevice company based in Austin, Texas. ArthroCare’s products used a 

technology that allowed doctors to cut, seal, and remove tissue at a low 

temperature and in a minimally invasive manner. ArthroCare sold its products 

to hospitals and surgery centers through sales representatives, sales agents, 

and, relevant here, distributors. As CEO, Baker was involved in ArthroCare’s 

day-to-day operations. He worked closely with other senior executives, 

including Michael Gluk, the Chief Financial Officer, John Raffle, the Senior 

Vice President of Operations, David Applegate, the Vice President of the “spine 

division,” and Steve Oliver, the Senior Director of Financial Planning.1

 

1 Raffle described Baker’s “inner circle” at the company and testified that he did not 

“believe anyone held anything back from this group when we were there. . . . [I]t was a small 

company, we were working together to achieve a goal, and we talked about everything.” Gluk

testified to the executives’ “informal” “open-door” working environment and that he and 

Baker would talk “at least once a day.”

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Baker set growth targets for the company and oversaw a “channelstuffing” operation to inflate ArthroCare’s revenue numbers. Baker, as well as 

Gluk, Raffle, and Applegate, hid the fraudulent nature of this operation from 

ArthroCare’s board of directors, audit committee, and auditors. They also made 

false statements to investors about the company’s revenue projections and 

relationships with its distributors. When all this was uncovered, ArthroCare 

restated its past earnings and revenue, causing its stock price to drop and its 

investors to sustain significant losses.

This court previously described the basic structure of the channelstuffing scheme between ArthroCare and one of its distributors, DiscoCare; 

Baker’s false statements to investors about that relationship; and how the 

fraud was uncovered:

“Channel stuffing” is a fraudulent scheme companies 

sometimes attempt, in an effort to smooth out uneven earnings—

typically to meet Wall Street earnings expectations. Specifically, a 

company that anticipates missing its earnings goals will agree to 

sell products to a coconspirator. The company will book those sales 

as revenue for the current quarter, increasing reported earnings. 

In the following quarter, the coconspirator returns the products, 

decreasing the company’s reported earnings in that quarter. 

Effectively, the company fraudulently “borrows” earnings from the 

future quarter to meet earnings expectations in the present. Thus, 

in the second quarter, the company must have enough genuine 

revenue to make up for the “borrowed” earnings and to meet that 

quarter’s earnings expectations. If the company does not meet 

expectations in the second quarter, it might “borrow” ever-larger 

amounts of money from future quarters, until the amounts become 

so large that they can no longer be hidden and the fraud is 

revealed.

ArthroCare carried out exactly this fraud, with DiscoCare 

playing the role of coconspirator. Over several years, ArthroCare 

fraudulently “borrowed” around $26 million from DiscoCare. This 

“borrowing” occurred by directing DiscoCare to buy products from 

ArthroCare on credit, with the agreement that ArthroCare would 

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be paid only when DiscoCare could sell those products. Although 

this can be a legitimate sales strategy, it was fraudulent here 

because DiscoCare purchased medical devices that it knew it could 

not sell reasonably soon for the sole purpose of propping up 

ArthroCare’s quarterly earnings. This fraud was carried out under 

the day-to-day supervision of John Raffle, the Vice President of 

Strategic Business Units, and of David Applegate, another 

[ArthroCare] executive.

DiscoCare’s business model (apart from the accounting 

fraud) was potentially wrongful, though no charges were brought. 

DiscoCare provided a medical device for which most insurers 

refused reimbursement. To sell its device, DiscoCare reached 

agreements with plaintiffs’ attorneys in civil actions for personal 

injuries. These agreements resulted in the majority of DiscoCare’s 

sales. Under this agreement, DiscoCare would treat clients of the 

attorneys. The plaintiffs’ attorneys would then cite the expense of 

their clients’ treatment as a reason for defendants to settle 

personal injury lawsuits. DiscoCare also allegedly illegally coached 

doctors on which billing codes to use, in an effort to increase 

insurance reimbursements. This practice allegedly went as far as 

instructing doctors to perform an unnecessary surgical incision to 

classify the treatment as a surgery. No charges were filed on any 

of this conduct.

ArthroCare subsequently purchased DiscoCare for $25 

million, a price that far exceeded its true value (DiscoCare had no 

employees at the time). During this purchase, the fraud began to 

unravel, with media reports alleging accounting improprieties. To 

reassure investors, Gluk and Baker made several false statements 

during a series of conference calls. As evidence mounted, the audit 

committee of ArthroCare’s board of directors commissioned an 

independent investigation by forensic accountants and the law 

firm Latham & Watkins. As a result of this investigation, the 

board determined that Raffle and Applegate had committed fraud 

and that Gluk and Baker had not adequately supervised them. The 

board restated earnings, resulting in a significant drop in the value 

of ArthroCare stock. The board fired Raffle and Applegate for their 

roles in the fraud. The board also fired Gluk, determining that he 

had been remiss in not detecting the fraud earlier. Finally, the 

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board fired Baker, determining that he should have implemented 

better internal controls.2

After the Securities and Exchange Commission (“SEC”) and the 

Department of Justice (“DOJ”) investigated, a grand jury indicted Baker and 

Gluk on charges for wire fraud, securities fraud, making false statements to 

the SEC, and conspiracy to commit wire fraud and securities fraud.

B. Procedural Background

Baker has been convicted twice for his conduct relating to the fraud at 

ArthroCare. At the first trial in June 2014, a jury convicted Baker and Gluk 

on all counts. On appeal, this court vacated Baker’s and Gluk’s convictions on 

evidentiary grounds and remanded for a new trial.3

On remand, Gluk admitted that he had participated in the fraud, agreed 

to cooperate and testify against Baker, and pleaded guilty to conspiracy to 

commit wire fraud and securities fraud. The government retried Baker, this 

time with Gluk as a witness. The facts established at the second trial largely 

track the facts in the first trial, as this court set them out in the previous 

appeal.4 The government put on thirteen witnesses, including: Gluk,5 Raffle,6

Applegate,7 Oliver,8 ArthroCare’s Chief Medical Officer and Audit Committee 

 

2 United States v. Gluk, 831 F.3d 608, 611–12 (5th Cir. 2016) (amended opinion on 

petition for panel rehearing).

3 Id. at 610.

4 See id. at 611–612. 5 Gluk testified that he “conspired with Mike Baker, John Raffle, David Applegate and 

others to misrepresent the accounts of ArthroCare Corporation, to engage in channel stuffing 

and hide the nature of the relationship between DiscoCare and ArthroCare, and as a result 

of all that, [] filed incorrect statements with the Securities and Exchange Commission.”

6 Raffles testified that he had “an agreement” with Baker to engage in channel stuffing 

to “manipulate ArthroCare’s earnings and revenue numbers.”

7 Applegate testified that he had an agreement with Baker “[n]ot to disclose DiscoCare 

and particularly not to disclose the personal injury aspect of DiscoCare.”

8 Oliver testified that he participated in a scheme with Baker to “manipulate revenue 

and income in order to achieve targets that were in alignment with what the expectation[] of 

the analyst community were.”

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chairman, and several analysts and investors who testified to their reliance on 

Baker’s statements. 

At trial, Baker’s counsel conceded that a fraud had occurred at 

ArthroCare, but the defense was that Gluk, Raffle, and Applegate had 

orchestrated it without Baker’s knowledge. Baker’s counsel attempted to show 

that although Baker was generally aware of the nature of DiscoCare’s 

business, he did not have specific knowledge about the fraudulent details, or 

he learned about them too late. Baker’s counsel also sought to undermine 

Gluk’s, Raffle’s, and Applegate’s credibility based on their plea deals with the 

government and their own participation in the DiscoCare scheme. Baker did 

not testify or present witnesses, but his counsel did introduce exhibits, 

including the SEC memoranda that this court had held were admissible.

The jury convicted Baker on twelve counts and acquitted him on two of 

the wire fraud counts and one false statement count. The trial court then (1) 

sentenced him to a 240-month term of imprisonment and five years of 

supervised release; (2) imposed a $1 million fine; and (3) ordered that he forfeit 

$12.7 million.

Baker timely appealed.

II. ANALYSIS

Baker challenges his conviction on four grounds. First, he contends that 

the FBI case agent’s testimony was improper “summary witness” testimony. 

Second, he asserts that the district court should have admitted the SEC 

deposition testimony of Brian Simmons, ArthroCare’s former controller who 

invoked the Fifth Amendment and did not testify at Baker’s trial. Third, he 

challenges the district court’s jury instruction on wire fraud, insisting that it 

did not require the government to prove the “obtain money or property” 

element of that offense. Finally, he maintains that the district court erred by 

refusing to instruct the jury on “advance knowledge” for accomplice liability 

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under Rosemond v. United States, 134 S. Ct. 1240 (2014). We address each 

issue in turn.

A. Summary Witness Testimony

1. Background

FBI Special Agent Steven Callender was the case agent. He reviewed 

many of the documents admitted into evidence and testified at trial. Baker 

contends that Agent Callender’s testimony was impermissible “summary 

witness” testimony. 

Baker objected at trial to Agent Callender’s testimony. The district court 

overruled his objection and allowed Agent Callender to testify, but stated that 

its ruling did not stop Baker’s counsel “from making an objection if [the 

testimony] gets into substantive evidence. If he’s just talking about his 

research of documents, that’s tangible, then he can go into the summary. But 

if he gets into any other testimony, feel free to object.”

When the prosecutor asked Agent Callender to explain his summary 

charts setting out the exhibits that corresponded to each count in the 

indictment, Baker’s counsel objected to the witness “being asked whether or 

not these are the exhibits that correspond to those counts in the indictment.” 

The district court overruled that objection, stating “I think this is a very 

complicated case.” The court then gave the jury a limiting instruction about 

the use of demonstratives and summary witnesses:

[L]et me remind you, a demonstrative evidence is really not 

evidence. When he moves to introduce it, he’s just giving notice 

that he’s got a [sic] demonstrative evidence. If we had a great big 

blackboard or bulletin board while he presents a witness, he could 

have the witness -- or he can draw on it with regard to the witness’ 

testimony. So this is not evidence. It is merely an illustration 

because they’re going to use this FBI agent as a summary witness, 

and you’ll give it whatever substance that you think it deserves, if 

any.

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Agent Callender then testified. His testimony consisted primarily of 

reading and explaining (1) exhibits that had already been admitted at the trial 

and (2) new exhibits that were being admitted through his testimony. The 

exhibits he testified about included audio clips, transcripts of conference calls, 

documents showing ArthroCare’s organizational charts, board presentations, 

payroll information, emails between Baker and other executives, and SEC 

filings. 

2. Analysis

We review “the admission of evidence, including summaries and 

summary testimony, for abuse of discretion.”9 “If there is error, it is ‘excused 

unless it had a substantial and injurious effect or influence in determining the 

jury’s verdict.’”10

We “allow[] summary witness testimony in ‘limited circumstances’ in 

complex cases,” but have “repeatedly warned of its dangers.”11 “While such 

witnesses may be appropriate for summarizing voluminous records, as 

contemplated by Rule 1006, rebuttal testimony by an advocate summarizing 

and organizing the case for the jury constitutes a very different phenomenon, 

not justified by the Federal Rules of Evidence or our precedent.”12 “In 

particular, ‘summary witnesses are not to be used as a substitute for, or a 

supplement to, closing argument.’”13

“To minimize the danger of abuse, summary testimony ‘must have an 

adequate foundation in evidence that is already admitted, and should be 

 

9 United States v. Armstrong, 619 F.3d 380, 383 (5th Cir. 2010).

10 Id. (quoting United States v. Harms, 442 F.3d 367, 375 (5th Cir. 2006)).

11 Id. at 385 (quoting United States v. Nguyen, 504 F.3d 561, 572 (5th Cir. 2007)).

12 Id. (quoting United States v. Fullwood, 342 F.3d 409, 414 (5th Cir. 2003)). 

13 Id.

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accompanied by a cautionary jury instruction.’”14 “Moreover, ‘[f]ull crossexamination and admonitions to the jury minimize the risk of prejudice.’”15

i. Summary Witnesses in General

Baker claims that, in general, summary witness testimony is 

inadmissible. He argues that summary witnesses lack personal knowledge of 

the matter to which they are testifying, so Rule 602 of the Federal Rules of 

Evidence prohibits that type of testimony. He also contends that, because Rule 

1006, which governs summaries, is located within Article X of the Rules that

govern “writings and recordings”—and not “witnesses”—Rule 1006 does not 

allow live summary witnesses. 

Regrettably, Baker does not cite United States v. Armstrong, the key 

Fifth Circuit case that refutes these arguments. Contrary to Baker’s contention 

that summary witnesses are inadmissible, this circuit expressly allows 

summary witnesses to summarize voluminous records in complex cases.16

ii. Agent Callender’s Testimony

The next issue is whether Agent Callender’s testimony permissibly 

summarized the voluminous evidence, or impermissibly “organiz[ed] the case 

for the jury” or served as a “substitute” for closing argument.17

Baker contends that Agent Callender’s testimony was “wholly 

argumentative,” drew inferences for the jury, and impermissibly summarized 

the prosecutor’s closing argument. Baker flags several parts of Agent 

Callender’s testimony as objectionable: (1) Agent Callender read an email in 

which Raffle indicates that Baker had approved adding DiscoCare employees 

to the ArthroCare payroll; (2) the prosecutor asked Agent Callender whether a 

 

14 Id. (quoting United States v. Bishop, 264 F.3d 535, 547 (5th Cir. 2001)).

15 Id. (quoting Bishop, 264 F.3d at 547).

16 Id.

17 See id.

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letter in an employee’s file was “consistent or inconsistent” with ArthroCare’s 

organizational charts; (3) testimony about a conference call at which Gluk 

discussed a “small success fee” paid to DiscoCare and subsequent emails 

showing a related $10 million payment to DiscoCare; (4) Agent Callender’s 

discussion of emails that Baker had sent to himself containing his monthly 

stock portfolio; and (5) Agent Callender’s testimony about particular exhibits 

that corresponded to the counts listed on a demonstrative chart. Baker 

describes this testimony as “highlight[ing] key pieces of prosecution evidence,” 

“walk[ing] through the charges count by count,” and “indistinguishable from a 

closing argument.” 

The government counters that most of Agent Callender’s testimony was 

not “summary witness” testimony, but rather was about exhibits that were 

being admitted during his testimony. The government also argues that the 

large number of documents and the complexity of the case justified the use of 

a summary witness.

When Agent Callender began testifying, the government introduced 

twenty-one new exhibits, each of which was admitted. Much of his testimony 

consisted of reading the contents of those exhibits aloud. Baker’s specific 

objections are primarily to the parts of Agent Callender’s testimony that 

introduced those new exhibits. But, this type of testimony is not summary 

testimony.18

In contrast, Agent Callender’s testimony that tied specific, alreadyadmitted exhibits to the substantive indictment counts listed on a 

demonstrative chart is summary testimony. Such testimony is permissible in 

complex cases with voluminous evidence. Contrary to Baker’s contention that 

 

18 See United States v. Castillo, 77 F.3d 1480, 1499 (5th Cir. 1996) (“[T]he witness may 

testify to facts that were ‘personally experienced’ by him, even though this testimony 

‘bolsters’ the government’s other evidence.”).

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this was not a complex case, channel stuffing is a relatively complicated type 

of fraud. The jury heard seven days of testimony; there were 15 charges; and 

the district court stated that it was “a very complicated case.” The evidence 

was also voluminous. The government introduced 193 exhibits and Baker 

introduced 87. Agent Callender gave a “rough estimate” that the investigation 

involved “between three and seven million” documents. 

A review of the testimony shows that, although Agent Callender 

highlighted some key pieces of evidence, the testimony did not draw inferences 

for the jury, was not “wholly argumentative,” and did not serve as a substitute 

for closing argument.19 Rather, the testimony consisted of reading the contents

of exhibits and sorting through the evidence to show how the documents 

related to each other and to the charges in the indictment.20 This type of 

testimony is different from the testimony that this circuit has excluded, such 

as allowing a case agent “to recap a significant portion of the testimony already 

introduced by the Government” during a rebuttal case,21 putting on a summary 

witness “before there [was] any evidence admitted for the witness to 

summarize,”22 or using a summary witness to “merely [] repeat or paraphrase 

 

19 See United States v. Echols, 574 F. App’x 350, 356 (5th Cir. 2014) (“[The summary 

witness] only succinctly referenced patients’ and doctors’ testimony to remind the jury which 

witnesses the documentary evidence related to and said virtually nothing about the 

testimony of the government’s principal trial witnesses.”).

20 Here is one representative example:

Q. Can we take a look at Count 5? Can you tell the jury about what government 

exhibits relate to Count 5?

A. Count 5 relates to an email from Mike Gluk to Mike Baker, who were both in 

Texas, and it was routed through ArthroCare’s servers in California. And the 

e-mail was sent March 20, 2008. It’s Exhibit 379.

Q. All right. And that’s been put into evidence, correct?

A. It has.

21 Fullwood, 342 F.3d at 412–13. 

22 United States v. Griffin, 324 F.3d 330, 348–49 (5th Cir. 2003).

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the in-court testimony of another as to ordinary, observable facts . . . .”23 We 

conclude that Agent Callender’s testimony was permissible.

To the extent that Agent Callender’s testimony went too far, all three 

curatives were present: (1) the testimony had an adequate foundation in the 

evidence already admitted; (2) the district court gave the jury a limiting 

instruction about summary evidence generally; and (3) Baker’s counsel crossexamined Agent Callender.24 These minimized the risk of prejudice, so any 

error was harmless.25

B. Brian Simmons’s SEC Deposition Testimony

In 2010, the SEC deposed Brian Simmons, ArthroCare’s former 

controller, in its civil investigation of the company. At the first trial, Baker 

sought to subpoena Simmons, but Simmons refused to testify, asserting his 

Fifth Amendment right against self-incrimination. Baker and Gluk sought to 

admit Simmons’s SEC deposition testimony under Rule 804(b)(1). In a written 

order, the district court excluded the testimony.

At the second trial, after Raffle, Applegate, and Gluk testified that 

Simmons had participated in the fraud at ArthroCare,26 Baker again 

subpoenaed Simmons. But Simmons refused to testify on Fifth Amendment 

grounds, and Baker again sought to admit excerpts of Simmons’s SEC 

deposition testimony. Baker proffered excerpts of that testimony, in which 

Simmons (1) denied wrongdoing and awareness of improper activities at 

ArthroCare and (2) stated that ArthroCare’s audit committee and outside 

auditor, PricewaterhouseCoopers, were aware of a “bill-and-hold” practice for 

 

23 Castillo, 77 F.3d at 1499–1500. 24 Armstrong, 619 F.3d at 385.

25 See United States v. Spalding, 894 F.3d 173, 186 (5th Cir. 2018). 

26 Simmons was an unindicted co-conspirator. 

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ArthroCare’s sales to DiscoCare. The district court, referencing its order in the 

first trial, again excluded the testimony.

Rule 804(b)(1) provides exceptions to the rule against hearsay for “former 

testimony” of witnesses who are unavailable. It provides: 

(b) . . . 

(1) Former Testimony. Testimony that:

(A) was given as a witness at a trial, hearing, or lawful 

deposition, whether given during the current 

proceeding or a different one; and 

(B) is now offered against a party who had – or, in a 

civil case, whose predecessor in interest had – an 

opportunity and similar motive to develop it by direct, 

cross-, or redirect examination.27

Simmons’s deposition testimony contains hearsay and his invocation of 

the Fifth Amendment made him unavailable.28 The issues therefore are (1) 

whether the DOJ and the SEC are the “same party” or “predecessors in

interest,” and (2) if so, whether the SEC, in its civil investigation of 

ArthroCare, had both the opportunity and a similar motive to the DOJ in 

developing Simmons’s testimony. 

We review the district court’s exclusion of the testimony for abuse of 

discretion.29 We conclude that the SEC and the DOJ were not the same party 

for 804(b) purposes under these circumstances. But even if the agencies were

the same party, they did not have sufficiently similar motives in developing 

Simmons’s testimony. 

 

27 FED. R. EVID. 804(b)(1).

28 Id. R. 804(a)(1).

29 United States v. Kimball, 15 F.3d 54, 55 (5th Cir. 1994).

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1. Same Party

This court has not decided whether the SEC and the DOJ are the same 

party for 804(b) purposes.30 The case law on this issue is limited, and no court 

has expressly held that the SEC and the DOJ are the same party.31 Courts

sometimes proceed directly to the “similar motive” inquiry.32

Baker contends that the two agencies are the same party because they 

are both Executive Branch agencies. He relies primarily on United States v. 

Sklena, 692 F.3d 725, 730–32 (7th Cir. 2012), which held that the Commodity 

Futures Trading Commission (“CFTC”) and the DOJ were the same party for 

804(b) purposes. He also relies on Boone v. Kurtz, 617 F.2d 435, 436 (5th Cir. 

1980), in which we held that different government agencies were the same 

party for res judicata purposes. 

In response, the government cites United States v. Martoma, 12-Cr. 973, 

2014 WL 5361977, at *3–5 & n.5 (S.D.N.Y. Jan. 8, 2014), in which the district 

court considered whether an unavailable co-conspirator’s prior SEC deposition 

was admissible at a later criminal trial. The Martoma court held that the SEC 

and DOJ were not the same party for 804(b) purposes.33

In Sklena, the Seventh Circuit relied on the significant control that the 

DOJ exercised over the CFTC, including the CFTC’s statutory mandate to 

 

30 Neither party contends that the SEC was the DOJ’s “predecessor in interest” at 

Simmons’s deposition. 

31 See United States v. Sklena, 692 F.3d 725, 731 (7th Cir. 2012) (“There is very little 

law on the question whether two government agencies, or as in this case the United States 

and a subsidiary agency, should be considered as different parties for litigation purposes, or 

if they are both merely agents of the United States.”).

32 See, e.g., United States v. Whitman, 555 F. App’x 98, 103 (2d Cir. 2014) (summary 

order) (“Assuming arguendo that the SEC lawyers and the trial prosecutors can be treated 

as the same party, the district court reasonably concluded that they had differing motivations 

to develop testimony by cross-examination.”); see also United States v. Kennard, 472 F.3d 

851, 855 (11th Cir. 2006) (not addressing the “same party” issue and instead addressing only 

whether the SEC and the DOJ had similar motives).

33 United States v. Martoma, 12-Cr. 973, 2014 WL 5361977, at *3–5 & n.5 (S.D.N.Y. 

Jan. 8, 2014).

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report to the DOJ.34 The court reasoned that the “statutory control mechanism 

suggests to us that, had the Department wished, it could have ensured that 

the CFTC lawyers included questions of interest to the United States when 

they deposed [the non-testifying codefendant].”35 The court’s holding also 

relied on the agencies’ “closely coordinated roles on behalf of the United States 

in the overall enforcement of a single statutory scheme.”36 The Sklena court 

concluded that “[f]unctionally, the United States is acting in the present case 

through both its attorneys in the Department and one of its agencies, and we 

find this to be enough to satisfy the ‘same party’ requirement of Rule 

804(b)(1).”37

Here, the district court determined that the SEC and the DOJ were not 

the same party because the SEC conducted an independent investigation of 

ArthroCare and its employees and independently pursued its own criminal and 

civil actions. On appeal, Baker disagrees with that conclusion. He points to 

several emails between prosecutors and SEC investigators describing 

telephone calls, meetings, and “working together.” According to Baker, these 

show that the SEC “was functionally working as part of the prosecution team.”

In response, the government points out that (1) the SEC did not 

participate in any interviews conducted by the DOJ; (2) the DOJ was not 

present at any of the SEC’s depositions; (3) an SEC attorney was not crossdesignated or assigned to the prosecution team; and (4) the DOJ did not 

provide the SEC with materials from its investigation. In an order denying the 

designation of the SEC as part of the prosecution team at the first trial, the 

district court concluded that “[w]hile the SEC provided some material to the 

 

34 692 F.3d at 731–32 (citing 7 U.S.C. § 13a–1(a), (f)–(g)).

35 Id. at 732.

36 Id.

37 Id.

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Government—which the Government, in turn, has provided to Defendants—

the SEC’s investigation pre-dated and was independent from the Government’s 

investigation, and there was no overlap of personnel or direction.” The 

government also notes that when the DOJ formally requested information 

from the SEC, the SEC faced restrictions responding to that request and 

limited the information it provided to the DOJ.

Although there was some cooperation between the two agencies, it was 

not extensive enough for the SEC and the DOJ to be deemed the same party. 

Baker’s contention that the SEC and the DOJ coordinated closely is 

undermined by (1) the telephone calls and meetings Baker cites occurred after

Simmons’s February 2010 deposition and (2) the district court’s specific 

findings that the SEC had been uncooperative and limited the information it 

provided to the DOJ.

Sklena does not mandate a different result. Unlike the CFTC, the SEC 

is not statutorily required to report to the DOJ, nor must the two agencies 

cooperate to enforce the same statutory scheme. The SEC is an independent 

agency with its own litigating authority.38

2. Opportunity and Similar Motive

Even if the SEC and the DOJ were deemed to be the same party, they 

did not share a sufficiently similar motive in developing Simmons’s testimony.

When, as here, testimony in a prior civil proceeding is being offered against 

 

38 In contrast to the CFTC, “the SEC has ‘complete autonomy in civil prosecutions’ and 

is not required to report on its activities to the USAO.” Martoma, 2014 WL 5361977, at *4 & 

n.5 (quoting SEC v. Robert Collier & Co. Inc., 76 F.2d 939, 940 (2d Cir. 1935)); see United 

States v. Klein, 16-cr-422, 2017 WL 1316999, at *6 (S.D.N.Y. Feb. 2, 2017) (“In contrast [to 

Sklena,] the SEC and DOJ are independent executive agencies and there is no indication 

whatsoever that they coordinated their investigations here.”); see also 15 U.S.C. § 77t 

(“Whenever it shall appear to the Commission that any person is engaged or about to engage 

in any acts or practices which constitute or will constitute a violation of the provisions of this 

subchapter, . . . the Commission may, in its discretion, bring an action in any district court 

of the United States . . . .”). 

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the government in a subsequent criminal proceeding, this court considers “(1) 

the type of proceeding in which the testimony is given, (2) trial strategy, (3) the 

potential penalties or financial stakes, and (4) the number of issues and 

parties.”39

At the first trial, the district court excluded the testimony, ruling that 

the SEC and the DOJ did not have sufficiently similar motives. At the second 

trial, the district court referenced its previous order and again excluded 

Simmons’s testimony. The court added that there was “no question” that 

Simmons was “involved in a conspiracy if there was a conspiracy,” and that he 

would have had “to be deaf, blind and dumb in his position not to see it.” The 

court concluded that (1) “the SEC ha[d] been totally noncooperative in this 

criminal case from the beginning, declined to share any information to the 

Department of Justice [or] counsel in this case for the defense” and would not 

“provide its investigators to cooperate in any way”; (2) The SEC’s civil 

investigation of ArthroCare was “totally different from a criminal trial”; and 

(3) the court’s review of the SEC deposition testimony showed no “basis for any 

cross-examination.”

Even if we assumed that the SEC and the DOJ are the same party, the

agencies did not have sufficiently similar motives. First, the stakes and 

burdens of proof were different: The SEC was in the discovery phase in relation 

to potential civil enforcement actions, whereas the DOJ was investigating for 

potential criminal involvement after a grand jury indictment. Second, the 

focuses and motivations of the investigations were different: The SEC was 

 

39 United States v. McDonald, 837 F.2d 1287, 1292 (1988) (quoting United States v. 

Feldman, 761 F.2d 380, 385 (7th Cir. 1985)); see also WRIGHT & MILLER, 30B FED. PRAC. &

PROC. § 6974 (2018 ed.) (“The ‘similar motive’ sentiment can be boiled down to a call for trial 

courts to analyze: (i) the issue or issues to which the testimony was addressed, (ii) the degree 

to which those issues mattered to the ultimate resolution of the proceeding; and then (iii) 

compare those variables across the two proceedings.”).

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likely developing a factual background regarding wrongdoing at the company 

generally, whereas the DOJ would have been gathering evidence to convict 

specific individuals.40 Third, the lack of cross-examination shows the agencies’ 

different trial strategies: The SEC deposition excerpts show no sign of crossexamination or additional follow-up questions after Simmons denied his 

involvement and that he had any conversations with Baker. In contrast, for 

the reasons we have already explained, the agencies were not coordinating 

their activity to a degree that would have led the SEC lawyer to cross-examine

Simmons like a criminal prosecutor would have.41

The district court did not abuse its discretion in excluding Simmons’s 

deposition testimony. 

C. The “Obtain Money or Property” Element of Wire Fraud

Baker next contends that the term “obtain money or property” in the 

wire fraud statute, 18 U.S.C. § 1343, requires the government to plead and 

prove that Baker “intended to obtain money or property from deceived 

investors.” This challenge to the jury instructions presents a question of 

statutory interpretation, so we review it de novo.42 We also review de novo 

 

40 See Martoma, 2014 WL 5361977, at *4 (“[T]he purpose of a deposition in a civil case 

or an administrative investigation is to develop investigative leads and to ‘freeze the 

witness[’s] . . . story.’ . . . The SEC lawyers taking [the co-conspirator’s] deposition were not 

attempting to persuade a jury to convict, or even attempting to persuade a grand jury to 

indict. Instead, the [co-conspirator’s SEC deposition] was part of an effort to ‘develop the facts 

to determine if an [enforcement action] was warranted.’” (quoting DiNapoli, 8 F.3d at 913)). 

41 See Whitman, 555 F. App’x at 103 (“The rest of the examination consisted of general 

inquiries about his relationship to [the defendant] and his work at [the company], many of 

which elicited long, descriptive answers from [the unavailable co-conspirator] that, 

unsurprisingly, asserted innocence. A prosecutor seeking to rebut a trial defense would have 

pressed the witness, but the SEC examiner rarely did, for the most part allowing [the coconspirator’s testimony to stand unquestioned.”); McDonald, 837 F.2d at 1293 (although the 

DOJ and the former party in a civil action had “similar status in their respective claims, we 

find that the trial strategies were not sufficiently similar” for admission under Rule 

804(b)(1)).

42 United States v. Harris, 740 F.3d 956, 964 (5th Cir. 2014).

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Baker’s contention that the indictment did not charge the elements of the 

offense.43

Baker asked for a jury instruction defining a “scheme to defraud” as one 

“intended to obtain money or property from the victim by fraudulent means,” 

and requiring that the defendant intended to “acquire[] some money or 

property that the victim gives up.” The district court denied that request.

Instead, the district court’s jury instructions on wire fraud required, in 

relevant part:

That the defendant knowingly devised, or intended to devise, any 

scheme to defraud, that is to deceive investors about ArthroCare 

Corporation’s financial condition[.]

. . . 

A “scheme to defraud” means any plan, pattern, or course of action 

intended to deprive another of money or property, or bring about 

some financial gain to the person engaged in the scheme.

After the jury convicted Baker, he moved for a judgment of acquittal. He 

reasserted his objection to the definition of a “scheme to defraud,” focusing on 

the “or bring about some financial gain to the person engaged in the scheme” 

language. The district court denied the motion, concluding that “the focus” of 

a scheme to defraud is on “depriving the victim of property for some benefit” 

and that there is “no requirement that a defendant must directly gain or 

possess [the victim’s] property.” The court explained that “substantial evidence 

was presented to show the misleading and fraudulent statements made by 

Baker induced investment in ArthroCare,” and that “a rational trier of fact 

could have found the goal of the scheme . . . was to deprive investors of money 

they otherwise would have possessed.”

 

43 United States v. Kay, 359 F.3d 738, 742 (5th Cir. 2004).

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On appeal, Baker challenges this instruction on two grounds. First, he 

contends that the wire fraud statute imposes a “mirror image” requirement.

For support, he relies on the Supreme Court’s decision in Skilling v. United 

States, which states that under “traditional” fraud, “the victim’s loss of money 

or property supplied the defendant’s gain, with one the mirror image of the 

other.’”44

Although Baker describes that statement from Skilling as its holding, a 

review of the case proves otherwise. In context, the Court was comparing 

“traditional” fraud with honest-services fraud: 

Unlike fraud in which the victim’s loss of money or property 

supplied the defendant’s gain, with one the mirror image of the 

other, . . . the honest-services theory targeted corruption that 

lacked similar symmetry. While the offender profited, the betrayed 

party suffered no deprivation of money or property; instead, a third 

party, who had not been deceived, provided the enrichment.45

Skilling did not impose a “mirror image” requirement for wire fraud. As the 

district court explained, “Skilling merely commented that traditional fraud 

features a bilateral relationship—one between the offender and the victim—

while the honest-services theory concerns a trilateral relationship between 

bribe-giver, bribe-recipient, and betrayed party. . . . Skilling did not interpret 

wire fraud or securities fraud to require proof the defendant sought to 

personally acquire money or property from the victim.” Moreover, no court has 

held that a “mirror image” transaction is necessary.46

Baker next points to the language of § 1343, which provides:

Whoever, having devised or intending to devise any scheme or 

artifice to defraud, or for obtaining money or property by means of 

false or fraudulent pretenses, . . . transmits or causes to be 

 

44 Skilling v. United States, 561 U.S. 358, 400 (2010).

45 Id. (emphasis added).

46 United States v. Hedaithy, 392 F.3d 580, 601 (3d Cir. 2004); see United States v. 

Finazzo, 850 F.3d 94, 105–07 (2d Cir. 2017).

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transmitted by means of wire, . . . any writings, signs, signals, 

pictures, or sounds for the purpose of executing such scheme or 

artifice, shall be fined . . . or imprisoned not more than 20 years, 

or both.47

Baker compares the statute’s “obtaining money or property” language with the 

jury instruction’s definition of a “scheme to defraud” that required that the 

scheme intended to “bring about some financial gain to the person engaged in 

the scheme.” According to Baker, the instruction did not require the 

government to prove that he intended to obtain property from a victim, but 

instead allowed for a conviction based on a scheme that was only intended to 

bring about a financial gain to Baker.

Baker relies on Sekhar v. United States, a case interpreting the Hobbs 

Act, which held that “a defendant must pursue something of value from the 

victim that can be exercised, transferred, or sold . . . .”48 However, “[u]nlike the 

mail fraud statute, the Hobbs Act expressly requires the Government to prove 

that the defendant ‘obtain[ed] property from another.’”49

He also relies on United States v. Honeycutt, a case interpreting the 

federal forfeiture statute, which held that a defendant may not “be held jointly 

and severally liable for property that his co-conspirator derived from a crime 

but that the defendant himself did not acquire.”50 But Honeycutt did not 

consider the wire fraud statute and therefore did not broaden the Court’s 

interpretation of that offense.51

 

47 18 U.S.C. § 1343.

48 570 U.S. 729, 736 (2013).

49 Hedaithy, 392 F.3d at 602 n.21; see Finazzo, 840 F.3d at 107 (“[I]n contrast to the 

Hobbs Act extortion provision, the mail and wire fraud statutes do not require a defendant 

to obtain or seek to obtain property . . . .”).

50 Honeycutt v. United States, 137 S. Ct. 1626, 1630 (2017). 

51 See Porcelli v. United States, 404 F.3d 157, 162 (2d Cir. 2005) (“The fact that the 

Hobbs Act and the mail and wire fraud statutes contain the word ‘obtain’ does not necessitate 

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Section 1343 does not require an intent to obtain property directly from 

a victim. In United States v. Hedaithy, the Third Circuit considered a similar

assertion. There, the defendants argued that a scheme must be “designed to 

actually ‘obtain’ the victim’s property.” The court rejected that argument on 

several grounds:

We reject [that argument], primarily because it is 

inconsistent with the Supreme Court’s decision in Carpenter [v. 

United States, 484 U.S. 19 (1987)]. Although the defendants in 

Carpenter clearly “obtained” the Journal’s confidential business 

information, this was not the conduct, according to the Court, that 

constituted the mail fraud violation. Rather, the conduct on which 

the Court focused was the act of fraudulently depriving the 

Journal of the exclusive use of its information.

Furthermore, Defendants’ argument misconstrues the 

language of other relevant decisions. For example, they rely upon 

the Supreme Court’s statement in Cleveland [v. United States]

that “[i]t does not suffice, we clarify, that the object of the fraud 

may become property in the recipient’s hands; for purposes of the 

mail fraud statute, the thing obtained must be property in the 

hands of the victim.” [531 U.S. 12, 15 (2000)]. The context in which 

this statement was written, however, clarifies that the Court was 

not setting out a requirement that a mail fraud scheme must be 

designed to “obtain” property. Rather, this language reflects the 

Court’s conclusion that a victim has been defrauded of “property,” 

within the meaning of the mail fraud statute, only if that which 

the victim was defrauded of is something that constitutes 

“property” in the hands of the victim.

Defendants also insist that their interpretation of the mail 

fraud statute is supported by the Supreme Court’s holdings, in 

McNally and Cleveland, that § 1341’s second clause—“or for 

obtaining money or property by means of false or fraudulent 

promises”—“simply modifies” the first clause—“any scheme or 

artifice to defraud.” McNally, 483 U.S. at 359, 107 S. Ct. 2875; 

Cleveland, 531 U.S. at 26, 121 S. Ct. 365. Defendants construe this 

 

imposing [a] construction of a wholly separate statute onto this Court’s pre-existing 

construction of the mail fraud statute.”).

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language as meaning that any violation of the mail fraud statute 

must involve a scheme for obtaining the victim’s property. We do 

not read McNally or Cleveland as providing any such 

requirement. . . . In neither case, . . . did the Court hold that a mail 

fraud violation requires that the second clause of § 1341 be 

satisfied.52

In addition to the Third Circuit’s persuasive rejection of the argument 

that Baker advances, this court, in United States v. McMillan, held that an 

indictment sufficiently charged mail fraud in the context of a scheme to 

“defraud the victim insofar as victims were left without money that they 

otherwise would have possessed.”53 This court also explained that the “issue is 

whether the victims’ property rights were affected by the 

misrepresentations.”54

The jury instructions here allowed for a conviction if Baker intended to 

deceive the victims out of their money for his own financial benefit. The 

evidence at trial showed that Baker did just that: (1) He made false statements 

to investors and potential investors to induce them to hold onto or buy 

ArthroCare stock; (2) he knew the statements did not accurately reflect 

ArthroCare’s business model or revenue projections; and (3) the scheme was 

intended to benefit Baker via bonuses and appreciation of his own stock 

options. By inducing investments in ArthroCare, the scheme affected the 

victims’ property rights by wrongfully leaving them “without money that they 

otherwise would have possessed.”55

The jury instructions were not erroneous.

 

52 Hedaithy, 392 F.3d at 601–02.

53 600 F.3d 434, 449 (5th Cir. 2010).

54 Id. 

55 McMillan, 600 F.3d at 449.

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D. Accomplice and Co-conspirator Liability

Baker was charged as both a principal and an aider or abettor under 

18 U.S.C. § 2 for the wire and securities fraud charges. The district court’s jury 

instructions on “Aiding and Abetting (Agency)” included some general 

language about accomplice liability, then stated:

You must be convinced that the Government has proved 

each of the following beyond a reasonable doubt:

First: That the offenses alleged in Counts Two through 

Twelve were committed by some person;

Second: That the defendant associated with the criminal 

venture;

Third: That the defendant purposefully participated in the 

criminal venture; and

Fourth: That the defendant sought by action to make that 

venture successful.

“To associate with the criminal venture” means that the 

defendant shared the criminal intent of the principal. This element 

cannot be established if the defendant had no knowledge of the 

principal’s criminal venture.

“To participate in the criminal venture” means that the 

defendant engaged in some affirmative conduct designed to aid the 

venture or assist the principal of the crime.

This instruction tracked the Fifth Circuit Pattern Instruction on 

accomplice liability.56 Baker challenges this instruction as lacking an express 

“advance knowledge” instruction based on Rosemond, a Supreme Court 

decision addressing the federal aiding and abetting statute’s mens rea 

requirements.

 

56 FIFTH CIRCUIT PATTERN CRIM. JURY INSTRUCTIONS § 2.4.

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Although Baker preserved that objection and briefed the Rosemond issue 

on appeal, we need not address it because the jury also convicted Baker as a 

co-conspirator. In addition to the charges for aiding and abetting wire and 

securities fraud, Baker was also charged with and convicted of “Conspiracy to 

Commit Wire Fraud and Securities Fraud.”57

“In Pinkerton, the Supreme Court held that conspirators are criminally 

liable for substantive crimes committed by other conspirators in furtherance of 

the conspiracy, unless the crime ‘did not fall within the scope of the unlawful 

project, or was merely a part of the ramifications of the plan which could not 

be reasonably foreseen as a necessary or natural consequence of the unlawful 

agreement.’”58 “A substantive conviction cannot be upheld solely under 

Pinkerton unless the jury was given a Pinkerton instruction.”59

Here, the jury (1) was properly instructed on the Pinkerton theory of coconspirator liability and (2) convicted Baker on a separate charge for 

conspiracy to commit wire and securities fraud.60 The evidence at trial showed 

that Baker instructed others to participate in the channel-stuffing scheme and 

approved the statements covering it up. The substantial evidence of Baker’s 

involvement establishes that the fraudulent acts were reasonably foreseeable 

by him and done in furtherance of the conspiracy. We therefore affirm Baker’s 

conviction on the wire and securities fraud charges under the Pinkerton theory 

of co-conspirator liability and do not address Baker’s challenge to the jury 

instructions under Rosemond.61

 

57 ROA.3885.

58 United States v. Gonzales, 841 F.3d 339, 344 n.4 (5th Cir. 2016) (quoting Pinkerton 

v. United States, 328 U.S. 640, 647–48 (1948)).

59 United States v. Alaniz, 726 F.3d 586, 614 (5th Cir. 2013) (quotation omitted).

60 ROA.3875–76.

61 See United States v. Saunders, 605 F. App’x 285, 288–89 (5th Cir. 2015) (“We will 

assume that the jury charge on aiding and abetting is inadequate under Rosemond. [The 

defendant’s] rights, however, were not affected because the jury was given a correct Pinkerton

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E. Baker’s “Other” Objections

Baker contends that, in addition to the purported Rosemond error, the 

jury instructions were flawed in several other ways. Baker did not object to 

these issues in the district court, so they are reviewed for plain error.62 None 

of these challenges has merit under the plain-error test.

First, Baker challenges the instruction that: “If another person is acting 

under the direction of the defendant or if the defendant joins another person 

and performs acts with the intent to commit a crime, then the law holds the 

defendant responsible for the acts and conduct of such other persons just as 

though the defendant had committed the acts or engaged in such conduct.” 

Baker contends that this statement “is no longer legally accurate after 

Rosemond,” and that the instruction implied that he could be liable for the 

crimes of ArthroCare’s employees who were “acting under” his direction.

This instruction prefaced the formal elements of accomplice liability. 

Given that context, the instruction simply set out the basic principle of 

accomplice liability and was followed by a formal four-part definition. This 

instruction was not erroneous.63

Next, Baker contends that the Pinkerton instruction was improper, 

noting that Pinkerton is controversial and has been criticized by courts. He also

contends that “there was no evidentiary basis” for the Pinkerton instruction. 

 

instruction. . . . Given the copious evidence under the Pinkerton theory, any inadequacy in 

the district court’s aiding and abetting instruction did not affect [the defendant’s] substantial 

rights.”); see also United States v. Hare, 820 F.3d 93, 105 (4th Cir.), cert. denied, 137 S. Ct. 

224 (2016) (same); United States v. Stubbs, 578 F. App’x 114, 118 n.6 (3d Cir. 2014) (“Since 

we find the evidence sufficient to convict [the defendant] under a Pinkerton theory of 

vicarious liability, we need not decide whether there was sufficient evidence of [the 

defendant’s] advance knowledge under Rosemond.”).

62 United States v. Fuchs, 467 F.3d 889, 901 (5th Cir. 2006).

63 See Kay, 513 F.3d at 463 (“When reviewing the jury’s understanding of the charge, 

we look to the total context of the trial, with the benefit of arguments by all counsel.”).

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But this circuit has repeatedly applied Pinkerton,64 and the evidence at trial—

including testimony from three co-conspirators—provided a sufficient basis for 

the instruction.

Finally, Baker argues that the court’s “reckless indifference” instruction 

was improper because it conflicted with the wire fraud statute’s required 

“specific intent to defraud.”65 But we have approved such instructions.66 The 

“reckless indifference” instruction was not erroneous.

III. CONCLUSION

Baker’s conviction is, in all respects, AFFIRMED.

 

64 E.g., Gonzales, 841 F.3d at 351–53.

65 The district court instructed the jury that a representation is false if it “is made 

with reckless indifference as to its truth or falsity” and that “[r]eckless indifference means 

the omission or misrepresentation was so obvious that the defendant must have been aware 

of it.”

66 See United States v. Puente, 982 F.2d 156, 159 (5th Cir. 1993) (“‘Reckless 

indifference’ has been held sufficient to satisfy § 1001’s scienter requirement so that a 

defendant who deliberately avoids learning the truth cannot circumvent criminal 

sanctions.”).

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