Opinion ID: 3160112
Heading Depth: 6
Heading Rank: 2

Heading: The Instruction on Willfully Violating the

Text: Federal Securities Laws The court gave the following instruction of “willfully” in instructing the jury on the alleged 15 U.S.C. § 77x violation: A person acts “willfully” under the federal securities laws by intentionally undertaking an act that one knows to be wrongful. “Willfully” does not require that the person know specifically that the conduct was unlawful. Nelson renews the objection he made at trial that the instruction would allow conviction without proof that he knew his conduct violated the securities laws. He contends that because 15 U.S.C. § 77e forbids offering or selling unregistered securities, which is not inherently wrongful, this proof is required to show a “willful[]” violation of 15 U.S.C. § 77x. We rejected a similar argument in United States v. Reyes, 577 F.3d 1069 (9th Cir. 2009), an appeal from a conviction for knowingly falsifying “book[s], record[s], and account[s],” in violation of 15 U.S.C. § 78m(b)(5). The defendant argued that because “the knowing falsification of books, records, and accounts is not ‘inevitably nefarious,’” she could not be convicted without proof that she knew her conduct violated the law. Id. at 1080. We held that her argument was “foreclosed” by United States v. Tarallo, 380 F.3d 1174 (9th Cir. 2004), and other cases “reject[ing] the argument that, in the context of the securities fraud statutes, willfulness requires a defendant know that he or she was breaking the law.” Reyes, 577 F.3d at 1080 (citing Tarallo, 380 F.3d at UNITED STATES V. LLOYD 71 1187–88; United States v. Charnay, 537 F.2d 341, 351–52 (9th Cir. 1976)). The district court “correctly instructed the jury that it had to find that” the defendant “was aware of the falsification and did not falsify through ignorance, mistake, or accident,” but “[t]here is no higher standard for a willful violation of the securities laws.” Id. (quotation marks omitted). Nelson attempts to distinguish Reyes by arguing that it involved “securities fraud” under § 78m, not “regulatory violations” under § 77e that are not “inherently bad acts.” But both § 78m and § 77e use the scienter standard under 15 U.S.C. § 77x, which allows conviction if a person “willfully violates” the securities laws. There is no basis in the statutory language or in our cases to read a higher level of scienter into § 77x when the alleged violation is under § 77e. The district court did not commit reversible error in instructing the jury on the counts alleging that Nelson violated the securities laws. d. The Rule 404(b) Instruction Nelson argues, without citing authority, that the district court erred in instructing the jury on the Rule 404(b) evidence of his telemarketing work at Big Gunn after the FBI raided the Cinamour office where he worked. Although we find it error to admit the evidence, we find no error in the instruction, which tracked the Ninth Circuit model jury instruction for Rule 404(b) evidence: You have heard the evidence that defendant Nelson committed other acts not charged here. You may consider this evidence for its bearing, if any, on the question of defendant 72 UNITED STATES V. LLOYD Nelson’s intent, knowledge, absence of mistake and absence of accident and for no other purpose. You may not consider this evidence against any other defendant on trial. See Ninth Cir. Crim. Model Jury Instructions § 4.3 (2010 ed.). According to Nelson, the language “not charged here” implies that the uncharged acts could have been charged. We find that the instruction, considered as a whole, accurately and clearly stated the law. We have recently cited this model instruction with approval. United States v. Hardick, 766 F.3d 1051, 1054, 1056 (9th Cir. 2014) (the district court did not abuse its discretion in admitting Rule 404(b) evidence in part because the court “gave a limiting instruction at the close of evidence” describing “‘other acts not charged here’” that mirrored the “legally correct model instruction.”). The district court did not abuse its discretion in giving the Rule 404(b) instruction.