Opinion ID: 3171512
Heading Depth: 3
Heading Rank: 1

Heading: The Written Disclosures

Text: Each investor received written disclosures from BBC Equities, including a PPM and a subscription agreement. These disclosures revealed key features of BBC Equities investments that contradicted Bravata’s oral assurances. The subscription agreement and PPM -7- Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata notified investors that they could lose their entire principal investment. The subscription agreement warned that investment funds “may be used by the company to pay installments of the preferred distribution, the redemption price and/or early redemption price” to other investors, effectively admitting that BBC Equities functioned as a Ponzi scheme. The 2008 PPM disclosed the fact, but not the amount, of Bravata’s salary. The investors received and signed these disclosures. And Bravata contends that the signed disclosures immunize him from liability for his oral misrepresentations. Specifically, he presses that the disclosures show he never meant to defraud his investors—if they read their disclosures as he intended, he argues, they would not have been deceived. Although he advanced this argument during and after trial, Bravata never cited authority to support it. On appeal, he cites a contract-law case estopping the plaintiffs from voiding a written contract because they were “ignorant of its contents.” Reid v. Sears, Roebuck & Co., 790 F.2d 453, 461 (6th Cir. 1986) (quoting Sponseller v. Kimball, 224 N.W. 359, 360 (Mich. 1929)). True enough, the written disclosures might estop investors from enforcing Bravata’s oral representations or from voiding their subscription agreements. But those are not at issue here. Indeed, the jury heard testimony about Bravata’s treatment of the written disclosures that reinforced his intent to defraud investors. Katie Witkowski, a BBC Equities administrative employee, testified that Bravata told her to remove risk-acknowledgement forms from investor packets. The forms announced that investors could lose their principal, and Bravata was “upset” that Witkowski distributed them to investors. Robert Whitfield, a named victim who also worked for BBC Equities, testified that Bravata asked him to give PPMs only to -8- Case Nos. 13-2380, 13-2381, 13-2591, 15-1370, United States v. Bravata investors who requested them. If possible, Bravata wanted Whitfield to “sidetrack” the requests. The government presented sufficient evidence for the jury reasonably to infer that Bravata intended to defraud. We therefore reject Bravata’s argument that the written disclosures per se negated the intent element. We also reject any implicit argument that the written disclosures made the oral misrepresentations immaterial. See United States v. Ghilarducci, 480 F.3d 542, 547 (6th Cir. 2007) (“That the contracts should have placed the . . . victims on notice of the fact that no oral representation would be honored, does not mean the oral representations were immaterial or without tendency to influence.”).