Court Opinion

ID: 2814658
Source: CourtListenerOpinion
Date Created: 2015-07-06 20:01:43.587873+00
Date Added: 2024-06-11T11:30:33.282396
License: Public Domain

FILED
                              NOT FOR PUBLICATION                           JUL 06 2015

                                                                        MOLLY C. DWYER, CLERK
                       UNITED STATES COURT OF APPEALS                    U.S. COURT OF APPEALS

                               FOR THE NINTH CIRCUIT

    UNITED STATES OF AMERICA,                    No. 14-10204

                 Plaintiff - Appellee,           D.C. No. 3:11-cr-00625-EMC-1

     v.                                          MEMORANDUM*

    BASSAM YACOUB SALMAN, aka
    Bessam Jacob Salman,

                 Defendant - Appellant.

                     Appeal from the United States District Court
                         for the Northern District of California
                    Hon. Edward M. Chen, District Judge, Presiding

                           Argued and Submitted June 9, 2015
                               San Francisco, California

Before: CHRISTEN and WATFORD, Circuit Judges, and RAKOFF, Senior
District Judge.**

          Defendant-Appellant Bassam Yacoub Salman appeals his conviction,

following jury trial, for one count of conspiracy to commit securities fraud in

*
      This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
      The Honorable Jed S. Rakoff, Senior District Judge for the U.S. District
Court for the Southern District of New York, sitting by designation.
violation of 18 U.S.C. § 371 and four counts of securities fraud in violation of 15

U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5, 240.10b5-1 and 240.10b5-2,

and 18 U.S.C. § 2. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we

affirm.1

      Salman’s convictions arose from an insider-trading scheme involving his

extended family. The underlying facts and procedural history are set forth in the

opinion filed concurrently with this memorandum disposition. As relevant here, the

Government presented evidence at trial that Salman caused his brother-in-law,

Karim Bayyouk, to trade on material non-public information that Salman received

from other members of his family using a brokerage account in which Salman had

an undisclosed interest. On May 31, 2007, attorneys from the Securities and

Exchange Commission (“SEC”) interviewed Bayyouk, who falsely denied having

received information from anyone before making the relevant trades. A recording

of that interview (the “Bayyouk Interview”) was played for the jury at Salman’s

trial. Salman now claims the admission of the Bayyouk Interview violated the

Confrontation Clause, and, in any event, should have been excluded under Federal

      1
        The panel granted Salman’s motion to file a supplemental brief addressing
the effect, if any, of the Second Circuit’s opinion in United States v. Newman, 773
F.3d 438 (2d Cir. 2014). That issue is addressed in a separate opinion filed
concurrently with this memorandum disposition.

                                         -2-
Rules of Evidence 401–403. He further argues that the district court erred in giving

a “deliberate ignorance” instruction and that the cumulative effect of the district

court’s errors rendered his trial fundamentally unfair.2

      In Crawford v. Washington, 541 U.S. 36 (2004), the Supreme Court held

that the Confrontation Clause of the Sixth Amendment bars the use of testimonial

out-of-court statements by a witness who does not appear at trial unless the witness

is unavailable and the defendant had a prior opportunity for cross-examination. Id.

at 68. It is well established, however, that this Clause “does not bar the use of

testimonial statements for purposes other than establishing the truth of the matter

asserted.” Id. at 59 n.9; see also United States v. Mitchell, 502 F.3d 931, 966 (9th

Cir. 2007). Here, it is undisputed that the Bayyouk Interview was chiefly

introduced to show that Bayyouk lied to the SEC. Salman notes, however, that on

summation, the prosecutor, in response to Salman’s argument that his transactions

with Bayyouk were somehow related to the restaurant business in which they both

had an interest, made the following argument:

      First and most important, to test this defense, I want you to please
      consider what Karim Bayyouk said about his trading with Mr. Salman.

      2
        With respect to several of Salman’s claims, the parties disagree as to the
applicable standard of review. Because we find that the district court did not err
regardless of which standard is applied, we need not resolve these disputes.

                                          -3-
      He never said his trading with Mr. Salman was business-related. Far
      from it. Mr. Bayyouk told the SEC that his trading had nothing to do
      with business, let alone business with Bassam Salman.

(Emphasis added.)

      Although he did not object at trial, Salman now contends that the final

sentence quoted above demonstrates that the Government relied on some of

Bayyouk’s statements for their truth.

      When viewed in context, however, it is clear that in making the above

argument, the prosecutor was relying on the Bayyouk Interview, not for

what Bayyouk actually said, but rather for what he failed to say.3 The thrust

of the Government’s argument was that, if the transactions had been

legitimate and business-related, then Bayyouk would have simply told the

SEC as much. The fact that he failed to do so suggests that they were not.

This was a non-testimonial use of the Bayyouk Interview, and therefore does

not offend the Confrontation Clause.

      3
         In fact, at no point during the interview did Bayyouk tell the SEC that “his
trading had nothing to do with business, let alone business with Bassam Salman.”
Thus, there was no underlying statement on which the Government could have
relied for its truth. Although the sentence that Salman identifies may have
mischaracterized the evidence to some extent, that does not transform the
Government’s non-hearsay use of the Bayyouk Interview into a Confrontation
Clause violation.

                                         -4-
      Second, Salman argues that the admission of the Bayyouk Interview

was erroneous because it is irrelevant. Federal Rule of Evidence 401

provides that evidence is relevant if “it has any tendency to make a fact more

or less probable than it would be without the evidence” and “the fact is of

consequence in determining the action,” and Federal Rule of Evidence 402

requires that irrelevant evidence be excluded. In this case, however, the fact

that Bayyouk lied strongly suggests that he knew the trading to be improper,

which, in the circumstances, reasonably suggests in turn that Salman

indicated to him it was improper. Therefore, Bayyouk’s false statements

tended to establish Salman’s consciousness of guilt, and their admission was

not in error. See United States v. Hackett, 638 F.2d 1179, 1185–86 (9th Cir.

1980).

      Third, Salman contends that, even if the Bayyouk Interview was

relevant, the district court should have excluded it because its probative

value was “substantially outweighed” by the danger of “unfair prejudice.”

Fed. R. Evid. 403. Salman argues that it was unfair to taint him with

Bayyouk’s false statements, particularly because Bayyouk could have

learned that the trading was improper as a result of the SEC investigation

and not because of anything that Salman told him at the time the transactions

                                          -5-
took place. Salman was, however, free to the argue to the jury that any

inference about his own state of mind was unwarranted. Evidence is not

unfairly prejudicial merely because it damages the defendant’s case. See

United States v. Bowen, 857 F.2d 1337, 1341 (9th Cir. 1988) (“[T]he more

probative the evidence is, the more damaging it is apt to be.”). Because the

Bayyouk Interview was probative and posed little danger of unfair prejudice,

its admission was not erroneous.

      Fourth, Salman argues that the district court erred by giving a

deliberate ignorance instruction. As a general matter, a party is entitled to a

particular instruction “if it is supported by law and has foundation in the

evidence.” Jones v. Williams, 297 F.3d 930, 934 (9th Cir. 2002). Deliberate

ignorance involves “(1) a subjective belief that there is a high probability a

fact exists; and (2) deliberate actions taken to avoid learning the truth.”

United States v. Yi, 704 F.3d 800, 804 (9th Cir. 2013). In deciding whether

to give a deliberate ignorance instruction, the district court must determine

whether, viewing the evidence in the light most favorable to the party

requesting the instruction, “the jury could rationally find willful blindness

even though it has rejected the government’s evidence of actual knowledge.”

United States v. Heredia, 483 F.3d 913, 922 (9th Cir. 2007) (en banc).

                                          -6-
      Salman contends that a deliberate ignorance instruction was not

warranted because the Government presented no evidence that he took any

deliberate action to avoid learning the source of Michael Kara’s tips. He

relies on Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060 (2011),

in which the Supreme Court noted that the doctrine of deliberate ignorance

(also referred to as willful blindness), has 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,” and that “these requirements give willful blindness an

appropriately limited scope that surpasses recklessness and negligence.” Id.

at 2070. Salman urges that Global-Tech established that mere failure to

investigate is insufficient to find deliberate ignorance.

      Salman’s reliance on Global-Tech is misplaced. In that case, the

Supreme Court did not alter the standard for deliberate ignorance; rather, it

imported the well-established criminal standard into the civil context of a

claim for inducement to patent infringement. Id. at 2068–69; cf. United

States v. Goffer, 721 F.3d 113, 128 (2d Cir. 2013) (stating that Global-Tech

“did not alter or clarify the [deliberate ignorance] doctrine” and “simply

describes existing case law”). Consistent with this understanding, our post-

                                          -7-
Global-Tech cases make clear that, at least under circumstances where a

reasonable person would make further inquiries, “[a] failure to investigate

can be a deliberate action.” United States v. Ramos-Atondo, 732 F.3d 1113,

1119 (9th Cir. 2013); see also Yi, 704 F.3d at 805 (citing Global-Tech and

holding that deliberate ignorance instruction was warranted where jury could

infer that defendant “engaged in a deliberate pattern of failing to read

documents”).

      In this case, there were ample reasons why a person in Salman’s

position would seek to discover the source of the information. The

Government’s evidence showed that Salman was investing large sums of

money on short notice, in companies in which he had never invested

previously. Moreover, the information was both highly accurate and

inherently proprietary in nature, suggesting that it came from a source with

inside access to the various companies. Finally, Salman knew the Kara

family well, and therefore the jury could reasonably infer that he was aware

of Maher’s employment at Citigroup and of the Kara brothers’ close

relationship. Thus, if the jury believed that Salman did not actually know

that the information was coming from Maher Kara, then it could rationally

have concluded that the reason he did not know was that he deliberately

                                          -8-
refrained from asking. Accordingly, the district court did not err in giving

the deliberate ignorance instruction.

      Finally, because there was no error, there can be no cumulative error.

See Mancuso v. Olivarez, 292 F.3d 939, 957 (9th Cir. 2002), overruled on

other grounds by Slack v. McDaniel, 529 U.S. 473, 482 (2000).

      AFFIRMED.

                                         -9-