United States v. Richard A. Svoboda, Michael A. Robles
347 F.3d 471, 12 A.L.R. Fed. 2d 895, 2003 U.S. App. LEXIS 21766 (2003)
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Rule of Law:
A defendant's conscious avoidance of knowledge of a conspiracy's unlawful purpose is the legal equivalent of actual knowledge and may be used to satisfy the knowledge component of a conspiratorial agreement, even in a two-person conspiracy.
Facts:
- Richard Svoboda worked as a credit policy officer at Nations Bank, which gave him access to confidential information about the bank's corporate clients, including merger and acquisition plans.
- Between 1994 and 1997, Svoboda passed this confidential, non-public information to his long-time friend, Michael A. Robles.
- Robles used the information provided by Svoboda to make trades in the securities market.
- The trades were highly successful, yielding large returns up to 400%, and were often timed just days before public announcements of tender offers.
- Robles and Svoboda shared the profits realized from these trades.
- At trial, Svoboda testified that he and Robles explicitly discussed and agreed upon the scheme and that Robles was fully aware he was trading on unlawfully obtained insider information.
- Robles testified in his own defense, denying that he had knowledge of the unlawful source of Svoboda’s information.
Procedural Posture:
- Michael A. Robles was prosecuted in the United States District Court for the Southern District of New York.
- At the close of evidence, the Government requested a conscious avoidance jury instruction.
- Over Robles' objection to giving the charge, the district court granted the Government's request and included the instruction.
- A jury convicted Robles of one count of conspiracy to commit securities fraud and thirteen counts of substantive securities fraud.
- Robles, as the appellant, appealed his conviction to the United States Court of Appeals for the Second Circuit.
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Issue:
May the conscious avoidance doctrine, which permits a finding of knowledge when a defendant deliberately avoids learning a fact, be used to establish the knowledge element of a conspiratorial agreement, particularly in a conspiracy involving only two people?
Opinions:
Majority - Scullin, Chief District Judge
Yes, the conscious avoidance doctrine may be used to establish the knowledge element of a conspiratorial agreement, even in a conspiracy involving only two people. The court rejected Robles' contention that a two-person conspiracy requires proof that each co-conspirator possessed actual knowledge of the scheme's unlawful objectives. The court reasoned that knowledge consciously avoided is the legal equivalent of knowledge actually possessed. The court clarified that while conscious avoidance cannot prove the separate element of intent to advance the conspiracy's goals, it can be used to satisfy the knowledge component of the 'intent to participate' element. The court held that there was a sufficient factual predicate for the conscious avoidance instruction because Robles denied knowledge, yet the circumstances of the trades—their suspicious source, timing, and success—suggested a high probability that the tips were based on inside information, and that any lack of knowledge was due to a conscious effort to avoid confirming an obvious fact.
Analysis:
This decision solidifies the use of the conscious avoidance doctrine as a powerful tool for prosecutors in conspiracy cases within the Second Circuit. It clarifies that the doctrine can establish the crucial mens rea element of knowledge for the formation of a conspiratorial agreement itself, not just for joining a pre-existing one. By explicitly rejecting a higher standard for two-person conspiracies, the court prevents defendants from using a 'plausible deniability' defense where they intentionally remain ignorant of illegal details in a small-scale criminal enterprise. This precedent makes it harder for co-conspirators to escape liability by claiming ignorance when surrounded by overwhelmingly suspicious circumstances.
