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United States v. Salman

United States Court of Appeals, Ninth Circuit

July 6, 2015

UNITED STATES OF AMERICA, Plaintiff - Appellee,
BASSAM YACOUB SALMAN, aka Bessam Jacob Salman, Defendant - Appellant

Argued and Submitted, San Francisco, California June 9, 2015.

Appeal from the United States District Court for the Northern District of California. D.C. No. 3:11-cr-00625-EMC-1. Hon. Edward M. Chen, District Judge, Presiding.

For UNITED STATES OF AMERICA, Plaintiff - Appellee: Merry Jean Chan, Esquire, Robert Seldon Leach, Assistant U.S. Attorney, Adam A. Reeves, Esquire, Assistant U.S. Attorney, Barbara Valliere, Assistant U.S. Attorney, OFFICE OF THE U.S. ATTORNEY, San Francisco, CA.

For BASSAM YACOUB SALMAN, AKA Bessam Jacob Salman, Defendant - Appellant: John D. Cline, San Francisco, CA.

BASSAM YACOUB SALMAN, AKA Bessam Jacob Salman, Defendant - Appellant, Pro se, Orlando Park, IL.

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 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 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, 124 S.Ct. 1354, 158 L.Ed.2d 177 (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. 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.

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 ...

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