## Facts

- Thomas T. Prousalis, Jr., a securities lawyer, represented Busybox.com, Inc. in preparing and executing an initial public offering (IPO).
- He structured a compensation agreement providing a contingent legal fee tied to the IPO’s successful closing (the greater of $375,000 or 7.5% of gross proceeds).
- Offering materials disclosed a legal fee but did not disclose that the fee was contingent on the IPO’s completion.
- When Busybox’s CEO sought to correct the disclosure, Prousalis insisted the existing disclosure remain.
- Federal authorities charged Prousalis with fraud-related offenses tied to the IPO; he pled guilty in the Southern District of New York and was sentenced.
- After the Supreme Court decided *Janus Capital Group, Inc. v. First Derivative Traders* (2011), Prousalis sought habeas relief under 28 U.S.C. § 2241 in the Eastern District of Virginia, arguing that, under *Janus*, he was not the “maker” of the alleged misstatements and his conduct was therefore non-criminal.

## Issues

1. Whether *Janus*’s definition of who “makes” a statement under § 10(b) and Rule 10b-5 applies outside private civil actions so as to undermine criminal fraud convictions.
2. Whether Prousalis showed, for purposes of § 2241 collateral relief, that a change in law rendered the conduct underlying his guilty plea non-criminal.

## Decision

- The Fourth Circuit affirmed dismissal of the § 2241 petition.
- The court held that *Janus* was confined to the implied private right of action under § 10(b) and did not limit criminal liability for the conduct at issue.
- The court concluded Prousalis’s convictions remained valid under current law, so he was not entitled to § 2241 relief.
- A separate concurrence agreed with the disposition.

## Legal Principles

- *Janus*’s “maker of a statement” rule is limited to private suits under § 10(b) and Rule 10b-5 and does not control criminal prosecutions.
- Limits developed for judge-made private securities remedies do not automatically restrict liability under congressionally enacted criminal fraud statutes.
- § 2241 collateral relief is unavailable absent a showing that intervening law renders the petitioner’s conduct non-criminal; it is not a substitute for direct review or ordinary postconviction remedies.
- Participation in a fraudulent scheme may support criminal liability even if another actor is the formal issuer of challenged statements.

## Conclusion

The Fourth Circuit held that *Janus* did not apply to invalidate Prousalis’s criminal fraud convictions and that he failed to show, on § 2241 review, that intervening law made his underlying conduct non-criminal; the dismissal of his habeas petition was affirmed.


Prousalis v. Moore, 751 F.3d 272 (4th Cir. 2014)