## Facts

- Roger D. Blackwell, a board member of Worthington Foods (WF), learned confidential information during negotiations for Kellogg Company’s acquisition of WF (July–October 1999).
- During the negotiation period, Blackwell’s friends and family members made clustered purchases of WF stock and later profited when the acquisition closed.
- The unusual trading pattern triggered an NASD inquiry and an SEC investigation into relationships between the traders and anyone with knowledge of the acquisition.
- Blackwell told NASD and the SEC he did not disclose the acquisition to anyone; his then-wife Kristina Stephan-Blackwell and her parents initially gave similar denials.
- After separating from Blackwell and receiving immunity, Stephan-Blackwell admitted insider trading and perjury and testified that Blackwell tipped her about the acquisition, encouraged purchases, helped finance purchases by her parents, and coordinated false statements to regulators.
- A friend and business associate testified Blackwell told him to buy WF stock because Kellogg would acquire the company.
- WF’s CEO confirmed Blackwell had board-level access to the acquisition discussions, while also noting employee rumors about a possible buyout.
- A federal jury convicted Blackwell of conspiracies to commit insider trading and obstruct an agency proceeding, multiple insider trading counts, obstruction of an agency proceeding, and false statements; he received 72 months’ imprisonment and a $1,000,000 fine.

## Issues

1. Whether the evidence was sufficient to support convictions for insider trading, related conspiracies, obstruction, and false statements.
2. Whether reliance on immunized, recanting testimony rendered the verdict legally infirm.
3. Whether the jury instructions (including on material nonpublic information and scienter) misstated the law or misled the jury.
4. Whether challenged evidentiary rulings constituted reversible error.
5. Whether the district court properly calculated the advisory Sentencing Guidelines and imposed a reasonable sentence under 18 U.S.C. § 3553(a).

## Decision

- The Sixth Circuit affirmed the convictions and sentence.
- The court held the evidence, viewed most favorably to the government, permitted a rational jury to find guilt beyond a reasonable doubt on all counts.
- The court held credibility attacks on the immunized witness went to weight for the jury, not appellate sufficiency review, particularly where cross-examination occurred and corroboration existed.
- The court held employee rumors did not preclude a finding that Blackwell possessed and conveyed material nonpublic information based on confidential board-level acquisition negotiations.
- The court held the jury instructions, considered as a whole, fairly and adequately stated the law and did not warrant reversal.
- The court held the evidentiary rulings were not an abuse of discretion causing prejudicial error.
- The court held the sentence was procedurally and substantively reasonable under the post-Booker framework.

## Legal Principles

- On sufficiency review, the appellate court views evidence in the light most favorable to the prosecution and asks whether any rational juror could find the elements beyond a reasonable doubt.
- A conviction may rest substantially on cooperating or immunized witness testimony; bias, motive, and prior inconsistent statements generally present jury questions when the witness is subject to cross-examination.
- Market rumors or speculation do not necessarily render confirmed, specific acquisition negotiations “public”; an insider’s concrete, nonpublic knowledge can remain material and nonpublic despite general gossip.
- Obstruction and false-statement offenses may be supported by evidence of coordinated denials to regulators and efforts to influence others’ statements during an agency inquiry.
- After Booker, district courts must correctly calculate the advisory Guidelines and impose a sentence consistent with § 3553(a); appellate review considers procedural correctness and substantive reasonableness.

## Conclusion

The Sixth Circuit upheld Blackwell’s insider trading, obstruction, and false-statement convictions based on corroborated testimony and circumstantial evidence of coordinated trading and concealment, rejected challenges based on witness credibility and rumors, and affirmed a Guidelines-based sentence as reasonable under § 3553(a).


United States v. Blackwell, 459 F.3d 739 (6th Cir. 2006)