## Facts

- The case involved trading in healthcare-company securities based on confidential, predecisional information about forthcoming Centers for Medicare & Medicaid Services (CMS) reimbursement rules.
- Christopher Worrall, a CMS employee, had access to confidential nonpublic information concerning contemplated CMS rules and their timing.
- The government alleged Worrall disclosed CMS information to David Blaszczak, a former CMS employee who worked as a political-intelligence consultant to hedge funds.
- Blaszczak allegedly tipped the information to Theodore Huber and Robert Olan, partners/analysts at Deerfield Management Company, a healthcare-focused hedge fund.
- Deerfield allegedly traded in advance of CMS actions and earned more than $7 million in profits.
- A superseding indictment charged wire fraud (18 U.S.C. § 1343), Title 18 securities fraud (18 U.S.C. § 1348), conversion of U.S. property (18 U.S.C. § 641), conspiracy, and Title 15 securities fraud (Exchange Act § 10(b) and Rule 10b-5).
- The district court required a Dirks-style “personal benefit” instruction for the Title 15 securities-fraud counts, but not for the Title 18 wire-fraud or § 1348 counts.
- The jury convicted defendants on wire fraud, § 1348, § 641, and conspiracy, and acquitted them on the Title 15 securities-fraud counts.

## Issues

1. Whether confidential, predecisional CMS regulatory information constitutes “property” or a “thing of value” under 18 U.S.C. §§ 1343, 1348, and 641.
2. Whether the Dirks “personal benefit” requirement for tipper-tippee liability under Exchange Act § 10(b) and Rule 10b-5 applies to prosecutions under Title 18 wire fraud (§ 1343) and securities fraud (§ 1348).
3. Whether the evidence and alleged instructional, evidentiary, and joinder errors required reversal.

## Decision

- The Second Circuit affirmed the judgments of conviction (with one judge dissenting).
- The court held that confidential government information may qualify as “property” for purposes of the wire-fraud and Title 18 securities-fraud statutes.
- The court held the Dirks “personal benefit” test does not apply to Title 18 fraud prosecutions under §§ 1343 and 1348.
- The court rejected defendants’ remaining challenges, finding sufficient evidence and no prejudicial trial error.

## Legal Principles

- Confidential, nonpublic information can constitute “property” when the holder has a right to exclude others and to make exclusive use of the information before public release, including in certain government settings.
- A government agency’s confidential, predecisional information relating to contemplated actions may be treated as property (and as a “thing of value”) under Title 18 fraud and conversion statutes when framed as an interest in confidentiality and exclusive use, not merely as a regulatory power.
- The Dirks personal-benefit requirement is tied to the Exchange Act § 10(b)/Rule 10b-5 insider-trading framework and need not be imported into Title 18 wire fraud (§ 1343) or Title 18 securities fraud (§ 1348).
- Title 18 securities fraud (§ 1348) is textually and structurally distinct from Title 15 securities fraud and may permit conviction without proving a tipper’s personal benefit.

## Conclusion

The Second Circuit affirmed Title 18 fraud and conversion convictions arising from trading on leaked CMS rulemaking information, concluding that such confidential government information could constitute property under the statutes and that prosecutors need not prove a Dirks-style personal benefit for Title 18 wire-fraud and § 1348 securities-fraud liability.


United States v. Blaszczak, 947 F.3d 19 (2d Cir. 2019)