## Facts

- Refco, Inc., a large brokerage firm, collapsed in 2005 after accounting fraud was revealed.
- Joseph Collins served as Refco’s outside counsel from at least 1997 until the fraud became public.
- Refco executives concealed a large intercompany receivable through “short-term financings” that shifted the debt around audit periods, keeping it hidden from auditors, regulators, and market participants during a 2004 leveraged buyout and a 2005 initial public offering.
- Collins prepared documents for many transactions that collectively effectuated these short-term financings.
- Trial evidence indicated Collins was exposed to information materially inconsistent with Refco’s public debt disclosures, including references to substantially higher debt figures and being told of a very large undisclosed obligation during 2004 negotiations.

## Issues

1. Whether the evidence was sufficient for a rational jury to find beyond a reasonable doubt that Collins knowingly and intentionally participated in the conspiracy and committed securities fraud, false SEC filings, and wire fraud.
2. Whether the district court properly instructed the jury on conscious avoidance (willful blindness) as to the knowledge element.

## Decision

- The Second Circuit affirmed the judgment of conviction and sentence.
- The court held the evidence, viewed in the government’s favor, was sufficient for a jury to find Collins had the required knowledge and fraudulent intent.
- The court held the conscious-avoidance instruction was proper because the record supported a finding that Collins was aware of a high probability of the concealed debt and deceptive purpose of the financings and deliberately avoided confirming it.

## Legal Principles

- On sufficiency review, an appellate court views the evidence in the light most favorable to the government and sustains the verdict if any rational juror could find the elements proved beyond a reasonable doubt.
- A conscious-avoidance instruction is permissible when (1) the defendant disputes knowledge and (2) the evidence permits a finding that the defendant was aware of a high probability of the disputed fact and consciously avoided confirming it.
- In fraud and conspiracy cases, knowledge and intent may be proven by circumstantial evidence, including repeated involvement in suspicious transactions and exposure to information contradicting public disclosures.

## Conclusion

The Second Circuit upheld Collins’s convictions arising from Refco’s concealment of intercompany debt, concluding the trial evidence supported a finding of actual knowledge or deliberate ignorance and that the conscious-avoidance instruction was warranted on this record.


United States v. Collins, 581 F. App’x 59 (2d Cir. 2014)