## Facts

- Richard A. Svoboda worked as a credit policy officer at a bank and had access to confidential client information, including earnings and merger-and-acquisition activity.
- From about 1994 to 1997, Svoboda provided nonpublic information to his friend Michael A. Robles.
- Robles used the information to place securities and tender-offer trades that were closely timed to corporate events and generated large profits.
- Robles and Svoboda shared the trading profits; Svoboda later pleaded guilty and testified for the government.
- Robles denied knowing the information was unlawfully obtained; Svoboda testified Robles understood it was improperly sourced.
- The trades were executed on national securities exchanges located in the Southern District of New York; Robles received trade confirmations reflecting execution details.

## Issues

1. Whether a “conscious avoidance” (willful blindness) jury instruction was permissible to prove Robles’s knowledge of the unlawful source of the information in a conspiracy prosecution, including an alleged two-person conspiracy.
2. Whether venue was proper in the Southern District of New York for conspiracy and substantive securities/tender-offer fraud counts when Robles did not personally act in the district but the trades were executed there.

## Decision

- The Second Circuit affirmed Robles’s convictions for conspiracy and multiple substantive securities and tender-offer fraud counts.
- The court held the conscious avoidance instruction was properly given because the evidence supported an inference that Robles was aware of a high probability of illegality and deliberately avoided confirmation.
- The court rejected the claim that conscious avoidance is unavailable in a two-person conspiracy, treating it as a method of proving the knowledge element rather than the existence of an agreement.
- The court held venue was proper in the Southern District of New York because execution of the charged trades on exchanges in the district constituted conduct sufficient for venue, and it was reasonably foreseeable to Robles.

## Legal Principles

- When an offense requires that a defendant act “knowingly,” knowledge may be established by proof that the defendant was aware of a high probability of a fact and consciously avoided confirming it; negligence or mistake is insufficient.
- Conscious avoidance may be used to establish a conspirator’s knowledge element and is not categorically barred in a conspiracy involving only two participants.
- In federal criminal cases, venue is proved by a preponderance of the evidence.
- Venue for securities and tender-offer fraud may lie in the district where the relevant trades are executed on securities exchanges; for conspiracy, venue also lies where an overt act in furtherance occurs.

## Conclusion

The court upheld the convictions, concluding that the jury could infer Robles’s knowing participation through conscious avoidance and that the Southern District of New York was a proper venue because the fraudulent trades were executed on exchanges located there and that execution was reasonably foreseeable to Robles.


United States v. Svoboda, 347 F.3d 471 (2d Cir. 2003)