The I2G Jury Instructions were fraught with errors which prevented the jury from being able to render a fair verdict. The most egregious was a essentially a direct instruction from the Judge that the defendants were guilty of defrauding “victim investors” and guilty of “securities fraud.” Obviously, a judge an not direct a jury that a defendant is guilty or instruct them to convict but that is exactly what the instructions did.
The judge directly announced that alleged non-witness distributors, represented only by initials, were indeed “victim investors.” This is precisely how they were defined in the jury instructions. Additionally, the purchases of these non-witness (identified by initials) were identified as “securities.” Against this backdrop, a jury question arises, which gave the jury no choice except to follow the order of the I2G Court and convict the i2G defendants.
According to the government, if the Court’s answer to a jury question is found to be erroneous, it cannot be evaluated in isolation. Instead, it must be considered in the context of the overall instructions given (United States v. Khalil, 279 F.3d 358, 367 (6th Cir. 2002)). In making this argument, the government would have to concede that the Court’s response—indicating that a “purchase” occurred within the “statute of limitations” period—was indeed incorrect. However, they would argue that the overall instructions could remedy this error. This argument fails as the overall instructions contained multiple errors, which exacerbated, not mediated, the erroneous answer to a jury question.
The erroneous answer to the jury’s question must be considered alongside the jury instructions “as a whole,” which erroneously pre-announced distributors as “victim investors” whose purchases were announced as “securities.” The government contends that the jury question suggests that the jury had already determined that these “securities” purchases occurred, which is indeed the case. The jury could hardly reach any other conclusion since the Court and the accompanying instructions confirmed that these purchases were indeed “securities” and that they took place.
Regarding Count 13, the government must demonstrate that a member of the conspiracy committed an overt act with the aim of furthering or assisting the conspiracy to commit securities fraud concerning the sale of the identified securities. (298 R.554, #5263; 299 R.554, #5263-64).
The Court confirmed that a “purchase” occurred within the statute of limitations. Consequently, the jury had no option but to conclude that a “security” offense took place. Instead of clarifying that whether a “securities purchase” occurred within the statute of limitations was a decision for the jury to make, the Court affirmed that it did. Furthermore, the Court stated that all such “securities” sales to “victim investors” could be considered. This served as an affirmation of the defendant’s guilt by the Court.
When all the errors in the jury instructions are considered together, the impact of the incorrect response to the jury’s question becomes significant. The “instruction errors as a whole” included: defining a pyramid scheme as an automatic “scheme to defraud”; using incorrect definitions related to securities; providing overly broad definitions of pyramid schemes that could apply to any multi-level marketing (MLM) operation; conspiracy instructions that did not require proof of intent; denying an affirmative defense; and failing to provide clear instructions to distinguish between pyramid schemes and legitimate MLMs.