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Decisions in Criminal and Securities Discipline Cases

By FindLaw Staff on February 17, 2010 | Last updated on March 21, 2019

Today, the Ninth Circuit decided two criminal appeals, one related to hearsay evidence and the other concerning a Fourth Amendment issue, and a petition for review of the SEC's sanctions against two broker-dealers.

In US v. Norwood, No. 08-30050, defendant was tried and convicted of drug and firearm possession, and his appeal raised various challenges to his trial and sentence.

The Ninth Circuit affirmed, holding that 1) an affidavit showing that defendant did not have legitimate employment was not offered to prove an element of defendant's offense, nor was it the sole evidence of any relevant fact, and thus did not violate the Confrontation Clause; 2) the prosecutor's reference to the defendant's opportunity to testify was a fair response to claims made by defendant's counsel; and 3) defendant failed to provide any persuasive rationale for why his sentence should be considered cruel and unusual under the Eighth Amendment due to the distinction between the penalties imposed for cocaine powder and cocaine base.

In US v. Borowy, No. 09-10064, defendant appealed his conviction for child pornography possession.  An officer found the computer files at issue by downloading them over a peer-to-peer sharing service.  Defendant claimed that the officer violated the Fourth Amendment by downloading the files.

The court of appeals affirmed on the grounds that 1) because defendant lacked a reasonable expectation of privacy in the shared files at issue, the officer's use of a keyword search to locate those files did not violate the Fourth Amendment; 2) the officer had probable cause to download the files at issue because their filenames suggested that they contained child pornography; and 3) given the strength of the government's case, the benefit that defendant obtained by pleading guilty, and his focus on negotiating a lesser prison term, defendant did not demonstrate that the district court's Fed. R. Crim. P. 11 error affected his substantial rights.

Finally, in Gebhart v. SEC, No. 08-74943, the SEC sustained a National Association of Securities Dealers disciplinary sanction against petitioners-securities salespersons for making false statements to clients in connection with the sale of promissory notes used to finance the conversion of mobile home parks to resident ownership.  Petitioners petitioned for review of the SEC's order on the ground that the SEC failed to find that petitioners acted with scienter.

The Ninth Circuit denied the petition, holding that the SEC considered all of the evidence bearing on petitioners' actual state of mind, including their extreme departure from ordinary standards of care, and found that they were consciously aware of the risk that their statements were false.

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