United States v. Gregory Reyes

When a defendant signs off on granting stock options to himself, evidence of fraud presented to the jury was not false because the jury was informed that the defendant was not the one who ultimately approved granting stock options.

This is an appeal from a new trial for Gregory Reyes who was charged with securities fraud and making false filings with the SEC, falsifying corporate books, and making false statements to auditors. The first conviction was vacated due to prosecutorial misconduct. Reyes was again found guilty of all three charges and appealed arguing prosecutorial misconduct, insufficient evidence of materiality, and various evidentiary and instructional errors at trial. In the first Reyes appeal, the Court held that it is improper for the government to present to the jury statements or inferences that it knows to be false or has strong reason to doubt their veracity. The Court concluded in this case that Reyes failed to show that the prosecutor made false or misleading statements to the jury. It follows that the prosecutor did not knowingly make any misrepresentations to the jury. The prosecutor introduced evidence to show that Reyes engaged in fraud for personal benefit. Next, Reyes claims that the judge failed to give a jury instruction that said that Reyes, as CEO of his company, was not ultimately responsible for the conduct of the corporation. The Court found that the instructions which were given sufficiently covered this issue and there was not reversible error. Lastly, Reyes argues that the evidence used against him in the securities fraud charge is not sufficient to satisfy the materiality element. For an omission to be material there must be “substantial likelihood that the disclosure of the omitted fact would have been viewed by a reasonable investor as having significantly altered the ‘total mix’ of information available.” The Court concludes that there is substantial evidence from various sources for the jury to have found materiality. AFFIRMED