Legal Case Summary

Thank you Chief Judge Tracksler and may it please the court. When Mr. Prasalis pleaded guilty, it was understood that a lawyer representing a company in connection with his SEC filings could be charged with securities fraud for making the statements contained in those filings. That was the rule up until the Supreme Court decided in the Janice decision that the only maker of statements and securities filings with the SEC is the issuer itself. That constituted a fundamental change in law that entitles Mr. Prasalis to relieve under a Section 2241 habeas petition and for that reason his conviction should be vacated. I'd like to begin with the district court's conclusion that the Janice decision is limited to civil lawsuits. A conclusion that was based on language in the opinion drawn from Central Bank and Stone Ridge which had emphasized the narrow scope of the private right of action in civil cases. You will wear any criminal cases applying the Janice. I understand that there are some district court cases. I can't cite them off hand but I believe that there happens a following. Are they cited in your brief? No, no, your honor. We do have SEC enforcement proceedings where the SEC has conceded that the Janice decision would apply there. In that respect it's no different from a criminal proceeding because in both cases it's not a private civil suit brought by a private litigant and so it doesn't invoke the implied private right of action. So to that extent the SEC enforcement cases are relevant authority

. But the critical point for understanding the Janice decision is that it began with the language of Rule 10B5. It's an House that started with dictionary definitions of what it means to make a statement says the phrase at issue in Rule 10B5 to make any statement is thus the proximate equivalent of state continues for purposes of Rule 10B5 the maker of a statement is the person authority or person or entity with ultimate authority over the statement. And so the court's analysis makes clear that it is interpreting the language of the rule not relying exclusively on the narrow scope of a private right of action. The government in its argument said without language is ambiguous so you need to defer to the SEC and footnote a the Supreme Court rejected that and said the meaning of make in Rule 10B5 is not quote ambiguous. As I read the opinion there's no doubt that it was based in the first instance on the language of the rule and that the reference on a private right of action central bank and Stone Ridge was merely confirmatory of that. But the court also emphasized the narrow scope that it has to give an implied private right of action did it not? That is correct Your Honor and it's there are really two aspects of the decision. There's the interpretation of the language of the rule and also this private right of action. But if you look at what the course language was it said that its dictionary interpretation was quote further supported by Stone Ridge or that it accords with the narrow scope of the private right of action. So I think the better reading of that passage is that it was an additional reason for the court's interpretation of the language and we would submit that the language can't be interpreted differently in civil cases as opposed to criminal cases or SEC enforcement proceedings. And for that reason we would submit that in criminal cases like Mr. Prasalis the holding that the maker of a statement is the person or entity of ultimate authority over it. In this case busy box is controlling and forecloses the government's theory that Mr. Prasalis himself could have been the maker of those statements and therefore charged with them. And it is clear from the record in the criminal proceedings that that was indeed the government's theory the government in the superseding indictment alleged that the false statements were contained in the final busy box IPO registration statement that's J

.A. 227. It is such a big leap. I mean just to follow on what Judge Keenan was saying is such a big leap from a court's refusal to expand a judicially created implied cause of action. And then say we're going to just take that over to the entirely different context of a legislatively passed criminal statute and constrict that. I mean it makes sense to say well the Supreme Court is not going to expand an implied cause of action and at the same time it's not going to constrict and express congressional sanctioned criminal provision. I mean those they really are apples and oranges aren't they? Well Judge Wilkinson is the same provisions that are applicable on both civil and criminal cases and so to the extent that J.A.ness is an interpretation of the language of the rule there's no principled basis for distinguishing the two and I would contrast this with a case like Blue Chip Stamps which held that there's a purchaser seller requirement for private civil lawsuits. That by the courts on admission was was an interpretation of the scope of the private right of action. Maybe the first court to do this wouldn't we? The first appellate court at a minimum yes. But I think it it follows. Are there any district courts that have bought your theory? Your honor my understanding is that there are I can't cite them to the court at the moment. I can't however cite the SEC's recognition as I mentioned earlier

. So you're asking us to crawl out on the far limb. I wouldn't submit that as a far limb I think that if you look at the very first section of analysis in the Janus decision it starts with the dictionary definition of make. What does it mean to make a statement? It makes clear that they're talking about that phrase which the court later says is unequal. The span Janus this far it's almost doing away with aiding and abetting liability isn't it? Not at all your honor. But because you know the very definition of a non the people that were non makers of the statements in Janus and were spared from an implied civil cause of actions in the criminal context would be classic aiders and abetters. And so if you're asking us to I think you'd come to a surprise the Supreme Court that we take in Janus and used it to eviscerate aiding and abetting the whole concept of aiding and abetting a criminal offense. Well to be clear your honor we don't believe that this case was presented as an aiding and abetting case. And that's what you are. Well not at all your honor because in order for there to be- You're not a maker but at the same time you weren't exactly a bystander either you were you were up to your eyeballs with busy box and trying to engage in an inside deal that would enrich yourselves at the expense of the ordinary investor who had no idea this kind of stuff was going on. That's right at the heart of a securities fraud violation. And if you know if that is an aiding and abetting assuming you're not a maker I'm not sure about that but let's assume you're not a maker that's a classic aider and a better. That's your response to that Judge Wilkinson. And of course the aiding and abetting was charged and I guess you played to it. With respect your honor I think that although there are references to section 18 U

.S. Section 2 in the superseding indictment that's not picked up in the judgment but more fundamentally in order for there to be an aiding and abetting offense there must be an underlying violation which would mean that busy box the maker would have to have committed all of the elements of a primary Vultimify violation. If you're saying it has to be a guilty principle. Right but there is none here because the allegations of the superseding indictment were that busy box itself were defrauded. Now the solution to that and this gets actually to the dissent in the JNS decision. The dissentor said this is a real problem because you're a narrowing the scope of liability but maybe the solution is section 20b of the Exchange Act which is a puppeteer provision that makes it illegal to do indirectly what you can't do directly. And so for some speaking through someone else. The problem for the government in this case is that they never charged Mr. Prasalis with section 20b offenses. And so although in future cases there is a solution for what the government perceives to be the problem here it's not this case. And so for that reason I don't think that this would be nearing the scope of liability more than JNS itself acknowledged in response to the dissenters. To continue then with what the basis of the allegations were in response to whether this is an aiding in a betting case. As I mentioned there are two references to section 2, the aiding in a betting statute in the superseding indictment. But none of the allegations are aiding in a betting allegations

. The entire theory is that Mr. Prasalis himself made the false statements. There's an entire section on that. It's J229. The government repeats it at 227 to 38 to 39 to 40 to 43. All those are incorporated by reference in the later accounts. And then in the plea hearing the court asks in order to ascertain whether there's a basis for the plea whether Mr. Prasalis made the statements in the registration statement. He understood that the registration statement would be seen by investors. And so the entire theory here was that he made those statements, not that he aided and abetted somebody else in making them. And JNS makes clear that that's no longer a valid theory for securities for all liability. Mr. Martin, what about the Supreme Court's discussion in JNS of the Central Bank of Denver case? Why isn't that cutting against your position on the reach of JNS? Because the court is talking about the differences in private rights of action, the differences in reading the term make with regard to securities enforcement actions, with regard to private right of action. So the Supreme Court is essentially saying that the word make is treated differently or else they would in terms of the private right of action and the terms of the SEC enforcement

. Aren't they saying that? No, Your Honor. So there are two points. The first is that this is- Well, why aren't they saying that? Okay. So they- In that language where they say a broader reading of make to include entities without ultimate control of the content of a statement would substantially undermine central bank. And he's in saying that the enforcement action may be brought by the SEC, but does not constitute a private right of action. Sure. Well, the SEC has a separate enforcement provision. But what I'm saying is the Supreme Court is taking some pains to say that there can be separate treatment of the word make, which is- which is- is the foundation of your cases, I understand it, that they cannot be different. Actually, I don't read that as about the definition of make. Okay. So Section 28 says- The Supreme Court is not distinguishing saying make can mean different things depending on the type of proceeding. That's- that's what I read here. Sure. So Section 28 provides liability for an individual who substantially participates in a securities fraud

. And so the- that doesn't rely on a definition of make. The maker is still the issuer. It's just that there can be secondary liability for those who substantially participate in a SEC enforcement suit. And so it's not two different definitions of make. It's that there's this overlay enforceable only by the SEC for substantial participation in securities fraud. Well, it's not different definition. It's just how broadly is it applied, isn't that right? Well, no, I think that in both cases, maker is defined as this person or entity with ultimate authority over the statement. The Supreme Court- that's the holding in Janus for purposes of rule two and B five, the maker is the person or entity with ultimate authority. And SEC enforcement proceedings, there can also be secondary liability for substantial participation. But that's not applicable here and there's no 20A allegation here. And so I read the central bank discussion there as- it most confirming the definition of make in rule ten B five and then distinguishing SEC cases in which there can be broader liability, not by manipulating what make means, but by virtue of the secondary liability. Criminal trial here was suspended. And you played guilty to what was it, these three counts? Yes, Judge Wilkinson. All right

. And the only way that you can avail yourself of the safe harbor under 2241 is to prove that the conduct is no longer criminal. And that in order to do that, you have to essentially to prove it's non-criminal. You have to make the case that the Supreme Court decision in Janus should extend to the criminal realm. That, I mean, when you strip it all away, that's what it comes down to. Yes, Judge Wilkinson. That's the linchpin of it. That the Supreme Court in deciding that this ten B five civil liability doesn't apply to those who assisted really meant to extend this to this criminal statute as well. And I think it's really a case of, I don't know why we should be jumping out in front of the Supreme Court on this matter and skating on this kind of thin ice when there's all the difference in the world between declining to extend what was an implied right of action on this rule ten B five and something which Congress has has passed and which rests upon very traditional principles of criminal law. And no other court has done it. And you're left with what Judge Keenan, I think, was rightly concerned about, which was that the Supreme Court was discussing central bank of Denver, which was the whole foundation of Janus indicated that the foundation of that Janus case lay in the fact that they were dealing with an implied civil right of action. But I think we are being pushed into a breach here that you're trying to take, get us to do something very aggressive where no other court has gone before and where the Supreme Court has issued all kinds of warning signals saying that this is limited to an implied right of action under under ten B five that that's the context. With respect to your order, I think that the critical issue is not does Janus extend to civil cases, it is, is Janus an interpretation of the language of rule ten B five or a policy based limit on private rights of action? There are certain cases, again, blue chip stamps as the quintessential example, that are policy based limits on the private right of action. There's no reason why that would extend to criminal cases. But if you view Janus as an interpretation of the language of the rule, and I would submit that the court on at least three occasions says that's what it's doing, then there's no way it can't apply to criminal cases

. There's a single rule, if it means what the government or what the Supreme Court said in Janus, then it means that in civil cases. You just say in context, it doesn't matter at law. But the whole legal principle involved here is whether in the civil context, the idea of court created law versus the criminal context where there's a purge, as far as I can see, it's a perfectly normal and routine and ordinary exercise of Congress's authority to do the facts. It's up to past criminal statutes and to define the elements of a crime and to define a range of sanctions. It's just what you're proposing here is quite aggressive in my view. And I know you can say, we do this and do that. But when you strip it all away, that's what we're essentially being asked to do is to ignore in context of a prior Supreme Court case. And frankly, that position has reversed written all over it, reversed. Actually, with respect to honor, I think you'd be affirmed if you wrote that opinion. But what I would say is that the relevant context here is what does it mean, quote, to make any statement? That's the language of the rule. And the court purported to interpret, quote, the phrase, an issue in Rule 10B5. Now, yes, its conclusion was supported. It accords with the narrow scope of the private right of action. But the language of the rule to make any statement is the same in this case as it wasn't Janus

. And it can have to mean the same thing. What about count two in the fact of 78 J.B. and 78 FF? And the language of those two statutes with regard to count two certainly is broader. How does that affect your mouth? The count two is just a straight securities fraud count. I am not sure what effect we would give to any other provisions. I mean, he was if you look at the language of the superseding indictment charged with making a false statement. Your city government can't rely on indirectly or causes to be mean. Well, so the indirectly and directly language was also interpreted in the Janus decision, actually in a footnote. And what it says is that it doesn't undermine the making requirement. It just says once you make a statement, it can be communicated indirectly. That was actually a rejection of the government's position in Janus. And so you still have to beat the maker of a statement in order for that clause to apply. I've to know for the questions I see I'm quite over my time. You got some time reserved. Thank you Chief Judge Tracks. May I please the court, J.Hanbrook, on behalf of Respondent. Your Honours. In 2004, Tom's presale has pled guilty to a superseding indictment charging him with conspiracy to commit securities fraud, wire fraud and mail fraud. Securities fraud, including aiding and abetting and failing to disclose interest to counsel and securities filings, including aiding and abetting. The issue before this court is not whether Janus applies in a criminal case because that issue frankly is irrelevant. The issue is whether the conduct of which he was convicted remains criminal under the in-ray Jones test and therefore whether he can rely on the savings clause. That was the basis for the district court's decision. And this is a joint appendix 556. The district court wrote, even if the court found Trusalis' argument persuasive that under Janus, he no longer qualifies as a maker of the false statements because he lacked ultimate authority over them. Trusalis ignores the fact that he also pled guilty to conspiracy and aiding and abetting. Do you agree that to be guilty of aiding and abetting there has to be a guilty principle? Absolutely not, Your Honour

. You got some time reserved. Thank you Chief Judge Tracks. May I please the court, J.Hanbrook, on behalf of Respondent. Your Honours. In 2004, Tom's presale has pled guilty to a superseding indictment charging him with conspiracy to commit securities fraud, wire fraud and mail fraud. Securities fraud, including aiding and abetting and failing to disclose interest to counsel and securities filings, including aiding and abetting. The issue before this court is not whether Janus applies in a criminal case because that issue frankly is irrelevant. The issue is whether the conduct of which he was convicted remains criminal under the in-ray Jones test and therefore whether he can rely on the savings clause. That was the basis for the district court's decision. And this is a joint appendix 556. The district court wrote, even if the court found Trusalis' argument persuasive that under Janus, he no longer qualifies as a maker of the false statements because he lacked ultimate authority over them. Trusalis ignores the fact that he also pled guilty to conspiracy and aiding and abetting. Do you agree that to be guilty of aiding and abetting there has to be a guilty principle? Absolutely not, Your Honour. Council says that the government has no theory of aiding and abetting that survives Janus incites 18 USC 2A. Who are you aiding and abetting? The 18 USC 2B, which I will read to the court because it's very important, 18 USC 2B says, whoever willfully causes an act to be done, which if directly performed by him or another, would be an offense against the United States as punishable as a principle. And this court has held in United States V. Jackson, 608F3193, that 18 USC 2B is intended to impose criminal liability on one who causes an intermediary to commit a criminal act, even though the intermediary who performed the act has no criminal intent, and hence is innocent of the crime charged. So that case certainly stands for the proposition that you don't need a guilty principle to be convicted of 18 USC 2B aiding and abetting. There are two other cases that I think are very important. You need to even go that far. I mean, if there's a guilty play and the guilty plea stands as pled, unless the conduct is no longer criminal and to find the conduct no longer criminal, we would have to, the only route by which you can find the conduct no longer criminal is that the court somehow met Jainless to leap its implied civil right of action, boundaries, and knock down various criminal statutes, including one to which he had played. A great year on. And to further that point, he was charged with conspiracy to commit securities fraud, mail fraud, and wire fraud. He offers no objection that Jannison any way affects the conspiracy to commit mail fraud and wire fraud. And it's black letter law that so long as one object of the conspiracy is valid. He's he has he has pled guilty already to securities fraud and to to failure to disclose the interest of council and registration materials. Now, the only way that these that the guilty plea can be unraveled is if Janness was meant to inflict some sort of damage of unknown or has to inflict damage of some unknown scope and consent on these criminal statutes

. Council says that the government has no theory of aiding and abetting that survives Janus incites 18 USC 2A. Who are you aiding and abetting? The 18 USC 2B, which I will read to the court because it's very important, 18 USC 2B says, whoever willfully causes an act to be done, which if directly performed by him or another, would be an offense against the United States as punishable as a principle. And this court has held in United States V. Jackson, 608F3193, that 18 USC 2B is intended to impose criminal liability on one who causes an intermediary to commit a criminal act, even though the intermediary who performed the act has no criminal intent, and hence is innocent of the crime charged. So that case certainly stands for the proposition that you don't need a guilty principle to be convicted of 18 USC 2B aiding and abetting. There are two other cases that I think are very important. You need to even go that far. I mean, if there's a guilty play and the guilty plea stands as pled, unless the conduct is no longer criminal and to find the conduct no longer criminal, we would have to, the only route by which you can find the conduct no longer criminal is that the court somehow met Jainless to leap its implied civil right of action, boundaries, and knock down various criminal statutes, including one to which he had played. A great year on. And to further that point, he was charged with conspiracy to commit securities fraud, mail fraud, and wire fraud. He offers no objection that Jannison any way affects the conspiracy to commit mail fraud and wire fraud. And it's black letter law that so long as one object of the conspiracy is valid. He's he has he has pled guilty already to securities fraud and to to failure to disclose the interest of council and registration materials. Now, the only way that these that the guilty plea can be unraveled is if Janness was meant to inflict some sort of damage of unknown or has to inflict damage of some unknown scope and consent on these criminal statutes. And when you read Janness and you read the central bank of Denver and everything in the Supreme Court seems to go out of its way to indicate that it that its discussion is confined to the implied private right of action that was created under rule 10B5. And we all know, you know, this court has expressed a great deal of skepticism about private rights of action and judicial expansion of private rights of action that have never received any kind of congressional impromptu in the first place. And there's nothing in that discussion that indicates that it that it's distaste for private right of private right of action was somehow meant to impact adversely congresses right to define the elements of criminal defenses. And that has a sanction that the judicially implied private right of action never had. I mean, this is we would be I tend to this is a far far limb that we were asked to crawl out on. Absolutely, Your Honor. And and it council reference that some district courts may have applied Janice council didn't say to single criminal case in his briefs neither did we. I'm not aware of a single criminal case that applies Janice to in the criminal context certainly not in the context of decision by a court of appeals. So he is asking you to jump for a field of what Janice says and Janice is it to say that Janice can be interpreted without considering the context in which it was decided is simply inaccurate in my opinion. But again, we the point is that Janice central bank said there's no aiding and abetting liability and that decision has largely been extended to conspiracy actions in the civil case. For central and what the spring court was doing was basically in Janice saying for central bank to have meaning we need to define what is primary liability. But in the criminal context, the law is clear as defined by congress that you can have liability as a principle whether you're a primary actor, whether you're a native or a better, whether you're a conspirator. So Janice simply does not extend that far. The two other points I wanted to make are to

. And when you read Janness and you read the central bank of Denver and everything in the Supreme Court seems to go out of its way to indicate that it that its discussion is confined to the implied private right of action that was created under rule 10B5. And we all know, you know, this court has expressed a great deal of skepticism about private rights of action and judicial expansion of private rights of action that have never received any kind of congressional impromptu in the first place. And there's nothing in that discussion that indicates that it that it's distaste for private right of private right of action was somehow meant to impact adversely congresses right to define the elements of criminal defenses. And that has a sanction that the judicially implied private right of action never had. I mean, this is we would be I tend to this is a far far limb that we were asked to crawl out on. Absolutely, Your Honor. And and it council reference that some district courts may have applied Janice council didn't say to single criminal case in his briefs neither did we. I'm not aware of a single criminal case that applies Janice to in the criminal context certainly not in the context of decision by a court of appeals. So he is asking you to jump for a field of what Janice says and Janice is it to say that Janice can be interpreted without considering the context in which it was decided is simply inaccurate in my opinion. But again, we the point is that Janice central bank said there's no aiding and abetting liability and that decision has largely been extended to conspiracy actions in the civil case. For central and what the spring court was doing was basically in Janice saying for central bank to have meaning we need to define what is primary liability. But in the criminal context, the law is clear as defined by congress that you can have liability as a principle whether you're a primary actor, whether you're a native or a better, whether you're a conspirator. So Janice simply does not extend that far. The two other points I wanted to make are to. I stated in your argument about the fact that in the middle of that trial it was suspended and a guilty plea was entered as to those three counts. Presumptively guilty plea survive into collateral attacks and into twenty two fifty forty one partitions and twenty two fifty five partitions unless something pretty important comes along and that pretty important thing would be that Janice has somehow meant to reshape the concept of what conduct can be labeled criminal. And this I don't find it. The spring court doesn't reference the word criminal once it doesn't reference criminal cases but again so I think it's fair to say that petitioners asking you to take a gigantic leap to extend Janice to a criminal case. But in addition to that being unsound you don't need to because you have aiding in a betting lot. Well, first of all you have conspiracy to commit male and wire fraud which he doesn't even contest. So that conductor remains criminal. You also have aiding in a betting. Now council petitioners whole position is that busy box its officers and directors were the makers of these statements under Janice and they didn't have any criminal intent. Well council hasn't established that. Council's petitioner took the opposite position at sentencing. But the point is he hasn't carried his burden of proof of demonstrating that busy box directors and officers were innocent. But again it doesn't matter because under two eighteen USC to be you can be guilty of aiding in a betting even with an innocent principal. And the two cases I mentioned that I just wanted to point out because they aren't in our brief because the whole issue of aiding in a betting wasn't really fleshed out in the briefing unfortunately

. I stated in your argument about the fact that in the middle of that trial it was suspended and a guilty plea was entered as to those three counts. Presumptively guilty plea survive into collateral attacks and into twenty two fifty forty one partitions and twenty two fifty five partitions unless something pretty important comes along and that pretty important thing would be that Janice has somehow meant to reshape the concept of what conduct can be labeled criminal. And this I don't find it. The spring court doesn't reference the word criminal once it doesn't reference criminal cases but again so I think it's fair to say that petitioners asking you to take a gigantic leap to extend Janice to a criminal case. But in addition to that being unsound you don't need to because you have aiding in a betting lot. Well, first of all you have conspiracy to commit male and wire fraud which he doesn't even contest. So that conductor remains criminal. You also have aiding in a betting. Now council petitioners whole position is that busy box its officers and directors were the makers of these statements under Janice and they didn't have any criminal intent. Well council hasn't established that. Council's petitioner took the opposite position at sentencing. But the point is he hasn't carried his burden of proof of demonstrating that busy box directors and officers were innocent. But again it doesn't matter because under two eighteen USC to be you can be guilty of aiding in a betting even with an innocent principal. And the two cases I mentioned that I just wanted to point out because they aren't in our brief because the whole issue of aiding in a betting wasn't really fleshed out in the briefing unfortunately. But United States be rough in 613 F second 408. It stands for the same proposition that you can be convicted of aiding in a betting with an innocent principal but it goes a step further. Because in that case the innocent individual was an employee of an agency that was receiving federal funds and the court said that it is equally clear that under 18 USC to be one who causes another to commit a criminal act may be found guilty as a principal. Even though the agent who committed the act is innocent or acquitted the addition of the words or another in 18 USC to be is therefore significant for present purposes because they render criminally liable a person causing another to commit criminal acts where the other even though innocent has the capacity to do so and the defendant does not. So applied to this context what he is saying is I'm prousalous I was not a maker because I did not have authority but I caused the officers and directors to make these misleading statements. So what this case says is that you can take the officers and directors their capacity as makers and you can extend that to prousalous and you can take the officers and directors making the statement and you can extend that to prousalous. Are you arguing that even if Janus does extend to the criminal realm it doesn't affect this play? Correct either or even an alternative argument. Correct our position is that Janus should not be applied to the criminal context but even if it does let me make an effort. It strikes me that you may need to jump through a lot of war hoops or take a lot of more twist and turns. If Janus does apply I think your case becomes more complicated. I mean you may not because you have this view of dating and abetting and you have this view of conspiracy and that you only need to conspire for one of the objects and male fraud and wire fraud and not securities fraud. But I don't understand why the straight forward route is to just respect the Supreme Court's decision in the area and context in which it was rendered. And I think that's what the court expects us to do with its cases. I would agree on her and I would agree that Janus should not be interpreted to apply to criminal cases but as lawyers are often want to do we come up with alternative arguments when they're well founded

. But United States be rough in 613 F second 408. It stands for the same proposition that you can be convicted of aiding in a betting with an innocent principal but it goes a step further. Because in that case the innocent individual was an employee of an agency that was receiving federal funds and the court said that it is equally clear that under 18 USC to be one who causes another to commit a criminal act may be found guilty as a principal. Even though the agent who committed the act is innocent or acquitted the addition of the words or another in 18 USC to be is therefore significant for present purposes because they render criminally liable a person causing another to commit criminal acts where the other even though innocent has the capacity to do so and the defendant does not. So applied to this context what he is saying is I'm prousalous I was not a maker because I did not have authority but I caused the officers and directors to make these misleading statements. So what this case says is that you can take the officers and directors their capacity as makers and you can extend that to prousalous and you can take the officers and directors making the statement and you can extend that to prousalous. Are you arguing that even if Janus does extend to the criminal realm it doesn't affect this play? Correct either or even an alternative argument. Correct our position is that Janus should not be applied to the criminal context but even if it does let me make an effort. It strikes me that you may need to jump through a lot of war hoops or take a lot of more twist and turns. If Janus does apply I think your case becomes more complicated. I mean you may not because you have this view of dating and abetting and you have this view of conspiracy and that you only need to conspire for one of the objects and male fraud and wire fraud and not securities fraud. But I don't understand why the straight forward route is to just respect the Supreme Court's decision in the area and context in which it was rendered. And I think that's what the court expects us to do with its cases. I would agree on her and I would agree that Janus should not be interpreted to apply to criminal cases but as lawyers are often want to do we come up with alternative arguments when they're well founded. And in this case the issue is not whether Janus applies to criminal cases. I mean that controls the outcome of the case certainly but the issue is whether the conduct of which he was convicted remains criminal. How does the effect your analysis that eating and abetting was not found in the judgment? And it wasn't discussed at the plea hearing either wasn't it contains it's contained in the indictment it's the indictment says Janus and Kirk who was the CEO of Baron Chase the investigation. I understand that it's referenced in the indictment but I'm saying does it make any difference to the strength of your argument that it was not discussed at the plea hearing and is not contained in the judgment order. No it doesn't in my opinion because because number one you don't even need to charge anything and abetting for eating and abetting to apply. A person can be found guilty whether they're charged even if eating and abetting is an even referenced in the indictment. I'm talking about at the plea that what the petitioner is arguing is that the labels changed. No no I'm just trying to understand the argument and whether there's a problem in the fact that neither the judgment nor the plea hearing reference. No because in Ray Jones looks at the conduct so let's look at the conduct of which he was convicted. If you assume he is not a maker which is he has an established in my opinion but if you assume that then for the conspiracy did he have an agreement with Kirk that misleading statements would be contained in the registration statement and did what were overt acts done that was all discussed in the plea agreement. That's the conspiracy on eating and abetting. The label doesn't matter if you say busy box was the maker and he was simply the facilitator at the end that's the same as saying he did what he did. He doesn't matter what the judgment. No it doesn't because the because the native and the better is punished as a principle doesn't it doesn't affect the sentence it doesn't affect anything

. And in this case the issue is not whether Janus applies to criminal cases. I mean that controls the outcome of the case certainly but the issue is whether the conduct of which he was convicted remains criminal. How does the effect your analysis that eating and abetting was not found in the judgment? And it wasn't discussed at the plea hearing either wasn't it contains it's contained in the indictment it's the indictment says Janus and Kirk who was the CEO of Baron Chase the investigation. I understand that it's referenced in the indictment but I'm saying does it make any difference to the strength of your argument that it was not discussed at the plea hearing and is not contained in the judgment order. No it doesn't in my opinion because because number one you don't even need to charge anything and abetting for eating and abetting to apply. A person can be found guilty whether they're charged even if eating and abetting is an even referenced in the indictment. I'm talking about at the plea that what the petitioner is arguing is that the labels changed. No no I'm just trying to understand the argument and whether there's a problem in the fact that neither the judgment nor the plea hearing reference. No because in Ray Jones looks at the conduct so let's look at the conduct of which he was convicted. If you assume he is not a maker which is he has an established in my opinion but if you assume that then for the conspiracy did he have an agreement with Kirk that misleading statements would be contained in the registration statement and did what were overt acts done that was all discussed in the plea agreement. That's the conspiracy on eating and abetting. The label doesn't matter if you say busy box was the maker and he was simply the facilitator at the end that's the same as saying he did what he did. He doesn't matter what the judgment. No it doesn't because the because the native and the better is punished as a principle doesn't it doesn't affect the sentence it doesn't affect anything. I would also say that the other case that's worth reading is United States V Marguillata 68F second 108 which stands for the same proposition that an A during a better under 2 B can adopt the capacity of an innocent intermediary so again it doesn't matter that if Prusalus was not a maker. But again we get back to ultimately his argument that he is he is not a maker under Janice and it certainly boggles my mind to think that an attorney when the subject of a misrepresentation is the attorney's own retainer agreement that the attorney who prepares the documents that controls the documents that the attorney's own documents. That is dealing with a novice company and as the judge from the southern district of New York observed repeatedly change the attorney changes the registration agreements if you read the I believe it's a sentencing hearing she says in the first registration statement Prusalus included false information about his retainer agreement. The original management of the company changed it then Prusalus changed it back then the management changed it then Prusalus changed it back to be false and they went through seven iterations of that and on the eighth Prusalus finally said I talked to the SEC everything's fine as a factual matter how the attorney cannot be deemed to be the the one with ultimate authority because that's what Janice stands for. It's not the capacity or the identity of the speakers that person with ultimate authority how that attorney cannot be found to be the one with the ultimate authority is simply beyond me as a matter of primary liability but then you get into eating and betting conspiracy etc. Your honours I'm unless you have questions I think I've made the points that I wanted to make. Okay thank you Mr. America appreciate your argument we have no more questions. Thank you Chief Judge Traxford I'd like to start with the aiding and a betting theory that the government has started with something else a minute of course. When we step back from this horrifying I would like to hear him at some point on aiding and a betting you don't mind. We go ahead with your question but I do want you to come back to eating and a bet. Go ahead with the chief judge's question. Okay thank you both. The government has tried it out a new theory in this court that had never previously been raised in the litigation that effectively Mr

. I would also say that the other case that's worth reading is United States V Marguillata 68F second 108 which stands for the same proposition that an A during a better under 2 B can adopt the capacity of an innocent intermediary so again it doesn't matter that if Prusalus was not a maker. But again we get back to ultimately his argument that he is he is not a maker under Janice and it certainly boggles my mind to think that an attorney when the subject of a misrepresentation is the attorney's own retainer agreement that the attorney who prepares the documents that controls the documents that the attorney's own documents. That is dealing with a novice company and as the judge from the southern district of New York observed repeatedly change the attorney changes the registration agreements if you read the I believe it's a sentencing hearing she says in the first registration statement Prusalus included false information about his retainer agreement. The original management of the company changed it then Prusalus changed it back then the management changed it then Prusalus changed it back to be false and they went through seven iterations of that and on the eighth Prusalus finally said I talked to the SEC everything's fine as a factual matter how the attorney cannot be deemed to be the the one with ultimate authority because that's what Janice stands for. It's not the capacity or the identity of the speakers that person with ultimate authority how that attorney cannot be found to be the one with the ultimate authority is simply beyond me as a matter of primary liability but then you get into eating and betting conspiracy etc. Your honours I'm unless you have questions I think I've made the points that I wanted to make. Okay thank you Mr. America appreciate your argument we have no more questions. Thank you Chief Judge Traxford I'd like to start with the aiding and a betting theory that the government has started with something else a minute of course. When we step back from this horrifying I would like to hear him at some point on aiding and a betting you don't mind. We go ahead with your question but I do want you to come back to eating and a bet. Go ahead with the chief judge's question. Okay thank you both. The government has tried it out a new theory in this court that had never previously been raised in the litigation that effectively Mr. Prusos used busy box as a Marionette to convey his false statements. That I think carries the government's waiver on aiding and a betting even further than it had previously been. Previously we'd established that the government the judgment didn't refer to aiding and a betting the plea allegations didn't refer to aiding and a betting and the allegations in the superseding indictment were focused on busy box having made a statement not sorry Mr. Prusos having made the allegedly illegal statement not that he aided and a bet it someone else. Now we think that's sufficient to establish that the second two counts can't be affirmed on an aiding and a betting theory but just to make that even clear the government is now advanced a theory that appears nowhere not not in the documents connected to the conviction not in its brief in this court of acknowledged that the cases it was trotting out now and never previously been cited. So we think any any attempt to raise this new aiding and a betting theory are waived in addition to not being contained in the the conviction materials. The government also says well we petitioner have not established that busy box lacked the relevant criminal intent but that actually is the allegation that the government made in the superseding indictment. The government the superseding indictment alleges on J 227 that it was a scheme to defraud busy box. It similarly says that Mr. Prusos failed to disclose to busy box that's J 234 various aspects of the alleged statements and finally both on J 235 and 244 the government alleges that Mr. Prusos told busy box that no additional disclosures were necessary. And so in our view under the land in case that we cite in the brief there must be underlying criminal contact in order to submit to supporting aiding and a betting charge and that's exactly contrary to what the government alleges in the superseding indictment in addition as I mentioned to not being aired in the judgment of conviction or frankly anywhere else. Judge Wilkinson I don't know if you want to be to come back to your question. No it's not

. Prusos used busy box as a Marionette to convey his false statements. That I think carries the government's waiver on aiding and a betting even further than it had previously been. Previously we'd established that the government the judgment didn't refer to aiding and a betting the plea allegations didn't refer to aiding and a betting and the allegations in the superseding indictment were focused on busy box having made a statement not sorry Mr. Prusos having made the allegedly illegal statement not that he aided and a bet it someone else. Now we think that's sufficient to establish that the second two counts can't be affirmed on an aiding and a betting theory but just to make that even clear the government is now advanced a theory that appears nowhere not not in the documents connected to the conviction not in its brief in this court of acknowledged that the cases it was trotting out now and never previously been cited. So we think any any attempt to raise this new aiding and a betting theory are waived in addition to not being contained in the the conviction materials. The government also says well we petitioner have not established that busy box lacked the relevant criminal intent but that actually is the allegation that the government made in the superseding indictment. The government the superseding indictment alleges on J 227 that it was a scheme to defraud busy box. It similarly says that Mr. Prusos failed to disclose to busy box that's J 234 various aspects of the alleged statements and finally both on J 235 and 244 the government alleges that Mr. Prusos told busy box that no additional disclosures were necessary. And so in our view under the land in case that we cite in the brief there must be underlying criminal contact in order to submit to supporting aiding and a betting charge and that's exactly contrary to what the government alleges in the superseding indictment in addition as I mentioned to not being aired in the judgment of conviction or frankly anywhere else. Judge Wilkinson I don't know if you want to be to come back to your question. No it's not. Just as a general matter then I just briefly like to return to what this case is ultimately about and Judge Wilkinson do you have a number of difficult questions about should we really be messing with criminal liability and I would just come back to in our view the critical question is not is this civil or is this criminal. It's whether this is an interpretation of the language of the rule or something else and if you agree with our reading of Janice that it is about the language of the rule. Then we would submit that that has to apply equally in criminal cases and as in SEC enforcement proceedings which as we cite on pages twenty twenty one and twenty two of our opening brief courts of applied Janice and SEC enforcement proceedings where there's equally no independent or certain implied private or private action that's being interpreted. Unless there are further questions we would respectfully submit that the judgment below should be reversed. I don't have no questions. Okay. Thank you, Your Honor. Are you caught appointed in this case? Pardon? Are you caught appointed in this case? I'm not proven. I'm not caught appointed. Okay.

Thank you Chief Judge Tracksler and may it please the court. When Mr. Prasalis pleaded guilty, it was understood that a lawyer representing a company in connection with his SEC filings could be charged with securities fraud for making the statements contained in those filings. That was the rule up until the Supreme Court decided in the Janice decision that the only maker of statements and securities filings with the SEC is the issuer itself. That constituted a fundamental change in law that entitles Mr. Prasalis to relieve under a Section 2241 habeas petition and for that reason his conviction should be vacated. I'd like to begin with the district court's conclusion that the Janice decision is limited to civil lawsuits. A conclusion that was based on language in the opinion drawn from Central Bank and Stone Ridge which had emphasized the narrow scope of the private right of action in civil cases. You will wear any criminal cases applying the Janice. I understand that there are some district court cases. I can't cite them off hand but I believe that there happens a following. Are they cited in your brief? No, no, your honor. We do have SEC enforcement proceedings where the SEC has conceded that the Janice decision would apply there. In that respect it's no different from a criminal proceeding because in both cases it's not a private civil suit brought by a private litigant and so it doesn't invoke the implied private right of action. So to that extent the SEC enforcement cases are relevant authority. But the critical point for understanding the Janice decision is that it began with the language of Rule 10B5. It's an House that started with dictionary definitions of what it means to make a statement says the phrase at issue in Rule 10B5 to make any statement is thus the proximate equivalent of state continues for purposes of Rule 10B5 the maker of a statement is the person authority or person or entity with ultimate authority over the statement. And so the court's analysis makes clear that it is interpreting the language of the rule not relying exclusively on the narrow scope of a private right of action. The government in its argument said without language is ambiguous so you need to defer to the SEC and footnote a the Supreme Court rejected that and said the meaning of make in Rule 10B5 is not quote ambiguous. As I read the opinion there's no doubt that it was based in the first instance on the language of the rule and that the reference on a private right of action central bank and Stone Ridge was merely confirmatory of that. But the court also emphasized the narrow scope that it has to give an implied private right of action did it not? That is correct Your Honor and it's there are really two aspects of the decision. There's the interpretation of the language of the rule and also this private right of action. But if you look at what the course language was it said that its dictionary interpretation was quote further supported by Stone Ridge or that it accords with the narrow scope of the private right of action. So I think the better reading of that passage is that it was an additional reason for the court's interpretation of the language and we would submit that the language can't be interpreted differently in civil cases as opposed to criminal cases or SEC enforcement proceedings. And for that reason we would submit that in criminal cases like Mr. Prasalis the holding that the maker of a statement is the person or entity of ultimate authority over it. In this case busy box is controlling and forecloses the government's theory that Mr. Prasalis himself could have been the maker of those statements and therefore charged with them. And it is clear from the record in the criminal proceedings that that was indeed the government's theory the government in the superseding indictment alleged that the false statements were contained in the final busy box IPO registration statement that's J.A. 227. It is such a big leap. I mean just to follow on what Judge Keenan was saying is such a big leap from a court's refusal to expand a judicially created implied cause of action. And then say we're going to just take that over to the entirely different context of a legislatively passed criminal statute and constrict that. I mean it makes sense to say well the Supreme Court is not going to expand an implied cause of action and at the same time it's not going to constrict and express congressional sanctioned criminal provision. I mean those they really are apples and oranges aren't they? Well Judge Wilkinson is the same provisions that are applicable on both civil and criminal cases and so to the extent that J.A.ness is an interpretation of the language of the rule there's no principled basis for distinguishing the two and I would contrast this with a case like Blue Chip Stamps which held that there's a purchaser seller requirement for private civil lawsuits. That by the courts on admission was was an interpretation of the scope of the private right of action. Maybe the first court to do this wouldn't we? The first appellate court at a minimum yes. But I think it it follows. Are there any district courts that have bought your theory? Your honor my understanding is that there are I can't cite them to the court at the moment. I can't however cite the SEC's recognition as I mentioned earlier. So you're asking us to crawl out on the far limb. I wouldn't submit that as a far limb I think that if you look at the very first section of analysis in the Janus decision it starts with the dictionary definition of make. What does it mean to make a statement? It makes clear that they're talking about that phrase which the court later says is unequal. The span Janus this far it's almost doing away with aiding and abetting liability isn't it? Not at all your honor. But because you know the very definition of a non the people that were non makers of the statements in Janus and were spared from an implied civil cause of actions in the criminal context would be classic aiders and abetters. And so if you're asking us to I think you'd come to a surprise the Supreme Court that we take in Janus and used it to eviscerate aiding and abetting the whole concept of aiding and abetting a criminal offense. Well to be clear your honor we don't believe that this case was presented as an aiding and abetting case. And that's what you are. Well not at all your honor because in order for there to be- You're not a maker but at the same time you weren't exactly a bystander either you were you were up to your eyeballs with busy box and trying to engage in an inside deal that would enrich yourselves at the expense of the ordinary investor who had no idea this kind of stuff was going on. That's right at the heart of a securities fraud violation. And if you know if that is an aiding and abetting assuming you're not a maker I'm not sure about that but let's assume you're not a maker that's a classic aider and a better. That's your response to that Judge Wilkinson. And of course the aiding and abetting was charged and I guess you played to it. With respect your honor I think that although there are references to section 18 U.S. Section 2 in the superseding indictment that's not picked up in the judgment but more fundamentally in order for there to be an aiding and abetting offense there must be an underlying violation which would mean that busy box the maker would have to have committed all of the elements of a primary Vultimify violation. If you're saying it has to be a guilty principle. Right but there is none here because the allegations of the superseding indictment were that busy box itself were defrauded. Now the solution to that and this gets actually to the dissent in the JNS decision. The dissentor said this is a real problem because you're a narrowing the scope of liability but maybe the solution is section 20b of the Exchange Act which is a puppeteer provision that makes it illegal to do indirectly what you can't do directly. And so for some speaking through someone else. The problem for the government in this case is that they never charged Mr. Prasalis with section 20b offenses. And so although in future cases there is a solution for what the government perceives to be the problem here it's not this case. And so for that reason I don't think that this would be nearing the scope of liability more than JNS itself acknowledged in response to the dissenters. To continue then with what the basis of the allegations were in response to whether this is an aiding in a betting case. As I mentioned there are two references to section 2, the aiding in a betting statute in the superseding indictment. But none of the allegations are aiding in a betting allegations. The entire theory is that Mr. Prasalis himself made the false statements. There's an entire section on that. It's J229. The government repeats it at 227 to 38 to 39 to 40 to 43. All those are incorporated by reference in the later accounts. And then in the plea hearing the court asks in order to ascertain whether there's a basis for the plea whether Mr. Prasalis made the statements in the registration statement. He understood that the registration statement would be seen by investors. And so the entire theory here was that he made those statements, not that he aided and abetted somebody else in making them. And JNS makes clear that that's no longer a valid theory for securities for all liability. Mr. Martin, what about the Supreme Court's discussion in JNS of the Central Bank of Denver case? Why isn't that cutting against your position on the reach of JNS? Because the court is talking about the differences in private rights of action, the differences in reading the term make with regard to securities enforcement actions, with regard to private right of action. So the Supreme Court is essentially saying that the word make is treated differently or else they would in terms of the private right of action and the terms of the SEC enforcement. Aren't they saying that? No, Your Honor. So there are two points. The first is that this is- Well, why aren't they saying that? Okay. So they- In that language where they say a broader reading of make to include entities without ultimate control of the content of a statement would substantially undermine central bank. And he's in saying that the enforcement action may be brought by the SEC, but does not constitute a private right of action. Sure. Well, the SEC has a separate enforcement provision. But what I'm saying is the Supreme Court is taking some pains to say that there can be separate treatment of the word make, which is- which is- is the foundation of your cases, I understand it, that they cannot be different. Actually, I don't read that as about the definition of make. Okay. So Section 28 says- The Supreme Court is not distinguishing saying make can mean different things depending on the type of proceeding. That's- that's what I read here. Sure. So Section 28 provides liability for an individual who substantially participates in a securities fraud. And so the- that doesn't rely on a definition of make. The maker is still the issuer. It's just that there can be secondary liability for those who substantially participate in a SEC enforcement suit. And so it's not two different definitions of make. It's that there's this overlay enforceable only by the SEC for substantial participation in securities fraud. Well, it's not different definition. It's just how broadly is it applied, isn't that right? Well, no, I think that in both cases, maker is defined as this person or entity with ultimate authority over the statement. The Supreme Court- that's the holding in Janus for purposes of rule two and B five, the maker is the person or entity with ultimate authority. And SEC enforcement proceedings, there can also be secondary liability for substantial participation. But that's not applicable here and there's no 20A allegation here. And so I read the central bank discussion there as- it most confirming the definition of make in rule ten B five and then distinguishing SEC cases in which there can be broader liability, not by manipulating what make means, but by virtue of the secondary liability. Criminal trial here was suspended. And you played guilty to what was it, these three counts? Yes, Judge Wilkinson. All right. And the only way that you can avail yourself of the safe harbor under 2241 is to prove that the conduct is no longer criminal. And that in order to do that, you have to essentially to prove it's non-criminal. You have to make the case that the Supreme Court decision in Janus should extend to the criminal realm. That, I mean, when you strip it all away, that's what it comes down to. Yes, Judge Wilkinson. That's the linchpin of it. That the Supreme Court in deciding that this ten B five civil liability doesn't apply to those who assisted really meant to extend this to this criminal statute as well. And I think it's really a case of, I don't know why we should be jumping out in front of the Supreme Court on this matter and skating on this kind of thin ice when there's all the difference in the world between declining to extend what was an implied right of action on this rule ten B five and something which Congress has has passed and which rests upon very traditional principles of criminal law. And no other court has done it. And you're left with what Judge Keenan, I think, was rightly concerned about, which was that the Supreme Court was discussing central bank of Denver, which was the whole foundation of Janus indicated that the foundation of that Janus case lay in the fact that they were dealing with an implied civil right of action. But I think we are being pushed into a breach here that you're trying to take, get us to do something very aggressive where no other court has gone before and where the Supreme Court has issued all kinds of warning signals saying that this is limited to an implied right of action under under ten B five that that's the context. With respect to your order, I think that the critical issue is not does Janus extend to civil cases, it is, is Janus an interpretation of the language of rule ten B five or a policy based limit on private rights of action? There are certain cases, again, blue chip stamps as the quintessential example, that are policy based limits on the private right of action. There's no reason why that would extend to criminal cases. But if you view Janus as an interpretation of the language of the rule, and I would submit that the court on at least three occasions says that's what it's doing, then there's no way it can't apply to criminal cases. There's a single rule, if it means what the government or what the Supreme Court said in Janus, then it means that in civil cases. You just say in context, it doesn't matter at law. But the whole legal principle involved here is whether in the civil context, the idea of court created law versus the criminal context where there's a purge, as far as I can see, it's a perfectly normal and routine and ordinary exercise of Congress's authority to do the facts. It's up to past criminal statutes and to define the elements of a crime and to define a range of sanctions. It's just what you're proposing here is quite aggressive in my view. And I know you can say, we do this and do that. But when you strip it all away, that's what we're essentially being asked to do is to ignore in context of a prior Supreme Court case. And frankly, that position has reversed written all over it, reversed. Actually, with respect to honor, I think you'd be affirmed if you wrote that opinion. But what I would say is that the relevant context here is what does it mean, quote, to make any statement? That's the language of the rule. And the court purported to interpret, quote, the phrase, an issue in Rule 10B5. Now, yes, its conclusion was supported. It accords with the narrow scope of the private right of action. But the language of the rule to make any statement is the same in this case as it wasn't Janus. And it can have to mean the same thing. What about count two in the fact of 78 J.B. and 78 FF? And the language of those two statutes with regard to count two certainly is broader. How does that affect your mouth? The count two is just a straight securities fraud count. I am not sure what effect we would give to any other provisions. I mean, he was if you look at the language of the superseding indictment charged with making a false statement. Your city government can't rely on indirectly or causes to be mean. Well, so the indirectly and directly language was also interpreted in the Janus decision, actually in a footnote. And what it says is that it doesn't undermine the making requirement. It just says once you make a statement, it can be communicated indirectly. That was actually a rejection of the government's position in Janus. And so you still have to beat the maker of a statement in order for that clause to apply. I've to know for the questions I see I'm quite over my time. You got some time reserved. Thank you Chief Judge Tracks. May I please the court, J.Hanbrook, on behalf of Respondent. Your Honours. In 2004, Tom's presale has pled guilty to a superseding indictment charging him with conspiracy to commit securities fraud, wire fraud and mail fraud. Securities fraud, including aiding and abetting and failing to disclose interest to counsel and securities filings, including aiding and abetting. The issue before this court is not whether Janus applies in a criminal case because that issue frankly is irrelevant. The issue is whether the conduct of which he was convicted remains criminal under the in-ray Jones test and therefore whether he can rely on the savings clause. That was the basis for the district court's decision. And this is a joint appendix 556. The district court wrote, even if the court found Trusalis' argument persuasive that under Janus, he no longer qualifies as a maker of the false statements because he lacked ultimate authority over them. Trusalis ignores the fact that he also pled guilty to conspiracy and aiding and abetting. Do you agree that to be guilty of aiding and abetting there has to be a guilty principle? Absolutely not, Your Honour. Council says that the government has no theory of aiding and abetting that survives Janus incites 18 USC 2A. Who are you aiding and abetting? The 18 USC 2B, which I will read to the court because it's very important, 18 USC 2B says, whoever willfully causes an act to be done, which if directly performed by him or another, would be an offense against the United States as punishable as a principle. And this court has held in United States V. Jackson, 608F3193, that 18 USC 2B is intended to impose criminal liability on one who causes an intermediary to commit a criminal act, even though the intermediary who performed the act has no criminal intent, and hence is innocent of the crime charged. So that case certainly stands for the proposition that you don't need a guilty principle to be convicted of 18 USC 2B aiding and abetting. There are two other cases that I think are very important. You need to even go that far. I mean, if there's a guilty play and the guilty plea stands as pled, unless the conduct is no longer criminal and to find the conduct no longer criminal, we would have to, the only route by which you can find the conduct no longer criminal is that the court somehow met Jainless to leap its implied civil right of action, boundaries, and knock down various criminal statutes, including one to which he had played. A great year on. And to further that point, he was charged with conspiracy to commit securities fraud, mail fraud, and wire fraud. He offers no objection that Jannison any way affects the conspiracy to commit mail fraud and wire fraud. And it's black letter law that so long as one object of the conspiracy is valid. He's he has he has pled guilty already to securities fraud and to to failure to disclose the interest of council and registration materials. Now, the only way that these that the guilty plea can be unraveled is if Janness was meant to inflict some sort of damage of unknown or has to inflict damage of some unknown scope and consent on these criminal statutes. And when you read Janness and you read the central bank of Denver and everything in the Supreme Court seems to go out of its way to indicate that it that its discussion is confined to the implied private right of action that was created under rule 10B5. And we all know, you know, this court has expressed a great deal of skepticism about private rights of action and judicial expansion of private rights of action that have never received any kind of congressional impromptu in the first place. And there's nothing in that discussion that indicates that it that it's distaste for private right of private right of action was somehow meant to impact adversely congresses right to define the elements of criminal defenses. And that has a sanction that the judicially implied private right of action never had. I mean, this is we would be I tend to this is a far far limb that we were asked to crawl out on. Absolutely, Your Honor. And and it council reference that some district courts may have applied Janice council didn't say to single criminal case in his briefs neither did we. I'm not aware of a single criminal case that applies Janice to in the criminal context certainly not in the context of decision by a court of appeals. So he is asking you to jump for a field of what Janice says and Janice is it to say that Janice can be interpreted without considering the context in which it was decided is simply inaccurate in my opinion. But again, we the point is that Janice central bank said there's no aiding and abetting liability and that decision has largely been extended to conspiracy actions in the civil case. For central and what the spring court was doing was basically in Janice saying for central bank to have meaning we need to define what is primary liability. But in the criminal context, the law is clear as defined by congress that you can have liability as a principle whether you're a primary actor, whether you're a native or a better, whether you're a conspirator. So Janice simply does not extend that far. The two other points I wanted to make are to. I stated in your argument about the fact that in the middle of that trial it was suspended and a guilty plea was entered as to those three counts. Presumptively guilty plea survive into collateral attacks and into twenty two fifty forty one partitions and twenty two fifty five partitions unless something pretty important comes along and that pretty important thing would be that Janice has somehow meant to reshape the concept of what conduct can be labeled criminal. And this I don't find it. The spring court doesn't reference the word criminal once it doesn't reference criminal cases but again so I think it's fair to say that petitioners asking you to take a gigantic leap to extend Janice to a criminal case. But in addition to that being unsound you don't need to because you have aiding in a betting lot. Well, first of all you have conspiracy to commit male and wire fraud which he doesn't even contest. So that conductor remains criminal. You also have aiding in a betting. Now council petitioners whole position is that busy box its officers and directors were the makers of these statements under Janice and they didn't have any criminal intent. Well council hasn't established that. Council's petitioner took the opposite position at sentencing. But the point is he hasn't carried his burden of proof of demonstrating that busy box directors and officers were innocent. But again it doesn't matter because under two eighteen USC to be you can be guilty of aiding in a betting even with an innocent principal. And the two cases I mentioned that I just wanted to point out because they aren't in our brief because the whole issue of aiding in a betting wasn't really fleshed out in the briefing unfortunately. But United States be rough in 613 F second 408. It stands for the same proposition that you can be convicted of aiding in a betting with an innocent principal but it goes a step further. Because in that case the innocent individual was an employee of an agency that was receiving federal funds and the court said that it is equally clear that under 18 USC to be one who causes another to commit a criminal act may be found guilty as a principal. Even though the agent who committed the act is innocent or acquitted the addition of the words or another in 18 USC to be is therefore significant for present purposes because they render criminally liable a person causing another to commit criminal acts where the other even though innocent has the capacity to do so and the defendant does not. So applied to this context what he is saying is I'm prousalous I was not a maker because I did not have authority but I caused the officers and directors to make these misleading statements. So what this case says is that you can take the officers and directors their capacity as makers and you can extend that to prousalous and you can take the officers and directors making the statement and you can extend that to prousalous. Are you arguing that even if Janus does extend to the criminal realm it doesn't affect this play? Correct either or even an alternative argument. Correct our position is that Janus should not be applied to the criminal context but even if it does let me make an effort. It strikes me that you may need to jump through a lot of war hoops or take a lot of more twist and turns. If Janus does apply I think your case becomes more complicated. I mean you may not because you have this view of dating and abetting and you have this view of conspiracy and that you only need to conspire for one of the objects and male fraud and wire fraud and not securities fraud. But I don't understand why the straight forward route is to just respect the Supreme Court's decision in the area and context in which it was rendered. And I think that's what the court expects us to do with its cases. I would agree on her and I would agree that Janus should not be interpreted to apply to criminal cases but as lawyers are often want to do we come up with alternative arguments when they're well founded. And in this case the issue is not whether Janus applies to criminal cases. I mean that controls the outcome of the case certainly but the issue is whether the conduct of which he was convicted remains criminal. How does the effect your analysis that eating and abetting was not found in the judgment? And it wasn't discussed at the plea hearing either wasn't it contains it's contained in the indictment it's the indictment says Janus and Kirk who was the CEO of Baron Chase the investigation. I understand that it's referenced in the indictment but I'm saying does it make any difference to the strength of your argument that it was not discussed at the plea hearing and is not contained in the judgment order. No it doesn't in my opinion because because number one you don't even need to charge anything and abetting for eating and abetting to apply. A person can be found guilty whether they're charged even if eating and abetting is an even referenced in the indictment. I'm talking about at the plea that what the petitioner is arguing is that the labels changed. No no I'm just trying to understand the argument and whether there's a problem in the fact that neither the judgment nor the plea hearing reference. No because in Ray Jones looks at the conduct so let's look at the conduct of which he was convicted. If you assume he is not a maker which is he has an established in my opinion but if you assume that then for the conspiracy did he have an agreement with Kirk that misleading statements would be contained in the registration statement and did what were overt acts done that was all discussed in the plea agreement. That's the conspiracy on eating and abetting. The label doesn't matter if you say busy box was the maker and he was simply the facilitator at the end that's the same as saying he did what he did. He doesn't matter what the judgment. No it doesn't because the because the native and the better is punished as a principle doesn't it doesn't affect the sentence it doesn't affect anything. I would also say that the other case that's worth reading is United States V Marguillata 68F second 108 which stands for the same proposition that an A during a better under 2 B can adopt the capacity of an innocent intermediary so again it doesn't matter that if Prusalus was not a maker. But again we get back to ultimately his argument that he is he is not a maker under Janice and it certainly boggles my mind to think that an attorney when the subject of a misrepresentation is the attorney's own retainer agreement that the attorney who prepares the documents that controls the documents that the attorney's own documents. That is dealing with a novice company and as the judge from the southern district of New York observed repeatedly change the attorney changes the registration agreements if you read the I believe it's a sentencing hearing she says in the first registration statement Prusalus included false information about his retainer agreement. The original management of the company changed it then Prusalus changed it back then the management changed it then Prusalus changed it back to be false and they went through seven iterations of that and on the eighth Prusalus finally said I talked to the SEC everything's fine as a factual matter how the attorney cannot be deemed to be the the one with ultimate authority because that's what Janice stands for. It's not the capacity or the identity of the speakers that person with ultimate authority how that attorney cannot be found to be the one with the ultimate authority is simply beyond me as a matter of primary liability but then you get into eating and betting conspiracy etc. Your honours I'm unless you have questions I think I've made the points that I wanted to make. Okay thank you Mr. America appreciate your argument we have no more questions. Thank you Chief Judge Traxford I'd like to start with the aiding and a betting theory that the government has started with something else a minute of course. When we step back from this horrifying I would like to hear him at some point on aiding and a betting you don't mind. We go ahead with your question but I do want you to come back to eating and a bet. Go ahead with the chief judge's question. Okay thank you both. The government has tried it out a new theory in this court that had never previously been raised in the litigation that effectively Mr. Prusos used busy box as a Marionette to convey his false statements. That I think carries the government's waiver on aiding and a betting even further than it had previously been. Previously we'd established that the government the judgment didn't refer to aiding and a betting the plea allegations didn't refer to aiding and a betting and the allegations in the superseding indictment were focused on busy box having made a statement not sorry Mr. Prusos having made the allegedly illegal statement not that he aided and a bet it someone else. Now we think that's sufficient to establish that the second two counts can't be affirmed on an aiding and a betting theory but just to make that even clear the government is now advanced a theory that appears nowhere not not in the documents connected to the conviction not in its brief in this court of acknowledged that the cases it was trotting out now and never previously been cited. So we think any any attempt to raise this new aiding and a betting theory are waived in addition to not being contained in the the conviction materials. The government also says well we petitioner have not established that busy box lacked the relevant criminal intent but that actually is the allegation that the government made in the superseding indictment. The government the superseding indictment alleges on J 227 that it was a scheme to defraud busy box. It similarly says that Mr. Prusos failed to disclose to busy box that's J 234 various aspects of the alleged statements and finally both on J 235 and 244 the government alleges that Mr. Prusos told busy box that no additional disclosures were necessary. And so in our view under the land in case that we cite in the brief there must be underlying criminal contact in order to submit to supporting aiding and a betting charge and that's exactly contrary to what the government alleges in the superseding indictment in addition as I mentioned to not being aired in the judgment of conviction or frankly anywhere else. Judge Wilkinson I don't know if you want to be to come back to your question. No it's not. Just as a general matter then I just briefly like to return to what this case is ultimately about and Judge Wilkinson do you have a number of difficult questions about should we really be messing with criminal liability and I would just come back to in our view the critical question is not is this civil or is this criminal. It's whether this is an interpretation of the language of the rule or something else and if you agree with our reading of Janice that it is about the language of the rule. Then we would submit that that has to apply equally in criminal cases and as in SEC enforcement proceedings which as we cite on pages twenty twenty one and twenty two of our opening brief courts of applied Janice and SEC enforcement proceedings where there's equally no independent or certain implied private or private action that's being interpreted. Unless there are further questions we would respectfully submit that the judgment below should be reversed. I don't have no questions. Okay. Thank you, Your Honor. Are you caught appointed in this case? Pardon? Are you caught appointed in this case? I'm not proven. I'm not caught appointed. Okay