FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS HON. DOUGLAS P. WOODLOCK, U.S. DISTRICT JUDGE
C. Frongillo, with whom Gus P. Coldebella, Caroline K.
Simons, and Fish & Richardson P.C. were on brief, for
Patrick J. Massari and Erica L. Marshall on brief for amicus
curiae Cause of Action Institute.
Alexander P. Robbins, U.S. Department of Justice, Criminal
Division, Appellate Section, with whom Kenneth A. Blanco,
Acting Assistant Attorney General, Trevor N. McFadden, Acting
Principal Deputy Assistant Attorney General, William D.
Weinreb, Acting United States Attorney, and Sarah E. Walters
and Eric A. Forni, Assistant United States Attorneys, were on
brief, for appellee.
Howard, Chief Judge, Selya, Circuit Judge, and McConnell,
District Judge. [*]
HOWARD, Chief Judge.
Weed, a securities lawyer, wrote false opinion letters so
that his two co-conspirators could sell stock to the public
in a "pump and dump" scheme. In connection
with this conduct, he was convicted of securities fraud, wire
fraud, and conspiracy to commit both. Following the
jury's guilty verdict, Weed moved for a judgment of
acquittal. He argued that the evidence was insufficient to
support his convictions, relying on a novel interpretation of
a particular Securities Act provision. The district court
denied Weed's motion. After careful consideration, we
of the jury's guilty verdict, we review the record
"in the light most favorable to the prosecution."
United States v. Manso-Cepeda, 810 F.3d 846, 847
(1st Cir. 2016). The trial evidence established that Weed
participated in a pump and dump scheme with two former
stockbrokers, Coleman Flaherty and Thomas Brazil. From 2008
to 2013, these conspirators ran several iterations of the
scheme, using a public "shell" company that
Flaherty had acquired from Weed in 2008.
Flaherty and Brazil would identify an entrepreneur who owned
a privately held target company and offer to help take the
target public through a "reverse merger" with the
shell company. Once the entrepreneur accepted the offer,
Weed would complete the legal work needed to carry out the
merger. The resulting post-merger company would be publicly
listed under the target's name.
paper, Flaherty and Brazil would hold only debt in the
post-merger company, in the form of promissory notes, which
could be converted into shares of stock. To make money,
Flaherty and Brazil would arrange for stock promoters to
inflate the company's value artificially by, for example,
issuing glowing press releases about the company's
prospects. Then - and this is where Weed's expertise as a
securities lawyer was critical -Flaherty and Brazil would
convert their promissory notes into freely tradable stock,
sell their overvalued shares to an unwitting public, and stop
investing in the company, which would soon collapse. As Weed
put it to Flaherty, "the deals are all vapor, and they
can't sustain themselves for six weeks."
Weed's help, Flaherty and Brazil ran through four
iterations of this scheme, making about $5 million in the
process. Weed was prepared to run the scheme a fifth time,
but by then Flaherty had begun cooperating with the Federal
Bureau of Investigation. The conspiracy unraveled, and Weed
was arrested in November 2014. He was ultimately indicted for
securities fraud, 15 U.S.C. §§ 78j(b), 78ff(a);
wire fraud, 18 U.S.C. § 1343; and conspiracy to commit
securities fraud and wire fraud, id. § 371.