APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MASSACHUSETTS [Hon. Nathaniel M. Gorton, U.S.
G. Weinberg, with whom Kimberly Homan was on brief for
M. Lieberman, Attorney, Criminal Division, Appellate Section,
U.S. Department of Justice, with whom John P. Cronan, Acting
Assistant Attorney General, William D. Weinreb, Acting United
States Attorney, Randall E. Kromm, Assistant United States
Attorney, and Brian A. Pérez-Daple, Assistant United
States Attorney, were on brief for appellee.
Howard, Chief Judge, Lynch and Thompson, Circuit Judges.
HOWARD, CHIEF JUDGE.
convicted Amit Kanodia of insider-trading securities fraud
and related conspiracy offenses after a twelve-day trial.
Kanodia challenges the sufficiency of the evidence to sustain
his convictions, as well as various jury instructions. He
also appeals the district court's denial of his motion
for a new trial. For the reasons discussed below, we affirm
Kanodia's convictions and the denial of his new trial
the stage for our analysis of the sufficiency challenge, we
sketch the facts in a manner hospitable to the jury's
verdicts, while leaving some details for later in the
opinion. See United States v.
Rodríguez-Milián, 820 F.3d 26, 31 (1st
about 2007, Kanodia, an experienced real estate investor, met
Shahana Basu, a U.S.-licensed lawyer living in London,
England, through an online dating service. The two married in
April 2008, at which time Basu moved in with Kanodia in
Brookline, Massachusetts. In February 2012, Basu accepted the
chief legal officer position at Apollo Tyres
("Apollo") in New Delhi, India. After Basu moved to
New Delhi, Kanodia traveled to India roughly once every two
or three months, staying with her for two or three weeks at a
2013, Basu helped negotiate Apollo's proposed purchase of
Cooper Tires ("Cooper"), an American company.
Apollo sought to use the acquisition to expand into the U.S.
market. The rumors of that expansion had been in the
financial press since late 2012. Apollo's insider-trading
and confidential-information policies covered Basu's work
at the company, including her role negotiating the Cooper
transaction. Nevertheless, shortly after Basu started at
Apollo in the fall of 2012, she began boasting to friends,
sometimes in Kanodia's presence, that Apollo brought her
on board to orchestrate its acquisition of Cooper.
early April 2013, Apollo and Cooper preliminarily agreed on
Cooper's purchase price. From April through May 2013,
Basu resided at the Waldorf Hotel in New York City while
conducting Apollo's due diligence on Cooper. Apollo
considered the Cooper deal's confidentiality so important
that it required Basu and other top executives to disguise
their trip to New York to finalize the deal. They did so in
part by splitting the trip from India into two legs, with two
separate tickets. Kanodia stayed with Basu in her room at the
Waldorf for several weeks beginning in early April. During
her stay in New York, Basu disclosed to two acquaintances
that she was in New York to negotiate Apollo's purchase
of a company, in violation of Apollo's confidentiality
policy. Both of Basu's disclosures occurred in
Kanodia disclosed to his two closest friends, Ifthikar Ahmed,
a venture capitalist, and Steven Watson, a semi-retired
businessman with a Harvard MBA, that Basu was in New York and
that Apollo's purchase of Cooper would go forward.
According to Watson, Kanodia chose to provide this
information to his "best friends" because, if
Kanodia personally traded based on his knowledge of the deal,
he would risk getting Basu or himself into trouble. Instead,
Kanodia expected that his friends would invest and some of
the investment profits would be paid back to him. Kanodia
sometimes updated Watson over the phone from Basu's room
at the Waldorf. But he generally preferred to speak in-person
to avoid detection.
April, Kanodia told Ahmed and Watson that Apollo planned to
purchase Cooper for $35 per share. Both friends bought shares
of Cooper, then valued between $24 and $25 per share, in
April and May 2013. Ahmed also bought call options in
The jury heard evidence that Kanodia called the two men
shortly before some of their trades in Cooper's
companies announced the acquisition publicly on June 12,
2013. Kanodia, though, had informed Watson at least five days
before about the public announcement. With that information,
on June 7, 2013, Watson purchased call options on Cooper
stock that entitled him to buy shares for $30. The options he
purchased had an expiration dates of July 20, 2013 or August
17, 2013. On June 10 and 11, Watson purchased additional
Cooper call options, which also provided him the right to buy
shares at $30 and which expired on August 17, 2013. Ahmed,
too, traded in June 2013 prior to the deal's
announcement; he also purchased options for $30, and his
options expired on June 22, 2013. Additionally, Ahmed bought
shares in Cooper during June 2013.
their June 12, 2013 announcement, the companies disclosed
that Apollo planned to purchase Cooper for $35 per share,
precisely as Kanodia had tipped his friends. Cooper's
share price rose 40% after the announcement, from about $25
to almost $35 per share. Watson made $167, 000 in profits
from selling his Cooper options and shares, while Ahmed made
$1, 100, 000.
August 2013, Kanodia created a new bank account for an entity
called the Lincoln Charitable Foundation ("LCF").
Shortly after Kanodia opened the account, Ahmed wired $220,
000 into it. Watson agreed to pay Kanodia a 25% after-tax
commission on his profits and wrote a $22, 500 check that was
deposited into the LCF account in December 2013.
interviewed Watson about his trades. After initially telling
the FBI that he purchased Cooper securities based on his
research into the tire industry, he eventually recanted and
accepted a plea deal in exchange for his cooperation. Kanodia
was indicted in May 2015. Ahmed was indicted as well, but he
fled the country after his initial appearance. A superseding
indictment, filed in June 2015, charged both Kanodia and
Ahmed with nineteen counts of insider-trading securities
fraud and related conspiracy offenses, in violation of 15
U.S.C. §§ 78j(b), 78ff(a), 17 C.F.R. §
240.10b-5, and 18 U.S.C. §§ 2, 371.
Trial and Post-Trial Proceedings
trial, the government alleged that Kanodia's tips to
Ahmed and Watson constituted insider trading under the
misappropriation theory of insider-trading securities fraud.
Under this theory, corporate outsiders violate Section 10(b)
of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 10b-5 promulgated thereunder when they
trade on the basis of material, nonpublic information
obtained from a corporate insider to whom outsiders owe
"a duty of trust and confidence that prohibits them from
secretly using such information for their personal
advantage." Salman v. United States, 137 S.Ct.
420, 423 (2016); 15 U.S.C. §§ 78j(b), 78ff(a); 17
C.F.R. § 240.10b-5. Outsiders who owe insiders a duty
not to trade on such "inside information" also
violate Section 10(b) and Rule 10b-5 when an outsider (the
"tipper") tips another outsider (the
"tippee") in exchange for a personal benefit.
Salman, 137 S.Ct. at 423.
government's case included testimony by Watson, by
Apollo's chief financial officer, and by the chief
operating officer of Ahmed's former employer. Its case
also included documents revealing details about Kanodia's
travel and the LCF bank account, about Ahmed's and
Watson's financial transactions, and about Apollo's
plans to acquire Cooper. After the close of the
government's case, Kanodia unsuccessfully moved for a
judgment of acquittal. Basu, who had gone to India, did not
defense relied on witnesses who testified that Basu had told
them about the Apollo-Cooper deal and on testimony by an
expert who asserted that Cooper's financial performance
indicated that its pre-deal announcement share price
understated Cooper's true value. None of these witnesses
claimed that Basu had disclosed the deal's price or
announcement date. A different witness, Anand Mallipudi,
testified that he understood that Basu had disclosed
confidential information to him in telling him there were
merger talks. Kanodia also introduced various news articles
about Apollo's interest in acquiring Cooper. Kanodia
renewed his motion for acquittal after presenting his case,
which the district court denied.
October 17, 2016, the jury convicted Kanodia on eleven counts
of insider-trading securities fraud related to Ahmed's
purchases of options and stock in May and June 2013 and
Watson's trades in options in June 2013. The jury
acquitted Kanodia for the two men's other share purchases
in April and May. Kanodia moved for a judgment of acquittal
and a new trial, which the district court denied. In due
course, the district court sentenced Kanodia to a
substantially below guidelines term of 20 months
incarceration. Kanodia timely appealed.
February 2017, Kanodia again moved for a new trial based on
purportedly newly discovered Indian media reports and
witnesses. The anonymously sourced, mostly Hindi- and
Urdu-language reports offered various estimates that were
close to the eventual deal price and announcement date.
Kanodia also offered five purportedly newly-discovered
witnesses, who averred in affidavits that Basu had told them
the deal price and announcement date before the announcement.
The district court denied this new trial motion on the
grounds that the reports could have been discovered with due
diligence before trial and that the witnesses were
cumulative. Kanodia seasonably appealed both his conviction
and that order, and we subsequently consolidated both
Kanodia's Conviction and the Sufficiency of the
presents two challenges to the sufficiency of the evidence to
sustain his convictions. First, he argues that the jury's
verdicts rest on insufficient evidence to show that he owed
Basu a duty of trust and confidence. Alternatively, he
contends that the government failed to prove that he violated
that duty willfully. His arguments are unavailing.
Standard of Review
review sufficiency-of-the-evidence challenges de novo and
construe the trial evidence in the light most favorable to a
jury's verdict. United States v.
Franco-Santiago, 681 F.3d 1, 8 (1st Cir. 2012);
United States v. Ridolfi, 768 F.3d 57, 59 n.1 (1st
Cir. 2014). Accordingly, we "do not 'assess the
credibility' of witnesses because 'that is a role
reserved for the jury.'" United States v.
Robles-Alvarez, 874 F.3d 46, 50 (1st Cir. 2017) (quoting
United States v. Rivera-Donate, 682 F.3d 120, 134-35
(1st Cir. 2012)). Out of deference to the jury's role, we
only upset jury verdicts where "no rational jury could
have found the defendant guilty beyond a reasonable