United States v. Korchevsky

19-197 (L)
United States v. Korchevsky

In the
United States Court of Appeals
For the Second Circuit
________

AUGUST TERM, 2019

ARGUED: FEBRUARY 11, 2020
DECIDED: JULY 19, 2021

Nos. 19-197-cr, 19-780-cr

UNITED STATES OF AMERICA,
Appellee,

v.

VLADISLAV KHALUPSKY, VITALY KORCHEVSKY,
Defendants-Appellants.*

________

Appeal from the United States District Court
for the Eastern District of New York.
________

Before: WALKER, PARKER, and CARNEY, Circuit Judges.
________

*The Clerk of Court is respectfully directed to amend the caption as set
forth above.
2 19-197 (L)

For years, defendants-appellants Vladislav Khalupsky and
Vitaly Korchevsky used information from stolen, pre-publication
press releases to execute advantageous securities trades. Their
trading was facilitated by intermediaries who paid hackers for the
stolen press releases, provided the releases to Khalupsky and
Korchevsky, and funded brokerage accounts for them to use in trades.
Ultimately, the defendants’ illicit trades netted profits in excess of $18
million.

Following a jury trial in the United States District Court for the
Eastern District of New York (Raymond J. Dearie, J.), Khalupsky and
Korchevsky were convicted of conspiracy to commit wire fraud,
conspiracy to commit securities fraud and computer intrusions,
securities fraud, and conspiracy to commit money laundering. They
now appeal, contending that the evidence was insufficient to support
conviction, venue was improper on the securities fraud counts, the
government’s proof at trial constructively amended the indictment,
the district court erred by instructing the jury on conscious avoidance,
and the district court erred in how it responded to a jury note.
Finding no merit in these arguments, we AFFIRM the judgments of
conviction.

________

JULIA NESTOR (Susan Corkery, Richard M. Tucker,
David Gopstein, on the brief), Assistant United
States Attorneys, for Jacquelyn M. Kasulis, Acting
United States Attorney for the Eastern District of
New York, for Appellee.
3 19-197 (L)

DARRELL FIELDS, Federal Defenders of New York,
New York, NY, for Defendant-Appellant Vladislav
Khalupsky.

RANDY D. SINGER (Rosalyn Singer, Kevin
Hoffman, on the brief), Singer Davis, LLC, Virginia
Beach, VA; Steven Gary Brill (on the brief), Sullivan
& Brill, LLP, New York, NY; for Defendant-
Appellant Vitaly Korchevsky.

________

JOHN M. WALKER, JR., Circuit Judge:

For years, defendants-appellants Vladislav Khalupsky and
Vitaly Korchevsky used information from stolen, pre-publication
press releases to execute advantageous securities trades. Their
trading was facilitated by intermediaries who paid hackers for the
stolen press releases, provided the releases to Khalupsky and
Korchevsky, and funded brokerage accounts for them to use in trades.
Ultimately, the defendants’ illicit trades netted profits in excess of $18
million.

Following a jury trial in the United States District Court for the
Eastern District of New York (Raymond J. Dearie, J.), Khalupsky and
Korchevsky were convicted of conspiracy to commit wire fraud,
conspiracy to commit securities fraud and computer intrusions,
securities fraud, and conspiracy to commit money laundering. They
now appeal, contending that the evidence was insufficient to support
conviction, venue was improper on the securities fraud counts, the
government’s proof at trial constructively amended the indictment,
4 19-197 (L)

the district court erred by instructing the jury on conscious avoidance,
and the district court erred in how it responded to a jury note.
Finding no merit in these arguments, we AFFIRM the judgments of
conviction. 1

BACKGROUND

In 2010, brothers Arkadiy and Pavel Dubovoy approached
Korchevsky, a hedge fund manager and investment advisor, to seek
his help implementing a scheme to use nonpublic information to
trade on the stock market. The nonpublic information was coming
from hackers in Ukraine, who hacked into three newswires (PR
Newswire, Marketwired, and Business Wire) that disseminate press
releases from publicly traded companies. The hackers obtained the
press releases containing crucial financial information before the
releases were published. Then, they saved the stolen releases onto a
web-based server to which the Dubovoys also had access.

The Dubovoys provided Korchevsky with login credentials to
review some of the stolen releases in order to convince him of the
nascent scheme’s potential. Korchevsky looked at the releases and
agreed that advance information of the sort could be traded upon
profitably. Accordingly, Arkadiy Dubovoy opened and funded
brokerage accounts, in which Korchevsky would trade. Arkadiy’s
son, Igor Dubovoy, equipped Korchevsky with computers, phones,

1 The resolution of this appeal was held pending resolution of the appeal
to this court in United States v. Chow, No. 19-325, which in part concerned a related
legal issue. See infra Part II. Chow was decided on April 6, 2021. United States v.
Chow, 993 F.3d 125 (2d Cir. 2021).
5 19-197 (L)

and a software program enabling easy access to the server hosting
the stolen releases.

From January 2011 until February 2015, Korchevsky executed
advantageous trades using the information in the stolen press
releases. In return for trading on Arkadiy’s behalf, he received a
percentage of the profits. Korchevsky did most of the trading in the
window of time after the press release was uploaded to a newswire’s
internal computer system but before it was publicly disseminated
(i.e., trading “in-window”). He then closed on his trading position
after the release became public and the market had reacted to its
contents. During the scheme, Korchevsky ultimately amassed
roughly $15 million in net profits—a 1,660% return on investment—
in Arkadiy’s brokerage accounts.

The Dubovoys eventually decided to bring in another trader,
Khalupsky. Khalupsky owned a trading company in Ukraine and
used its employees to conduct trading as part of the charged scheme.
As with Korchevsky, the Dubovoys shared the stolen releases with
Khalupsky, funded brokerage accounts in Arkadiy’s name, and paid
Khalupsky a piece of the profits. These trades, too, were generally
initiated in-window. The Khalupsky trades yielded roughly $3.1
million in net profits during the scheme.

The scheme faltered for a time after the relationship with the
hackers soured. Arkadiy had opened additional brokerage accounts
unknown to the hackers in order to exclude them from some of the
profits. The hackers grew suspicious and, in early 2014, stopped
sending stolen press releases to the Dubovoys. Without access to the
6 19-197 (L)

nonpublic information, Korchevsky’s trading volume and profits
plummeted.

By late 2014, the Dubovoys found another Ukrainian hacker
who could steal pre-publication press releases. This new hacker
charged more for the service, however, so the Dubovoys questioned
whether the arrangement would still be worthwhile. Korchevsky
insisted that the Dubovoys secure this new source of press releases.
They did, and the scheme continued, albeit in modified form. Rather
than trading directly out of Arkadiy’s brokerage accounts,
Korchevsky now received the stolen press releases from Igor,
reviewed them, and sent him a coded text message telling him how
much of which stocks he should purchase. The scheme continued
into 2015.

On August 15, 2015, a grand jury returned the first indictment
in this case, charging Khalupsky and Korchevsky with conspiracy to
commit wire fraud, in violation of 18 U.S.C. § 1349 (Count One);
conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371
(Count Two); securities fraud, in violation of 15 U.S.C. §§ 78j(b) and
78ff (Counts Three and Four); and money laundering conspiracy, in
violation of 18 U.S.C. § 1956(h) (Count Five). On September 13, 2016,
a second grand jury returned a superseding indictment, replicating
the first one but adding computer intrusions as an object of the
conspiracy to commit securities fraud charge in Count Two.

Following a three-week jury trial that concluded in July 2018,
Khalupsky and Korchevsky were convicted on all counts. The district
court sentenced Khalupsky to four years’ imprisonment to be
followed by two years’ supervised release, and ordered him to forfeit
7 19-197 (L)

$397,281.12 and pay $339,062.99 in restitution. It sentenced
Korchevsky to five years’ imprisonment to be followed by three years’
supervised release, and ordered him to forfeit $14,452,245 and pay
$339,062.99 in restitution. This appeal followed.

DISCUSSION

Korchevsky’s principal argument on appeal is that the evidence
was insufficient to establish his participation in the single charged
conspiracy with Khalupsky. Korchevsky also argues that: the
evidence was insufficient to support the securities fraud convictions;
venue was improper in the Eastern District of New York (EDNY) for
the securities fraud counts (an argument Khalupsky joins); the proof
at trial constituted either a constructive amendment of the
superseding indictment or prejudicial variance from it; and the
district court erred by giving a particular exhibit to the jury in
response to a note during deliberations. Khalupsky additionally
asserts that the district court erred in charging the jury on conscious
avoidance (an argument Korchevsky joins in his reply brief). Each of
the defendants also adopted the arguments of the other pursuant to
Federal Rule of Appellate Procedure 28(i). None of the arguments of
either defendant, however, is persuasive.

I. Sufficiency of the Evidence

Korchevsky challenges the sufficiency of evidence in support
of both his conspiracy convictions and his substantive securities fraud
convictions. In challenging the sufficiency of the evidence,
Korchevsky “face[s] a heavy burden, as the standard of review is
8 19-197 (L)

exceedingly deferential to the jury’s apparent determinations.” 2
“[W]e view the evidence in the light most favorable to the
government, crediting every inference that could have been drawn in
the government’s favor.” 3 When the sufficiency challenge is to a
conspiracy conviction, “deference to the jury’s findings is especially
important because a conspiracy by its very nature is a secretive
operation, and it is a rare case where all aspects of a conspiracy can
be laid bare in court.” 4 We will uphold the challenged convictions if
“any rational trier of fact could have found the essential elements of
the crime beyond a reasonable doubt.” 5 Here, we find no basis to
disturb the convictions.

A. Conspiracy

To challenge his conspiracy convictions, Korchevsky makes the
following argument: co-conspirators must know one another, but the
evidence established that he did not know Khalupsky, so the evidence
cannot support his participation in one conspiracy with Khalupsky. 6
This argument fails because its premise is incorrect. Korchevsky and
Khalupsky need not have known one another to be co-conspirators.

United States v. Flores, 945 F.3d 687, 710 (2d Cir. 2019) (internal quotation
2

marks omitted).
3 Id. (internal quotation marks omitted).
4 Id. (internal quotation marks and alteration omitted).
5 Id.
6Korchevsky also argues that, because he could not have been Khalupsky’s
co-conspirator, he suffered spillover prejudice by being tried jointly with
Khalupsky. Because we find that the defendants were co-conspirators, we have
no occasion to address this argument.
9 19-197 (L)

The evidence was sufficient to support the defendants’ knowing
participation in a single conspiracy.

“Whether the government has proved a single or multiple . . .
conspiracies is a question of fact for a properly instructed jury.” 7 To
prove conspiracy, “the government must show that two or more
persons entered into a joint enterprise for an unlawful purpose, with
awareness of its general nature and extent.” 8 It must “show that each
alleged member agreed to participate in what he knew to be a
collective venture directed toward a common goal.” 9 But “[t]he
government need not show that the defendant knew all of the details
of the conspiracy,” “[n]or must the government prove that the
defendant knew the identities of all of the other conspirators.” 10 That
is “especially [true] where the activity of a single person was central
to the involvement of all” conspirators. 11 “Indeed, a defendant may
be a co-conspirator if he knows only one other member of the
conspiracy . . . .” 12

7 United States v. Sureff, 15 F.3d 225, 229 (2d Cir. 1994) (internal quotation
marks omitted). The jury in this case was instructed only on the possibility of a
single conspiracy, not on multiple conspiracies. Korchevsky does not challenge
that decision on appeal.
8 United States v. Torres, 604 F.3d 58, 65 (2d Cir. 2010) (collecting cases).
9United States v. Maldonado-Rivera, 922 F.2d 934, 963 (2d Cir. 1990) (internal
quotation marks omitted).
10 United States v. Huezo, 546 F.3d 174, 180 (2d Cir. 2008); see also Sureff, 15
F.3d at 230 (“A single conspiracy may encompass members who neither know one
another’s identities nor specifically know of one another’s involvement.” (citations
omitted)).
11 Maldonado-Rivera, 922 F.2d at 963 (internal quotation marks omitted).
12 Huezo, 546 F.3d at 180.
10 19-197 (L)

Korchevsky contends that he was a member of one conspiracy
with the Dubovoys, while Khalupsky was a member of an entirely
separate conspiracy with the Dubovoys. To suggest that his view of
the evidence is the only reasonable one, Korchevsky relies on the
following brief passage of Arkadiy’s direct testimony:

Q: You were intentionally trying to keep [Khalupsky
and Korchevsky] away from each other?

A: Yes. . . . We wanted to see who was better at
trading. 13

But this exchange does not compel the conclusion Korchevsky seeks.
To the contrary, the testimony indicates that Arkadiy kept Khalupsky
and Korchevsky apart precisely because doing so furthered the
common goal of the conspiracy: to maximize profits by successfully
trading on information from the stolen press releases. That
Khalupsky’s and Korchevsky’s individual goals were limited in scope
to their own trading activity is irrelevant. Co-conspirators’ goals
“need not be congruent for a single conspiracy to exist, so long as their
goals are not at cross-purposes.” 14

Upon review of the full record, we have no doubt that the
evidence was sufficient to support the conspiracy convictions. It is
clear that Korchevsky not only “agreed to participate in what he knew
to be a collective venture directed toward a common goal,” 15 but also
“had reason to know that in dealing with” the Dubovoys he “w[as]

13 App. at 351–52.
14 Maldonado-Rivera, 922 F.2d at 963.
15 Id. (internal quotation marks omitted).
11 19-197 (L)

involved with a larger organization.” 16 For example, the first time
Arkadiy and Korchevsky met, Arkadiy told him that he would be
trading on information originally coming from an unnamed group of
Ukrainian hackers, with everybody doing their part in return for a
percentage of the profits. Separately, Igor and Korchevsky discussed
what portion of earnings was paid to the hackers and the fact that
there was an additional intermediary between the hackers and the
Dubovoys also taking a cut.

Faced with this evidence, Korchevsky argues that the record at
most shows his awareness of other upstream co-conspirators, but fails
to support his awareness of a co-conspirator similarly situated to
Khalupsky. His argument is unavailing because our precedent does
not require that level of specific awareness. In United States v. Sureff,
we affirmed the defendant’s conviction for a single drug dealing
conspiracy even though there was no evidence that her two retailer
partners—participants in the charged single conspiracy—were aware
of one another’s existence. 17 The retailers nevertheless had the
required awareness that “they were involved with a larger
organization” because each knew that the defendant was working
with “the bank” upstream from the retail operations. 18 There is no
relevant distinction between the awareness the retailers in Sureff each
had of the defendant and her upstream co-conspirators and the
awareness Khalupsky and Korchevsky each had about the Dubovoys
and the hackers.

16 Sureff, 15 F.3d at 230.
17 15 F.3d at 229–30.
18 Id. at 230.
12 19-197 (L)

Korchevsky instead attempts to analogize this case to United
States v. McDermott, 19 but McDermott is inapposite. In that case, the
defendant (McDermott) gave non-public stock information to a
woman (Gannon) with whom he was having an affair. 20
Unbeknownst to McDermott, Gannon was simultaneously having an
affair with another man (Pomponio) and conveying McDermott’s
stock recommendations to him. 21 Pomponio traded on McDermott’s
information, sharing the profits with Gannon. 22 McDermott was
ultimately tried with Pomponio and convicted as his co-conspirator
on the theory that, at least from the perspective of two members of
the love triangle, the three of them were working toward “a unitary
purpose to commit insider trading.” 23 On appeal, we vacated the
conviction because there was “no record evidence suggesting that
McDermott’s agreement with Gannon encompassed a broader scope
than the two of them.” 24 Unlike Korchevsky or the retailers in Sureff,
McDermott was not aware he was “involved with a larger
organization.” 25 He had not agreed that Gannon could “pass [his]

19 245 F.3d 133 (2d Cir. 2001).
20 Id. at 136.
21 Id.
22 Id.
23 Id. at 137.
24 Id. at 138. To the extent language in McDermott suggests that McDermott
would have needed to be aware that “there existed others similarly situated” to him
in the scheme, it is dicta; we vacated his conviction because he was unaware there
was anybody other than Gannon involved, regardless of the other person’s
relationship to Gannon. Id. (emphasis added).
25 Sureff, 15 F.3d at 230.
13 19-197 (L)

insider information to . . . another person, even if unknown.”26
Korchevsky, by contrast, knew that he depended on a large network
of people to facilitate his illicit trading, and he agreed that the profits
he generated would be shared with them.

B. Securities Fraud

Counts Three and Four charged Khalupsky and Korchevsky
with fraudulent trading in securities as corporate outsiders, in
violation of Section 10(b) of the Securities and Exchange Act and Rule
10b-5, promulgated thereunder. Section 10(b) prohibits the “use or
employ, in connection with the purchase or sale of any security . . . [,
of] any manipulative or deceptive device or contrivance in
contravention of such rules and regulations as the [Securities and
Exchange] Commission may prescribe.” 27 Rule 10b-5 prohibits
“employ[ing] any device, scheme, or artifice to defraud . . . in
connection with the purchase or sale of any security.” 28

To challenge his convictions on these substantive securities
fraud counts, Korchevsky first argues that the government could not
prove he engaged in a “scheme or artifice to defraud” within the
meaning of Rule 10b-5. Specifically, he claims the proof necessarily
failed because he did not owe a fiduciary duty to investors or
potential investors in the companies whose press releases were stolen,
and because any deception employed to obtain the releases did not
target the investors. Second, Korchevsky argues that the type of

26 McDermott, 245 F.3d at 138.
27 15 U.S.C. § 78j(b).
28 17 C.F.R. § 240.10b-5.
14 19-197 (L)

computer hacking used to access Marketwired’s systems—the
conduct charged in Count Four—did not constitute a “deceptive
device or contrivance” within the meaning of Section 10(b). 29 We are
unpersuaded.

First, we dispatch Korchevsky’s contention that he did not
engage in a “scheme or artifice to defraud.” Although a fiduciary
duty is relevant to other securities violations—e.g., insider trading—
it need not be shown to prove the securities fraud charged here:
fraudulent trading in securities by an outsider. 30 Further,
Korchevsky’s assertion that the deception must have targeted
investors contradicts the plain language of Rule 10b-5. The deception
need only be “in connection with the purchase or sale of any security,” 31
and here it was. The newswire hacking directly prompted and
enabled the charged securities trading. 32 Indeed, the ensuing trades
needed to occur soon after a press release was illicitly obtained from

29Korchevsky initially challenged his convictions on both Counts Three
and Four on the basis that computer hacking was not “deceptive” within the
meaning of Section 10(b). In reply, he abandoned his challenge to his conviction
on Count Three, which charged securities fraud in connection with the “spear
phishing” hack of PR Newswire’s systems. Spear phishing occurs when a hacker
sends a misleading email to an account user in order to deceive that user into
providing the hacker with his login credentials, often by inducing the user to click
on a link that in turn prompts them to enter the credentials. As Korchevsky
concedes in reply, spear phishing to obtain credentials and then using the ill-
gotten credentials to log in is “deceptive” under Section 10(b). Def.-Appellant
Korchevsky’s Reply at 21 (citing S.E.C. v. Dorozhko, 574 F.3d 42, 44–49 (2d Cir.
2009)).
30 See Dorozhko, 574 F.3d at 46–49.
31 17 C.F.R. § 240.10b-5 (emphasis added).
32See S.E.C. v. Zandford, 535 U.S. 813, 822 (2002) (“It is enough that the
scheme to defraud and the sale of securities coincide.”).
15 19-197 (L)

a newswire’s servers, but before the newswire could publish the
release, in order to maximize the hacked information’s value.

Second, we find that the hack of Marketwired’s systems
qualified as a “deceptive device or contrivance” under Section 10(b).
The hackers initially accessed Marketwired’s systems using a
technique known as SQL injection. This enabled them to glean the
architecture of the hacked computer system, identify vulnerabilities,
and extract data. Then, having gained initial access, the hackers
extracted employee login credentials and used those credentials to
intrude into the system’s more secure areas. Regardless of how one
might characterize the initial SQL injection technique, the subsequent
use of stolen employee login credentials to gain further system access
was deceptive. Every time the hackers attempted to access parts of
the system by entering stolen credentials, they misrepresented
themselves to be authorized users. “[M]isrepresenting one’s identity
in order to gain access to information that is otherwise off limits, and
then stealing that information is plainly ‘deceptive’ within the
ordinary meaning of the word.” 33

Korchevsky cannot carry his heavy burden to overcome the
jury’s findings and demonstrate that the evidence was insufficient to
support conviction on any count.

II. Venue

Khalupsky and Korchevsky both argue that there was
insufficient evidence to establish venue in the EDNY for the securities
fraud counts. We disagree. It was foreseeable to the defendants that

33 Dorozhko, 574 F.3d at 51.
16 19-197 (L)

acts constituting the securities fraud violations would take place in
the EDNY.

The Securities and Exchange Act provides that, for securities
fraud, the “criminal proceeding may be brought in the district
wherein any act or transaction constituting the violation occurred.” 34
That test is satisfied in any district where “the defendant intentionally
or knowingly causes an act in furtherance of the charged offense to
occur,” or where “it is foreseeable to the defendant that such an act
would occur . . . and that act does in fact occur.” 35 “To be in
furtherance of the charged offense, acts or transactions must constitute
the securities fraud violation—mere preparatory acts are
insufficient.” 36 “Venue may also be established if the defendant aids
and abets another’s crime of securities fraud in the district.” 37

The government bears the burden of proving appropriate
venue on each count, as to each defendant, by a preponderance of the
evidence. 38 Our review is de novo, but we view the evidence “in the
light most favorable to the government, crediting every inference that
could have been drawn in its favor.” 39 In this case, the government

34 15 U.S.C. § 78aa(a).
35 United States v. Lange, 834 F.3d 58, 69 (2d Cir. 2016) (alteration and
internal quotation marks omitted) (quoting United States v. Royer, 549 F.3d 886, 894
(2d Cir. 2008), and United States v. Svoboda, 347 F.3d 471, 483 (2d Cir. 2003)).
36 Id. (internal quotation marks omitted).
37 Id.
38Chow, 993 F.3d at 143 (noting that proof is only by a preponderance of the
evidence because venue is not an element of a crime); Lange, 834 F.3d at 71.
United States v. Tzolov, 642 F.3d 314, 318 (2d Cir. 2011) (internal quotation
39

marks omitted).
17 19-197 (L)

presented an assortment of evidence to establish venue in the EDNY.
Viewing this evidence collectively, we agree that venue was proper
in the EDNY.

First, evidence suggested the defendants foresaw that some of
their trades would be consummated with counterparties in the
EDNY. The government’s expert confirmed that 175 of the
defendants’ trades were in fact consummated with counterparties in
the EDNY, and that 300 more may have been. 40 This evidence, along
with the vast scope of the trading scheme 41 and the defendants’
expertise as traders, 42 cumulatively supports the inference that the
defendants foresaw the existence of counterparties in the EDNY.

Second, the government introduced evidence that one of
Korchevsky’s brokerage accounts used J.P. Morgan Clearing
Corporation, located in the EDNY, as its clearing agent. The account-
opening forms Korchevsky signed listed the J.P. Morgan Clearing
Corporation’s address. So did the account’s monthly statements. The
jury was thus entitled to infer that Korchevsky knowingly used an

40 The expert was unable to identify a single precise counterparty for each
of these 300 trades, but narrowed down the universe of possible counterparties for
each trade to a small number, at least one of which was located in the EDNY. A
jury could therefore reasonably infer that, more likely than not, at least some of
these 300 counterparties were in fact in the EDNY.
41 See Royer, 549 F.3d at 894 (reasonable for jury to infer that at least one of
300 recipients of the disseminated information would trade on it in the EDNY).
42See Chow, 993 F.3d at 143–44 (jury could infer from defendant’s college
and graduate business degrees that he would have been aware shares were listed
on the Nasdaq in Manhattan); Svoboda, 347 F.3d at 483 (jury could infer that a
“savvy investor” would foresee what exchanges his trades would be executed on).
18 19-197 (L)

EDNY-based clearing agent for the illicit trades from that account.43
This evidence also established venue as to Khalupsky by virtue of the
aiding and abetting charges. Once proper venue is established in the
EDNY for the scheme through Korchevsky, it is enough that
Khalupsky “aided and abetted the scheme of securities fraud” writ
large; we “do[] not require that a defendant aid and abet the specific
criminal activity occurring within the district of venue.” 44

Finally, all of this evidence concerns acts or transactions
“constituting” the securities fraud violation, as they must to establish
venue, rather than “mere preparatory acts.” 45 Counterparties and
clearing agents are both “crucial to the success of the scheme.” 46
Without them, there would be no completed sale of a security.
Accordingly, venue was proper in the EDNY. 47

43 Cf. United States v. Geibel, 369 F.3d 682, 697 (2d Cir. 2004) (“The
government failed to establish that defendants’ trades . . . utilized the facilities of
any . . . securities exchange or brokerage firm” in the venue district, in a case where
“the only connection” to the district was that the initial misappropriation of
information occurred there.).
44 Lange, 834 F.3d at 73–74.
Id. at 69; see also Chow, 993 F.3d at 143 (affirming venue in the district
45

where, among other things, the counterparties’ brokers were located and
“purchases of [the] shares were executed, cleared, and recorded”).
46 Royer, 549 F.3d at 895.
47 Additionally, the government presented evidence about how trades
executed on the New York Stock Exchange and the Nasdaq are often processed
and settled through a Depository Trust and Clearing Corporation (DTCC) data
center located in the EDNY. The government identified at least two of
Khalupsky’s trades that were in fact cleared through the DTCC. Despite a lack of
direct evidence that either Khalupsky or Korchevsky was aware of the DTCC’s
existence or location, the government urged the jury to infer that traders of their
19 19-197 (L)

III. Constructive Amendment and Prejudicial Variance

Korchevsky argues that the government’s proof at trial either
(a) constructively amended the superseding indictment, or
(b) prejudicially varied from it. Specifically, he objects to the
presentation of three categories of evidence: (1) trades involving
target companies that were not identified in the superseding
indictment, (2) trades involving press releases hacked from Business
Wire, which were not charged in their own securities fraud count, and
(3) trades taking place in 2015, even though much of the activity
alleged in the indictment took place in 2011–2014. For the reasons
below, none of this evidence constructively amended or prejudicially
varied from the superseding indictment. 48

A. Constructive Amendment

To satisfy the Fifth Amendment’s Grand Jury Clause, “an
indictment must contain the elements of the offense charged and
fairly inform the defendant of the charge against which he must
defend.” 49 This clause is violated, and reversal is required, if the

experience would have been. We need not address this proffered basis for venue
in this case, however, because the other evidence in support of venue was
sufficient.
The parties dispute whether Korchevsky adequately objected to the
48

government’s proof before the district court, and thus dispute the applicable
standard of review. Because the standard is irrelevant to our conclusion, we
review de novo. See United States v. Dove, 884 F.3d 138, 146 (2d Cir. 2018).
49Id. at 146 (internal quotation marks and alteration omitted); see U.S.
CONST. amend. V, cl. 1 (“No person shall be held to answer for a capital, or
otherwise infamous crime, unless on a presentment or indictment of a Grand Jury
. . . .”).
20 19-197 (L)

indictment has been constructively amended. 50 “A constructive
amendment occurs when the charge upon which the defendant is
tried differs significantly from the charge upon which the grand jury
voted.” 51 A defendant claiming constructive amendment “must
demonstrate that either the proof at trial or the trial court’s jury
instructions so altered an essential element of the charge that, upon
review, it is uncertain whether the defendant was convicted of
conduct that was the subject of the grand jury’s indictment.” 52 The
charge has been so altered “either where (1) an additional element,
sufficient for conviction, is added, or (2) an element essential to the
crime charged is altered.” 53 We undertake this inquiry mindful that
“courts have constantly permitted significant flexibility in proof,
provided that the defendant was given notice of the core of
criminality to be proven at trial.” 54 “The core of criminality of an
offense involves the essence of a crime, in general terms; the
particulars of how a defendant effected the crime falls outside that
purview.” 55

We do not find a constructive amendment resulting from any
of the evidence to which Korchevsky objects. The trades involving

50 Dove, 884 F.3d at 149.
51 Id. at 146.
52 United States v. Salmonese, 352 F.3d 608, 620 (2d Cir. 2003).
Dove, 884 F.3d at 146 (citations omitted) (first citing United States v. Miller,
53

471 U.S. 130, 138–39 (1985), and then citing United States v. Agrawal, 726 F.3d 235,
259 (2d Cir. 2013)).
54United States v. Ionia Mgmt. S.A., 555 F.3d 303, 310 (2d Cir. 2009) (per
curiam) (internal quotation marks and emphasis omitted).
United States v. D’Amelio, 683 F.3d 412, 418 (2d Cir. 2012) (internal
55

quotation marks omitted).
21 19-197 (L)

stocks of other target companies simply served as additional
examples of the same conduct constituting the charged scheme. 56 So,
too, did proof of the trades in 2015, particularly given that the
superseding indictment alleged the scheme persisted into 2015.
Korchevsky’s argument about the trades resulting from the Business
Wire hack is similarly weak. Even though the Business Wire hack was
not charged as a standalone securities fraud count, Business Wire was
identified as one of the victim newswires in the superseding
indictment’s introductory section, which was incorporated by
reference into all charged counts. In sum, although “not specifically
pleaded in the indictment, [these trades] are plainly within the
charged core of criminality.” 57 None of it was proof of a different
kind, setting forth “an additional basis . . . not considered by the grand
jury” for conviction. 58

56See Salmonese, 352 F.3d at 621 (no constructive amendment where
indictment alleged twenty-five occasions on which conspirators sold inflated
stripped warrants as part of fraud conspiracy, and at trial government proved
additional, unalleged sales of stripped warrants).
Id. at 621; see also United States v. Dupre, 462 F.3d 131, 140–41 (2d Cir. 2006)
57

(”[T]he evidence at trial concerned the same elaborate scheme to defraud investors
as was described in the indictment.”).
Dove, 884 F.3d at 146. Korchevsky’s reliance on Stirone v. United States,
58

361 U.S. 212 (1960), is misplaced for this reason. In Stirone, the defendant was
charged with violating the Hobbs Act by obstructing interstate importation of sand
destined for use in construction of a steel mill. Id. at 217. At trial, the government
argued that the defendant had also interfered with commerce (an element of the
Hobbs Act violation) by obstructing the interstate exportation of the yet-to-be
manufactured steel from that mill. Id. The Court found that to be a constructive
amendment, noting that “when only one particular kind of commerce is charged
to have been burdened a conviction must rest on that charge and not another.” Id.
at 218.
22 19-197 (L)

B. Prejudicial Variance

We also do not find that the evidence at trial prejudicially
varied from the superseding indictment. “A variance occurs when
the charging terms of the indictment are left unaltered, but the
evidence at trial proves facts materially different from those alleged
in the indictment.” 59 To warrant reversal, the defendant must show
“that substantial prejudice occurred at trial as a result” of the
variance. 60 “A defendant cannot demonstrate that he has been
prejudiced by a variance where the pleading and the proof
substantially correspond, where the variance is not of a character that
could have misled the defendant at the trial, and where the variance
is not such as to deprive the accused of his right to be protected
against another prosecution for the same offense.” 61

For the reasons discussed in the context of constructive
amendment, we do not think that the evidence Korchevsky points to
“materially differe[d]” from what was alleged in the superseding
indictment. 62 And in any event, Korchevsky cannot demonstrate
“substantial prejudice.” 63 The superseding indictment itself put
Korchevsky on notice of much of the evidence about which he
complains. To the extent he had not been on notice of every piece of
trade data, he was notified by the government’s pretrial disclosures

59 Dove, 884 F.3d at 149 (internal quotation marks omitted).
60 Id. (internal quotation marks omitted).
61 Salmonese, 352 F.3d at 621–22 (internal quotation marks omitted).
62 Dove, 884 F.3d at 149.
63 Id.
23 19-197 (L)

of exhibits about the trades it intended to rely upon and of the vast
data set underlying its statistical analysis of his trading activity.

IV. Response to Jury Note

Korchevsky argues that the district court’s response to a jury
note during deliberations caused the jury to resolve a disputed factual
question against him. We review a trial court’s response to a jury
request during deliberations only for abuse of discretion, 64 and we
find none here.

The fact in dispute was whether Korchevsky had traded on any
stolen press releases from the Dubovoys. Korchevsky contended he
had never received them. To prove that he had, the government
introduced forensic reports for a number of electronic devices seized
from Korchevsky’s home, including a 221-page report on the contents
of an iPad. The forensic report indicated that the iPad had been used
to access the “stargate11@e-mail.ua” email account (Stargate
Account). On July 30, 2012, the Stargate Account sent four emails to
itself, each containing the one-word message “Updates” along with
an attachment. Forensics could not recover the attached files. Other
evidence at trial, however, established that the conspirators shared
login credentials for communal email accounts in order to
disseminate the press releases amongst themselves.

The government urged the jury to infer that the July 30 Stargate
Account emails attached stolen press releases, that Korchevsky had

64 See United States v. Rommy, 506 F.3d 108, 126 (2d Cir. 2007) (“[R]esponse
to jury request ‘is a matter committed to the sound exercise of a trial court’s
discretion.’” (quoting United States v. Young, 140 F.3d 453, 456 (2d Cir. 1998))).
24 19-197 (L)

read the emails on the iPad, and that he had relied upon these
attachments in his stock trades. Korchevsky, on the other hand,
claimed that somebody else had accessed the Stargate Account from
the iPad. He suggested it was Igor, pointing to evidence that Igor’s
Skype account had been used on that iPad in December 2012.

During deliberations, the jury sent out a note requesting “Any
and ALL Texts[,] Phone calls[,] Emails[,] Bank records To and/or From
Korchevsky on or in any devices found in his residence, or offices
possession past or at time of arrest.” 65 While the parties and the court
were discussing whether the iPad evidence would be responsive to
that request, the jury sent out a second note, this time asking for
“Korchevsky – Stargate – dubavoy correspondence.” 66 The defense
argued that there was no such correspondence. Further, it argued
that if the district court sent the iPad report back to the jury, the
district court would be endorsing the government’s argument that
Korchevsky had used the iPad to access the Stargate Account. The
district court decided to send the iPad report to the jury. It also
permitted the government place a flag on the page concerning the July
30 Stargate Account emails.

We do not find an abuse of discretion in the district court’s
response to the jury’s request. The jury’s “Korchevsky – Stargate –
dubavoy correspondence” note was not entirely clear, and we think
the district court “gave it a reasonable interpretation” 67 by inferring

65 App. at 820.
66 Id. at 821.
67See United States v. McElroy, 910 F.2d 1016, 1026 (2d Cir. 1990) (“[T]here
plainly was no abuse of discretion here. The jury’s written response to the court’s
25 19-197 (L)

from the “Stargate” mention that the jury hoped to receive the
Stargate Account emails in the iPad report. District courts are
significantly better situated than we are to interpret cryptic jury notes,
and they accordingly “enjoy[] considerable discretion in construing
the scope of a jury inquiry and in framing a response tailored to the
inquiry.” 68 We find no reason to upset that exercise of discretion here.

V. Conscious Avoidance

The defendants challenge the district court’s decision to charge
the jury that conscious avoidance can satisfy the knowledge
requirement. They also challenge the particular instruction given.
We find no merit in these challenges.

“Instructions are erroneous if they mislead the jury as to the
correct legal standard or do not adequately inform the jury of the
law.” 69 “Objectionable instructions are considered in the context of
the entire jury charge, and reversal is required where, based on a
review of the record as a whole, the error was prejudicial or the charge
was highly confusing.” 70

A conscious avoidance charge is appropriate: “(i) when a
defendant asserts the lack of some specific aspect of knowledge
required for conviction[,] and (ii) the appropriate factual predicate for

query was ambiguous, and the trial judge gave it a reasonable interpretation in
rereading the cross-examination by the government and asking if that was what
the jury wished to hear.”).
68 Rommy, 506 F.3d at 126.
United States v. Kopstein, 759 F.3d 168, 172 (2d Cir. 2014) (internal
69

quotation marks omitted).
70 Id. (internal quotation marks omitted).
26 19-197 (L)

the charge exists, i.e., the evidence is such that a rational juror may
reach the conclusion beyond a reasonable doubt that the defendant
was aware of a high probability of the fact in dispute and consciously
avoided confirming that fact.” 71 Even where the government’s
primary theory is that the defendant has actual knowledge, a
conscious avoidance charge can be properly given in the alternative
“because ordinarily the same evidentiary facts that support the
government’s theory of actual knowledge also raise the inference that
he was subjectively aware of a high probability of the existence of
illegal conduct and thus properly serve as the factual predicate for the
conscious avoidance charge.” 72

The district court in this case gave the following conscious
avoidance instruction to the jury, over Khalupsky’s objection:

[T]he government is required to prove that
the defendants acted knowingly. To
determine whether the defendant acted
knowingly[,] you may consider whether the
defendant deliberately closed his eyes as to
what would otherwise have been obvious to
him. If you find beyond a reasonable doubt
that the defendant acted or that the
defendant’s ignorance was solely and
entirely the result of a conscious purpose to
avoid learning the truth, then this element
may be satisfied. However, guilty
knowledge may not be established by

71 Lange, 834 F.3d at 76 (internal quotation marks omitted).
72 Id. at 78 (internal quotation marks and alterations omitted).
27 19-197 (L)

demonstrating that the defendant was
merely negligent, foolish, or mistaken . . . .

If you find that the defendant was aware of
the high probability that the press releases
were stolen, and that defendant acted with
deliberate disregard of that fact, you may
find the defendant acted knowingly.
However, if you find that the defendant
believed that the information was lawfully
obtained, he must be found not guilty.

It is entirely up to you whether you find the
defendant deliberately closed his eyes[,] and
any inferences to be drawn from the
evidence on this issue. 73

In challenging this instruction on appeal, Khalupsky argues
both that there was no factual predicate warranting a conscious
avoidance instruction, and that the instruction led the jury to believe
that conscious avoidance could satisfy the intent needed to convict on
conspiracy or aiding and abetting. Korchevsky joins these arguments
in reply, and also argues that the language of the conscious avoidance
instruction was prejudicial.

We first reject the argument that there was no factual predicate
for the conscious avoidance instruction. The inclusion of the charge
was properly objected to before the district court, so we review de
novo. 74 We find that the record contained ample evidence from which
a jury could reasonably infer that “the defendant[s] w[ere] aware of a

73 App. at 680–81.
74 United States v. Applins, 637 F.3d 59, 72 (2d Cir. 2011).
28 19-197 (L)

high probability of the fact in dispute and consciously avoided
confirming that fact.” 75 As to Khalupsky, the government presented
evidence that he had received passwords to access the press releases
on which his employees were trading. The jury would have been
entitled to infer that the need for password-protection signaled to
Khalupsky that the press releases—documents usually publicly
disseminated without need for security—had been illicitly obtained,
and that he chose not to confirm that suspicion. Similar reasoning
prevails as to Korchevsky, because there was evidence that Arkadiy
had shown Korchevsky printouts of the press releases and provided
him with login credentials to access the information.

Second, we reject the argument that the conscious avoidance
instruction confused the jury into thinking that it could convict on
conspiracy or on aiding and abetting without finding the necessary
intent. As the defendants concede, because they did not object before
the district court to any particular language in the charge, we review
this issue only for plain error. 76 It is not “clear or obvious” to us, as it
must be on plain error review, that the charge confused the jury in the
way defendants claim. 77

As to conspiracy, we do not think the jury could have convicted
the defendants by finding only conscious avoidance of the fact of
participation in the conspiracy. Conscious avoidance may satisfy the

75Lange, 834 F.3d at 76 (internal quotation marks omitted). It is undisputed
that the first condition necessary for a conscious avoidance charge—that the
“defendant asserts the lack of some specific aspect of knowledge required for
conviction”—was satisfied. Id.
76 See United States v. Vilar, 729 F.3d 62, 88 (2d Cir. 2013).
77 See id. at 70 (defining plain error).
29 19-197 (L)

defendant’s “knowledge of the conspiracy’s unlawful goals,” but it
may not be used to support the defendant’s prerequisite “knowing
participation or membership in the scheme charged.” 78 The jury
instructions made clear that proof of membership in the conspiracy
required a showing of actual knowledge. In describing what the
government needed to prove to show that the defendants joined the
conspiracy, the district court charged that it had to prove a defendant
“knowingly and willfully was or became a member of the conspiracy,”
and that he became a member “with knowledge of its criminal goal,
willfully and intending by his actions to help it succeed.” 79 Further, the
district court defined “willfully” as something “done knowingly and
purposefully with intent to do something the law forbids.” 80

Nor do we think there was any risk that the jury convicted on
the aiding and abetting theory of securities fraud—a specific intent
crime 81—by finding only conscious avoidance. The district court
charged the jury that, “in order to aid and abet someone to commit a
crime, it is necessary that the defendant knowingly aid[] another
person in committing a crime with the intent to facilitate the crime
and make it succeed.” 82 It went on to explain that “[t]o establish that
the defendants knowingly aided another person with the intent to
facilitate a crime, the [g]overnment must prove the defendants of
course acted knowingly and intentionally.” 83 Nowhere in the

78 Lange, 834 F.3d at 76 (internal quotation marks omitted).
79 App. at 646–47 (emphases added).
80 Id. at 647.
81 United States v. Rosemond, 572 U.S. 65, 70–77 (2014).
82 App. at 661–62.
83 Id. at 662 (emphasis added).
30 19-197 (L)

discussion of aiding and abetting liability did the court reference
conscious avoidance as a relevant form of that intent.

Third, we reject Korchevsky’s argument that the conscious
avoidance charge given in this case was prejudicial. Korchevsky
asserts that the district court’s instruction to the jury presupposed that
Korchevsky had seen the stolen press releases, and therefore
prejudiced the jury in disposing of a disputed fact. Korchevsky did
not make this objection to the district court, however, and we do not
think any potential for confusion in this respect rises to the level of
plain error. Indeed, we think it clear that the district court was
referencing the stolen press releases by way of example in order to
demonstrate to the jury how conscious avoidance operates. Lest the
jurors be confused, the district court reiterated Korchevsky’s theory
in defense—that “he did not knowingly and intentionally access
stolen press releases or trade on non-public information” 84—
immediately after charging on conscious avoidance.

Finally, we note that even if we had found any error in the
issuance or form of this conscious avoidance instruction, we would
have found the error harmless. The “overwhelming evidence” of
actual knowledge in support of the jury’s verdict, coupled with the
fact that the government did not at all rely on conscious avoidance in
its summation, renders this dispute over conscious avoidance beside
the point. 85

84 Id. at 681.
85 United States v. Ferrarini, 219 F.3d 145, 154 (2d Cir. 1993) (“[A]n
erroneously given conscious avoidance instruction constitutes harmless error if
the jury was charged on actual knowledge and there was overwhelming evidence
31 19-197 (L)

CONCLUSION

We have considered all of the defendants’ arguments and
found them without merit. For the foregoing reasons, we AFFIRM
the judgments of conviction.

to support a finding that the defendant instead possessed actual knowledge of the
fact at issue.” (internal quotation marks and emphasis omitted)).