NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 28 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 22-10249
Plaintiff-Appellee, D.C. No.
4:18-cr-02220-RM-EJM-3
v.
ROBERT B. SPROAT, MEMORANDUM*
Defendant-Appellant.
Appeal from the United States District Court
for the District of Arizona
Rosemary Márquez, District Judge, Presiding
Argued and Submitted November 14, 2023
San Jose, California
Before: GRABER, PAEZ, and FRIEDLAND, Circuit Judges.
Defendant Robert Sproat timely appeals his convictions of ten counts of
securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and 17 C.F.R.
§ 240.10b-5, and the resulting sentence of 30 months in prison.1 We affirm.
1. Sufficient evidence supported the securities fraud convictions. See
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
1
In a concurrently filed opinion, we address Defendant’s jury coercion
challenge. We address his remaining arguments in this disposition.
United States v. Tarallo, 380 F.3d 1174, 1181 (9th Cir. 2004), as amended by 413
F.3d 928 (9th Cir. 2005) (stating that we review de novo the sufficiency of the
evidence). Viewing the evidence in the light most favorable to the government,
United States v. Tydingco, 909 F.3d 297, 301 n.1 (9th Cir. 2018), a reasonable jury
could have concluded that Defendant willfully committed securities fraud. With
respect to victims from nine of the ten counts, Defendant signed investment
contracts—memoranda of understanding or promissory notes—stating that the
Fortitude Foundation was engaged in a “joint venture,” but Defendant did not
disclose that the Fortitude Foundation had never supplied the initial $14,000,000
investment to fund that venture. Although Defendant was not a signatory to the
profit-sharing agreement that his codefendants made with the victim in the tenth
count, Defendant made other misrepresentations directly to that victim, including a
statement to the victim that a purported investment opportunity in Africa involving
diamond extraction was a “guaranteed investment.”
Additionally, the record supports that Defendant acted willfully. For
example, the fact that Defendant received thousands of dollars in rent payments
unrelated to any kind of investment undermines his claim that he was himself
deluded about how the investment funds were being used. Furthermore, the record
contains evidence that Defendant knew that he was not a director of the Fortitude
Foundation, but he held himself out to be a director anyway. Defendant also knew
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that victims’ investment funds, which had been solicited for an ostensible gold
recovery project, would be spent for another purpose entirely: collectible Chinese
Petchili bonds.
2. The district court did not clearly err in concluding that Defendant failed to
prove by a preponderance of the evidence that he qualified for protection under the
final clause of 15 U.S.C. § 78ff(a). See United States v. Cantrell, 433 F.3d 1269,
1279 (9th Cir. 2006) (stating standard of review). A person may not be imprisoned
under 15 U.S.C. § 78ff(a) “for the violation of any rule or regulation” if the
defendant proves that “he had no knowledge of such rule or regulation.”
Defendant asserted in an affidavit that, before his indictment and arrest, he “had no
knowledge of any rule or regulation prescribed by the Securities and Exchange
Commission.” But Defendant was convicted of violating the general prohibition
on securities fraud, and his vague statement is insufficient to show that he did not
know of the substance of that general prohibition. See United States v. Reyes, 577
F.3d 1069, 1081 (9th Cir. 2009) (“Other circuits have also observed that proof of
no knowledge of the rule ‘can only mean proof of an ignorance of the substance of
the rule, proof that the defendant did not know that [his or her] conduct was
contrary to law.’” (brackets in original) (emphasis added) (citation omitted)); see
also United States v. Laurienti, 731 F.3d 967, 972 (9th Cir. 2013) (denying the
defendant’s request for an evidentiary hearing to determine lack of knowledge
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under 15 U.S.C. § 78ff(a) because “he had ample opportunity to present
information showing he lacked knowledge of the substance of Rule 10b-5”
(emphasis added)). There also was other evidence in the record—such as emails
he sent referencing securities laws—that Defendant did know of securities rules
and regulations. Accordingly, the district court did not clearly err.
AFFIRMED.
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