PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
v.
CHARLES E. JOHNSON, JR.,
Defendant-Appellee,
No. 06-5181
and
CHRISTOPHER J. BENYO; JOSEPH
MICHAEL KENNEDY; JOHN P. TULI;
KENT D. WAKEFORD,
Defendants.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Walter D. Kelley, Jr., District Judge.
(1:05-cr-00012-WDK)
Argued: November 2, 2007
Decided: December 14, 2007
Before WILLIAMS, Chief Judge, and WILKINSON
and MICHAEL, Circuit Judges.
Reversed by published opinion. Judge Wilkinson wrote the opinion,
in which Chief Judge Williams and Judge Michael joined.
COUNSEL
ARGUED: Charles Francis Connolly, Assistant United States Attor-
ney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria,
2 UNITED STATES v. JOHNSON
Virginia, for Appellant. Patrick J. Hanley, Covington, Kentucky, for
Appellee. ON BRIEF: Chuck Rosenberg, United States Attorney,
Matthew J. Donnelly, Special Assistant United States Attorney,
Appellate Staff, Civil Division, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C., for Appellant.
OPINION
WILKINSON, Circuit Judge:
Defendant Charles "Junior" Johnson was charged in the Eastern
District of Virginia with, inter alia, causing the filing of a false and
fraudulent document with the Securities and Exchange Commission.
After a pre-trial hearing, the district court granted Johnson’s motion
to dismiss the count for lack of venue. The government now appeals
that decision.
In support of the district court’s holding, the defendant makes two
claims. First, he argues that the electronic transmission of a fraudulent
document to a computer server in Alexandria, Virginia, does not con-
stitute a venue-sustaining act. Second, he contends that because he
could not have reasonably foreseen that the form would be transmit-
ted to the Eastern District of Virginia, venue cannot lie in that district.
Based on the plain language and underlying purposes of the gov-
erning venue provision, 15 U.S.C. § 78aa, we reject both of these
claims and find that the Eastern District of Virginia was an appropri-
ate venue for this securities fraud offense. We thus reverse the district
court’s dismissal of the aforementioned count for lack of venue.
I.
This case arises from the prosecution of a corporate executive for
securities fraud and other related offenses. On January 10, 2005, a
federal grand jury in the Eastern District of Virginia returned a thirty-
one count indictment against Johnson and five co-defendants.1 One of
1
Because this appeal relates to only one of the charges brought against
Johnson, we focus solely on the facts pertinent to his case and the issue
presently before us.
UNITED STATES v. JOHNSON 3
the counts, count 3, charged Johnson with causing the filing of false
and fraudulent documents with the Securities and Exchange Commis-
sion ("SEC") in violation of 15 U.S.C. § 78j(b), 15 U.S.C. § 78ff, 17
C.F.R. § 240.10b-5, and 18 U.S.C. § 2. Specifically, it alleged that
Johnson caused his company to submit an SEC Form 10-Q that con-
tained fraudulently inflated revenue figures.
Johnson was the Chief Executive Officer and Chairman of the
Board of Directors of PurchasePro.com, Inc. ("PurchasePro"), a
publicly-owned company based in Las Vegas, Nevada, that sold inter-
net procurement software designed to facilitate "business-to-business"
transactions online. In March 2000, PurchasePro established a com-
mercial partnership with America OnLine, Inc., to develop a business-
to-business marketplace. According to the indictment, Johnson took
personal control of PurchasePro’s relationship with AOL and subse-
quently worked to inflate PurchasePro’s reported revenue figures. The
government alleges that this was accomplished through various
devices, including secret and undisclosed side deals, the use of back-
dated contracts, and false entries in the company’s books and records.
Under federal rules and regulations, PurchasePro was required to
file a quarterly revenue report, known as a Form 10-Q, with the SEC.
On May 29, 2001, PurchasePro electronically submitted a Form 10-Q,
containing its financial results for the first quarter of 2001, to the SEC
through the Electronic Data Gathering, Analysis, and Retrieval sys-
tem ("EDGAR"). According to the indictment, the filed documents
contained false, misleading, and inflated revenue numbers. Notably,
EDGAR’s Management Office of Information and Technology and
the system’s computer servers, which store the transmitted files and
make them publicly available through the EDGAR website, are
located in Alexandria, Virginia, in the Eastern District of Virginia.
The transmission to the EDGAR servers represents Johnson’s lone
contact with the Eastern District for the purposes of this offense.
After he was indicted in the Eastern District for causing the fraudu-
lent submission, Johnson moved to have the count dismissed for lack
of venue. Specifically, he argued that the Eastern District of Virginia
was an improper venue under 15 U.S.C. § 78aa, the applicable venue
provision for securities fraud offenses. On May 25, 2006, the district
court held a hearing to consider the motion, and on October 16, 2006,
4 UNITED STATES v. JOHNSON
it issued an order granting the motion to dismiss count 3 for lack of
venue.
Two days later, Johnson’s trial on the non-dismissed counts began.
The district court later declared a mistrial, and on November 14,
2006, the government filed a timely notice of appeal of the dismissal
of count 3. This court has jurisdiction pursuant to 18 U.S.C. § 3731.
II.
We review briefly the relevant venue standards. The Constitution
has two provisions governing venue for criminal cases. Article III
provides that criminal trials "shall be held in the State where the said
Crimes shall have been committed." U.S. Const. art. III, § 2, cl. 3.
Similarly, the Sixth Amendment requires that "[i]n all criminal prose-
cutions, the accused shall enjoy the right to a speedy and public trial,
by an impartial jury of the State and district wherein the crime shall
have been committed." U.S. Const. amend. VI. These constitutional
safeguards are meant to "protect[ ] the defendant from bias, disadvan-
tage, and inconvenience in the adjudication of the charges against
him." United States v. Ebersole, 411 F.3d 517, 524 (4th Cir. 2005);
see also United States v. Smith, 452 F.3d 323, 334 (4th Cir. 2006).
In accordance with these constitutional principles, Congress may,
if it so desires, prescribe specific venue requirements for a particular
crime. If Congress adopts such a statute, "that provision must be hon-
ored (assuming, of course, that it satisfies the constitutional minima)."
United States v. Salinas, 373 F.3d 161, 164 (1st Cir. 2004). If Con-
gress does not supply a specific venue provision, then venue is to "be
determined from the nature of the crime alleged and the location of
the act or acts constituting it." Ebersole, 411 F.3d at 524 (quoting
United States v. Cabrales, 524 U.S. 1, 6-7 (1998)). It is well-accepted
that there may be "more than one appropriate venue, or even a venue
in which the defendant has never set foot," so long as it meets the rel-
evant constitutional and statutory requirements. Ebersole, 411 F.3d at
524 (quoting United States v. Bowens, 224 F.3d 302, 309 (4th Cir.
2000)). The government bears the burden of proving venue by a pre-
ponderance of the evidence. See Ebersole, 411 F.3d at 524.
For securities offenses, Congress has provided a specific venue
provision: "Any criminal proceeding may be brought in the district
UNITED STATES v. JOHNSON 5
wherein any act or transaction constituting the violation occurred." 15
U.S.C. § 78aa (2000). It is undisputed that this provision applies to
count 3 and thus governs the issue at hand. The controversy in this
case centers on whether the facts alleged in the indictment satisfy the
requirements of this specific venue provision.
III.
A.
Johnson first argues that venue cannot lie in the Eastern District of
Virginia because the electronic transmission of the Form 10-Q to the
EDGAR servers in Alexandria, Virginia, did not constitute a material
part of the alleged offense. See In re AES Corp. Sec. Litig., 240 F.
Supp. 2d 557, 559 (E.D. Va. 2003) (holding that a "venue-sustaining
act [under § 78aa] need not constitute the core of the alleged viola-
tion, nor even be illegal, so long as it represents more than an immate-
rial part of the alleged violation[ ]") (quoting S-G Sec., Inc. v. Fuqua
Inv. Co., 466 F. Supp. 1114, 1121 (D. Mass. 1978)); see also First
Fed. Sav. & Loan Assoc. of Pittsburgh v. Oppenheim, Appel, Dixon
& Co., 634 F. Supp. 1341, 1350 (S.D.N.Y. 1986) (finding that "any
non-trivial act in the forum district which helps to accomplish a secur-
ities law violation is sufficient to establish venue" under § 78aa).
The "essence" of the charged crime, Johnson asserts, is filing a
fraudulent form with the SEC in Washington, D.C., not its servers in
Alexandria. Moreover, the fact the SEC channels the Form 10-Q to
its EDGAR Office "for its own administrative ministerial purposes"
is "of no substantial consequence" and cannot "constitute a basis for
venue." Brief of Appellee at 11-12 (citing United States v. Bez-
malinovic, 962 F. Supp. 435 (S.D.N.Y. 1997) (holding that venue for
a bank fraud offense was inappropriate in a district where the only
contacts were a bank’s "ministerial actions")). Thus, while Johnson
concedes venue may lie in the District of Columbia, he argues that it
cannot lie in the Eastern District of Virginia.
We cannot accept Johnson’s contention. We therefore hold that
causing the transmission of the Form 10-Q to the Eastern District of
Virginia will suffice to sustain venue in that district. The notion that
venue in securities prosecutions must be limited to where the "es-
6 UNITED STATES v. JOHNSON
sence" of the offense exists finds no basis in the text of § 78aa. To
the contrary, this provision, whose language is "manifestly broad,"
see AES Corp., 240 F. Supp. 2d at 559, simply requires that "any act
or transaction constituting the violation" have taken place in the perti-
nent district, 15 U.S.C. § 78aa (2000) (emphasis added). As a result,
the "venue-sustaining act need not constitute the core of the alleged
violation," but merely one that is material to the charged offense. AES
Corp., 240 F. Supp. 2d at 559.
Under that standard, causing the transmission of a false Form 10-
Q to the Eastern District of Virginia satisfies the requirements set
forth in § 78aa. The violation with which Johnson is charged is caus-
ing the filing of fraudulent documents with the SEC. It is undisputed
that the documents at issue were electronically transmitted to the
Eastern District of Virginia and filed with the SEC through EDGAR.
Moreover, this process was part of the SEC’s normal course of busi-
ness, see Ebersole, 411 F.3d at 525-27, 530-33, as all such documents
are filed, stored, and disseminated to the public through the EDGAR
website in Alexandria, Virginia. Because a material act that consti-
tutes the violation occurred in the Eastern District of Virginia, namely
the transmission of a fraudulent Form 10-Q into the district, the East-
ern District is a proper venue under § 78aa.
Other courts have also found that causing the transmission of
fraudulent information into a district is enough to establish venue in
that district. For example, in AES Corp., the court held that "[v]enue
will be sustained in a securities case where a defendant causes false
or misleading information to be transmitted into a judicial district,
even if the defendant never has been physically present in that dis-
trict." 240 F. Supp. 2d at 559 (quoting John Nuveen & Co. v. New
York City Hous. Dev. Corp., 1986 WL 5780 (N.D. Ill. May 9, 1986));
see also AES Corp., 240 F. Supp. 2d at 559 n.5 (collecting cases with
similar holdings). Although AES Corp. involved a civil action, the
court was interpreting the same language of § 78aa at issue here, as
this particular provision applies to both civil and criminal proceed-
ings. See 15 U.S.C. § 78aa. Likewise, in United States v. Ebersole,
411 F.3d 517 (4th Cir. 2005), this court, considering a different sub-
stantive offense (wire fraud) but a similar venue provision (the gen-
eral "continuing offense" provision of 18 U.S.C. § 3237(a)),2 held that
2
18 U.S.C. § 3237(a) states that: "Except as otherwise expressly pro-
vided by enactment of Congress, any offense against the United States
UNITED STATES v. JOHNSON 7
venue was appropriate in any district where the defendant "caused
any payment-related wire communication to be transmitted." Eber-
sole, 411 F.3d at 527.
Johnson counters with the decision in United States v. Ferguson,
432 F. Supp. 2d 559 (E.D. Va. 2006). In Ferguson, the court consid-
ered a motion to transfer venue in a criminal securities fraud case.
The defendants, like Johnson, were charged in the Eastern District of
Virginia with, inter alia, causing the filing of fraudulent documents
with the SEC after transmitting false financial data through EDGAR.
These transmissions represented the defendants’ principal contact
with the Eastern District. In granting the motion to transfer pursuant
to Federal Rule of Criminal Procedure 21(b), the court noted that the
SEC’s "decision to locate EDGAR, the electronic filing system and
to host the SEC website on a computer server in Alexandria, Virginia
will not in and of itself transform the Eastern District of Virginia into
the exclusive jurisdiction for criminal securities fraud cases." Id. at
569. This, Johnson urges, counsels a finding that the Eastern District
lacks venue in the present case.
We find Johnson’s reliance on Ferguson to be misplaced. In that
case, the court was determining whether to transfer venue, not
whether venue was permissible in the first instance. Although the
defendants purportedly caused the electronic transmission of a false
document into the Eastern District of Virginia, the court observed,
and the government conceded, that "the majority of the alleged crimi-
nal activity took place in Connecticut and New York." Ferguson, 432
F. Supp. 2d at 566. After weighing the evidence and degree of incon-
venience, the court granted the motion to transfer venue to the District
begun in one district and completed in another, or committed in more
than one district, may be inquired of and prosecuted in any district in
which such offense was begun, continued, or completed.
Any offense involving the use of the mails, transportation in interstate
or foreign commerce, or the importation of an object or person into the
United States is a continuing offense and, except as otherwise expressly
provided by enactment of Congress, may be inquired of and prosecuted
in any district from, through, or into which such commerce, mail matter,
or imported object or person moves."
8 UNITED STATES v. JOHNSON
of Connecticut in order to avoid "a substantial balance of inconve-
nience to the defendants." Id. at 562 (internal quotations omitted).
In so concluding, the court noted that the location of EDGAR and
its servers could "not in and of itself transform the Eastern District of
Virginia into the exclusive jurisdiction for criminal securities fraud
cases. The hosting of an electronic impulse, without more, will not
result in a preferred venue in this district." Id. at 569 (emphasis
added). Johnson mistakenly understands these remarks to mean that,
based on electronic transmissions to Alexandria, the Eastern District
could not even serve as a "potential" jurisdiction or "permissible"
venue. This misreads the district court’s decision and its use of the
terms "exclusive" and "preferred." In fact, when determining whether
to transfer venue to the District of Connecticut, the district court in
Ferguson implicitly assumed that venue was permissible in the East-
ern District — otherwise, it would not have needed to weigh the rela-
tive inconveniences under Rule 21(b) if one district was not a
permissible venue to begin with.
B.
In the alternative, Johnson claims that venue cannot lie in the East-
ern District of Virginia because he could not have reasonably foreseen
that the Form 10-Q would be transmitted to that district rather than
Washington, D.C. Even assuming that he could not have reasonably
foreseen the document’s destination, we reject Johnson’s contention
that this precludes the Eastern District from serving as an appropriate
venue.
Johnson does not dispute that he caused the Form 10-Q to be trans-
mitted to the EDGAR servers in the Eastern District of Virginia.
Rather, Johnson argues that venue cannot lie there because he did not
know and could not have reasonably foreseen that the form would be
transmitted to Alexandria rather than Washington.
Johnson points to several reasons why he believed the form would
be sent to Washington. First, the SEC’s principal office is located
there. Second, the official SEC address listed at the top of the Form
10-Q is Washington, D.C. Third, a federal regulation governing the
filing of SEC documents states that "[a]ll papers required to be filed
UNITED STATES v. JOHNSON 9
with the Commission pursuant to the [Securities Exchange] Act or the
rules and regulations thereunder shall be filed at the principal office
in Washington, DC." 17 C.F.R. § 240.0-3(a). Thus, Johnson contends
that it was reasonable for him to believe that the Form 10-Q would
be filed in Washington, not Alexandria.
In Ebersole, a wire fraud case, we expressly reserved the question
of whether there was a foreseeability requirement for establishing
venue. 411 F.3d at 527-28 (refusing to "reach[ ] the merits of [the
defendant’s] foreseeability objection" because it had been waived).
Other circuits that have addressed the issue in the context of wire
fraud and related offenses are split on the matter. Compare United
States v. Angotti, 105 F.3d 539, 543 (9th Cir. 1997) (holding that "[i]t
is irrelevant whether [the defendant] subjectively knew the identity or
location of [a bank] official" for the purposes of venue in a false state-
ment prosecution), and United States v. Goldberg, 830 F.2d 459, 465
(3d Cir. 1987) (indicating that it was unnecessary in a wire fraud
prosecution to determine whether the defendant could have reason-
ably foreseen that a wire transfer would pass through the relevant dis-
trict), with United States v. Svoboda, 347 F.3d 471, 483 (2d Cir. 2003)
(holding that "venue is proper in a district where (1) the defendant
intentionally or knowingly causes an act in furtherance of the charged
offense to occur in the district of venue or (2) it is foreseeable that
such an act would occur in the district of venue").
In the context of securities offenses, we need not speculate as to
whether there is, or should be, a mens rea requirement when it comes
to venue. This is because the plain text of § 78aa does not permit us
to hold that such a foreseeability requirement exists. The statute states
simply that "[a]ny criminal proceeding may be brought in the district
wherein any act or transaction constituting the violation occurred." 15
U.S.C. § 78aa. Accordingly, we decline the invitation to judicially
engraft a mens rea requirement onto a venue provision that clearly
does not have one.
If Congress had wanted to limit venue to those districts where the
defendant could have reasonably foreseen his criminal conduct taking
place, it could have easily done so. Instead, it enacted a broad venue
provision, one that lacked any reference to a defendant’s mental state
or predictive calculus, and focused solely on whether "any act or
10 UNITED STATES v. JOHNSON
transaction constituting the violation" took place in the district. 15
U.S.C. § 78aa.
We are especially reluctant to imply a foreseeability requirement in
light of the fact that it "is well settled that mens rea requirements typi-
cally do not extend to the jurisdictional elements of a crime." United
States v. Cooper, 482 F.3d 658, 664 (4th Cir. 2007). This is because
venue is similar in nature to a jurisdictional element, see United States
v. Perez, 280 F.3d 318, 330 (3d Cir. 2002) (noting that venue is "an
element more akin to jurisdiction than to the substantive elements of
the crime") (quoting United States v. Massa, 686 F.2d 526, 530 (7th
Cir. 1982)), and typically lacks any sort of explicit knowledge or fore-
seeability prerequisite, see, e.g., Fed. R. Crim. P. 18 ("Unless a statute
or these rules permit otherwise, the government must prosecute an
offense in a district where the offense was committed.").
C.
If we were to adopt either of Johnson’s proposed interpretations of
§ 78aa, we would be eschewing not only the provision’s plain lan-
guage but also one of its plain objectives, namely avoiding having
related counts adjudicated in piecemeal fashion across several venues.
That, however, is not the end of the matter. To the degree Johnson
believes the Eastern District of Virginia poses a burdensome or incon-
venient forum, he may seek a transfer of venue, though not an out-
right dismissal of the count. See Fed. R. Crim. P. 21.
As noted earlier, the wording of § 78aa is unmistakably broad. One
reason for such a broad venue provision is to minimize unnecessary
inefficiencies in the prosecution of a single case where multiple
counts address related underlying conduct. In this case, an improper
dismissal of count 3 could lead to the sort of inefficiencies and multi-
plicity of efforts that § 78aa, specifically, and our criminal justice sys-
tem, generally, seek to avoid. Cf. Fed. R. Crim. P. 8, 14 (governing
the joinder of offenses and defendants in a criminal prosecution).
In the long-run, Johnson’s restrictive approach to venue would be
problematic for both defendant and prosecutor alike, as well as other
interested third parties. If the government were required to bring
related counts in separate venues, both prosecution and defense would
UNITED STATES v. JOHNSON 11
be tasked with preparing for multiple trials and exerting time, energy,
and resources in more than one district. This could also produce nota-
ble inconveniences for witnesses who are forced to testify in more
than one case and saddle the courts with extra litigation when there
could have been a single prosecution. Therefore, unless otherwise
directed by Congress or required by the Constitution, we should not
undermine the broad wording of § 78aa and create inefficiencies
where they need not and should not be.
Johnson predicts, however, that terrible results will ensue if we
hold that venue under § 78aa can be established solely on the basis
of an electronic transmission to the EDGAR servers in Alexandria.
Specifically, Johnson warns that every public company that files a
document through EDGAR will be subject to prosecution in the East-
ern District, no matter how tenuous its links to the district otherwise
are.
There are two responses to this argument. First, by finding the
Eastern District to be an appropriate venue, we in no way impose a
rule that all securities fraud prosecutions based on the filing of fraud-
ulent documents through EDGAR must take place where the EDGAR
server is located. Rather, we simply hold that such a district is one
permissible venue. As always, the government may, in its discretion,
prosecute in another available venue. See United States v. Smith, 452
F.3d 323, 336 (4th Cir. 2006) ("[O]ur venue rules make clear that
where venue lies, the choice among acceptable fora is one for the
prosecution.").
Second, to the extent Johnson believes the Eastern District is an
inconvenient or prejudicial venue, Congress has already addressed
these concerns through the safeguard of Federal Rule of Criminal Pro-
cedure 21. In particular, Rule 21(b) states that "[u]pon the defendant’s
motion, the court may transfer the proceeding, or one or more counts,
against that defendant to another district for the convenience of the
parties and witnesses and in the interest of justice." See also United
States v. Heaps, 39 F.3d 479, 482-83 (4th Cir. 1994) (citing Platt v.
Minnesota Mining & Mfg. Co., 376 U.S. 240, 243-44 (1964)) (listing
ten factors that a court may consider when determining whether to
transfer venue under Rule 21); Ferguson, 432 F. Supp. 2d at 562
12 UNITED STATES v. JOHNSON
(applying the factors and granting the motion to transfer in a criminal
securities fraud case).
Therefore, if an appropriate venue is otherwise burdensome or
inconvenient, a proper remedy is afforded the defendant under Fed-
eral Rule of Criminal Procedure 21. Congress obviously intended 15
U.S.C. § 78aa and Rule 21 to operate in tandem, and we decline to
deprive either provision of its manifest effect.
IV.
Based on the text of 15 U.S.C. § 78aa and the facts alleged in the
indictment, we hold that the Eastern District of Virginia is a permissi-
ble venue for count 3 of the indictment against Johnson. Thus, the
judgment of the district court dismissing that count for lack of venue
is
REVERSED.