United States v. Yeager

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
March 17, 2008
No. 06-20321
Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff - Appellee
v.

SCOTT YEAGER
Defendant - Appellant
----------------------------------------------------------------------------------------------------

Consolidated with
No. 06-20593

UNITED STATES OF AMERICA
Plaintiff - Appellee
v.

REX SHELBY
Defendant - Appellant
----------------------------------------------------------------------------------------------------

Consolidated with
No. 06-20691

UNITED STATES OF AMERICA
Plaintiff - Appellee
v.

JOSEPH HIRKO
Defendant - Appellant
 No. 06-20321

Appeals from the United States District Court
for the Southern District of Texas

Before HIGGINBOTHAM, GARZA, and BENAVIDES, Circuit Judges.
FORTUNATO P. BENAVIDES, Circuit Judge:
This is a consolidated interlocutory appeal of an order denying a motion
to dismiss a government indictment under the doctrine of collateral estoppel.1
In 2005, Defendants F. Scott Yeager, Joseph Hirko, and Rex Shelby
(“Defendants”) were tried on various counts for their actions while employed at
Enron Broadband Services (“EBS”). The jury acquitted Defendants on some of
these counts but hung on others, after which the United States (“Government”)
again indicted Defendants on some of the mistried counts. Contending that the
acquitted counts collaterally estopped the Government from pursuing the
mistried counts, Defendants moved to dismiss the indictment. The district court
denied the motion. For the reasons below, we AFFIRM.
I.
This case arises from the collapse of Enron Corporation (“Enron”) and its
subsidiaries. Defendants were senior executives at EBS, Enron’s broadband and
telecommunications unit. In November 2004, Defendants were indicted on
various counts of: (1) conspiracy to commit securities and wire fraud, (2)
securities fraud, (3) wire fraud, (4) insider trading, and (5) money laundering.2

1
We have jurisdiction over this case under 28 U.S.C. § 1291. Abney v. United States,
431 U.S. 651, 659 (1977) (“Although it is true that a pretrial order denying a motion to dismiss
an indictment on double jeopardy grounds lacks the finality traditionally considered
indispensable to appellate review, we conclude that such orders fall within the small class of
cases that Cohen [sic] placed beyond the confines of the final-judgment rule.”) (internal
quotation marks omitted).
2
Defendants Yeager, Hirko, and Shelby were all charged with one count of conspiracy
to commit securities and wire fraud, 18 U.S.C. § 371, one count of securities fraud, 15 U.S.C.
§§ 78j(b) and 78ff, and four counts of wire fraud, 18 U.S.C. § 1343. In addition, Yeager was

2
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In 1998, Enron began developing an “intelligent” telecommunications
network and associated software. The indictment alleged that Defendants
purposely sought to deceive the public by making false statements about EBS’s
progress and financial condition. According to the indictment, Defendants made
false claims in various press releases beginning in 1999 and at Enron’s annual
analyst conference in January 2000. The indictment also charged Defendants
with selling millions of dollars of Enron stock while making these false
statements.
In July 2005, the jury acquitted Defendants on some counts but could not
reach a verdict on others. Yeager was acquitted of the conspiracy, wire fraud,
and security fraud counts. Hirko was acquitted of some of the insider trading
and money laundering counts; and Shelby was acquitted of some of the insider
trading counts. Because the jury hung on the remaining counts, the district
court declared a mistrial on those counts. The district court also granted
Shelby’s Rule 29 motion for judgment of acquittal on the money laundering
counts and the wire fraud counts.3
In November 2005, the Government obtained new indictments against
Defendants. These post-trial indictments recharged Shelby and Hirko with all
of the mistried counts and recharged Yeager with some of the mistried insider
trading and money laundering counts. The indictments recharged Yeager with
five counts of insider trading and eight counts of money laundering; Hirko with
one count of conspiracy, one count of securities fraud, and five counts of insider
trading; and Shelby with one conspiracy count, one securities fraud count, and

charged with 20 counts of insider trading and 99 counts of money laundering. Shelby was
charged with eight counts of insider trading and six counts of money laundering. Hirko was
charged with 7 counts of insider trading and 14 counts of money laundering.
3
Rule 29 of the Federal Rules of Criminal Procedure states in relevant part: “If the jury
has failed to return a verdict, the court may enter a judgment of acquittal.” Fed. R. Crim. P.
29(c)(2).

3
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four counts of insider trading. Shelby and Hirko moved to dismiss all of the
recharged counts, except for the conspiracy counts against Hirko and Shelby and
the 2001 insider trading counts against Hirko. Yeager moved to dismiss all of
the mistried insider trading and money laundering counts.4 Defendants contend
that their previous acquittals collaterally estopped the Government from
pursuing these charges. The district court denied their motion.
II.
Whether collateral estoppel bars a subsequent criminal prosecution is a
question of law that we review de novo. United States v. Brackett, 113 F.3d
1396, 1398 (5th Cir. 1997).
III.
The Fifth Amendment’s guarantee against double jeopardy incorporates
the collateral estoppel doctrine. Ashe v. Swenson, 397 U.S. 436, 443-44
(1970). Collateral estoppel “means simply that when an issue of ultimate fact
has once been determined by a valid and final judgment, that issue cannot
again be litigated between the same parties in any future lawsuit.” Id. at
443. As traditionally understood, the Double Jeopardy Clause precludes
multiple prosecutions and multiple punishments for the same offense. See
United States v. Odutayo, 406 F.3d 386, 392 (5th Cir. 2005). Ashe, however,
limits successive prosecution of defendants, not for the same offenses but for

4
In addition to the recharged counts, Yeager moved to dismiss the mistried counts in
the indictment the Government secured before the trial (“the old indictment”) but not in the
November 2005 indictment (‘the new indictment”). The Government maintains that it can
prosecute Yeager under both the new and old indictments and, therefore, can retry him on all
of the insider trading and money laundering counts. Therefore, Yeager moved to dismiss both
indictments, contending that collateral estoppel precludes the Government from retrying him
on any of the mistried counts. Because the Government does not dispute Yeager’s contention
that the collateral estoppel analysis is the same for all of the mistried counts, we do not
differentiate between the two indictments here.

4
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different offenses.5 After an acquittal, Ashe bars the government from
prosecuting defendants on a different charge “if one of the facts necessarily
determined in the former trial is an essential element of the subsequent
prosecution.” Brackett, 113 F.3d at 1398. Defendants asserting collateral
estoppel carry the burden to make this showing. Dowling v. United States,
493 U.S. 342, 350 (1990) (“The Court of Appeals have unanimously placed the
burden on the defendant to demonstrate that the issue whose relitigation he
seeks to foreclose was actually decided in the first proceeding.”).
To determine whether collateral estoppel bars a subsequent criminal
prosecution, courts must conduct a two-step analysis. Bolden v. Warden, W.
Tenn. High Sec. Facility, 194 F.3d 579, 584 (5th Cir. 1999). “Initially, we
must decide which facts necessarily were decided in the first proceeding.
Then we must consider whether the facts necessarily decided in the first trial
constitute essential elements of the offense in the second trial.” Id. Here,
Defendants assert collateral estoppel bars the Government from pursuing all
of the current charges against them, except for the conspiracy counts against

5
In Ashe, masked gunmen robbed a group of men playing poker at a residence. Ashe,
397 U.S. at 437. The government alleged that the defendant was one of the gunmen and
charged the defendant with the armed robbery of one of the players. Id. at 438. Neither party
disputed the facts that an armed robbery had occurred and that the gunmen had taken the
victim’s property. Id. The only dispute was whether the defendant was one of the robbers.
See id. After the jury acquitted the defendant for lack of sufficient evidence, the government
prosecuted him for robbing one of the other poker players. Id. at 439. According to the Court,
“the jury by its verdict found that he had not [been one of the robbers],” and, under the
doctrine of collateral estoppel, the second prosecution was impermissible. Id. at 445.

5
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Hirko and Shelby and the 2001 insider trading counts against Hirko.6 We
engage in this two-step analysis as to each defendant’s claims below.7
A. Rex Shelby
Shelby was acquitted of the four insider trading counts related to his
sale of Enron stock in the summer of 2000 (“Summer 2000 Insider Trading
Counts”). The jury hung on the conspiracy to commit securities and wire
fraud count, the securities fraud count, the four wire fraud counts, the four
insider trading counts related to trades he conducted between January and
March 2000 (“Early 2000 Insider Trading Counts”), and all the money
laundering counts. After the jury rendered its verdict, the district court
granted Shelby’s Rule 29 motion for judgment of acquittal on the money
laundering counts and the wire fraud counts. Shelby now contends that,
under collateral estoppel, these acquittals preclude the Government from
retrying him on the securities fraud count and the Early 2000 Insider Trading
Counts. This argument is unpersuasive.8
1. Jury Acquittals

6
For convenience purposes, we will refer to all of the counts that Defendants seek to
dismiss as the “mistried counts” from this point onward. We recognize that the jury also hung
on the conspiracy counts against Defendants Hirko and Shelby and the 2001 insider trading
counts against Hirko. But because Defendants Hirko and Shelby do not seek their dismissal,
these counts are not at issue here and are, therefore, omitted from our discussion.
7
While Defendants all argue that collateral estoppel bars a retrial, the specifics of each
defendant’s argument are different. In this case, each defendant was acquitted of different
counts and now seeks to dismiss different counts. Therefore, we must analyze each defendant’s
collateral estoppel argument separately.
8
Shelby does not contend that collateral estoppel applies to the conspiracy to commit
securities and wire fraud count. Shelby argues, however, that, if we decided that collateral
estoppel precludes the Government from retrying him on the securities fraud and the Early
2000 Insider Trading Counts, then collateral estoppel also would bar the Government from
introducing some evidence in a retrial of the conspiracy count. Because we find that collateral
estoppel does not bar a retrial of any of the mistried counts, we do not address this issue here.

6
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Based on his review of the record, Shelby claims that the jury
necessarily came to one of three potential conclusions when it acquitted him
of the Summer 2000 Insider Trading Counts: (1) he did not withhold material
information from the public, (2) there was no scheme to defraud, or (3) he
lacked the intent to defraud. Because any one of these findings would bar the
Government from prosecuting him on the securities fraud count and the
Early 2000 Insider Trading Counts, Shelby seeks dismissal of these counts.
After an extensive examination of the record, we conclude that the jury
could have acquitted Shelby of the Summer 2000 Insider Trading Counts on
another basis: it determined that he did not “use” undisclosed, material
information when he made the sales. Shelby testified that he sold shares of
his Enron stock in 2000 because he was uncomfortable with being in the stock
market and that he relied on his friend David Berberian’s advice as to when
to sell. Moreover, in the summer of 2000, Shelby immediately exercised
options that vested and promptly sold the shares that he received. Because
Shelby sold those shares as soon as possible, the jury could have concluded
that Shelby conducted the summer 2000 trades due to his discomfort with the
stock market.9
Shelby argues that the jury could not have acquitted him on this basis
because the jury instructions did not explain the relevance of “using” insider
information to insider trading. According to Shelby, the elements of insider
trading do not include the word “uses,” and the district court’s explanation of
the word “uses” does not immediately follow its instruction on the elements of
insider trading.

9
Shelby conducted four trades in June and July of 2000. He sold shares of Enron stock
on June 26, June 27, June 29, and July 19. The sale on July 19 involved options different from
those involved in the June sales, which vested in late June. It is not clear from the record,
however, when the options Shelby exercised in July vested. But because the July sale was so
close in time to the June sales, we find that the jury could have reasonably decided that all of
the summer 2000 trades were motivated by Shelby’s distrust of the stock market.

7
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We reject Shelby’s selective reading of the jury instructions. In the jury
instructions related to insider trading, the district court stated that “the law
forbids [a person possessing insider information] from using that insider
information in buying or selling the securities in question.” The district court
further explained that “[a] person ‘uses’ material, non-public information in
connection with a stock purchase or sale if that information is a factor in his
decision to purchase the stock.” Therefore, these instructions were clear that
the jury had to acquit Shelby of insider trading if it did not find that Shelby
both: (1) had insider information and (2) was motivated by this information
when he traded.
Because we find that the jury could have acquitted Shelby of the
Summer 2000 Insider Trading Counts by concluding that these trades were
not motivated by insider information, collateral estoppel does not preclude a
retrial of the Early 2000 Insider Trading Counts and the securities fraud
count. Shelby is correct that collateral estoppel would bar the Government
from retrying Shelby on the Early 2000 Insider Trading Counts if the jury
determined that he also did not use insider information when he conducted
these trades. The jury, however, did not necessarily make this finding. In
acquitting Shelby of the later counts, the jury could have differentiated
between the two different sets of trades. The jury could have found that
Shelby did not use insider information when he conducted the trades that
underlie the Summer 2000 Insider Trading Counts but did use insider
information when he conducted the trades that underlie the Early 2000
Insider Trading Counts.
The evidence at trial supports this distinction. In the summer of 2000,
Shelby traded after exercising options as soon as they vested. But from
January through March of 2000, Shelby traded after exercising options that
vested in June 1999. From this delay, the jury could have rationally

8
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concluded that Shelby purposely waited for the stock price to go up before
exercising his 1999 options and that Shelby knew the price would go up
because of his knowledge of insider information.10 In contrast, Shelby
exercised his 2000 options immediately after they vested. Thus, because the
jury could have made this timing distinction, it did not necessarily make a
factual determination that would bar a subsequent prosecution on the Early
2000 Insider Trading Counts.11
Similarly, the four insider trading acquittals do not estop the
Government from retrying Shelby for securities fraud. As discussed above,
the jury could have acquitted Shelby of the four insider trading counts
because it concluded that he did not use insider information in making the
underlying trades. But this determination is not dispositive as to whether
Shelby engaged in securities fraud. “Using” insider information in making
trades is not an element of securities fraud.12 Therefore, because the jury

10
Shelby alleges that he did not exercise his 1999 options immediately after they vested
because the market price of Enron stock at the time was lower than the option strike price.
Moreover, Shelby contends that he exercised these options in 2000 when “they now had value.”
But evidence indicates that Enron stock “had value” long before the time he conducted his
trades. The price of Enron stock began to rise precipitously in late November 1999. Therefore,
Shelby’s argument is unpersuasive because Shelby could have exercised those options in late
1999 instead of waiting until the stock price was well above the strike price.
11
Shelby alleges that the jury could not have made a timing distinction when it
acquitted him of the Summer 2000 Insider Trading Counts because neither the Government
nor Shelby argued this distinction at trial. Moreover, Shelby points out that he had the same
defense against all the insider trading counts: he traded because he was uncomfortable in the
stock market, and he followed the advice of his friend, Berberian. From the evidence presented
at trial, however, we find that the timing distinction is obvious and one that the jury could
have made on its own. Therefore, the jury could have accepted Shelby’s defense for one set of
counts and not the other.
12
The district court instructed the jury that it could convict Defendants of securities
fraud if it found that the Government had proven three essential elements beyond a reasonable
doubt:
First: That in connection with the purchase or sale of Enron stock, the
defendant did any one or more of the following:
(1) employed a device, scheme, or artifice to defraud as charged

9
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could have acquitted Shelby by concluding that he did not use insider
information, Shelby has not shown that the jury necessarily made a factual
determination that would bar a retrial of the securities fraud count.
2. Rule 29 Acquittals
We reject Shelby’s contention that his Rule 29 wire fraud acquittals
collaterally estop the Government from retrying him on insider trading or
securities fraud. After the jury rendered its verdict, the district court granted
Shelby’s Rule 29 motion for judgment of acquittal on the money laundering
counts and the wire fraud counts.13 While Rule 29 acquittals may collaterally
estop the government from bringing a subsequent prosecution, see United
States v. Bernhardt, 840 F.2d 1441, 1447-48 (9th Cir. 1988), we find that they
do not preclude a retrial in this case.
As with jury acquittals, Rule 29 acquittals collaterally estop the
government from relitigating only the factual issues that were necessarily
decided to reach the verdict. See id. at 1448. Because courts issue Rule 29
acquittals, collateral estoppel in this scenario applies to the factual
determinations the court, and not the jury, made to acquit. Here, the district
court granted Shelby’s Rule 29 motion for judgment of acquittal on the wire

in the Indictment; or
(2) made any untrue statement of a material fact, or omitted to
state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were
made, not misleading as charged in the Indictment; or
(3) engaged in an act, practice, or course of conduct that operated,
or would operate, as a fraud and deceit on any person as charged
in the Indictment;
Second: That the defendant acted willfully, knowingly, and with the
intent to defraud; and
Third: That the defendant used, or caused to be used, any means or
instrumentality of interstate commerce or of the mails.
13
Shelby does not allege that the Rule 29 money laundering acquittals have any
collateral estoppel effect.

10
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fraud counts because it found that there was no evidence that Shelby had any
involvement with the allegedly fraudulent press releases underlying those
counts. According to the district court, the Government could not prove that
Shelby used interstate wire communications facilities to carry out an illegal
scheme without this evidence.14 Whether Shelby used interstate wire
communications, however, is not essential to either insider trading or
securities fraud. Therefore, we find that the Rule 29 wire fraud acquittals do
not bar the Government from retrying the remaining insider trading counts
or the securities fraud count.15
B. Joseph Hirko
Hirko was acquitted of twelve counts of money laundering related to
monetary transactions he conducted in 2000 (“the Money Laundering
Counts”) and two counts of insider trading related to his sale of Enron stock
in February and April 2000. The jury hung on the conspiracy to commit

14
At trial, the district court instructed the jury that it could convict Defendants of wire
fraud only if the Government proved:
First: That the defendant[s] knowingly devised or intended to devise a
scheme to defraud, as described in the indictment;
Second: That the defendant[s] acted with a specified intent to defraud;
Third: That the defendant[s] used or caused another person to use
interstate wire communications facilities for the purpose of carrying out
the scheme; and
Fourth: That the scheme to defraud employed false material
representations.
15
Shelby asserts that the absence of evidence that he participated in the press releases
establishes that he was not part of a scheme to defraud, rather than that he did not use
interstate wire communications facilities. According to Shelby, he stipulated to having used
interstate communications at trial. Therefore, he argues that the district court should have
granted his Rule 29 motion for judgment of acquittal on the wire fraud counts by finding that
he was not involved in a scheme to defraud. Moreover, he contends that we should apply
collateral estoppel using this finding instead of the one the district court actually made.
Shelby’s argument lacks merit. The district court was clear that it granted Shelby’s
Rule 29 motion because it found that he did not use interstate communications. Even
assuming that Shelby is correct that the district court erred in making this finding, Shelby
cites no case law that allows us to apply collateral estoppel based on what the court should
have found instead of what it explicitly claimed to have found.

11
 No. 06-20321

securities and wire fraud count, the securities fraud count, four counts of wire
fraud, and five counts of insider trading. Hirko now contends that the
acquittals on the 2000 Money Laundering Counts collaterally estop the
Government from retrying him on the securities fraud count, the wire fraud
counts, and the two remaining insider trading counts related to his May 2000
trades.16 We find Hirko’s argument unconvincing.
To acquit him on the Money Laundering Counts, Hirko contends, the
jury must have found that he did not engage in insider trading when he sold
shares of Enron stock in May 2000 or commit securities fraud or wire fraud.
A party commits money laundering by “knowingly engag[ing] in a monetary
transaction in criminally derived property of a value greater than $10,000.”
United States v. Freeman, 434 F.3d 369, 377 (5th Cir. 2005). At trial, Hirko
stipulated to having engaged knowingly in monetary transactions involving
more than $10,000. Both parties also acknowledged that the bulk of the
funds involved in the transactions underlying the Money Laundering Counts
came from Hirko’s sale of Enron stock in 2000. Therefore, Hirko argues, the
only issue the jury had to decide to convict him on the Money Laundering
Counts was whether his sale of Enron stock was unlawful, making these
funds “criminally derived.” Because of the way the Government tried the
case, Hirko alleges that the jury could have found that his 2000 sales were
unlawful if it concluded that he committed securities fraud, wire fraud, or
insider trading.
While the Government charged him with having committed various
different types of fraud, Hirko argues that the Government contended at trial
that all of these fraudulent acts were part of a grand scheme to defraud the

16
Because Hirko does not contend that collateral estoppel bars the Government from
retrying him on insider trading related to his 2001 trades, we do not address these counts here.
Therefore, when we refer to “insider trading” as it relates to Hirko, we are referring only to
insider trading related to his 2000 trades.

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investing public. According to Hirko, the Government claimed that
Defendants made material misrepresentations and omissions, thereby
committing securities fraud and wire fraud, to “pump Enron’s stock price” so
that they could then profit from insider trading by selling their shares of
Enron stock at the artificially inflated price. Under the Government’s theory,
all of Hirko’s allegedly fraudulent acts played a role in generating the funds
involved in the Money Laundering Counts, and Hirko contends that the
district court instructed the jury to that effect.17 In the jury instructions for
money laundering, the district court explained that funds were criminally
derived in this case if the jury determined that Hirko transacted in funds
resulting from wire fraud, securities fraud, or insider trading. Therefore,
Hirko contends that the jury could have acquitted him of the Money
Laundering Counts only by finding that he did not commit securities fraud,
wire fraud, or insider trading.
Hirko’s argument falls under its own weight. Under the jury
instructions for money laundering, the Government must prove that the
funds transacted were “derived from a specified unlawful activity,” which the
district court defined as “wire fraud” or “fraud in the sale of securities.”

17
The district court instructed the jury that it could convict Defendants of money
laundering if it found that the Government had proven five essential elements beyond a
reasonable doubt:
First: That the defendant engaged or attempted to engage in a monetary
transaction;
Second: That the monetary transaction involved criminally derived
property of a value greater than $10,000;
Third: That the property was in fact derived from a specified unlawful
activity, that is, wire fraud in violation of Title 18, United States Code,
Section 1343, and fraud in the sale of securities in violation of Title 15,
United States Code, Sections 78j(b) and 78ff and Title 17, Code of
Federal Regulations, Section 240.10b-5;
Fourth: That the defendant acted knowingly, that is, with knowledge
that the transaction involved proceeds of a criminal offense; and
Fifth: That the transaction took place in the United States.

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Because Hirko stipulated to the other elements, he contends that the jury
concluded that he did not commit any of these acts when it acquitted him of
the Money Laundering Counts. But Hirko’s analysis is flawed because, under
his argument, the jury must find that he committed “a specified unlawful
activity” as a precondition to convicting him on the Money Laundering
Counts. Thus, if the jury could not decide whether Hirko committed “a
specified unlawful activity,” then it would have to acquit him on the Money
Laundering Counts.
In fact, that is seemingly what happened here. In addition to money
laundering, Hirko was also charged with securities fraud, wire fraud, and
insider trading, and the jury hung on these counts. Since it could not
determine whether Hirko committed these acts, the jury then could not
convict Hirko on the Money Laundering Counts and had to acquit. Because
Hirko has failed to show that the jury necessarily found that he did not
commit fraud or insider trading, collateral estoppel does not bar the
Government from retrying Hirko on the securities fraud, wire fraud, and the
insider trading counts.
C. F. Scott Yeager
Yeager was acquitted of securities fraud, four counts of wire fraud, and
conspiracy to commit securities fraud and wire fraud. The jury hung on 20
counts of insider trading and 99 counts of money laundering. Yeager now
argues that, in acquitting him, the jury necessarily found that he did not have
insider information, and, therefore, collateral estoppel bars the Government
from retrying him on insider trading and money laundering. For the reasons
below, we find that Yeager is correct that the jury, acting rationally, could
have acquitted Yeager on securities fraud only by concluding that he did not
have insider information. But because Yeager was also charged with insider
trading and money laundering and the jury hung on those counts, we find

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that collateral estoppel, under our precedent, does not bar a retrial in this
case.
1. Securities Fraud
Considering only the jury instructions, we conclude that there are four
rational bases the jury could have used to acquit Yeager on securities fraud.
The Government charged Yeager with securities fraud for making material
misrepresentations or omissions at the 2000 analyst conference. As discussed
above, the district court instructed the jury that it could convict Yeager on
securities fraud only if it determined that the Government had proven three
elements beyond a reasonable doubt: (1) Yeager participated in making
material misrepresentations or omissions; (2) Yeager acted “willfully,
knowingly, and with the intent to defraud”; and (3) Yeager used “[a] means or
instrumentality of interstate commerce or of the mails.” Because neither
party contends that the third element is at issue, the jury must have decided,
in acquitting Yeager, that the Government did not carry its burden as to the
first or second elements. Two reasons the Government might not have
succeeded in carrying its burden as to the first element are: (1) it failed to
show there were misrepresentations or omissions made at the analyst
conference; or (2) it failed to show that Yeager participated in making
material misrepresentations or omissions. Two reasons the Government
might not have succeeded in carrying its burden as to the second element are:
(1) it failed to show that Yeager knew the presentations given at the analyst
conference were fraudulent when they were made; or (2) it failed to show that
any misrepresentations or omissions Yeager made were intentional rather
than negligent.
After reviewing the record, we conclude that the jury could have
acquitted Yeager on the basis of the first element by concluding that there
were no misrepresentations or omissions made at the conference. At trial,

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Defendants presented evidence that the conference presentations did not
contain falsehoods and that the omitted information was not material so as to
render the presentations misleading. The jury could have found this evidence
convincing.
We also conclude, however, that the jury could not have acquitted
Yeager by finding that, while there were misrepresentations or omissions
made, Yeager did not participate in making them. While both parties
acknowledge that Yeager did not give a presentation at the analyst
conference, the Government argued strenuously at trial that Yeager helped
shape the message of the conference presentations, which Yeager did not
dispute. Under the jury instructions, Yeager participated in making material
misrepresentations or omissions as long as he “caused the statement[s] to be
made or the fact[s] to be omitted.” Therefore, if the jury concluded that the
presentations were fraudulent, the jury could not have acquitted Yeager on
the grounds that he did not participate in the fraud.
From our examination of the record, we additionally find that the jury
could have acquitted Yeager on the basis of the second element by finding
that Yeager did not knowingly make misrepresentations and omissions
because he believed the presentations were truthful. Yeager’s main defense
at trial was that he thought the conference presentations were truthful
because of his good faith reliance on information that he received from others.
Therefore, the jury could have acquitted Yeager for this reason.
We conclude, however, that the jury could not have acquitted Yeager for
negligently making material misrepresentations or omissions. The district
court instructed the jury that Defendants must have been at least reckless
when making material misrepresentations or omissions to be guilty of
securities fraud. But it was undisputed that Yeager, as Senior Vice President
of Strategic Development, helped plan the conference message. Therefore, if

16
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the jury determined that Yeager possessed information that contradicted the
presentations, the jury could not have found that he was negligent in
dispensing falsehoods to the public.
In sum, our review of the record demonstrates that the jury could have
acquitted Yeager of securities fraud for two reasons: (1) there were no
material misrepresentations or omissions made at the conference; or (2)
Yeager did not knowingly make misrepresentations or omissions because he
believed the presentations were truthful. Under either rationale, the jury
must have found when it acquitted Yeager that Yeager himself did not have
any insider information that contradicted what was presented to the public.18
The insider trading counts are based on allegations that Yeager had insider
information when he conducted his trades because he knew that the
information released to the public was fraudulent. Therefore, the jury
seemingly made a finding that precludes the Government from now
prosecuting him on insider trading and money laundering.19 Accordingly,
when we consider the acquittals by themselves, it appears that Yeager is
correct that collateral estoppel bars a retrial.20

18
The Government did not contend at trial nor does it contend here that Yeager could
have discovered insider information after the conference. Therefore, if the jury found that
Yeager did not have insider information at the conference, it must also have found that he did
not have insider information when he conducted his trades in the subsequent months.
19
Yeager is charged with money laundering based on transacting in money generated
from trades he conducted allegedly on the basis of insider information. Therefore, the finding
that Yeager did not have insider information would also preclude the Government from
retrying him for money laundering.
20
Yeager also was acquitted of four counts of wire fraud and conspiracy to commit
securities fraud and wire fraud. Yeager argues that, in acquitting him of these counts, the jury
must also have found that he did not possess insider information. Because we determine that
Yeager is correct that the jury must have so concluded when it acquitted him of securities
fraud, it is unnecessary for us to determine whether the jury made the same conclusion when
it acquitted Yeager of these other counts.

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The problem in this case, however, is that the same jury hung on the
insider trading counts. If Yeager is correct that the jury found that he did not
have insider information, then the jury, acting rationally, would also have
acquitted Yeager of the insider trading counts. Thus, when we consider the
hung counts along with the acquittals, we are faced with a potential
inconsistency, making it impossible for us to decide with any certainty what
the jury necessarily determined. Whether we can weigh hung counts in
applying collateral estoppel then is crucial to our analysis. Because, as
discussed below, we conclude that our precedent dictates that we must, we
find that we cannot apply collateral estoppel in this case.
2. United States v. Larkin
We have addressed before the question of how collateral estoppel
applies when the jury acquitted on some counts but hung on related counts.
In United States v. Larkin, we rejected the defendant’s assertion that the jury
necessarily determined that he was not part of a conspiracy when it hung on
the conspiracy count but acquitted him of various counts of vicarious liability.
605 F.2d 1360, 1370 (5th Cir. 1979), withdrawn in part on other grounds, 605
F.2d 585 (5th Cir. 1980). In applying Ashe, the Larkin court laid out the
various rational bases on which the jury could have acquitted the defendant.
Id. We then ruled out the possibility that the jury acquitted the defendant of
vicarious liability because it found that he was not a member of a conspiracy.
Id. at 1370-71. According to the Court, “No rational jury could have absolved
[him] of [vicarious liability] because of the absence of a conspiracy between
the two, while it simultaneously failed to acquit him on the conspiracy charge
itself.” Id. Therefore, Larkin requires that we consider mistried counts in our
collateral estoppel analysis; and, in particular, under Larkin, the presence of
mistried counts diminishes the likelihood that, in acquitting defendants on
related counts, the jury made a factual determination that bars a retrial.

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Yeager contends that collateral estoppel precludes the Government
from retrying him for insider trading and money laundering. According to
Yeager, the jury necessarily determined that he did not have insider
information when it acquitted him and that no jury can convict him on insider
trading and money laundering if he did not have insider information. But
even if Yeager is correct that the jury could have acquitted him on the fraud
and conspiracy counts only if it found that he did not have insider
information, that does not end our inquiry as to what the jury necessarily
decided at trial because, under Larkin, we must also take into consideration
the mistried counts. As we similarly noted in Larkin, if Yeager is correct that
the jury found that he did not have insider information, then the jury, acting
rationally, would have acquitted him of insider trading and money
laundering. Instead, the jury hung.
The result is a discrepancy that has four possible explanations. One
possibility is that the jury was irrational and came to two inconsistent
conclusions. When considering the fraud and conspiracy counts, the jury
decided that Yeager did not have insider information. When considering the
insider trading and money laundering counts, the jury decided that Yeager
had insider information but hung for other reasons. Another possibility, as
the Government speculates, is that the jury decided that Yeager had insider
information when considering both sets of counts, but, for some unknown
reason, it nonetheless acquitted Yeager on some of them. A third possibility
is that the jury decided that Yeager did not have insider information when
considering both sets of counts, but, for some unknown reason, it failed to
push all of them through to acquittals. Finally, a fourth possibility is that the
jury decided that Yeager did not have insider information when it acquitted
him on the fraud and conspiracy counts and simply did not reach the issue

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when it considered the hung counts because it could not agree on whether the
Government had carried its burden as to the other elements.
Because it is impossible to determine why the jury hung, we find that
collateral estoppel does not bar a retrial in this case. In the first scenario,
collateral estoppel would not bar a retrial because, if the jury irrationally
came to two inconsistent conclusions, we cannot say that it came to any
definitive conclusion. In the second scenario, collateral estoppel would not
bar a retrial because the jury found that Yeager had insider information. In
the third and fourth scenarios, however, collateral estoppel would preclude a
retrial because the jury concluded that Yeager did not have insider
information. Under Ashe, however, the burden is on defendants to show that
the jury necessarily determined the issue that they seek to foreclose.
Brackett, 113 F.3d at 1398. Given the evidence at trial, whether Yeager had
insider information was a close issue, and the jury could have come to the
conclusions in any of these four scenarios. Therefore, we cannot determine
with any certainty which scenario Yeager’s case falls under, and we cannot
conclude what the jury necessarily decided. Because Yeager failed to carry
his burden and establish what the jury necessarily decided, we find that
collateral estoppel does not bar the Government from retrying Yeager on the
insider trading and money laundering counts.
3. United States v. Powell
Finally, we note that we are not extending, at the Government’s urging,
United States v. Powell, 469 U.S. 57 (1984), to preclude applying collateral
estoppel where a jury acquitted defendants on some counts but hung on
related counts. Many of our sister circuits have rejected this argument in
similar cases. United States v. Ohayon, 483 F.3d 1281, 1289 (11th Cir. 2007);
United States v. Romeo, 114 F.3d 141, 144 (9th Cir. 1997); United States v.
Bailin, 977 F.2d 270, 276 (7th Cir. 1992); United States v. Frazier, 880 F.2d

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878, 883 (6th Cir. 1989). Contra United States v. White, 936 F.2d 1326 (D.C.
Cir. 1991). Because our finding does not rely on Powell, however, these cases
do not affect our analysis.
Powell bars applying collateral estoppel in cases where there are
inconsistent verdicts. In Powell, the Court found that collateral estoppel
cannot apply to reverse a conviction when the jury both acquitted and
convicted defendants of related counts.21 Powell, 469 U.S. at 68. According to
the Court, the doctrine of collateral estoppel is “no longer useful” when the
same jury reached inconsistent verdicts because collateral estoppel is
“predicated on the assumption that the jury acted rationally and found
certain facts in reaching its verdict.” Id.
In the cases before our sister circuits, the Government has argued, as it
does here, for an extension of Powell. The Government maintains that Powell
precludes applying collateral estoppel in cases where the jury acquitted
defendants on some counts but hung on related counts because this result is
also inconsistent. The Sixth, Seventh, Ninth, and Eleventh Circuits rejected
this argument because they found that acquittals are not inconsistent with
mistried counts. Ohayon, 483 F.3d at 1289; Romeo, 114 F.3d at 144; Bailin,
977 F.2d at 279-80; Frazier, 880 F.2d at 883. As the Sixth Circuit noted, “[n]o
such inconsistency is necessarily present” because “[b]oth the acquittal and
the failure to agree could result from a number of factors.” Frazier, 880 F.2d
at 883.
While we arrive at what appears to be a contrary decision, we do not
disagree with our sister circuits. As we acknowledged above, there are four

21
In Powell, the defendant was acquitted of various drug felonies but convicted of
facilitating those felonies. 469 U.S. at 60. Because an element of the facilitation counts is that
she committed the felonies that she allegedly facilitated, the defendant argued that collateral
estoppel required overturning the convictions. See id. at 68. The Court found the defendant’s
argument unconvincing. Id.

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possibilities as to how to reconcile Yeager’s acquittals with the mistried
counts, and only in one of these possibilities must the jury have been
inconsistent. In short, we concur with our sister circuits that it is impossible
to discern definitively why a jury hung. Therefore, we also reject the
Government’s argument because it requires us to necessarily find an
inconsistency where one may not exist.
Where we part ways with our sister circuits is that they ignored the
mistried counts after they determined that Powell does not apply. Because
our precedent dictates that we weigh mistried counts, however, we cannot do
the same. Under Ashe, the burden is on defendants to show that the jury
necessarily determined the issue they seek to foreclose in their favor.
Therefore, collateral estoppel cannot apply if the uncertainty raised by the
mistried counts, which we must consider under Larkin, precludes Yeager
from meeting this burden. For the reasons above, we find that it does.22 In
sum, we agree with our sister circuits that Powell does not bar applying
collateral estoppel when a jury acquitted defendants on some counts but hung
on related counts. But we conclude that Ashe precludes applying collateral
estoppel in this scenario because Yeager has failed to show that the jury
necessarily determined that he did not have insider information.
IV.
For the aforementioned reasons, we AFFIRM the district court’s denial
of Defendants’ motion to dismiss under the doctrine of collateral estoppel.

22
We can only speculate as to why our sister circuits did not also consider the mistried
counts in its analysis under Ashe. While our precedent requires us to weigh mistried counts
in determining whether collateral estoppel applies under the Ashe framework, the other
circuits may not be similarly bound by their precedent.

22