FusionPharm Lawyer Convicted of Securities Fraud Loses Appeal

An attorney convicted of securities fraud and other related crimes lost his bid to reverse several criminal counts, after the Third Circuit rejected his arguments asserting faulty jury instructions and improper evidence.

The jury didn’t require additional instructions on whether Guy M. Jean-Pierre made a misrepresentation or omission of material fact, the U.S. Court of Appeals for the Third Circuit said.

The instructions adequately informed the jury as to the elements of a securities fraud offense, and it was reasonable for the lower court to conclude that further detail would cause confusion, Judge Carolyn B. McHugh wrote in the Tuesday ruling.

And even if evidence that he had used his niece’s signature without her consent to submit attorney letters to the U.S. Securities and Exchange Commission was improperly admitted as evidence of a prior bad act, the error was harmless, the court said.

It rejected his challenge, which was to four of the 28 crimes for which he was convicted.

The fraud involved shares of FusionPharm Inc., a company that made hydroponic grow units, sold on over-the-counter markets. Jean-Pierre was indicted for, among other things, failing to disclose an affiliate who was previously convicted of securities fraud. If the individual, a co-conspirator, had been disclosed as an affiliate, the shares couldn’t have been traded on the OTC Pink Market.

The Pink Market is the lowest tier on the OTC market and is used for companies that aren’t required satisfy any minimum financial standards or reporting requirements.

Jean-Pierre argued that the jury should have been instructed that the government needed to prove beyond a reasonable doubt that securities in FusionPharm sold by the undisclosed co-conspirator’s companies weren’t subject to an exemption under Rule 144 to prove that he made a materially false statement.

But the jury could have convicted Jean-Pierre of making a materially false statement in connection with a different representation or act, according to the ruling. And it wasn’t unreasonable for the court to conclude it would be confusing to separately instruct the jury on only one fact theory, when instructions on other counts didn’t do the same, the court said.

Rule 144 allows for public resale of restricted and control securities if certain conditions are met. If the person selling the securities is considered an affiliate, additional requirements apply, including, among other things, a holding period and a limitation on the amount of securities sold.

Judges Tymkovich and Carson joined the opinion.

Jean-Pierre is represented by Megan L. Hayes of Laramie, Wyo.

The case is U.S. v. Jean-Pierre, 10th Cir., No. 20-1039, 6/15/21.