United States of America v. Eric Weller

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-2814
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ERIC WELLER,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 17 CR 643 — Matthew F. Kennelly, Judge.
____________________
ARGUED SEPTEMBER 24, 2020 — DECIDED JULY 7, 2022
____________________
Before EASTERBROOK and MANION, Circuit Judges.*
EASTERBROOK, Circuit Judge. Eric Weller has been convicted
of a crime related to inside trading in securities, see United
States v. O’Hagan, 521 U.S. 642 (1997), and sentenced to a year
and a day in prison. The evidence at trial permiQed a jury to
* Circuit Judge Kanne, a member of the panel at the time of argument,
died on June 16, 2022. This appeal is being decided by a quorum. 28 U.S.C.
§46(d).

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2 No. 19-2814
find that Weller was a remote tippee of Shane Fleming, a vice
president of Life Time Fitness, Inc., who learned that his com-
pany was likely to be acquired by a private-equity firm at an
above-market price.
Fleming alerted his friend Bret Beshey, who passed the in-
formation to Chasity Clark and Peter Kourtis. Both Clark and
Kourtis knew that Fleming had misappropriated the infor-
mation. Clark tipped off one additional person, while Kourtis
relayed the information to four more, including Weller. Most
of the tippees made profits by buying out-of-the-money call
options, which they sold once the offer was announced.
Weller made more than $550,000. After reaping profits, the
tippees showed their appreciation through kickbacks. Weller,
for example, provided Kourtis with at least 10 pounds of ma-
rijuana, which he sold for $20,000. Kourtis shared some of
those proceeds with Beshey, and Beshey shared with Fleming.
All of this could have been found by a reasonable jury, as the
district judge concluded when denying Weller’s motion for
acquiQal. 2019 U.S. Dist. LEXIS 126515 (N.D. Ill. July 30, 2019).
One element of trading on inside information is breach of
a duty to keep the information confidential. See Dirks v. SEC,
463 U.S. 646 (1983). Weller contends that the indictment does
not adequately allege that he knew of Fleming’s violation of
that duty. The parties agree that this allegation, if present at
all, must be found in ¶3(f) of the indictment, which says (with
names in all-caps type wriQen normally):
Beginning on or about February 24, 2015, Kourtis, while in pos-
session of the material, nonpublic information he received from
Beshey, which information Kourtis knew that Beshey’s close per-
sonal friend and Life Time Fitness, Inc. insider, “Shane,” had mis-
appropriated in breach of a duty of trust and confidence to keep
such information confidential, provided the information to [4

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No. 19-2814 3
names, including Weller], with each of whom Kourtis had a close
personal relationship. Based on the information provided by
Kourtis, [4 names, including Weller] knew: (i) that Kourtis had
learned the material, nonpublic information from Kourtis’ close
personal friend [Beshey]; (ii) that Kourtis’s close personal friend
had learned the information from a close personal friend and sen-
ior employee [Fleming] at Life Time Fitness, Inc.; and (iii) that the
senior employee at Life Time Fitness, Inc. had misappropriated
the material, nonpublic information from Life Time Fitness, Inc.
in breach of a duty of trust and confidence to keep such infor-
mation confidential.
What’s missing from this stilted verbiage is an express allega-
tion that Fleming breached a duty to his employer by provid-
ing the information to Beshey. And that omission, Weller con-
tends, means that the indictment does not allege an offense.
But the district judge denied Weller’s motion to dismiss.
United States v. Beshey, Mansur & Weller, 2019 U.S. Dist. LEXIS
9569 (N.D. Ill. Jan. 22, 2019).
An express allegation that Beshey’s gratitude was a benefit
to Fleming would have sufficed. Weller says not, relying on
United States v. Newman, 773 F.3d 438 (2d Cir. 2014), for the
proposition that the benefit must be in the form of money or
other property. But Salman v. United States, 137 S. Ct. 420, 428
(2016), disapproved Newman and reaffirmed the statements in
Dirks that assisting a friend or relative counts as a personal
benefit.
Still, the indictment does not allege in so many words that
Fleming received a forbidden benefit. It does say that Beshey
was Fleming’s friend and that Fleming violated a duty to his
employer. Is that close enough? Given Salman and Dirks, the
answer must be yes. An indictment suffices when it notifies
the defendant of the charge, which can be done without par-
roting the words of the statute—or, for inside-trading

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4 No. 19-2814
doctrine, parroting the language of the Supreme Court’s deci-
sions. See United States v. Resendiz-Ponce, 549 U.S. 102 (2007);
United States v. Khan, 937 F.3d 1042 (7th Cir. 2019). Resendiz-
Ponce holds that an implicit allegation suffices. 549 U.S. at 107.
Paragraph 3(f) meets that standard.
To the extent that Weller contests the sufficiency of the ev-
idence on the ground that the United States did not prove a
monetary benefit to Fleming, that again rests on the holding
of Newman, which did not survive Salman. Weller does not
contend that the jury instructions were deficient on this score,
so we agree with the district judge that both the indictment
and the evidence permit a conviction consistent with Dirks
and Salman.
A careful reader may have noticed the odd phraseology in
this opinion’s first sentence: “a crime related to inside trading
in securities”. We put it that way because, although Weller
was charged with three violations of §10(b) of the Securities
Exchange Act, 15 U.S.C. §78j(b), and the SEC’s Rule 10b–5, 17
C.F.R. §240.10b–5, the jury acquiQed him of those substantive
charges. He was convicted on a single charge of conspiracy to
violate the securities laws, in violation of 18 U.S.C. §371, and
he maintains that the prosecution did not show a conspiracy.
The jury’s decision is inscrutable, but there is no priority
among inconsistent verdicts. United States v. Powell, 469 U.S.
57 (1984); Yeager v. United States, 557 U.S. 110 (2009). We must
assess the conspiracy conviction as if it had been the only
charge.
When denying Weller’s motion for judgment of acquiQal,
the district judge remarked that it is hornbook law that con-
spirators need not know everyone else’s names and roles.
United States v. Blumenthal, 332 U.S. 539 (1947). Weller insists

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No. 19-2814 5
that things are otherwise for inside trading. He relies on
United States v. Geibel, 369 F.3d 682 (2d Cir. 2004), which holds
that it is not possible to find a conspiracy among the first tip-
per and all remote tippees unless the first tipper expected or
intended wide distribution of the information. The indict-
ment alleges that Fleming met with some of the remote tip-
pees and received kickbacks from at least two, but it does not
include language matching Geibel’s. Nor did the jury instruc-
tions. It follows, Weller contends, that he must be acquiQed.
That’s not an appropriate conclusion. What follows from
Geibel is that Fleming would have been entitled to acquiQal,
had he been charged with conspiring with Weller and other
fourth-tier tippees. Fleming conspired with Beshey but not
with Weller. The problem for Weller, however, is that a jury
need not convict all charged members of the conspiracy in or-
der to convict any given charged member. If the indictment
charges that A, B, C, D, and E conspired, and the jury finds
that only A, B, and C did so, a conviction of A is valid if sup-
ported by the evidence. United States v. Duff, 76 F.3d 122, 126
(7th Cir. 1996). The difference is a variance, to be sure, but not
a prejudicial one. In Geibel itself the Second Circuit concluded
that the conspiracy supported by the evidence was smaller
than the one charged in the indictment, but it affirmed the
convictions of those inside traders who conspired with at least
one other person. No maQer what else one makes of the evi-
dence, Weller and Kourtis conspired to misuse material non-
public information. They acted in concert for their private
benefit, in violation of legal rules, which is a conspiracy. For
the same reason Geibel affirmed the convictions of three de-
fendants, we affirm Weller’s. (And, again for the same reason,
the jury instructions did not need to include a buyer-seller

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6 No. 19-2814
instruction. The instructions defined the word “conspiracy”
in a way that excluded stand-alone commercial transactions.)
Weller has three other arguments: that the judge should
not have allowed the jury to hear statements he made to other
tippees after the inside trading had ended; that his sentence is
too high compared with other defendants; and that he should
not have been ordered to forfeit his profits. None of these con-
tentions persuades us. Weller’s statements were properly re-
ceived as admissions, whether or not they came within the co-
conspirator exception to the hearsay rule. Fed. R. Evid.
801(d)(2)(E). The sentence is proper because Weller made
more than any other tippee, which produced a higher range
under the Sentencing Guidelines. The 366-day sentence is be-
low the Guideline range and therefore cannot be aQacked as
creating unwarranted disparities, in violation of 18 U.S.C.
§3553(a)(6). United States v. BartleR, 567 F.3d 901, 907–08 (7th
Cir. 2009). What’s more, Fleming pleaded guilty and cooper-
ated; Weller did not. And the judge was entitled to find, by a
preponderance of the evidence, that Weller made forfeitable
profits by substantive violations of the securities laws. The
jury’s conclusion that guilt was not shown beyond a reasona-
ble doubt does not constrain a judge’s decision on a lower
standard of proof. United States v. WaRs, 519 U.S. 148 (1997).
AFFIRMED

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