Criminal Procedure — ostrich instruction

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 United States Court of Appeals For the Seventh Circuit

Criminal

Criminal Procedure — ostrich instruction

Where a defendant charged with participation in a fraudulent Ponzi scheme denied knowledge that the scheme was a fraud, the district court properly gave the jury an ostrich instruction.

“Ronnanita has maintained throughout that she had no knowledge of the scheme being a sham; element one is easily satisfied. The testimony presented at trial satisfied the second element as well: Ronnanita was described as being ‘second in command’ to Roy Jr. and the person to go to with questions or concerns. She was intimately familiar with the 200% returns promised to participants as well as MTE’s expenses, both necessary (rent) and extravagant (trips and cars). Ronnanita opened bank accounts for Roy Jr. and MTE and made monetary transfers between the accounts. She also knew when the Housing Program had difficulties meeting its payment obligations. Based on Ronnanita’s access to this information, she could have chosen at any point to investigate what investments MTE was making and what returns MTE was generating. This would have immediately demonstrated the fraudulent nature of the schemes. Ronnanita claims she simply followed Roy Jr.’s orders, but her failure to inquire further in light of the information she possessed is evidence that could lead a reasonable jury to conclude she deliberately avoided learning the truth about MTE’s programs. See Craig, 178 F.3d at 897-98; see also United States v. Leahy, 464 F.3d 773, 796 (7th Cir. 2006) (holding that ‘red flags’ and a failure to ask questions about them demonstrates deliberate avoidance). This is precisely the type of situation that warrants an ostrich instruction. See United States v. Paiz, 905 F.2d 1014, 1022 (7th Cir. 1990) (‘Such a scenario, one in which “the defendant acknowledges [her] association with the group but, despite circumstantial evidence to the contrary, denies knowledge of the group’s illegal activity,” is a paradigm case for use of the ‘ostrich’ instruction.’ (quoting United States v. Diaz, 846 F.2d 544, 550 (7th Cir. 1988))). We find the district court appropriately gave the ostrich instruction.”

Affirmed.

11-1013, 11-3008 & 11-3082 U.S. v. Fluker

Appeals from the United States District Court for the Northern District of Illinois, Coar, Feinerman, JJ., Bauer, J.