Table of Contents
Willful blindness means deliberately avoiding confirmation of something you strongly suspect is true, and courts can treat it as knowledge. When an investor told me over sushi that Keith's returns meant "performance sells itself," I walked out instead of telling him the truth. That line ended up in my plea agreement.
Sushi in Century City
Keith was struggling to raise money in small amounts, so he started buying out older money managers with $3 to $5 million and no way to retire. One of them, John, wanted to meet the people at UBS who executed the trades.
I didn't want to go. Keith didn't have to say why I would. He did $200,000 a month in commissions, and he knew plenty of brokers in Century City would take that business and ask fewer questions.
So on a Friday afternoon, Kenny, Keith, John, and I sat down for sushi in Century City. Kenny asked John why he was selling his fund to Keith.
John said he'd seen the returns on Keith's fund. "Performance sells itself."
That line ended up in my plea agreement.
Executing trades for people you never see is one thing. Watching a man across the table get ready to hand over $5 million for returns that don't exist is another. I didn't say a word. I told everyone I had to get back upstairs and walked out.
Upstairs, Kenny said John would sign the disclosure letter. I knew that didn't make it okay. I was 27, on my fourth firm, and I didn't want to go back to cold walking Ventura Boulevard. I picked that day's commission over the rest of my life.
Judge Bennett told Michael that the statements that move him take responsibility, name the harm to the victims, and lay out a specific plan.
What to do this week
Write down your moment, the one when you knew and kept going. Where you were, who was in the room, what you did next. Keep it for yourself.
Questions people ask
What is the legal test for willful blindness?
In Global-Tech Appliances v. SEB (2011), the Supreme Court described two parts: the person believes there is a high probability a fact exists, and takes deliberate steps to avoid learning it.
Is willful blindness used in fraud cases?
Yes. Federal judges often instruct juries on willful blindness in fraud trials. Whether it applies to your case is a question for your lawyer.
Related: Michael is visiting every federal prison in the country to teach. The Bureau of Prisons doesn't pay for that, or for the thousands of books he gives away each year. Our community does. When you work with us, you're part of that.
Read next: Part 10: Should You Pay Restitution Before Sentencing?
Written by
Justin Paperny
Founder White Collar Advice
