United States v. Aldo Tarallo

Defendant Aldo Tarallo appeals his convictions on six counts of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. § 240 .10b-5; and four counts of mail fraud, in violation of 18 U.S.C. § 1341 . We reverse his convictions with respect to three vicarious liability counts for lack of evidence. In affirming the remaining seven counts, we hold that a defendant may commit securities fraud “willfully” in violation of 15 U.S.C. § 78ff and 17 C.F.R. § 240 .10b-5 even if the defendant did not know at the time of the acts that the conduct violated the law. We further hold that a defendant may commit securities fraud “willfully” by intentionally acting with reckless disregard for the truth of material misleading statements. Finally, we hold that 15 U.S.C. § 78ff is not facially unconstitutional as a violation of Apprendi v. New Jersey, 530 U.S. 466 , 120 S.Ct. 2348 , 147 L.Ed.2d 435 (2000).

FACTUAL AND PROCEDURAL BACKGROUND

Defendant and two co-defendants, David Colvin and John Larson, together participated in a fraudulent telemarketing scheme. Colvin owned several companies used in the scheme, including Intellinet, Inc., and Larson was Intellinet’s sales…