Criminal defense lawyers dread the jury instruction on "conscious avoidance" (also called "willful blindness" or "deliberate indifference"). It is given, almost always at the prosecution’s request, when the evidence of requisite knowledge is weak. It is, to defense lawyers, an invitation to the jury to convict based on recklessness, negligence, or surmise.

"Conscious avoidance" is a judicially-made doctrine that expands the definition of knowledge to include closing one’s eyes to the high probability a fact exists. An obvious example occurs when one agrees with a fellow air passenger to carry a suitcase through customs for $100,000 but specifically tells the other passenger he does not want to know what the suitcase contains. The doctrine has recently been reaffirmed, but apparently narrowed, by the Supreme Court in a patent infringement case, Global-Tech Appliances Inc. v. SEB S.A., 131 S. Ct. 458 (2011)(for more discussion on this case see here and here). There the Court held that one’s subjective belief that there was a high probability that a fact existed combined with his "taking steps to avoid knowing" the fact existed constituted willful blindness. The "deliberate steps" prong seemingly went beyond the prevailing definitions of willful blindness in most federal circuits, which required little, if anything, beyond awareness of the high probability that the fact exists.

The Madoff bankruptcy trustee, Irving H. Picard, is employing the conscious avoidance doctrine in a clawback action against Fred Wilpon and Saul Katz, the owners of the New York Mets. Picard’s lengthy complaint alleges that the Mets’ owners deliberately failed to investigate the tell-tale signs of Madoff’s fraud and, therefore, instead of being victims, were beneficiaries — and by implication even accomplices – of the fraud. He is seeking not only a return of funds they received from Madoff, but also damages for the indirect benefits of their Madoff association.

Picard’s novel theory will be decided not in the bankruptcy court which is his home field, but by Jed S. Rakoff, a brilliant and hard-working Southern District judge (and a friend) who himself is not shy about innovation. It will be interesting to see what happens.

In the meantime, although it appears to go against the grain of those cases which hold in essence that negligence or stupidity of the victim is no defense to fraud (otherwise, there would be far fewer successful fraud prosecutions), defense lawyers might consider whether conscious avoidance of the purported victim may be a defense.

(Goldman)