United States v. Leonard

Paul Dickau and Nanci Silverstein (defendants) sold interests in film-production LLCs, mailing offering materials that described investors as playing an active management role, while in reality investors rarely voted, could not negotiate the investment terms, gained no managerial rights until the LLCs were already organized, and needed no film-industry experience. Dickau and Silverstein earned a commission on every interest sold but failed to disclose those commissions as securities law required; a jury convicted them of securities and mail fraud, and they appealed, arguing the LLC interests were not securities at all.