Harry Sandick, Partner

On July 25, 2018, in United States v. Lambus, No. 16-4296 (Kearse, Livingston, Jeffrey Meyer, D.J.), the Second Circuit issued a lengthy decision analyzing two questions related to the suppression of  GPS data from an ankle bracelet and evidence obtained from a wiretap.  The GPS question raises interesting issues about when a federal prosecution can make use of evidence obtained in connection with state parole supervision without a federal warrant and the relevance of state-federal coordination when making that assessment.  And the wiretap issue addresses whether an undisputed, but inadvertent, error in a wiretap application should result in the suppression of evidence.  On both issues, the district court (Weinstein, J.) granted the defendants’ motions to suppress, but the Circuit reversed.

In a brief decision issued on Tuesday, July 31, in United States v. Green, the Second Circuit (Cabranes, Carney, Goldberg by designation) vacated in part a judgment ordering the defendant to pay restitution for the theft of government property that was stolen outside the applicable statute of limitations.  In doing so, the Court rejected the government’s arguments that the defendant had (i) waived her right to appeal in her plea agreement, and (ii) consented in her plea agreement to pay restitution for property stolen outside the applicable limitations period.  Having disposed of these contentions, the Court rejected the government’s argument that the underlying theft was a “continuing offense” that would permit the government to obtain restitution for amounts stolen both within and outside of the limitations period.

In the context of an appeal from a decision of the Board of Immigration appeals, Zuniga-Perez v. Sessions, the Second Circuit (Pooley, Wesley, Chin, C.JJ) ruled that a search conducted by law enforcement personnel violated the Fourth Amendment.  The Court recognized that the petitioner “made a sufficient showing of an egregious constitutional violation” by law enforcement agents, and reversed the immigration judge’s decision to deny a suppression motion without a hearing.  While this is not a criminal law decision, it raises some important criminal law issues, so we have decided to cover it.

On July 25, 2018, in United States v. Lambus, No. 16-4296 (Kearse, Livingston, Jeffrey Meyer, D.J.), the Second Circuit issued a lengthy decision reversing pretrial rulings suppressing evidence obtained from wiretaps and GPS monitoring.

In United States v. Hernandez, 16-2765, the Second Circuit (Kearse, Cabranes, Lohier) affirmed the conviction of a member of La Mara Salvatrucha (MS-13), a street gang that operates in certain parts of the country, arising out of an initiation shooting in Brentwood. 

In United States v. Jimenez, the Second Circuit (Pooler, Raggi, Droney) rejected an as-applied Second Amendment challenge to a provision of the Gun Control Act of 1968 that makes it illegal for a person who has been dishonorably discharged from the military to possess guns or ammunition, 18 U.S.C. § 922(g)(6).  In the decision, which marks the first time a federal court of appeals has grappled with the statute’s constitutionality post-District of Columbia v. Heller, 554 U.S. 570 (2008), the Court was careful to note that it was not considering a facial challenge and limited its discussion to persons, as here, who have been dishonorably discharged for “felony-like” military offenses.

In United States v. Gasperini, the Court (Cabranes, Lynch, Carney) resolved various challenges by Fabio Gasperini, an Italian citizen, to his conviction under the Computer Fraud and Abuse Act of 1986 (“CFAA”).  Gasperini was convicted following an elaborate hacking scheme in which he exploited a “backdoor” of certain internet-connected devices around the globe to seize control of the devices, used the compromised devices to search for other vulnerable devices to grow his computer army, and then unleashed his “botnet” of over 155,000 machines to generate “ad click” revenue and launch distributed denial-of-service attacks.  Gasperini was ultimately arrested in the Netherlands and tried in the Eastern District of New York.

On Monday a divided Second Circuit panel (Katzmann, Pooler, Chin) issued an amended decision upholding the conviction of former SAC Capital portfolio manager Mathew Martoma on one count of conspiracy to commit securities fraud and two substantive counts of securities fraud.  The amended decision—like the original decision—is a major decision expounding on the common law of insider trading, from the leading Court on questions of federal securities law.  The decision—both the majority and the dissent—requires close study not only of its 61 combined pages, but several prior Supreme Court and Second Circuit decisions upon which it is premised.  In this regard, the decision reflects the continuing uncertainty that is created by the absence of a statute that specifically addresses insider trading.  Both the majority and the dissent make compelling arguments, and the question of what should be permitted and prohibited would be resolved most constructively by the legislative branch.

On June 19, 2018, in a split decision in United States v. Sawyer, No. 15-2276 (Jacobs, Pooler, Crawford) the Circuit issued a firm rebuke of a District Court judge who – per the Circuit’s mandate – reduced the defendant’s sentence on remand, but did so without curing certain deficiencies the Circuit had identified as making the sentence substantively unreasonable.  The majority opinion makes clear that when the Circuit issues a mandate on remand, the district court is not at liberty to ignore it – even if the district court can achieve the same outcome (here, a reduced sentence) through different means.  As the dissent (Jacobs, J.) observes, however, the holding yields the anomalous result whereby the District Court may have remedied the substantive unreasonableness of the initial sentence on remand, but because it did so for the wrong reasons – i.e., by expressly declining to link the reduction to the two variables identified in the mandate – the sentence could not stand. 

In United States v. Rose, the Court (Katzmann, Walker, and Bolden, sitting by designation) rejected a jurisdictional challenge to a guilty plea to violating the Hobbs Act, potentially giving rise to a Circuit split.  The defendant, Floyd Rose, was charged with robbing his victim by forcing them to withdraw money from their bank’s ATM and then hand it over to Rose.  After pleading guilty to Hobbs Act robbery, Rose argued that his plea should be set aside because the robbery lacked any connection to interstate commerce.

Over a year and a half after issuing its initial decision in United States v. Hill, 14-3872-cr (August 3, 2016), the Court amended its decision on May 9, 2018.  The amended decision maintains the Court’s holding that a Hobbs Act robbery is a categorical “crime of violence” under the so-called “force clause” clause (§ 924(c)(3)(A)).  However, the amended decision excises the Court’s prior holding that the “risk-of-force” clause (§ 924(c)(3)(B), also called the “residual clause”) was not void for vagueness and also qualified the a Hobbs Act robbery as a categorical “crime of violence.”

In United States v. Mark Henry, the Second Circuit (Jacobs, Cabranes, and Wesley, Js.) affirmed that the Arms Export Control Act (“AECA”), 22 U.S.C. § 2751 et seq., does not constitute an unconstitutional delegation of legislative authority to the executive branch, in addition to addressing various issues of trial procedure.  The defendant, Mark Henry, appealed his 2014 conviction following a jury trial of violating and attempting to violate the AECA by exporting “ablative materials”—military-grade technology used in rockets and missiles—and microwave amplifiers to customers in Taiwan and China.  The AECA prohibits the exportation of ablative materials, microwave amplifiers, and other “defense articles” except pursuant to a license issued by the Directorate of Defense Trade Controls, a division of the U.S. Department of State.  The government presented evidence at trial that the defendant was aware of the need for an export license, that he did not have such a license, and that instead of acquiring a license the defendant took steps to conceal his exportation of restricted materials through the use of intermediaries, fictitious companies, and falsified documents, among other things.  The court allowed the defendant, who is from China and primarily speaks Mandarin, to testify at trial in English through the help of a standby interpreter, although the court otherwise required a translator to assist the defendant throughout the trial.

In United States v. Litvak, the Second Circuit (Winter, Chin, Korman D.J.) reversed the conviction of Jesse Litvak, a securities trader at investment bank Jefferies & Co., for securities fraud premised on Litvak’s misrepresentations to trading counterparties about Jefferies’ profits on the transaction. The Court held that the district court improperly admitted testimony that Litvak’s counterparty believed that Litvak was acting as his fiduciary agent—even though in fact no such relation existed.  The Court explained that the counterparty’s erroneous, subjective belief was irrelevant as to the objective materiality of the misstatement, but likely swayed the jury in convicting.  The decision also raises interesting questions about expectations between traders and their customers, and the Government’s role in policing that relationship. For our discussion and commentary on this decision, please see our article on Law 360.

In 2014, a federal jury acquitted Gerald E. Bove of one count of Hobbs Act conspiracy and one count of Attempted Hobbs Act extortion.  Following his acquittal, Bove applied for reimbursement of the attorney’s fees and expenses he incurred in defending the criminal charges, pursuant to a rarely-litigated statutory provision known as the Hyde Amendment of 1997,[1] codified at 18 U.S.C. § 3006A.  On April 26, 2008, the Second Circuit (Cabranes, Livingston, Carney, Js.) affirmed the district court’s denial of Bove’s application, and in doing so confirmed that the standard for criminal defendants to recover fees and costs is high, and the discretion afforded district courts presented with Hyde Amendment applications is wide.

In United States v. Rodriguez, a panel of the Second Circuit (Judges Katzmann, Walker, and Bolden (D. Conn., sitting by designation)) reversed the conviction of a defendant for money laundering.  It concluded that the Government had established only that the defendant, Angelo Rodriguez, had attempted to deliver $300,000 in cash proceeds from sales of cocaine to what turned out to be an undercover agent—but not that the purpose of the transaction was to “to conceal or disguise the nature of . . . the proceeds of specified unlawful activity,” as the money-laundering statute requires.  See 18 U.S.C. § 1956(a)(1)(B)(i).  Although the panel acknowledged that the Government had presented evidence that the attempted delivery of cash was covert, it held that the circumstances of the transaction were “equally consistent with the purpose of paying off a drug supplier or purchasing additional drugs, which aims do not entail the intent to conceal required by” the money-laundering statute.  In other words, the panel made clear that the mere covert delivery of money in connection with an illicit scheme does not amount to money laundering:  the Government must prove that the transaction was specifically intended to disguise the use of the funds for an unlawful purpose.

In Rodriguez v. United States, the Second Circuit remanded the case to the district court to hear evidence on a defendant’s application to vacate her guilty plea, on the grounds that she would not have entered into the plea if her counsel had properly advised her as to its immigration consequences.  The Circuit, in a summary order written by Judges Walker, Lynch, and Chin, concluded that there was a reasonable probability that, had she been properly advised, she may have chosen not to plead guilty and thus may have avoided the immigration consequences that later ensued.  Accordingly, it remanded the case to the district court to develop an evidentiary record and make a finding on those issues.  The order requiring a hearing on a defendant’s right to extraordinary relief represents a reminder to judges and prosecutors that the immigration consequences of a guilty plea are no less central to the plea allocution than the contemplated term of imprisonment.  The decision follows the Supreme Court’s decision last term in Lee v. United States, 137 S. Ct. 1958, 1967 (2017).  In Lee, the Court held that a defendant who would not have pleaded guilty but for counsel’s errors concerning the deportation consequences of his or her plea has demonstrated ineffective assistance.

In United States v. Haak, 16-3876-cr, the Second Circuit (Raggi, Hall, Carney) reversed a suppression order, finding that local law enforcement authorities did not falsely promise the defendant immunity from prosecution and his statements therefore were not coerced in violation of the Fifth Amendment.

In United States v. Papas (17-cr-1591-cr), the Second Circuit remanded by summary order a $5 million forfeiture order entered in the Southern District of New York (Daniels, J.) after the defendant pleaded guilty to conspiracy to distribute marijuana.  Judges Cabranes, Carney, and Caproni (sitting by designation) were on the panel. 

In United States v. Dove, 14-1150-cr, the Second Circuit (Walker, Pooler, Chin) upheld a drug conspiracy conviction against claims that the government improperly shifted its case away from the broader conspiracy charge in the indictment.  The defendant alleged that this amounted to a constructive amendment or a prejudicial variance, in violation of the Fifth Amendment Grand Jury Clause.  The 2-1 decision, with Judge Chin dissenting, raises thorny questions about the evidence necessary to prove a defendant’s awareness of his role in a larger conspiracy and the government’s ability to thwart a lack-of-awareness defense through its selection of evidence at trial.  Although the Court affirmed, the extended discussion and the dissent may be useful to future litigants who wish to invoke these defenses.

In United States v. Smith, No. 15-3313-cr, the Second Circuit (Winter, Cabranes, Restani, sitting by designation) held that New York second-degree robbery is a “crime of violence” under § 4B1.2(a) of the 2014 United States Sentencing Guidelines.  As the panel acknowledged, Smith follows directly from United States v. Jones (2d Cir. Oct. 5, 2017), covered here and here, which held that New York first-degree robbery is a crime of violence under the same Guidelines provision because the official commentary lists robbery as a crime of violence, and New York generically defines first-degree robbery to include as an element the taking of property from another person, or person’s immediate presence, by force or intimidation.  The panel reasoned that the rationale of Jones was “directly applicable” because New York second-degree robbery has the same element involving the use of force or intimidation. 

In United States v. Holcombe, 16-1429-cr, the Second Circuit (Jacobs, Leval, Lohier) resolved three open issues involving a conviction for failing to register pursuant to the Sex Offender Registration and Notification Act (“SORNA”), 18 U.S.C. § 2250(a).  First, the Court held that the interstate travel offense at issue “began” in the state the defendant left, New York, and thus venue in SDNY was proper.  Second, the Court held that any potential vagueness in a 30-day window for updating registration did not render defendant’s conviction here void for vagueness given the passage of at least 18 months.  Last, the Court rejected defendant’s claim that the SORNA registration requirement violated his constitutional right to travel.

In United States v. Carosella, 17-896-cr, the Second Circuit clarified an open issue relating to Amendment 782 to the Sentencing Guidelines.  Amendment 782 is sometimes called the “drugs minus two” amendment because it reduced the base offense level for drug offenses by two levels.  Amendment 782 was made retroactive through Amendment 788, and allows for an offender to be resentenced when its application leads to a reduced Guidelines range.  Amendment 782 has led to the reduction of more than 31,000 sentences—but more than 48,000 defendants have sought such relief, meaning that more than one-third of those defendants were turned away empty-handed.  One defendant who did not receive such relief in the district court was Anthony Carosella, and in a per curiam opinion (Walker, Lynch, Chin), the Second Circuit affirmed this decision.

In United States v. Gomez, 16-181-cr (Parker, Wesley, and Droney), the Second Circuit found that the defendant’s Fourth Amendment rights were violated during a five-minute traffic stop because the police officers extended the stop for reasons unrelated to the defendant’s traffic violations.  However, the Court nonetheless affirmed the conviction, ruling that the good-faith exception applied given that the officers acted legally under the Second Circuit’s prior precedent.

In a 12-page summary order issued on February 9, 2018, the Second Circuit affirmed an order of restitution in United States v. Quatrella, 17-1786.  The order is interesting primarily because it addresses the question of when a victim of an offense is not really a victim but rather a fellow participant in the criminal scheme.  The rule in the Circuit is clear:  no order of restitution should be granted that has the effect of treating a coconspirator as a victim.  At the same time, a victim may not be denied restitution simply because the victim had greedy or dishonest motives, so long as the victim’s intentions were not in pari materia with the defendant’s.