Harry Sandick, Partner

In a short summary order issued on October 25, 2018, the Second Circuit (Newman, Lynch, Droney) affirmed the denial of a habeas petition in the case of Whitman v. United States.  This case could have given the Second Circuit an opportunity to address again a complicated area of insider trading law, but the Court instead rejected the appeal based on procedural grounds, holding that procedural default prevented the district court from granting the petition.

In a short summary order issued in United States v. Levy, the Second Circuit (Hall, Lynch, and Kuntz, D.J.) struck a condition of supervised release that delegated to the United States Probation Department the authority to decide whether to impose a curfew on the defendant.  This condition was discussed briefly at sentencing, with the district court advising the defendant as follows:  “They tell you you have to stay home at a certain hour or curfew, you have to obey.  You understand?”  The witness answered in the affirmative, and defense counsel did not object.[1] 

In United States v. Barrett, the Second Circuit (Winter, Raggi, Droney) rejected a defendant’s argument that his conviction under Title 18, United States Code, Section 924(c), for using firearms in the commission of a violent crime, should be reversed based on the recent Supreme Court decisions in Sessions v. Dimaya, 138 S. Ct. 1204 (2018) and Johnson v. United States, 135 S. Ct. 2551 (2015).  Barrett admitted on appeal that the evidence showed that he was a member of a violent robbery conspiracy but still contended that the firearms counts could not be upheld because the underlying Hobbs Act predicates did not categorically fall within the definition of a crime of violence in Section 924(c)(3).  While Dimaya and Johnson have changed how courts must construe Section 924(c)(3), those precedents did not lead the Court to reverse Barrett’s conviction, leaving in place his 90-year sentence.  This is a major decision for those who practice in the violent crimes area and given the novelty of the issues the decision covers, it seems likely to be the subject of further review, perhaps by the Supreme Court.

In a short per curiam opinion in United States v. Lobo (Parker, Hall, Lohier), the Second Circuit affirmed the imposition of a Guidelines enhancement based on the importation of a controlled substance into the United States. 

In United States v. Paul, the Second Circuit (Newman and Pooler Circuit Judges, and Cote, J., by designation) issued an opinion interpreting the meaning of the phrase “physically restrained” during a commission of a crime for the purpose of applying the physical restraint enhancement set forth in Sentencing Guidelines Section 2B3.1.

In United States v. Pereira-Gomez, a panel of the Second Circuit (Cabranes, Carney, Caproni, D.J.) issued an opinion analyzing whether attempted robbery under New York law qualifies as a “crime of violence” for enhancement purposes under Section 2L1.2 of the November 2014 United States Sentencing Guidelines.  Engaging in a meticulous exercise in statutory interpretation, the panel concluded that while the offense is not specifically enumerated in the Guidelines’ definition of “crime of violence,” it does fall within the residual “force clause” of the relevant Guidelines application note, thereby resulting in a substantial prior offense enhancement to the applicable sentencing range.  This case demonstrates the difficulties that courts and litigators experience in interpreting sentencing enhancement provisions that are based on the categorical nature of a prior conviction.

In United States v. Le, No. 16-819, the Second Circuit considered the constitutionality of the Biological Weapons Anti-Terrorism Act of 1989 and whether it can reach “purely local” conduct.  The panel (Sack, Raggi, Gardephe, D.J.), affirmed the conviction of Cheng Le for attempting to acquire the toxin ricin to create a foolproof murder method, rejecting his constitutional challenges.

In a lengthy opinion in United States v. Sampson on August 6, 2018, the Second Circuit (Cabranes, Livingston, Carney) affirmed the conviction of former New York State Senator John Sampson for obstruction of justice and false statements.  Sampson challenged his conviction at trial on a variety of different grounds.  The strongest possible basis for reversal was based on two prior decisions of the Second Circuit that limited the reach of Section 1503(a), one of the statutes that prohibits obstruction of justice.  In order for the Court to affirm, it needed to limit the apparent reach of these decisions, coming right up to the line that prohibits one panel of the Second Circuit from revisiting a prior panel decision without an en banc ruling by the Court.  In the end, the Court rejected this claim and the many other claims presented by Sampson, leaving both his conviction and sentence in place.

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.