Harry Sandick, Partner

On December 3, 2019, the Second Circuit (Kearse, Pooler, Livingston) issued a decision in United States v. Calderon, et al., reversing an $18 million restitution order and otherwise affirming the defendants convictions and sentences.  In reversing the restitution order, the Court determined that the defendants’ fraud had not proximately caused the financial losses suffered by the U.S. Department of Agriculture (“USDA”) and certain banks.

On November 13, 2019, the Second Circuit (Hall, Lynch, Gardephe) issued a decision in United States v. Balde, vacating the defendant’s guilty plea for unlawful possession of a firearm by an alien who is in the United States illegally or unlawfully, in violation of 18 U.S.C. §§ 922(g)(5)(A) and 924(a)(2).  The panel initially upheld Balde’s conviction on appeal, but eight days after the Court’s original decision, the United States Supreme Court decided Rehaif v. United States, 139 S. Ct. 2191 (2019), holding that a conviction under the relevant statutes required the government to prove that the defendant knew that he or she was in the country illegally at the time he or she possessed the firearm.  Prior to Rehaif, every Circuit to consider the question held that the defendant’s knowledge of this fact was not an element.  The Second Circuit then granted Balde’s petition for rehearing and concluded that the district court had committed plain error in failing to ensure that Balde was apprised of this knowledge requirement before pleading guilty (even though the district court had no reason at the time to think it was an element of the crime) and because the record did not contain facts sufficient to support a conclusion that Balde was aware that he was in the country illegally. 

On November 4, 2019, the Second Circuit (Kearse, Wesley, Chin) issued a decision in United States v. Murphy, vacating a defendant’s guilty plea for traveling interstate for the purpose of engaging in illicit sexual conduct with a minor, in violation of 18 U.S.C § 2243(b).  The panel sided with several sister circuits in concluding that § 2243(b) is not a strict liability crime, and requires that the defendant travel interstate with the requisite intent, regardless of the actual age of the victim.  The Court concluded that the district court had committed plain error in failing to ensure both that the defendant was adequately informed of this essential element of the crime to which he was pleading guilty, or that there was an adequate factual basis for the plea.  Notwithstanding the awful nature of the crime committed here, it is important for courts to make sure that a defendant is advised of the elements of the offense, as required by Rule 11, and that he admits to those elements.

In United States v. Arrington, 17-4092-cr (October 18, 2019) (Lynch, Lohier, Judge Brian M. Cogan of the United States District Court for the Eastern District of New York, sitting by designation), the Second Circuit vacated Defendant-Appellant Roderick Arrington’s convictions for murder in aid of racketeering and related convictions, and remanded for a new trial, holding that he was not provided with adequate information prior to waiving his attorney’s actual conflict of interest. While defendants should have their counsel of choice, and have the right to waive most conflicts of interest, the defendant needs to have sufficient information and independent advice to make a knowing and intelligent waiver of the right to conflict-free counsel. The Court of Appeals has long policed the boundaries of this issue and Arrington will give courts and counsel further guidance about how to approach these notoriously tricky Sixth Amendment questions.

On September 3, 2019, a divided panel issued a decision in United States v. Wallace (Winter, Pooler, Abrams, by designation) affirming the district court’s denial of Wallace’s suppression motion as well as Wallace’s 15-year mandatory minimum sentence under the Armed Career Criminal Act (“ACCA”).  Judge Pooler wrote an 18-page dissent explaining why she believed Wallace’s suppression motion should have been granted.  The primary issue addressed in the competing opinions was whether the prolonging of a traffic stop was supported by reasonable suspicion.

In United States v. Barrett, No. 14-2541 (2d Cir. Aug. 30, 2019) (Winter, Raggi, Droney), the Second Circuit vacated a defendant’s conviction for using a firearm in connection with a “crime of violence” under 18 U.S.C. § 924(c) in the wake of the Supreme Court’s recent decision striking down the residual clause of that statute in United States v. Davis, 139 S. Ct. 2319 (2019).  To understand the Second Circuit’s decision, a brief discussion of Section 924(c) and Davis is warranted.  Section 924(c) raises some of the same questions presented by litigation under the Armed Career Criminal Act (“ACCA”), which has been the subject of repeated litigation in the Supreme Court and the Circuit Courts of Appeal in recent years.

In United States v. DiTomasso, Defendant was convicted of producing child pornography and transporting and distributing child pornography in the Southern District of New York.  The Second Circuit (Kearse, Jacobs, and Sack) held that searches of Defendant’s emails and chats on internet service providers AOL and Omegle, used for a search warrant leading to evidence against Defendant, did not violate Defendant’s Fourth Amendment rights, and that Defendant failed to preserve on appeal his argument that an entity which reports illegal user activity to authorities was a government entity or actor, subjecting that entity’s search to the Fourth Amendment.  In addition, the Circuit held that Defendant’s trial counsel was not ineffective where counsel made a strategy decision not to call Defendant’s uncle (“Marcus”)—who allegedly admitted to Defendant’s crimes—as a witness.

In United States v. Sierra, the Second Circuit (Newman, Jacobs, Droney) wrote a short published decision that rejected the argument raised by several defendants that it violated the “cruel and unusual” provision of the Eighth Amendment to impose a mandatory life sentence in this case involving convictions for murder in aid of racketeering. 

The Second Circuit (Walker, Cabranes, Sack) issued a per curiam decision in United States v. Bleau, 18-cr-1574 affirming a sentence based on a conviction for receiving and possessing child pornography, but remanding for further consideration of whether to impose a particular special condition of supervised release. 

The Second Circuit (Pooler, Jacobs, Wesley) issued an opinion holding that a criminal forfeiture order in an insider trading case is not limited to the amount of funds acquired through illegal activity but may extend to the appreciation of those funds.  In the case United States v. Afriyie, 17-cr-2444 and 17-cr-4045, the Court upheld a conviction for securities fraud and wire fraud, and upheld an almost $2.8 million forfeiture order, but vacated and remanded a restitution order in light of the Supreme Court’s recent decision in Lagos v. United States, 138 S. Ct. 1684 (2018).

In United States v. Pauling, the Second Circuit (Katzmann, Kearse, and Chin) affirmed the District Court’s post-trial order granting Pauling’s motion under Federal Rule of Criminal Procedure 29 to set aside his conviction for Conspiracy to Distribute or Possess with Intent to Distribute 100 Grams or More of Heroin.  The Court concluded that the District Court had correctly found that the evidence at trial was insufficient to establish the quantity element of the offense (100 grams or more), and therefore entered judgment of conviction instead to a lesser included offense that did not have a quantity requirement (and did not carry a mandatory minimum sentence).

On April 24, 2019, the Second Circuit issued a per curiam decision in United States v. Hausa (Kearse, Jacobs, and Hall) affirming the conviction of Ibrahim Hausa—a member of Al Qaeda known as Spin Ghul (the “White Rose”)—on charges related to his participation in attacks on United States and coalition forces in Afghanistan, which resulted in the deaths of two U.S. soldiers.

In United States v. Walker, 17-1896-cr (Jacobs, Calabresi, and Rakoff, by designation) (April 4, 2019), the Second Circuit held that the Government breached its plea agreement with the defendant by advocating for a term of imprisonment that was substantially higher than the Government’s initial sentencing estimate in the plea agreement.  In support of the increased sentence, the Government pointed only to information known to the Government at the time of the plea.  The decision addresses so-called “Pimentel estimates” used in the Eastern District of New York, in which the Government provides the defendant with pre-sentencing notice of its calculation of the applicable Sentencing Guidelines range in a plea agreement, while cautioning that this estimate may change in the future.  The panel held that, at least on these facts, the defendant was entitled to rely on the Government’s Pimentel estimate despite the cautionary language and, accordingly, the Government unlawfully changed its position based on information known from the outset.  As a result, the case will be remanded for resentencing to a new district judge.

In United States v. Lyle, 15-058-cr (April 1, 2019) (Raggi, Chin, Lohier), the Second Circuit, following a remand from the United States Supreme Court, once again held that the search of a rental car that James Lyle was driving (1) without a valid driver’s license, (2) without the permission of the rental car company, but (3) with the permission of the authorized driver, was lawful.  We covered the panel’s original opinion in United States v. Lyle, 856 F.3d 191 (2d Cir. 2017) in a June 1, 2017 post.  That post lays out the rather interesting facts and procedural history of this methamphetamine distribution and conspiracy case, and discusses each of the issues originally raised on appeal by Lyles and his co-defendant, Michael Van Praagh, including the panel’s original treatment of the rental car search issue.  Subsequent to that blog post, the United States Supreme Court granted Lyle’s petition for a writ of certiorari challenging the search of the rental car and remanded to the Second Circuit for further consideration in light of its unanimous decision in Byrd v. United States, 584 U.S. ---, 138 S. Ct. 1518 (2018).  Byrd included grand rhetoric about the Fourth Amendment, with Justice Kennedy writing that “[f]ew protections are as essential to individual liberty as the right to be free from unreasonable searches and seizures.”  138 S. Ct. at 1526.  On remand, however, the Circuit once again upheld the search of the rental car. 

In an appeal arising in the aftermath of Raj Rajaratnam’s criminal conviction for insider trading, the Second Circuit (Lynch, Raggi, Droney) issued an opinion upholding an almost $93 million Securities and Exchange Commission (“SEC”) civil penalty that was imposed based on the same conduct that served as the basis for Rajaratnam’s conviction.  The case, Securities and Exchange Commission v. Raj Rajaratnam, No. 11-5124-cv, demonstrates that an individual convicted of insider trading may be required to pay a sizable fine under Section 21A of the Securities Exchange Act, despite having already paid a significant criminal penalty.  Despite some provocative comments by the district court about the defendant, the Circuit held that the imposition of the maximum possible fine under the statute was supported by law.

On January 31, 2019, the Second Circuit issued a per curiam decision in United States v. Thrower (Wesley, Chin, and Cote, by designation) reversing a 2017 judgment from the Eastern District of New York that reduced the defendant’s sentence from 180 months to 120 months, which resulted in the defendant’s immediate release.  The district court issued that order after concluding that Thrower’s prior New York convictions for robbery in the third degree and attempted robbery in the third degree do not qualify as predicate “violent felonies” under the Armed Career Criminal Act (“ACCA”).  The Second Circuit concluded that those determinations were incorrect, vacated the district court’s judgment, and remanded with instructions that the district court reinstate Thrower’s original mandatory 180-month sentence.

In a recent summary order in United States v. Smith, 17-2446, the Second Circuit (Katzmann, Kearse, Meyer by designation) remanded a case for additional fact-finding on a narrow issue relating to the duration of the time it took police to obtain a warrant to search the contents of a tablet computing device following the lawful warrantless seizure of the tablet. 

The appeal in United States v. Galanis, 17-629 (Sack, Parker, Chin) resulted in a limited remand in a summary order so that the district court can determine whether there was ineffective assistance of counsel.  The facts of the case are somewhat unusual.  Galanis was indicted in two different and separately-charged securities fraud cases.  In September 2015, Galanis was indicted in the Gerova matter, and in May 2016, he was indicted in the Wakpamni matter.  He was represented by a California law firm in the Gerova matter, but that firm declined to appear in the Galanis matter (perhaps due to unpaid invoices by the client).  This left Galanis unrepresented in the Genova matter.

In Shabazz v. United States, the Second Circuit (Katzmann, Leval, Berman by designation) again addressed the meaning of “violent felony” under the Armed Career Criminal Act (“ACCA”), this time under its “force clause.”  As readers of this blog will recall, ACCA has been the subject of many appeals during the past year.  See Jacqueline L. Bonneau & Harry Sandick, The Second Circuit Counts to Three: How One Defendant Became a Career Criminal Over the Course of an Hour (Apr. 2, 2018); Joshua Kipnees & Harry Sandick, In Split Decision, Court Again Applies Castleman To Interpret the “Force Clause” of the Armed Career Criminal Act (July 18, 2018); D. Brandon Trice & Harry Sandick, Court Regrets Allowing Successive 2255 Petition in Massey v. United States (July 16, 2018).  At issue in this case was whether Shabazz’s convictions for first and second-degree robbery under Connecticut law constitute violent felonies.  The Circuit held that all convictions for robbery in Connecticut inherently involve the use or threatened use of violent force, and therefore reversed the District Court’s grant of Shabazz’s habeas petition.  Interestingly, the Court based its holding not on an interpretation of the elements of robbery by the Connecticut Supreme Court, but on the inherent danger of violent force associated with the act of robbery.  Given the breadth of this holding, any robbery offense that is similar to the common law definition now likely qualifies as an ACCA predicate offense in the Second Circuit, perhaps cutting off future appeals arising out of convictions for robbery in other jurisdictions.

In a brief summary order issued yesterday, the Second Circuit denied Rajat Gupta’s collateral attack on his insider trading conviction in Gupta v. United States, Nos. 15-2707(L), 15-2712(C).  In a decision reminiscent of the recent summary order in Whitman v. United States, the panel (Kearse, Wesley, Droney) passed on the opportunity to develop the law on the “personal benefit” element of insider trading and instead denied Gupta’s habeas petition on the primary ground that he procedurally defaulted by failing to raise the issue on direct appeal.

In United States v. Altareb, 17-1717, the Second Circuit (Sack, Parker, Chin) issued a summary order affirming a conviction for, inter alia, operating an unlicensed money transmitting business and bulk cash smuggling. 

The Second Circuit has once again confronted the issue of what is a “controlled substance” for purposes of sentencing enhancements under the Guidelines.  Earlier this year, the Second Circuit held that the phrase “controlled substance” in U.S.S.G. § 2K2.1(a)(2)—a section that enhances the guidelines sentence for a felon in possession of a firearm previously convicted of two felonies for either a crime of violence or a “controlled substance offense”—refers “exclusively to those substances in the [federal Controlled Substances Act (“CSA”)].” United States v. Townsend, 897 F.3d 66, 75(2d Cir. 2018).  This meant that not all state law drug offenses were suitable to be used as sentencing enhancements.  Now, in United States v. Guerrero, the Circuit held that the phrase “controlled substance offense” construed in Townsend has the same meaning as the term “felony drug trafficking offense” found in Section 2L1.2(b)(1)(B) of the 2014 Sentencing Guidelines, which is used for illegal reentry offenses.  United States v. Guerrero, No. 17-cv-851 (2d Cir. Dec. 10, 2018). 

In United States v. Demott, No. 13-3410 (2d Cir. Oct. 9, 2018) (Leval, Pooler, Wesley), the Second Circuit vacated two convictions under the Controlled Substance Analogue Enforcement Act of 1986 (the "Analogue Act"), 21 U.S.C. § 802(32)(A), 813, due to errors in the district court’s jury instructions relating to the statute’s knowledge element.  The Court also found error in the admission of certain hearsay testimony by a case agent about the underlying investigation.  The defendants in Demott were convicted of participating in a conspiracy to distribute two different synthetic “designer drugs” substantially similar to the listed controlled substance MDMA.  The defendants were thus prosecuted under the Analogue Act, which functions as a catch-all statute to enable prosecutions of crimes involving drugs that are substantially similar to drugs already listed in the schedule set forth in the Controlled Substances Act (“CSA”), 21 U.S.C. § 812.  See id. §§ 802(32)(A), 813.

In Illarramendi v. United States, 18-35 (October 16, 2018), the Second Circuit (Walker, Calabresi, Livingston) in a per curiam decision affirmed the denial of a motion for bail pending resolution of the motion to vacate petitioner’s sentence under 28 U.S.C. § 2255.  In doing so, however, the Second Circuit held that the petitioner need not obtain a certificate of appealability (COA) in order to proceed with the appeal of the district court’s decision.  This was a departure from Second Circuit precedent—a rare event in the absence of an en banc decision by the Court of Appeals.