Second Circuit Criminal Law Blog

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The Second Circuit Criminal Law Blog is your place to follow the criminal law decisions rendered by the U.S. Court of Appeals for the Second Circuit.  With a rich 225-year history of legendary judges like Learned Hand and Henry Friendly, the Second Circuit has long been known for writing important and thoughtful opinions on many subjects, including the criminal law.  We review every published criminal law opinion handed down by the Second Circuit in order to provide you with a summary of the holding, an assessment of the key legal issues, and practice pointers based on the Court’s ruling.  Our focus is on white-collar criminal cases and matters relating to internal investigations.  Our blog is written by a team of experienced attorneys, including many former law clerks for the Second Circuit and other federal courts.  The blog’s editor in chief is a former Deputy Chief Appellate Attorney in the U.S. Attorney’s Office for the Southern District of New York who has appeared in more than 100 Second Circuit criminal appeals.

Circuit Amends Decision Affirming Sentence Two Panel Members Deemed “Absurd,” Remands for Resentencing

On October 5, 2017 the Circuit published an amended opinion in United States v. Jones, No. 15-1518 (Walker, Calabresi, Hall), which supplanted a decision issued on September 11 that we covered in an earlier blog post.  The amended decision differs from its forbearer in one key respect.  In the initial decision, Judge Calabresi authored a concurring opinion (joined in by Judge Hall) that chided the district court’s sentence, as affirmed by the Circuit, as “little short of absurd” given the defendant’s borderline IQ, old crimes, and the “timing quirks” that rendered the sentence “very, very high . . . in contrast with almost every similarly situated defendant.”  Now, in this amended opinion, the panel affirmed but still remanded “for further consideration as may be just in light of the circumstances.”

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Circuit Denies Protection to Hallway Conversation Between Co-Defendants, Highlighting Limits of JDAs

A Joint-Defense Agreement (JDA) can be an extremely valuable tool in coordinating defenses against pending or impending prosecution, as it formalizes the creation of a zone of privilege in which co-defendants and their counsel can exchange confidential information without fear of compelled disclosure. But as the Circuit’s recent decision in United States v. Krug, No. 16-4136 (Leval, Pooler, Hall) (Aug. 18, 2017) exemplifies, a JDA protects communications between co-defendants only insofar as they further the provision of legal advice. A JDA cannot transform the joint-defense group’s communications relating to business, personal, or other non-legal issues into privileged discussions. As happened here, such non-privileged statements can become part of the government’s case at trial.

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This Is Not Fine: Circuit Vacates Fine Imposed on Unable-to-Pay Defendant, Citing Lack of Reasoning or Evidence for Judge’s Sentence

In a summary order issued March 7, 2017, United States v. Marmilev, 14-4738 (Leval, Calabresi, and Carney), the Circuit vacated and remanded the portion of the defendant’s sentence imposing a $250,000 fine after the defendant pled guilty for charges including conspiracy to operate an unlicensed money transmitting business.  From the Court’s procedural history, it’s fair to say that the fine assessed by the district court seemed to come out of the blue for all involved parties:  the presentence report (PSR) had cited the defendant’s inability to pay and recommended against a fine; the Government did not request that a fine be imposed; and the district court did not question the PSR’s recommendation or indicate prior to sentencing that it was considering a fine.  Yet not only did the district court order the defendant to pay a fine, but the fine it imposed was well in excess of the Guidelines range of $17,500-$175,000.

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Court Affirms Conviction In Case Involving $126 Million Loan For Shopping Mall Transaction, Rejecting Argument That Sentence Should Be Lowered Because Of The Financial Crisis

In a summary order on March 8, 2017, the Second Circuit (Katzmann, C.J. and Pooler and Lynch, J.) affirmed the conviction and sentence for wire fraud in United States v. Frenkel. The case attracted some public attention because Frenkel’s co-conspirator, Mark Stern, was a cooperating witness in a number of public corruption cases brought by the U.S. Attorney for the Southern District of New York. The underlying facts involved Frenkel’s fraudulent inducement of Citigroup to lend $126 million to finance the purchase of shopping malls. Although the decision has no precedential value, it presented four interesting issues.

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Return to Sender: Aéropostale Employee’s Fraud Convictions Affirmed, But Restitution Order Sent Back for Recalculation

Aéropostale is known by many as a staple of adolescent wardrobes and shopping-mall standard.  But as a patsy for kickback schemes?  In United States v. Finazzo, 14-3213-cr, 14-3330-cr (Droney, J., joined by Judges Sack and Chin), issued March 7, 2017, the Circuit affirmed the mail and wire fraud convictions of an Aéropostale executive who, over the course of a decade, steered hundreds of millions of dollars in business to a vendor that cut him in on the profits.  In affirming his convictions, the Court held that the defendant’s deprivation of Aéropostale’s right to control its assets was injury sufficient under the mail and wire fraud statutes, and that the district court had adequately instructed the jury that such deprivation must be able to cause tangible economic harm.  However, the panel vacated and remanded the district court’s restitution order on the grounds that the calculations presumed that any financial gain to defendant through the scheme was a loss to Aéropostale.  With little more direction than to “try again,” the court instructed the district court to develop a new methodology for computing a restitutionary award that subtracts any legitimate value that Aéropostale derived through its dealing with the vendor.  The Circuit has long stressed the need for precision in restitution calculations, and it can be difficult to make such calculations in a kickback case prosecuted under a theory based on the deprivation of the right to control assets.

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An Empty Bargain: Circuit Overturns Guilty Plea Entered By Defendant Unapprised of Mandatory Life Sentence

In a decision dated March 10, 2017, the Circuit issued a blistering decision vacating the district court’s denial of the defendant’s motion to withdraw his guilty plea in United States v. Johnson, No. 15-3498-cr (Jacobs, J., joined by Judges Cabranes and Parker), holding that the defendant’s plea to offenses requiring a mandatory life sentence was not made knowingly, voluntarily and intelligently.  Readers squeamish of benchslaps are advised to stop reading here: the panel called out the defendant’s asleep-at-the-wheel trial counsel by name no fewer than a dozen times, and chided the “robotic” prosecutor for delivering a prolix recitation of the sentence facing the defendant during plea allocation.  But the panel saved its strongest admonishment for the district court judge, whom it believed so incapable of handling the proceedings fairly and competently on remand that it directed the case to be reassigned.  In the end, only the defendant – a repeat offender facing felony drug trafficking charges – emerged from the opinion unscathed.

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If It Looks Like a Bomb, and Explodes Like a Bomb . . . : The Court Finds Model Pipe Bomb Is a Destructive Device

Is a pipe bomb that exploded a “destructive device”?   Though it may seem like a trick question, in United States v. Sheehan, 15-2028-cr (Lynch, J., joined by Judges Winter and Wesley), issued September 23, 2016, the Court spends most of its 44-page decision grappling with whether a bomb built and planted by the defendant was an “explosive bomb” (or a “combination of parts” from an explosive bomb could readily be assembled) such that it qualifies as a destructive device under Section 924.  The Government (and common sense) prevailed:  the Court concluded that, indeed, this exploding bomb was an explosive bomb.

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Disjunction, Disjunction, What’s Your Function? Despite Statutory “or,” Court Holds Same Conduct May Support Both Modification and Revocation of Supervised Release

At issue in the Court’s September 22, 2016 decision in United States v. Harris, No. 15-1774 (Raggi, J., joined by Judges Newman and Calabresi) is a clever defendant’s embrace of the disjunctive in Section 3583 in urging that the statute governing revocation of supervised release permits a violation of release conditions to serve as the basis to revoke “or” modify supervision – but not both. 

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Gimme Shelter, But One With Economic Substance

The line that separates lawful tax shelters from unlawful ones is notoriously hazy, particularly at the margins.  There is little question, however, that a transaction that serves no meaningful business purpose other than to reduce one’s tax liability will be treated as an illegitimate tax shelter.

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Second Circuit Affirms Honest Services Fraud Conviction Amidst Doubt About The Future Viability Of Honest Services Fraud

Does the act of paying money to a party official to allow a candidate merely to run for public office constitute bribery?  And does a party official owe a “fiduciary duty” to his party to open its ticket to candidates from opposing parties only sparingly, such that an exchange of money for a place on the party ticket supports a conviction under the honest services fraud statute (18 U.S.C. § 1346)?

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