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.
On September 11, 2017, the Second Circuit (Parker, Carney, Stanceu) reversed by summary order the sentence of the defendant in United States v. Soborski (16-cr-3369). The panel remanded the case to the U.S. District Court for the Southern District of New York (Swain, J.) for resentencing so that the district court could consider whether Soborski should receive a minor-role reduction under an amendment to the Sentencing Guidelines.
Second Circuit Affirms Sentence Based on Correct Application of Career Offender Guideline, Yet Majority of Panel Agrees the Result is “Unjust” and “Close to Absurd”
On Monday, September 11, the Second Circuit issued a published opinion in United States v. Jones, No. 15-1518 (Walker, Calabresi, Hall), a case with a complicated procedural history in which the Court affirmed a defendant’s sentence as a career offender under the now-removed residual clause of the Career Offender Sentencing Guideline. The decision was accompanied by a concurrence authored by Judge Calabresi and joined by Judge Hall, which upheld the sentence while calling the result “unjust” and “close to absurd.” We have reported on this case before, when the Circuit reversed and remanded the sentence; subsequent to our earlier blog post the case was re-opened for additional argument, and this week’s decision now affirms.
Golb v. Attorney General, No. 16-0452-pr (Jacobs, Leval, Raggi), arises out of unusual facts—forged emails by a proponent of one side of an academic dispute—and reaches an unusual result. On habeas review, the Second Circuit found that it only owed partial AEDPA deference, and overturned an number of convictions after finding a New York statute unconstitutionally overbroad. In this case, an advocate of one side of the unresolved academic debate about the authorship of the Dead Sea Scrolls went too far and engaged in illegal acts that brought about his own criminal conviction. On its face, the decision applies important aspects of New York and federal constitutional law. However, in a larger sense, the law most relevant to the decision may be Sayre’s Third Law of Politics, which provides that academic policies are the most vicious form of politics because the stakes are so low.
United States v. Gill, No. 15-4444-cr(L) (Livingston, Chin, Carney), a decision in a drug trafficking and murder conspiracy appeal, offers several interesting rulings on evidentiary and trial practice issues that arose out of a 4-week trial. As we often see, these decisions may originate in the world of violence crime and narcotics, but the legal rules established in these cases will also apply in the world of business crimes.
In United States v. Genao, No. 16-924 (Katzmann, Lynch, Chin), the Second Circuit examined the application of the categorical approach to a prior burglary conviction that indisputably involved threats of physical harm but whose minimal elements arguably did not meet the Guidelines’ definition of a “crime of violence.” The Second Circuit reaffirmed that the categorical approach requires evaluation of the elements of conviction, not the facts of conviction, making it reversible error for the district judge to have “short circuited” the analysis by starting with the facts. But the Second Circuit emphasized that in an advisory-Guidelines world, the district court is free to take those facts of conviction into account in exercising its discretion to set the final sentence. So long as the sentencing correctly applies and calculates the appropriate Guidelines sentence, the court is then liberated—indeed required—to pick the sentence that it believe best fits the crime.
A divided Second Circuit panel (Katzmann, Pooler (dissenting), Chin) on Wednesday upheld the insider trading conviction of former SAC Capital portfolio manager Mathew Martoma. Confronting its precedent in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), for the first time since the Supreme Court struck down part of the Newman tippee liability standard this past December, see Salman v. United States, 137 S. Ct. 420 (2016), the Court ruled that the “meaningfully close personal relationship” requirement of Newman is no longer good law. See United States v. Martoma, 14-3599 (2d Cir. Aug. 23, 2017).
Divided Second Circuit Panel Upholds Martoma Conviction, Ruling that Newman’s “Meaningfully Close Personal Relationship” Requirement Is No Longer Good Law After Salman
In a highly anticipated decision, a divided Second Circuit panel (Katzmann, Pooler (dissenting), Chin) today upheld the insider trading conviction of former SAC Capital portfolio manager Mathew Martoma, ruling that the “meaningfully close personal relationship” requirement set out by the Court in United States v. Newman, 773 F.3d 438 (2d Cir. 2014), does not survive the Supreme Court’s decision in Salman v. United States, 137 S. Ct. 420 (2016). See United States v. Martoma, 14-3599 (2d Cir. Aug. 23, 2017).
In United States v. Browder, the Second Circuit (Cabranes, Lohier, Forrest, sitting by designation) has vacated in part an order finding that the defendant violated two conditions of supervised release. The Court’s decision sheds light on the respective roles of the district court and the Probation Office in entering and executing an order of supervised release, and it suggests that the Court may look with increased scrutiny at generalized conditions that defer to the Probation Office without sufficient judicial scrutiny, and may reject violation specifications based on those infirm conditions.
Last week, in Barinas v. United States, the Second Circuit held that a defendant who is extradited to the United States to face charges, pursuant to agreement with the asylum nation, may not raise the objection that the prosecution exceeds the scope of the extradition agreement or that he is to be tried on charges other than those for which he is extradited. That objection, known as a “rule of specialty” objection, may be raised only by the asylum nation itself. The panel also held that when a defendant on supervised release becomes a fugitive, his supervised-release term is tolled during the period of fugitivity. The impact of this ruling is that a defendant who commits another crime while a fugitive from supervised release can be charged with a violation specification even if, at the time he committed the second crime, his term of supervised release otherwise would have ended.
Last week, in Weingarten v. United States, the Second Circuit denied the Section 2255 petition of a convicted child sex offender, who claimed that his counsel had rendered ineffective assistance by failing to challenge the timeliness of the Government’s indictment. The panel—consisting of Judge Wesley, who authored the opinion, as well as Judge Parker and Judge Droney—unanimously concluded that the timeliness issue was too complex, and too uncertain, to support a finding that trial counsel made a “significant and obvious” error by declining to raise it.
The Chiclets and Runts vending machine at your local car repair shop last decade may have been one piece of a fraudulent enterprise that ensnarled roughly 7,000 victims. As CEO of Vendstar, Defendant Edward (“Ned”) Weaver directed a scheme that enticed victims to make substantial up-front investments in quarter-slot candy dispensers with false promises of significant returns—even hundreds of a dollars a day. Despite assurances that this “home-based vending business” had “little risk,” many customers lost their entire investment.
In United States v. Weaver, 16-3861 (June 21, 2017) (Newman, Cabranes, Lynch), the Court held in a per curiam order that contractual disclaimers signed by victims of Weaver’s fraud did not render the fraudulent statements “immaterial” as a matter of law and negate criminal liability.
Yesterday the Second Circuit, in United States v. Huertas (15-4014) weighed in on the question of when a suspect’s brief encounter with police can support a finding that the suspect was “seized” within the meaning of the Fourth Amendment. Judge Jacobs, joined by Judge Winter, concluded that a suspect who briefly pauses to answer a police officer’s questions, but then proceeds to flee, has not been “seized.” Judge Pooler dissented, pointing to out-of-Circuit precedent and arguing that a suspect’s encounter with police generally constitutes a seizure if it extends beyond a “momentary halt.”
On July 19, 2017, in United States v. Allen, et al. (16-cr-98) (Cabranes, Pooler, Lynch), the Second Circuit issued a decision reversing the convictions of defendants Anthony Allen and Anthony Conti for wire fraud and conspiracy to commit wire fraud and bank fraud. This was the first federal criminal appeal in connection with the London Interbank Offered Rated (“LIBOR”) prosecutions, which involved allegations that various individuals and banks manipulated the LIBOR. The LIBOR is a benchmark interest rate intended to reflect the available rates at which banks borrow money from other banks; the LIBOR is incorporated into the terms of financial transactions worldwide. We provided a brief summary of the opinion a few hours after the decision was rendered; here is our more detailed summary.
On July 19, 2017, in United States v. Allen, et al. (16-cr-98) (Cabranes, Pooler, Lynch), the Second Circuit issued a decision reversing the convictions of defendants Anthony Allen and Anthony Conti for wire fraud and conspiracy to commit wire fraud and bank fraud. This was the first federal criminal appeal in connection with the London Interbank Offered Rated (“LIBOR”) prosecutions, which involved allegations that various individuals and banks manipulated the LIBOR.
In a decision that will provide reassurance both to prosecutors and to the institutions with whom they enter into deferred prosecution agreements (“DPAs”), the Second Circuit (Katzmann, Lynch, Pooler (concurring)) held in United States v. HSBC Bank USA, N.A., No. 16-308(L), that the periodic reports submitted by an independent monitor responsible for evaluating compliance with a DPA are not “judicial documents” to which the public enjoys a First Amendment right of access. To reach its holding, the Court was required to address foundational separation-of-powers questions regarding a court’s role in approving and supervising the implementation of a DPA. The decision, written by Chief Judge Katzmann, will discourage courts from second-guessing decisions made by the executive branch in the legitimate exercise of its prosecutorial discretion. Along with the Second Circuit’s decision in SEC v. Citigroup Global Markets, Inc., 752 F.3d 285 (2d Cir. 2014), which held that a district court reviewing a proposed SEC consent decree may only reject it under limited circumstances, last week’s decision makes clear that the Second Circuit envisions that district courts will not play a significant role in assessing the fairness of the government’s settlements with financial and other institutions.
This morning the Second Circuit (Cabranes, Wesley, Sessions, D.J.) released an opinion vacating the conviction of Sheldon Silver and remanding the case to the district court for further proceedings including a retrial. The Second Circuit concluded that the evidence of guilt was sufficient to permit a retrial, but found that the jury instructions did not comport with the Supreme Court’s McDonnell decision and that the error was not harmless. The panel took no joy in rendering its decision, observing that “many would view the facts adduced at Silver’s trial with distaste.” Nor did the panel blame either the district court or the government for today’s reversal, recognizing that the McDonnell decision—which changed the law of the Circuit—was issued after the Silver trial had concluded. Nevertheless, the panel felt itself compelled by McDonnell and the facts of the case to decide the matter as it did.
Court Remands Guidelines Sentence for Child Pornography Offenses Without Finding Procedural or Substantive Unreasonableness
In a summary order issued on July 11, 2017, United States v. Burghardt, No. 16-949(L) (Katzmann, Pooler, Lynch), the Second Circuit remanded a 322-month Guidelines sentence for distribution and receipt of child pornography for “further consideration” by the district court. The Court found the sentence to be procedurally reasonable and also found it was not substantively unreasonable, but nonetheless remanded the case for further consideration, continuing the recent trend of reversals in the sentencing of child pornography cases.
On July 10, 2017, in United States v. Boyland, No. 15-3118 (Kearse, Walker, Hall), the Second Circuit affirmed the conviction of former New York State Assembly member William F. Boyland, Jr. on twenty-one counts of public corruption offenses, including eleven counts of honest services fraud. Many of these counts involved determining that the benefits Boyland offered in exchange for bribes amounted to “official acts” under 18 U.S.C. § 201, the federal bribery statute prohibiting public officials from “being influenced in the performance of any official act.” Id. § 201(b)(2)(A). The U.S. Supreme Court recently narrowed the definition of this term in McDonnell v. United States, 136 S. Ct. 2355 (2016), which led the government to concede in Boyland’s appeal that the trial court’s jury instructions on the meaning of “official act” were in part erroneous. The Second Circuit, however, determined on plain error review that the error did not affect Boyland’s “substantial rights” and thus affirmed his convictions. This decision may prove problematic for other high-profile former elected officials whose appeals are currently pending before the Second Circuit.
On July 7, 2017, the Second Circuit (Jacobs, Leval, Raggi) issued a short summary order in United States v. Stegemann. Most of the order is dedicated to affirming the defendant’s conviction at trial on several drug and firearm-related offenses, but at the end the Court reverses the order of forfeiture imposed as part of the defendant’s sentence, in part with the government’s consent.
In United States v. Martinez, Nos. 14-2759, 15-511, 15-836, 15-1001, 15-3699 (Kearse, Jacobs, Pooler), issued on July 7, the Second Circuit affirmed the convictions of several co-conspirators in a decade-long scheme where at least two dozen individuals allegedly committed over 200 drug robberies by impersonating police officers who “arrested” drug traffickers and “seized” cash and drugs.
In United States v. Delacruz, No. 15-4174, the Second Circuit (Kearse, Lohier, Droney) vacated a defendant’s sentence, holding that the district court’s findings supporting the defendant’s failure to accept responsibility were clearly erroneous. In an opinion by Judge Kearse, the Second Circuit emphasized its precedent that a Sentencing Guidelines reduction for acceptance of responsibility is appropriate where the defendant truthfully admits the conduct comprising the offense of conviction. It would violate the Fifth Amendment’s Due Process Clause to withhold an acceptance of responsibility adjustment because the defendant denied other conduct that was not proved beyond a reasonable doubt. Thus, a “good-faith objection to material [presentence report] statements . . does not provide a proper foundation for denial of the acceptance-of-responsibility credit.”
On June 19, 2017, the Second Circuit (Katzmann, Kearse, Livingston) issued a per curiam decision in United States v. Burden, et al., vacating the term of supervised release imposed on the defendants and remanding the case for resentencing as to supervised release. Judge Kearse concurred in a separate opinion.
On June 5, 2017, in an opinion with facts that even the Court seemed to recognize read like the script for a straight-to-video movie, the Second Circuit (Jacobs, Sack, Carney) declined to overturn a defendant’s conviction and 35-year sentence despite the fact that the defendant’s counsel had engaged in an alleged sexual relationship with the defendant’s mother contemporaneously with his representation of the defendant, arguably creating an impermissible conflict of interest in violation of the Sixth Amendment. The Second Circuit deferred the issue of whether the relationship in fact infringed on the defendant’s right to conflict-free representation, reasoning that post-conviction collateral review provided a better avenue to develop a factual record as to the nature and extent of the alleged affair and its impact, if any, on the defendant’s decision to plead guilty.
In a rare move, the Second Circuit (Jacobs, Pooler, Hall) overturned Armani Cummings’s convictions for murder, conspiracy, and multiple drugs and firearms offenses. The Court reversed based on violation of the hearsay rules—not a common basis for reversal, but on the facts here, the Court recognized the powerful nature of the evidence that was admitted in violation of the rules of evidence. Any reversal of a criminal conviction based on an evidence error—particularly one involving crimes as serious as those alleged here—merits close consideration.
In a summary order issued on May 24, 2017, Pollard v. United States, 16-2918 (Raggi, Carney, and Kaplan by designation), the Circuit affirmed the decision of the United States District Court for the Southern District of New York ( Forrest, J.), denying Pollard’s habeas corpus petition pursuant to 18 U.S.C. § 2241 to challenge conditions of his parole. Pollard, arguably one of the most notorious spies in American history, was arrested in 1985 after passing top secret documents to Israel while working as a research analyst for the U.S. Navy.
A Long Journey Through “Silk Road” Appeal: Second Circuit Affirms Conviction and Life Sentence of Silk Road Mastermind
On May 31, 2017, the Second Circuit issued its long-awaited decision in the “Silk Road” case, United States v. Ulbricht, (15-1815-cr) (2nd Cir. May 31, 2017) (Newman, Lynch, Droney). The panel affirmed Ulbricht’s conviction and sentence of life imprisonment, identifying no reversible error. From 2011-2013 Silk Road, which functioned as an “eBay” for drug dealing, generated approximately $183 million in sales of illegal drugs. Defendant Ross William Ulbricht, who used the pseudonym “Dread Pirate Roberts,” was the owner and creator of Silk Road, and he took a commission on drugs sold through the website.
We are attaching an article about a major Supreme Court decision that imposes a five-year statute of limitations on disgorgement actions brought by the SEC. Justice Sotomayor, writing for a unanimous court, held that disgorgement is a financial penalty, not a form of restitution to victims. The SEC now must either more quickly bring its charges or persuade targets of its investigation to agree to a tolling agreement.
Second Circuit Rejects Novel Due Process Challenge to Rule Permitting Evidence of Prior Sexual Assaults
The Second Circuit joined its sister circuits and upheld the constitutionality Federal Rule of Evidence 413, which renders admissible propensity evidence about the defendant in sexual assault cases. In United States v. Schaffer, 15-2516-cr (Walker, Cabranes, Berman) the Circuit rejected as a matter of first impression the defendant’s argument that Rule 413 violates the Due Process Clause of the Fifth Amendment. The Court also reviewed its jurisprudence on “custodial” interrogation in the course of affirming the admissibility of incriminating statements the defendant made to law enforcement agents prior to his arrest.
Upon Further Review, Second Circuit Holds That Defendant’s Conduct not “in Furtherance of” Alien’s Unlawful Presence in United States
In United States v. Khalil, No. 15-3819 (2d Cir. May 16, 2017) (Calabresi, Wesley, Lohier), the Second Circuit reversed the defendant’s conviction for transporting an alien within the United States for profit in violation of 8 U.S.C. § 1324(a)(1)(A)(ii) and § 1324(a)(1)(B)(i). It did so based on the Government’s failure to put forward sufficient evidence at trial to establish that Khalil transported an alien “in furtherance of” the alien’s illegal stay in the United States.
Second Circuit Partially Affirms Evidentiary Ruling on Interlocutory Appeal in Decision Illustrating the Importance of Proofreading
In United States v. Brown, 16-3468-cr (Leval, Hall, Chin) the Second Circuit affirmed in part and vacated in part via summary order a ruling excluding evidence related to a firearm that had not been identified in the indictment. The ruling is the result of a typographical error in the original indictment that went uncorrected in four superseding indictments issued over the course of nearly five years.
Exigent Circumstances Under the Fourth Amendment May Extend to the Need to Interview an Arrestee in Place
In a split decision in United States v. Delva, No. 15-cr-683 (Kearse, Winter, Jacobs), the Second Circuit held that the Fourth Amendment allowed law enforcement officers to seize cell phones and a number of letters that were in plain view in the room of a suspect’s home where he was interviewed immediately after an arrest. The majority opinion, written by Judge Kearse, relied on the “exigent circumstances” doctrine to hold that it was reasonable under the circumstances to hold an interview in the suspect’s home, which allowed the officers to seize incriminating evidence that was in plain view without obtaining a search warrant. Although the majority opinion is careful to recognize that the exigent circumstances exception requires a case-by-case analysis, the decision extends the infrequently applied exigent circumstances doctrine to a new set of facts. The decision drew a dissent from Judge Jacobs, who objected to the majority’s reliance on the exigent circumstances doctrine when the government had not raised it in the trial or appellate court, thus denying the defendant any chance to respond to this somewhat novel analysis offered by the Court.
In United States v. Lyle, 15-958-cr (Raggi, Chin, Lohier), the Second Circuit covered an array of criminal procedure issues—including the Fourth Amendment concerns associated with rental car searches, proffer agreement waivers, and the admissibility of a co-defendant’s confession—in the course of affirming the defendants’ narcotics conspiracy convictions. Lyle leaves unresolved the issue of whether an unauthorized driver ever has a reasonable expectation of privacy in a rental car. It does provide, however, an important reminder of the potential pitfalls of proffer agreements and the challenges that arise when trying multiple defendants together.
On May 31, 2017, the Second Circuit issued its long-awaited decision in the “Silk Road” case, United States v. Ulbricht, (15-1815-cr) (2nd Cir. May 31, 2017) (Newman, Lynch, Droney). The panel affirmed Ulbricht’s conviction and sentence of life imprisonment, identifying no reversible error. Notwithstanding the many amici submissions challenging the district court’s unreasonableness in imposing a life sentence, the Court disagreed with those contentions and explained that it was required to be deferential to the district court. Judge Lynch, who is a scholar in the area of sentencing, reasoned that “[a]t his point in our history . . . the democratically-elected representatives of the people have opted for a policy of prohibition, backed by severe punishment.” Id. at 120 (emphasis added).
Til Death Do Us Part – Second Circuit Vacates Deceased Former New York State Senator’s Criminal Fine and Special Assessment under the Common Law Doctrine of Abatement
In United States v. Libous, 15-3979 (2nd Cir. May 30, 2017) (Katzmann, Winter, Stein), the Second Circuit vacated the jury conviction of former New York State Senator Thomas W. Libous’ and remanded the case to the district court for dismissal of the indictment and an order to return the $50,000 fine and $100 special assessment to the decedent’s estate. The short story is that if you die while your appeal is pending, any fine is revoked; if your fine was paid, then the amount is returned to the decedent’s estate. The Court invites Congress to enact legislation if it is dissatisfied with the result created by this common law rule.
Second Circuit Rejects Application of Collateral Order Doctrine to “Non-Colorable” Double Jeopardy Claim
In United States v. Serrano, 16-432-cr; 17-461-cr (Kearse, Calabresi, Cabranes), the Second Circuit denied the defendant’s interlocutory appeal for lack of jurisdiction, holding that the collateral order doctrine is inapplicable to “non-colorable” double jeopardy claims and reaffirming its prior rulings that the denial of a Rule 29 motion does not fall within the scope of the doctrine. The Court infrequently polices the bounds of its appellate jurisdiction, and so it is useful to have this short decision on the subject of when a defendant may take an interlocutory appeal.
A Second Circuit panel has ruled that infamous mob boss Carmine “The Snake” Persico will continue serving his 100-year sentence in federal prison. In United States v. Persico, 16-2361, the Second Circuit (Walker, Jacobs, Parker) affirmed by summary order the decision of the United States District Court for the Southern District of New York (Duffy, J.), denying Persico’s motion to shorten his sentence pursuant to the old Federal Rule of Criminal Procedure 35(a).
District Court Must Consider Significant Disparity Between Plea Offer and Ultimate Sentence When Assessing Ineffective Assistance Claims
In Reese v. United States, 16-516, the Second Circuit (Pooler, Wesley, Carney) vacated by summary order the order of the U.S. District Court for the Southern District of New York (Marrero, J.) denying Reese’s petition to vacate his conviction and sentence pursuant to 28 U.S.C. § 2255. Reese claimed that his counsel had provided ineffective assistance, an argument the district court rejected on the grounds that Reese could not establish prejudice because the evidence of guilt presented at trial was “overwhelming.”
The murder-for-hire statute makes it a crime to agree to commit murder in exchange for “anything of pecuniary value.” 18 U.S.C. § 1958. The Second Circuit has understood this language to require that, at the time of the agreement, there was a quid pro quo or at least the promise of some pecuniary consideration. In United States v. Babilonia, No. 14-3739, the Court (Chin, Carney, and Cogan, sitting by designation) reaffirmed this “pecuniary consideration” requirement, but then suggested it presents a minimal hurdle where there was payment after the fact.
Second Circuit Holds that District Court Orders Determining Restitution Credits are Final, Appealable Orders
In United States v. Yalincak, No. 11-5446 (2nd Cir. Apr. 10, 2017) (Calabresi, Raggi, Lynch), the Second Circuit addressed a complicated issue of appellate procedure in the course of a decision on the law of restitution. Specifically, the Court weighed in on when a district court’s order crediting a defendant funds against his restitution obligations becomes a final, appealable order that cannot be revisited by the district court.
For the third time in the past year, the Second Circuit in United States v. Jenkins, No. 14-4295 (Kearse, Jacobs, Parker), has vacated as substantively unreasonable a sentence imposed under the sentencing guideline for child pornography offenses, U.S.S.G. § 2G2.2.
The Circuit Raises A Glass To A Broad Construction Of Law Enforcement’s Authority Under The Fourth Amendment
Yesterday the Second Circuit issued a decision in United States v. Diaz, No. 15-3776 (Walker, Sack, Chin). In an opinion by Judge Sack, the Court addressed two questions under the Fourth Amendment: when does a police officer have probable cause to make an arrest under an ambiguous law, and whether an officer can conduct a search incident to arrest if she only intends to issue a citation.
In Summary Order, Second Circuit Finds Plain Error in Miscalculation of Defendant’s Supervised Release Guidelines Range
In United States v. Shaday, 16-529, the Second Circuit (Jacobs, Livingston, and Kaplan (sitting by designation)) vacated and remanded the supervised release portion of defendant Yova Kana Shaday’s sentence after finding that the district court had applied the wrong Guidelines range. The district court had sentenced Shaday to a Guidelines sentence of twenty-four months’ imprisonment for failing to register as a sex offender under 18 U.S.C. § 2250(a), along with a supervised release term of ten years. Reviewing for plain error, the Second Circuit found that the district court had miscalculated the supervised release portion of Shaday’s sentence when it applied a three-years-to-life Guidelines range instead of the correct five-year fixed term. Such an error was not harmless, the Court continued, as there was no indication in the record that the district court would have imposed the same supervised release sentence had it applied the correct Guidelines range; rather, the district court mistakenly believed it was imposing a within-Guidelines supervised release sentence and thus never considered whether to impose an upward departure.
In United States v. Bodouva, 16-3937 (March 22, 2017) (Katzmann, C.J., Pooler and Lynch, J.), the Court held in a per curiam order that a defendant convicted of embezzlement must forfeit the full amount of her illicit gains to the government even after paying restitution to victims. The ostensibly “duplicative” financial penalty entered against the defendant was not only permissible, but in fact required by statute. The district court thus appropriately ruled at sentencing that it lacked discretion to modify the forfeiture amount. With this decision, the Second Circuit joined several other circuits in holding that restitution and forfeiture serve distinct purposes and, absent clear statutory authority to the contrary, may not offset each other.
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.
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.
In United States v. Monsalvatge (Nos. 14-1113, 14-1139, and 14-1206), a divided panel of the Second Circuit explored the contentious topic of introducing blockbuster films as evidence in a criminal prosecution. Defendants Akeem Monsalvatge, Edward Byam, and Derrick Dunkley were tried and convicted of committing (and conspiring to commit) two armed robberies of Pay-O-Matic check-cashing stores in Queens. The robberies occurred nearly two years apart—in 2010 and 2012—and there were significant differences in the manner in which each crime was carried out. The government believed that these differences were attributable to the fact that the defendants admired and were inspired by the 2010 Hollywood crime thriller, The Town, and altered their modus operandi to carry out the 2012 robbery in a manner resembling the crimes committed in the film. At trial, the district court permitted the government to play for the jury several brief clips from The Town, in order to highlight the similarities between the film and the 2012 robbery. On appeal, the Second Circuit concluded that the district court did not abuse its discretion in admitting these clips into evidence. Judge Livingston authored an opinion joined by Judge Droney; District Judge Analisa Torres, sitting by designation, found the introduction of the clips inappropriate but ultimately concurred in the judgment based on a finding of harmless error.
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.
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.
Second Circuit Reverses In Part and Affirms In Part In Appeal From Convictions Under Sarbanes-Oxley and Accessory-After-The-Fact Statutes
On February 23, 2017, the Second Circuit (Chief Judge Katzmann, Judge Winter, and District Judge Sidney Stein, by designation) issued a per curiam decision in United States v. Natal, et al., that led to a partial reversal and remand for resentencing in the case of one defendant, Hector Morales. The Court held that the conviction of one defendant—Hector Morales—for destruction and concealment of evidence must be vacated because his conduct was not prohibited by Title 18, United States Code, Section 1519. This was a direct result of the Supreme Court’s decision in Yates v. United States, 135 S. Ct. 1074 (2015), which limited the reach of the relevant statute to the destruction of objects that can be used to record or preserve information. We have previously reported on this important decision. Here, the repainting of a van allegedly used to drive away from a crime scene was held to be outside of the reach of Section 1519, as limited by Yates. This reversal of the Section 1519 count requires that Morales be given a de novo resentencing.
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