In a per curiam decision issued on July 27, 2018, the Second Circuit affirmed a $10 million fine imposed on Morris Zukerman as part of a sentence for tax evasion in United States v. Zukerman, No. 17-948 (Katzmann, Kearse, Pooler). The Court summarized its reason for affirming the fine, which was well above the $250,000 Guidelines ceiling, by writing that “Zukerman, a very wealthy man who has repeatedly and brazenly committed sophisticated tax fraud—a rarely caught and more rarely punished offense that undercuts the functioning of state and federal governments—ought to pay a fine hefty enough to take any financial benefit out of his crimes and to give pause to others who might be tempted to commit similar crimes.” While tax cases often involve downward variances to a non-incarceratory sentence, this case involved a district judge’s strongly held belief that the high fine was important to the purposes of sentencing and that it merited an upward variance. The Circuit agreed.
Human Chorionic Gonadotropin is a hormone produced during pregnancy that is prescribed as part of some fertility treatments and, less legitimately, sold as a dieting aid. In New York, it is considered a controlled substance, but it’s not listed on the federal controlled substance schedule. In United States v. Townsend, the Second Circuit (Cabranes, Carney, Lawrence Vilardo, D.J.) faced a defendant with a prior conviction for possession of HCG, and considered whether his base offense level should be increased based on a prior conviction for an “offense under federal or state law . . . that prohibits . . . distribution . . . of a controlled substance.” USSG § 2K2.1(a). Applying a presumption that the Guidelines refer to federal law unless they explicitly incorporate state law, the panel said no: because HCG is not banned on the federal level, its possession is not an offense for possession of a “controlled substance” for sentencing purposes.
The Second Circuit issued an amended opinion in United States v. Smith (Cabranes, Winter, Restani by designation). Both the original decision, which we covered on the blog earlier this year and the amended decision held that the defendant was subject to an enhanced Guidelines range as a result of having committed the New York offense of robbery in the second degree. This crime constituted a crime of violence within the meaning of the residual clause of Sentencing Guidelines Section 4B1.2(a)(2), which was in effect when Smith was sentenced on October 1, 2015.
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 Split Decision, Court Again Applies Castleman To Interpret the “Force Clause” of the Armed Career Criminal Act
In Villanueva v. United States, the Second Circuit held by a 2-1 vote (Newman and Leval, with Pooler dissenting) that a conviction for first degree assault under Connecticut law qualifies as a violent felony under the Armed Career Criminal Act of 1984 (“ACCA”). The question before the Court was whether the Connecticut statute, analyzed under the “modified categorical approach,” is a violent felony that requires the use of physical force. The Court reversed the district court’s decision to grant the petition under Section 2255 and remanded the case for resentencing.
On July 11, 2018, the Court of Appeals issued a short per curiam opinion (Wesley, Chin, Furman D.J. by designation) in Massey v. United States, affirming the sentence imposed on an individual who was convicted of possession of a firearm after a felony conviction pursuant to 18 U.S.C. § 922(g). Massey had committed three prior felonies in New York: third-degree robbery, second-degree assault, and second-degree attempted assault. Each of these was deemed a crime of violence under the “force clause” of the Armed Career Criminal Act (“ACCA,” codified at 18 U.S.C. § 924(e)). The question presented to the Court of Appeals was whether Massey’s sentence pursuant to the ACCA should be affirmed in light of the Supreme Court’s decision in Johnson v. United States, 135 S. Ct. 2551, 2563 (2015) (Johnson II), holding that the “residual clause” of the ACCA was unconstitutionally vague.
Circuit Holds That Pending State Counts Qualify as “Anticipated” Sentence for Purposes of Sentencing Guidelines on Concurrent Sentencing
Is a term of imprisonment “anticipated” if charges are pending but the defendant has not yet pled or been found guilty? In a per curiam decision, United States v. Olmeda, No. 15-3449 (Katzmann, Leval, and District Judge Carter by designation) (June 22, 2018), the Circuit addressed whether a defendant facing pending state charges is subject to an “anticipated” sentence – which, under Section 5G1.3(c) of the Sentencing Guidelines, would require his federal sentence to run concurrently with any state sentence later imposed. Upon reviewing the relevant legislative history and case law, the Circuit determined that a state sentence is sufficiently anticipated for federal sentencing purposes even when the defendant's guilt has not yet been established in state court. This decision will make sentences marginally shorter for defendants who are in the unfortunate position of being prosecuted in both state and federal court at the same time.
Circuit Vacates Child Pornography Sentence For Second Time, Citing District Court’s Failure to Follow Circuit’s Mandate
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.
No Shortcuts: District Court Must Calculate Guidelines Range Before Ruling on Sentencing Reduction Motion
In United States v. Brooks, the Court (Leval, Pooler, Hall) reiterated that district courts are required to calculate the applicable Sentencing Guidelines range when faced with a § 3582(c)(2) motion for a sentence reduction, and suggested that the failure to do so will rarely be harmless.
Court Allows Wife of Criminal Defendant to Amend Challenge to Forfeiture of Allegedly Commingled Assets on Due Process Grounds
In United States v. Daugerdas, the Court (Walker, Lynch, Chin) offered a lifeline to the wife of a defendant convicted of tax fraud, who sought to assert a third-party interest in funds that the Second Circuit had previously determined were forfeitable to the government as proceeds of the defendant’s crimes. The U.S. District Court for the Southern District of New York concluded that petitioner Eleanor Daugerdas failed to state a claim that she was entitled to retain funds that her husband, defendant Paul Daugerdas, had gratuitously transferred to her. She sought to argue that the tainted funds had been commingled with legitimately earned funds prior to their transfer and therefore could not easily be traced back to Paul’s crimes. But the question of whether the seized funds arose from Paul’s criminal activity had been decided in the affirmative by the district court as part of Paul’s sentencing. As a result, the district court held that Eleanor could not relitigate the issue of whether those funds should be characterized not as criminal proceeds but as substitute assets, which would require the government to seek forfeiture of other property belonging to Paul.
Sentencing Court Must Provide Sufficient Reasons for Sentence Imposed to Determine if Factual Error Influenced Sentence
In United States v. Derek Armstrong, 18-368, the Second Circuit (Sack, Raggi, Kaplan) issued a summary order vacating a three-month prison sentence imposed on the defendant by the U.S. District Court for the Eastern District of New York for violating probation by failing to report for random drug testing. The defendant had previously been sentenced in 2015 to three years’ probation for filing false tax returns and it was his violation of that probation that resulted in the challenged sentence. On appeal, he argued that his prison sentence was procedurally unreasonable because it was based on an erroneous fact asserted by the government at sentencing: that the defendant had failed to pay any of the back-tax payments ordered by the district court.
On May 2, 2018, the Second Circuit held in United States v. Jamaal Brooks (Parker, Lynch, Chin) (per curium) that the district court erred in imposing a sentence of lifetime supervised release on a defendant who had violated prior terms of supervised release due to continued drug use and failure to report to scheduled drug testing. The Court stressed that while the sentencing court has substantial discretion in fashioning an appropriate sentence, a term of supervised release is nonetheless substantially unreasonable if it is improperly justified by retribution and deviates significantly from the sentence given to similarly-situated violators. Supervised release imposes real burdens on both defendants and the justice system, and this decision is a reminder that, as in other aspects of federal sentencing, the punishment should fit the crime.
Missing Texts, Unfair Trial: Second Circuit Remands Case for Possible Brady Violations and Sentencing Irregularities
In United States v. Djibo, the Second Circuit vacated and remanded a judgment of conviction entered in the Eastern District of New York (Johnson, J.) following the defendant’s trial on charges arising from an international heroin-smuggling conspiracy. In a summary order by Judges Sack, Hall, and Droney, the Circuit concluded that errors had affected both the trial and the sentencing, and reassigned the case to a new judge on remand.
The Second Circuit Counts to Three: How One Defendant Became a Career Criminal Over the Course of an Hour
In United States v. Bordeaux, 17-486-cr (Cabranes, Raggi, Vilardo), the Second Circuit held that the defendant’s three prior Connecticut state convictions for first-degree robbery—all of which took place during a single night—satisfied the requirements for conviction under the Armed Career Criminal Act (ACCA), 18 U.S.C. § 924(e). The opinion confirms that a conviction under Connecticut’s first-degree robbery statute constitutes a “violent felony” within the meaning of the ACCA and continues the majority approach to interpreting the “different occasions” requirement of the Act—which places the greatest emphasis on whether a defendant had time to contemplate his actions between the incidents giving rise to his prior convictions. Much is at stake for the defendant: a conviction under Section 924(e) carries with it a mandatory consecutive 15-year term of imprisonment.
The Price of a Drug Conspiracy Conviction: Second Circuit Remands $5 Million Forfeiture Order in Light of Recent Supreme Court Precedent
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.
Second Circuit Reminds Courts They Must Advise Defendants of the Immigration Consequences of Guilty Pleas
In United States v. Gonzales, 16-4318 (March 13, 2018), the Second Circuit (Sack, Parker, Carney) in a per curiam order vacated the conviction of a defendant who had pled guilty without being informed that he was likely to be deported at the end of his sentence. On June 23, 2015, Wilfredo Gonzales appeared before the Western District of New York (Geraci, C.J.) and pled guilty pursuant to a plea agreement to one count of conspiracy to manufacture, possess with intent to distribute, and distribute cocaine, and one count of possessing a firearm in furtherance of a drug trafficking offense. During the plea colloquy, the District Court failed to inform Gonzales, who was a lawful permanent resident, that he could be removed from the United States as a result of his conviction.
In a recent nonprecedential summary order, the Second Circuit (Winter, Lynch, Chin) vacated and remanded a sentence due to a condition of supervised release that prohibited the defendant from having unsupervised contact with any minor, including his nine-year old son. The summary order in United States v. Donohue, 17-943-cr, reflects the Circuit’s continuing concern that the conditions of supervised release be appropriate given the defendant’s conviction and personal circumstances.
On February 9, 2018, the Second Circuit issued a summary order vacating a sentence imposed for a violation of supervised release. United States v. Kalaba, 17-328, involved a defendant who had been convicted for credit card theft and who was sentenced to 70 months’ imprisonment. After his time in prison concluded, he began a three-year term of supervised release. Before his supervised release term ended, Kalaba was arrested and indicted with multiple narcotics offenses, for which he was sentenced to 84 months’ imprisonment, well below the 240 month sentence recommended by the U.S. Probation Office.
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.
In a short summary order issued on February 9, 2018, in the case of United States v. Muir, 17-150, the Second Circuit affirmed a sentence and reminded everyone that nothing about Apprendi, Booker and their progeny changes the rule that existed even prior to the Sentencing Reform Act: uncharged and acquitted conduct can be relied upon by the district court at sentencing. This is not a violation of either the Due Process Clause or the Double Jeopardy Clause of the Fifth Amendment, nor does it violate the Sixth Amendment’s guarantee of the right to trial by jury. So long as the court finds that the relevant facts are proved by a preponderance of the evidence and do not increase either the statutory minimum or maximum sentence, there is no violation of law.
In United States v. Zukerman, No. 17-948 (2d Cir. Feb. 6, 2018) (ALK, RAK, RSP) (summary order), the appellant, Morris Zuckerman, challenged the substantive and procedural reasonableness of his sentence, which was imposed following his pleading guilty for tax evasion and obstruction of the IRS, see 26 U.S.C. §§ 7201, 7212(a). While Zukerman’s plea agreement contained a stipulated fine range of $25,000 to $250,000, the district court (Torres, J.) imposed a fine of $10 million. Given that tax fraud defendants are typically required to resolve their civil tax liabilities in parallel proceedings, it is unusual for such a large fine to be imposed in this type of case. After acknowledging that fine calculations are typically committed to the discretion of the sentencing judge, the Second Circuit held that Judge Torres’ comments at the sentencing hearing and in the written statement of reasons did not provide the panel with a sufficient basis to determine how she reached the $10 million fine amount. Rather than try to guess what considerations went into this calculation, the Court ordered a so-called “Jacobson remand”—wherein it remands “partial jurisdiction to the district court to supplement the record on a discrete factual or legal issue while retaining jurisdiction over the original appeal”—and directed the district court to “elaborate on its rationale for imposing a fine greater than those typically imposed in tax prosecutions.”
Circuit Says “I’ll Drink To That,” Grants Defendant’s Appeal Challenging Alcohol-Ban Condition of Supervised Release
Update: The Second Circuit’s decision in United States v. Betts (No 17-231), which was initially released as a non-precedential summary order on February 5, 2018, was re-released as a published opinion on March 28, 2018. A copy of the opinion can be found here. This upgrade to a precedential opinion is consistent with the Circuit’s recent focus on reasonableness review of the conditions of supervised release. For more on that subject, see our recent post on United States v. Donahue (17-943-cr) Second Circuit Continues To Give A Close Look To Supervised Release Conditions. We also welcome the Court’s decision to make this ruling one with precedential impact rather than a summary order. Even when the legal standard is neither disputed nor newly pronounced, the development of the law requires the application of the standard to different sets of facts, so that attorneys may argue by analogy. Given the relative infrequency with which sentences are reversed for being unreasonable, more guidance from the Circuit is always appreciated.
On January 9, 2018, the Second Circuit (Kearse, Cabranes, Wesley) rejected a request by ex-AOL Inc. employee Jason Smathers to junk the restitution component of his sentence, which requires him to recompense the online service provider for the losses it incurred after Smathers sold 92 million AOL screen names to spammers in the early 2000s—one of the earliest large-scale data security breaches of the Internet age. Smathers argued that his restitution award should be offset by damages later obtained by AOL in litigation against Smathers’s co-conspirators.
In a summary order on January 2, 2018 in United States v. Reyes, the Court (Winter, Lynch, Droney) vacated and remanded a life sentence as procedurally unreasonable on the ground that the district court failed to properly apply a reduction for acceptance of responsibility under U.S.S.G. § 3E1.1. The decision reiterates that a three-level reduction is mandatory under certain circumstances if the district court has already imposed a two-level reduction, and that the government must formally move for a three-level reduction in order to bind the court’s hands. The third point of acceptance of responsibility under the Guidelines is not a matter of grace or kindness by the district court. When a defendant is entitled to receive the third point, the district court is obliged to award it.
In Rare Ruling Vacating Sentence as Both Procedurally and Substantively Unreasonable, Second Circuit Expounds on the Role of Mercy in Sentencing
In United States v. Singh, 16-1111-cr (Kearse, Hall, Chin), the Second Circuit vacated the defendant’s 60-month prison sentence—which was nearly three times the top of his Guidelines range—for illegally reentering the United States after the commission of an aggravated felony on the grounds that it was both procedurally and substantively unreasonable. This opinion stands out as a rare ruling striking down a sentence as substantively unreasonable. It is also notable for the Court’s musings on the role of mercy in the sentencing process.
The Klansman and His Death Ray: Second Circuit Affirms Conviction and Sentence in Bizarre Domestic Terrorism Plot
In United States v. Crawford, 16-4261-cr (Kearse, Cabranes, Wesley), the Second Circuit affirmed via summary order the terrorism-related conviction and sentence of a Klansman in upstate New York. This case represented the first conviction under the 2004 law barring the acquisition and use of so-called “dirty bombs” and provided a rare opportunity for the Circuit to interpret several terrorism statutes. It is most notable, however, for its bizarre fact pattern—involving Ku Klux Klan business cards, a modified x-ray machine, and a plot to kill President Barack Obama and an unknown number of Muslims. In August 2015, Glendon Scott Crawford—a Navy veteran and an avowed member of the Ku Klux Klan—was convicted of several counts of domestic terrorism and was subsequently sentenced to 30 years’ imprisonment for his crimes.
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.”
Circuit Remands Restitution Order for Further Consideration of Indigent Defendant’s Right to Counsel and Application for Expert Services
In United States v. Torriero, the Second Circuit (Chin, Droney, Restani by designation) vacated by summary order a $765,561 restitution order relating to costs incurred by the EPA in cleaning up a property that the defendant had used as an illegal landfill. Although not the panel’s primary focus, the order also addresses a district court’s role in approving or denying an indigent defendant’s request for expert services—an issue currently being examined as part of a broader review of the defense funding under the Criminal Justice Act (“CJA”) by an ad hoc committee chaired by Judge Kathleen Cardone of the U.S. District Court for the Western District of Texas.
Second Circuit Finds Death Extinguishes Trial Convictions and Related Restitution Order – But Tax Offenses and Bail Forfeiture Survive
In 2010, a federal jury in the Eastern District of New York convicted body-armor tycoon David H. Brooks of multiple counts of conspiracy, insider trading, fraud, and obstruction of justice for his role in a $200 million scheme to enrich himself from company coffers. Brooks was the founder and former chief executive of DHB Industries, the leading supplier of bulletproof vests to police departments and the U.S. military. Brooks later pleaded guilty to associated charges of conspiracy to defraud the IRS and filing false income tax returns that had been severed from the rest of the case. While he appealed the result of his jury trial, he did not appeal the tax fraud convictions (pursuant to the terms of a plea agreement). Brooks died in prison while his appeal was pending, forcing the Second Circuit to revisit an obscure area of law to decide what aspects of his convictions, if anything, survived his death. Ultimately, Brooks’s death in prison led to the abatement of his trial convictions, and with that abatement, the erasure of significant restitution obligations that Brooks otherwise would have owed.
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.
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.
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.
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.
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.
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).
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).
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.
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.
In a short summary order in United States v. Breton, the Court (Winter, Jacobs, Cabranes) vacated a term of supervised release because the district court had improperly calculated the advisory Guidelines range. Defendant Raddy Breton pleaded guilty to attempted possession of methylone with intent to distribute. Pursuant to U.S.S.G. § 5D1.2(a) and 18 U.S.C. § 3553(f), which limits the applicability of statutory minimums in certain cases, Breton faced an advisory Guidelines range of one to three years of supervised release. During sentencing, the district court calculated the applicable supervised release range as three years to life. Both parties submitted that the miscalculation constituted plain error.
Second Circuit Parses Distinction Between “Based on” and “Applicable to” in Context of Sentence Reductions for Retroactive Amendments to Sentencing Guidelines
In United States v. Leonard, No. 15-22-32-cr (December 14, 2016) (Raggi, Chin, Droney), the Second Circuit vacated and remanded an order finding a defendant ineligible for a sentence reduction based on a retroactive amendment to the Sentencing Guidelines under 18 U.S.C. § 3852(c)(2).
In United States v. Huggins,15-1676, the Second Circuit (Winter, Cabranes, and Restani, sitting by designation) limited the scope of two Guidelines enhancements often applicable to white-collar crimes: (1) U.S.S.G. §2B1.1(b)(16)(A), which provides for a two-level enhancement when the conduct derived more than $1 million from financial institutions; and (2) U.S.S.G. §3B1.3, which permits a two-level increase when a defendant has abused a position of public or private trust. Huggins marks the first time the Court has given thorough consideration to the first enhancement and further clarified how courts should apply the second.
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