Daye of the Weak

United States v. Daye, No. 08-1012-cr (2d Cir. July 10, 2009) (Miner, Raggi, Livingston, CJJ)

Bruce Daye received an 180-month ACCA sentence. On appeal, he raised challenges to the use of all of his prior convictions as ACCA predicates, and the court sent the case back for further findings.

1. Escape

One of Daye’s prior convictions was for escape, most likely under Vt. Stat. Ann. tit. 13, § 1501. At the time of his federal sentencing, circuit law provided that, categorically, all escape convictions were crimes of violence for ACCA. Thus, although defense counsel objected to the characterization of the escape as a crime of violence, the district court made no findings as to the nature of the escape, which is now dispositive under Chambers v. United States, 129 S.Ct. 687 (2009).

Here, the PSR strongly suggested that Daye’s conviction arose from failing to return from a furlough, rendering it likely that the conviction is not an ACCA predicate. Since the record is incomplete, however, the court remanded the case to the district court for consideration of whether, under Chambers, Daye’s escape conviction is an ACCA predicate.

2. Sex Abuse of a Minor

Crime of Violence

Daye also had three prior convictions for sexual assault of a child under a Vermont statute that makes it a crime to engage in a “sexual act with another person” who is “under the age of 16.” A “sexual act” includes any physical contact with the sex organs, and any act of genital or anal penetration.

The circuit concluded that engaging in an illegal sex act with a child is a crime of violence under ACCA’s “residual clause,” which covers conduct that “presents a serious potential risk of physical injury to another.” Infliction of a sexual act upon a child by an adult clearly qualifies under this section given that such offenses “typically occur in close quarters,” where the adult is older, stronger and more experienced and is likely to have coerced the child. The court also rejected the view of some other circuits that such conduct is not a crime of violence where the child, unless “particularly young,” professes to consent. The very nature of the conduct, along with the child’s relative physical weakness, will always create a “serious risk that physical injury will result.”

The court also concluded that such conduct is similar in kind to the predicate offenses that are specifically listed in ACCA. The Vermont statute, although it imposes strict liability as to the age of the victim, requires “deliberate and affirmative conduct,” and a child is typically unable to deter an adult from using coercive force.

Different Occasions?

Two of Daye’s sex abuse convictions arose from a single incident in which he took four boys blackberry picking, while the third arose from a separate incident.

An infrequently invoked provision of ACCA requires that the predicate convictions arise from acts “committed on occasions different from one another.” Under circuit precedent, acts are committed on different occasions if they do not stem from the same “criminal episode.” The relevant considerations include whether the victims were different, whether the crimes were committed at different locations and whether they were separated by the passage of time.”

Here, the district court had no occasion to consider whether Daye’s two “blackberry picking” convictions arose from crimes committed on different occasions. The circuit remanded the case for consideration of this question, as well.

Resolution of the issue is clearly important here. If, as seems likely Daye’s, escape conviction is not a crime of violence, and one of his three sex abuse convictions is knocked out because it was committed on the same occasion as another, which also seems likely, then Daye might not be subject to ACCA.

Back to the Future

United States v. Pearson, No. 07-0142-cr (2d Cir. July 2, 2009) (Miner, Katzmann, Raggi, CJJ) (per curiam)

Title 18, U.S.C. § 2259 provides that, in sex abuse cases, restitution is mandatory for the full amount of any loss to the victim, including the costs of medical or psychiatric care. Here, in a case of first impression in the circuit, the court held that this section includes restitution for estimated future expenses.

In this case, then, the district court properly ordered such future restitution. The circuit sent the case back anyway, however, because the district court, which arrived at a figure of nearly $ 1 million - the victims were two young girls - did not adequately explain how it arrived at the figure it selected.

The court also held that the issue survived the appellate waiver in Pearson’s plea agreement. With respect to restitution, the agreement merely stipulated that Pearson would pay “in full,” without specifying an amount. This language “plainly contemplate[d] a future determination of the amount necessary to provide ‘full’ restitution.” Thus, while the waiver would have covered the district court’s decision to impose full restitution, it did not “unambiguously” cover an appeal of “possible errors in the determination of what amount constitutes full restitution.”

No Escape

United States v. Mills, No. 07-0308-cr (2d Cir. June 26, 2009) (Kearse, Sack, Livingston, CJJ) (per curiam)

Gary Mills was convicted of violating 18 U.S.C. § 922(g), and received a 188-month sentence under the Armed Career Criminal Act, 18 U.S.C. § 924(e) (ACCA). But for ACCA, his statutory maximum would have been 120 months’ imprisonment.

On appeal he argued, and both the government and the court of appeals agreed, that under Chambers v. United States, 129 S.Ct. 687 (2009), his Connecticut conviction for first-degree escape was not a violent felony.

The Connecticut statute proscribes a variety of conduct, ranging from escape from a correctional institution (which probably is a crime of violence) to failing to return to a halfway house or from a furlough. Here, at the sentencing hearing, the evidence established that Mills had been released from prison to “transitional supervision.” He lived in a private residence, but was required to report regularly to a community enforcement officer. After he repeatedly failed to do so, and the officer could not locate him, Mills was charged with escape.

The government conceded that all it would ever be able to prove was that Mill’s “escape” was merely a failure to return or report. And, as the court agreed, after Chambers, a “failure to report or failure to return is not a violent felony under the ACCA.”

Summary Summary

Interesting summary orders have been piling up. Here is the latest crop:

In United States v. Strand, No. 08-3730-cr (2d Cir. July 8, 2009), the court held that the district court lacked the authority to impose a drug sentence lower than the mandatory minimum to “adjust” for time served on state sentences for related conduct, where the state sentences had been fully discharged several years before the federal sentences were imposed. The court also held that a valid claim that the defendants were not subject to consecutive § 924(c) sentences under Whitley and Williams was waived by the appellate waiver in the plea agreement.

In United States v. Brown, No. 08-3364-cr (2d Cir. July 6, 2009), the court held that a commerce clause challenge to one of the failure-to-register statues, 42 U.S.C. § 14072, was “not jurisdictional,” and hence was waived by a guilty plea.

In United States v. Douglas, No. 08-0597-cr (2d Cir. June 29, 2009), although the court affirmed the conviction, it was unusually critical of the government's performance. First the court gave "special comment" to the government's discovery violations, including its failure to disclose a recording of the defendant's telephone conversation with his mother and its failure to provide advance notice of an expert witness' testimony. The court also noted with displeasure the government's careless word choice during a critical aspect of its summartion.

In United States v. Hossain, No. 08-3805-cr (2d Cir. June 24, 2009), the court remanded for resentencing because the district court did not adopt the PSR in open court, only in written, post-sentencing writings. This did not satisfy the obligation to calculate and identify the applicable guideline range.

In United States v. Suriel, No. 08-3952-cr (2d Cir. June 4, 2009), the court held that the wording of a Southern District plea agreement’s appellate waiver permitted the defendant to appeal an adverse “safety valve” determination.

Unlucky Day

United States v. Lucky, No. 08-1939-cr (2d Cir. June 19, 2009) (Calabaresi, Katzmann, CJJ, Eaton, J CIT)

Damon Lucky appealed the denial of his Speedy Trial Act (STA) dismissal motion. The circuit, finding only 69 days of nonexcluded time, one short of the magic number, affirmed.

Lucky’s argument was that there was no proper STA exclusion during the 70 days from May 20, 2005, to July 28, 2005, because the district court excluded the time from the STA calculations without making an “ends of justice” finding. The government countered that the time had been properly excluded to give the parties time for plea negotiations, and that plea negotiations are automatically excluded as “other proceedings concerning the defendant” under § 3161(h)(1) of the STA, with no “ends of justice” finding required.

While two other circuits have so held, the Second Circuit is “not yet convinced” by this argument. The phrase “other proceedings” typically refers to “formal judicial processes,” and the statute itself includes as examples “formal processes over which the parties have no direct control.” Plea negotiations, by contrast, are controlled by the parties, not the court, and thus do not “fit comfortably into the ‘other proceedings’ section.”

Ultimately, however, the court ducked the question. It identified a single day during the 70-day period upon which the district court held a status conference. Since a status conference is definitely a “proceeding,” and is “very similar” to the examples listed in § 3161(h)(1), that day was automatically covered by the district court’s exclusion order, and did not require an “ends of justice” finding. This rendered Lucky’s “plea negotiations” argument moot - the court’s thoughtful analysis is thus merely dicta - since with that single day excluded, Lucky could identify only 69 nonexcluded days. Accordingly, his conviction was affirmed.

Gray's Anatomy

United States v. Jass, No. 06-4899-cr (2d Cir. June 16, 2009) (Walker, Cabranes, Raggi, CJJ)


Defendant Leight began sexually abusing his daughter when she was four years old. Jass, his girlfriend, entered the household four or five years later and joined in. This prosecution concerns events that occurred when the daughter was twelve. The daughter had a school friend who was the same age, and Leight and Jass began abusing her as well, first in the car, then at their Rockland County home and, finally, on an overnight trip to New Jersey.

This opinion concerns the admissibility of one defendant’s redacted statement and a sentencing issue.

The Redacted Statement

The defendants’ activities came to light soon after the New Jersey trip, and both were arrested. Post-arrest, Leight gave a detailed statement about the New Jersey trip that implicated both him and Jass. At the defendants’ joint trial, Leight’s confession was admitted, but was redacted of its references to Jass, who was either referred to as “another person” or “the other person.” The district court also gave instructions limiting the jury’s use of the statement to Leight and prohibiting its use against Jass.

On appeal, Jass argued that the admission of Leight’s confession violated her confrontation right under Bruton because the use of neutral pronouns or phrases such as “another person” was inadequate under Gray v. Maryland, 523 U.S. 185 (1998), which held that replacing a defendant’s name with an obvious blank or a “deleted” reference was insufficient to avoid Bruton error. Jass claimed that the redaction here was insufficient because it still obviously implicated her, and that the circuit’s pre-Gray case law - which permitted the substitution of neutral words for a defendant’s name - had been abrogated by Gray.

The circuit disagreed. It first noted that it had already held, in a 2001 case, that this was not so and that there was no basis for reconsidering that case.

Nor did it matter that in Jass’ case the redacted confession implicated only one person other than the declarant and only the declarant and one other person were on trial. While Leight’s redacted confession alluded only to a single, presumably female, confederate, this circumstance is not analogous to Gray because the “another person” redaction effectively concealed from the jury the fact that Leight had referred directly to another person at all, let alone that the person he identified was Jass.

According to the circuit, this is the core element of the Bruton/Gray line of cases: a concern that juries not learn that a declarant defendant has “specifically identified a co-defendant as an accomplice in the charged crime,” because such “specific testimony” is “more vivid than inferential incrimination” and is thus “more difficult to thrust out of mind.” But the Bruton rule is “narrow,” confined to those situations where there will be an “overwhelming probability” that the jury cannot ignore one defendant’s specific implication of another. Where the redaction adequately conceals from the jury the specific identification of a co-defendant, there is no reason to fear that a jury will be unable to follow the court’s instruction that it should consider a confession only against its maker. The Confrontation Clause does not require that a “confession be redacted so as to permit no incriminating inference against the non-declarant defendant.”

Here, accordingly, the redaction was adequate. First, it did not indicate to the jury that Leight’s original statement contained actual names. The way the agent described the confession - e.g., “Mr. Leight told me that he and another person had taken [Victim 2] to ... New Jersey” - in no way suggested that Leight had given the agent the actual name of his accomplice.

Nor did the redacted confession “immediately” inculpate Jass. Here, the inference that the jury would have had to make to connect Jass to the redacted statement was sufficiently attenuated, because the jury would have had to refer to other trial evidence to make the link. Viewing the statement in isolation, it would not have been immediately apparent that the references to “another person” must have meant Jass, even though some of the redactions made it fairly clear that the “other person” was a woman. A “simple gender reference ... lacks the specificity necessary to permit a jury to draw an immediate inference that the defendant is the person identified in the confession.” This is true even though Jass was the only other person on trial with Leight. All a juror could infer from this was that the prosecution believed that Jass was the other person that Leight mentioned in his confession but who, as far as the jury knew, he did not identify further. Accordingly, there was no Confrontation Clause violation here.

The court concluded with a review of the “extensive and powerful” evidence of Jass’ guilt apart from Leight’s statement. This evidence was “so overwhelming” that any error in the admission of Leight’s statement would have been harmless.

The Sentencing Issue

Before the New Jersey trip, Leight used a computer, with Jass’ knowledge, to “groom” the daughter’s friend by showing her images of adults having sex with children so as to persuade her that such acts were normal. The district court subjected both defendants to the two-level enhancement under guideline section 2G2.1(b)(3)(B)(ii), which prescribes a two-level enhancement for the use of a computer to “solicit participation with a minor in sexually explicit conduct.” Jass argued that this enhancement did not apply, since it was the minor’s own participation - and not a third party's - that had been solicited.

The circuit agreed. It would make no sense to say that there should be a two-level increase because Leight used a computer to “solicit [Victim 2's] participation with [Victim 2] in sexually explicit conduct.” It is more natural to read this section as addressing a situation in which one person solicits another person to engage in sexual activities with a minor; otherwise the phrase “participation with” is rendered effectively meaningless. Accordingly, here, it was error to enhance Jass’ sentence under this provision.

But the error was harmless. The district court gave Jass a below-Guideline sentence of 65-years’ imprisonment - Leight got 115 years - and specifically indicated that it would have imposed the same sentence without the enhancement.

Gambling Problem

United States v. Ivezaj, No. 06-3112-cr (2d Cir. June 11, 2009) (Feinberg, Miner, Parker, CJJ)

Six defendants were convicted of racketeering and related offenses arising from their efforts to break the hold that New York City’s traditional organized crime families had on illegal gambling.

The primary challenge on appeal concerned two RICO predicate acts that alleged violations of New York state’s extortion statute. In New York, extortion involves compelling another person to “deliver ... property” to himself or a third person through fear of a future injury. “Property” is any personal property or “article, substance or thing of value ... which is provided for a charge or compensation.” The defendants argued that control over illegal intangible property such as a gambling operation was not “property” and could not be “delivered.”

The circuit disagreed. Surveying New York case law, the court first concluded that the state recognizes that intangible property - for example, a tenant’s right to occupy an apartment - is covered by the extortion statute. New York courts have also held that “illegal tangible goods,” such as narcotics, can constitute “property.” From those two propositions, the circuit readily concluded that illegal intangibles are also “property” under New York law.

The circuit’s own Hobbs Act jurisprudence bolstered this conclusion. Indeed, the court in 2006 held that “intangible property rights can qualify as extortable property under the Hobbs Act,” whether legal or not.

The court characterized the defendants’ claim that control over an illegal gambling business could not be “obtain[ed]” or “deliver[ed]” as “imaginative but overly literal,” since New York courts have already held that intangible property rights can be extorted.

Relatedly, the defendants also claimed that one of their beating victims was not a “victim” of the inchoate extortion offense, since he was not an “owner” of the extorted property. The court held that, since the defendants were charged with attempt and conspiracy offenses, it was sufficient that the defendants thought he was an owner.

Finally, the defendants challenged their § 924(c) convictions, which related back to the substantive racketeering count, arguing that racketeering did not constitute a “crime of violence.” Applying the traditional “categorical approach” to both the racketeering statute and the statutes underlying the predicate acts, the court disagreed. “[W]here the government proves (1) the commission of at least two acts of racketeering and (2) at least two of those acts qualify as ‘crime[s] of violence’ under § 924(c)," a racketeering conviction serves as a predicate for a § 924(c) conviction.

Finally, the court tackled an open Guidelines question in racketeering cases. One defendant challenged his aggravating role enhancement on the ground that the district court should have looked only to the conduct alleged in the charged RICO predicates, and not to his role in the enterprise as a whole. The circuit disagreed, adopting the reasoning of a Seventh circuit case. In racketeering prosecutions, role adjustments function just as they do in any other prosecution: the sentencing court is to look to the count of conviction and all relevant conduct.

Timewell Spent

United States v. Timewell, No. 07-4587-cr (2d Cir. June 1, 2009) (Miner, Raggi, Livingston, CJJ)

Here, the circuit held that the district court’s reasons for denying a Crosby remand rendered the sentence procedurally unreasonable. It remanded the case for reconsideration, with instructions.

Background

Gregory Timewell was a major international trafficker in marijuana and hashish. In the late 1990's, he was prosecuted in the Eastern District of New York, where he cooperated with the government. In 1998, he signed a cooperation agreement, which included a list of his assets that he agreed to forfeit to the government. Three years later, it emerged that Timewell had misled the government about some of his assets - millions of dollars hidden in Switzerland. His explanation was that, at the time of his original cooperation, he believed that the money had been appropriated by one of his associates. He later learned that this was not true, but did not tell the government, a violation of his cooperation agreement. As a result of this, in 2001, he pled guilty to making false statements to the government.

Timewell was sentenced in 2004, before Booker. His offense level was 41: a subtotal of 44, which included a 2-level increase for obstruction of justice based on his concealment of assets, less 3 levels for acceptance of responsibility, which produced a 324-to-405-month sentencing range. The government decided to honor cooperation agreement and made a 5K1.1 motion, urging a “substantial” sentence reduction in light of Timewell’s “extensive” cooperation, which included testimony at a co-defendant’s trial. The court downwardly departed, but only to 275 months’ imprisonment.

The Crosby Remand

In preparation for the Crosby remand, Timewell’s counsel again recounted the scope of Timewell’s cooperation, and also noted that one of Timewell’s co-conspirators received a 120-month sentence. Also before the district court were letters from the government, and a former DEA agent who had debriefed Timewell.

At the Crosby hearing, the assistant again praised Timewell for his forthrightness in cooperating, and noted that a different co-conspirator had received a 180-month sentence with no 5K1.1 motion. The government asked the court to give “serious consideration and weight to the argument” that there should not be a “significant disparity” between Timewell and that co-conspirator.

Despite this, the district court remained concerned about Timewell’s earlier failure to disclose some assets. The court entered an order in October 2007 in which it decided not to resentence Timewell. First, the court found no unwarranted sentencing disparity between Timewell and his co-defendants because, unlike them, Timewell violated his cooperation agreement by failing to disclose assets. The court also took into account that the government typically refuses to file a 5K1.1 motion at all when a cooperator has violated the plea agreement, and noted that it had for this reason imposed a sentence “substantially” longer than it otherwise might have.

The Appeal

On appeal, the circuit vacated that order, and remanded the case with instructions. The court identified five procedural errors in the district court’s approach.

First, the lower court did not “respond directly” to the inquiry “required” by Crosby - whether the sentence would have been “materially different from the sentence originally imposed” had the district court known that the sentencing guidelines were not mandatory.

In addition, the court erred in taking into account what it perceived to be the government’s customary practice of voiding plea agreements whenever a defendant violates one of its terms. There was no evidence before the district court that such a practice existed, and it was procedural error to rest a sentence on a “clearly erroneous finding of fact.”

The district court also erred by increasing Timewell’s sentence based on this supposed “practice” in the first place. “That the government usually voids cooperation agreements upon a breach by the defendant should not be a reason to constrain a district court from giving proper effect to a 5K1.1 letter if the government decides to submit [one] notwithstanding the defendant’s breach.”

Fourth, the court erred in its belief that, absent a 5K1.1 motion, the guidelines would have recommended a life sentence. In fact, the range was 324 to 405. A district court errs when it “makes a mistake in its Guidelines calculation.”

Finally, the court mischaracterized Timewell’s unwarranted disparities argument by including more co-defendants in its analysis than Timewell had proposed as a basis for comparison. The district court included defendants who had been sentenced after Timewell was sentenced, but under Crosby a court considering a remand must limit its decision to the circumstances “existing at the time of the original sentence.”

The circuit remanded the case and directed that the district court consider the Crosby inquiry “without consideration of past practices of the government in regard to the rescission of cooperation agreements.” In addition, if the court decides to revisit the original sentence, it should consider (1) the sentencing disparities among co-defendants; (2) the government’s recommendation of a “substantial” departure from the guidelines “in view of Timewell’s excellent cooperation”; and (3) the factors set forth in § 5K1.1 itself.

Reduction Ad Absurdum

United States v. Savoy, No. 08-4800-cr (2d Cir. May 27, 2009)(per curiam)

After a 1998 jury trial on crack distribution charges, Demetric Savoy faced a guideline sentencing range of 188 to 235 months’ imprisonment, and received a sentence at the bottom of the range. In 2008, he moved, under 18 U.S.C. § 3582(c)(2), for a sentence reduction under the retroactive ameliorating amendment to the crack guidelines. With that amendment, Savoy faced a revised range of 151 to 188. However, in the motion, he argued that the court should sentence him to 120 months. The district court granted the § 3583(c)(2) motion and reduced the sentence to 151 months, but refused to go lower. The court believed that the relevant guideline provision, § 1B1.10, was binding and precluded a sentence below the amended range.

On appeal, the circuit affirmed. The language of § 1B.10 is mandatory: the court “shall not reduce the defendant’s term of imprisonment under ... § 3582(c)(2) ... to a term that is less than the minimum of the amended guideline range.” Savoy argued that Booker and its progeny have made this mandatory language advisory. The circuit disagreed, but took the easy way out. Instead of reasoning its way through the issue, the court simply noted that seven other circuits have held that sentencing courts lack authority to reduce a sentence below the amended guideline range, and noted that it was “persuaded by the reasoning of those courts.”

There is, however, a circuit split on the issue, so perhaps it will go up.

Citizen Feign

United States v. Tureseo, No. 07-2933-cr (2d Cir. May 14, 2009)(Miner, Cabranes, CJJ, Berman, DJ)

Juan Tureseo was deported in 1997, after an assault conviction. Immigration agents found him in the United States in 2006, at which time he insisted he was a United States citizen named Danny Ortega. When the agents warned him that it was a crime to lie to them, he admitted the truth.

Tureseo was originally charged only with illegal reentry. As that case wore on, however, he again insisted that he was Danny Ortega, a United States citizen. His wife provided Ortega’s birth certificate to his counsel, who passed it on to the government, asserting that it belonged to his client. As a consequence, the government obtained a superseding indictment charging Tureseo with falsely claiming United States citizenship and aggravated identity theft. Tureseo, now with new attorneys, was convicted after a jury trial.

The Defendant’s Absence

On the second day of the jury charge, with just two short instructions left to give, the defendant was not present. In the jury’s absence, the judge explained that, the defendant had refused to come to court that morning and that the lead defense attorney, after calling chambers, had gone to the jail to prod Tureseo to get moving. The judge waited an hour for them to arrive, then concluded the charge without them, instructing the jury to disregard the fact that Tureseo and one of his attorneys were missing.

Shortly thereafter, lead counsel and Tureseo came to court. Counsel explained that Tureseo’s absence was the fault of a marshal who refused to cuff him, and moved for a mistrial based on the court’s decision to proceed in their absence.

The circuit found that the district court violated Tureseo’s right to be present. The record was unclear as to whether Tureseo knowingly and voluntarily absented himself from the trial. Beyond hearing counsel’s explanation, the district court did not conduct an inquiry into the circumstances of Tureseo’s absence, and whatever inquiry the court had earlier undertaken did not take place on the record. On these facts, the decision to continue the trial in Tureseo’s absence was error.

The error, however, was harmless. The jury was permitted to return to court later to examine Tureseo’s features - a disputed issue in the case - and there was “overwhelming evidence of Tureseo’s guilt” such that there was “no possibility of prejudice.”

Aggravated Identity Theft

Tureseo requested that the court instruct the jury that, for the aggravated identity theft count, the government was required to prove that he knew that the means of identity he used to falsely claim United States citizenship belonged to an actual person. The district court refused, which was error under Flores-Figueroa v. United States, __U.S___, 2009 WL 1174852 (May 4, 2009). Moreover, the error was not harmless: while there was “substantial evidence” that Tureseo knew that Ortega was an actual person at the time he used Ortega’s birth certificate to assert United States citizenship, the evidence “d[id] not all flow in one direction.” Ortega testified that he did not know Tureseo, which suggested that Tureseo did not know of Ortega’s existence, either.

Summary Summary

There have been five summary orders of interest in the past month or so. Here they are:

In United States v. Al Manware, No. 08-2235-cr (2d Cir. May 4, 2009), the court ordered resentencing on a supervised release violation because the district court did not provide the defendant an opportunity to allocute before imposing sentence.

In United States v. McGowan, No. 08-2603-cr (2d Cir. May 4, 2009), the court found no abuse of discretion in the district court's permitting hearsay at a supervised release revocation hearing. The declarant was a 12-year-old child victim and the district court "implicitly found" that her age and the "suggestive nature of the offense weighed in favor of not requiring her testimony." Moreover, the hearsay was trustworthy, since it was supported by "ample circumstantial evidence" such as surveillance photographs and the defendant's own admissions.

In United States v. Scott, No. 08-1489-cr (2d Cir. April 14, 2009), the court held that a restitution order could include lost investment returns from funds that were stolen from variable annuities and IRA's.

In United States v. Hamilton, No. 07-2874-cr (2d Cir. April 14, 2009), the court vacated a sentence under Kimbrough where the district court indicated that it would not consider the defendant's age because the guidelines forbade it. The circuit would not "assume that the district court understood that it had discretion to consider age and its correlation with recidivism."

In United States v. Cayce, No. 08-3784-cr (2d Cir. April 2, 2009), the court remanded the case for further consideration of the defendant's motion to withdraw his plea. It noted that at least two factors supported the motion: he moved to withdraw on the next business day after the plea hearing, and the basis was a statute of limitations defense, a claim of "legal - though not factual - innocence."

The Pursuit of Happy Ness

United States v. Ness, No. 05-4401-cr (2d Cir. May 8, 2009) (Winter, Calabresi, Pooler, CJJ)

Samuel Ness was convicted of money laundering offenses in connection with his armored car business, which received and distributed millions of dollars in narcotics proceeds. He was sentenced to 15 years in prison. On his first appeal, the circuit affirmed. He then sought certiorari in the wake of Regalado Cuellar v. United States, 128 S.Ct. 1994 (2008), and the Supreme Court vacated the affirmance and remanded the case for further consideration. This time, the circuit found that the evidence was insufficient and reversed the conviction.

Cuellar held that, for transportation money laundering offenses, the government must prove that the defendant’s purpose, “in whole or in part, was to conceal the nature, location, source, ownership or control of the funds.” A showing that a defendant hid funds during transportation is not sufficient to support a conviction, since there is “a difference between concealing something to transport it, and transporting something to conceal it.”

Ness was convicted of two counts. A substantive transaction money laundering count under 18 U.S.C. §§ 1956(a)(1)(B)(i), and a conspiracy with three objects:transaction money laundering, transportation money laundering under 1956(a)(2)(B)(i), and engaging in monetary transactions in unlawful funds under 18 U.S.C. § 1957(a).

With respect to the § 1956 charges, the circuit found no evidence that Ness’ “purpose in transporting the [drug] proceeds was to conceal” the nature, location, source, ownership or control of the money. All the government proved was “how” Ness moved the money, not “why.” Even Ness’ “avoidance of a paper trial” by hiding the proceeds and using code words showed “only that he concealed the proceeds in order to transport them. Under Cuellar, such evidence is not sufficient to prove transaction or transportation money laundering.”

A different analysis doomed the § 1957 object. This statute requires the government to prove a “monetary transaction” that involved a “financial institution.” Here, the evidence on that element was insufficient. “Financial institution” has a long and complex definition, comprising the twenty-six types of institutions listed in 31 U.S.C. § 5312, plus several others described in related regulations. Neither Ness nor his armored car company qualified under any of these definitions.

On appeal, the government relied solely on one of the regulations, 31 C.F.R. § 103.11, which covers money transmitters and the like. The circuit first held that since the government did not present this theory to the jury it “cannot support an affirmance.” In any event, it lacked merit, since Ness’ business lacked the features that the regulation requires of a money transmitter.