Sunday, March 27, 2011

Summary Summary

Here are three more summary orders of interest.

United States v. Hernandez, No. 09-4930-cr (2d Cir. March 25, 2011), points out an interesting Guidelines question. Under § 3B1.1, the government bears the burden of proving that the defendant played an aggravating role. And one of the requirements for safety valve consideration is that the defendant not receive an aggravating role enhancement. But the circuit has held that the defendant bears the burden of proving that he qualifies for the safety valve. These conflicting principles have created "uncertainty about where the burden lies with respect to" this aspect of safety valve relief. This opinion, unfortunately, only points out the question but does not answer it.

In United States v. Nelson, No. 09-3308-cr (2d Cir. March 23, 2011), the court considered whether an appeal waiver was knowing and voluntary. The waiver precluded an appeal of any sentence of 137 months' imprisonment or less, but during the plea, at one point, the court advised Nelson that he would not be able to appeal any sentence that "exceeds 137 months' incarceration." Nevertheless, the court, "after careful review of the record," declined to invalidate the waiver. At another point in the plea the AUSA correctly explained the appeal waiver, and the court itself correctly described a parallel provision of the waiver dealing with career offender classification. Thus, there was "no meaningful risk that Nelson elected to enter into the plea agreement on the mistake understanding that it precluded his ability to appeal a sentence in excess of, but not at or below, 137 months."

In United States v. Bell, No. 09-4964-cr (2d Cir. March 23, 2011), the defendant challenged the government's rebuttal summation, which identified him with Lee Harvey Oswald and also "falsely portrayed him as a gambler and gunman waiting for a shootout with the police." The circuit found some of the comments "troubling," because they "overstated the trial evidence in a number of respects," and others "misleading" because they were "unsupported by the evidence" and an "inappropriate" characterization of it. But the court nevertheless affirmed, noting that the defendant did not object to the comments below, and that they were an "aberration in an otherwise fair proceeding."

Sunday, March 20, 2011

Get the Point?

United States v. Potes-Castillo, No. 07-5518-cr (2d Cir. March 15, 2011) (Straub, Hall, CJJ, Underhill, DJ)

The defendant here received a 188-month sentence after a jury convicted him of a drug conspiracy. At sentencing, it emerged that he had but one prior conviction: a 2004 New York State conviction for driving with ability impaired by alcohol (“DWAI”) in violation of New York Vehicle and Traffic Law § 1192(1). He was sentenced to a one-year conditional discharge and a fine.

Although he argued at sentencing that the conviction should not count in his criminal history score, the district court disagreed. It assessed him one point for the conviction and two additional points for committing the instant offense while under the conditional discharge. This placed him in Category II and rendered him ineligible for safety valve treatment.

On appeal, the circuit reversed.

Guideline Section 4A1.2(c) contains two lists of misdemeanor and petty offenses that are excluded from consideration in the criminal history score. Sentences for the offenses listed in 4A1.2(c)(1) and those “similar to” them are excluded if the sentence was a term of probation of one year or less or a term of imprisonment of at less than thirty days, or the prior offense was similar to an offense for which the defendant is now being sentenced. Included in the § 4A1.2(c)(1) list is “careless or reckless driving.”

Section 4A1.2(c)(2) contains a list of offenses - and also includes those “similar to” them - for which the sentences are never counted. Included on this list are “minor traffic infractions (e.g., speeding.)”

There is an Application Note that deals with DWAI offenses. Note 5 to § 4A1.2 provides that “Convictions for driving while intoxicated or under the influence (and similar offenses by whatever name they are known) are counted. Such offenses are not minor traffic infractions within the meaning of § 4A1.2(c).”

The plain language of the Note precludes an argument that DWAI is a “minor traffic infraction” under § 4A1.2(c)(2), since both the Note and this section use the same phrase.

But, the circuit concluded, Note 5 is ambiguous as to whether it also precludes applying § 4A1.2(c)(1) to DWAI offenses. If the first sentence of the note is read to mean that such offenses are always counted, without possibility of exception, then the second sentence would be rendered “meaningless.” Another reading, however, would be that the Note simply takes such offenses out of § 4A1.2(c)(2), leaving open the possibility that they might still be covered by § 4A1.2(c)(1). This is the reading that the court selected.

The first alternative - advocated by the government - would treat DWAI offenses, in essence, as felonies, and always count them, making them the only misdemeanors or petty offenses to which § 4A1.2(c) can never apply. The court rejected this: “It would be plainly inconsistent with section 4A1.2(c) to argue that DWAI offenses, although they are misdemeanor or petty offenses, are always counted and can never fit within the exclusion explicitly provided in section 4A1.2(c)(1).”

Rather, the court concluded that the Note is meant only to take DWAI offenses out of § 4A1.2(c)(2), but that they can still be excluded from the criminal history score if they are “similar to" any offenses listed in section 4A1.2(c)(1). Under this section, “the seriousness of the conduct in each individual case will determine whether the sentence actually counts.”

Accordingly, here, the district court erred by failing to apply § 4A1.2(c)(1) to the DWAI conviction. Since the sentence imposed on the DWAI was not so severe as to take the conviction out of § 4A1.2(c)(1), and the offense was not similar to the federal offense of conviction, the circuit sent the case back to the district court with instructions to determine whether the DWAI conviction was “similar to” the § 4A1.2(c)(1) offense of “careless or reckless driving.”


Down for the Count

United States v. Desnoyers, No. 10-0447-cr (2d Cir. March 14, 2011) (Jacobs, Wesley, Chin, CJJ)

Mark Desnoyers was convicted of, inter alia, one count of conspiring to both violate the Clean Air Act (“CAA”) and to commit mail fraud, in connection with his asbestos abatement work. The district court, finding both factual and legal problems with the conviction on that count, entered a post-verdict judgment of acquittal. On the government’s appeal, the circuit reversed and reinstated the conviction.

The conviction on the conspiracy count related to asbestos abatement work in eight buildings. But, after trial, the government conceded that seven of the buildings were not subject to the CAA’s asbestos removal regulations. As for the eighth, the evidence was equivocal. The issue - whether that building contained enough asbestos to qualify - was not proven directly at trial because no witness actually took measurements there. Rather, the only evidence was a description of the abatement project that used trade jargon that was ambiguous.

The district court concluded that the guilty verdict on the conspiracy count could not stand, holding that the CAA object of the conspiracy “suffered from a factual defect,” and, alternatively, that the CAA object “suffered from a legal defect.”

The circuit disagreed on both theories, and reversed. A factual challenge to a conviction raises the standard question for sufficiency: could a reasonable jury find each element of the offense proven beyond a reasonable doubt. A legal challenge occurs when a defendant is “charged with conduct that is not legally actionable.” The difference is significant. Where a jury is considering alternative theories of guilt but renders a general verdict, a factual challenge fails as long as there was “sufficient evidence to support one of the theories presented.” But if the challenge is legal and“any of the theories was legally insufficient, then the general verdict must be reversed.

Under these standards, the conspiracy count was sound. As for factual insufficiency, Desnoyers did not challenge the mail fraud object at all. Thus, even if the CAA theory were insufficient, the conviction should still survive a factual challenge.

There is a “caveat” to this rule - the count should still be reversed when “an overwhelming amount of evidence relevant only to the unproved part of the conspiracy may have prejudiced the jury.” But the caveat did not apply here. There was not an overwhelming amount of evidence relevant only to the CAA object. Rather, most of the evidence was relevant both to the CAA object and the mail fraud object.

Desnoyer’s legal challenge to the count also failed. In fact, he did not “actually set forth a cognizable legal challenge” to the count at all. Rather, all he did was restate the factual objection - that the government could not prove that any of the eight projects was subject to CAA asbestos regulations - and cast it as a legal defect. The court rejected his claim that the jury was instructed “using an incorrect explanation of the law.”

Thus, while the circuit reversed a conviction for Hobbs Act extortion where the two of the three definitions of extortion in the jury charge did not satisfy the statutory definition of extortion, this case was different. All the jury was asked was whether his conduct violated the CAA, something that juries are “always asked” to do. There was no mistake about the law.


Thoroughly Unappealing

United States v. Buissereth, No. 09-5358-cr (2d Cir. March 15, 2011) (Cabranes, Chin, CJJ, Crotty, DJ)

This decision found great fault with a sentencing that “left much to be desired.” The district court “failed to (1) rule on the numerous filed objections to the PSR; (2) rule on the requests for downward departures and a variance; (3) adopt the findings of the PSR; (4) mention, much less articulate its consideration of, the relevant factors set forth in 18 U.S.C. § 3553(a); or (5) calculate an applicable sentencing range under the Sentencing Guidelines.”

Nevertheless, the sentence was within the range specified in the plea agreement’s waiver clause, and the waiver was otherwise valid. The court accordingly dismissed the appeal. But it did note that,= the waiver did not “relieve the District Court of its responsibility to follow the procedural requirements related to the imposition of sentence,” even if it “preclude[d] this Court from correcting the errors alleged to have occurred below.” That said, there is a point at which “an arbitrary practice of sentencing without [proffered] reasons would amount of an abdication of judicial responsibility subject to mandamus” and an appeal waiver would not be enforced.

This case, while bad, did not “present such an extraordinary circumstance,” since the record as a whole indicates that the court at least gave “due consideration to” the defendant’s sentencing arguments.

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Nothing Special

Morales v. United States, No. 04-0585-pr (2d Cir. March 11, 2011) (Pooler, Hall, Livingston, CJJ)

Although decisions in habeas cases are generally beyond the scope of this blog, this one contains an discussion of an interesting sentencing issue relating to convictions on multi-object conspiracies where there is no special verdict.

Morales was a “Director of Security” for the Latin Kings street gang. In 1995, he was convicted of multiple RICO and VICAR counts as well as two drug counts: a conspiracy to possess with intent to distribute marijuana, heroin, cocaine and cocaine base, and a substantive count of possessing with the intent to distribute 50 grams or more of crack cocaine. He received six life sentences, one of which was on the drug conspiracy count. Although it was a multiple-object conspiracy count, the jury did not return a special verdict as to which drugs Morales conspired to possess, and the life sentence on that count was premised on an assumption that he conspired to possess cocaine and/or cocaine base, since the maximum sentence would have been less than life for the other drugs that were the object of the conspiracy.

After losing his direct appeal, Morales filed a pro se 2255 motion arguing, inter alia, that his trial and appellate counsel were ineffective for not challenging the life sentence on the drug conspiracy count since, under United States v. Orosco-Prada, 752 F.2d 1076 (2d Cir. 1984), with only a general verdict on that count, the sentence should have been based on the drug carrying the lowest statutory penalty - marijuana.

The district court denied the motion, and the circuit affirmed, but not because there was no error. Rather, the court held that Morales could not establish prejudice, since he received five other life sentences.

But the court went on to discuss the legal issue itself, which is an important one. In Orozco-Prada, 732 F.2d at 1083, the jury convicted the defendant of conspiring to traffic in both marijuana and cocaine without specifying. The circuit held that it was error for the defendant to be sentenced in excess of the maximum term for a marijuana conspiracy. In “the absence of a special verdict, there was no way for” the sentencing judge “ to know whether the jury intended to convict ... for a cocaine-related conspiracy, for a marijuana related conspiracy” or both. Accordingly, the judge “should have inferred that the conviction was for the drug conspiracy with the lowest statutory maximum,” and sentenced accordingly.

Here, the district court was aware of this rule, but found it in applicable to Morales. Citing a Seventh Circuit case, Peters, the court used the verdict on the substantive drug count - which was for possessing cocaine base - to assume that the jury also convicted Morales of conspiring to traffic in cocaine base. The district court called this an “exception” to Orozco-Prada.

In this opinion, the circuit “clarif[ied]” that it has “not yet expressly adopted any exception to the rule concerning general verdicts on multiple-drug conspiracy counts set forth in Orozco-Prada.” Rather, so far, the court has expressly refrained from adopting Peters. But its finding of a lack of prejudice here, coupled with the parties' lack of briefing on whether the court should adopt Peters going forward prevented it from deciding the question. Instead, “we will wait until the issue is squarely before us.”


Meet The Press

United States v. Treacy, No. 09-3939-cr (2d Cir. March 9, 2011) (McLaughlin, Hall, CJJ, Restani, JCIT)

James J. Treacy, former COO and President of the parent company of, was convicted of securities fraud and related offenses based on a scheme in which he backdated stock options. On appeal, the circuit held that the district court violated Treacy’s confrontation rights by restricting his cross-examination of a Wall Street Journal reporter who had written an article about the backdating of options at Monster that seemingly contained false exculpatory statements made by Treacy, but that the error was harmless. The court also found that the district court improperly calculated the forfeiture amount with respect to one of the options grants.

The Confrontation Issue

At trial, the government introduced into evidence a WSJ article that opined that the odds were one in nine million that a pattern of options grants as favorable or more favorable than those Treacy received would have occurred if dates were selected randomly. The article also contained extensive quotes from Treacy himself, in which he denied any wrongdoing, and the government called the reporter to the stand to verify the accuracy of the statements he attributed to Treacy.

The reporter tried to quash the subpoena, citing the journalist’s privilege. The district would not quash, but tightly limited both the direct and the cross-examination. As for the direct, the questioning was to be limited only to the reporter’s work on the particular article; he would only be asked to verify that Treacy made statements to him that he subsequently reported, and to identify the specific things that they said to each other in the interview. As for the cross, since Treacy argued only that the statements were taken out of context, and not that he did not make them or that they were otherwise misreported, his questioning of the reporter was limited to going over the questions that the reporter asked of him “immediately before those that elicited the responses quoted in the story.”

In the event, when the reporter testified, the court sustained the reporter’s attorneys objections to questions asked by Treacy that went beyond the court’s ruling - such as why he interviewed Treacy, and questions about a post-interview that the reporter sent to Monster’s public relations consultant - holding that Treacy could not make an “open ended attack” on the reporter’s credibility. The court, however, did allow Treacy to introduce the email itself.

The circuit began its discussion with the journalist’s privilege, noting that “at least in the civil context” a “journalist possesses a qualified privilege protecting him or her from the compelled disclosure of even nonconfidential materials.” Here, there was no claim that the reporter was trying to protect a source or other confidential materials. To the contrary, he was trying to protect materials that the source wanted disclosed. In this situation, the nature of the press interest protected by the privilege is narrower, and the privilege is more easily overcome. In civil cases where this is the issue, the privilege yields if a litigant can establish that the materials are of likely relevance to a significant issue in the case and are not “reasonably obtainable from other sources.”

The court rejected the argument - made by Dow Jones, as an amicus - that there should be a higher standard for overcoming the journalist’s privilege in criminal cases. Without delving into the competing constitutional concerns, the court simply noted that Dow Jones had not provided “any convincing reason why” the test should be different in criminal cases where only nonconfidential materials are sought. Thus, “in instances where a reporter is not protecting a confidential source or confidential materials, the showing required to overcome the journalist’s privilege is the same in a criminal case as it is in a civil case.” This is true “whether the party seeking to overcome the privilege is the prosecution or the defense.”

The district court correctly applied these principles in limiting the direct examination of the reporter. Treacy’s statements to the reporter appeared to be false exculpatories, and were thus “likely relevant.” And, since Treacy could not be compelled to testify, the reporter was the only source of the information. The district court’s limitations protected the journalist’s privilege by tailoring the questions to the showing of relevance and necessity.

But the limitations on the cross-examination, by contrast, went too far. Even taking into account the district court’s broad discretion in setting the parameters of cross-examination, curtailing cross-examination that “keeps from the jury relevant and important facts bearing on the trustworthiness of crucial testimony” is an abuse of discretion. Accordingly, here, it was an abuse of discretion to forbid cross-examination of the reporter beyond the ways that the ordinary rules regarding scope of direct and relevancy would restrict the examination of any other witness. Since the privilege issue was the same on cross as it was on direct, the district court should not have treated the reporter’s “interest as a competing interest to be balanced against Treacy’s Confrontation Clause rights.”

Thus, Treacy should have been permitted to “challenge [the] reporter’s credibility about the specific content of his direct testimony.” In addition, while the district court had the discretion to prevent a “general attack on credibility,” in application the restriction here went too far. The purpose of the reporter’s direct testimony was to confirm the accuracy of the statements attributed to Treacy in the article. Thus, Treacy should have been able to test the reporter’s memory with respect to the writing of the article. If the district court truly believed that “Treacy could not fully exercise his Confrontation Clause rights” due to the reporter’s “assertion of the privilege, it ought to have” either quashed the subpoena or stricken the reporter’s direct testimony.

A confrontation error does not require reversal if the government establishes that the error was “harmless beyond a reasonable doubt,” after assuming that the “damaging potential of the cross-examination were fully realized.” That standard was met here, even though the government in summation repeatedly emphasize Treacy’s statements to the reporter as evidence of his mendacity. Here, “the other evidence in the prosecution’s case was vastly more significant to demonstrating Treacy’s actual actions.” The court noted that Treacy was able to introduce the reporter’s post-interview email and that this allowed him to argue, even if with less force, that the statements attributed to him in the article were taken out of context. Second, in this circuit, false exculpatory statements are considered to be weak circumstantial evidence of guilt. Finally, other evidence in the case convincingly established Treacy’s guilt, and the court was “confident that the jury would not have been persuaded otherwise by an ambiguous newspaper article.”

The Forfeiture Issue

The circuit did agree, however, that the district court erred in for calculating the forfeiture amount as to one of the options grants because the court used an incorrect measurement date. According to Treacy, if a different date were used it would result in a smaller forfeiture. The court thus vacated this portion of the forfeiture and remanded for recalculation.

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Friday, March 11, 2011

A Good-Faith-Based Decision

United States v. Clark, No. 09-3462-cr (2d Cir. March 8, 2011) (Sack, Raggi, Lynch, CJJ)

In the district court, defendant Clark moved to suppress physical evidence and statements obtained after execution of a search warrant, and the district court granted the motion. On this, the government’s appeal, the circuit agreed that the warrant was defective - it did not establish probable cause - but that, contrary to the district court’s conclusion, the good faith exception applied. The court accordingly reversed and remanded.


Local police officers in Niagara Falls, New York, obtained a warrant from a city court judge to search Clark and "1015 Fairfield Ave, being a multi family dwelling” for drugs and drug dealing paraphernalia. The supporting affidavit disclosed that an informant of “unknown reliability” told them that Clark was selling cocaine there, and that Clark had “full control” over the location. The affidavit also described two controlled purchases of cocaine that took place in “the area of 1015 Fairfield Ave.”

When the officers executed the warrant, Clark was in a downstairs apartment, and the officers found cocaine base, money, and other evidence. They arrested and Mirandized Clark who asked, “What am I looking at? 25 or what?”

On Clark’s suppression motion, the district court held that the warrant was not supported by probable cause to search the entire multi-family dwelling, and that the search tainted Clark’s statement. It also held that the good faith exception did not apply because the issuing judge “failed to act as a neutral and detached magistrate,” the warrant was “facially defective,” and the lack of probable cause was “so apparent that the police could not reasonably rely on the validity of the warrant.”

The Appeal

The circuit, like the district court, could not identify a “substantial basis” for the local judge to authorize a search of the entire multi-family dwelling. Included in the Fourth Amendment is a particularity requirement. Concerns as to this requirement most often arise when the warrant does not concretely or accurately describe the place to be searched. But particularity is also an issue when the warrant describes a multi-family dwelling, because it is possible that the “breadth of that description outruns the probable cause supporting the warrant.”

The government tried to argue that the warrant application asserted that Clark exercised “control over the entire premises,” and thus that there was no particularity problem. The circuit was not convinced. Control over a multiple-occupancy building can support a warrant to search the whole premises, but only where the warrant is supported by probable cause to believe that “evidence of criminality will be found throughout the building.” The mere allegation of “control,” without more, is not enough. Here, the allegations of “control” were not enough to establish probable cause to support a search of all residences in the building. The allegation came from an untried informant, and the assertion was entirely conclusory. There was thus no basis for the issuing judge to find probable cause. The judge was not told the size of the building or the number of units, and the affidavit did not explain what the informant meant by “full control,” or include any descriptive facts on the issue. Moreover, the affidavit’s description of the controlled purchases only established that Clark was in the “area” of 1015 Fairfield Avenue. It did not establish where within the building he conducted his drug business and certainly did not establish that he had control over all parts of the building.

Thus, even though there was probable cause that Clark was dealing drugs from “somewhere within 1015 Fairfield Avenue,” the totality of the circumstances did not provide a “substantial basis to conclude that Clark so controlled the various residential units in that multi-family dwelling that there was probable cause to think evidence of his criminal conduct could be found throughout the building.”

But, nevertheless, the court held that the district court erred in its application of the good faith exception. First, the issuing judge did not abandon his judicial role. While he made a legal error in identifying probable cause, this does not indicate the “sort of wholesale abandonment” necessary to overcome the good faith exception. Nor was the warrant facially deficient. That occurs only when “it omits or misstates information specifically required to be contained therein,” that is, “the place to be searched, and the persons or things to be seized.” The warrant here had no such defect. While the warrant was not, in fact, based on probable cause, the probable cause need not be “stated in the warrant itself.” Rather, a lack of probable cause is a defect in the supporting affidavit, not the warrant. Finally, the warrant was not so lacking in probable cause as to preclude reasonable reliance. The affidavit here was not “bare bones” - it was not “totally devoid of factual circumstances to support conclusory allegations,” even though it did not provide “detailed factual allegations” to support probable cause to search the entire building. It still had enough detail to render reliance on it reasonable, since it clearly established probable cause to believe that Clark was dealing drugs form somewhere within the building. And, while the affidavit’s allegation of “control” was “entirely conclusory,” the officers’ reliance on the warrant was not so “flagrant or culpable” as to warrant suppression. When the warrant was issued it was not yet settled that “control” had to be alleged with “some factual specificity.” Thus, a well-trained officer could not be faulted for relying on a warrant that lacked such specificity.

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Dead Again

United States v. Qurashi, No. 10-348-cr (2d Cir. March 8, 2011) (Newman, Walker, Pooler, CJJ)

Imran Quarashi and his brother, Adnan, purchased $3 million insurance policies on Adnan’s life from two different insurance companies. They then faked Adnan’s death, falsely asserting that he had died in a car accident in Pakistan, and the insurers paid Quarashi on the policies. A few years later, Adnan returned to the United States and assumed a new identity, Hassan Khan, and Quarashi purchased eight $10 million insurance policies on Khan’s life. When he claimed that Khan had been killed in a traffic accident in Pakistan, the insurance companies balked, opened an investigation, and Quarashi was ultimately charged with fraud.

Quarashi pled guilty - Adnan is still a fugitive - and was sentenced to 108 months’ imprisonment. On appeal he challenged the district court’s inclusion of prejudgment interest on the restitution order. Noting that this was an issue of first impression here, the circuit affirmed.

The restitution statute, 18 U.S.C. § 3663A, provides that restitution shall be based on the property’s value “on the date of sentencing” if that is greater than the value on the date of loss. Since the purpose of restitution is to make the victims whole,“value” is a “flexible concept to be calculated by a district court by the measure that best serves” the statutory purpose. And, indeed, accounting for the “time-value of money” requires flexibility. Since the statute requires restitution in the “full amount of” the victim’s losses, there is “no reason to exclude losses that result from the deprivation of the victim’s ability to put its money to productive use.” Prejudgment interest “stands in to provide a rough but fair approximation” of this loss.

The court also indicated - but stopped short of holding - that in a case where there is evidence that the victim “would not have put the funds to productive use,” prejudgment interest might not be appropriate. Here, while the insurance companies’ restitution request, which included a request for prejudgment interest, did not specify how the money would have been used if it had not been paid out to Quarashi, there was no evidence that they would not have used it productively.


Thursday, March 10, 2011

Summary Summary

It's been a while since the court issued an interesting summary order. But here are three that caught my eye.

In United States v. Gjuraj, No. 09-1736-cr (2d Cir. March 11, 2011), the court remanded for clarification where it was not clear that the district court understood its authority to impose the federal sentence concurrently to an undischarged term of imprisonment, where the undischarged state sentence had yet to begin.

In United States v. Alkhabbaz, No. 09-5271-cr (2d Cir. March 10, 2011), the defendant's original sentence included a reduction for acceptance of responsibility, and the government did not appeal. The defendant was resentenced after a remand, and this time the court denied him the adjustment because, in the interim, he had jumped bail. On appeal, the court held that under the cross-appeal rule - under which "an appellate court may not alter a judgment to benefit a nonappealing party," and thus, in a criminal case, absent a government appeal, the circuit cannot increase a defendant's sentence on its own initiative - the government's failure to appeal the original sentence was not a waiver of the argument that, on remand, he was ineligible for acceptance of responsibility. The cross-appeal rule does not confine the trial court, the doctrines of "default and forfeiture" do. But here the government did not forfeit the issue by agreeing to acceptance of responsibility at the original sentencing, since Alkhabbaz did not skip out until later.

In United States v. Mends, No. 09-5361-cr (2d Cir. March 4, 2011), the court agreed that a sentence to "time served," when the defendant had spent twenty-two months' in prison but the Guideline range was eight to fourteen months', was error. The sentence was, in effect, a "substantial upward departure or variance" that the court did not explain. Notably, the court also found that the issue was not moot, even though Mends had completed both the term of imprisonment and his supervised release, because the length of the sentence "could materially affect his prospects of obtaining a discretionary waiver of inadmissibility" from an immigration judge. This "potentiality" gave Mends a "personal stake" in the outcome of the litigation sufficient to create a "case or controversy" under Article III of the Constitution.

Peter Paul and Money

United States v. Paul, No. 09-3191-cr (2d Cir. March 7, 2011) (Cabranes, Chin, CJJ, Crotty, DJ)

Defendant Peter Paul pled guilty to securities fraud, in connection with a stock manipulation scheme that permitted him to fraudulently obtain multi-million dollar margin loans, which he never repaid, from two brokerage houses. The district court sentenced Paul principally to 120 months’ imprisonment and more than $11.4 in restitution.

He raised three main claims on appeal, all without success.

At a pretrial conference, the district judge remarked that he had a reputation for giving a Guideline sentence after trial but for being lenient with defendants who pled guilty. The judge also remarked that the twenty-five months Paul spent fighting extradition in Brazil - he apparently fled there as his scheme was unraveling - would not be credited if he did not plead guilty. On appeal, Paul claimed that these remarks violated Fed.R.Cr.P. 11(c)(1), which forbids the district court from participating in plea discussions. The court rejected a “bright-line” rule in assessing Rule 11(c)(1) claims, noting that such issues are “highly fact-specific.” The the judge made the first remark in the context of setting a trial date - not about Paul specifically. The second remark, in context, was of even less concern to the court; it was clearly related to the court’s effort to find a way to release Paul on bail and not to coerce a plea. Moreover, any Rule 11(c)(1) violation here was harmless; Paul was not present when the remarks were made, pled guilty several months later, affirmed in the plea that he was doing so voluntarily, and neither he nor his attorney ever objected to the statements.

Paul also claimed, again for the first time on appeal, that the nearly four-year delay in his sentencing violated his right to a speedy sentencing. But the court found no plain error. Most of the delay was due to prosecutorial negligence, which “does not weigh as heavily as would an intentional delay,” and one year of the delay was attributable “solely to Paul’s request for adjournments.” In addition, Paul could identify no actual prejudice resulting from the delay other than his anxiety over the uncertainty of what would happen to him.

Finally, Paul challenged the restitution order, which required him to repay the losses to the brokerage houses that extended the margin loans. He argued that those losses were caused by the declining stock price, which left the institutions without the collateral necessary to recover the money they lent. The circuit disagreed because the losses were not caused by a decline in stock value, they were caused by “the making of the loans in the first instance,” and Paul clearly obtained the loans fraudulently.

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Information Failure

United States v. Espinal, No. 09-4344-cr (2d Cir. March 7, 2011) (Walker, Straub, Lynch, CJJ)

Here, the district court did not properly follow 21 U.S.C. § 851(b), which sets out the procedures for using a prior felony information to increase the mandatory minimum sentence in a drug case. Because both the defendant and the government were prejudiced, the circuit remanded the case for resentencing.


The government had offered to permit defendant Santo Laiz to plead guilty to a drug offense with a ten-year mandatory minimum and agreed to refrain from filing a prior felony information. But Laiz pled guilty after the deadline, by which time the government had filed the information, which alleged that Laiz had been convicted of a felony drug offense in Massachusetts under the name “Jose Luis Lai.” During Laiz’ guilty plea, the court did not ask him whether he admitted to the conviction.

In his sentencing submissions, Laiz raised various legal challenges to the information, but did not clearly deny the allegation that he had in fact been convicted of the offense it specified. Thus, at the sentencing itself, the prosecutor sought clarification of the defendant’s position. Laiz’ attorney replied that he had “no grounds to believe that Mr. Laiz was not convicted,” but, since had not verified the conviction himself, he was “taking the word of the government.”

The district court still did not ask Laiz himself to affirm or deny the conviction. Instead, it asked the prosecutor for verification, and the AUSA responded by handing up a rap sheet that warned that it was “not supported by fingerprints.” The rap sheet had a variety of names, including “Santo Ramon Laiz” and “Jose Luis Lai,” and a birthdate of December 3, 1964. An associated docket sheet reflected a similar conviction with some different names and the same date of birth. The identifying information on these documents was not entirely consistent with those in Laiz’ PSR - the date of birth was different and some of the aliases differed, as well.

When the judge finally asked Laiz whether he affirmed or denied the conviction, on advice of counsel, Laiz remained silent. The judge, concluding that Laiz did not have a right to refuse to affirm or deny, imposed the enhanced, twenty-year minimum sentence with no further findings or warnings to Laiz.

The Appellate Court’s Decision

Laiz’ main argument on appeal was that the proof was insufficient to establish that he was the person named in the Massachusetts records. But the circuit, finding that the government had not had a “full and fair opportunity to present its best evidence” on the issue, did not rule on the sufficiency of the evidence. Instead, finding numerous procedural defects, the court sent the case back for a do-over.

Under Section 851(b), once the prosecutor has filed a prior felony information, if the defendant is convicted of the underlying offense, the district court must ask the defendant whether he affirms or denies that “he has been previously convicted as alleged in the information,” and must also inform the defendant that he waives that any collateral challenge to the prior conviction that is not made before sentence is imposed. If the defendant denies the allegation, or claims that the conviction is invalid, he must be given an opportunity file a written response to the information. This triggers a hearing, at which the government must prove any issue of fact beyond a reasonable doubt.

The district court did not follow these procedures “meticulously.” First, it did not ask Laiz to affirm or deny the prior conviction at his plea, although it did not have to then. Moreover, while Laiz did not expressly deny the conviction in his sentencing submission, the failure to do so then did not waive the objection. Accordingly, by the time of sentencing there was still “some ambiguity” as to the extent of Laiz’ objection to the enhancement.

Moreover, at sentencing, the district court did not undertake the required “affirm or deny” inquiry until after “considerable confusion about Laiz’ position had already been generated,” and never warned him that he had a right to put his objections in writing and that a failure to object would constitute a waiver. The “hearing” required by the statute was more like an “impromptu inquiry,” in which the district court examined documents handed up by the prosecutor without addressing their “obvious discrepancies” or “giving the defendant an opportunity to review and comment on them.”

Of course, Laiz did not help matters. Neither he nor his counsel made clear before sentencing whether they planned challenge the conviction, and Laiz’ refusal to affirm or deny is not covered by the statute at all. But, at least on these facts, the court refused to conclude that the refusal should be treated either as a denial - triggering the government’s beyond-a-reasonable-doubt burden - or an affirmation, which would have served as a waiver of the right to challenge the prior felony, since the district court did not follow the “affirm or deny” inquiry with the other statutory requirements: an opportunity to respond in writing and a warning of the consequences of a failure to act.

The failure to comply with § 851 does not automatically invalidate the enhanced sentence, since harmless error analysis applies. But here, Laiz was prejudiced in two distinct ways, apart from the extra ten years of prison time he received. First, the court’s failure to warn him of the effect of failing to object “may well have influenced Laiz’ unusual choice not to affirm or deny the allegations in the information,” which in turn affected the government’s burden of proof. In addition, the district court’s failure to follow the statutory procedure “compromised the reliability and thoroughness of the ‘hearing’” that it conducted.”

In the end, given the many uncertainties, the court neither affirmed the enhanced penalty nor struck it. Instead, it vacated the sentence and remanded the case for resentencing so that “proper procedures” could be followed.


Racket Club

United States v. Applins, No. 07-2193-cr (2d Cir. March 1, 2011) (Miner, Sack, Hall, CJJ)

This decision closes a hole in the Second Circuit’s RICO jurisprudence. The appellants, drug dealers who were members of something called the Elk Block gang, were convicted of RICO conspiracy under 18 U.S.C. § 1962(d) in the Northern District of New York. The trial judge gave confusing jury instructions as to whether, for RICO conspiracy, the existence of an enterprise was an element of the offense.

The defendants pursued this issue on appeal, and the circuit affirmed, holding that “the establishment of an enterprise is not an element of the RICO conspiracy offense.” In a footnote, the court brushed aside its past decisions that seemed to suggest otherwise, deeming the relevant language “dicta.”

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Sunday, March 06, 2011

Face Time

United States v. Hotaling, No. 09-3935-cr (2d Cir. February 28, 2011) (Newman, Hall, CJJ, Restani, JCIT)

John Hotaling cropped the faces from non-pornographic pictures of minor females and morphed them onto the heads of nude adult women engaged in sexually explicit conduct, including one in which the woman was handcuffed, shackled and tied to a dresser. He pled guilty to violating 18 U.S.C. §§ 2252A and 2256(8)(A), which together make it a crime to possess images containing child pornography where the image “has been created, adapted or modified to appear that an identifiable minor is engaged in sexually explicit conduct.” The district court sentenced him to 78 months in prison, having included in the Guidelines calculation the enhancement for possessing an image that portrayed sadistic or masochistic conduct. On appeal, the circuit rejected Hotaling’s “as applied” challenge to the statute as well as his challenge to the sentencing enhancement.

The government has a compelling interested in protecting minors from becoming victims of child pornography, and child pornography is not protected speech under the First Amendment when using the child’s image “implicates the interests of an actual minor.” Hotaling’s argument was that the interests of these actual children were not implicated because the children were not engaged in sexual activity during the creation of the photographs.

But the circuit concluded that the “interests of actual minors” are still implicated when their faces are used to create morphed images “that make it appear that they are performing sexually explicit acts.” Here, the only recognizable persons in the pictures were the minors, and Hotaling had added their actual names to the image files - while he did not distribute the images, they were digitally coded in a way that appeared that he planned to. Accordingly, the images were not “protected expressive speech under the First Amendment.”

The circuit also agreed that the sadism/masochism enhancement applied, even though the image did not actually depict a minor engaged in sexual activity that would cause her pain. A district court should apply the enhancement in cases where, using an “objective standard,” it finds that the morphed image portrays both sexual activity involving a minor and sadistic conduct that includes the likely infliction of pain, physical, mental or other excessive cruelty, or other depictions of violence. The image here clearly met that test, since it appeared to depict a minor engaged in sadistic conduct that would have caused at least some level of pain, and also involved cruelty in the form of forcible restraint.


Saturday, March 05, 2011

PC World

As usual, sentencing issues occupy the court in its most recent pair of per curiam opinions.

In Brown v. United States, No. 09-3495-pr (2d Cir. March 1, 2011) (Winter, Livingson, Lynch, CJJ) (per curiam), an appeal of the denial of a § 2255 motion, the court rejected an argument that the Sentencing Guidelines’ treatment of prior convictions affected the application of the Armed Career Criminal Act (“ACCA”). ACCA counts predicate convictions for crimes “committed on occasions different from one another” separately, even if the offenses happened on the same day, were not separated by an intervening arrest and concurrent sentences were imposed on the convictions in a single proceeding. For ACCA, the relevant considerations are only whether the victims and locations were different, and the degree to which the offenses were separated by the passage of time.

Brown had two prior robbery convictions that, under Guidelines section 4A1.2 - which is part of the basic criminal history rules - would be treated as a single conviction because he was sentenced on them simultaneously and the offenses were not separated by an intervening arrest. Nevertheless, the two convictions were properly considered as separate ACCA predicates. “Section 4A1.2 speaks only to the calculation of criminal history points and does not bear on the calculation of Brown’s ACCA sentence.”

United States v. Akinrosotu, No. 09-2333-cr (2d Cir. February 28, 2011) (Cabranes, Chin, CJJ, Crotty, DJ) (per curiam) considers the district court’s ability to modify a fine, but does not reach a firm conclusion. At sentencing, the court had imposed a $50,00 fine - due immediately - and imposed a condition of supervised release requiring the payment of any balance that remained unpaid as of the defendant’s release from prison. Years later, the defendant, still serving his thirty-year sentence, unsuccessfully petitioned the district court for remission of the fine. Addressing a question of first impression, the court of appeals concluded that, if § 3583(e)(2), which permits the district court to modify a condition of supervised release, confers any authority to modify a fine at all, that authority is limited to the amount that remains unpaid at the commencement of the term of supervised release. Here, the prison sentence is likely to outlive the fine, since under the law applicable to Akinrosotu - since amended - the fine will expire twenty years after its imposition, but Akinrosotu will not yet be on supervised release. Thus, concluding that there will be no unpaid balance when Akinrosotu starts his term of supervised release, the court dismissed the appeal.

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