Thursday, March 15, 2012

PC World

United States v. Roccisano, No. 10-5237-cr (2d Cir. March 14, 2012) (Katzmann, Parkjer, CJJ, Restani, JCIT) (per curiam)

Guideline section 4A1.1(d) adds two criminal history points if the defendant committed the federal offense while under a criminal justice sentence, e.g., probation, parole or supervised release. The defendant here was deported to Italy in 2006 after completing the prison portion of a federal drug sentence that included a five-year term of supervised release. He was found in the United States in 2010, before the term of supervised release had expired, and the district court assessed those points. On appeal, he argued that this was error, because he had never been actively supervised in light of his deportation.

The circuit rejected this argument, joining at least five other circuits in holding that a term of supervised release is not extinguished by the defendant's deportation. The court also noted that the amended version of U.S.S.G. § 5D1.1 (November 1, 2011), which provides that courts should ordinarily not impose a term of supervised release at all where the defendant is an alien who will likely be deported after imprisonment, had no impact here. That provision does not apply where a term of supervised release is mandated by statute, and this was true in Roccisano's case, since the underlying conviction was for a drug crime.

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Friday, March 09, 2012

Not Much Moore

United States v. Moore, No. 10-2740-cr (2d Cir. February 22, 2012) (Jacobs, Cabranes, Livingston, CJJ)

This decision marks the circuit’s latest effort to sort out a “two-step” interrogation in the wake of Missouri v. Seibert, 542 U.S. 600 (2004).

Chauncy Moore, having evaded a Connecticut police officer who had a warrant for Moore’s arrest, tossed a gun onto the roof of a house. He was apprehended on the warrant early the next day, but did not receive Miranda warnings. He spent the morning in a police station lockup, but was not brought to court due to a paperwork glitch. Later that day, still at the precinct, Moore twice asked to speak with a detective, but none was around. In the afternoon, he was moved to a cell with a pay phone, from which he spotted a narcotics officer he knew, Ronald Pine, and called him over. Pine was not involved in Moore’s case, but knew that it involved a gun. Pine asked Moore to tell him where the gun was, and Moore declined. An ATF agent happened to be nearby, and Pine called him over. Pine told Moore that he could talk to the ATF ageant after Moore helped them find the gun.

Moore agreed, told them where he tossed the gun, and drew a map. The two officers went to the location, where they were joined by detectives, and recovered the gun. Pine told the detectives that Moore wanted to speak to them and, about ninety minutes after Moore first started talking to Pine, they returned to the station house and interviewed him, this time giving him Miranda warnings. Moore waived his rights and confessed.

The district court held that the initial, un-Mirandized statements should be suppressed, but also held that the later, warned statement was admissible. On Moore’s appeal, the circuit, after surveying Seibert and its progeny, affirmed.

Here, there was no subjective evidence that Pine and the ATF agent were trying to circumvent Miranda. Rather, while the “public safety” exception to Miranda might not have applied on the facts here, the “undoubted public safety considerations [of a discarded gun] plausibly account for the conduct of the police in a way that militates against finding that the first interview was a premeditated attempt to evade Miranda.” Similarly, the “objective evidence,” including the narrowness of the overlap between the subjects of the two interrogations, the participation of different officers, and the elapse of more than ninety minutes “decidedly points against concluding that the government engaged in a deliberate two-step process designed to undermine Moore’s Fifth Amendment rights." Finally, the circuit noted that it was clear that Moore’s later statement was entirely voluntary, and that the Miranda waiver was itself valid.

Moore also argued, alternatively, that the questioning occurred in violation of his Sixth Amendment right to counsel. The circuit agreed with the district court, however, that there was no Sixth Amendment violation because the right to counsel had not yet attached to the federal gun charge to which he pled guilty.

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Sunday, March 04, 2012

No Gain, Yes Pain

United States v. Hsu, No. 09-4152-cr (2d Cir. February 17, 2012) (Winter, Lynch, Carney, CJJ)

Norman Hsu, a prominent, if corrupt, political fundraiser, used the connections he made in politics to run a giant Ponzi scheme. He pled guilty to mail and wire fraud, and was convicted by a jury of campaign finance fraud. In all, the district court imposed a 292-month guideline sentence.

The main, but not only, issue on his appeal concerned an interesting sentencing issue. The district court found that the Ponzi scheme caused a loss of between $50 million and $100 million, but in doing so included earnings that the victims reinvested in the scheme - even though those earnings were invented as part of the scheme - in the intended loss. The circuit agreed that this was permissible.

Normally, in fraud cases, the guidelines measure the amount of principal the victims lost, and not the amount of lost principle plus the promised profit that never materialized. But the “situation is different” where the investor is “told not simply that his investment will grow, but that it has grown, and that the total of his original investment and the accrued interest or other gain is now available to be withdrawn or reinvested in the scheme, depending on the investor’s preference.” For Ponzi-scheme participants who can choose either to withdraw or reinvest, the choice to reinvest, which is usually necessary to keep the scheme alive, “transforms promised interest into realized gain that can be used in the computation of loss.” Only the “most recent promised or reported” gains are excluded from the guidelines calculation as interest.

The alternative, calculating losses only by looking at the money actually invested by victims, would “fail to take into account” the very nature of Ponzi schemes: the victims’ changing behavior in the face of the fraudulent report of the success of their investments and the fact that the purported proceeds of this “success” are maintained in accounts controlled by the defendant, not withdrawn by the investors. When the defendant gives the victims the option of withdrawing the proceeds, but then induces them to instead reinvest the money and again put it at risk, the “victims have suffered further loss.”

The court recognized that the task of defining this “reinvestment” will in many cases be difficult and will have to be “pursue[d] with care,” because “what constitutes interest precluded from consideration during sentencing in one context may be the very loss intended in another.” But here, the case was “straightforward. Hsu’s victims frequently returned post-dated checks to him for reinvestment, thereby relinquishing the opportunity to cash those checks and withdraw from the scheme. When this occurred, the reinvested checks - including the previously promised returns - became part of their principle investment, and therefore constitute the very losses that Hus intended to inflict.” Hsu’s contrary argument - “that the ‘gains’ did not exist ... reduces to the claim that the victims losses do not count because he was unable to pay them back.”

The court concluded by noting that this method is not “the only way to measure loss in a Ponzi scheme,” but is one way to develop a “reasonable estimate” of loss for the guidelines. In the end, all the court really held is that the exclusion of interest from loss calculations did not apply, and that the district court’s calculation was otherwise reasonable and appropriately measured the harm to the victims.


Rehab? No, No, No.

United States v. Gilliard, No. 11-1088 (2d Cir. February 16, 2012) (Wesley, Lohier, CJJ, Rosenthal, DJ)

Tapia v. United States, 131 S.Ct. 2382 (2011), held that the district court cannot impose or lengthen a prison sentence based on the defendant’s rehabilitative needs. Here, the circuit joins the national trend of reading Tapia narrowly.

Troy Gilliard, sentenced before Tapia came down, faced a 57 to 71 month range for heroin trafficking; both the defendant and the government sought a within-guideline sentence, and probation recommended 65 months, also within the range. In imposing sentence, the court mentioned Gilliard’s criminal history, the seriousness of the offense, the need for specific deterrence, and also mentioned Gillard’s rehabilitative needs - he had both substance abuse and medical issues - while in custody, noting that it was “important” that he be “sentenced in such a way that you are able to address those problems.” Taking into account “everything [that it had] talked about,” the court sentenced Gilliard to 96 months’ imprisonment.

The appellate court rejected the argument that the court’s reference to Gilliard’s rehabilitative needs violated Tapia. The court did not see those comments as connecting the rehabilitative needs to the length of Gilliard’s sentence, which the sentencing court explicitly did in Tapia. “Unlike in Tapia, the record here does not suggest that the length of Gilliard’s sentence was based on the district court’s consideration of his rehabilitative needs.” Rather, to the circuit, the court’s mention of Gilliard’s rehabilitative needs was confined to the - permissible - context of recommending to the BOP appropriate treatment programs.

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Off The Waterfront

United States v. Coppola, No. 10-0065-cr (2d Cir. February 14, 2012) (Raggi, Lynch, Wallace, CJJ)

This very long, and very fact-bound mob-related RICO appeal covers very little new ground. However, it has an interesting discussion of the applicability of Skilling to extortion cases.

Defendant Michael Coppola spent three decades rising through the ranks of the Genovese crime family, ultimately becoming a captain. The particular conduct that resulted in his conviction, and sixteen-year sentence, related to the family’s criminal control of the New York and New Jersey waterfronts in general, and over the longshoremen’s union - ILA Local 1235, in particular. The family used intimidation and fear to extort money from the both the union and trucking companies doing business at the docks. The family also controlled the union directly, through three successive local presidents who were in the family’s pocket.

On appeal, Coppola challenged the validity of the extortion RICO predicates, invoking Skilling v. United States, 130 S.Ct. 2896 (2010). Skilling held that, in fraud prosecutions predicated on schemes to deprive the victim of the intangible right to honest services, there must be a bribery or kickback “core” to the conduct. Here, the extortion predicates were indeed based on an intangible property theory, that "property" being the statutory right of union members to receive the loyal service of the union’s officials. Coppola argued that there was little difference between this intangible right and the right to “honest services” at issue in Skilling.

But the circuit disagreed. Skilling did not identify vagueness concerns with all intangible rights, just the particularly ill-defined right to “honest services” mentioned in the fraud statutes. There is no equivalent vagueness in the statutory definition of a union official’s duties; the statute specifically enumerates both the duties and the persons from and to whom they are owed. Finally, the intangible right at issue here does not define the predicate crime; the Hobbs Act does, and that statute clearly does not proscribe mere self-dealing. Thus, the ambiguity concerns in the fraud statute that animated Skilling are not present under the Hobbs Act.


Saturday, March 03, 2012

Summary Summary

Four more summary orders of note:

In United States v. Magner, No. 11-0751-cr (2d Cir. January 25, 2012), a child pornography case, the court voided a special condition of supervised release prohibiting the defendant from using an electronic device to access “pornography of any kind,” including any “website depicting images of nude adults or minors.” The condition was overbroad, as it included “materials that are not by any normal definition obscene, pornographic, or even erotic, such as art museum websites containing works of art.”

United States v. Echeverri, No. 11-0303-cr (2d Cir. February 16, 2012), found that a within-guideline, ninety-seventh month child pornography sentence was insufficiently explained, and hence procedurally unreasonable, where the district court justified the sentence only by observing that it had considered the statute and arguments of counsel and had concluded that a “low end” sentence was appropriate.

In United States v. Fann, No. 11-0540-cr (2d Cir. February 21, 2012), a government appeal, the court upheld a district court order finding that a putative “protective sweep” violated the Fourth Amendment, “[i]n part” because the government did not submit any “affidavits or other evidence” to “develop the record” in the district court. The court agreed that the government thereby failed to establish that the officers “reasonably believed that an individual was present at the time of Fann’s arrest and that such individual posed a danger.”

In United States v. Hill, No. 11-4790-cr (2d Cir. February 21, 2012), the court recognized that an excessively long period of pretrial detention can constitute a due process violation, but found that there was no such violation here. The “lengthy” period “certainly require[d a] convincing justification” but was justified by the inherent complexity of the large multi-defendant case, with “voluminous discovery” and “myriad motions to address.” Moreover, the delay was not occasioned by the government but, mostly, by requests for continuances by the twenty co-defendants.