Circuit Buries The Lede

United States v. Esso, No. 11-570-cr (2d Cir. June 27, 2012) (Walker, Lynch, Droney, CJJ)

The published opinion in this case is a short and fairly unremarkable decision holding that the district court did not err in allowing the members of a deliberating jury to take the indictment - it charged conspiracy to commit wire and bank fraud and substantive bank fraud - home with them to read overnight. The judge instructed the jurors that they must not show the indictment to - or discuss it with - anyone else, or conduct any outside research, and that the indictment was not evidence. 

That said, however, the circuit strongly “question[ed] the wisdom of the practice,” and “urge[d] caution on district courts considering it.” The practice increases the chance that jurors will be exposed to outside influences in a way that the court cannot monitor and also risks overemphasizing the significance of the indictment itself. But, nevertheless, here, it did not deprive the defendant of a fair trial. Jurors are permitted to think about the case before them on their own time, and the jurors received very thorough instructions, which there was no evidence that they disregarded. 

But the decision that is of real interest in this case is the accompanying summary order, bearing the same docket number, that vacates Esso’s sentence, finding an unwarranted disparity between his sentence and that imposed on a co-defendant, Persaud. Both defendants were convicted on all counts.  The district court sentenced Esso first. It deemed him the “least culpable participant” in the scheme, and imposed a below-Guideline sentence of one year and one day in prison.  Three weeks later, the same judge sentenced Persaud to 12 weekends in a halfway house, but no jail. Esso then moved for resentencing, and the court denied the motion on the ground that it lacked jurisdiction, while noting that it was “tempted to say that it would have given” Esso a lower sentence if it could.

The circuit agreed that Esso’s sentence was procedurally unreasonable. The district court, having concluded that Esso was the “smallest player,” did not explain why his sentence was longer than Persaud’s. And, to the circuit, apart from their distinct roles in the offense (Persaud faced higher Guidelines, too), the defendants seemed to be similarly situated.  The circuit accordingly vacated Esso’s sentence so that the district court could either better explain it or “correct its mistake and exercise its discretion anew.”

An Affair To Remember

United States v. Sekhar, No. 11-4298 (2d Cir. June 26, 2012) (Jacobs, Parker, Hall, CJJ)

Defendant Skhar was convicted of Hobbs Act extortion and the interstate transmission of extortionate threats based on a particularly bizarre set of facts. He was a managing partner of a tech company into which the New York State Comptroller was considering investing state retirement funds. An earlier investment in the fund had been cleared, but never closed. That investment had been marketed by a placement agent, a process that was later banned. The current investment was not marketed by a placement agent but was "essentially the same" as the earlier one. While the Comprtroller’s General Counsel was considering the issue, he learned from the New York State Attorney General that the placement agent was under investigation; the General Counsel advised against moving forward with the deal, and that decision was then communicated to the fund.

Shortly thereafter, the General Counsel started receiving emails threatening that if he did not have a change of heart, and recommend moving forward with the investment, the writer would disclose that the General Counsel was having an extra-marital affair. This correspondence went on for several weeks. In the end, the emails were traced to Sekhar, who admitted sending them.

Sekhar moved to dismiss the indictment on the ground that it failed to state an offense, because the General Counsel’s recommendation was not "property," a core element of the definition of extortion. He defended at trial on this theory, and also raised it in a Rule 29 motion, all without success. On appeal, the circuit affirmed.

The Hobbs Act defines extortion as "the obtaining of property from another, with his consent, induced by the wrongful use of ... fear.' This definition is also incorporated into 18 U.S.C. § 875(d), which covers extortionate threats. According to the circuit, the "obtaining ... property" element has two parts: whether the defendant attempted to carry out "the deprivation of a property right from another" and whether he had "the intent to exercise, sell, transfer, or take some other analogous action with respect to that right." And property is not limited to "physical or tangible property or things," but also includes, "in a broad sense, any valuable right considered as a source or element of wealth." This includes the "right to pursue a lawful business."

The General Counsel’s job was to "provide legal advice to the Comptroller," in essence the sale of "time and advice." Thus, he had "a property right in rendering sound legal advice to the Comptroller and, specifically to recommend – free from threats – whether the Comptroller" should pursue the investment. Moreover, the government did not have to prove that the General Counsel would derive wealth specifically from his ability to make the recommendation. His ability to give unconflicted legal advice is itself a "source or element of wealth," but, more generally, the property right in an extortion case need not be a "source of wealth to the target of the extortion."

Thus, here, not only was there a deprivation of property, there was also sufficient evidence of an acquisition of property on the part of the defendant. A positive recommendation from the General Counsel was a means for the defendant to profit, and that is enough. That recommendation would have increased the chances that the investment would have occurred, and Sekhar, as a managing partner, would have profited. Since "opportunities have value," the evidence was sufficient.

PC World

Here are the court’s three most recent per curiams.

In United States v. Deida, No. 11-2272-cr (2d Cir. June 20, 2012) (Winter, McLaughlin, Chin, CJJ) (per curiam), the court affirmed a life sentence under the federal "three strikes" statute, 18 U.S.C. § 3559(c). The court rejected the defendant’s argument that the statute violates the principle of separation of powers, joining four other circuits. Even though the statute gives the executive branch the authority to determine the defendant’s sentence, the judiciary "does not possess exclusive control over sentencing matters." Thus, § 3559(c) does not unconstitutionally delegate a judicial power to the executive branch. The court also rejected the argument that the defendant was entitled to a jury trial on the sentencing enhancement, adhering to the holdings of Apprendi and Almendariz-Torres that recidivism-based sentencing enhancements are not elements of the offense that need to be found by a jury.

In United States v. Diamreyan, No. 10-03575 (2d Cir. July 3, 2012) (Pooler, Parker, Lohier, CJJ) (per curiam), the court upheld sentencing findings in a fraud case on the defendant’s role and the number of participants that were based on emails between the defendant and other participants in the scheme.  First, as to role, other participants referred to Diamreyan in their emails as the "chairman," and emails that he sent to them included instructions on how to perpetuate the scheme. Nor was it error to rely on unique email addresses in calculating the number of participants. Participants need not be identified by actual name, "so long as the record allow the district court reasonably to find the existence of other participants in the scheme."

United States v. Highsmith, No. 11-48-cr (2d Cir. August 8, 2012) (Livingston, Lynch, Droney, CJJ) (per curiam), adopts the Supreme Court’s decision in Dorsey v. United States, 132 S.Ct. 2321 (2012), and holds that the lesser penalties created by the Fair Sentencing Act apply retroactively to those defendants sentenced after the Act went into effect, even if the criminal conduct was completed before that date.

How Not To Hire An Investigator

Matthews v. United States, No. 10-0611-pr (2d Cir. June 14, 2012) (Kearse, Cabranes, Straub, CJJ)

Petitioner Michael Matthews was convicted of a 2006 bank robbery and received a life sentence under the federal "three strikes" statute, 18 U.S.C. § 3559(c). After exhausting his direct appeals, he filed a 2255 motion alleging, amongst other things, ineffectiveness of his trial counsel.

Matthew’s specific claim was that his counsel was ineffective because hired a private investigator, an ex-cop named Haumann, whom he knew had a conflict of interest. Matthews alleged that when Haumann was a police officer, he had arrested and "viciously assaulted" Matthews and had also treated him "with racial disdain and insensitivity." Matthews backed this up with a newspaper article that confirmed the facts, except for the racial allegations. Nevertheless, the district court, adopting the government’s characterization of the claim as "general" "cursory" and "vague," denied the petition without a hearing, although it did grant a COA.

On appeal, the circuit concluded that it was error for the district court to deny the 2255 without a hearing, and remanded the case for further proceedings on the ineffectiveness claim, along with anything else the district court intended to include in the COA, which did not specify any particular issue or issues.

To the circuit, there was clearly enough to the ineffectiveness issue to warrant a hearing. Strickland itself specifically identifies the investigation phase as a part of counsel’s performance that can be subject to an ineffectiveness claim, and Matthews alleged both that the investigator hired by his counsel was biased against him and that his counsel knew about the bias. "Although a conflict of interest or an inferable bias on the part of a person on whom the attorney relies for information in formulating a defense does not mean that the attorney himself has a conflict of interest, the record plainly reveals a plausible basis for an inference that Haumann could reasonably be expected to bear animus against Matthews. Matthews’s attorney’s reliance on such a person while knowing of that person’s presumable bias would call into question whether counsel had performed his ‘duty to make reasonable investigations’" under Strickland.

Constructive Criticism

United States v. D’Amelio, No. 09-2541-cr (2d Cir. June 13, 2012) (Raggi, Hall, Chin, CJJ)

This opinion provides some helpful clarification of the confusing precedents that try to differentiate between a constructive amendment to the indictment - which, in this circuit at least, requires reversal without a showing of prejudice - and a variance.

Background

Defendant D’Amelio was convicted after a jury trial of attempted enticement of a minor - in reality an undercover police officer - for the purpose of engaging in sexual activity with her. D’Amelio’s contacts with "Mary," took place over the Internet and on the telephone, but the "to wit" clause of the indictment alleged only that he "used a computer and the Internet," which the circuit noted were the same thing. Over objection, however, the district court charged the jury that it could convict based on either telephonic or Internet contact because both were facilities of interstate commerce. Post-conviction, D’Amelio filed a Rule 33 motion on this same issue, characterizing the evidence and jury charge as a constructive amendment. The district court, believing it to be bound by circuit precedent, agreed and granted him a new trial.

The Circuit’s Decision

On this, the government’s appeal, the circuit reversed. A constructive amendment to an indictment occurs when the presentation of the trial evidence and the jury instructions modify essential elements of the offense charged. This violates the Fifth Amendment’s Grand Jury Clause because it raises the possibility that the defendant was convicted of an offense other than that charged in the indictment. By contrast, a variance in proof occurs when the charging terms are unaltered, but the evidence at trial proves facts that are materially different from those alleged in the indictment. A variance requires reversal only where it is prejudicial, typically by infringing on the notice and double jeopardy protections of an indictment.

But identifying the line between these two, related errors has been difficult, because it relies on identifying something kind of amorphous: the "core of criminality" of the offense. To the circuit, the "core of criminality" involves the "essence" of the crime, and not "the particulars of how [the] defendant effected" it. And, as the circuit noted here, the defendant cannot necessarily rely only on the "to wit" clause to narrow the scope of the "core of criminality" to only the specific facts alleged there.

While there might be a constructive amendment where the jury convicted based on a complex of facts distinctly different from that set forth in the indictment, there is no constructive amendment where the indictment alleges a single set of discrete facts, and the proof varies from that set. Deciding whether the proof at trial was a "distinctly different complex set of uncharged facts" or was merely "a single set of discrete facts consistent with the charge in the indictment" can be difficult, and that is why the circuit's own cases have been so confusing Here, the court instructed that the main question should be whether the differences between the indictment and proof were "extreme," such that defendant "well may have been surprised by hte introduction" of "different and unrelated proof adduced at trial."

In D'Amelio's case, the circuit concluded that there were not "distinctly different sets of facts and theories presented and charged to the jury." All of D’Amelio’s contacts with "Mary" were part of a single course of conduct within the discrete time period charged in the indictment. That course had a "single, ultimate purpose" - the "core of criminality" - which was to entice Mary to have sex with him. This "core of criminality" did not encompass a "specific facility and a specific means of interstate commerce."

Accordingly, here, there was no constructive amendment. The issue turned only on the specific means that D’Amelio used to effect the crime, but that is not an "essential element" of the offense; "proof of specific means apart from those charged in the indictment does not constructively amend" it. The circuit did note in closing, however, that "this particular litigation could have been avoided had the government been more careful in wording its indictment."

Summary Summary

There has been a recent flurry of interesting summary orders. Enjoy!

United States v. Wilke, No. 11-1122-cr (2d Cir. May 31, 2012), contains an interesting discussion of the double jeopardy implications of being convicted of both tghe receipt of and the possession of the same images of child pornography. The court, which has never decided the issue, notes that there "may be substantial support for such a proposition," and that it might even rise to the level of plain error. Here, however, there was no plain error since there was a "clear possibility" that Wilke was convicted of different conduct for each count. Interestingly, the court also rejected the government’s claim that the imposition of concurrent sentences on two such counts would undercut the prejudice prong of the plain error analysis, calling the claim "problematic."

United States v. Pena Soltren, No. 11-256-cr (2d Cir. May 31, 2012), examines an "old-law" sentence." In 1968, Pena Soltren helped hijack a Pan Am flight to Havana. He remained in Cuba for more than forty years, but in 2009 he returned to the United States and was prosecuted for his role in the hijacking. He pled guilty, and the district court sentenced him to fifteen years’ imprisonment "without parole." Under the sentencing regime in place at the time of the crime, however, that sentence was illegal. The district court had only three options: (1) impose sentence under the general parole statute, under which Pena Soltren would have been eligible for parole after serving one-third of his term of imprisonment; (2) set a modified date for parole eligibility, which could be less than but not more than one-third of the maximum sentence imposed by the court, or; (3) fix a maximum term of imprisonment to be served and delegate to the parole board the task of determining eligibility. The circuit also rejected the claim that this error required resentencing before a different judge.

In United States v. Golding, No. 10-800-cr (2d Cir. May 23, 2012), the court vacated three counts convicting the defendant of being a felon-in-possession. At trial, defense counsel stipulated to the prior conviction but, rather than submitting the stipulation to the jury, the district court withheld it, eliminating the felony element entirely from the jury’s consideration, and only admitting the stip after the jury convicted. The circuit concluded that the district court committed plain error in failing to submit the stipulation to the jury, "regardless of defense counsel’s position regarding the element."

In United States v. Fuller, No. 09-1437-cr (2d Cir. May 23, 2012), the court reversed a SORNA conviction for failing to register as a sex offender, citing Reynolds v. United States, 132 S.Ct. 975 (2012). Fuller was convicted of a sex offense prior to SORNA’s enactment and traveled interstate before the Attorney General specified that SORNA’s registration requirements applied to persons in his position. Thus, since Fuller was not required to register at the time of his interstate travel, his conduct did not violate SORNA.

United States v. Karimu, No. 11-468-cr (2d Cir. May 22, 2012), vacated a forfeiture order where, based on representations it made during the plea allocution, the government waived its forfeiture allegation.

Finally, in United States v. Pressley, No. 11-2094-cr (2d Cir. May 21, 2012), the court vacated the district court’s order suppressing evidence recovered as the fruit of a canine sniff. Under Illinois v. Caballes, 543 U.S. 405 (2005), a canine sniff is not a search, and only violates the Fourth Amendment if it extends the time of a lawful stop beyond that reasonably necessary to complete the inquiry that prompted the stop. But the district court did not analyze the case under Caballes. Thus, while the sniff here came after a lawful stop based on reasonable suspicion for trespassing, under Caballes its legality turned on whether the officers were still reasonably pursuing their trespass inquiry at the time. The circuit accordingly remanded for further findings of fact.

　

　

PC World

United States v. Gowing and Scheringer, Nos. 10-4037-cr, 11-683-cr (2d Cir. June 6, 2012) (Winter, Straub, Lynch, CJJ) (per curiam)

The court’s latest per curiam looks at 18 U.S.C. § 3147, which enhances the sentence of a person "convicted of an offense committed while on release."

The underlying case involved a massive oil contract fraud orchestrated by Scheringer. Gowing was an attorney who represented Scheringer in a civil fraud suit, who eventually joined the fraud. Although he initially refused to invest or refer others to the scheme, he eventually helped solicit funds from victims. Both defendants had been released on bail by 2006, but continued to engage in the scheme. Calls recorded by the government in 2008 captured them speaking about obtaining more money from victims. Even after Scheringer was remanded in 2009, his prison calls reflected Gowing’s efforts to continue raising money from victims.

On appeal, Gowing challenged the district court’s application of § 3147, arguing that the section applied only where a defendant on release commits a second, distinct offense and not where the defendant is arrested and released but then continues to commit that same crime while on release.

The circuit rejected this argument based on the text of the statute, which applies whenever a "person" is "convicted of an offense committed while released." It does not indicate that the offense committed while on release must be a "separate or second offense." Nor is Gowing's reading is supported by the statute’s legislative history, which discusses the particular risk to public safety posed by those who commit "another" offense while on bail. There is "no reason to believe that Congress meant this in a narrow or technical way." It is enough that the defendant has committed another criminal act, even if he is not chargeable with a second offense for continuing the original crime.

I Second That Amendment

United States v. Decastro, No 10-3773 (2d Cir. June 1, 2012) (Jacobs, Hall, Lynch, CJJ)

In 2002, Angel Decastro moved from Florida to New York to help run his father’s dry-cleaning business. After a violent confrontation with a customer, Decastro requested a handgun license application from the NYPD. He did not submit it, however; he claimed that a desk officer told him that there was "no way" that it would be approved. Instead, he returned to Florida, where he was licensed to own a handgun, and purchased two guns. He left one in Florida and brought the other back to New York. A few years later, he moved back to Florida but left his gun with a relative in the Bronx, planning to retrieve it later. In the interim, the relative’s girlfriend turned the gun in to the police. The police traced it back to Decastro, who was charged with and convicted of violating 18 U.S.C. § 922(a)(3), which prohibits those not licensed to do so from transporting into their state of residence firearms purchased or acquired outside that state.

This appeal concerns Decastro’s Second Amendment challenge to this conviction. His first argument was that the interplay between New York’s strict licensing scheme and § 922(a)(3) violated the Second Amendment because he was virtually forced to purchase a firearm outside of New York in order to protect himself there. But the circuit concluded that he lacked standing to challenge New York’s licensing scheme because he did not actually apply for a New York license. Moreover, the evidence he adduced in the district court in an effort to establish the "futility" of getting a firearms licence in New York did not show that at all. To the contrary, it showed that during the relevant time period getween 2/3 and 3/4 of the handgun license applications submitted in New York were granted.

The court also rejected the argument that § 922(a)(3) on its face violates the Second Amendment. The individual right guaranteed by the Second Amendment is the right to possess and carry weapons for self-defense in case of confrontation. But only laws that impose a "substantial burden" on that right receive heightened scrutiny. And here, the circuit found no such substantial burden. Section 922(a)(3) only prohibits interstate transportation; it does nothing to keep someone from purchasing a firearm in her home state, "which is presumptively the most convenient place to buy anything." Moreover the law’s purpose is legitimate - it helps stop the circumvention of state laws regulating gun possession by requiring state residents to comply with conditions of sale and similar requirement in their home state.

Absent any sort of heightened scruutiny, the Second Amendment facial challenge here failed. It is not true that there is "no set of circumstances ... under which the [statute] would be valid." Given its purpose and function, § 922(a)(3) "plainly" has a "legitimate" sweep. This is true even accepting that some state laws governing the sale of firearms may themselves be unconstitutional, since nothing in § 922(a)(3) sanctions, compels or encourages state regulations that offend the Second Amendment. And Decastro could not rely on a claim that the section has no excpetion for the transportation of firearms purchased out of state by someone licensed to possess a gun at home; Decastro did not have a license to own a firearm in New York, and did not even apply for one.

　

　

That's What She Said

United States v. Carthen, No. 10-4817-cr (2d Cir. May 23, 2012) (Winter, McLaughlin, Cabranes, CJJ)

Defenant Tyrone Carthen appealed the government’s reliance on hearsay at his supervised release violation hearing. The circuit, finding no error, affirmed.

Carthen was charged with violating his supervised release by beating and threatening his ex-girlfriend, Marquita Cox. The matter was investigated by Carthen’s probation officer, Darcy Zavatsky, who interviewed Cox and other witnesses, and also reviewed various police and court records. At the VOSR hearing, however, the government called only Zavatsky, who was permitted to, over objection, describe what she had learned. Just before the hearing, it emerged that Cox, who had been cooperative at first, was refusing to testify because she did not want to be respnosible for sending Carthen back to jail. Just after the district court decided the case, Cox submitted a letter to the court asserting that she had "lied on Mr. Tyrone Carthen." Despite this, the district court refused to reopen the hearing.

The found no abuse of discretion in the admission of the hearsay. It found "significant indicia of reliability" in Cox’s statements accusing Carthen of assaulting her. Zavatsky interviewed her six times, and her interviews with other witnesses corroborated Cox’s claims. In addition, Cox bore a scar that was consistent with a would she had described. The reports that Zavatsky relied on were detailed and credible, and some were made under oath. Finally, Cox’s desire not to testify was "not an unusual reaction by a victim of domestic abuse."

Nor was there an abuse of discretion in the district court’s refusal to reopen in the wake of Cox’s seeming recantation. Witness recantations are generally viewed with "utmost suspicion," and here, the district court’s conclusion that Cox’s letter was not credible was sound given the considerable corroboration of her initial, contrary account.

Lost In Translation

United States v. Batista, No. 10-3284-cr (2d Cir. May 17, 2012) ( Kearse, Cabranes, Sack, CJJ)

Louis Batista, a former New York City police officer, was convicted by an Eastern District jury of participating in a longstanding drug distribution ring based in Bushwick, Brooklyn.

This long opinion affirms this conviction and sentences,  as well as the sentence of one of the cooperating witnesses, and covers relatively little new ground.

However, it has a potentially interesting, if brief, discussion of an issue that does not come up very often, the district court’s handling of a matter under the Court Interpreters Act of 1978, 28 U.S.C. § 1827. At trial, a cooperating witness testified that Batista would warn his co-conspirators of imminent police activity in their area with the Spanish phrase "loco cuidate." According to the circuit, the meaning of the phrase is ambiguous. It might mean "take care, dude," which in context would be relatively innocuous, or it might mean "be careful, dude," a less innocuous spin.

The district court asked the witness, who spoke both English and Spanish, what he understood Batista to mean - he said "be careful," not "take care" - and then instructed the court interpreter to use that translation. While this might potentially have violated the Act,neither side objected, and the circuit found no plain error.

Fleeced Hampton

United States v. Litwok, No. 10-1985-cr (2d Cir. April 30, 2012) (Livingson, Lohier, CJJ, Koeltl, DJ)

An Eastern District jury convicted defendant Evelyn Litwok of one count of mail fraud, and three counts of tax evasion - for the years 1995, 1996 and 1997. The circuit found the evidence legally insufficient to support the conviction for the 1996 and 1997 tax evasions, and also found that the mail fraud and the 1995 tax evasion counts were improperly joined. The court remanded for a new trial on those counts.

Background

Litwok seems to have spent a good part of the mid-1990's involved in financial shenanigans in and around East Hampton. The mail fraud conviction arose from her involvement in a scheme to defraud an insurance company by making false claims for property damage and related losses at her two East Hampton homes. The tax evasion charges arose from private equity companies that she operated, also out of East Hampton, for the 1995, 1996 and 1997 tax years. Although she owed nearly $1.5 million in taxes, she failed to file a single tax return for those years.

The Tax Evasion Charges

In order to sustain a conviction for tax evasion, the government must prove: (1) the existence of a substantial tax debt; (2) a willful nonpayment, and; (3) an affirmative act performed by the defendant with the intent to evade or defeat the calculation or payment of the tax.

At issue here was only the third element. For one of the tax years at issue, 1995, the government established this element by showing that Litwok barred her accountant from taking  thesteps necessary to preparing and filing her tax return for that year.

But for 1996 and 1997, the government introduced no evidence at all on element three. It showed only that she failed to file her taxes for those years. At oral argument, the government came up with various arguments about how this element might have been established but, since it did not raise those claims either in the district court or in its brief, the circuit considered them forfeited. It reversed the judgment of conviction on the counts relating to those tax years.

Misjoinder

The court also remanded for a new trial on the mail fraud and 1995 tax evasion counts, concluding that they were misjoined. The government established no link between the insurance scam, which took place in 1997, and the unreported 1995 income.

The court also found prejudice in the misjoinder. The 1995 tax evasion count included evidence that Litwok cheated her investors out of millions of dollars for her personal gain, and caused the government to brand her "a cheat, a liar, and a thief." None of the tax fraud evidence would have been admissible at a trial only on the mail fraud, yet it "inevitably colored the jury’s view" of her role in that scheme. Moreover, the evidence against Litwok was not overwhelming, and the district court gave no limiting instructions.

Warning Signs

United States v. Williams, No. 11-324-cr (2d Cir. May 17, 2012) (McLaughin, Parker, Wesley, CJJ)

On this government appeal, the circuit reversed a district court order that suppressed a Mirandized statement, after finding that it was the product of an illegal "two-step" interrogation.

Robert Williams was arrested in a Bronx apartment in which law enforcement officers executed a search warrant. The officers found four weapons, but were expecting to uncover many more. One agent, without Mirandizing him, asked Williams who owned the guns they had found, and he said that they were his.  An hour later, the agent took Williams to a police station, where he read Williams his rights. Williams waived, and gave a detailed confession.

The district court suppressed Williams’ initial, un-Mirandized statement as outside the scope of the public safety exception, since it went to who owned the guns the agents found, and not where other guns might be located. It then, citing a recent circuit decision, Capers (see "Two Steps Forward," posted December 11, 2010), held that it was also "constrained" to suppress the station-house confession. The district court held that, under Capers, the main question was wheher the initial failure to Mirandize was "legally justifiable." Finding that it was not, it found the later Miranda waiver to be invalid.

The government, which does not seem to have challenged the suppression of the first statement, appealed the suppression of the second, and the circuit reversed.  A Mirandized statement that follows an unwarned interrogation should only be suppressed where the police used "a deliberate, two-step strategy ... to obtain the postwarning confession." A district court should "review the totality of the objective and subjective evidence surrounding the interrogations" in order to make this call.

Under this standard, the government established that there was no deliberate two-step interrogation. There was simply no evidence that the agent questioned Williams in the apartment "in a way calculated to undermine the Miranda warning later given at the station house." In context, the question who owned the guns was most plausibly seen as an effort to learn who in the apartment was the person specified in the search warrant as the agents’ principal target. Moreover, the district court was incorrect in concluding that Capers required a shift in focus from whether the first interrogation was a deliberate effort to undermine Miranda to whether the decision to forego warnings initially was "legally justifiable." Rather, Capers simply sets out the general test identified above: a review of the totality of the evidence surrounding the investigations.

Cash Cow

United States v. Wagner-Dano, No. 10-4593-cr (2d Cir. May 14, 2012) (Winter, Livingston, CJJ, Rakoff, DJ)

Melissa Wagner-Dano was a bookkeeper in upstate New York, where she worked for a small town and two large dairy farm cooperatives. She stole more than $1 million from her employers through unauthorized withdrawals from their bank accounts, using used the money for various personal projects. Wagner-Dano covered her tracks by transferring funds among the employers’ accounts. As the scheme unraveled, she blamed the missing funds on computer errors, then repaid some of the money from her personal bank account. Finally, she threw in the towel, admitted her crime and pled guilty to wire fraud.

On appeal, she claimed that several errors in her presentence report rendered her 78-month, top-of-the-range sentence procedurally unreasonable. Wagner-Dano had detailed these objections to the Probation Department, which had explained them in the addendum to the report, but at sentencing her counsel referred to - but did not elaborate on - them.

The circuit concluded that some of these objections were resolved by the district court’s adoption of the findings of the presentence report. Others, however, were at least arguably not, because they involved more complex discussions of Wagner-Dano’s motivations at various stages of the criminal activity and coverup. Nevertheless, the circuit concluded that Wagner-Dano’s failure to press these claims at the sentencing hearing limited the court’s review to plain error: "We review for plain error where, as here, an appellant asserts that the district court neglected to address an objection to the PSR in violation of Rule 32(i)((B), but that appellant failed to alert the district court of this procedural issue after the district court made its findings." In reaching this result, the court extended existing precedent that, where an appellant argues for the first time on appeal that the district court failed to consider the § 3553(a) sentencing factors, appellate review is for plain error only.

The circuit noted that if "the defendant or the Government believes that a particular factual issue is material and the district court neglects to address the issue at sentencing, it is not difficult - indeed, it should be intuitive - to bring this procedural error to the district court’s attention." In so holding, the court also seemingly abrogated a line of cases under the precursor to Rule 32(i)(3), the 1983 through 1994 version, which was codified as Rule 32(c)(3)(D). But the court noted that subsequent versions of the relevant portion of Rule 32 had been specifically intended to reduce the burdens on district courts and confine the purpose of the rule to resolving factual issues that were material to the sentence itself. And the court also noted that it has not recently remanded cases to remedy an unpreserved "technical violation" of Rule 32(i)(3).

Applying the plain error standard here, the court affirmed, since none of the matters that Wagner-Dano claimed the district court failed to address would have been likely to affect her sentence.

Comment: This decision once again demonstrates the importance of thorough, focused advocacy at sentencing, particularly where an appeal is likely.

PC World

Here are the court’s three  most recent per curiam opinions:
                               

United States v. David, No. 11-741-cr  (2d Cir. May 17, 2012)  Calabresi, Cabranes, Chin, CJJ) (per curiam)

In this drug case, the circuit remanded for resentencing because the district court acted before two 2011 circuit decisions, Chowdhury and Figueroa, in calculating the marijuana equivalency for the drug BZP.  Defendant David pled guilty to trafficking in large quantities of pills thought to contain the drug Ecstasy.  At sentencing, it emerged that the pills actually contained BZP, a somewhat similar drug often sold as Ecstasy. The district court analogized BZP to Ecstasy for guidelines purposes, and sentenced accordingly.  Strangely, a lab report submitted to the circuit, but not, apparently, the district court, indicated that the pills contained a combination of BZP and two other substances, TFMPP and caffeine.

The circuit noted that Chowdhury held that it was not error for a district court to conclude that a similar combination of drugs was most closely related to Ecstasy for guidelines purposes, while Figuroa held that it was error to treat BZP alone as Ecstasy, at least not without further fact development. Here, the court remanded for resentencing, noting that if the district court had had the benefit of those decisions  - and an accurate lab report - it might have conducted its drug equivalency analysis differently. The court also noted that the Sentencing Commission is considering developing a separate marijuana equivalency for BZP, and that this might also affect the sentence in this case.

United States v. Rood, No. 11-2174-cr (2d Cir. May 15, 2012) (Calabresi, Cabranes, Chin, CJJ) (per curiam)

In this decision, the court vacated a repeat-sex-offender mandatory life sentence imposed pursuant to 18 U.S.C. § 3553(e). At issue was whether the defendant’s 1991 Ohio conviction under a state statute that criminalized sexual contact with individuals under the age of 13 was equivalent to the relevant federal offense, which criminalizes such conduct with individuals under the age of 12. Since the statutes alone did not answer the question of the age of Rood's Ohio victim, the district court should have conducted a “modified categorical” inquiry to determine that fact.

Here, the Ohio judicial record evidence that the district court considered was insufficient. Without a transcript of the Ohio guilty plea, or some other equivalent judicial record, the circuit was unable to determine whether the available information sufficiently established that the victim was under 12. The court accordingly remanded for a de novo sentencing.

United States v. Ramos, No. 10-3982-cr (2d Cir. April 26, 2012) (McLaughlin, Sack, Livingston, CJJ) (per curiam)

The district court assessed defendant Ramos, convicted of alien smuggling and illegal reentry, two criminal history points for committing those crimes while on supervised release, a "criminal justice sentence" for purposes of U.S.S.G. § 4A1.1(d). The supervised release arose from a 2001 passport fraud conviction in the Southern District of Florida, where the sentence was time served and three years of supervised release. After that sentence was imposed, Ramos was immediately transferred to I.C.E. custody and removed from the United States.

In this case, Ramos did not dispute that he came back to the United States during the term of supervised release and that a violation warrant issued before its expiration. He claimed that he should not have been assessed the points because he did not know that he was on supervision when he came back, and thus did not know that he was supposed to report to Probation - that failure triggered the warrant - when he did.  The circuit held that Ramos' supposed lack of knowledge was “simply not relevant” to the criminal history calculation. Guideline § 4A1.1(d) “does not require a defendant to have knowledge that he is under a criminal justice sentence at the time he or she commits a new offense in order for its two-level increase to apply."

Gain? Wait!

United States v. Zangari, No. 10-4546-cr (2d Cir. April 18, 2012) (Cabranes, Pooler, Wesley, CJJ)

In this decision, the court found that the district court’s restitution order, which was based on the defendant's gain instead of the victims' loss, was error, but not plain error. It accordingly affirmed.

Defendant Zangari was a securities broker in the securities-lending departments of two major banks.  He engaged in unauthorized stock-loan transactions with financial institutions that had a relationship with one of his co-workers, and received a portion of the kickbacks, approximately $65,000.  His employers  suffered “losses in the form of unrealized profit.”

Zangari pled guilty to a Travel Act conspiracy, and was sentenced under USSG § 2B4.1, the commercial bribery guideline. The PSR used the $65,000 figure as the loss calculation, recommending an enhancement for a loss between $30,000 and $70,000. Although neither bank had submitted a loss affidavit, the PSR used Zangari’s gain as a proxy for their losses. The report equated the kickback amount the banks’ lost profit on the transactions, but did not detail how it reached this conclusion.

Zangari never objected to the loss calculation, and the district court used it both for calculating his guidelines and for fixing the amount of restitution.  On appeal, however, Zangari argued that the restitution order was illegal because the victims suffered no loss.

The circuit agreed that the restitution order was erroneous. The restitution statutes require that the order reflect the “full amount of each victim’s loss.” But here, the district court based the order instead on Zangari’s gain. While this is acceptable for calculating the loss for guidelines purposes - an application note permits using gain as a substitute for loss where the loss “reasonably cannot be determined” - the substitution is not permissible for calculating restitution.  Indeed, every circuit to consider the question has reached the same result, even in “hard cases.”

It is true that there are cases where there is a direct correlation between the defendant’s gain and the victim’s loss; in such situations the gain is a “measure of” but not a “substitute for” the loss.  But here, there was no such correlation. In the stock-loan transactions at issue the securities and collateral involved were returned to their previous owners at the end of the loan. “Therefore, any loss to the identified victims in this case could only have come in the form of opportunity cost.” And those losses were not equivalent to the sham finders fees that produced Zangari’s gain.

Accordingly, the order was error, and the error was “plain.” Nevertheless, the circuit declined to exercise its discretion to correct it because Zangari failed to show prejudice by demonstrating that the amount would have been less had it been properly calculated.  Rather, he insisted only that the banks’ failure to file affidavits of loss showed that they suffered no loss at all. The circuit disagreed: “the fact that the victims did not claim a loss does not mean that they did not sustain” one.

The circuit also thought this might even be a case of “salutary error,” in that it was possible that the restitution award “in fact understated the victims’ actual losses.”  Zangari pled guilty to being a member of an “industry-wide” conspiracy, and could have been held liable for all of the losses of all of the victims affected by it along with, under § 3663A(b)(4), the expenses they incurred in their internal investigations, including attorneys fees and accounting costs.

Remorse Code

United States v. Aleynikov, No. 11-1126 (2d Cir. April 11, 2012) (Jacobs, Calabresi, Pooler, CJJ)

Sergey Aleynikov, a former Goldman Sachs computer programmer, stole a portion of Goldman’s proprietary high frequency trading (“HFT”) computer code, apparently in preparation for taking a related, but higher paying, job at a startup company.  A jury convicted him of violating 18 U.S.C. § 2314, which makes it a crime to transport stolen “goods” in interstate commerce, and § 1832, which makes it a crime to steal a trade secret that is related to or included in a “product” that is “produced for or placed in” commerce.  Two months ago, the circuit reversed these convictions in a one-line order with an opinion to follow.

And here it is. While we were all expecting a sufficiency-of-the-evidence opinion, the court instead concluded that the indictment charging Aleynikov with those crimes was itself insufficient because it failed to allege a crime within the terms of the applicable statutes.

First, as to the stolen property count, the court concluded that the stolen HFT code did not constitute “goods,” “wares,” or “merchandise” within the meaning of the statute.  

In 1966, the court had held that stolen photocopies of documents detailing a pharmaceutical manufacturing process were “goods” because the documents were tangible items that were transported across state lines. But that case also suggested that if intellectual property were stolen in an intangible form, the statute would not apply. Moreover, in 1985, the Supreme Court held that the interstate transmission of intangible property - there it was the musical compositions contained in bootleg recordings - did not violate § 2314. Several circuits have subsequently held that intangible property is not a “good” “ware or “merchandise.” 

Aleynikov’s case is no different. He uploaded Goldman’s HFT code to a server in Germany, thereby stealing “purely intangible property embodied in a purely intangible format.”  The indictment did not allege that he “physically seized anything tangible from Goldman,” such as a CD or a flash drive.  And, while he later copied some of the code onto his own laptop and flash drive and transported it interstate, this did not violate the statute either, since the “thing stolen” must be a good or ware “at the time of the theft.”  “The later storage of intangible property on a tangible medium” - just like the bootleg phonograph records in the Supreme Court case - “does not transform the intangible property into a stolen good.”

For the trade secret count, the court concluded that code was not “related to or included in a product that is produced for or placed in” commerce, as required by § 1832.  This language covers two distinct categories of products: those “placed in” commerce are already in the marketplace, while those “produced for” commerce are still in development.  Clearly the source code here was not a product “placed in” commerce. But was also not “produced for” commerce simply because its function was to execute trades in financial markets.  And Godlman had no intention of selling its HFT system or of licensing it to anyone else. Thus, since that code “was not designed to enter or pass in commerce, or to make something that does,” its theft did not violate § 1832. At a minimum, the statute was ambiguous as to whether it would cover stolen HFT code, and under the rule of lenity the outcome would be the same.

In a concurring opinion, Judge Calabresi noted that, while it certainly appeared that Aleynikov’s theft of Goldman’s code was the type of “mischief” that Congress intended to be covered by § 1832, he agreed with the majority’s textual analysis. He suggested that Congress “return to the issue.”

Scott Free

United States v. Scott, No. 10-3978-cr (2d Cir. April 6, 2012) (Pooler, Parker, CJJ)

In 2009, two NYPD detectives arrested defendant Scott after witnessing him engage in what they said was a hand-to-hand drug sale. At trial, the district court permitted the detectives to testify, over objection, that they had seen Scott several times before, and had spoken to him several times, for as long as twenty minutes. The circuit, finding that this evidence violated both Rule 404(b) and Rule 403, vacated the judgment and remanded the case for a new trial.

The circuit first concluded that the evidence was indeed Rule 404(b) evidence, and not something else. Rule 404(b) covers other “acts,” not other “bad acts,” and here, the detectives’ description of their prior contacts with Scott clearly would bear adversely on the jury’s assessment of his character. The court distinguished this case from those where the evidence was limited to officers’ testifying that they had seen the defendant in the past. “The difference between a police officer’s mere observations of a defendant in an area and testimony that two different detectives had had occasion to speak to him up to five times and for up to twenty minutes ... is substantial.” This latter scenario “indicates to a jury” that the defendant is “at a minimum, the sort of person who warrants a level of police observation to which law-abiding citizens are unaccustomed” and thus that he is a person “with a propensity to engage in wrongful, criminal or otherwise unusual behavior that would attract the attention of the police.”

Next, the court found that the evidence was inadmissible under Rule 404(b), following the Huddleston factors. The court found that the evidence was not admissible as to Scott’s identity, because Scott’s identity was not at issue. His defense was that he did not engage in a drug sale, and not that the detectives arrested the wrong person. But even if identity were disputed, that would only justify permitting the officers to testify that they had seen Scott before, not that they had had numerous lengthy conversations wit him.

The court also rejected the government’s novel argument that the officers’ familiarity with Scott would somehow free up their powers of observation to focus better on what he was doing. In fact, this argument only supported the view that the evidence went to Scott’s criminal propensity. “There is only one reason a person is better able to tell what someone he knows is doing, which is that he knows what someone he is familiar with is likely to be doing.”

The court also held that the evidence was not admissible to bolster the credibility of the detectives by explaining their actions, which the court sometimes permits to ward off a defense argument that police testimony was suspect because the officers appeared to have singled out the defendant, or that the evidence corroborated the detectives’ other testimony. Here there was no fact that could be corroborated by the officers’ having seen and spoken with Scott before.

Finally, the court found both that the district court did not engage in a full Rule 403 analysis and that, in any event, the admission of the evidence violated Rule 403.

The district court’s only comment about any possible prejudice was that the evidence would not lead the jury to conclude that Scott had been previously arrested. But that was insufficient, because Rule 404(b) covers any acts that might relate to a persons’ character, and the evidence here surely implied that Scott had had “substantial contact with the police that was not benign.” The lower court's “too narrow” view of prejudice was error. Under its own review, the circuit found “no probative value” to the evidence, and that any minimal value was “substantially outweighed by the risk of prejudice” since the testimony clearly telegraphed what Scott was “likely to be doing” - dealing drugs.

Finally, the court found that the error was not harmless. The government’s case was “not particularly strong”: the observations were made through a patrol car’s tinted windows, from a great distance, and using only the side- or rear-view mirrors. Some of the testimony was also of suspect credibility: the supposed drug sale took place in broad daylight, with no lookout, and no one noticed the obvious police vehicle nearby. Moreover, the officers did not find drugs on Scott or the alleged buyer. The evidence was also clearly important to the prosecution, which opened on it and dedicated one sixth of its summation to it. The summation was particularly prejudicial because it perpetuated the propensity argument that the officers were better able to tell what Scott was doing because, since they knew him, they knew what he was “likely to be doing.”

DNA Claim IS DOA

United States v. Pitera, No. 10-1564-cr (2d Cir. April 3, 2012) (Jacobs, Miner, Katzmann, CJJ)

In this opinion by the late Judge Miner, the circuit rejected the claim of Thomas Pitera, formerly of the Bonanno crime family, that the district court erroneously rejected his application for DNA testing of “newly discovered” evidence.

Pitera was convicted in 1992 of various racketeering and CCE offenses that were predicated on seven murders, and received a life-plus-thirty-year sentence. Since then, he has regularly sought post-conviction relief. Most pertinent to the issues on this appeal is a 1999 habeas petition in which Pitera unsuccessfully alleged that evidence seized from one Frank Gangi, the main cooperator against him, would prove that Gangi was the “true killer.” The district court denied relief, noting that Gangi had admitted at Pitera’s trial that he was a participant in many of the murders, and explained that he had done them with Pitera. The habeas court also noted that Pitera’s involvement in the murders was corroborated by other evidence, including the recovery from Pitera’s home of items belonging to the victims and a recorded phone call where he discussed disposal of the bodies.

In the current litigation, Pitera returned to the claim that Gangi committed the murders of which Pitera was convicted. He filed a claim under the Innocence Protection Act, 18 U.S.C. 3600 (“the Act”), asking the government to compel DNA testing of six items of evidence allegedly seized from Gangi. Pitera alleged that a finding of either a victim’s or Gangi's DNA would raise a reasonable probability that Gangi, and not Pitera, was the murderer. The district court denied the application, and the circuit affirmed.

The circuit started by answering a question it had not yet reached - the standard of review. It concluded that whether a prisoner is entitled to DNA testing under the Act is reviewed de novo, with the related findings of fact reviewed for clear error. Here, the court had little trouble affirming. The issues Pitera raised were the same ones he raised in 1999, albeit with a “speculative forensic twist.” Even if the materials allegedly recovered from Gangi showed only DNA from Gangi and one or more victims, this would not raise a “reasonable probability that” Pitera did not commit the offense because, as noted above, the government’s theory was that Pitera and Gangi committed the murders together. The circuit again relied on Gangi’s trial testimony and the same corroborating evidence that the district court relied on in the earlier habeas litigation.

The Lyin’ King

United States v. Oyewumi, No. 10-3427(L) (2d Cir. March 29, 2012) (Wesley, Carney, CJJ, Cedarbaum, DJ)

Defendant-appellant Saeed went through the entire district court process - arrest, trial, safety-valve proffer and sentence - under the name Reginald Davis, a stolen identity. He also, according to a footnote in this opinion,tried to continue using that identity in the circuit, but the court would not permit it. It is his use of that identity that generated the most action on his appeal.

Saeed was arrested in 2009 after law enforcement agents seized a package at Newark Airport that contained 787 grams of heroin. A controlled delivery, followed by some monitored telephone calls, ultimately implicated Saeed. Saeed’s attorney told the government that Saeed might be eligible for safety-valve relief. Warning that Saeed would have to reveal his true identity, the government invited him to a proffer. Saeed attended, and continued to insist that he was Reginald Davis, although he also appeared to give a truthful account of his involvement in the drug conspiracy.
Saeed was subsequently charged with four additional crimes, all resulting from his use of a false identity during the safety-valve proffer, although two of the four were dismissed before trial. He was convicted by a jury of the narcotics conspiracy, one count of violating 18 U.S.C. § 1001, and one aggravated identity theft count. At sentencing, the government opposed safety-valve treatment because Saeed had lied about his identity in the proffer. The court agreed that this disentitled him to the safety-valve, and sentenced him to 110 months’ imprisonment.

On appeal, Saeed argued that his § 1001 conviction - which was the predicate for the aggravated identity theft count - was based on legally insufficient evidence because his false statements about his identity were not material. The circuit disagreed. “As a matter of common sense, providing a false identity to officials conducting a safety-valve proffer has both a ‘natural tendency to influence’ and is ‘capable of distracting’ those officials.” This type of deception affects the government’s ability to develop information about the crime, the defendant’s participation in it, and any relevant criminal history. The government was not required to prove that the lies actually affected those inquiries.

Saeed also argued that the government should not have been permitted to introduce his safety-valve proffer statements at trial, on the theory that the government acted in “bad faith” in continuing the proffer after it realized that he would not meet the pre-condition of disclosing his true identity. The circuit again disagreed. Saeed was informed of the government’s pre-condition for recommending safety-valve relief but nevertheless lied about his identity. The government was “under no obligation to save Saeed from himself once he failed to reveal his true identity.”

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.