United States v. Ochoa ( 2023 )

United States Court of Appeals
For the First Circuit
No. 22-1327
UNITED STATES OF AMERICA,
Appellee,
v.
CHRISTOPHER OCHOA,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. John A. Woodcock, Jr., U.S. District Judge]
Before
Kayatta, Selya, and Gelpí,
Circuit Judges.
Robert C. Andrews, with whom Robert C. Andrews Esquire P.C.
was on brief, for appellant.
Brian S. Kleinbord, Assistant United States Attorney, with
whom Darcie N. McElwee, United States Attorney, was on brief, for
appellee.
January 26, 2023
SELYA, Circuit Judge. Defendant-appellant Christopher
Ochoa, formerly a practicing attorney and now a convicted
fraudster, challenges the district court's restitution order,
which held him jointly and severally liable for all sums illicitly
obtained by the charged conspiracy. In the defendant's view, his
restitution obligation should have been limited to the portion of
the proceeds that went into his own pocket. Concluding, as we do,
that the restitution order falls within the encincture of the
district court's discretion, we affirm.
I
We briefly rehearse the facts and travel of the case.
Because this "appeal follows a guilty plea, 'we glean the relevant
facts from the change-of-plea colloquy, the unchallenged portions
of the presentence investigation report (PSI Report), and the
record of the disposition hearing.'" United States v. Dávila-
González, 595 F.3d 42, 45 (1st Cir. 2010) (quoting United States
v. Vargas, 560 F.3d 45, 47 (1st Cir. 2009)).
Beginning in March of 2017, the defendant — a lawyer
formerly licensed in the state of Florida — and his co-conspirators
orchestrated a scheme designed to defraud investors of millions of
dollars. To execute the scheme, the conspirators (or
intermediaries acting to their behoof) contacted prospective
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victims and induced them to invest in standby letters of credit.1
The conspirators pitched the investments as a win-win opportunity.
On the one hand, if the standby letters of credit were
issued, the investors would reap huge returns within days or weeks
(or so they were promised).2 On the other hand, if the standby
letters of credit were not issued, the investors would not lose a
dime (or so they were promised); each investor would simply receive
a full refund of his initial investment.
Over the course of a few months, the conspirators
convinced at least five people to invest substantial sums of money
in the scheme. The defendant played a significant role in bilking
the investors. At the direction of two of his co-conspirators
(Russell Hearld and Herbert Caswell), he drafted agreements to
memorialize the investments, delineate the handling of the
investors' funds, and limn the terms of the transactions. Among
other things, the agreements represented that investor funds would
be held in escrow in the client trust account of the defendant's
1 A standby letter of credit is an agreement through which a
financial institution commits to "serve as a guarantor of a certain
amount of money in a transaction between" a debtor and a third-
party beneficiary. F.D.I.C. v. Plato, 981 F.2d 852, 854 n.3 (5th
Cir. 1993); see Mago Int'l v. LHB AG, 833 F.3d 270, 272 (2d Cir.
2016).
2 For example, one victim who invested $50,000 was promised a
$6,200,000 return within ten weeks. Another victim was promised
that his $250,000 investment would yield a $10,000,000 return
within seven to twelve days.
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law firm unless and until the defendant received confirmation that
a standby letter of credit had been issued.
Trusting that the drafted agreements said what they
meant and meant what they said, each of the five investors wired
funds to the defendant to be held in escrow. The defendant,
though, did not retain the investors' money in his trust account.
Instead, he quickly withdrew some funds for his personal use and
disbursed other funds to his co-conspirators.
A few examples help to illustrate the defendant's role.
On April 10, 2017, two investors wired a total of $1,500,000 to
the defendant's trust account. That same day, the defendant
transferred $50,000 from the trust account to his personal account
and $50,000 to his business account. In addition, he wired
$750,000 to Hearld and $300,000 to Caswell's company. The next
day, the defendant transferred another $10,000 to his personal
account and transferred $200,000 to Hearld.
Essentially the same pattern was repeated a few weeks
later after a different investor wired $1,250,000 to the trust
account. Within hours, the defendant transferred $50,000 to his
personal account and $10,000 to his business account. He also
wired $900,000 to Hearld and $250,000 to Caswell.
The five victims of the fraudulent scheme invested a
total of $3,550,000. Individual investments ranged from $50,000
to $1,500,000. After sending their money to the defendant, the
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investors were kept in the dark: no investor was informed by any
of the conspirators (including the defendant) that any of his funds
had been withdrawn from the trust account.
In point of fact, not a red cent of the investors' money
was ever used to obtain standby letters of credit. Nor was any of
that money ever refunded to any investor.
The conspirators bought time by playing on the
investors' fears. For instance, one of the conspirators (Arthur
Merson) threatened the investors that they could be precluded from
future investment opportunities if they sought the return of their
funds.
Patience has its limits and — after some time had passed
— one of the victims contacted Florida authorities. That contact
started a chain reaction that brought the matter to the attention
of the Federal Bureau of Investigation. A probe ensued and, on
April 25, 2019, a federal grand jury sitting in the District of
Maine handed up an indictment charging the defendant and his three
co-conspirators with a single count of conspiracy to commit wire
fraud.3 See 18 U.S.C. §§ 1343, 1349. Although the defendant
3 Although none of the defendants resided in Maine, one of
the victims was a resident of that state. Moreover, that victim
had wired funds from his in-state bank account to the defendant's
trust account. In a federal criminal case, venue may be laid in
any district in which an act in furtherance of a charged conspiracy
has taken place. See 18 U.S.C. § 3237(a); see also United States
v. Rutigliano, 790 F.3d 389, 395-97 (2d Cir. 2015). Consequently,
venue in this case was properly laid in the District of Maine.
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initially maintained his innocence, he later entered into a plea
agreement with the government. On July 22, 2021, he pleaded guilty
to the single count charged in the indictment. The district court
accepted his plea.
The disposition hearing was held on February 11, 2022,
and the court sentenced the defendant to a twenty-nine-month term
of immurement, to be followed by a three-year term of supervised
release. The court also determined that restitution was "mandatory
in the amount of $3,473,701," which was the total amount of the
loss caused by the fraudulent scheme.4 The court deferred,
however, in entering a defendant-specific restitution order, see
18 U.S.C. § 3664(d)(5), and directed the parties to furnish further
briefing as to whether to apportion restitution or, conversely, to
hold the defendant jointly and severally liable for the entire
amount of the loss.
In due course, the parties filed their supplemental
submissions. The district court reviewed those submissions, and
on April 15, 2022, rejected the defendant's entreaty that
restitution be limited to $230,000 — the amount that the defendant
"personally received from the fraud." United States v. Ochoa, No.
Although the conspirators had obtained $3,550,000 from the
4
victims, the district court found that one of the victims had
managed to recoup $76,299. The court, therefore, subtracted that
sum from the amount of the loss for purposes of restitution. This
overall loss calculation is not challenged on appeal.
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19-00077, 2022 WL 1127858, at *3 (D. Me. Apr. 15, 2022). Instead,
the court ruled that the defendant should be held jointly and
severally liable (along with his co-conspirators) for the full
amount of the victims' loss: $3,473,701. See id. at *1, *5. In
reaching this result, the court observed that the defendant:
played a major role in carrying . . . out [the
scheme], and its success turned on [his]
position as an attorney. Mr. Ochoa induced
trusting victims to deposit their money in his
law office's trust account, drafted related
agreements, and, as the [c]ourt raised during
the sentencing hearing, disbursed the victims'
funds in direct violation of the agreements
that he himself drafted. Moreover, each of
the victims wired money to Mr. Ochoa's
attorney trust account and Mr. Ochoa disbursed
the money to his co-conspirators and to
himself. . . . In other words, all of the
losses subject to restitution passed through
Mr. Ochoa's trust account and none is
attributable to activity in which he was not
involved.
Id. at *4. The court found it unpersuasive that the defendant had
"retained less of the proceeds" than two of his co-conspirators,
noting that such an argument "improperly conflate[d] [the
defendant's] gain with the victims' losses." Id. at *5. Finally,
the court declined the defendant's invitation to apply the
reasoning of Paroline v. United States, 572 U.S. 434 (2014), a
child pornography case, to the case at hand. See Ochoa, 2022 WL
1127858, at *3.
This timely appeal followed.
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II
This is a rifle-shot appeal: the sole issue on appeal
focuses on the district court's decision to hold the defendant
jointly and severally liable for the full amount of loss
attributable to the fraud scheme. The defendant argues that the
court should have limited his restitution obligation to $230,000
— the amount that he personally garnered from the scheme.
Relatedly, he argues that holding him liable for the full amount
of the sums extracted by the conspiracy would impose a crushing
burden and foreclose any prospect of rehabilitation. Because the
defendant preserved this claim of error below, our review is for
abuse of discretion. See United States v. Carrasquillo-Vilches,
33 F.4th 36, 45 (1st Cir. 2022). Within that framework, we
"examin[e] the court's subsidiary factual findings for clear error
and its answers to abstract legal questions de novo." United
States v. Chiaradio, 684 F.3d 265, 283 (1st Cir. 2012).
The restitution order in this case is grounded upon the
Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. The
MVRA requires a district court to order a defendant convicted of
"an offense against property . . . including any offense committed
by fraud or deceit," 18 U.S.C. § 3663A(c)(1)(A)(ii), "to 'make
restitution to the victim of the offense,'" United States v. Soto,
799 F.3d 68, 97 (1st Cir. 2015) (quoting 18 U.S.C. § 3663A(a)(1)).
What is more, the MVRA requires the court to "order restitution to
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each victim in the full amount of each victim's losses as
determined by the court and without consideration of the economic
circumstances of the defendant." United States v. Morán-Calderón,
780 F.3d 50, 51 (1st Cir. 2015) (quoting 18 U.S.C.
§ 3664(f)(1)(A)). This mandate is easy to apply when a defendant,
acting alone, caused all of a victim's losses: in that event, the
defendant must be ordered to pay the entire amount of the losses.
See United States v. Yalincak, 30 F.4th 115, 121 (2d Cir. 2022).
The situation is more nuanced, however, when — as in
this case — more than one miscreant has contributed to the victims'
losses. In that event, the MVRA gives the court a choice between
two options. See United States v. Salas-Fernández, 620 F.3d 45,
49 (1st Cir. 2010). The court may "apportion liability among
defendants according to culpability or capacity to pay, or, in the
alternative, [may] make each defendant liable for the full amount
of restitution by imposing joint and several liability." United
States v. Wall, 349 F.3d 18, 26 (1st Cir. 2003); see 18 U.S.C.
§ 3664(h). In making this choice, a sentencing court enjoys broad
discretion. See Morán-Calderón, 780 F.3d at 52; Salas-Fernández,
620 F.3d at 48-49.
The short of it is that the court may weigh an individual
defendant's role in the offense when deciding whether to apportion
restitution — but it is generally free to decide the issue either
way. See Salas-Fernández, 620 F.3d at 49-50. This freedom of
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choice is especially appropriate in conspiracy prosecutions. In
that context, "it is well established that defendants can be
required to pay restitution for the reasonably foreseeable
offenses of their co-conspirators." United States v. Newell, 658
F.3d 1, 32 (1st Cir. 2011); see United States v. Collins, 209 F.3d
1, 4 (1st Cir. 1999). Put another way, under the MVRA, members of
a conspiracy may be "held jointly and severally liable for all
foreseeable losses within the scope of their conspiracy regardless
of whether a specific loss is attributable to a particular
conspirator." United States v. Moeser, 758 F.3d 793, 797 (7th
Cir. 2014).
With these tenets in mind, it is readily apparent that
the district court acted within the encincture of its discretion
in entering a restitution order that held the defendant jointly
and severally liable to each of the victims for the full amount of
the losses suffered by that victim as a result of the scheme.
Although not obligated to do so, see Salas-Fernández, 620 F.3d at
48-49, the district court went the extra mile, sought supplemental
briefing, and thoroughly considered the degree to which the
defendant's actions contributed to the victims' losses. In the
district court's judgment, this review reinforced — rather than
weakened — the appropriateness of holding the defendant jointly
and severally liable for all of the losses.
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The court supportably found that the defendant played an
instrumental part in the conspiracy: he took advantage of his
position as a lawyer to entice investors to entrust him with their
money; he drafted the agreements used to facilitate the scheme; he
served as a de facto intake valve for the bilked funds; he falsely
promised to hold those funds in escrow; and he siphoned off the
money and disbursed it — in varying amounts — to himself and to
his co-conspirators. And as the district court astutely noted,
the defendant's actions created a facade of legitimacy that formed
an essential part of the conspiracy.
To be sure, the defendant received a smaller share of
the booty than some of his co-conspirators. But his able counsel
made that argument to the district court, which rejected it.
Nothing in the record fairly suggests that we should second-guess
the district court and disturb that quintessential exercise of its
discretion.
In an effort to blunt the force of this reasoning, the
defendant strives to convince us that a district court's exercise
of discretion under the MVRA should be guided by "a standard that
place[s] some restriction" on the district court's exercise of
that discretion. Although the defendant does not provide much
detail as to what the contours of that standard should be, he
suggests that this new standard should be derived from the Supreme
Court's decision in Paroline, 572 U.S. 434. Based on the logic of
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that case, he submits that a district court should be obliged to
give weight to a defendant's "conduct" and relative "culpability"
in determining whether to apportion restitution. We are not
convinced.
Paroline is not a fair congener. There, the defendant
pleaded guilty to possessing child pornography, and the Court was
faced with "the question of how to determine the amount of
restitution a possessor of child pornography must pay to the victim
whose childhood abuse appears in the pornographic materials
possessed." Paroline, 572 U.S. at 439. The governing statute was
not the MVRA but, rather, 18 U.S.C. § 2259 — a restitution statute
specific to offenses enumerated in 18 U.S.C. chapter 110. The
Fifth Circuit held that the defendant could be adjudged jointly
and severally liable for the full amount of restitution owed to
the victim, approximately $3,400,000. See id. at 441-43. That
holding was premised in part on the notion that section 2259 "did
not limit restitution to losses proximately caused by the
defendant" so that "each defendant who possessed the victim's
images should be made liable for the victim's entire losses from
the trade in her images." Id. at 442-43.
The Supreme Court took a different view, rejecting the
Fifth Circuit's conclusion that section 2259 did not "limit[]
restitution to those losses proximately caused by the defendant's
offense conduct." Id. at 443. The Court held that "a court
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applying [section] 2259 should order restitution in an amount that
comports with the defendant's relative role in the causal process
that underlies the victim's general losses." Id. at 458. The
Court described the "causal process" between the defendant's
offense and the victim's losses as "atypical," and it was careful
to explain that its holding applied only to the "special context"
before it — a context that embodied cases in which the defendant
was "one of thousands" who contributed to the victim's loss by
possessing her images and where, as a result, "it [wa]s impossible
to trace a particular amount of [the victim's] losses to the
individual defendant." Id. at 449, 458.
The case at hand is at a far remove from Paroline. This
case involves a fraud scheme in which there is nothing either
atypical or difficult to trace about the causal nexus between the
offense conduct and the investors' losses. Nor is there anything
about the context that can fairly be described as "special": the
defendant took part in a garden-variety fraud scheme in which he
and his co-conspirators obtained millions of dollars from five
individuals by hoodwinking them into pursuing a bogus investment
opportunity. Apples should be compared with apples and — given
the starkly different factual settings — we decline to transplant
the reasoning of Paroline into the inhospitable soil of this case.
See United States v. Kolodesh, 787 F.3d 224, 242-43 (3d Cir. 2015)
(declining to extend Paroline to "case involv[ing] straightforward
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consideration of moneys obtained by fraud"); see also United States
v. Sheets, 814 F.3d 256, 261 (5th Cir. 2016) ("Paroline solely
involves the issue of whether restitution may be imposed under the
circumstances of that case . . . .").
Three decades ago, we wrote that "[i]n making
discretionary judgments, a district court abuses its discretion
when a relevant factor deserving of significant weight is
overlooked, or when an improper factor is accorded significant
weight, or when the court considers the appropriate mix of factors,
but commits a palpable error of judgment in calibrating the
decisional scales." United States v. Roberts, 978 F.2d 17, 21
(1st Cir. 1992); accord United States v. Soto-Beníquez, 356 F.3d
1, 30 (1st Cir. 2003); Indep. Oil & Chem. Workers, Inc. v. Procter
& Gamble Mfg. Co., 864 F.2d 927, 929 (1st Cir. 1988). Here, the
district court did not overlook a relevant factor. Nor has the
defendant argued that the court gave significant weight to any
irrelevant factor. And, finally, the district court's careful
handling of the issue belies any suggestion that it made a palpable
error of judgment.
We hold that where, as here, a defendant is convicted as
a member of a wire-fraud conspiracy, a district court has
discretion to order him to reimburse the victims of the scheme,
jointly and severally with his co-conspirators, for all reasonably
foreseeable losses engendered by the scheme. See Newell, 658 F.3d
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at 32; Collins, 209 F.3d at 4. Such a holding is consistent with
the principle that a defendant may be held liable "for all
foreseeable losses within the scope of [a] conspiracy." Moeser,
758 F.3d at 797. And the court's discretion does not vanish into
thin air simply because a particular defendant received a smaller
share of the swindled funds than was received by other co-
conspirators. See United States v. Rodriguez, 915 F.3d 532, 536-
37 (8th Cir. 2019).
III
We need go no further. For the reasons elucidated above,
the district court's restitution order is
Affirmed.
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