United States v. Gordon ( 2013 )

FILED
United States Court of Appeals
Tenth Circuit
March 15, 2013
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
Nos. 10-5146 & 11-5009
GEORGE DAVID GORDON, a/k/a
“G. David Gordon”
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Oklahoma
(D.C. No. 4:09-CR-00013-JHP-1)
William D. Lunn, Tulsa, Oklahoma, for Defendant-Appellant.
Claire McCusker Murray, Criminal Division, Appellate Section, U.S. Department
of Justice, Washington, D.C. (Thomas Scott Woodward, United States Attorney,
Catherine J. Depew, Assistant United States Attorney, Northern District of
Oklahoma; Kevin B. Muhlendorf and Andrew H. Warren, Trial Attorneys, Lanny
A. Breuer, Assistant Attorney General, Criminal Division, Greg D. Andres,
Acting Deputy Assistant Attorney General, Criminal Division, and Joseph Palmer,
Attorney, Criminal Division, Appellate Section, U.S. Department of Justice,
Washington, D.C., on the brief), for Plaintiff-Appellee.
Before HARTZ, O’BRIEN, and HOLMES, Circuit Judges.
HOLMES, Circuit Judge.
Defendant-Appellant George David Gordon is a former securities attorney
convicted of multiple criminal charges relating to his alleged participation in a
“pump-and-dump” scheme where he, along with others, violated the federal
securities laws by artificially inflating the value of various stocks, and then
turning around and selling them for a substantial profit. The government also
restrained some of his property before the indictment was handed down and
ultimately obtained criminal forfeiture of that property. We affirm Mr. Gordon’s
conviction and sentence, as well as the accompanying forfeiture orders.
I. Factual and Procedural Background
Mr. Gordon was a securities attorney in Tulsa, Oklahoma. The government
charged that Mr. Gordon and Richard Clark, 1 a Tulsa businessman, engaged in a
“pump-and-dump” scheme. 2 As part of their scheme, Messrs. Gordon and Clark,
1
Mr. Clark is the subject of a related appeal arising from his
convictions in the same scheme. See United States v. Clark, No. 10-5152.
2
In the indictment, the government describes pump-and-dump
schemes as follows:
A pump and dump scheme involves the artificial manipulation of
the price and volume of a particular stock in order to later sell
that stock at an artificially inflated price. Generally, the
perpetrators of a pump and dump scheme obtain control over a
substantial portion of free trading shares of the company. Free
trading shares are shares of stock that the owner can trade
without restriction on a national exchange, e.g., the New York
Stock Exchange or NASDAQ, or are traded in the
over-the-counter market via the Pink Sheets. To obtain the free
trading shares, the perpetrators may orchestrate a reverse merger,
which occurs when a privately held company with no publicly
traded stock merges with a publicly listed shell company that has
(continued...)
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along with other alleged co-conspirators, “acquired millions of shares in ‘penny
stock’ companies[,] . . . used false and backdated documents to make their shares
publicly tradeable[,] . . . [and] coordinated trading among themselves and
nominees they controlled to create the false appearance of an active market for
the stock[s].” Aplee. Br. at 3.
The government further claimed that the conspirators initiated false and
misleading advertising campaigns to promote the stocks, sold the stocks through
“an array of bank accounts and nominee[s],” and engaged in a subsequent cover-
up to conceal their conduct from the Securities and Exchange Commission
2
(...continued)
no assets or revenue but has stock available for public trading,
resulting in a public company. The pump usually involves
artificially inflating a company’s stock price by engaging in
coordinated trading of the stock in order to create the appearance
of a more active market for that stock. The pump also usually
involves disseminating false and misleading promotional
materials—unsolicited advertisements touting a particular stock
and encouraging others to purchase the stock, which are often
sent to millions of recipients by fax or email “blasts.” After
pumping the stock, the perpetrators dump their shares, meaning they
sell large volumes of the shares that they own and control to
unsuspecting investors. The dumping often occurs soon after the
dissemination of the promotional materials touting the particular
company. The perpetrators of a pump and dump scheme will often
“park” their shares by depositing or transferring them into different
accounts, including nominees ’ accounts, and then trade the
manipulated stock using the different accounts in order to conceal
their trading activity.
R., Vol. I, at 55–56 (Indictment, filed Jan. 15, 2009).
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(“SEC”). Id. at 3–4.
The scheme can be traced back to 2004 when Mr. Gordon began dealing
with Mark Lindberg and Joshua Lankford, two Dallas stock promoters (also
alleged members of the conspiracy). Through a sequence of transactions, Mr.
Gordon assisted Mr. Lindberg, Mr. Lankford, and others in, inter alia,
establishing and promoting the stock of numerous companies. Transactions
involving three companies headline the government’s charges: specifically,
National Storm Management (“National Storm”), Deep Rock Oil & Gas (“Deep
Rock”), and Global Beverage Company (“Global Beverage”). The government
also alleged that Mr. Gordon fraudulently obtained free-trading shares of
International Power Group (“IPG”). We briefly discuss the material facts relevant
to each company below. 3
A. National Storm
National Storm was a roofing and siding company in Illinois with annual
revenues of around $8 million. Mr. Gordon and Mr. Lindberg met with National
3
The entirety of the indictment charged Mr. Gordon with: conspiracy
(Count 1), in violation of 18 U.S.C. § 371; wire fraud (Counts 2–10, 23), in
violation of 18 U.S.C. §§ 1343 and 2(a); securities fraud (Counts 11–15), in
violation of 15 U.S.C. §§ 78j(b), 78ff and 17 C.F.R. § 240.10b-5, 18 U.S.C.
§ 2(a); money laundering (Counts 16–21), in violation of 18 U.S.C. §§ 1957(a)
and 2(a); making a false statement to a government official (Count 22), in
violation of 18 U.S.C. § 1001; and knowingly corrupting, or attempting to
corrupt, an official proceeding relating to the government’s forfeiture attempts
(Count 24), in violation of 18 U.S.C. § 1512(c)(2).
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Storm’s president in 2005 to discuss financing options. The parties agreed to take
the company public. In pursuit of that goal, Mr. Gordon and an associate (New
York businessman Richard Singer) arranged for a merger between National Storm
and The 18th Letter—a public “shell company . . . that had been incorporated and
had issued stock in 2002.” Aplt. Opening Br. at 9.
Mr. Gordon forwarded to Mr. Singer a legal opinion letter pursuant to SEC
Rule 144, signed by an associate attorney, Robert Bertsch, stating that The 18th
Letter’s shares were freely tradeable under Rule 144’s criteria because the shares
had been purchased by the respective owners two years ago. See 17 C.F.R.
§ 230.144(k) (“Rule 144”) (2005) (“The requirements of paragraphs (c), (e), (f)
and (h) of this section shall not apply to restricted securities sold . . . [by] a
person who is not an affiliate of the issuer at the time of the sale . . . , provided a
period of at least two years has elapsed since the later of the date the securities
were acquired from the issuer or from an affiliate of the issuer.” (emphasis
added)); 4 see also M & A West, 538 F.3d at 1051 (“Rule 144(k) permits a person
who is not an affiliate of the issuer . . . to sell restricted securities without
complying with certain requirements after they have held the securities for a
period of two years.” (footnote omitted)).
4
“Rule 144(k) has since been repealed and replaced by Rule 144(b),
which replaced the two-year holding period of Rule 144(k) with a one-year
holding period.” SEC v. M & A West, Inc., 538 F.3d 1043, 1046 n.1 (9th Cir.
2008).
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Mr. Singer testified that because he was the only shareholder in The 18th
Letter, Mr. Gordon instructed him to “offer some friends a thousand dollars each
to falsely claim that they were shareholders.” Aplee. Br. at 6. Mr. Gordon’s
office transmitted to Mr. Singer “backdated corporate records . . . that purported
to memorialize Singers’ [sic] friends’ purchase of shares two years
previously”—i.e., seemingly with the aim of satisfying Rule 144’s requirements.
Id.; see R., Vol. VIII, at 1494–98 (Trial Test. of Richard Singer, dated Apr. 14,
2010) (“[The documents] were backdated to show that the shareholders owned the
stock longer than they actually did, so upon becoming a public company those
shares would be freely tradable to sell in the market.”).
The opinion letter was transmitted to a transfer agent so that the shares at
issue could be traded publicly on an “over-the-counter” (“OTC”) market. See
generally Black’s Law Dictionary 1214 (9th ed. 2009) (defining “over-the-counter
market” as “[t]he market for securities that are not traded on an organized
exchange”). The merged company consisted of six million freely-tradeable
shares—or 15% of the total shares. National Storm’s president held the
remaining interest in the form of restricted shares (i.e., non-trading shares).
In 2005, several storms pelted the Gulf of Mexico, causing “severe
damage” throughout the Southern states. Aplt. Opening Br. at 6. Because
National Storm was a building company, Messrs. Gordon, Lindberg and Lankford
wanted to take advantage of the potential for increased share performance, so they
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employed a stock promoter named Dean Sheptycki (a charged co-conspirator)
“who could write and send . . . millions of fax advertisements each day about a
company.” Id. at 10. A “fax blast” campaign was initiated subsequently;
thousands of faxes were sent out touting strong market expectations for National
Storm’s future growth. A similar “e-mail blast” campaign followed.
The distributed material was misleading in many ways. For instance, an
August 31, 2005, fax represented that “Wall Street expectations” for the
company’s growth were “207% now” and “450% in the next 12 months”—this,
despite the fact that no Wall Street “analysts” were covering the company. Aplee.
Br. at 7 (citation omitted) (internal quotation marks omitted); see also Aplt.
Addendum, ex. 4 (Nat’l Storm Fax Advertisement, dated Aug. 31, 2005).
Evidence also was introduced at trial that the faxes included misleading
statements regarding the source of the information in order to “conceal the fact
that the blast had been prepared by Sheptycki, reviewed by Gordon, and paid for
from Gordon’s client trust account.” Aplee. Br. at 8; see also R., Vol. VIII, at
3049–50 (Trial Test. of Mark Lindberg, dated Apr. 6, 2010) (noting that a
marketing company included in the fax blast disclosures actually had no
involvement with their dissemination, and that a statement suggesting that non-
affiliated shareholders paid for the advertisements was untrue). Similarly, one
mass e-mail that contained information regarding National Storm’s purported
significant expected growth referred readers to the SEC’s website for investor
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information. But, because National Storm was a so-called “Pink Sheet” OTC
company, it was not required to file periodic reports with the SEC. See generally
SEC v. Whittemore, 659 F.3d 1, 5 (D.C. Cir. 2011) (describing the Pink Sheet
system as “a trading system that lists small companies that do not meet the
requirements of the major stock exchanges”); SEC v. Platforms Wireless Int’l
Corp., 617 F.3d 1072, 1081 (9th Cir. 2010) (noting that the defendant’s “stock
has been traded on the Pink Sheets, now known as Pink Quote, an inter-dealer
electronic quotation and trading system for registered and unregistered
securities”); Black’s Law Dictionary 1265 (defining “pink sheet” as “[a] daily
publication listing over-the-counter stocks, their market-makers, and their
prices”); R., Vol. I, at 53 (describing “Pink Sheets” as “a quotation service for
over-the-counter stocks”).
Throughout the advertising campaign, Mr. Gordon, along with other co-
conspirators, including Mr. Lindberg, used various “nominee” accounts to
disguise ownership of National Storm shares and coordinate trading. National
Storm’s stock began to rise. As the prices rose, the conspirators began selling
their shares. Ultimately, the conspirators made more than $5 million from the
manipulation of National Storm.
B. Deep Rock
The conspirators conducted another promotion, this time of Deep Rock, a
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Tulsa-based oil company. See Aplt. Opening Br. at 12 (“The rise in natural gas
prices during the early part of 2005 caused Lindberg to want to do a similar
promotion with Deep Rock . . . .”). Mr. Clark had held a majority of the “non-
insider” shares of Deep Rock for many years. The government presented
testimony that, similar to what had occurred with National Storm, Mr. Gordon
arranged for Mr. Clark’s shares to be transferred to various nominees in order to
disguise their ownership. See R., Vol. VIII, at 3138–39 (noting that shares were
“parked” with others in order “to not disclose who actually control[led] all the
shares”). Mr. Gordon prepared an opinion letter stating that the nominees had
fulfilled Rule 144’s requirements in order for the stock to be assigned a symbol
for public trading.
The conspirators began coordinated trading in Deep Rock stock, some of
which occurred via separate nominee accounts. See id. at 3140 (discussing how
the conspirators were able to “prime” Deep Rock stock—i.e., create the
appearance of high-volume trading before promotions began). In September
2005, they sent out a series of fax and e-mail blasts hyping Deep Rock and
touting its potential for astronomical profits in the wake of the chaos created by
Hurricane Katrina and in light of rising energy prices. These faxes, like those in
the National Storm blast, contained many misleading assertions. Also, in support
of their efforts, the conspirators caused to be prepared certain promotional
“magalogs”—i.e., catalogue-type brochures. Mr. Gordon personally reviewed
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some of the promotional material. On one occasion, he responded on Deep
Rock’s behalf to a complaint about the fax blasts, denying knowledge of the
source of the faxes, and noting that Deep Rock “would consider joining a lawsuit
against the perpetrators.” Aplee. Br. at 14.
Deep Rock’s stock price rose. See Aplt. Opening Br. at 13 (noting that
“[i]t spiked in September, 2005, then began a steady decline into 2006”). Mr.
Gordon, along with his co-conspirators, made around $5 million in gross proceeds
from Deep Rock sales.
C. Global Beverage
In 2005, Mr. Lindberg and other co-conspirators became involved with a
sport drink company (Rudy Beverages) founded by Rudy Ruettiger, a former
Notre Dame athlete, and the subject of the major motion picture, Rudy. Mr.
Ruettiger wanted to expand his business, and in the summer of 2005, conspirators,
including Mr. Lindberg, put a plan into action to help finance the company.
Global Beverages, a company in which certain conspirators controlled a
substantial stake, acquired Rudy Beverages in the fall of 2005. While financing
issues were worked out, Mr. Gordon permitted the conspirators to “park” millions
of corporate shares in his client trust account.
Shares of Global Beverage became publicly tradeable. And Mr. Lindberg
and other co-conspirators devised a plan to manipulate the stock. See R., Vol.
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VIII, at 178 (Trial Test. of Mark Lindberg, dated Apr. 7, 2010) (noting that there
was no difference between the “manipulation of Global Beverage . . . [and]
National Storm and Deep Rock”). 5 Mr. Lindberg testified that, as part of the plan,
the conspirators placed many shares with nominees and began a promotional
campaign for the company. Mr. Sheptycki composed and sent numerous faxes for
the campaign. Further, e-mails and magalogs were transmitted. The promotional
materials contained misleading information. See id. at 215 (noting that Mr.
Sheptycki “made up” information regarding the source of the materials).
The price of Global Beverage stock spiked during the end of 2005 and
beginning of 2006, but, due in part to disappointing financials, eventually
dropped. The conspirators, including Mr. Gordon, made roughly $25 million total
from the manipulation of Global Beverage.
D. International Power Group 6
Sometime in 2004 or 2005, Mr. Gordon approached Mr. Lindberg about
getting a trading symbol for a private company that he and Mr. Singer had
discovered: IPG. Mr. Gordon used a company called “Ednet”—an entity that was
5
Mr. Lindberg advocated for a replacement of the CEO of the
company. Mr. Gordon recommended Mr. Clark because he was “heat-resistant,”
see R., Vol. VIII, at 186, and would be “in with the plan,” id. at 187. Mr. Clark
became the CEO.
6
The only substantive counts in the indictment that related to the IPG
scheme (Counts 23 and 24) concerned charges that only implicated Mr. Gordon.
See R., Vol. I, at 76–80; see also Discussion infra.
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controlled by his “longtime friend and business associate,” Mark White—to serve
as a shell for a reverse merger with IPG. Id. at 251. See generally M & A West,
538 F.3d at 1046 (“A reverse merger is a transaction in which a privately-held
corporation acquires a publicly-traded corporation, thereby allowing the private
corporation to transform into a publicly-traded corporation without the necessity
of making an initial stock offering.”). Mr. Gordon prepared a Rule 144 opinion
letter and instructed Mr. Singer to have his attorney, Robert Bertsch, sign it on his
firm’s letterhead, “even though [Mr. Bertsch] had never communicated with the
purported shareholders.” Aplee. Br. at 13; see R., Vol. VIII, at 1604 (answering,
“No. Not at all,” to the question, “Did Mr. Bertsch have any conversations with
any of [the shareholders]?”). Mr. Singer and Mr. Bertsch were given IPG shares.
Mr. Gordon advised Mr. Lindberg’s assistant, Chasity Thompson, to
prepare backdated corporate documents for Ednet, including bylaws and board
meeting notes, because Mr. White ostensibly had “lost all the [original]
documents.” R., Vol. VIII, at 907–08 (Trial Test. of Chasity Thompson, dated
Apr. 12, 2010). After the Rule 144 opinion that Mr. Gordon drafted was
transmitted to a transfer agent, unrestricted shares were issued. Mr. Singer
gradually sold shares on Mr. Gordon’s behalf, and at one point in November
2005, wire-transferred roughly $1.7 million of the proceeds to “pay off the
mortgage on [Mr. Gordon’s] house.” Id. at 1610. The government also presented
evidence that Mr. Singer later prepared a false, backdated document purporting to
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memorialize a sale of IPG stock between Mr. Gordon and Mr. Singer that never
actually took place. This document allegedly was created in an attempt to stop
the government from obtaining forfeiture of Mr. Gordon’s home.
E. The Investigation and Prosecution
In 2004, SEC official Samuel Draddy began looking into an unrelated Pink
Sheet company that had some “unusual trading surrounding its stock and appeared
to be the subject of a promotional campaign.” Id. at 1753 (Trial Test. of Samuel
Draddy, dated Apr. 15, 2010). This case led to further investigations of other
“similarly-situated issuers” with unusual trading patterns and promotional
campaigns. Id. After taking a deeper look, investigators noticed that the
companies under consideration revealed similar patterns where “the people
involved owned shells, [which] were publicly-traded issuers that had no
legitimate business purpose, . . . [and t]hey would then get private companies to
reverse-merge into these shells so they could get publicly traded.” Id. at 1754.
Mr. Gordon represented some of the companies and individuals involved in the
investigations, including National Storm and Deep Rock.
SEC investigators called Mr. Gordon on September 20, 2005. Before
commencing the discussion, they informed Mr. Gordon that he could speak with
counsel before answering their questions, and that he could choose whether or not
to answer the questions as a general matter. They also informed him that “there
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[were] potential penalties, both civil and criminal, for giving false answers to
government officials.” Id. at 1772. During the conversation, Mr. Gordon was
asked about, and denied any knowledge of, the source of the National Storm and
Deep Rock promotions. 7
In 2007, roughly two years before the indictment was filed, the government
placed a caveat on two lots that Mr. Gordon had previously acquired as a part
owner of the Delvest Corporation (the “Delvest lots”). See generally Black’s Law
Dictionary 252 (defining “caveat” as “[a] warning or proviso”). Further, a caveat
was placed on Mr. Gordon’s personal residence. The government also seized two
of his law firm’s bank accounts. The government filed a civil forfeiture action
against the residential property in 2007 and replaced the caveat with a lis
pendens. Upon the response of Mr. Gordon’s wife—who was listed as the
primary owner of the home—the government obtained a stay pending the
resolution of its criminal investigation. When the indictment was returned in
2009, it sought forfeiture of both the residence and the law firm accounts.
At trial, 8 the government called various witnesses (and co-conspirators) to
7
Later, on Mr. Gordon’s recommendation, many of his individual
clients involved in the transactions at issue invoked the Fifth Amendment and
refused to testify in front of the SEC.
8
On March 10, 2009, the district court granted the government’s
motion to declare the matter complex, and ordered an ends-of-justice continuance
under the Speedy Trial Act. The court subsequently set the trial date for January
(continued...)
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summarize the details of the conspiracy, including Mr. Lindberg and Mr. Singer.
Investigator Draddy also testified about the promotional campaigns and Mr.
Gordon’s discussion with the SEC. Other witnesses were called to summarize
volumes of documentary evidence.
Late in the trial, the district court excused a petit juror. Specifically, after
the government rested its case, a juror informed a court staff member that she
wanted to serve as an alternate because her continued presence on the jury “could
affect the outcome of the case,” R., Vol. VIII, at 2468 (Trial Tr., dated Apr. 29,
2010), because of, among other things, her “take on [certain] personalities,” id. at
2478 (Trial Test. of Juror, dated Apr. 29, 2010). After an investigation, the court
decided, over Mr. Gordon’s objection, that it would excuse her “out of an
abundance of caution.” Id. at 2505.
Ultimately, Mr. Gordon was convicted on all counts that were submitted to
the jury. 9
8
(...continued)
19, 2010. However, the presiding judge recused himself in late 2009, and Judge
James Payne was assigned to the matter. Judge Payne reset the trial date to
March 29, 2010. However, in light of numerous pending motions and an
interlocutory appeal filed by Mr. Gordon, the trial ultimately did not begin until
April 5, 2010.
9
Before the trial started, the government moved for, and the district
court granted, dismissal of Count 16, a money laundering allegation.
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F. Post-Trial Proceedings
The U.S. Probation Office prepared a Presentence Report (“PSR”),
recommending various upward adjustments under the U.S. Sentencing Guidelines
(“U.S.S.G.”) for offense-specific characteristics. 10 The parties filed multiple
objections to the PSR. The PSR notably recommended a twenty-level
enhancement under U.S.S.G. § 2B1.1(b)(1)(K), because Mr. Gordon’s fraudulent
conduct, both individually and jointly with others in the conspiracy, caused an
estimated loss to investors of, at the very least, an amount exceeding $7,000,000.
However, the PSR made explicit that total loss could not be accurately calculated,
and in that vein, set forth a potential alternative estimate of $10,720,000
representing Mr. Gordon’s illicit gain from the stock scheme. Pertinently, the
government objected both to the PSR’s calculation of loss, and to its alternative,
gain figure, arguing that—taking the most conservative approach—reasonable
estimations of loss (and alternatively, gain) far exceeded $20,000,000, which
would merit a greater enhancement.
Agreeing with the government, the district court determined that it would
be too difficult to determine the losses suffered by each individual investor.
Consequently, it calculated an illicit gain of $46,642,313 as an alternative
10
For its computations, the Probation Office used the 2009 edition of
the U.S.S.G. Mr. Gordon has not taken exception to this choice. Therefore, we
also reference that edition of the U.S.S.G.
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measure of loss, resulting in a twenty-two-level increase in Mr. Gordon’s offense
level under § 2B1.1(b)(1)(L) of the Guidelines. The court subsequently arrived at
a total offense level of forty-five and a criminal history category of I, which
produced a guideline range of life. However, the court granted Mr. Gordon’s
request for a substantial downward variance and sentenced him to a total of 188
months’ imprisonment. 11 The court further ordered Mr. Gordon to pay
$6,150,136.79 in restitution.
The district court also ordered forfeiture of, inter alia, up to $1.702 million
in equity in Mr. Gordon’s home and the full amount in his law firm bank accounts
as directly forfeitable assets. The Delvest lots, along with some of Mr. Gordon’s
other accounts and property, were later ordered forfeited as “substitute” assets.
See generally 21 U.S.C. § 853(p) (providing for the forfeiture of substitute
assets); United States v. Bornfield, 145 F.3d 1123, 1139 (10th Cir. 1998) (“An
asset cannot logically be both forfeitable and a substitute asset. . . . Assets
involved in or traceable to the offense are forfeitable once the requisite nexus is
established. The substitute assets provision allows the forfeiture of other assets
not already forfeitable when the forfeitable asset is unavailable due to some act or
11
The sentence consisted “of 188 months as to each of Counts Two
through Fifteen, and Twenty-three and Twenty four; 120 months as to each of
Counts Seventeen through Twenty-one; and sixty months as to each of Counts
One and Twenty-two, all counts to run concurrently.” R., Vol. VI, at 1066 (J. in a
Criminal Case, filed Nov. 8, 2010).
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omission of the defendant.” (citation omitted)). Mr. Gordon now appeals his
conviction and sentence, and the district court’s forfeiture orders. 12
II. Discussion
On appeal, Mr. Gordon raises multiple issues relating to the validity of his
conviction and sentence, and the propriety of the government’s conduct (both
before and after trial) related to the forfeiture of his assets. In the end, we find no
reversible error and affirm Mr. Gordon’s conviction and sentence, as well as the
district court’s forfeiture orders.
A. Claims Relating to the Sixth Amendment Right to Counsel
Mr. Gordon first argues that the government improperly seized his assets
and, as a consequence, substantially deprived him of his Sixth Amendment right
to counsel. However, we hold that, even assuming arguendo that the government
acted improperly, Mr. Gordon’s Sixth Amendment rights were not violated.
The Sixth Amendment provides that “the accused shall enjoy the right . . .
to have the Assistance of Counsel for his defence.” U.S. Const. amend. VI; see
Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 624 (1989) (“[T]he
Sixth Amendment guarantees a defendant the right to be represented by an
otherwise qualified attorney whom that defendant can afford to hire . . . .”).
12
Because of the extensive nature of the facts in this case, we have
offered supra only a general overview. We supplement the overview with
additional relevant facts in resolving Mr. Gordon’s specific legal challenges.
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“This protean right has several manifestations, some familiar, some less familiar.”
United States v. Rosen, 487 F. Supp. 2d 721, 726 (E.D. Va. 2007). Among these
manifestations is the “qualified right to counsel of choice,” which “stems from a
defendant’s right to decide what kind of defense he wishes to present.” United
States v. Jones, 160 F.3d 641, 646 (10th Cir. 1998) (emphasis added) (quoting
United States v. Collins, 920 F.2d 619, 625 (10th Cir. 1990)) (internal quotation
marks omitted). This right may not be “improperly impede[d].” Id. Indeed, the
right to select counsel of one’s choice “has been regarded as the root meaning of
the constitutional guarantee.” United States v. Gonzalez-Lopez, 548 U.S. 140,
147–48 (2006).
Practical considerations, such as a defendant’s relative wealth or penury,
can of course impose constraints on a defendant’s ability to exercise his right to
counsel of choice—that is, to hire the attorney that he prefers. A defendant’s
ability in this regard also may be limited by the claims of other parties to his
resources. One such party may be the government. For instance, with regard to a
defendant who is prosecuted by the government for certain crimes and convicted,
“[t]he court . . . shall order that the person forfeit to the United States any
property, real or personal, involved in such offense, or any property traceable to
such property.” 18 U.S.C. § 982(a)(1). 13
13
“The key to whether property is forfeitable is whether it is ‘involved
(continued...)
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In 2007, before Mr. Gordon was indicted, the government filed caveats on
the Delvest lots, and a lis pendens and a caveat on his residential property; it also
seized two of his law firm bank accounts. In 2009, the government pursued
forfeiture before the grand jury of the residence and the law office accounts. As
returned by the grand jury, the indictment did not mention the Delvest lots.
Furthermore, the grand jury found that the bank accounts were only substitute
13
(...continued)
in’ or ‘traceable to’ the offense.” Bornfield, 145 F.3d at 1135 (quoting 18 U.S.C.
§ 982(a)(1)). Property “involved in” the offense “include[s] the money or other
property being laundered (the corpus), any commissions or fees paid to the
launderer, and any property used to facilitate the . . . offense.” Id. (alteration in
original) (quoting United States v. Tencer, 107 F.3d 1120, 1134 (5th Cir. 1997))
(internal quotation marks omitted). Further, “property ‘traceable to’ means
property where the acquisition is attributable to the money laundering scheme
rather than from money obtained from untainted sources.” Id.In Caplin & Drysdale, the Supreme Court rejected any contention that “the
Sixth Amendment puts limits on the forfeiture statute[s].” 491 U.S. at 625–26.
Assets that are properly forfeitable are not the defendant’s rightful property. See
id. at 626. As ill-gotten gains, they are “another person’s money.” Id. Indeed,
these assets may belong to the government by virtue of the “relation-back”
provision of 21 U.S.C. § 853(c), which by operation of law vests title to
forfeitable property in the government “upon the commission of the act giving
rise to forfeiture.” United States v. Jarvis, 499 F.3d 1196, 1203 (10th Cir. 2007)
(quoting 21 U.S.C. § 853(c)) (internal quotation marks omitted); see United States
v. Erpenbeck, 682 F.3d 472, 477 (6th Cir. 2012) (noting, as to the relation-back
doctrine, “[i]f the cash were tainted property, title would have vested in the
government at the time of [the defendant’s] fraud, which occurred prior to the
bankruptcy filing, and the cash would not have entered the bankruptcy estate”).
Based upon these principles, we have explained that “a criminal defendant has no
Sixth Amendment right to use forfeitable assets to employ counsel.” Jones, 160
F.3d at 648.
-20-
assets—in other words, it determined that they were not directly forfeitable. The
grand jury did find, however, that Mr. Gordon’s residence was directly
forfeitable, to the extent that it was connected to the IPG scheme. The
government subsequently filed a Bill of Particulars that not only alleged that the
residence was directly forfeitable, but also that the bank accounts were too,
notwithstanding the grand jury’s findings.
Mr. Gordon later filed a motion to dismiss on the grounds that the
government’s forfeiture conduct violated his constitutional rights, and the district
court scheduled a hearing on the issue of forfeiture. However, the case was
reassigned to a different judge, who struck all of the scheduling dates, and after
ordering a surreply from the government, denied Mr. Gordon’s motion to dismiss.
The gravamen of Mr. Gordon’s claim is that the government wrongfully
placed common law impediments on his property and thereby prevented him from
accessing funds necessary to pay for his counsel of choice, in violation of the
Sixth Amendment. As best as we can tell, his argument plays out as follows.
First, some of the “restrained” property was not directly forfeitable; rather, it was
“substitute” property that was off-limits to the government unless and until he is
convicted, per our decision in Jarvis. 14 Second, even if his property was
14
A defendant may own what the forfeiture statute calls “substitute
property.” See 21 U.S.C. § 853(p). Such property “neither comprises the fruits
of nor is connected to the defendant’s alleged crime.” Jarvis, 499 F.3d at
(continued...)
-21-
forfeitable, the applicable provisions of the criminal forfeiture statute, 21 U.S.C.
§ 853, that authorize imposition of pre-indictment impediments on such property,
require that interested persons receive prior notice and an opportunity to be heard,
neither of which supposedly occurred here. These and other instances of
unfairness, he contends, infringed upon his Sixth Amendment right to counsel. 15
14
(...continued)
1203–04; see Bornfield, 145 F.3d at 1139. “[F]orfeiture of substitute property
cannot occur until after the defendant’s conviction and a determination by the
trial court that the defendant’s act or omission resulted in the court’s inability to
reach [forfeitable property].” Jarvis, 499 F.3d at 1204; see Erpenbeck, 682 F.3d
at 477 (“But the government did not seek forfeiture of the cash as tainted
property. It argued (and the district court found) that the cash was ‘substitute
property’—untainted property that the government may seize to satisfy a
forfeiture judgment if the tainted property is unavailable.” (emphasis added));
United States v. Oregon, 671 F.3d 484, 487 (4th Cir. 2012) (“[W]hen the property
representing direct proceeds of illegal activity is unavailable, the United States
may instead seek the forfeiture of ‘substitute property’ of a defendant up to the
value of the property that would otherwise be subject to forfeiture.”). More
specifically, in order for the government to forfeit substitute property, it must
establish that through “any act or omission of the defendant” one of five things
has occurred—for example, forfeitable property cannot be located through the
exercise of due diligence, or such property has been placed beyond the
jurisdiction of the court. 21 U.S.C. § 853(p)(1). Furthermore, we reasoned in
Jarvis that because the government has no pre-conviction interest in substitute
property, it may not impose pre-trial restraints on a defendant’s substitute
property. See 499 F.3d at 1204 (“[Unlike forfeitable property,] the United States
does not have a ripened interest in § 853(p) substitute property until (1) after the
defendant’s conviction and (2) the court determines the defendant’s . . .
forfeitable property is out of the government’s reach for a reason enumerated in
§ 853(p)(1)[].”).
15
We interpret Mr. Gordon’s briefs to make the alleged infringement of
his Sixth Amendment rights the singular focus of his claims of prejudice; that is,
the government’s alleged circumvention of the procedural requirements for
imposing pre-trial restraints on property was the means to effectuate his
(continued...)
-22-
The government’s conduct, he reasons, was deliberately calculated to deny him
the right of access to his funds to use for the presentation of a defense. See, e.g.,
Oral Arg. at 0:58–1:12 (“The convictions in this case should be reversed . . .
because Appellee orchestrated a calculated scheme to deprive [Mr. Gordon] of the
use of his own funds to prepare a viable defense.”).
At bottom, then, Mr. Gordon contends that, through its intentional and
15
(...continued)
unconstitutional injury. For example, he claims that the unlawful “seizure of his
property . . . had profound implications under the Sixth Amendment for him to
fund a viable defense.” Aplt. Reply Br. at 13.
To the extent that there are arguments in Mr. Gordon’s trial briefing that he
has failed to press on appeal, we will not accord him the benefit of those
arguments, despite his apparent request for a complete incorporation of his trial
briefings, see, e.g., Aplt. Opening Br. at 22 (“In this case, Appellee totally
ignored the provisions of 18 U.S.C. [§] 853(e). . . . [I]t devised a scheme, every
bit as complex as the criminal scheme alleged against [Mr. Gordon] in the
indictment . . . . The actions taken by Appellee against [Mr. Gordon] are
meticulously set out in trial counsel’s proffer (XI-1), which should be considered
by this court, along with trial counsel’s motion to dismiss (X-1) and reply (X-
351), in evaluating this appeal.”). Litigants who premise their appellate
arguments on the incorporation by reference of arguments that they have
advanced in their trial court papers, or other materials, do so at their peril. It is
beyond peradventure that such a briefing technique is disfavored. See 10th Cir.
R. 28.4 (“Incorporating by reference portions of lower court . . . briefs or
pleadings is disapproved and does not satisfy the requirements of Fed. R. App. P.
28(a) and (b).”). And we have repeatedly held that “[t]his court is under no
obligation to consider arguments not fully set forth in a party’s appellate brief,
including arguments incorporated by reference to prior pleadings or other
materials.” Concrete Works of Colo., Inc. v. City & Cnty. of Denver, 321 F.3d
950, 979 n.14 (10th Cir. 2003); accord Lauck v. Campbell Cnty., 627 F.3d 805,
814–15 (10th Cir. 2010). We follow this path here, declining to consider any
arguments that Mr. Gordon purports to assert through incorporation by reference
to his trial court papers or other materials.
-23-
wrongful circumvention of the proper procedures for imposing pretrial restraints
or impediments on his property, the government violated his Sixth Amendment
right to counsel of choice. In making this argument, Mr. Gordon heavily relies on
United States v. Stein, 435 F. Supp. 2d 330 (S.D.N.Y. 2006). Specifically, he
reasons, that like Stein, this case involves a situation where the government’s
wrongful conduct resulted in a total deprivation of his right to counsel of choice.
We disagree. Even assuming arguendo that the government acted improperly in
imposing pretrial restraints on his property, Mr. Gordon cannot establish that this
conduct violated his Sixth Amendment rights.
In particular, Mr. Gordon’s attempt to establish a Stein-type violation is
unavailing. In Stein, the court considered whether the government’s actions in
“interfer[ing] with the . . . Defendants’ right to be represented as they choose,
subject to the constraints imposed by the resources lawfully available to them,”
violated their Sixth Amendment right to counsel and the right to a fair trial. 435
F. Supp. 2d at 369; see id. at 360. The court concluded that the government’s
conduct in that case—which involved essentially convincing an employer to
renege on prior legal-fee agreements with the defendants (its former
employees)—violated the defendants’ rights because, among other reasons, the
government had directly interfered with resources that the defendants had a
fundamental expectation could be used to fund their defense. See id. at 353(“Absent the [the government’s conduct], [the employer] would have paid the
-24-
legal fees and expenses of all of its partners and employees both prior to and after
indictment, without regard to cost.”); id. at 367–69.
On appeal, the Second Circuit affirmed the district court, concluding first
that the district court properly considered “pre-indictment state action that
affected defendants post-indictment,” even though the Sixth Amendment right to
counsel attaches “only upon indictment.” 16 United States v. Stein, 541 F.3d 130,
153 (2d Cir. 2008). More pertinently for this case, the Second Circuit agreed
with the district court that the government’s conduct violated the defendants’
right to counsel, insofar as it directly “intrude[d] on the attorney-client
relationship.” Id at 154.
However, even if Stein provided an appropriate guidepost in certain cases
of governmental interference with the right to counsel of choice, Stein is patently
distinguishable from the instant case. First of all, the Stein defendants had
demonstrably “limited resources” and had made a showing that their trial strategy
was diminished significantly by the government’s conduct. See 435 F. Supp. 2d
16The government here does not argue that Mr. Gordon’s Sixth
Amendment right to counsel was not affected as a matter of law by its pre-
indictment conduct. See generally Rothgery v. Gillespie Cnty., Tex., 554 U.S.
191, 198 (2008) (“The Sixth Amendment right of the ‘accused’ to assistance of
counsel in ‘all criminal prosecutions’ is limited by its terms: ‘it does not attach
until a prosecution is commenced.’” (footnote omitted) (quoting McNeil v.
Wisconsin, 501 U.S. 171, 175 (1991))). Consequently, we assume without
deciding that the government’s pre-indictment conduct could (as a matter of law)
implicate Mr. Gordon’s Sixth Amendment rights.
-25-
at 371–72. Even though Mr. Gordon’s assets may have been incidentally
constricted by the government’s conduct, he has not demonstrated that he was
denied access to funds to pay for his defense in any substantial sense; certainly,
he has not demonstrated a magnitude of financial deprivation anywhere close to
that experienced by the Stein defendants.
As the district court found in denying his motion to dismiss the indictment,
[c]ontrary to Gordon’s claims of financial hardship, he has paid
defense counsel over $900,000 in attorneys’ fees and costs since
being indicted. Additionally, the government has submitted a
loan application from November 2006, wherein Gordon stated his
net worth was over $8.8 million ($8,816,000), including $2.8
million in a CD and $398,000 in cash. Thus, irrespective of his
allegations that the Government’s preservation of assets
prevented him from hiring counsel of his choice, Gordon has not
established he lacks funding to secure defense counsel.
R., Vol. X, at 504–05 (Dist. Ct. Order, filed as sealed Feb. 8, 2010) (citation
omitted).
We agree with the district court that Mr. Gordon has not shown that he
“ha[d] no assets, other than those restrained, with which to retain private
counsel.” See Jones, 160 F.3d at 647. Mr. Gordon does not meaningfully dispute
that he did have other resources to fund his defense, only noting in conclusory
fashion that “he did not” have such resources, Aplt. Reply Br. at 14, and that “the
Sixth Amendment guarantees him the right to use the assets he has lawfully
-26-
available,” id. at 14 n.3. This will not suffice. 17
Furthermore, unlike Stein, it is quite significant that Mr. Gordon’s counsel
remained fully and actively engaged in the case throughout the entire trial court
17
More specifically, Mr. Gordon does not persuasively contest the
district court’s factual conclusions, claiming only that they were “based on an
asset statement filled out . . . almost three and a half years earlier,” and were
contrary to the allegations in his counsel’s motion to withdraw that “he had not
been paid for over twenty months and was owed $73,000 for expenses already
incurred.” Aplt. Opening Br. at 27–28. Those assertions are unavailing,
considering that our review of the district court’s factual findings is for clear
error. See United States v. Ludwig, 641 F.3d 1243, 1247 (10th Cir. 2011) (“We
also accept the district court’s specific factual findings unless clearly
erroneous—no easy hurdle to clear, requiring the defendant to show that the
findings are more than possibly or even probably wrong but pellucidly so.”);
United States v. Tafoya, 557 F.3d 1121, 1126 (10th Cir. 2009) (analyzing the
district court’s factual findings for clear error in considering a motion to dismiss
the indictment, and reasoning that a “factual finding is clearly erroneous when ‘it
is without factual support in the record or if, after reviewing all the evidence, we
are left with a definite and firm conviction that a mistake has been made’”
(quoting Plaza Speedway Inc. v. United States, 311 F.3d 1262, 1266 (10th Cir.
2002))).
Here, Mr. Gordon “was represented by his counsel of choice through the
end of trial,” Aplee. Br. at 38, and the record clearly suggests that he had other
available assets—including the equity in his home above the $1.7 million, which
was the amount the government focused on in imposing the impediment on the
Gordon residence—but did not elect to use those resources, see id.; R., Vol. X, at
281 (Letter from Steven A. Tyrrell to Thomas O. Gorman & William McGrath,
dated Oct. 29, 2009) (setting forth the government’s position that it was
“amenable to any mortgage that would allow equity in [Mr. Gordon’s home] over
and above the amount of traceable proceeds to be used for attorney fees”). Mr.
Gordon claims that the government’s offer to make additional equity in his
residence available for funding was essentially hollow in light of the fact that it
asserted “open-ended claims” against his property, making it unlikely that a
lender would provide a mortgage. See Aplt. Reply Br. at 4 n.1. But he provides
no explanation for why this would necessarily be the case if the government’s
interest—if any—in the property was only (at most) $1.7 million.
-27-
proceedings. 18 Indeed, our searching review of the record demonstrates that Mr.
Gordon was represented in a thorough and vigorous fashion by the attorney he
originally retained. Mr. Gordon’s allegations of prejudice come down to
statements in which he suggests that “[p]reparing the defense to this action would
require a team of experienced white collar and securities lawyers” who would
have to sort through the thousands of documents prepared during the
investigation—i.e., documents in his own war room. Id. at 16 (citation omitted)
(internal quotation marks omitted). However, Mr. Gordon does not identify any
concrete facts that would explain what was actually done in preparation for his
defense and what additional steps his counsel would have taken, if Mr. Gordon
had not been denied access to his funds through the government’s allegedly
wrongful conduct.
In light of the district court’s findings regarding Mr. Gordon’s access to
considerable financial resources to pay his counsel, we will not engage in
speculative ping-pong about the potential for harm to his defense resulting from
the government-initiated restraints on his property—even assuming that those
18
Indeed, the Second Circuit in Stein made it explicit that this situation
of ongoing representation by counsel of choice was beyond the scope of the issues
in that case. See 541 F.3d at 158 n.15 (refusing to address the application of its
own holding to a scenario where “[t]he defendant proceeds to trial with his or her
chosen attorney, and the attorney is forced to limit the scope of his or her efforts
due to the defendant’s financial constraints” and “[t]he defendant is convicted
based on overwhelming evidence of his or her guilt”).
-28-
restrains were improperly imposed. 19 See United States v. Dowie, 411 F. App’x
19
Our tacit proposition that Mr. Gordon must establish prejudice to
prove a violation of his Sixth Amendment rights may warrant further explication.
In Gonzalez-Lopez, the Supreme Court concluded, “[w]here the right to be
assisted by counsel of one’s choice is wrongly denied, . . . it is unnecessary to
conduct an ineffectiveness or prejudice inquiry to establish a Sixth Amendment
violation.” 548 U.S. at 148. The right is “wrongly denied” where the “defendant
is erroneously prevented from being represented by the lawyer he wants,
regardless of the quality of the representation he received.” Id. However,
acknowledging that “most constitutional errors” do not affect the “structural”
nature of the proceedings, see id. (quoting Arizona v. Fulminante, 499 U.S. 279,
306 (1991)) (internal quotation marks omitted), a number of courts have applied a
“prejudice” inquiry when addressing allegations of improper interference with a
defendant’s Sixth Amendment right to counsel, see, e.g., Rosen, 487 F. Supp. 2d
at 735; United States v. Olis, Nos. H-07-3295 & H-03-217-01, 2008 WL 5046342,
at *12 (S.D. Tex. Nov. 21, 2008)—as opposed to allegations of a complete denial
of that right. Notably, in such cases, unlike in Gonzalez-Lopez and Stein,
“defense counsel . . . remain[s] fully engaged in th[e] case” and the allegation of
interference really centers on its “adverse effect on [counsel’s] ability to mount a
defense by reducing the resources available,” Rosen 487 F. Supp. 2d at 734.
This approach has merit. Where the right to counsel of choice is not fully
denied, but rather the situation is that counsel’s representation may have been
constrained or limited by some external governmental factor (as is alleged here),
the crux of the defendant’s claim is really that he has been denied the right to
constitutionally effective representation. Cf. Gonzalez-Lopez, 548 U.S. at 148(warning against “confus[ing] the right to counsel of choice—which is the right to
a particular lawyer regardless of comparative effectiveness—with the right to
effective counsel—which imposes a baseline requirement of competence on
whatever lawyer is chosen or appointed”). Ordinarily, a defendant cannot
establish a Sixth Amendment violation based upon deficient performance “until
the defendant is prejudiced.” Id. at 147; see United States v. Gaya, 647 F.3d 634,
638–39 (7th Cir. 2011) (“The defendant who has a lawyer, even an incompetent
one, must to establish a violation of his constitutional right to effective assistance
of counsel prove that he was prejudiced by the lawyer’s incompetence . . . .”);
United States v. Lewis (Beau Lee Lewis), 611 F.3d 1172, 1177 (9th Cir. 2010)
(“Defendant fails to identify any actual prejudice that occurred as a result of
being represented by other counsel, who mounted a highly competent and
(continued...)
-29-
21, 29 (9th Cir. 2010) (refusing to credit a Stein-type argument where the
defendant failed to rebut the district court’s findings that he “maintained his
counsel of choice throughout the trial, and there was no indication their defense
work was limited in any way”); see also Rosen, 487 F. Supp. 2d at 735–36
(finding that defendants’ Stein-type argument was “not persuasive” where “the
record . . . reflect[ed] that defense counsel . . . mounted a vigorous and effective
defense notwithstanding the absence of [advances of attorney fees that were
allegedly stanched by the government’s wrongful interference]”); Olis, 2008 WL
5046342, at *13 (“[The defendant] has failed to present any evidence showing
either that he lacked funds needed to mount the defense of his choosing or that
the defense presented at his trial was anything other than the defense he chose to
present and would have presented [absent interference].”). In sum, we conclude
that Mr. Gordon has not established a deprivation of his Sixth Amendment right
to counsel of choice.
B. Sufficiency of the Evidence
Mr. Gordon challenges the sufficiency of the evidence as to all of the
substantive counts relating to the scheme to defraud with respect to the
19
(...continued)
vigorous defense.”); cf. United States v. Morrison, 449 U.S. 361, 365 (1981)
(“The premise of our prior cases is that the constitutional infringement identified
has had or threatens some adverse effect upon the effectiveness of counsel’s
representation or has produced some other prejudice to the defense. Absent such
impact . . . there is no basis for imposing a remedy in that proceeding . . . .”).
-30-
promotional campaigns for National Storm, Deep Rock, and Global Beverage. In
addition, he challenges the counts that are predicated on the allegedly fraudulent
nature of the opinion letters permitting restriction-free designations on some of
the stocks at issue—specifically, the stock of National Storm, Deep Rock, and
IPG. Finally, he claims that the evidence is insufficient to show that he
obstructed, or attempted to obstruct, an official proceeding.
“In reviewing the sufficiency of the evidence and denial of a motion for
judgment of acquittal, this court reviews the record de novo to determine whether,
viewing the evidence in the light most favorable to the government, any rational
trier of fact could have found the defendant guilty of the crime beyond a
reasonable doubt.” United States v. Irvin, 682 F.3d 1254, 1266 (10th Cir. 2012).
In conducting this inquiry, the court may “not ‘weigh conflicting evidence.’” Id.(quoting United States v. Evans, 318 F.3d 1011, 1018 (10th Cir. 2003)).
Moreover, the “court considers the entire record, including both direct and
circumstantial evidence, together with the reasonable inferences to be drawn from
it.” United States v. Mendez, 514 F.3d 1035, 1041 (10th Cir. 2008).
1. The scheme to defraud
Mr. Gordon makes various arguments that challenge the sufficiency of the
government’s evidence regarding the counts associated with the charged scheme
to defraud. First, without identifying the specific legal shortcomings of any
-31-
particular count, he makes a global argument that “the fax blasts, e-mails and the
brochures were [not] illegal,” Aplt. Opening Br. at 33, for the National Storm,
Deep Rock and Global Beverage promotions under § 17(b) of the Securities Act
of 1933, 15 U.S.C. § 77q(b), “which makes it unlawful to publicize a stock for
consideration from an issuer, underwriter, or dealer without disclosing the fact
and amount of the payment,” United States v. Wenger, 427 F.3d 840, 843 (10th
Cir. 2005). Citing our articulation of § 17(b)’s requirements in Wenger, see id. at
852, Mr. Gordon contends that the faxes, e-mails, magalogs, etc., in this case
required only a disclosure that the promoter received payment for the
advertisement, and disclosure of the amount of the payment. He submits that all
of the promotional material at issue contained such information and, contrary to
the government’s arguments, it did not need to include the “name” of the
promoters or whether the promoter was buying or selling the stock. See Aplt.
Opening Br. at 31 (discussing evidence showing that “Pink Sheets wanted the
SEC to include more requirements in such advertisements, such as identification
of the promoters,” but as of the time of Mr. Gordon’s criminal conduct, no such
requirements existed).
However, as the government correctly notes, Mr. Gordon was not charged
with violating § 17(b). Instead, as relevant here, he was charged under the
general wire fraud statute, see 18 U.S.C. § 1343, and § 10b of the Securities Act
of 1934, and the applicable rule promulgated thereunder, 17 C.F.R. § 240.10b-5
-32-
(“Rule 10b-5”), for “unlawful[ly] . . . employ[ing], in connection with the
purchase or sale of any security . . . [a] manipulative or deceptive device or
contrivance,” 15 U.S.C. § 78j(b). Mr. Gordon has failed to explain how technical
compliance with § 17(b) would provide an effective safe harbor or immunity from
prosecution for the manipulation of stock with the intent to defraud investors,
which ordinarily would give rise to violations of the wire fraud statute and Rule
10b-5. Cf. Wenger, 427 F.3d at 852–54 (analyzing separate charges arising out of
the same fraudulent scheme under § 17(b) and § 10(b), because “the government
presented sufficient evidence to convince a reasonable jury beyond a reasonable
doubt that [the defendant] had intent to defraud”). In other words, he offers no
legal support for his global argument on appeal; consequently, we reject it.
Even so, Mr. Gordon contends that with respect to the allegations related to
Rule 10b-5, there can be “no liability . . . for failure to disclose information
absent a duty to do so.” Aplt. Opening Br. at 32. Thus, as Mr. Gordon reasons,
to the extent that the government’s allegations concern the non-disclosure of
certain information in the promotional materials such as, for instance, the true
identity of the source of the material—viz., the members of the underlying
conspiracy—they are legally insufficient because there was no independent duty
to disclose such information in this case, either by him or his co-conspirators. In
essence, Mr. Gordon challenges whether the government showed, beyond a
reasonable doubt, that there were actionable misstatements or omissions, as well
-33-
as a fraudulent intent to deceive investors. 20
In support of this assertion, Mr. Gordon cites United States v. Schiff, 602
F.3d 152 (3d Cir. 2010), a Third Circuit case that affirmed the dismissal of
multiple Rule 10b-5 charges upon the theory that a corporate executive had an
affirmative fiduciary duty to correct material misstatements made by another
executive. In concluding that the government’s theory was too broad, the court in
Schiff pointed out that § 10b gives rise to a duty to disclose in three separate and
distinct circumstances: (1) where there is insider trading, (2) where a statute
requires disclosure, or (3) where there has been an “inaccurate, incomplete or
misleading prior disclosure.” 602 F.3d at 162 (quoting Oran v. Stafford, 226 F.3d
275, 285–86 (3d Cir. 2000)) (internal quotation marks omitted).
However, despite the holding in Schiff, “where a party without a duty elects
20
“Violations of section 10(b) and Rule 10b-5 can give rise to both
civil liability and criminal liability.” United States v. Laurienti, 611 F.3d 530,
537 (9th Cir. 2010) (citing Chiarella v. United States, 445 U.S. 222 (1980)). The
basic elements for a Rule 10b-5 charge based upon misstatements or omissions in
a civil context include the requirement that the government prove that the
defendant “(1) made a misrepresentation or omission (2) of material fact, (3) with
scienter, (4) in connection with the purchase or sale of securities, and (5) by
virtue of the requisite jurisdictional means.” SEC v. Wolfson, 539 F.3d 1249,
1256 (10th Cir. 2008); accord SEC v. Curshen, 372 F. App’x 872, 877 (10th Cir.
2010); cf. Wenger, 427 F.3d at 854 (“Fraudulent intent is an element of a Section
10(b) offense.”). The jury instructions on the 10b-5 allegations in this case were
stated in a manner that was generally consistent with the foregoing requirements.
See R., Vol. VIII, at 2544–45 (Jury Instructions, given Apr. 29, 2010). The
primary distinction between 10b-5 actions in the civil and criminal context is that
in the latter the “government must prove the offense beyond a reasonable doubt.”
United States v. Gansman, 657 F.3d 85, 91 n.7 (2d Cir. 2011).
-34-
to disclose material facts, he must speak fully and truthfully, and provide
complete and non-misleading information.” Curshen, 372 F. App’x at 880
(emphasis added); see also Schiff, 602 F.3d at 162 (“When you speak, however,
and it is material, you are ‘bound to speak truthfully.’” (quoting Shapiro v. UJB
Fin. Corp., 964 F.2d 272, 282 (3d Cir. 1992))); Thomas Lee Hazen, The Law of
Securities Regulation § 12.9[10], at 471–72 (6th ed. 2009) (“[O]nce a statement
of fact . . . has been made, the person making the statement is then under a duty to
correct any misstatements . . . .”).
In this case, the government offered substantial evidence that many aspects
of the information disseminated in the promotional campaigns were false and
misleading, and that misleading statements went uncorrected by numerous
material omissions. See, e.g., R., Vol. VIII, at 3045–46 (noting that, despite an
advertisement representing that “Wall Street expectations” were good for National
Storm, the statement was incorrect and was made “to make it appear as though
Wall Street was covering it and that the stock was going to rise because of it”);
id. at 3049–50 (noting a fax blast’s assertion that “Putnam International
Consulting,” was the source of payment for a particular fax blast, was false
because the blast “was paid for out of . . . Gordon’s attorney trust account [by
him and other members of the conspiracy]” and they “had control over more than
10 percent of the company making [them] affiliates”); id. at 3085 (discussing
language in one of the e-mail blasts encouraging investors to refer to the SEC’s
-35-
website for information seemingly related to National Storm, when certain
conspirators knew that the company was, in fact, not registered with the SEC in
light of its Pink Sheet status); id. at 3145–48 (describing a similarly misleading
fax blast campaign with respect to Deep Rock, and noting that a statement
representing that non-affiliated shareholders paid the fee for advertisements was
false because, inter alia, Mr. Gordon “controlled the float”); id. at 214–15 (noting
that, like in prior blasts, Mr. Sheptycki “made up” information on the identity of
the source of a Global Beverage blast and projected growth numbers).
Significantly, the evidence also tended to establish that there was a group
of shareholders (of which Mr. Gordon was a part) who disguised their stake in the
applicable stocks by using nominee accounts, and who fraudulently manipulated
the price in order to make a profit, all at the expense of the general shareholders. 21
21
Mr. Gordon contends in passing that many of the “falsehoods” and
instances of alleged misconduct simply were not actionable for various reasons.
Most of his arguments are easily disposed of. For instance, he claims that, on
cross-examination, Mr. Lindberg “admitted” the statements in the faxes and
e-mails were correct, but Mr. Gordon does not explain which statements were
“correct,” and his argument contradicts Mr. Lindberg’s long direct testimony. In
addition, he argues that the information in some of the faxes was mere puffing.
To be sure, generally, loose “statements of optimism are not actionable.” Hazen,
supra, § 12.9[4], at 464; see id. at 464 nn.123, 128 & 130 (citing cases).
However, “[m]isrepresentation by implying the existence of certain facts cannot
be disguised as mere puffing.” Id. at 464. The statements identified by the
government in the evidence are not “generalized [ones] of optimism that are not
capable of objective verification.” Grossman v. Novell, Inc., 120 F.3d 1112, 1119
(10th Cir. 1997). To the contrary, at the very least, those statements falsely imply
that objective sources had predicted the stocks to skyrocket, and omit crucial
(continued...)
-36-
See, e.g., id. at 3139–40 (noting that the “plan” as to Deep Rock “was to start the
stock at four or five cents and gradually walk it up before the promotional effort
started” and that the priming was “substantially . . . controlled”).
On this record, we conclude that any rational trier of fact could have found
that Mr. Gordon’s conduct was fraudulent within the meaning of the securities
laws. See, e.g., United States v. Ware, 577 F.3d 442, 448 (2d Cir. 2009)
(concluding that the evidence was sufficient to convict the defendant of securities
fraud in a “pump-and-dump” scheme where he sent out press releases—regarding
a company in which he owned millions of shares—that “fabricated . . . [the]
sources of [the] factual information” in the press releases and failed to disclose
the true sources of the funds allowing for release of the press releases); Wenger,
21
(...continued)
information about “who” was really paying for the promotions. Inasmuch as a
“reasonable investor would place [significance] on the withheld or misrepresented
information,” Basic Inc. v. Levinson, 485 U.S. 224, 240 (1988), any rational trier
of fact could have found Mr. Gordon guilty.
He also makes a general contention that the use of nominee accounts was
not illegal, and it was not improper to engage in “[t]imed sequences of buying and
selling” in the stocks at issue. Aplt. Reply Br. at 19 (discussing evidence that
suggested Pink Sheet stocks are often made up of a small group of investors).
However, even assuming that the buying and selling of stock by a small group of
individuals is not per se illegal, Mr. Gordon does not explain how it necessarily
follows that the same is true where the transactional purpose is to create the false
appearance of an active market for the shares in order to induce people to rely on
that impression and buy the stock. And the testimony at trial tended to establish
that these were the reasons for many of the conspirators’ nominee accounts,
promotional campaigns, and the transaction sequences. See, e.g., R., Vol. VIII, at
3140–42 (suggesting as much with respect to Deep Rock).
-37-
427 F.3d at 854 (holding that there was sufficient evidence of fraud under § 10b,
where the defendant sent out newsletters advising investors to buy a stock, which
“at the same time” he was selling); cf. Stoneridge Inv. Partners, LLC v. Scientific-
Atlanta, Inc., 552 U.S. 148, 158 (2008) (“[M]anipulative trading practices . . . are
deceptive within the meaning of the rule.”); Santa Fe Indus., Inc. v. Green, 430
U.S. 462, 476 (1977) (noting that “manipulation,” as used in this context, “refers
generally to practices, such as wash sales, matched orders, or rigged prices, that
are intended to mislead investors by artificially affecting market activity”
(emphasis added)); Ernst & Ernst v. Hochfelder, 425 U.S. 185, 199 (1976)
(suggesting that manipulative conduct “connotes intentional or willful conduct
designed to deceive or defraud investors by controlling or artificially affecting the
price of securities”); Wilson v. Merrill Lynch & Co., 671 F.3d 120, 130 (2d Cir.
2011) (“In order for market activity to be manipulative, that conduct must involve
misrepresentation or nondisclosure.”). 22 Therefore, insofar as it is predicated
22
Mr. Gordon also makes something of a causation argument.
Specifically, he contends that the observed price spikes in the stocks during the
fraudulent “pumping” period were substantially attributable to the circumstances
of the particular industries in which the companies operated (and, thus,
presumably not attributable to the conspirators’ fraudulent conduct). For
instance, the price of home-building company stocks was seemingly correlated
with Hurricane Katrina. As a general matter, his briefing on this issue is skeletal
at best. We would be justified in refusing to address it on that grounds alone.
See Burrell v. Armijo, 603 F.3d 825, 835 (10th Cir. 2010) (“Without specific and
reasoned argument . . . , we have no basis to reverse the district court’s
decision.”). Nonetheless, as the government points out, “the jury was not
(continued...)
-38-
upon the assertion that there was no evidence of actionable false and material
statements or omissions made with respect to the promotional campaigns, with a
fraudulent intent, Mr. Gordon’s sufficiency-of-the-evidence challenge is wholly
without merit.
Finally, the government charged Mr. Gordon with a violation of 18 U.S.C.
§ 1001, on the grounds that he falsely denied knowledge of the Deep Rock fax
promotion to an SEC official (Count 22). See R., Vol. I, at 75. Mr. Gordon
challenges his conviction under § 1001 on the grounds that “[i]f the fax blasts
were legal, then whatever [he] told [SEC investigators] about them would not
have been material.” Aplt. Opening Br. at 38. However, in light of the foregoing
discussion, Mr. Gordon’s argument must fail because the promotional campaigns
(including the fax blasts) were not legal.
In any event, to establish “materiality” under § 1001, the government had
to show that the statement had “a natural tendency to influence, or [be] capable of
influencing, the decision of the decisionmaking body to which it was addressed.”
United States v. Gaudin, 515 U.S. 506, 509 (1995) (alteration in original)
22
(...continued)
required to accept [alternative theories for the prices’ rise and fall], particularly
where the promotions hyped the stock based on the same external events that
Gordon claims caused the price movements.” Aplee. Br. at 25; cf. United States
v. Haymond, 672 F.3d 948, 956 (10th Cir. 2012) (noting that “[t]he jury was not
required to credit [the defendant’s] assertions” on his own view of the evidence
(emphasis added)).
-39-
(quoting Kungys v. United States, 485 U.S. 759, 770 (1988)) (internal quotation
marks omitted). Here, a rational trier of fact could have concluded that Mr.
Gordon’s statement denying any knowledge of the Deep Rock fax promotions
satisfied this understanding of “materiality” because Deep Rock was one target in
the SEC’s investigation, and a false statement by Deep Rock’s attorney that he
had no knowledge of a promotional campaign—which, at that time, was
potentially illegal—could have influenced the agency’s decision on how to craft
its investigative focus. See id. at 522–23 (noting that “the jury [must be allowed]
to pass on the ‘materiality’ of [the defendant’s] false statements”).
In other words, any rational trier of fact could have concluded that Mr.
Gordon’s denial was capable of influencing the SEC’s investigation of the
underlying scheme. See R., Vol. VIII, at 1777 (Investigator Draddy responding,
“Absolutely” to the question, “Was the information about fax promotions for
Deep Rock relevant [and important] to the SEC’s investigation?”); see also
United States v. Oldbear, 568 F.3d 814, 825 (10th Cir. 2009) (holding that a false
statement made to an FBI agent that the defendant had “no information” regarding
the matter under investigation was “material” under § 1001(a)(2) because the
statement related to one of the issues that was important to the underlying
investigation). For that reason, Mr. Gordon’s challenge to Count 22 also must
-40-
fail. 23
2. Legality of the opinion letters
Mr. Gordon also lodges a challenge to the sufficiency of the evidence with
respect to the allegations that he prepared or endorsed “false” opinion letters for
Deep Rock, National Storm, and IPG. 24 According to Mr. Gordon,
Robert Bertsch never appeared to testify that the two opinion
letters he wrote [for Ednet, the company IPG had merged with,
and National Storm] were forgeries or that the companies he
wrote about had not been formed at least two years earlier or that
he had not determined that the shareholders listed in the opinion
23
Embedded in Mr. Gordon’s brief is the additional contention that he
had an “ethical obligation” to protect the information about the Deep Rock
promotional campaign because, at the time he was asked about it, he was
representing Deep Rock. Aplt. Opening Br. at 38. However, Mr. Gordon points
us to no privilege permitting an attorney to lie to a government official
purportedly to protect his client’s interests, and we certainly are not aware of
anything of the sort. Aside from the fact that Mr. Gordon appears to have been
simultaneously or concurrently representing his clients in the face of seemingly
patent conflicts of interest, see Okla. Rules of Prof’l Conduct R. 1.7 (noting that
“a lawyer shall not represent a client if the representation involves a concurrent
conflict of interest,” which includes cases where “there is a significant risk that
the representation of one or more clients will be materially limited . . . by a
personal interest of the lawyer”); see also Okla. Rules of Prof’l Conduct R. 1.7
cmt. 10 (“[I]f the probity of a lawyer’s own conduct in a transaction is in serious
question, it may be difficult or impossible for the lawyer to give a client detached
advice.”), had he actually been concerned with his clients’ confidences, he could
have declined to answer at all, see Okla. Rules of Prof’l Conduct R. 1.6(a) (“A
lawyer shall not reveal information relating to the representation of a client unless
the client gives informed consent . . . .”). Deceit is not an accredited tool of
which a lawyer may avail himself in the representation of a client.
24
Mr. Gordon asserts these challenges at two points in his brief—in
“Proposition Two” and “Proposition Four.” However, we address his arguments
here under the same heading for clarity.
-41-
letters had not obtained their stock as Rule 144 required.
Similarly, the opinion letter written by [Mr. Gordon] involved a
company, Deep Rock, whose stock, the testimony established,
had been distributed to numerous parties, many in the Clark
family [and could thus be transferrable through “tacking”], more
than a decade before. There was no evidence [Mr. Gordon] knew
that any shares of stock ultimately traded as a result of his
opinion letter should not have done so or that the opinion letter
failed to qualify for the Rule 144 exemption.
Aplt. Opening Br. at 34. These assertions, however, are refuted by the record.
There was ample evidence for a rational jury to determine that the information in
the opinion letters was false, and that Mr. Gordon knew it. In fact, there was
evidence that he laid the groundwork for many of the false representations. See,
e.g., R., Vol. VIII, at 1493 (“[Mr. Gordon] told me that I should go talk to a
couple of my friends, offer them money, a thousand dollars a piece or something
in that range, and ask them to do me a favor to say they were shareholders of the
company.”); id. at 1303–07 (Trial Test. of Donald Clark, dated Apr. 13, 2010)
(referencing a transfer document issued by Mr. Gordon’s law office that purported
to establish that Mr. Clark (as a shareholder-seller) had acquired Deep Rock
shares “more than two years prior” despite the fact that Mr. Clark had never
advised Mr. Gordon or anyone in his law office to this effect (internal quotation
marks omitted)); id. at 1495 (stating that share transfer documents “were
backdated to show that the shareholders owned the stock longer than they actually
did, so upon becoming a public company those shares would be freely tradable to
-42-
sell in the market”); id. at 1279 (Trial Test. of Tom Klenda, dated Apr. 13, 2010)
(noting that, despite the fact that he was listed as trustee for a trust that owned
2,000,000 shares of Deep Rock stock, which Mr. Gordon indicated that he wanted
to transfer in a Rule 144 opinion letter, he “was not involved in [the] transaction
[that referenced him and] had no knowledge [of it]”). 25 Consequently, Mr.
Gordon’s sufficiency-of-the-evidence argument with respect to the National
Storm and Deep Rock opinion letters is meritless.
Mr. Gordon, under Proposition Four, also argues that the government’s
25
Mr. Gordon also claims that, under Rule 144, “tacking of stock
gifted to another extends the holding period to include the period held by the
donor,” and in light of this, many of the shareholders listed actually qualified
under the rule. Aplt. Reply Br. at 20. See generally M & A West, Inc., 538 F.3d
at 1051 (“Rule 144(k) further permits purchasers of restricted securities who
acquire from non-affiliates in private transactions to comply with the two-year
holding period by adding—‘tacking’—the holding period of the prior non-affiliate
holder to their own holding period. Tacking is not permitted, however, if the
purchaser acquires the securities directly from an affiliate in a private
transaction.”); Black’s Law Dictionary 1590 (defining “tacking” as “[t]he joining
of consecutive periods of possession by different persons to treat the periods as
one continuous period”). However, even if the true facts of the shareholder
ownership would have permitted the requirements of Rule 144 to be satisfied by
tacking—and it is not clear to us that this is true, based upon Mr. Gordon’s
cursory discussion of the factual underpinnings of the argument—the evidence
established that Mr. Gordon elected to use fraudulent means to make the stocks
freely tradeable. More specifically, the evidence demonstrated that Mr. Gordon
knew the representations in the documents underlying the opinion letters were
materially false, but nonetheless directed their creation. See R., Vol. VIII, at
1305–07; see also id. at 1495 (noting that documents, which purported to set forth
that paid “shareholders” owned 18th Letter stock, “were backdated to show that
the shareholders owned the stock longer than they actually did” and “Mr. Gordon
kn[e]w that [shareholders] would be signing backdated documents”).
-43-
evidence regarding the IPG transaction was insufficient, and thus, “there is no
wire fraud [as to Count 23].” Aplt. Opening Br. at 40. Specifically, he claims
that the witness testimony established that the opinion letter prepared for
IPG—along with backdated corporate documents that Mark White signed—was
accurate, and that backdating corporate documents to bolster the letter was not
illegal in this context.
“Conviction for wire fraud under 18 U.S.C. § 1343 requires (1) a scheme or
artifice to defraud or obtain property by means of false or fraudulent pretenses,
representations, or promises, (2) an intent to defraud, and (3) use of interstate
wire or radio communications to execute the scheme.” United States v. Ransom,
642 F.3d 1285, 1289 (10th Cir. 2011) (footnote omitted) (quoting United States v.
Gallant, 537 F.3d 1202, 1228 (10th Cir. 2008)) (internal quotation marks
omitted); accord United States v. Cooper, 654 F.3d 1104, 1116 (10th Cir. 2011).
Mr. Gordon does not suggest that a false opinion letter fabricated in order to
facilitate the free trading of IPG shares would not constitute a scheme or artifice
to defraud or obtain property by means of false or fraudulent pretenses,
representations, or promises; rather, his argument attacks the factual
predicate—viz., he contends that there was no evidence that the IPG opinion letter
actually was false or that it failed to meet the requirements of Rule 144.
Even assuming, as a general proposition, that backdating corporate
-44-
documents is not necessarily illegal, see generally United States v. Reyes, 577
F.3d 1069, 1073 (9th Cir. 2009) (“Backdating is not itself illegal . . . .”), the
opinion letter that served as the basis for Count 23 in this case relied on more
than mere backdated corporate records; it falsely represented that the shareholders
had advised Mr. Bertsch’s office that the relevant shares of Ednet—the company
with which IPG was merged—had been acquired in accordance with the
requirements of Rule 144. For instance, the letter at the outset notes that the
drafter “ha[d] been advised by [the shareholders] . . . that a sale will occur of
1,000,000 shares of Common Stock.” Aplt. Addendum, ex. 19, at 1 (Letter from
Robert Bertsch to Routh Stock Transfer, Inc., dated Sept. 17, 2004) (emphasis
added). Further, on the second page, it notes that “we are advised that the Shares
were deemed to be acquired by the Seller more than two years prior to the sale.”
Id. at 2 (emphasis added). Neither of these assertions was true.
Given the reference to the shareholders actually providing the “advice”
regarding their holding status, it is not surprising that the transfer agent was
misled into issuing the non-restrictive legends for IPG. See R., Vol. VIII, at
1034–35 (Trial Test. of Jason Freeman, dated Apr. 12, 2010) (testifying that he
relied on the representations made in the IPG opinion letter in order to “issue
free-trading shares”). We are obliged when reviewing the sufficiency of the
evidence to give the government the “reasonable inferences to be drawn from it.”
Mendez, 514 F.3d at 1041. And here, the government offered evidence that Mr.
-45-
Gordon intended to mislead by creating this letter and directing Mr. Bertsch to
sign it. See R., Vol. VIII, at 1604 (answering, “Yes. It came from his office,”
when asked, “Did Mr. Gordon have an understanding this was a false document
when he sent it to you?”); id. (noting that Mr. Bertsch “sign[ed] a false opinion
letter” in order to “complete the transaction”). Any rational trier of fact could
have found the misrepresentations to be false and fraudulent. Cf. Cooper, 654
F.3d at 1118–19 (concluding that the evidence was sufficient to sustain a wire
fraud conviction where the government presented evidence at trial that the
defendant transmitted false information by wire to induce individuals to continue
to participate in a pyramid scheme). 26 In sum, Mr. Gordon’s challenge to his
conviction of Count 23 is without merit.
26
Moreover, any rational trier of fact could have found the
representations to be material. See Ransom, 642 F.3d at 1289–90 (noting that
“the materiality of a falsehood is a required element of wire fraud”). “In general,
a false statement is material if it has a natural tendency to influence, or is capable
of influencing, the decision of the decisionmaking body to which it was
addressed.” Irvin, 682 F.3d at 1267 (quoting Neder v. United States, 527 U.S. 1,
16 (1999)) (internal quotation marks omitted); see United States v. Lawrence, 405
F.3d 888, 901 (10th Cir. 2005) (“To determine whether a statement is material the
appropriate test is to examine whether it has a natural tendency to influence, or is
capable of influencing a decision or action by another.”). Here, the false
statements concerned whether the shareholders had advised Mr. Bertsch of the
factual predicate for Rule 144 certification; it is beyond peradventure that these
statements had a natural tendency to influence a transfer agent’s issuance of non-
restricted certificates. Cf. Lawrence, 405 F.3d at 901 (holding that the evidence
was sufficient to sustain convictions of, inter alia, wire fraud, where the
government showed the defendant’s fraudulent use of a seemingly valid physician
provider number and Medicare codes, which had a “natural tendency to influence”
and “induce payment” of false claims).
-46-
3. Attempted Obstruction of an Official Proceeding
Mr. Gordon also challenges Count 24, which charged him with a violation
of 18 U.S.C. § 1512(c)(2)—that is, with corruptly obstructing, impeding, or
influencing, or attempting to do so, an official proceeding. This charge was based
upon the government’s contention that Mr. Gordon directed Mr. Singer to “sign a
backdated agreement purporting to memorialize a sale of [IPG] stock that never
took place,” Aplee. Br. at 27, and that Mr. Gordon actually created such a false
document, with Mr. Singer’s help. The government argued that Mr. Gordon
intended to present the document in the government-initiated civil forfeiture
proceeding, in order to prevent forfeiture of his home.
As we noted in Part I, supra, Mr. Singer gradually sold IPG shares on Mr.
Gordon’s behalf, and at one point in November 2005, wire-transferred roughly
$1.7 million of the proceeds to “pay off the mortgage on [Mr. Gordon’s] house.”
R., Vol. VIII, at 1610. This allegedly fraudulent IPG-related conduct was the
predicate for the government’s forfeiture action regarding Mr. Gordon’s house.
According to Mr. Singer, around December 2007, Mr. Gordon directed him to
endorse a false, backdated document that purported to memorialize a sale of IPG
stock between Mr. Gordon and Mr. Singer. This sale supposedly took place in
October 2005—prior to the November 2005 wire transfer—and the documents
evinced a purchase price of approximately $1.9 million, an amount that somewhat
-47-
exceeded, but was similar to, the wire-transfer amount of $1.7 million. Mr.
Singer testified that, at Mr. Gordon’s request, he returned to Mr. Gordon a signed
copy of the purported agreement and a blank copy. Mr. Singer identified for the
jury a record of a contemporaneous electronic communication from Mr. Gordon in
which he informed Mr. Singer that he was “going to go w/unsigned version and
let them no [sic] that the original [was] lost but this was the agreement.” R., Vol.
VIII, at 1665 (internal quotation marks omitted). It is undisputed that the jury
never heard evidence relative to whether Mr. Gordon ever presented either the
signed or blank version of the purported purchase agreement to the government or
in an official proceeding. 27 Mr. Singer confirmed, however, that “there was no
27
Apparently, as a matter of litigation strategy, the government elected
not to present evidence to the jury regarding Mr. Gordon’s use of the purported
agreement because (a) the government steadfastly maintained that it was
sufficient proof of the offense that, with the aim of defeating the forfeiture of his
home, Mr. Gordon corruptly directed Mr. Singer to sign a backdated, fabricated
document and that, with Mr. Singer’s help, Mr. Gordon actually created such a
false document, and (b) omitting such evidence of Mr. Gordon’s use of the
document would permit the government to avoid conceivably turning Mr.
Gordon’s counsel into witnesses. As to the latter point, outside of the jury’s
hearing, Mr. Gordon’s counsel raised an objection with the district court
regarding Mr. Singer’s testimony. They informed the court that Mr. Gordon had
informed them that he had gone to Mr. Singer to obtain a copy of the purported
purchase agreement; and when Mr. Singer could not unearth it, Mr. Gordon wrote
down on a piece of paper the basic terms of the agreement; and, carrying this
paper with them, counsel met with the government’s lawyers in January
(apparently) 2008 to discuss the piece of paper and the purported purchase
agreement, with the objective of convincing the government that there was
nothing wrong with Mr. Singer’s 2005 transfer of funds to Mr. Gordon.
(continued...)
-48-
original” agreement and that “[t]he only thing that happened prior [i.e., in 2005]
was [his] selling [IPG] stock” and transferring sales proceeds to Mr. Gordon. Id.
at 1666; see id. at 1610 (answering, with respect to the $1.7 million dollar wire
transfer to Mr. Gordon, in response to the government’s question, “Were those
also the proceeds of the sale from the [IPG] stock?,” “That’s correct”).
“Under § 1512(c)(2), any person who ‘corruptly . . . obstructs, influences,
or impedes any official proceeding or attempts to do so, shall be fined under this
title or imprisoned not more than 20 years or both.’” United States v. Phillips,
583 F.3d 1261, 1263 (10th Cir. 2009) (quoting 18 U.S.C. § 1512(c)(2)); accord
United States v. Ahrensfield, 698 F.3d 1310, 1324 (10th Cir. 2012). Under this
provision, “a defendant must act with the intent that his actions will influence a[n
27
(...continued)
Mr. Gordon’s counsel argued to the court that Mr. Singer’s testimony
would implicate their efforts (on Mr. Gordon’s behalf) to use the purported
purchase agreement to sway the government’s forfeiture decision and they were
“going to wind up in the middle of this and this is going to conflict us both out of
the case” and cause a mistrial. R., Vol. VIII, at 1651; see id. at 1649 (“[W]e’re
going to wind up conflicted out of this case and cause a mistrial and that’s not
what we’re trying to do here.”). The government contended that the argument of
Mr. Gordon’s counsel was “a red herring” because Mr. Singer “is here to testify
about what happened between him and Mr. Gordon,” id. at 1654, and “the fact
that they [i.e., Mr. Gordon’s counsel] were the vehicle for Mr. Gordon’s attempt
to obstruct an investigation is immaterial,” id. at 1652. According to the
government, “[t]he critical fact here is . . . that the document [i.e., the purchase
agreement] didn’t exist, it never existed, and that’s what this witness [that is, Mr.
Singer] is going to testify about.” Id. at 1652. With the government’s
representations regarding the scope of Mr. Singer’s expected testimony in mind,
the court overruled the objection of Mr. Gordon’s counsel.
-49-
applicable] proceeding.” Phillips, 583 F.3d at 1263.
Mr. Gordon essentially makes two arguments. First, he argues that “[t]he
testimony never established that any ‘official proceeding’ was set or even
contemplated during this time . . . [because the] in rem action against [the]
residence . . . [was] stayed” in November 2007 and remained so at the time the
alleged “obstruction” occurred, and the product of the alleged acts was intended
to be presented to government lawyers, not the court. Aplt. Reply Br. at 23.
Second, he suggests that the evidence simply did not show that he is guilty under
§ 1512(c)(2).
“[O]fficial proceeding” in this context is defined as, inter alia, “a
proceeding before a judge or court of the United States.” 18 U.S.C.
§ 1515(a)(1)(A). Mr. Gordon claims that the government’s evidence only showed
that he wanted the fabricated share-purchase agreement for his records when he
was meeting with the government regarding the forfeiture of his house and that,
during the period in which he allegedly sought fabrication of the purchase
agreement, the government-initiated civil forfeiture proceedings were technically
stayed. These facts, he suggests, caused any proceeding to lose its character as
“official.” These argument do not move beyond the threshold, however. In
particular, we conclude that they are waived—specifically, his arguments aimed
at showing that a stayed proceeding cannot constitute an “official proceeding” for
-50-
purposes of § 1512(c)(2), and that “[a]n ad hoc meeting between lawyers,” Aplt.
Reply Br. at 23, similarly cannot constitute an official proceeding, such that the
presentation of fraudulent documents in such a meeting could be deemed
criminally actionable conduct.
Mr. Gordon did not specifically present these arguments in his opening
brief; rather, he attempts to formulate them for the first time in his reply brief. It
is well settled that “[t]his court does not ordinarily review issues raised for the
first time in a reply brief.” Stump v. Gates, 211 F.3d 527, 533 (10th Cir. 2000).
Even then, the arguments are presented in a perfunctory and conclusory fashion,
and we are rightly hesitant to definitively opine on such legally significant issues
when they have received such cursory treatment. See, e.g., Cooper, 654 F.3d at
1128 (“It is well-settled that ‘[a]rguments inadequately briefed in the opening
brief are waived.’” (alteration in original) (quoting Adler v. Wal-Mart Stores,
Inc., 144 F.3d 664, 679 (10th Cir. 1998))). Consequently, to the extent that Mr.
Gordon purports to raise these arguments as a separate basis for error, we
conclude that they are waived.
Second, Mr. Gordon appears to contest whether the evidence actually
showed that the creation of the false purchase agreement constituted an
“obstruction,” where there was no evidence before the jury that the document was
actually given to a government official or to the court. However, in addition to
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its substantive provisions, § 1512(c)(2) also includes an attempt
provision—authorizing conviction of an individual who “corruptly . . . attempts
[to obstruct or impede]” an official proceeding, 18 U.S.C. § 1512(c)(2) (emphasis
added)—and Mr. Gordon was charged in Count 24 both with the substantive
offense and with the inchoate crime of attempt. Therefore, in assessing the
sufficiency of the evidence regarding Count 24, we are free to focus on whether
any rational finder of fact could have found Mr. Gordon guilty of the attempt
offense (as opposed to the substantive offense), and we elect to do so.
“An attempt [generally] requires both (1) an ‘intent to commit the
substantive offense,’ and (2) the ‘commission of an act which constitutes a
substantial step towards commission of the substantive offense.’” United States
v. Washington (Deandre Washington), 653 F.3d 1251, 1264 (10th Cir. 2011)
(quoting United States v. Vigil, 523 F.3d 1258, 1267 (10th Cir. 2008)); accord
United States v. Irving, 665 F.3d 1184, 1195 (10th Cir. 2011).
“A substantial step must be something more than mere preparation, yet may
be less than the last act necessary before the actual commission of the substantive
crime.” United States v. Fleming, 667 F.3d 1098, 1107 (10th Cir. 2011) (quoting
Deandre Washington, 653 F.3d at 1264) (internal quotation marks omitted). “The
fact that further, major steps remain ‘before the crime can be completed does not
preclude a finding that the steps already undertaken are substantial.’” Irving, 665
-52-
F.3d at 1196 (quoting United States v. Savaiano, 843 F.2d 1280, 1297 (10th Cir.
1988)). “[A] substantial step is appropriately found where the defendant
undertook ‘an act adapted to, approximating, and which in the ordinary and likely
course of things will result in, the commission of [a] particular crime.’” Fleming,
667 F.3d at 1107 (second alteration in original) (quoting Deandre Washington,
653 F.3d at 1264). “Importantly, the act or acts ‘must be strongly corroborative
of the firmness of the defendant’s criminal intent.’” Irving, 665 F.3d at 1196(quoting United States v. Bunney, 705 F.2d 378, 381 (10th Cir. 1983)); see also
United States v. Lucas, 499 F.3d 769, 781 (8th Cir. 2007) (en banc) (concluding
that the defendant’s “earnest” request that two other individuals “claim ownership
of [a] firearm . . . was enough to prove that [he] took a ‘substantial step’ toward
obstruction of justice [under § 1512(c)(2)]”).
Thus, the government was required to prove beyond a reasonable doubt (1)
that Mr. Gordon intended to “corruptly” obstruct an official proceeding (here, the
civil forfeiture proceeding), and (2) that he committed a substantial step toward
the commission of the intended “obstruction.” Acting “corruptly” within the
meaning of § 1512(c)(2) means acting “with an improper purpose and to engage
in conduct knowingly and dishonestly with the specific intent to subvert, impede
or obstruct the [forfeiture proceeding].” United States v. Friske, 640 F.3d 1288,
1291 (11th Cir. 2011) (alteration in original) (quoting United States v. Mintmire,
507 F.3d 1273, 1289 (11th Cir. 2007)) (internal quotation marks omitted); cf.
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United States v. Ogle, 613 F.2d 233, 238 (10th Cir. 1979) (in defining “corruptly”
under 18 U.S.C. § 1503, noting that “corruption” means “[a]n act done with an
intent to give some advantage inconsistent with official duty and the rights of
others” (quoting Bouvier’s Law Dictionary, Vol. I) (internal quotation marks
omitted)).
Any rational trier of fact could have concluded that Mr. Gordon was guilty
of attempting to violate § 1512(c)(2). First, as for his corrupt intent, the
government’s evidence showed that Mr. Gordon directed Mr. Singer to sign a
backdated agreement that memorialized a sale of IPG stock between the two. As
the jury heard, “he wanted . . . to have it for his records when he was . . . meeting
with the government regarding the forfeiture or seizure of his house.” R., Vol.
VIII, at 1663. The evidence further showed that the share-purchase agreement
specified that it was executed in October 2005—prior to Mr. Singer’s November
2005 wire transfer of funds to Mr. Gordon—but Mr. Singer “never had an
agreement regarding the shares of [IPG]” with Mr. Gordon. Id. at 1656. When
Mr. Gordon asked for his endorsement on a backdated share-purchase agreement,
Mr. Singer understood him “to be asking . . . to create false documents,” and Mr.
Singer did so because “[Mr. Gordon] was a friend, [and Mr. Singer] was trying to
help him out.” Id. at 1663.
Any rational jury could have determined that the creation of these false
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documents was for the corrupt purpose of redirecting the government, based upon
false pretenses, away from property that it was trying to seize (i.e., Mr. Gordon’s
home) in an official proceeding and that Mr. Gordon could foresee that the
document would have this effect. See Friske, 640 F.3d at 1293 (noting that, in
making this showing, the government must establish that the “[defendant] knew
that his actions were likely to affect a forfeiture proceeding”); United States v.
Reich, 479 F.3d 179, 186 (2d Cir. 2007) (concluding that the defendant had
“failed to show that the evidence was insufficient to establish a nexus between his
actions and obstruction of [a] proceeding” where he completed “[a] forged Order
[that] appeared to render moot [a litigation opponent’s] application to the Second
Circuit for a writ of mandamus, [because] it was foreseeable that upon receiving
the forged Order, [the opponent] would withdraw the application”).
Furthermore, any rational jury could conclude that the evidence sufficiently
established that Mr. Gordon took a “substantial step” toward the obstruction. Mr.
Singer’s testimony suggested that Mr. Gordon intended to imminently use the
false documents. See R., Vol. VIII, at 1665–66, 1668 (discussing text messages
where Mr. Gordon implies that he was going to soon present a version of the
unsigned (and false) document to the government after its receipt). As noted,
even if “major steps remain,” a rational finder of fact may determine that the
steps already completed are substantial. Irving, 665 F.3d at 1196; see Deandre
Washington, 653 F.3d at 1266 (noting that a “substantial step” may be established
-55-
even though “several steps . . . remain before the planned [crime] . . . [actually]
take[s] place”).
More specifically, “[i]f the activity ha[s] proceeded to a further length, that
is, if a tangible act which constituted proximate and tangible evidence of a real
effort had emerged, the government’s [charge] [is] more tenable.” Deandre
Washington, 653 F.3d at 1265 (first and third alterations in original) (quoting
United States v. Monholland, 607 F.2d 1311, 1317 (10th Cir. 1979)) (internal
quotation marks omitted). And we look to see whether the act or acts strongly
corroborate the firmness of the defendant’s intent to carry out the substantive
offense. See Irving, 665 F.3d at 1198. Here, any rational finder of fact could
have found that Mr. Gordon’s direction to Mr. Singer to endorse a backdated
share-purchase agreement and Mr. Gordon’s actual creation of such an agreement
(with Mr. Singer’s help) amounted to a tangible act. And that this act strongly
corroborated the firmness of Mr. Gordon’s corrupt intent to obstruct an official
proceeding. In particular, there was no evidence before the jury that Mr. Gordon
expressed second thoughts about his corrupt plan, or in any other respect changed
his mind about the criminal endeavor.
Unlike in Monholland, this is not a situation where a defendant just
engaged in “mere abstract talk.” 607 F.2d at 1318; cf. Irving, 665 F.3d at1200–01 (concluding, that defendant’s conduct, “viewed in the aggregate”
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amounted to more than abstract talk, where he “active[ly] solicit[ed]” an
undercover agent to secure a killer for a murder-for-hire contract, achieved the
“actual consummation of a murder-for-hire contract,” and took “concrete actions
to facilitate the completion of the contract”). In responding to Mr. Gordon’s
motion for judgment of acquittal, the government forcefully hammered this point
home:
[T]he fact that Mr. Gordon never lied to [the] court[] doesn’t
matter. The count alleges that he endeavored to obstruct justice.
He endeavored, not by thinking about it, not by walking around
and talking to himself about it . . . but by doing something, by
talking to Rick Singer about it, by sending him documents, and
by instructing . . . Rick Singer to backdate the document and
create a false document [and that] is sufficient.
R., Vol. VIII, at 2378–79. Thus, taking account of all of the circumstances, we
conclude that the government presented sufficient evidence for a rational
factfinder to conclude that Mr. Gordon possessed the requisite corrupt intent to
obstruct or impede an official proceeding and took a substantial step to
accomplish that end. Accordingly, we reject Mr. Gordon’s sufficiency-of-the-
evidence challenge to his conviction of Count 24. 28
28
Mr. Gordon also argues that there is no indication that he
“intentionally harassed” Mr. Singer. See Aplt. Reply Br. at 24 (discussing
§ 1512). But he points to no portion of § 1512(c)(2) that contains an intentional
harassment component, nor any case that recognizes such a patina on the
provision. Furthermore, like his argument on the scope of § 1512(c)(2), Mr.
Gordon’s argument on this issue is fragmentary and cursory. Thus, we decline to
(continued...)
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C. Fifth Amendment
Mr. Gordon complains that the district court erred in permitting the
government to insinuate guilt by introducing evidence that infringed upon his
Fifth Amendment right to remain silent. At trial, the government offered the
testimony of Mr. Lindberg (over objection), which established that he and Mr.
Gordon had discussed who should be permitted to testify in the proceedings
before the SEC. Moreover, two witnesses—who were incidentally involved in the
scheme—testified that Mr. Gordon advised them to take the Fifth Amendment.
The testimony was offered to corroborate Mr. Lindberg’s testimony that he and
Mr. Gordon had essentially calculated a cover-up strategy. Mr. Gordon claims
that this tactic tainted the invocation of his own Fifth Amendment right not to
testify at trial, which he in fact exercised.
“We review a district court’s evidentiary rulings for an abuse of discretion,
considering the record as a whole.” United States v. Ledford, 443 F.3d 702, 707
(10th Cir. 2005). However, “[w]e review de novo the extent of constitutional
rights.” Jones, 160 F.3d at 645; see United States v. Rivas-Macias, 537 F.3d
1271, 1278 (10th Cir. 2008) (“Whether an individual may properly invoke the
privilege against self-incrimination is a question of law, which we review de
novo.”); see also United States v. Bright, 596 F.3d 683, 690 (9th Cir. 2010)
28
(...continued)
pursue the matter further. See Cooper, 654 F.3d at 1128.
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(collecting cases and noting that it “review[s] de novo a district court’s
application of the Fifth Amendment privilege against self-incrimination”).
“The Fifth Amendment provides, in relevant part, that no person ‘shall be
compelled in any criminal case to be a witness against himself.’” United States v.
Mike, 632 F.3d 686, 697 (10th Cir. 2011) (quoting U.S. Const. amend. V)). It
“protects an accused . . . from being compelled to testify against himself, or
otherwise provide the State with evidence of a testimonial or communicative
nature.” Schmerber v. California, 384 U.S. 757, 761 (1966). It further prevents
“adverse comment[s] . . . on a defendant’s failure to take the stand in a criminal
trial.” Griffin v. California, 380 U.S. 609, 615 (1965) (Harlan, J., concurring);
see United States v. Templeman, 481 F.3d 1263, 1265 (10th Cir. 2007) (“[A]
defendant’s Fifth Amendment privilege against self-incrimination prohibits a
prosecutor from commenting on a defendant’s exercise of his right not to
testify.”); United States v. Nelson, 450 F.3d 1201, 1212 (10th Cir. 2006).
Mr. Gordon contends that the government’s evidence tainted his own
invocation of the Fifth Amendment privilege during trial. 29 He reasons that the
29
Mr. Gordon appears to make a related argument that “[a] lawyer’s
effort to advise his client of the full range of legal options available, including
taking the Fifth Amendment, . . . cannot be portrayed as . . . wrongdoing” as a
general matter. Aplt. Opening Br. at 44. In support he cites United States v.
Farrell, 126 F.3d 484 (3d Cir. 1997), a Third Circuit case that dealt primarily
with the meaning of “corrupt persuasion” under the witness-tampering statute, see
18 U.S.C. § 1512(b)(3). Mr. Gordon’s related argument lacks merit. In
(continued...)
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evidence introduced by the government (noted above) insinuated that “taking the
Fifth” is what guilty people do. But the evidence here did no such thing. As
discussed, it is absolutely true that “a defendant’s Fifth Amendment privilege
against self-incrimination prohibits a prosecutor from commenting on a
defendant’s exercise of his right not to testify.” Templeman, 481 F.3d at 1265.
However, “[w]hen evaluating comments [or evidence] bearing upon a defendant’s
failure to testify, we look to see if the language used was ‘manifestly intended to
be a comment on the defendant’s failure to testify’ or was of ‘such character that
the jury would naturally and necessarily take it to be such a comment.’” Id.(emphasis added) (quoting United States v. Rahseparian, 231 F.3d 1267, 1273
(10th Cir. 2000)); see United States v. Ivory, 532 F.3d 1095, 1100 (10th Cir.
2008) (“[T]o determine whether . . . [a] remark will be considered a comment on
the defendant’s failure to testify[,] . . . [we must assess] whether the language
29
(...continued)
particular, his reliance on Farrell is misguided. At issue there was whether the
defendant’s conduct itself was sufficient to support a criminal charge under the
witness-tampering statute. See Farrell, 126 F.3d at 485–86. Specifically, Farrell
dealt with whether evidence of a defendant persuading his alleged co-conspirator
to not reveal information to authorities could constitute “corrupt persuasion”
under 18 U.S.C. § 1512(b). Id. at 488–89. The court found that “more culpability
is required for a statutory violation [of § 1512(b)] than that involved in the act of
attempting to discourage disclosure in order to hinder an investigation.” Id. at
489. However, Farrell tells us nothing about whether evidence relating to third
parties’ invocation of the Fifth Amendment privilege may detrimentally taint a
defendant’s invocation of the privilege; in other words, Farrell says nothing
about the issue before us.
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used was manifestly intended or was of such character that the jury would
naturally and necessarily take it to be a comment on the failure of the accused to
testify.” (quoting United States v. Barton, 731 F.2d 669, 674 (10th Cir. 1984))
(internal quotation marks omitted)).
Mr. Gordon has pointed to no statement in the record that comes close to
meeting this standard. Instead, he simply asserts conclusorily that the
government’s conduct indirectly satisfies it. See Aplt. Opening Br. at 44 (“By its
action, [the government] indirectly accomplished what has routinely been held
justification for a mistrial—commenting on a defendant’s right to remain silent.”).
That is not enough. Cf. In re Martinez, 126 F. App’x 890, 899 (10th Cir. 2005)
(“[Appellants] simply continue to assert a general Fifth Amendment claim that
answering the certified questions would impinge on their rights against self-
incrimination. This is insufficient to invoke the Fifth Amendment.”).
To the contrary, the evidence related to Mr. Gordon’s discussions with
others about their testimony in an SEC proceeding; it did not pertain to Mr.
Gordon’s invocation of his own Fifth Amendment right in his criminal trial. The
Fifth Amendment prevents a prosecutor from “comment[ing] on the failure of the
defendant to provide . . . evidence,” or to speak. Rahseparian, 231 F.3d at 1274(emphasis added); see United States v. Hamilton, 587 F.3d 1199, 1217 (10th Cir.
2009). It does not prevent the evidence elicited in this case because that evidence
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did not reasonably (or necessarily) refer to Mr. Gordon’s invocation of his own
Fifth Amendment right not to testify. See Nelson, 450 F.3d at 1212 (“The general
rule of law is that once a defendant invokes his right to remain silent, it is
impermissible for the prosecution to refer to any Fifth Amendment rights which
defendant exercised.” (quoting United States v. Burson, 952 F.2d 1196, 1201
(10th Cir. 1991)) (internal quotation marks omitted)); see also United States v.
Hanrahan, 508 F.3d 962, 968 (10th Cir. 2007) (rejecting an argument that the
prosecution’s use of the defendant’s prior testimony was in some way an effort to
comment on his decision not to testify at the trial at which it was introduced,
because the “prosecutor revealed nothing that . . . would cause the jury to
consider it a comment on [the defendant’s] choice not to testify”). It is for this
reason that we reject Mr. Gordon’s Fifth Amendment challenge. As the district
court aptly noted, Mr. Gordon “should not be permitted to perpetuate . . . a
stock-manipulation scheme and claim that evidence of the cover-up is somehow
protected simply because he is an attorney.” R., Vol. VIII, at 371 (Trial Tr.,
dated Apr. 8, 2010).
D. Juror Dismissal
Mr. Gordon argues that the district court erred in excusing a petit juror
without adequate cause. At trial, after the government rested its case, a member
of the court’s staff was informed by a juror that she wanted to serve as an
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alternate because her continued presence on the jury “could affect the outcome of
the case.” R., Vol. VIII, at 2468. The juror further commented that, “perhaps” in
light of her “take on personalities . . . and [her] take on some of the bits of th[e]
case . . . [she] may be a roadblock.” Id. at 2478. After carefully conducting a
one-on-one inquiry with each member of the panel—during which time the court
asked whether this particular juror had made comments that could have
contaminated the jury 30—it decided, over Mr. Gordon’s objection, that it would
excuse her “out of an abundance of caution.” Id. at 2505.
“We have stated that the determination of ‘whether to excuse a juror rests
on whether the juror can remain impartial.’” United States v. Brothers, 438 F.3d
1068, 1071 (10th Cir. 2006) (quoting United States v. Black, 369 F.3d 1171, 1176
(10th Cir. 2004)), abrogated in part on other grounds as recognized in United
States v. Soza, 643 F.3d 1289, 1291 (10th Cir. 2011); see also United States v.
Wood, 299 U.S. 123, 145–46 (1936) (“Impartiality is not a technical conception.
It is a state of mind. For the ascertainment of this mental attitude of appropriate
indifference, the Constitution lays down no particular tests and procedure is not
chained to any ancient and artificial formula.”). “This rule is based on a
defendant’s Sixth Amendment right to a fair trial ‘by an impartial jury.’”
Brothers, 438 F.3d at 1071 (quoting U.S. Const. amend. VI).
30
It was determined, ultimately, that “she didn’t contaminate the rest of
the pool.” R., Vol. VIII, at 2504.
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The district court has broad discretion in determining whether to excuse a
juror for potential bias. See Bornfield, 145 F.3d at 1132 (“It is well settled that
the district court has broad discretion in determining how to handle allegations of
juror bias.”); United States v. McIntyre, 997 F.2d 687, 697 (10th Cir. 1993)
(“Whether an individual is qualified to serve as a fair and impartial juror is a
decision that is firmly within the discretion of the district court.”); see also Black,
369 F.3d at 1176. And the decision to dismiss—or not to dismiss—a juror is
reviewed only for an abuse of discretion. See Black, 369 F.3d at 1176–77; see
also Skilling v. United States, 130 S. Ct. 2896, 2918 (2010) (“Reviewing courts
are properly resistant to second-guessing the trial judge’s estimation of a juror’s
impartiality, for that judge’s appraisal is ordinarily influenced by a host of factors
impossible to capture fully in the record—among them, the prospective juror’s
inflection, sincerity, demeanor, candor, body language, and apprehension of
duty.”); United States v. Bolden, 596 F.3d 976, 980–81 (8th Cir. 2010) (affirming
the district court’s dismissal of a juror that was made largely out of an abundance
of caution in light of the juror’s brief conversation with the defendant’s
girlfriend); Bornfield, 145 F.3d at 1132–33 (affirming the district court’s
dismissal of a juror as an alternate where the juror expressed displeasure with the
pace of the trial).
“Under the abuse of discretion standard, a trial court’s decision will not be
disturbed unless the appellate court has a definite and firm conviction that the
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lower court has made a clear error of judgment or exceeded the bounds of
permissible choice in the circumstances.” United States v. Chanthadara, 230
F.3d 1237, 1248 (10th Cir. 2000) (quoting United States v. Thompson, 908 F.2d
648, 650 (10th Cir. 1990)) (internal quotation marks omitted); cf. United States v.
Warner, 498 F.3d 666, 689 (7th Cir. 2007) (“[A] district court abuses its
discretion in the context of juror removal only ‘if the juror was discharged
without factual support or for a legally irrelevant reason.’” (quoting United States
v. Edwards, 303 F.3d 606, 631 (5th Cir. 2002))). Compare Brothers, 438 F.3d at1071–72 (applying an abuse-of-discretion standard to the district court’s decision
to remove a juror for cause), with Black, 369 F.3d at 1176–77 (applying an abuse-
of-discretion standard to the district court’s decision not to remove a juror for
medical reasons).
Mr. Gordon contends that the district court essentially lacked good cause
for excusing the juror. However, we need not address whether the district court
erred in discharging the juror. Even if it did so, we will not reverse “unless it
resulted in prejudice to the defendant.” Brothers, 438 F.3d at 1072; see 2 Charles
Alan Wright & Peter J. Henning, Federal Practice and Procedure § 388, at 659
(4th ed. 2009) (“Defendant is entitled to a new trial because of the substitution of
an alternate juror prior to the start of deliberations only if he can demonstrate that
he was prejudiced by the substitution.” (emphasis added)); id. at 659 n.22
(collecting cases); see also id. at 659–60 (noting that, in showing prejudice, “it is
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not enough that the juror who was excused was thought by the defendant to be
biased in his favor”). And we conclude that there was no such prejudice to Mr.
Gordon.
Here, the juror in question “gave no indication [as to] which side she
favored,” Aplee. Br. at 59, and Mr. Gordon “fails to point to any concrete factor
that moves [his] assertion [of prejudice] beyond the realm of mere speculation,”
Brothers, 438 F.3d at 1073. More specifically, although Mr. Gordon suggests that
he was denied the participation of a “highly conscientious juror,” he fails to
demonstrate that the remaining jurors were not just as conscientious or fair. See
Brothers, 438 F.3d at 1072 (“[T]here is no indication that the court’s replacement
of the juror in question with an alternate juror resulted in a biased jury or an
otherwise unfair trial.”); see also United States v. Thompson, 528 F.3d 110, 121
(2d Cir. 2008) (“[The defendant] points to no evidence that the substitution [of a
juror] created bias or prejudiced his defense.”); United States v. Vega, 72 F.3d
507, 512 (7th Cir. 1995) (“[W]e will not overturn a conviction for a Rule 24(c)
violation unless appellant can show prejudice.”). And Mr. Gordon offers no
allegation, much less any evidence, that the resulting juror pool was tainted or
otherwise adversely affected. See United States v. Bradley, 644 F.3d 1213, 1282
(11th Cir. 2011) (“Conjecture about the impact the replacement of a juror had on
the jury’s verdicts is . . . insufficient evidence of prejudice.”). For these reasons,
we reject his claim related to the district court’s dismissal of the juror.
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E. Speedy Trial Act
Mr. Gordon contends that certain provisions of the Speedy Trial Act, 18
U.S.C. §§ 3161–3174, were violated when the district court continued the date for
commencement of the trial—after the unsealing of the indictment on February 10,
2009—to January 19, 2010, and then subsequently to April 5, 2010. He claims
that the district court “failed to articulate the information necessary to justify . . .
[the] continuances.” Aplt. Opening Br. at 49.
As alluded to in Part I, supra, on February 26, 2009, the government filed
an unopposed motion to declare the case complex pursuant to the provisions of 18
U.S.C. § 3161(h), in light of the massive pending discovery and complex legal
issues presented. The district court granted the motion, declared the case
“complex,” and concluded that the “ends of justice” outweighed the public’s
interest in a speedy trial. A few days later, the district court set the trial date for
January 19, 2010, and reiterated that, under 18 U.S.C. § 3161(h)(8)(A), the “ends
of justice would be served by granting [the] continuance.” 31 R., Vol. I, at 141
31
The district court referred to provisions concerning ends-of-justice
continuances that were applicable before 2008. See R., Vol. I, at 118 (Order
Granting Unopposed Mot. of United States to Declare This Case a Complex
Matter, filed Mar. 10, 2009) (citing 18 U.S.C. §§ 3161(h)(8)(A) and
3161(h)(8)(B)(ii) (2006)). However, in 2008, “Congress redesignated 18 U.S.C.
§ 3161(h)(8) as 18 U.S.C. § 3161(h)(7).” United States v. Hernandez-Mejia, 406
F. App’x 330, 331 n.2 (10th Cir. 2011); see Judicial Administration and Technical
Amendments Act of 2008, Pub. L. No. 110-406, § 13, 122 Stat. 4291, 4294
(2008). We refer to the current numbering of the applicable provisions of
(continued...)
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(Notice of Electronic Filing, dated Mar. 17, 2009).
After the case was reassigned to another district court judge (i.e., Judge
Payne), he struck the pretrial conference and January 19th trial date. On March
17, 2010, Mr. Gordon filed a motion to dismiss under the Speedy Trial Act,
arguing that the continuances in the case were inadequately explained and were
not supported by a basis for exclusion under the Act. The court denied this
motion, and the trial began on April 5, 2010.
“The Speedy Trial Act . . . requires that a criminal defendant’s trial
commence within 70 days after he is charged or makes an initial appearance,
whichever is later . . . .” 32 Bloate v. United States, 130 S. Ct. 1345, 1349 (2010);
accord United States v. Larson, 627 F.3d 1198, 1203 (10th Cir. 2010). The Act
excludes “certain enumerated events” from this time period. See Bloate, 130 S.
Ct. at 1349 (discussing 18 U.S.C. § 3161(h)(1)). Among those events are
“proceedings concerning the defendant,” 18 U.S.C. § 3161(h)(1), and time which
31
(...continued)
§ 3161(h), in addressing Mr. Gordon’s arguments.
32
The parties agree that the seventy-day clock under the Act
commenced on the day the indictment was unsealed. See 18 U.S.C. § 3161(c)(1)
(noting “the trial of a defendant charged in an information or indictment . . . shall
commence within seventy days from the filing date (and making public) of the
information or indictment”). That is, there is no argument that Mr. Gordon’s
charges were made “public” before February 10, 2009, or that the speedy-trial
clock should have begun at an earlier date for any other reason. We are content
to proceed based upon the parties’ agreement on this matter.
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the court determines—“either orally or in writing”—should be excluded because
“the ends of justice served by the granting of such continuance outweigh the best
interests of the public and the defendant in a speedy trial,” id. § 3161(h)(7)(A).
As relevant here, the factors to be considered in granting a continuance under
§ 3161(h)(7)(A) include “[w]hether the case is so unusual or so complex . . . that
it is unreasonable to expect adequate preparation for pretrial proceedings or for
the trial itself within the time limits established by [the Act].” Id.
§ 3161(h)(7)(B)(ii).
We review the district court’s decision to grant a continuance for the “ends
of justice” for an abuse of discretion. See United States v. Toombs, 574 F.3d
1262, 1268 (10th Cir. 2009) (“We apply an abuse of discretion standard to a
district court’s decision to grant an ends-of-justice continuance . . . .” (quoting
United States v. Gonzales, 137 F.3d 1431, 1433 (10th Cir. 1998)) (internal
quotation marks omitted)). “This court [otherwise] reviews de novo . . . the
district court’s compliance with the legal requirements of the Speedy Trial Act.”
Id.In this case, the district court’s original order granting the government’s
request for a continuance noted the voluminous discovery in the case, including
documents detailing the hundreds of financial transactions that formed the basis
for the charges. Further, the government’s motion set forth in detail the hundreds
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of thousands of documents that needed to be catalogued and separated, so that the
parties could “identify[]” the relevant ones. R., Vol. I, at 105 (Unopposed Mot.
of United States to Declare this Case a Complex Matter, filed Feb. 26, 2009). We
conclude that the district court’s findings were sufficient to justify the ends-of-
justice continuance up to January 19, 2010, because it is obvious “what factors
[it] relied upon in making its determination.” Larson, 627 F.3d at 1206; cf. id.(concluding that the ends-of-justice continuance was inadequate where the district
court did not make clear the factors it relied upon in making its determination).
Indeed, the record is clear that the district court’s decision was based on the
fact that the transactional evidence was extensive and complex, and that it would
take additional time to sufficiently analyze and organize the evidence before trial.
These facts were identified both in the court’s order, see, e.g., R., Vol. I, at 118
(“In this case, the number of defendants, the voluminous discovery [previously
referenced in the order] and the ongoing nature of the investigation render the
matter so complex as to warrant the grant of an ends-of-justice continuance
. . . .”), and by reference to the government’s motion, see, e.g., id. at 104–05; cf.
Toombs, 574 F.3d at 1271 (“[T]he district court need not articulate facts that are
obvious and set forth in the motion to continue in granting an ends-of-justice
continuance.”).
While we have previously held that “[s]imply identifying an event, and
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adding the conclusory statement that the event requires more time for counsel to
prepare, is not enough,” Toombs, 574 F.3d at 1271–72, the district court’s
findings here explained “why the mere occurrence of the event identified . . .
necessitat[ed] the continuance,” id. at 1271, and it is “clear from the record that
the trial court struck the proper balance [under the Speedy Trial Act] when it
granted the continuance,” 33 Larson, 627 F.3d at 1206 (quoting United States v.
Williams, 511 F.3d 1044, 1056 (10th Cir. 2007)) (internal quotation marks
omitted); see United States v. O’Connor, 656 F.3d 630, 639–40 (7th Cir. 2011)
(reading an ends-of-justice continuance “in light of” earlier court orders, and
concluding that the continuance was justified due in part to “the complexity of the
case[ and] the magnitude of the discovery”); United States v. Bieganowski, 313
F.3d 264, 282 n.15 (5th Cir. 2002) (collecting cases and noting that “the decision
33
Further, the amount of time given by the continuance is particularly
reasonable when considering Mr. Gordon’s counsel’s own position in early 2009
on the pace of the proceedings and the complexity of the case. In this regard,
shortly after the district court filed its order granting the continuance, the
government filed a status report and a motion for a scheduling conference,
proposing a trial date of August 17, 2009. Mr. Gordon’s counsel promptly filed a
responsive memorandum complaining that the case had advanced too quickly, and
that counsel would only be amenable to a trial date commencing at the earliest in
mid-October of 2009. The record here demonstrates that the length of the
continuance permitted by the district court is clearly rooted in counsel’s
averments to the court, and the expectation of the time it would take to “properly
analyze the . . . transactions which [had to] be carefully pieced together” in order
to present a “proper[] defen[se].” R., Vol. I, at 139 (David Gordon’s Mem. in
Resp. to Government’s Status Report, filed Mar. 16, 2009). Mr. Gordon has
offered no persuasive argument to the contrary.
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to grant a continuance based on the volume of discovery[ is] consistent with cases
interpreting section 3161(h)([7])”); cf. United States v. Napadow, 596 F.3d 398,
405–06 (7th Cir. 2010) (“While, of course, the record would have been more clear
if the district court had identified precisely why the ends of justice served by
granting the exclusion outweighed the best interest of the public and [the
defendant] in a speedy trial, a comparison of the district court’s actual statements
with the circumstances of the pretrial proceedings provide an adequate basis to
justify the . . . exclusion.”).
Finally, from the record, it appears that much of the time between January
19, and April 5, 2010, was excludable under the Act because of pending motions
and due to Mr. Gordon’s filing of an interlocutory appeal. As a threshold matter,
Mr. Gordon has short-changed this portion of the analysis. Notably, he broadly
claims in a conclusory and unsupported fashion that a total of 240 days passed
“when no motions had been filed and no adequate justification had been given for
the . . . delay.” Aplt. Opening Br. at 49. But he does not adequately identify
whether this argument relates to any of the allegedly non-excludable days
between January 19, and April 5, 2010, or only the period before that. Because it
is not clear whether Mr. Gordon is specifically challenging the time period after
January 19—viz., the time after the first ends-of-justice continuance ended—we
would be well within our discretion to reject any of his nonspecific, unsupported
assertions when considering this period. See Burrell, 603 F.3d at 835.
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In any event, even were we to focus on the period from January 19 to April
5, 2010, Mr. Gordon would not be entitled to relief. The Act excludes periods of
delay “resulting from any interlocutory appeal,” 18 U.S.C. § 3161(h)(1)(C);
accord 3B Charles Alan Wright & Peter J. Henning, Federal Practice and
Procedure § 835, at 434, 436 & n.17 (4th ed. 2013), and those “resulting . . . from
the filing of [any pre-trial] motion through the conclusion of the hearing on, or
other prompt disposition of, such motion,” 18 U.S.C. § 3161(h)(1)(D); see also
United States v. Tinklenberg, 131 S. Ct. 2007, 2012 (2011) (noting that the
provision in § 3161(h)(1) regarding pre-trial motions applies “irrespective of
whether the motion has any impact on when the trial begins”). Even if the
appropriate calculations are completed for this period, according to the
government’s account of the litigation—which Mr. Gordon does not
challenge—the total non-excludable time falls far short of the seventy-day limit.
Put another way, when the total number of elapsed days between the unsealing of
the indictment and the start of the trial is reduced by the total number of
statutorily excludable days, the product (i.e., the difference) of non-excludable
days is considerably less than the seventy days that the Act permits to run. 34
34
We note that the circuits are not uniform in their calculation of
excludable days with respect to pre-trial motions; more specifically, the variance
relates to whether to deem the filing or disposition date of motions excludable
time. See Williams, 511 F.3d at 1051 n.5 (collecting cases and noting the lack of
uniformity regarding this pre-trial motion calculation under then § 3161(h)(1)(F)).
(continued...)
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For the foregoing reasons, Mr. Gordon has not shown a violation of the
Speedy Trial Act.
F. Sentencing
Mr. Gordon lodges numerous challenges to his sentence, specifically
relating to the district court’s loss and gain calculations and its imposition of joint
and several liability for the illicit stock sales. Broadly, Mr. Gordon appears to
make two, separate procedural challenges to his sentence. First, he contends that
the district court inappropriately based its measure of harm in this case
“exclusively on the differences in the cost of the four stocks purchased by a group
of persons oftentimes loosely linked to [him] and the amount each of those
various parties sold their stock for,” Aplt. Opening Br. at 51, and failed to take
into consideration “other economic factors unrelated to the defendant’s fraudulent
activity that may have caused the stock to increase or decrease,” id. at 52. 35 This,
34
(...continued)
Apparently, “we have not directly addressed the issue.” Id. However, regardless
of how the excludable time is calculated—viz., by including the date the motion is
filed and its disposition date, or by excluding either or both dates—our ultimate
conclusion would remain the same. Mr. Gordon was tried within the seventy
(non-excludable) days that the Act permitted.
35
The government has filed a motion to supplement the record under
seal with multiple sentencing documents not included in the parties’ appellate
appendices. Among these documents are earlier, provisional versions of Mr.
Gordon’s PSR and the district court’s Statement of Reasons for imposing
sentence. Mr. Gordon objects to the inclusion of the provisional PSRs without
the attachment of e-mails sent between his counsel and the U.S. Probation Office.
(continued...)
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he reasons, was “procedural error” in the determination of his sentence, insofar as
it concerns the application of the twenty-two-level enhancement under
§ 2B1.1(b)(1). Id. at 50. Second, he contends that the “damage[s] calculation
should be individual, rather than joint” in cases like his, where the court
attributed stock sales made by others who were at best only “tenuously affiliated”
with him. Id. at 54. And, in the latter respect, he takes issue with the district
court’s attribution of others’ illicit “gain” to him for purposes of “relevant
conduct” under the Guidelines.
“[S]entences are reviewed ‘under an abuse of discretion standard for
procedural and substantive reasonableness.’” United States v. Snow, 663 F.3d
1156, 1160 (10th Cir. 2011) (quoting United States v. Washington (Wildor
Washington), 634 F.3d 1180, 1184 (10th Cir. 2011)). “[W]e review the district
court’s legal conclusions de novo and its factual conclusions for clear error.”
Gallant, 537 F.3d at 1234. “A sentence is procedurally unreasonable if the
district court incorrectly calculates or fails to calculate the Guidelines sentence,
treats the Guidelines as mandatory, fails to consider the [18 U.S.C.] § 3553(a)
factors, relies on clearly erroneous facts, or inadequately explains the sentence.”
35
(...continued)
He does not, however, object to the inclusion of the district court’s Statement of
Reasons. We grant the motion with respect to the Statement of Reasons, but
because the PSR relied upon by the district court is already a part of the record,
we see no need to consider earlier, provisional versions of it. Consequently, we
deny the government’s motion to consider such versions of the PSR.
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United States v. Haley, 529 F.3d 1308, 1311 (10th Cir. 2008); see United States v.
Alapizco-Valenzuela, 546 F.3d 1208, 1214 (10th Cir. 2008) (“Procedural review
asks whether the sentencing court committed any error in calculating or
explaining the sentence.”).
1. Section 2B1.1(b)(1)
Section 2B1.1(b) “increases a defendant’s base offense level for fraud
according to the amount of the loss.” Wildor Washington, 634 F.3d at 1184. For
purposes of this provision, the court must “use the greater of actual or intended
loss.” Id. However, “[i]f the loss is not reasonably determinable, then a court
must use the gain that resulted from the fraud as an alternative measure.” Id.“When a defendant challenges the procedural reasonableness of [his] sentence by
attacking the district court’s loss calculation, our task is to determine whether the
district court’s factual finding of loss caused by the defendant’s fraud is clearly
erroneous.” United States v. Mullins, 613 F.3d 1273, 1292 (10th Cir. 2010). In
other words, “we may disturb the district court’s loss determination—and
consequent Guidelines enhancement—‘only if the court’s finding is without
factual support in the record or if, after reviewing all the evidence, we are left
with a definite and firm conviction that a mistake has been made.’” Id. (quoting
Aquila, Inc. v. C.W. Mining, 545 F.3d 1258, 1263 (10th Cir. 2008)). However,
the district court’s “loss calculation methodology” is reviewed de novo. Snow,
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663 F.3d at 1160 (quoting Wildor Washington, 634 F.3d at 1184) (internal
quotation marks omitted).
In this case, the district court determined that it would be too difficult to
determine the actual losses suffered by each individual investor affected by the
conspirators’ manipulation scheme. Thus, consistent with § 2B1.1, comment note
3(B), of the Guidelines, it calculated an alternative measure of illicit gain. See
U.S.S.G. § 2B1.1, cmt. n.3(B) (“The court shall use the gain that resulted from
the offense as an alternative measure of loss only if there is a loss but it
reasonably cannot be determined.”). In doing so, however, it first attempted (for
comparative purposes) to make reasonable estimates of the total losses to
investors, given the information available.
In calculating the loss estimates, the court utilized two separate methods.
First, it subtracted the average price of each stock after disclosure of the fraud
from the stock’s average price during the promotional period. Then, it multiplied
by the total number of shares sold. This method yielded a loss estimate of
$55,150,000. Alternatively, the court subtracted the inherent value of the stocks
from their average value during the promotional period, yielding a loss estimate
of $47,240,000. 36
36
In United States v. Nacchio, 573 F.3d 1062, 1075 (10th Cir. 2009),
we described “a stock’s inherent value” as “the market’s assessment of the stock’s
value, reflecting primarily the value of the firm’s net assets and operations and its
(continued...)
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The court then went on to calculate the total conspiratorial gain from the
manipulation of National Storm, Deep Rock, and Global Beverage to be
$43,927,809.95, and Mr. Gordon’s gain attributable to sales of IPG to be
$2,714,504, 37 and determined that those calculations corresponded to the loss
estimates, see Snow, 663 F.3d at 1161 (“The defendant’s gain may be used only
as an alternate estimate of . . . loss; it may not support an enhancement on its own
if there is no actual or intended loss to the victims.” (quoting Wildor Washington,
634 F.3d at 1184)) (internal quotation marks omitted)). We have endorsed the
base approach utilized by the district court in analogous contexts—viz., using gain
as an alternative measure of loss where loss cannot be reliably ascertained,
provided that the court first makes a reasonable estimate of loss. See United
States v. Galloway, 509 F.3d 1246, 1252 (10th Cir. 2007) (“[B]efore using gain as
an alternate estimate of loss, the district court must first estimate the actual and
intended loss due to a defendant’s fraudulent conduct, and then consider whether
the defendant’s gain is a reasonable estimate of the actual or intended loss.”); cf.
36
(...continued)
potential earnings and growth prospects.” This would be the value that a stock
holds without reference to any fraudulent conduct of the defendant.
37
The conduct concerning IPG was not a part of the government’s
general conspiracy allegations, so the court simply added the proceeds realized
from the fraudulent sale of IPG stock to the gains computed for National Storm,
Deep Rock, and Global Beverage under the Guidelines grouping rules in § 3D1.3.
Mr. Gordon’s sentencing challenges on appeal deal primarily with the gain
computations relating to the latter stocks, not IPG’s.
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Gallant, 537 F.3d at 1236–38 (holding that the district court improperly failed to
calculate reasonable estimates of loss in arriving at an alternative gain figure in a
financial-fraud scheme).
Mr. Gordon does not necessarily challenge the court’s findings under the
foregoing methodology; rather, he contends that the court should have also
considered other potential causes of fluctuations in the applicable share prices of
National Storm, Deep Rock and Global Beverage—for instance, the rising price of
gas during the promotional period, the natural disasters that occurred during the
holding period, etc.—and because the testimony that the district court relied upon
did not necessarily take those factors into account, the resulting gain figures were
erroneously obtained. In essence, Mr. Gordon challenges the inputs utilized by
the district court, reasoning that the court failed to consider the “economic
reality” of his conduct as required by our decision in Nacchio. 38
38
Although it might logically seem appropriate to apply Nacchio’s
sentencing paradigm in the pump-and-dump context, it does not appear to be
settled in our circuit whether Nacchio applies outside of the insider trading
context. See 573 F.3d at 1086 (noting that “district courts must undertake
‘thorough analyses grounded in economic reality,’ when sentencing defendants in
insider trading cases” (emphasis added) (citation omitted) (quoting United States
v. Olis, 429 F.3d 540, 547 (5th Cir. 2005))). While other courts have applied
Nacchio-type inquiries in the pump-and-dump context, see United States v. Zolp,
479 F.3d 715, 719 (9th Cir. 2007), Mr. Gordon has pointed to no Tenth Circuit
case extending it to that context. However, given that we conclude that Mr.
Gordon’s Nacchio argument is unavailing, we may assume without definitively
deciding that Nacchio’s sentencing principles apply with full force in the pump-
and-dump context.
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In Nacchio, we held that, when calculating a gain amount under the
Guidelines in insider trading cases, the district court should utilize “[a]n approach
that focuses on arriving at a figure that approximates the gain specifically
resulting from [the] offense,” which necessitates an inquiry into “the myriad of
factors unrelated to [the] criminal fraud that could have contributed to the
increase in the value of the securities.” 573 F.3d at 1074 (emphasis added).
More specifically, we held that “district courts must undertake ‘thorough analyses
grounded in economic reality.’” Id. at 1086 (quoting Olis, 429 F.3d at 547).
Here, in arriving at its conclusions, the district court explicitly cited Nacchio, and
stated that it was in fact considering the “economic reality” of the transactions at
issue in its underlying analysis. See R., Vol. VIII, at 2795 (applying “[m]ultiple
methods of calculating loss . . . [which we]re rooted in ‘economic reality’”). Mr.
Gordon concedes as much. See Aplt. Reply Br. at 28 (“Appellant acknowledges
the district court stated at sentencing [that] it had considered this court’s
sentencing factors for a securities fraud case in [Nacchio].”).
To be sure, the district court did not explain how any of the extraneous
factors that Mr. Gordon identifies on appeal affected the stock sales of National
Storm, Deep Rock, and Global Beverage. 39 However, by its plain dictate,
39
We are doubtful that Mr. Gordon presented this argument before the
district court in the context in which he now raises it on appeal. That is, he
appears not to have argued that the district court should have, in its ultimate
(continued...)
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Nacchio does not require the court to employ an empirical inquiry that takes
account of the effect of every conceivable variable that could possibly affect a
defendant’s gain from an illicit stock sale. Rather, it requires the court to “adopt
a sentencing approach that is focused on a defendant’s criminally culpable
conduct and has the effect of excising . . . unrelated market forces from the
sentencing calculus, thereby narrowing the zone of unpredictability in
sentencing.” Nacchio, 573 F.3d at 1082. Yet this “excisi[on]” need not be
absolutely “complete[].” Id.; see also U.S.S.G. § 2B1.1 cmt. n.3(C) (“The court
need only make a reasonable estimate of the loss.” (emphasis added)). It must
only ensure, as an overarching matter, that a defendant’s punishment “reflects his
. . . culpability for the criminal offense (rather than for unrelated gyrations of the
market).” Nacchio, 573 F.3d at 1077. What was contemplated in Nacchio was
not the complete elimination of “chance market forces” from a gain calculation,
but merely the “minimiz[ation of] the influence of factors other than a
defendant’s unlawful acts on the calculation of punishment.” Id. at 1086 n.23.
Significantly, in Nacchio, we suggested that unrelated market events were
39
(...continued)
calculations, considered specifically identified non-fraud related factors in
applying the enhancement under § 2B1.1(b)(1)(L). However, the government
does not contend that Mr. Gordon failed to preserve this issue (that is, that Mr.
Gordon forfeited it). Therefore, we exercise our discretion under the particular
circumstances presented here to ignore the possible lack of preservation.
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material only insofar as they “c[ould] be identified” and assessed. See id. In this
regard, it is notable that Mr. Gordon has not suggested that the district court
actually had evidence in the record to identify, and consider the effects of, the
alternative variables that he advocates for here. In fact, in his formal objections
to the PSR, Mr. Gordon “agree[d] that there is insufficient evidence in the record
to separate out the impact of legitimate market factors on the price of each stock
and quantify the impact of the promotional schemes.” R., Vol. VI, at 623 n.7
(Letter from Thomas O. Gorman to Scott Kallenberger, dated Aug. 2, 2010)
(setting out Mr. Gordon’s formal objections to the PSR). Thus, we would be
hard-pressed to conclude that the district court committed reversible error in not
identifying, and assessing the impact of extrinsic variables, when there was no
foundation in the record for it to do so. 40
40
Mr. Gordon does not contend that filling such purported evidentiary
holes was the government’s burden and that, consequently, any deficiencies in the
district court’s ruling must be laid at the government’s feat. Indeed, Mr. Gordon
tacitly suggests that he bore at least a portion of the burden to come forward with
evidence regarding such non-fraud factors. In this regard, he complains that he
might have filled any purported evidentiary holes, if the court had allowed him
access to substitute assets; with them, he allegedly could have hired an economic
expert to fill the holes. Although the question of burden of proof regarding the
identification of extrinsic, non-fraud factors does not appear to have been
explicitly addressed in Nacchio, the authorities upon which its analysis is founded
seem to have placed this burden on the defendant. See Nacchio, 573 F.3d at 1085(relying, inter alia, on SEC v. First City Fin. Corp., 890 F.2d 1215, 1232 (D.C.
Cir. 1989)). Because of Mr. Gordon’s silence on the issue, however, we need not
resolve the matter in this case. Furthermore, even if Mr. Gordon’s experts could
have filled the purported holes in the record, for reasons explicated below, we
(continued...)
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In any event, even if the district court committed some error, as the
government argues, it would be harmless. See Aplee. Br. at 64 (“In any event, the
loss calculation did not affect Gordon’s sentence.”). Although Mr. Gordon points
to some factors that the district court conceivably could have considered, he does
not explain how those factors would have materially affected the district court’s
sentencing calculations. In this vein, the district court found that the government
had made an adequate showing of the conspiratorial gain amount by virtue of its
trial evidence. Mr. Gordon has not identified how the court’s calculations would
have been changed, or how any variable would have necessarily lowered the total
gain calculation to an amount that is less than $20,000,000—i.e., the trigger under
§ 2B1.1(b)(1)(L) for the twenty-two-level enhancement that the district court
ultimately applied. And, on the basis of this record, we cannot discern any
support for such a proposition. Furthermore, as the government suggests, the
district court “made clear that its sentence was not driven by the loss calculation
and corresponding Guidelines range,” id., given that it expressed dissatisfaction
with the severity of the Guidelines in securities fraud cases and granted Mr.
Gordon a very substantial downward variance, see R., Vol. VIII, at 2824–25
(finding that “a downward variance . . . provides for an appropriate sentence” and
40
(...continued)
cannot conclude that the district court’s sentencing computations would have been
materially altered.
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noting that ranges specified by the securities fraud Guidelines “are patently
absurd on their face.”). Mr. Gordon has not alleged that the district court would
have varied downward even further, but for any alleged error in computing his
Guidelines range. In sum, we conclude that Mr. Gordon’s sentencing challenge
must fail: we discern no error in the district court’s Guidelines gain computations
and, even if it did err, such error was harmless.
2. Joint Liability and Relevant Conduct
Mr. Gordon also contends that the district court should have held him
responsible at most for his own trading profits, and not the profits linked to other
alleged co-conspirators. In that respect, he argues that “this is a good case for the
court to find that the damage calculation should be individual, rather than joint.”
Aplt. Opening Br. at 54.
Our review of the record demonstrates that Mr. Gordon did raise a version
of this argument below, though he certainly has not helped himself in his cursory
treatment of the issue on appeal. In any event, we may easily dispose of Mr.
Gordon’s challenge to the district court’s decision to attribute to him the gains of
alleged co-conspirators in determining his offense level under § 2B1.1. “U.S.S.G.
§ 1B1.3(a)(1)(B) provides that a defendant involved in a joint criminal
undertaking may be held responsible for relevant conduct that includes all
reasonably foreseeable conduct of his co-conspirators that is in furtherance of the
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conspiracy.” United States v. Offill, 666 F.3d 168, 180 (4th Cir. 2011); see
United States v. Treadwell, 593 F.3d 990, 1002 (9th Cir. 2010) (“Where the
amount of loss is the result of ‘jointly undertaken criminal activity’—such as a
conspiracy—the relevant amount of loss must be determined on the basis of ‘all
reasonably foreseeable acts and omissions of others in furtherance of the jointly
undertaken criminal activity, that occurred during the commission of the offense
of conviction.’” (quoting U.S.S.G. § 1B1.3(a)(1)(B))); see also United States v.
Griffith, 584 F.3d 1004, 1011 (10th Cir. 2009) (“In calculating loss under the
Guidelines, the district court does not limit itself to conduct underlying the
offense of conviction, but rather may consider all of the defendant’s ‘relevant
conduct’ [under § 1B1.3].” (quoting U.S.S.G. § 1B1.3)).
Application Note 3(B) to § 2B1.1 states that the court “shall use the gain
that resulted from the offense” where loss cannot be calculated, U.S.S.G. § 2B1.1
cmt. n.3(B)—as, of course, the district court in this case did. “The use of the
word ‘offense’ when applied here refers to the conspiracy.” Offill, 666 F.3d at
180. As long as the gain of a co-conspirator is reasonably foreseeable, it can be
attributed to a defendant. See id. (citing cases).
Thus, to the extent that Mr. Gordon contests as a matter of law the district
court’s use of a joint calculation in computing his gain, his argument lacks merit.
Indeed, courts have consistently held that reasonably foreseeable gains
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attributable to co-conspirators’ acts are properly tabulated in § 2B1.1(b)(1)’s
offense-conduct computations. See, e.g., id. (collecting cases and holding that the
district court did not err in imputing co-conspirators’ gains to a defendant in a
pump-and-dump scheme in calculating his offense level under § 2B1.1(b)(1)).
And the record here demonstrates that the district court had an adequate factual
basis on which to attribute all of the relevant conspiratorial conduct at issue to
Mr. Gordon for sentencing purposes. 41 See United States v. Lewis (Charles
Lewis), 594 F.3d 1270, 1290 (10th Cir. 2010) (concluding that a co-conspirator’s
fraudulent conduct was financial in nature and was therefore reasonably
foreseeable to the defendant as part of a ponzi scheme, where the defendant
played an extensive role in the scheme); see also United States v. Sells, 541 F.3d
41Mr. Gordon also challenges, in passing, that the “list of ‘associates’
compiled by Agent [Jarom] Gregory to inflate the overall damage calculation”
was improperly applied to him because it included individuals like Robert
Garner—the president of Deep Rock—who did “nothing more than work in the
same office building with [Mr. Gordon].” Aplt. Opening Br. at 54. His briefing
on this issue is woefully inadequate. While he singles out Mr. Garner in
illustration, and makes a vague and generalized reference to “several others like
him who had been tenuously affiliated” with Mr. Gordon, id., he does not begin to
describe the factual or legal bases for a conclusion that it was error to take into
account any of the individuals (including Mr. Garner) for purposes of calculating
relevant conduct. In essence, this argument is conclusory and offers no proper
foundation for appellate review. Therefore, we will not examine it further. See,
e.g., United States v. Pursley, 577 F.3d 1204, 1228 (10th Cir. 2009) (“[The
defendant] does not cite a single case to support his position. Consequently, we
are free to end our inquiry by applying the principle that ‘[a]rguments
inadequately briefed in the opening brief are waived.’” (second alteration in
original) (quoting Adler, 144 F.3d at 679)).
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1227, 1235 (10th Cir. 2008); United States v. Osborne, 332 F.3d 1307, 1311 (10th
Cir. 2003); United States v. Tagore, 158 F.3d 1124, 1128–30 (10th Cir. 1998);
United States v. McFarlane, 933 F.2d 898, 899 (10th Cir. 1991). For these
reasons, we reject Mr. Gordon’s joint-and-several argument.
G. Final Order of Forfeiture
Mr. Gordon lastly argues that the district court failed to follow the dictates
of 21 U.S.C. § 853(p) in issuing a final forfeiture order. “[W]e review the district
court’s forfeiture order as we would any other sentencing determination—that is,
we review its legal conclusions de novo and its factual findings for clear error.”
United States v. Bader, 678 F.3d 858, 893 (10th Cir. 2012); see Libretti v. United
States, 516 U.S. 29, 38–39 (1995) (“Forfeiture is an element of the sentence
imposed following conviction . . . .” (emphasis omitted)). “A forfeiture judgment
must be supported by a preponderance of the evidence.” Bader, 678 F.3d at 893.
On January 11, 2011, upon the government’s motion, the district court
ordered the forfeiture of various interests Mr. Gordon held in real property and
financial instruments as “substitute property” pursuant to Federal Rule of
Criminal Procedure 32.2 and 21 U.S.C. § 853(p). 42 The order was entered
subsequent to the district court’s entry of a joint and several money judgment in
the amount of $2,747,761.81, individually against Mr. Gordon for the IPG wire
42
These included shares of various companies, the “Delvest” lots, and
other accounts.
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fraud scheme, and $43,927,809.95 representing proceeds traceable to the criminal
acts at issue.
Rule 32.2(e)(1)(B) authorizes the government to move for an order of
forfeiture, or to “amend an existing order,” to include property that “is substitute
property that qualifies for forfeiture under an applicable statute.” As relevant
here, the criminal forfeiture statute provides that a defendant’s substitute property
may be forfeited where,
as a result of an act or omission of the defendant [the forfeited
property]-- (A) cannot be located upon the exercise of due
diligence; (B) has been transferred or sold to, or deposited with,
a third party; (C) has been placed beyond the jurisdiction of the
court; (D) has been substantially diminished in value; or (E) has
been commingled with other property which cannot be divided
without difficulty.
21 U.S.C. § 853(p)(1)(A)–(E). Forfeiture “shall” be ordered “up to the value of
any property described.” Id. § 853(p)(2).
In support of its second motion for forfeiture, the government offered the
affidavit of Litigation Financial Analyst William Robert Taylor, who averred that
he had conducted a full financial investigation of Mr. Gordon’s business and
personal accounts. Section 853(p)(1), by its express terms, permits the forfeiture
of substitute assets, when directly traceable assets cannot be located despite the
exercise of due diligence, because of an act or omission of the defendant. See,
e.g., Bornfield, 145 F.3d at 1139 (“The substitute assets provision allows the
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forfeiture of other assets not already forfeitable when the forfeitable asset is
unavailable due to some act or omission of the defendant.”). Mr. Taylor
specifically averred that “[d]ue to acts or omissions of [Mr. Gordon], additional
property directly traceable to the conspiracy . . . is unavailable for forfeiture.” R.,
Vol. VI, at 1101 (Aff. of William Robert Taylor, signed Nov. 19, 2010).
Similarly, the affidavit set forth that law enforcement personnel “have been
unable to locate, through the exercise of due diligence, any other assets . . . that
are traceable to the offenses.” Id. at 1101–02.
Because the directly forfeitable “assets” previously identified consisted
largely of a now uncontested money judgment, and the money could not be found
in Mr. Gordon’s accounts, it was reasonable for Mr. Taylor to infer, and the
district court to find, that the money was dissipated due to Mr. Gordon’s conduct.
Indeed, given the transactional nature of a large-scale securities fraud conspiracy,
vast sums of money are easily transferred or hidden. The evidence in this case
demonstrated that, as part of the conspiratorial plan, funds used to purchase
stocks were frequently decentralized and concealed.
“The Government generally has little difficulty in making the necessary
showing [under § 853(p)].” Stefan D. Cassella, Asset Forfeiture Law in the
United States § 22-3, at 643 (2007) (collecting cases); see United States v. Garza,
407 F. App’x 322, 324–25 (10th Cir. 2011) (relying on language asserting that the
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government exercised due diligence in attempting to located forfeitable assets
under § 853(a) in concluding that the government met its burden of establishing
the requirements of § 853(p)); see also United States v. Alamoudi, 452 F.3d 310,
316 (4th Cir. 2006) (concluding that the affidavit was sufficient to support
forfeiture under § 853(p) where it contained information that, based on the
investigator’s experience, the “acts” or “omissions” of the defendant made the
proceeds unavailable); United States v. Candelaria-Silva, 166 F.3d 19, 42–43 (1st
Cir. 1999) (holding that the government complied with § 853(p)’s requirements
where it submitted an affidavit that “recited the efforts [it] had made to locate the
proceeds of the . . . conspiracy” and concluded that the defendant had disposed of
those proceeds); United States v. Faulk, 340 F. Supp. 2d 1312, 1315 (M.D. Ala.
2004) (finding that the government met its burden under § 853(p)(1) where it
“show[ed] that . . . laundered money ha[d] been substantially dissipated due to the
dispersion of funds by the defendants themselves”); cf. United States v. Gregoire,
638 F.3d 962, 972 (8th Cir. 2011) (holding that there was no evidence that
forfeitable property was made unavailable by an act of the defendant, because it
was in the government’s possession). Here, despite posing general, rhetorical
questions in attempting to construct an argument, see, e.g., Aplt. Opening Br. at
56 (“Had Appellee knocked on Tommy Gambino’s door to ask him if he still had
any of the illicit proceeds attributable to him?”), Mr. Gordon offers no reasonable
basis to dispute or otherwise contradict the averments in Mr. Taylor’s affidavit
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that the government exercised due diligence in seeking to locate the directly
forfeitable funds at issue and that they were missing due to an act or omission of
Mr. Gordon.
Mr. Gordon further contends that the district court erred in finding in its
preliminary orders of forfeiture that the government had satisfied the
requirements of § 853(p)(2), which, upon a proper showing under § 853(p)(1),
requires the court to “order the forfeiture of any other property of the defendant.”
Mr. Gordon complains that the government simply did not show that (1) his
personal “residence” belonged to him (i.e., because it was in his wife’s name) and
(2) that many of the other identified assets belonged to him.
Contrary to Mr. Gordon’s suggestions, the Gordon residence was not
ordered forfeited entirely as “substitute property.” Rather, the court found
$1,702,000 of equity in the home directly forfeitable under 18 U.S.C.
§ 981(a)(1)(C) and 28 U.S.C. § 2461(c). Mr. Gordon’s brief does not appear to
challenge the propriety of this direct forfeiture. Mr. Gordon’s other challenges
are non-specific and conclusory, which yet again compels us to decline searching
review. However, we note that third-party ownership disputes are generally
“deferred to . . . ancillary proceeding[s] [under § 853(n)] and do not factor into
the court’s determination whether to order the forfeiture of the property in the
first instance.” Cassella, supra, § 22-3, at 645; see Fed. R. Crim. P. 32.2(c)(1);
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Baranski v. Fifteen Unknown Agents of Bureau of Alcohol, Tobacco & Firearms,
452 F.3d 433, 462–63 (6th Cir. 2006) (en banc) (Clay, J., dissenting) (suggesting
that a third party must assert his or her interest in property adjudicated to be
forfeitable in ancillary proceedings). “At [the forfeiture] stage the court does
not—and, indeed, may not—determine the rights of any third parties who assert
an interest in the property. Third parties . . . have an opportunity to assert their
rights to the property in an ‘ancillary proceeding’ . . . .” 43 United States v.
Andrews, 530 F.3d 1232, 1236 (10th Cir. 2008) (citations omitted) (quoting Fed.
R. Crim. P. 32.2(c)); see United States v. Musson, 802 F.2d 384, 386 (10th Cir.
1986) (“Appellants’ concerns regarding potential third party interests in the
subject property are also addressed by a provision for subsequent third party
petitions to the court.” (citing, inter alia, 21 U.S.C. § 853(n))); Cassella, supra,
§ 22-3, at 645–46 (“[T]he court does not determine that [a] substitute asset
belongs to the defendant when it includes it in the preliminary order of forfeiture;
rather, the requirement in § 853(p)(2) that the substitute asset be ‘property of the
defendant’ is satisfied by allowing third parties to contest the forfeiture of the
43
Indeed, in the district court’s final order of forfeiture it is clear that
an unidentified ancillary claimant “consented and stipulated to the entry of [the]
final order” with regard to the Gordon residence. R., Vol. VI, at 1224 (Dist. Ct.
Final Order of Forfeiture of Real Property & Funds in Financial Accounts, filed
Feb. 16, 2011). The record thus demonstrates that ancillary proceedings were
held, and Mr. Gordon has not explained the substance of any determination made
in those proceedings, much less demonstrated error.
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property in the ancillary proceeding pursuant to § 853(n) and Rule 32.2(c).”).
Thus, we reject Mr. Gordon’s arguments to the extent that they challenge the
district court’s preliminary forfeiture orders and their effect on third-party
interests. In sum, we conclude that the government offered sufficient evidence to
make the required showings under § 853(p)(1) and (p)(2) and that the district
court did not err in issuing its orders of forfeiture.
III. Conclusion
For the foregoing reasons, we AFFIRM Mr. Gordon’s conviction and
sentence, including the district court’s orders of forfeiture.
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