United States v. Yaman Sencan , 629 F. App'x 884 ( 2015 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-12577
________________________
D.C. Docket No. 1:13-cr-00117-WS-C-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
YAMAN SENCAN,
DAVID PETERSEN,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Southern District of Alabama
________________________
(October 23, 2015)
Before JORDAN and JULIE CARNES, Circuit Judges, and ROBRENO, * District
Judge.
*
Honorable Eduardo C. Robreno, United States District Judge for the Eastern District of
Pennsylvania, sitting by designation.
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PER CURIAM:
Yaman Sencan, David Petersen, Stephen Merry, and Timothy Durkin were
charged in a 20-count indictment for crimes related to a Ponzi scheme. The
indictment charged them with conspiracy to commit securities and wire fraud, in
violation of 18 U.S.C. § 371 (Count 1), one count of aiding and abetting securities
fraud, in violation of 15 U.S.C. § 77q and 18 U.S.C. § 2 (Count 2), and 18 counts
of aiding and abetting wire fraud, in violation of 18 U.S.C. §§ 2 and 1343 (Counts
3-20).
Durkin fled the country and has yet to be apprehended. The other three
(collectively referred to as “Defendants”) pled not guilty and proceeded to trial. At
the close of the Government’s case, and again at the close of all the evidence,
Defendants unsuccessfully moved for judgments of acquittal. Defendants were
convicted on all counts and each sentenced to 60 months’ imprisonment. Sencan
appeals his conviction; Petersen appeals his conviction and sentence.1 After a
careful review of the record and with the benefit of oral argument, we AFFIRM.
I. BACKGROUND
Defendants operated a classic Ponzi scheme between 2009 and 2012. “The
modus operandi of a Ponzi scheme is to use newly invested money to pay off old
1
Because Defendant Merry died while the appeal was pending, this Court dismissed his appeal
as moot.
2
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investors and convince them that they are earning profits rather than losing their
shirts.” In re Rothstein, Rosenfeldt, Adler, P.A., 717 F.3d 1205, 1207 n.5 (11th Cir.
2013) (internal quotations omitted). To that end, Defendant Sencan, the project’s
“go-to man,” explained to potential investors that a company named Westover
Energy Trading, LLC (“Westover”) 2 had developed a computer algorithm to make
rapid, highly profitable stock trades. By investing in Westover, Sencan boasted
that investors would earn 25% returns with virtually no risk. The truth was that
only a fraction of investors’ funds were transferred to Westover and invested. The
rest was distributed to earlier investors as “profits” from stock trades, or kept by
Defendants.
Sencan got each new investor to enter into a “co-investment agreement”
with RAMCO and Associates, LLC (“RAMCO”), a company that Defendant
Merry and his wife owned. According to the agreement, RAMCO had an
“ongoing relationship” with Westover permitting it to invest funds in Westover’s
“automated proprietary trading platform.” Under the agreement, investors would
wire their money to RAMCO, which in turn would transfer all funds to Westover
for investment. RAMCO was authorized to receive 50% of the net profits
generated from Westover’s trading program, but it was not authorized to take any
2
Defendant Durkin, the fugitive, was Westover’s managing partner.
3
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of the investors’ principal, nor was it entitled to any fees until actual profits were
earned. Sencan provided all potential investors with a copy of this agreement.
Instead of complying with the agreement, Sencan instructed investors to
wire their funds to an entity called “RAMCO 1 Business Trust” (“RAMCO 1”), a
Nevada business trust formed by Petersen and Merry. Petersen served as RAMCO
1’s accountant, and he and Merry exercised exclusive control over the trust’s bank
account. The victims, however, were never informed that their investments were
going to a trust that gave Petersen and Merry untethered control over their money.
After investors wired their money to the RAMCO 1 account, Sencan would
tell Petersen how to divert the funds. Instead of investing the funds with Westover,
Petersen would transfer them from RAMCO 1 into various business and personal
accounts that he, Sencan, and other conspirators controlled. At that point,
Defendants would distribute some of the funds to investors, who believed they
were receiving profits, and would use the rest for personal expenses.
To convince investors that Westover’s trading technology was profitable,
Petersen prepared weekly financial statements and sent them to Sencan, who then
forwarded them to investors. Because the statements falsely reported steady
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profits, they were instrumental in swaying investors to sink additional money into
the scam––and to encourage their friends and family to do likewise.3
In January 2012, Sencan told investors that RAMCO and Westover were
ending their investment relationship and that RAMCO would return all
investments, including profits, after the final trades. But the investors never saw
their money again. As investors repeatedly demanded their money back, Sencan
reassured them that he was trying to solve the problem and blamed Westover for
the delay in releasing the funds. Of course, Sencan knew that little if any of the
money went to Westover in the first place.
As these events unfolded, investors became suspicious that they were
victims of a Ponzi scheme. Indeed, between November 2011 and July 2012,
Sencan had been warned several times by different investors, and ultimately even
by the FBI, that he was actively involved in a Ponzi scheme. Yet, this news did
not slow him down, and he continued to send financial statements and reassure
investors until the scheme finally imploded and this criminal prosecution followed.
In the end, investors placed $4.6 million in the RAMCO 1 account, from
which Sencan, Petersen, and other conspirators stole $1.5 million and distributed
3
Sencan also told investors that he had invested his own life savings in Westover, which it
turned out amounted to around $40,000 from the sale of a piano. In contrast, many investors
were transferring hundreds of thousands of dollars to RAMCO 1. Tellingly, Petersen never
invested his own money in the scheme, even as he prepared financial reports showing 25%
returns.
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$3.1 million, as Ponzi payments, to earlier investors. Sencan used $102,000 of the
investors’ money for personal expenses and transferred $175,000 to his wife, for a
total haul of $277,000. Petersen spent $252,000 of investor funds on personal
expenses, including mortgage payments, credit card payments, and car payments.
II. DISCUSSION
A. Defendant Sencan
Sencan’s only argument on appeal is a challenge to the sufficiency of the
evidence to sustain his convictions. We review challenges to the sufficiency of
evidence de novo. United States v. Gamory, 635 F.3d 480, 497 (11th Cir. 2011).
We review the evidence in the light most favorable to the Government and resolve
all reasonable inferences in favor of the jury’s verdict. United States v. Doe, 661
F.3d 550, 560 (11th Cir. 2011). “A conviction must be upheld unless the jury
could not have found the defendant guilty under any reasonable construction of
evidence.” United States v. Byrd, 403 F.3d 1278, 1288 (11th Cir. 2005).
To sustain a conviction for conspiracy to commit a fraud, the Government
must prove that a defendant “knew of and willfully joined the unlawful scheme to
defraud.” United States v. Maxwell, 579 F.3d 1282, 1299 (11th Cir. 2009).
Circumstantial evidence can be used to prove knowledge of a scheme. Id.
Furthermore, “[a] scheme to defraud requires proof of a material
misrepresentation, or the omission or concealment of a material fact calculated to
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deceive another out of money or property.” Id. Sencan argues that the record is
devoid of evidence that he intentionally participated in a fraudulent scheme, or that
he knowingly made a material misrepresentation. We find the evidence to be more
than adequate.4
As described above, Sencan regularly instructed investors to wire money to
RAMCO 1, after which he instructed Petersen to divert the money into other
accounts, not to Westover. For example, in July 2011, an investor wired $100,000
to RAMCO 1 expecting it to be invested using Westover’s advanced computer
program. That same day, Sencan instead told Petersen to distribute the sum to
various investor accounts. Consistent with those instructions, Petersen moved
$12,800 into a business account that he and Merry controlled. He also wired
$86,980 to Sencan, who used those funds to pay two investors, keeping a cut of
$17,000 for himself. None of the money was moved to Westover as promised in
the co-investment agreement. Despite knowing that these funds were not being
invested with Westover––meaning there was no chance that investors would earn a
profit or necessarily even get their principal back––Sencan continued to send
investors weekly emails falsely showing they were earning major profits. Then,
4
Our sufficiency-of-the-evidence analysis also applies to both the substantive securities and
wire-fraud charges because these crimes require proof of the underlying scheme to defraud. See
15 U.S.C. § 77q (criminalizing the use of interstate communications in the offer or sale of
securities in a scheme to defraud) and 18 U.S.C. § 1343 (criminalizing the use of wire
communications in interstate commerce in the course of a scheme to defraud).
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when investors began to make requests for their money, Sencan reassured investors
by telling them that he was in the same situation they were, even though he had
earned back his $40,000 investment several times over, funneling nearly $300,000
of investors’ money to his personal account and to his wife.
These acts alone demonstrate Sencan’s knowledge that he was part of a
fraudulent scheme. Further, the Government presented evidence confirming that
Sencan was on notice of his wrongdoing as he continued to participate in the fraud.
Specifically, even when Sencan was warned several times by investors and the FBI
that he was involved in a Ponzi scheme, he failed to heed the warnings and
continued to send monthly statements to investors. Based on the evidence, the jury
reasonably concluded that Sencan knew he was involved in a Ponzi scheme and
knowingly made material misrepresentations to investors. 5 Sencan’s convictions
are therefore AFFIRMED.
B. Defendant Petersen
5
Sencan argues that he was “even more persuasively entitled to a . . . judgment of acquittal”
after investor Bill Abrams, who had warned Sencan about being involved in a Ponzi scheme,
testified that he did not believe that Sencan intended to deceive him. Essentially, this argument
asks us to weigh the persuasiveness of various pieces of evidence, which is the wrong inquiry.
Rather, we are to “accept all reasonable inferences and credibility determinations made by the
jury,” as “[t]he jury is free to choose between or among the reasonable conclusions to be drawn
from the evidence presented at trial.” United States v. Sellers, 871 F.2d 1019, 1021 (11th Cir.
1989). Because the jury could have reasonably believed that Abrams was wrong about Sencan’s
intentions or simply determined that Abrams was not credible on this point, Abram’s testimony
does not somehow make the evidence insufficient to support Sencan’s conviction.
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Petersen argues that (1) there was insufficient evidence to support his
conviction, (2) the evidence at trial materially varied from the indictment, (3)
prosecutorial misconduct warrants reversal, (4) the Government failed to turn over
financial documents to the defense before trial, (5) the court erred in not applying
the “minor participant” reduction under the Sentencing Guidelines, (6) the court
erred in calculating the loss and restitution amounts, and (7) appointed appellate
counsel was prejudiced because he was only permitted 35 days to review the
record.
1. Sufficiency of the Evidence
Defendant Petersen similarly mounts a sufficiency challenge, arguing that he
merely used the weekly data supplied by Westover to prepare the charts he sent to
Sencan, who in turn sent them to investors. Nevertheless, there was sufficient
evidence to convict Petersen.
First, Petersen committed acts that were necessary for the ongoing success
of the scheme. He co-owned RAMCO 1, served as its accountant, received
monthly account statements, diverted investor funds that were supposed to go to
Westover, and generated the account statements sent to investors that falsely
reported profits on their investments. Indeed, these false financial statements he
prepared were crucial to recruiting investors and keeping them in the dark. See
United States v. Bradley, 644 F.3d 1213, 1239 (11th Cir. 2011) (“A
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misrepresentation is material if it has a natural tendency to influence, or is capable
of influencing, the decision maker to whom it is addressed.” (internal quotations
omitted)).
As to his knowledge that he was facilitating a fraudulent scheme, Petersen
was necessarily aware that the account statements he was creating contained false
information because there were, in fact, no profits being earned by the victims’
investments. Moreover, he was necessarily aware that instead of being invested,
the victims’ funds were either being used to make payments to earlier investors or
were being diverted to coconspirators. In fact, he clearly knew that he had
received a substantial sum of money skimmed from the investments. The jury
therefore could reasonably have concluded that the material misrepresentations
found in the financial statements created by Petersen were made knowingly by
him. 6
Further, even if Petersen, himself, did not make material misrepresentations
to investors, 7 he was convicted of wire and securities fraud under an aiding and
abetting theory. “To prove aiding and abetting, the government must demonstrate
that a substantive offense was committed, that the defendant associated himself
6
As noted, Petersen invested none of his own money in Westover even though it supposedly
promised high returns at low risk. This fact further suggests that he knew the fraudulent nature
of the scheme.
7
Although Petersen states that he never directly communicated with investors, there was
evidence he communicated with and personally lured at least one investor into the scam.
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with the criminal venture, and that he committed some act which furthered the
crime.” United States v. Hamblin, 911 F.2d 551, 557 (11th Cir. 1990). In short,
there was sufficient evidence to allow the jury to conclude that Petersen both
furthered the scheme and did so knowingly.
2. Material Variance
Petersen next argues that his convictions should be reversed due to a
material variance between the indictment and the evidence presented at trial. “The
standard of review for whether there is a material variance between the allegations
in the indictment and the facts established at trial is twofold: First, whether a
material variance did occur, and, second, whether the defendant suffered
substantial prejudice as a result.” United States v. Chastain, 198 F.3d 1338, 1349
(11th Cir. 1999). In evaluating substantial prejudice, we consider whether “the
proof at trial differed so greatly from the charges that appellant was unfairly
surprised and was unable to prepare an adequate defense.” United States v.
Calderon, 127 F.3d 1314, 1328 (11th Cir. 1997).
According to Petersen, the evidence at trial materially varied from the
indictment in three ways: (1) the indictment alleged that Defendants falsely
represented that a New York real estate mogul was a principal investor in
Westover, yet the trial evidence showed that the investor was actually associated
with the firm; the Government changed its theory of the conspiracy at trial by
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showing evidence of a separate conspiracy without Defendant Durkin, the fugitive;
and (3) the Government turned the trial into a “tax case” by introducing tax
documents into evidence.
First, the trial evidence was consistent with the indictment’s allegations that
the New York real estate mogul was not a major investor and had not authorized
his name to be associated with Westover. More to the point, any variance on this
issue could not have affected Petersen’s ability to prepare an adequate defense, for
the evidence of his guilt stemmed from his ownership of the RAMCO 1 account
and the preparation of false investor statements, not anything specifically related to
this investor.
Next, the Government did not seek to prove a different conspiracy at trial.
The Government mentioned Durkin’s participation in the scheme throughout trial.
Naturally, because Durkin had absconded and was not on trial, the Government
spent much less time focusing on his participation in the fraud.
Finally, the Government’s introduction of tax returns into evidence did not
turn the proceeding into a “tax case.” Petersen could not have been unfairly
surprised that the Government used RAMCO 1 tax documents to prove that he
moved money in and out of the trust account. In sum, there was no material
variance at trial causing substantial prejudice.
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3. Prosecutorial Misconduct
Petersen argues that his conviction should be reversed because of
prosecutorial misconduct. He specifically asserts that the lead investigative agent
(1) gave incomplete and misleading trial testimony, (2) failed to investigate a
primary witness; and (3) failed to zealously seek the extradition of Durkin.
To establish a prosecutorial misconduct claim, Petersen must show the
Government’s conduct was improper and prejudiced his “substantial rights.”
United States v. Hasner, 340 F.3d 1261, 1275 (11th Cir. 2003). A defendant’s
substantial rights are prejudiced if there is a “reasonable probability” that, but for
the misconduct, “the outcome of the trial would have been different.” United
States v. Capers, 708 F.3d 1286, 1308–09 (11th Cir. 2013). Because Petersen did
not object to the alleged improper conduct below, we review only for “plain error
that is so obvious that failure to correct it would jeopardize the fairness and
integrity of the trial.” United States v. Bailey, 123 F.3d 1381, 1400 (11th Cir.
1997).
With respect to the lead agent, Defendants cross-examined him about his
investigation and had the opportunity to clarify any incomplete or misleading
aspects of his testimony. We find nothing improper about his testimony or
investigation. Nor was there misconduct surrounding efforts to extradite Durkin.
In fact, the Government had taken numerous steps to alert domestic and
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international law enforcement agencies to Durkin’s pending arrest warrant.
Finally, Petersen failed to articulate how the outcome of his trial would have been
different absent this alleged misconduct, given the ample evidence supporting his
conviction. We find no plain error.
4. Brady Issue
Petersen makes a passing reference in his brief to a Brady 8 violation, stating
that some financial documents were not turned over to the defense until the parties
were preparing for sentencing. “A passing reference to an issue in a brief is not
enough [to preserve it for appellate review], and the failure to make arguments and
cite authorities in support of an issue waives it.” Hamilton v. Southland Christian
Sch., Inc., 680 F.3d 1316, 1319 (11th Cir. 2012). Because Petersen supplies no
facts or legal arguments to support his Brady claim, we cannot meaningfully
examine it.
5. Minor Role Reduction
Petersen contends that he was entitled to a minor role adjustment 9 for
sentencing purposes in view of the total conduct of the conspiracy and his role
relative to his coconspirators. A determination that a defendant is not qualified for
8
Under the rule first announced in Brady v. Maryland, 373 U.S. 83, 87 (1963), prosecutors are
required to disclose evidence favorable to a defendant where the evidence is material to the
defendant’s guilt or punishment.
9
Under U.S.S.G. § 3B1.2(b), the defendant may receive a two-point reduction “[i]f the
defendant was a minor participant in any criminal activity.”
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a role reduction is a finding of fact reviewed for clear error. United States v.
Rodriguez De Varon, 175 F.3d 930, 937 (11th Cir. 1999) (en banc). In
determining whether to grant a minor role reduction, “(1) the court must compare
the defendant’s role in the offense with the relevant conduct attributed to him in
calculating his base offense level; and (2) the court may compare the defendant’s
conduct to that of other participants involved in the offense.” United States v.
Alvarez-Coria, 447 F.3d 1340, 1343 (11th Cir. 2006). “[A] defendant is not
automatically entitled to a minor role adjustment merely because [he] was
somewhat less culpable than the other discernable participants.” United States v.
Bernal-Benitez, 594 F.3d 1303, 1320–21 (11th Cir. 2010) (quotations omitted).
The district court did not clearly err by denying a minor role reduction. In
light of Petersen’s involvement, the court reasonably concluded that Petersen was
not substantially less culpable than the other participants. See Alvarez-Coria, 447
F.3d at 1343. In any event, any error was harmless. An error in calculating the
Guidelines range is harmless if (1) the district court would have imposed the same
sentence regardless of its ruling on the Guidelines issue, and (2) the sentence
would be reasonable even if that issue had been decided in the defendant’s favor.
See United States v. Keene, 470 F.3d 1347, 1349 (11th Cir. 2006).
Here, the Guidelines range was 135 to 168 months’ imprisonment, yet the
court imposed a below-Guidelines sentence of only 60 months. Further, the court
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declared that it would have imposed the same 60-month sentence even if it had
granted the role reduction. In fact, had the court granted the requested two-point
reduction, the adjusted range would have been 108 to 135 months. The 60-month
sentence imposed was well below the range to which Defendant contends he was
entitled. Further, we conclude that a 60-month sentence was reasonable no matter
the Guidelines range. In fact, the district court considered all the relevant factors
under 18 U.S.C. § 3553(a) and made findings supported by the record. Based on
these findings, the resulting below-Guidelines sentence of 60 months’
imprisonment was within “the range of reasonable sentences dictated by the facts
of the case.” United States v. Pugh, 515 F.3d 1179, 1191 (11th Cir. 2008)
(quotation marks omitted). Thus, even were there any error, it would have been
harmless.
6. Loss-Amount Calculation
Petersen also argues that the court double-counted the loss suffered by one
of the victims and thus overstated the total loss by at least $683,000. Based on
calculations asserted for the first time on appeal, he states that the correct loss
amount should have earned him a 16-level sentencing enhancement, not the 18-
level enhancement shown in the presentence report and applied by the district
court.
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We review the district court’s loss determination for clear error. See United
States v. Grant, 431 F.3d 760, 762 (11th Cir. 2005). However, “a party may not
challenge as error a ruling or other trial proceeding invited by that party.” United
States v. Ross, 131 F.3d 970, 988 (11th Cir. 1997) (quotations omitted). Invited
error exists when a party’s statements or actions induce the district court into
making an error. United States v. Love, 449 F.3d 1154, 1157 (11th Cir. 2006).
An insurmountable problem for Petersen is the fact that he not only failed to
make this argument below, but he also acquiesced to the correctness of the loss
calculation made by the district court. Specifically, prior to sentencing, defense
counsel had expressed concern that victims who had invested in the Ponzi scheme,
both individually and through corporate investor EMR, might receive double
restitution under the wording of the proposed judgment. To eliminate that risk,
Petersen’s counsel suggested that the district court strike “Spellmeyer” from the
phrase “EMR/Spellmeyer” in the table of losses to clarify that EMR alone was
entitled to restitution for the corresponding loss. Articulating no objection to the
total loss amount, counsel said the court should enter the judgment with his
proposed modification, and the court did so, making clear that the loss amount in
the PSR remained unchanged. In fact, had Petersen wanted to object to the loss
amount, the Government indicated that it had a witness prepared to testify about
that amount. In short, even assuming that the district court erred in its calculation
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of loss, Petersen invited the error. Moreover, as discussed above with regard to the
minor role adjustment, the district court indicated that its 60-month sentence was
the sentence it would have imposed, based on § 3553 factors, regardless of the
Guidelines calculations.
7. Time Permitted for Counsel on Appeal
Lastly, Petersen argues that he was prejudiced because his appointed
appellate counsel was afforded only 35 days to review the trial record. Petersen
was granted a one-week extension and then was granted leave to file his brief out
of time. Petersen fails to show that he was prejudiced.
III. CONCLUSION
For the foregoing reasons, we affirm Sencan and Petersen’s convictions, and
we affirm Petersen’s sentence.
AFFIRMED.
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