United States v. Benjamin Stanley, Rufus Paul Harris , 739 F.3d 633 ( 2014 )

Case: 12-11126 Date Filed: 01/06/2014 Page: 1 of 44
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-11126
________________________
D.C. Docket No. 1:09-cr-00406-TCB-JFK-2
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
BENJAMIN STANLEY,
RUFUS PAUL HARRIS,
Defendants - Appellants.
________________________
Appeals from the United States District Court
for the Northern District of Georgia
________________________
(January 6, 2014)
Before TJOFLAT and MARCUS, Circuit Judges, and VINSON, * District Judge.
MARCUS, Circuit Judge:
* Honorable C. Roger Vinson, United States District Judge for the Northern District of Florida,
sitting by designation.
Case: 12-11126 Date Filed: 01/06/2014 Page: 2 of 44
Co-defendants Rufus Paul Harris and Benjamin Stanley appeal their
securities fraud convictions and sentences stemming from their role in a “pump
and dump” scheme, in which misrepresentations artificially boost a company’s
stock price and allow insiders to sell inflated shares. Moments before Harris and
his co-defendants were to present opening statements in their securities fraud trial,
he moved to represent himself. After this wish was granted, and after the
Government had rested its case, Harris fled from justice. Now Harris and co-
defendant Stanley contend that the district court’s responses to Harris’s conduct
violated their constitutional rights. Specifically, Harris claims that his Sixth
Amendment rights were violated both because he did not validly waive his right to
counsel and because his standby counsel was not permitted to represent him after
he ran. However, the record as a whole establishes that Harris waived his right to
counsel knowingly, intelligently, and voluntarily. Moreover, in the face of this
valid waiver, the district court did not err by refusing to allow counsel to represent
an absconded Harris. Stanley argues, in turn, that the district court should have
severed his case and declared a mistrial once Harris fled. But the district court,
which issued a curative instruction to mitigate any perceived prejudice, did not
abuse its discretion in refusing to grant severance and mistrial.
Raising additional challenges to sentencing, Harris claims that the district
court impermissibly considered his lack of remorse in violation of his Fifth
2
Case: 12-11126 Date Filed: 01/06/2014 Page: 3 of 44
Amendment rights. But because the court at no point pressured Harris into
foregoing his right to silence, it did not err by considering remorseless statements
freely volunteered by Harris at the sentencing hearing. Finally, Stanley says that
he should have received a minor role reduction and that his sixteen year sentence
was unreasonable. However, the district court did not clearly err in finding that
Stanley played more than a minor role in this massive fraud, and it did not abuse its
considerable discretion because Stanley’s sentence was substantively reasonable.
Because we are persuaded by none of their claims, we affirm the convictions and
sentences of both defendants.
I.
A.
On September 15, 2009, a federal grand jury in the Northern District of
Georgia indicted Harris, Stanley, and Darryl Horton for securities fraud and
conspiracy. A November 9, 2009, superseding indictment charged the three co-
defendants with seven counts: conspiracy to commit securities fraud, in violation
of 18 U.S.C. § 1349; a substantive securities fraud charge, in violation of 18 U.S.C.
§ 1348; and five counts of wire fraud, in violation of 18 U.S.C. § 1343. Harris was
charged alone in an eighth count with false certification of a financial statement, in
violation of 18 U.S.C. § 1350(c)(1).
3
Case: 12-11126 Date Filed: 01/06/2014 Page: 4 of 44
At trial, the Government adduced these essential facts: Harris founded and
served as Chief Executive Officer of Conversion Solutions Holdings Corporation
(“CSHC”), a Delaware company operating out of Kennesaw, Georgia. Stanley,
CSHC’s cofounder, served as Chief Operating Officer. The third co-defendant,
Chief Financial Officer Horton, is not part of this appeal. Viewed most charitably,
CSHC’s business model sought to fund small businesses that were frozen out of
the mainstream credit market. CSHC traded publicly over the counter as a penny
stock, and the company was required to file periodic reports with the SEC.
Despite its officers’ rosy representations, for a “holdings corporation,”
CSHC held very little. Harris and Stanley falsely represented that CSHC owned
and maintained hundreds of millions of dollars in assets, including a “UCC
Security Note” worth $310 million that CSHC had purchased for $40 million.
Harris issued a series of press releases claiming that CSHC owned or controlled
entire issuances of foreign sovereign bonds of Venezuela and Finland worth
billions of dollars and paying tens of millions in annual interest. Several of these
press releases named Stanley alongside Harris as a CSHC contact person. CSHC’s
2006 10-K, filed with the SEC by Harris, claimed assets of $800 million, counting
the foreign sovereign bonds and the “UCC Security Note,” along with income of
nearly $20 million in interest from the bonds -- CSHC’s only income. Stanley and
Harris signed a management representation letter in which they attested to the
4
Case: 12-11126 Date Filed: 01/06/2014 Page: 5 of 44
accuracy of financial information provided to an outside auditor who prepared the
financial statements attached to SEC filings. Both Stanley and Harris solicited
individual investors and gave statements in radio interviews that confirmed
ownership of the sovereign bonds and promoted the value of company stock.
Investors testified that they relied on these misrepresentations when choosing to
invest. All the while, CSHC had few (if any) real assets. The worthless “UCC
Security Note” was not legitimate, and CSHC had not purchased it for $40 million.
CSHC did not own or control the foreign bonds. The company never earned any
revenue and was financed solely by $1.8 million in cash from investors, from
which Harris and Stanley each drew more than $300,000 in salary.
The co-defendants held significant equity in CSHC. Through much of
September 2006, CSHC stock traded around one dollar per share. At the end of
that month, as the misrepresentations in press releases and SEC filings took hold,
the stock price tripled in forty-eight hours to over three dollars per share, and it
remained artificially elevated for several weeks. With the “pump” in progress, the
“dump” began. The co-defendants each transferred substantial amounts of stock to
close family members who sold hundreds of thousands of shares at inflated prices.
By the time the SEC filed suit and halted trading in CSHC on October 24, 2006,
nearly 6,000 investors had lost an estimated $42 million.
B.
5
Case: 12-11126 Date Filed: 01/06/2014 Page: 6 of 44
On November 5, 2009, shortly after the co-defendants were indicted, the
district court appointed attorney Howard Jay Manchel as Harris’s counsel.
Manchel represented Harris in all pretrial proceedings. The record shows no
previous request from Harris for pro se representation before trial began on May
12, 2011. But after a jury was empaneled and the Government presented its
opening statement, Manchel informed the court that Harris had expressed a desire
to represent himself. The following exchange took place:
Harris: I can’t exactly think of the motion that needs to be filed,
mandate, mandel [sic], to where I remove my -- I put a
motion before the Court to remove my attorney and
represent myself. Or can I represent myself and have
him to advise me on technical paperwork and motions at
this point?
The Court: So, you want to represent yourself?
Harris: Again, can I represent myself and have him to advise me
in technical matters and objections and stuff of that type?
The Court: Mr. Manchel, how do you feel about serving as stand-by
counsel?
Manchel: Judge, I don’t -- I’ll do what my client wants.
The Court: All right. Your motion’s granted. You represent
yourself and Mr. Manchel will serve as stand-by counsel.
As long as you understand that this is a very important
decision that you’re making and one that most lawyers
would advise against and most people who have
experience in this field would advise against, and that -- I
assume that you do not have any significant legal
experience or expertise. Am I right about that?
6
Case: 12-11126 Date Filed: 01/06/2014 Page: 7 of 44
Harris: That is true, Your Honor.
The Court: Okay. The Court would advise you, sir, that you should
proceed very cautiously before you -- before you decide
to make this decision, but if you want to do this, you may
-- you may do so. But you just have to understand that
you have to live with the consequences of your decision,
and that you have the right to have counsel at all times
during this proceeding and you would be waiving that
right, and that you have to tell me that you’re freely and
voluntarily waiving it, understanding that you know you
have that constitutional right. Is that the case?
Harris: Is having him as stand-by counsel waiving my right?
The Court: Yes, you’re waiving your right to -- you’re representing
yourself.
Harris: I understand that. But he’s going to be there to
technically advise; right?
The Court: He’ll be there to consult with you.
Harris: Right. Okay. Thank you. Yes, Your Honor. I
understand.
The Court: If you have any technical questions that you feel you
need his help in, he will assist you. But you will --
Harris: Yes, sir.
The Court: It’s very different from him representing you in an
ordinary capacity. You will be doing the lion’s share of
the work in all likelihood, but you will be able to confer
with him as you deem necessary.
Harris: Yes, sir. I understand --
The Court: All right. I assume that you --
7
Case: 12-11126 Date Filed: 01/06/2014 Page: 8 of 44
Harris: -- that I’m waiving my right to counsel.
The Court: Sir?
Harris: I said yes, sir, I understand that I’m waiving my right to
counsel.
The Court: All right, sir. So, will you be making an opening
statement on behalf of yourself?
Harris: Yes, sir.
The Court: All right. Let’s bring the jury back . . . .
The Court also said: “And I just want to state on the record I think you’re
making a huge mistake.” Harris responded: “Thank you. I would have been
disappointed if you didn’t say that . . . .” Harris and counsel for the other
defendants gave their opening statements.
After opening statements had concluded, and less than two hours after the
first exchange with Harris concerning waiver of his right to counsel, the trial judge
engaged Harris again, this time in a deeper colloquy about self-representation.
During the second set of questions, the court inquired if Harris was “in good
physical health” (“Yes”); if he was “using any medication that might impair [his]
judgment right now” (“No”); if he was “suffering from any physical or mental
affliction or disease that might impair [his] judgment” (“No”); if he understood
that he would “be required to comply with the rules of procedure and evidence
during the trial even though [he was] not a lawyer” (“Yes”); if he was “making
8
Case: 12-11126 Date Filed: 01/06/2014 Page: 9 of 44
[the] decision because anyone’s compelled [him] to or coerced [him] to” (“No”); if
he was “aware, from talking to Mr. Manchel in preparation for this case, of
whatever defenses there might be that you have” (“Yes”); and if he understood that
the charges carried a maximum possible prison sentence of 160 years” and
“hundreds of thousands of dollars, if not over a million dollars” in possible fines
(“Yes”). When Harris asked, the court arranged for Manchel to provide him with
copies of procedural and evidentiary rules. Harris’s answers during this second
colloquy were generally straightforward, though he misunderstood the court’s first
question concerning coercion, initially saying that he had been coerced, threatened,
or forced “[f]or the past four and a half years,” by the fact “[t]hat we have a case,
period,” because “my family and I went through living Cain and my name’s crap.”
Trial continued, with Harris representing himself during the Government’s
case-in-chief and a portion of the defendants’ case. Harris actively advocated in
his own defense -- he invoked the rule of sequestration; made numerous
evidentiary objections; examined witnesses; distinguished Government case law
while arguing in response to a motion in limine; and argued a Rule 29 motion. As
standby counsel, Manchel provided Harris with active support by, among other
things, assisting with the preparation of witness subpoenas, addressing the court on
Harris’s behalf in responding to objections, and drafting proposed jury instructions.
9
Case: 12-11126 Date Filed: 01/06/2014 Page: 10 of 44
On May 24, 2011, after eight days of testimony and the completion of the
Government’s case-in-chief, and with only the potential testimony of three defense
witnesses and closing arguments remaining, Harris abandoned ship, absconding
from the trial. The court dismissed the jury for the day and requested briefing as to
the proper response to Harris’s absence. Manchel asked that he be allowed to
represent Harris because he had played an active role as standby counsel. The
court refused to appoint Manchel as counsel, finding that Harris had been “fully
advised by the Court of the risks and dangers inherent in self-representation,” that
Harris “indicated quite clearly and unambiguously that he wants to represent
himself,” and that Harris nonetheless absconded.
Co-defendants Stanley and Horton moved for a mistrial, claiming that the
three defendants jointly had raised a good faith defense that was irreparably
undermined by Harris’s flight. The district court refused to grant a mistrial, citing
the expense and delay it would cause, the burden it would impose on the
Government, witnesses, and victims, and the fact that the three defendants’
interests “are not totally aligned.” The court further concluded that the
Government could present testimony regarding Harris’s flight as evidence of his
consciousness of guilt. The trial court agreed, however, to provide the jury with a
cautionary instruction that this evidence could only be considered as to Harris, and
that no adverse inference could be imputed against Stanley or Horton. Stanley and
10
Case: 12-11126 Date Filed: 01/06/2014 Page: 11 of 44
Horton agreed to the proposed instruction. When trial resumed the next day, May
25, 2011, the court instructed the jury that “no negative inference whatsoever
should be drawn as to Defendants Horton and Stanley from Mr. Harris’ absence.”
Before Harris absconded, he had called and examined three witnesses,
though he had subpoenaed three more. On May 25, after counsel for Horton called
two of the three remaining witnesses, the defense rested. The Government
presented two rebuttal witnesses who testified that Harris had checked out of his
hotel and could not be located. In their closing arguments, Stanley and Horton
used Harris’s flight to distinguish their roles -- and culpability -- as far more
limited. Stanley’s counsel argued that Harris and Stanley were not “joined at the
hip”; that Harris controlled CSHC; and that, unlike Harris, “Mr. Stanley came here.
He did not flee. He did not run. He says you know what, I’m innocent.” Horton’s
counsel said Horton, who “didn’t attempt to flee,” was unlike Harris, “the man
with the plan, the man who ran.”
On May 26, 2011, the jury found Harris guilty of all eight counts. It found
Stanley guilty of Counts 1, 2, 4, 5, and 7, but not guilty on Counts 3 and 6. The
jury acquitted Horton on Counts 3, 4, and 5, and hung on the remaining counts.
Horton entered a guilty plea on May 27 to a single-count information charging him
with conspiracy to commit mail-fraud, in violation of 18 U.S.C. § 1341. The
district court dismissed the remaining counts against Horton.
11
Case: 12-11126 Date Filed: 01/06/2014 Page: 12 of 44
After a nationwide manhunt, federal marshals apprehended Harris 2,000
miles away, in Provo, Utah, on May 28, 2011. With Harris back, the district court
held a sentencing hearing for all of the defendants on February 23, 2012. Manchel
resumed his representation of Harris at sentencing. In addressing the court, Harris
stated that he “was completely transparent,” that there was no “attempt to hide
anything, because we did nothing wrong,” and, turning to his children, “you know
I didn’t do this. So don’t you believe one word that these people are saying . . . .”
Manchel noted that his client Harris was psychiatrically examined after trial and
diagnosed with a personality disorder with narcissistic tendencies. The district
court found that Harris was “clearly mentally competent.”
Meanwhile, Stanley argued that his Sentencing Guidelines range should
reflect a four-level “minimal role” reduction. The district court disagreed, finding
that, although Stanley was not as culpable as Harris, he was “obviously not a
minimal participant” for purposes of a 3B1.2 reduction. Still, the court noted that
Stanley’s lower culpability “will be very relevant” and “will be accounted for” at
sentencing.
The district court observed that the Government had “conservatively
concluded” that over 6,000 accounts lost money, with total losses exceeding $42
12
Case: 12-11126 Date Filed: 01/06/2014 Page: 13 of 44
million. 1 See U.S. Sentencing Guidelines Manual §§ 2B1.1(b)(1)(K);
2B1.1(b)(2)(C) (2011). For the purposes of Guidelines calculations, the parties
stipulated to a loss amount between $7 million and $20 million. The court found
that CSHC “had no operations whatsoever” and that Harris and Stanley “blatantly
falsely lied” about CSHC. As the district court put it, this fact distinguished a
crime of impulse from the fraud involved in this case, which evinced “this much
aforethought, this much scheming, this much deliberation involved, the planning
. . . at the expense of these innocent investors.” The court also credited trial
evidence showing that Harris and Stanley had participated in a similar “pump and
dump” scheme at Broadband Wireless.
The district court calculated that Harris had an advisory Guidelines offense
level of thirty-nine and a criminal history category of III, yielding a Guidelines
range of 324 to 405 months. Harris argued for a below-Guidelines sentence,
asserting that his criminal history category was exaggerated since it was drawn
only from two DUI convictions and from the fact that he had been on probation
during the securities offense. Ultimately, the district court sentenced Harris to 276
months of imprisonment, five years of supervised release, restitution of
1
The Presentence Report stated 5,894 victim accounts were affected, far in excess of the 250
victims relevant for the Sentencing Guidelines. See U.S. Sentencing Guidelines Manual §
2B1.1(b)(2)(C) (2011).
13
Case: 12-11126 Date Filed: 01/06/2014 Page: 14 of 44
$44,025,620 to be paid jointly and severally with his co-defendants, and a special
assessment of $800.
As for co-defendant Stanley, the district court found that his base offense
level began at seven. Id. § 2B1.1(a)(1). Twenty levels were added because of the
stipulated loss between $7 million and $20 million. Id. § 2B1.1(b)(1)(K). Six
levels were added because the offense involved 250 or more victims. Id.
§ 2B1.1(b)(2)(C). Four more levels were added because the offense involved a
violation of securities law when the defendant was an officer of a publicly traded
company. Id. § 2B1.1(b)(18)(A). As a result, Stanley’s offense level was thirty-
seven. He had no criminal history points and a criminal history category of I,
yielding a range between 210 and 262 months of incarceration.
Stanley presented four character witnesses and personally addressed the
court at sentencing, insisting that he had been unaware of the fraudulent activity
and had not intended to defraud anyone. The district court sentenced Stanley to
imprisonment for 192 months, five years of supervised release, joint and several
restitution, and a special assessment of $500.
Just before pronouncing these sentences, the trial court observed that it had
carefully considered the § 3553(a) factors, and added that it was “particularly
disturbed by the amount of the loss and by the recalcitrance or at least the
transigence of the defendants Harris and Stanley. They are adamant in their
14
Case: 12-11126 Date Filed: 01/06/2014 Page: 15 of 44
insistence that they have done nothing wrong.” After hearing his client’s sentence,
counsel for Harris stated, “I guess I really object to the Court’s great emphasis in
this sentence on my client’s failure to what I see repent before this Court.” The
Court responded:
I am just making the point that he is not repentant. Listen, I want the
record to reflect that is just a factor, and I use the indefinite article
specifically it is “a” factor. Not “the” factor, it is one of many factors.
And I don’t want anything that I have said to be misconstrued as over-
emphasizing that point because I am really not. The biggest factor,
frankly, to the Court, is that the crime was willfully committed, the
Defendants were all convicted by a jury, and the amount of the loss is
enormous. Those are the most important factors the Court, and they
all drive 3553(a) for me.
The Court continued: “I am not trying to hide anything. I have no reservation
whatsoever about pointing out that I am disturbed by the fact that this man
continues to insist that he did nothing wrong. I have a problem with that, but that
is not why I am sentencing him to 23 years in prison, okay?” Stanley’s counsel
also objected to the consideration of lack of remorse.
Harris and Stanley filed timely notices of appeal. We have jurisdiction
pursuant to 18 U.S.C. § 3742 and 28 U.S.C. § 1291.
II.
A.
First, Harris claims that his waiver of the right to counsel at trial was invalid
from the outset and that the district court erred in allowing him to represent
15
Case: 12-11126 Date Filed: 01/06/2014 Page: 16 of 44
himself. We review de novo whether a defendant validly waived the right to
counsel as a mixed question of law and fact. United States v. Garey, 540 F.3d
1253, 1268 (11th Cir. 2008) (en banc). On direct appeal, the Government bears the
burden of proving a valid waiver. United States v. Cash, 47 F.3d 1083, 1088 (11th
Cir. 1995). If the Government cannot meet this burden, the defendant need not
show prejudice to obtain a reversal. See id. at 1090 n.5; United States v. Fant, 890
F.2d 408, 410 (11th Cir. 1989).
The Government argues, though, that Harris’s failure to challenge the
validity of his waiver in the district court makes plain error review appropriate. No
published case in this Circuit explicitly addresses the question, though the mine run
of cases apply de novo review without discussing whether a defendant formally
objected at trial. See, e.g., United States v. Evans, 478 F.3d 1332, 1340 (11th Cir.
2007); Cash, 47 F.3d at 1088. However, one unpublished opinion cited by the
Government applied plain error review in this context. See United States v. Talley,
315 F. App’x 134, 136 (11th Cir. 2008) (per curiam) (unpublished). 2
2
Approaches to this question differ across, and even within, other circuits. See, e.g., United
States v. Bernard, 708 F.3d 583, 588 n.7 (4th Cir. 2013) (“[Because] defense counsel ‘bears
substantial responsibility’ for allowing the alleged error to pass without objection . . . [we]
conclude that, at a minimum, his failure to preserve the claim of invalid waiver warrants plain
error review.”); id. at 596 (Diaz, J., dissenting) (“[W]hen a defendant requests to proceed pro se
at a competency hearing, he has sufficiently put his competency at issue to preserve a claim of
invalid waiver of counsel.” (footnote omitted)); United States v. McBride, 362 F.3d 360, 365
(6th Cir. 2004) (“In this circuit . . . two trends have developed. We have on occasion applied
‘plain error’ review to examine the validity of a defendant’s waiver of counsel. Other panels
have approached the waiver-of-counsel issue by omitting discussion of the standard of review
16
Case: 12-11126 Date Filed: 01/06/2014 Page: 17 of 44
The appropriate standard of review thus presents an unsettled question. On
the one hand, a defendant’s motion to represent himself could be seen as
effectively placing the validity of the waiver before the court. Moreover, a
defendant would undermine his chance of success in a Faretta hearing by second-
guessing his own motion. On the other, plain error review may be appropriate,
especially here because Manchel represented Harris at the sentencing hearing,
where he easily could have challenged Harris’s previous waiver before the district
court. Regardless, we need not and do not decide this question because Harris’s
argument fails when measured under either standard. For that reason, we examine
his claim de novo.
B.
In Faretta v. California, 422 U.S. 806, 834 (1975), the Supreme Court
recognized that a defendant may exercise a right to self-representation by making a
knowing and voluntary waiver of the right to counsel. “The ideal method of
assuring a voluntary waiver is for the trial judge to conduct a pre-trial hearing at
and proceeding to engage in a thorough review of the colloquy between the district court judge
and the defendant.” (citations omitted)); United States v. Erskine, 355 F.3d 1161, 1166-67 (9th
Cir. 2004) (“Our requirements for reviewing the validity of a Faretta waiver are predicated on the
fact that we do not expect pro se defendants to know the perils of self-representation, and
consequently, we cannot expect defendants to recognize that they have not been correctly and
fully advised, let alone to point out the court’s errors. Accordingly, plain error review would be
inappropriate, and we instead perform the simple de novo review in which we have customarily
engaged.”).
17
Case: 12-11126 Date Filed: 01/06/2014 Page: 18 of 44
which the defendant would be informed of the charges, basic trial procedures, and
the hazards of self-representation.” Strozier v. Newsome, 926 F.2d 1100, 1104
(11th Cir. 1991). However, “[w]hile a pretrial hearing is preferred, it is not
required.” Cash, 47 F.3d at 1088. “The hearing . . . is a means to the end, namely
ensuring a voluntary and intelligent waiver.” Strozier v. Newsome, 871 F.2d 995,
998 (11th Cir. 1989). The failure to hold a Faretta hearing “is not error as a matter
of law. If the trial record shows that a defendant knowingly and voluntarily elected
to represent himself, the Faretta standard will be satisfied.” Nelson v. Alabama,
292 F.3d 1291, 1295 (11th Cir. 2002). “As long as the record establishes that the
defendant understood the risks of self-representation and freely chose to face them,
the waiver may be valid.” Strozier, 926 F.2d at 1105. “The ultimate test is not the
trial court’s express advice, but rather the defendant’s understanding.” Fitzpatrick
v. Wainwright, 800 F.2d 1057, 1065 (11th Cir. 1986).
Fitzpatrick elaborated eight factors for consideration in determining whether
a defendant executed a knowing and voluntary waiver of the right to counsel:
(1) the defendant’s age, educational background, and physical and mental health;
(2) the extent of the defendant’s contact with lawyers prior to trial; (3) the
defendant’s knowledge of the nature of the charges, possible defenses, and
penalties; (4) the defendant’s understanding of rules of procedure, evidence and
courtroom decorum; (5) the defendant’s experience in criminal trials; (6) whether
18
Case: 12-11126 Date Filed: 01/06/2014 Page: 19 of 44
standby counsel was appointed, and the extent to which that counsel aided
defendant; (7) mistreatment or coercion of the defendant; and (8) whether the
defendant was trying to manipulate the events of the trial. 800 F.2d at 1065-67.
In this case, the district court did not initially conduct an adequate Faretta
inquiry before it allowed Harris to represent himself during his opening statement.
When Harris first announced his intention to proceed pro se, the district court
noted that it was “a very important decision,” requested that Harris’s former
attorney serve as standby counsel, confirmed that Harris had no “significant legal
experience or expertise,” and asked Harris whether he was “freely and voluntarily
waiving” his “right to have counsel at all times during this proceeding.” The
inquiry fell well short of covering all, or even most, of the Fitzpatrick factors. It
did not inquire into the defendant’s health; did not probe Harris’s understanding of
the nature of the charges, defenses, and penalties; did not assess his grasp of court
rules or procedures; and did not look for mistreatment or coercion motivating
Harris’s decision.
A defendant’s waiver must be knowing and voluntary at the time pro se
representation is first permitted: the fact that a defendant later became aware of the
consequences of his decision may not cure a waiver that was initially unknowing.
Evans, 478 F.3d at 1340 (“Before the court grants the defendant’s request, the
court must make the defendant ‘aware of the dangers and disadvantages of self-
19
Case: 12-11126 Date Filed: 01/06/2014 Page: 20 of 44
representation, so that the record will establish that he knows what he is doing and
his decision is made with his eyes open.’” (quoting Faretta, 422 U.S. at 835)).
Nevertheless, we may look to subsequent events during a trial as evidence of what
would have been true when a defendant first waived his rights. See Fitzpatrick,
800 F.2d at 1065 (“If the trial record demonstrates that [the defendant’s] decision
to represent himself was made with an understanding of the risks of self-
representation, the knowing, intelligent, and voluntary waiver standard of the Sixth
Amendment will be satisfied.”). Thus, we consider how ably a pro se defendant
performed in presenting his case as evidence of his understanding of rules of
procedure, evidence, and courtroom decorum. And the extent of standby counsel’s
aid to a defendant can only be measured after the fact.
Notably, however, after Harris gave his opening statement, on round two the
district court expansively addressed many of the Fitzpatrick factors. Moreover, the
two colloquies occurred on the same day, the first of trial, less than two hours
apart. We have no reason to believe that the defendant gave different answers
during the latter exchange than he would have, if asked, in the initial conversation.
Harris’s consistent, repeated responses to a far more searching inquiry left no
doubt that he intended to proceed pro se, despite well knowing what he was getting
himself into. While we may not simply presume that Harris initially knew all of
the information delivered during the second colloquy, we can look to the whole
20
Case: 12-11126 Date Filed: 01/06/2014 Page: 21 of 44
record for evidence of whether Harris’s waiver was knowing and voluntary and
therefore valid when initially made. Measured against the Fitzpatrick factors, the
record -- including Harris’s behavior during the second colloquy -- fairly
establishes that he originally made a knowing, intelligent waiver “with eyes open.”
Faretta, 422 U.S. at 835 (quoting Adams v. United States ex rel. McCann, 317 U.S.
269, 279 (1942)).
1. Age, education, and health
At trial, Harris was a forty-three-year-old high school graduate. The district
court found the former CSHC CEO to be “a very bright man” who had been
responsible for his company’s SEC filings. See Fitzpatrick, 800 F.2d at 1066
(“Especially relevant to [Defendant’s] understanding of the risks of self-
representation with respect to the securities charges is the fact that he is an
experienced stockbroker.”); see also United States v. Kimball, 291 F.3d 726, 731
(11th Cir. 2002) (finding waiver from a defendant with an eleventh-grade
education to be valid when he was a “sophisticated businessman”). During the
second inquiry, Harris confirmed that he was in good physical health, that he was
not using any medication that might impair his judgment, and that he did not suffer
from any relevant physical or mental condition.
Harris now points out, however, that a presentencing evaluation diagnosed
him with a personality disorder with narcissistic issues. Therefore, his argument
21
Case: 12-11126 Date Filed: 01/06/2014 Page: 22 of 44
goes, he was disposed to overestimate his abilities and could not accurately assess
the waiver decision, even though the district court found that Harris was “clearly”
legally competent.
Two Eleventh Circuit cases have reached different conclusions concerning
defendants with narcissistic personality disorders who attempted to represent
themselves. In United States v. McKenzie, 160 F. App’x 821, 827 (11th Cir. 2005)
(unpublished), the Court found that the defendant was competent to waive counsel
despite a post-trial diagnosis when he “was well aware of the risks posed by self-
representation.” In Cash, by contrast, a panel of this Court found after a pre-trial
diagnosis as part of a competency evaluation that, “considering the inadequacy of
the district court’s colloquy with Appellant,” the Appellant’s mental problems
tipped the balance in favor of finding that the waiver of counsel was neither
knowing, voluntary, or intelligent. 47 F.3d at 1089. Here, unlike in Cash, the
defendant had not previously been declared incompetent before trial, and the Cash
diagnosis called the defendant’s legal judgment into serious doubt. McKenzie,
which featured a post-trial, pre-sentence diagnosis like that received by Harris,
more closely resembles this case. And, of course, each case of waiver will turn
peculiarly on its own set of facts.
Indeed concluding otherwise, and restricting Harris’s right to waive counsel
simply because of a post-trial diagnosis of antisocial personality, would undermine
22
Case: 12-11126 Date Filed: 01/06/2014 Page: 23 of 44
the theory of informed free choice at the heart of Faretta. The Supreme Court has
instructed us that the Sixth Amendment requires courts to respect the wishes of a
defendant who is “literate, competent, and understanding,” and who is “voluntarily
exercising his informed free will.” Faretta, 422 U.S. at 835-36. “It is the
defendant . . . who must be free personally to decide whether in his particular case
counsel is to his advantage.” Id. at 834. Despite the post-trial diagnosis, the first
Fitzpatrick factor weighs in favor of finding a voluntary waiver by Harris -- a
healthy, intelligent, middle-aged businessman well-versed in the securities field.
2. Contact with lawyers prior to trial
As the district court had reason to know, attorney Manchel represented
Harris up until the pro se motion on the first day of trial, from November 5, 2009,
until May 12, 2011. This representation likely exposed Harris to the complexity of
his case and the legal process. See Fitzpatrick, 800 F.2d at 1066. In Fitzpatrick,
this factor favored a valid waiver when a defendant “had significant contact” with
an attorney before trial, even though he never actually retained counsel. Id.
(“Through this contact, [Defendant] must have recognized that his case was more
complex than he originally thought.”). Because of Harris’s lengthy pre-trial
relationship with his court-appointed attorney, this factor weighs in favor of a valid
waiver.
3. Knowledge of the nature of the charges, possible defenses, and penalties
23
Case: 12-11126 Date Filed: 01/06/2014 Page: 24 of 44
When he moved to represent himself, Harris was abundantly aware of the
seriousness and complexity of the charges, which were part of a prosecution that
had engulfed nearly four years of his life. Harris’s business background, including
his prior involvement in a similar scheme, exposed him to the complexity of a
securities fraud case. In fact, Harris had just heard the Government’s opening
statement, which laid out the nature of the charges against him. And during the
court’s second colloquy concerning Harris’s decision to represent himself, Harris
indicated that the charges had severely impacted his life “[f]or the past four and a
half years,” because “my family and I went through living Cain and my name’s
crap.” During that exchange, the court also expressly informed Harris that he
faced a maximum of 160 years in prison and could be forced to pay millions of
dollars. Harris showed no surprise at hearing the severity of the charges, and in no
way indicated that the possible penalties undermined his decision to continue pro
se. His ultimate decision to abscond during the twilight of the trial also strongly
suggests that Harris was well aware of the consequences he faced. Because the
record amply shows Harris was aware of the seriousness and complexity of the
charges, this factor also indicates a valid waiver.
4. Understanding of rules of procedure, evidence and courtroom decorum
Harris appears to have had a limited legal background, but the district court
granted his request that attorney Manchel be made available as standby counsel for
24
Case: 12-11126 Date Filed: 01/06/2014 Page: 25 of 44
technical and procedural questions. “[T]echnical legal knowledge . . . [is] not
relevant to an assessment of [a defendant’s] knowing exercise of the right to
defend himself.” Faretta, 422 U.S. at 835. Instead, the fourth factor favors a valid
waiver when a defendant “understood that rules do exist to govern the procedure of
a trial, the introduction of evidence and the behavior of advocates and . . . that he
would be bound by those rules.” Kimball, 291 F.3d at 731. By all accounts, Harris
acquitted himself well as an advocate during trial -- like in Fitzpatrick, “he
generally knew how to handle himself in court.” 800 F.2d at 1067. Harris made
evidentiary objections, examined witnesses, distinguished Government case law,
invoked the rule of sequestration, and argued motions, including a motion in limine
and a Rule 29 motion. All indications are that Harris, with Mandel’s assistance,
performed adequately at trial, which also suggests a valid waiver.
5. Experience in criminal trials
Harris had no criminal trial experience. While this weighs against
recognizing a waiver as valid, it is far from dispositive, as a number of cases in this
Circuit have held a waiver to be knowing and voluntary in the absence of past trial
history. See Jones v. Walker, 540 F.3d 1277, 1295 (11th Cir. 2008); Fitzpatrick,
800 F.2d at 1067. “All factors need not point in the same direction.” Cash, 47
F.3d at 1089.
6. Appointment of and assistance from standby counsel
25
Case: 12-11126 Date Filed: 01/06/2014 Page: 26 of 44
After representing the defendant in this very case for an extended period of
time, Manchel served as standby counsel and assisted with technical legal issues
and procedural matters throughout the trial. Indeed, Harris admits that Manchel
“had taken an active role as standby counsel, including making objections for Mr.
Harris, submitting charges on his behalf, procuring and interviewing witnesses,
asking for bench warrants, and interceding with the court.” Appellant Harris’s Br.
22-23. Manchel’s availability and performance as standby counsel weighs in favor
of voluntariness.
7. Mistreatment or coercion
Harris does not argue that he was subject to any coercion or mistreatment in
waiving his right to counsel.
8. Efforts to manipulate the events of the trial
Finally, and especially important in this case, Harris attempted to delay and
manipulate the trial proceedings, making clear that he understood the palpable
risks he faced. See Fitzpatrick, 800 F.2d at 1067 (“[Defendant] manipulated the
proceedings, the trial court and his numerous attorneys in an attempt to delay as
long as possible having to answer the charges against him.”). Harris waited until
the day of trial, and until after the jury had already heard the prosecutor’s opening
statement, to broach the topic of pro se representation. But his most glaring effort
at manipulation was his flight to Utah -- after the Government had rested its case-
26
Case: 12-11126 Date Filed: 01/06/2014 Page: 27 of 44
in-chief and notably after his Rule 29 motion had been denied -- which delayed
trial for a day and generated many of the grounds for this appeal.
Seven out of the eight Fitzpatrick factors -- all except Harris’s criminal trial
experience -- strongly suggest his waiver was knowing and intelligent. Though the
question is rendered somewhat more difficult by the delayed colloquy, after
reviewing the entire record we are confident and hold that the district court did not
violate Harris’s right to counsel by allowing him to represent himself. 3
III.
Harris also argues that the district court erred by refusing to permit his
standby counsel to represent him at trial after Harris absconded. We review de
novo Harris’s claim that his Sixth Amendment rights were violated. See United
States v. Ignasiak, 667 F.3d 1217, 1227 (11th Cir. 2012); United States v. Yates,
438 F.3d 1307, 1311 (11th Cir. 2006). In the face of Harris’s knowing and
intelligent Sixth Amendment waiver, the district court did not violate Harris’s right
to counsel by refusing to allow standby counsel to represent the runaway Harris
during the final days of the trial.
Defendants who are not present at trial -- even those who flee from justice --
retain the right to counsel. Golden v. Newsome, 755 F.2d 1478, 1482 (11th Cir.
3
Out of an abundance of caution, we granted Harris’s December 23, 2013, motion to supplement
the record. After thorough review, we find that none of the supplemental materials in any way
alter our determination that Harris’s waiver was knowing, voluntary, and intelligent.
27
Case: 12-11126 Date Filed: 01/06/2014 Page: 28 of 44
1985) (“[A] defendant’s escape . . . tells us very little about his intent to forego the
right to be represented by counsel and to have effective assistance of counsel.”).
But defendants also have the right to waive counsel, and to be free from counsel
imposed on them against their will. “Unless the accused has acquiesced” in
representation by counsel, “the defense presented is not the defense guaranteed
him by the Constitution, for, in a very real sense, it is not his defense.” Faretta,
422 U.S. at 821. As the Supreme Court has explained, “the core of the Faretta
right” is that “the pro se defendant is entitled to preserve actual control over the
case he chooses to present to the jury.” McKaskle v. Wiggins, 465 U.S. 168, 178
(1984).
We have not previously considered whether counsel must be appointed in a
defendant’s absence when the defendant has waived both the right to counsel and
then the right to be present at trial. In Clark v. Perez, 510 F.3d 382 (2d Cir. 2008),
the Second Circuit dealt with a case involving a defendant who waived her right to
counsel and thereafter voluntarily absented herself as an act of political protest.
The Second Circuit found that, “[i]f she faced trial without advantages guaranteed
by the Sixth Amendment, that was not by the trial judge’s imposition, but by her
own informed choice, which the trial judge was bound to respect.” Id. at 397.
Quite simply, Harris cannot show on this record that he rescinded his waiver
of the right to counsel by absconding. With no other clues, his flight alone does
28
Case: 12-11126 Date Filed: 01/06/2014 Page: 29 of 44
not indicate unambiguously a desire to revoke his valid Sixth Amendment waiver
and reinstate Manchel as counsel of record. Harris instead argues that the district
court should have terminated his self-representation because he deliberately
engaged in serious and obstructionist misconduct. When pro se criminal
defendants have been removed from a courtroom because of disruptive behavior,
standby counselors have been permitted to step in. Illinois v. Allen, 397 U.S. 337
(1970); see also United States v. Cork, No. 1:07-CR-183-WSD, 2008 WL 622822,
at *3 (N.D. Ga. Mar. 4, 2008). As a result, Harris insists that the district court
could have allowed Manchel to serve in Harris’s absence. See Lefevre v. Cain,
586 F.3d 349, 356 (5th Cir. 2009) (“McCaskle . . . requires that standby counsel’s
participation be ‘over the defendant’s objection’ in order to erode the defendant’s
Faretta rights.”). But in this case we are not confronted with the question, and thus
need not decide, whether the Sixth Amendment would have allowed the district
court to permit standby counsel to represent an absconded Harris. Harris cannot
show that the Sixth Amendment required the court to permit standby counsel to
take over. And we have little doubt that if the district court had permitted Manchel
to pick up the representation of Harris after his flight, we would be confronted with
the argument that the district court had improvidently and without any record
support overruled Harris’s earlier unambiguous desire for self-representation.
29
Case: 12-11126 Date Filed: 01/06/2014 Page: 30 of 44
Moreover, Harris ignores that his own decision to flee made it impossible for
the trial to continue “in like manner and with like effect as if he were present.”
Taylor v. United States, 414 U.S. 17, 19 (1973) (per curiam). With or without
standby counsel, the trial could not continue as before once pro se Harris
absconded. Though Harris originally requested that Manchel serve as standby
counsel, he also made clear that he intended to set his own course. Harris cannot
now invoke a constitutional entitlement to the very counsel he knowingly and
voluntarily rejected, solely because he bolted before the last day of trial.
IV.
Co-defendant Stanley argues that the district court should have severed his
case from Harris’s and declared a mistrial after Harris absconded. Stanley asserts
that, when Harris ran, Harris’s good faith came into serious question, as did
Stanley’s simply by association. We are unpersuaded.
“A district court’s denial of a motion for severance is reversible only for
abuse of discretion, and we have explicitly noted that appellate courts are generally
reluctant to second guess a district court’s decision on severance.” United States v.
Baker, 432 F.3d 1189, 1236 (11th Cir. 2005). We also review the denial of a
motion for new trial for abuse of discretion. United States v. Campa, 459 F.3d
1121, 1151 (11th Cir. 2006) (en banc). To show an abuse of discretion in the
denial of severance, Stanley must show “specific and compelling prejudice”
30
Case: 12-11126 Date Filed: 01/06/2014 Page: 31 of 44
resulting in “fundamental unfairness.” Baker, 432 F.3d at 1236. Here there was
neither, particularly in light of the court’s curative instruction. The district court
addressed possible prejudice by instructing the jury that “no negative inference
whatsoever should be drawn as to Defendants Horton and Stanley from Mr. Harris’
absence.” See United States v. Carrazana, 921 F.2d 1557, 1568 (11th Cir. 1991);
see also Murr v. United States, 200 F.3d 895, 904 (6th Cir. 2000); United States v.
Rullan-Rivera, 60 F.3d 16, 20 (1st Cir. 1995).
Stanley’s lone rejoinder is that he had hitched his star to Harris’s through his
good faith defense, and that Harris’s flight -- and evident consciousness of guilt --
incurably tainted the jurors against the entire group. This story does not fit the
facts surrounding the jury verdict, which discerned varying degrees of culpability
among the co-defendants. Harris was convicted on all eight counts he faced;
Stanley was convicted on five but acquitted on two; and Horton was acquitted on
three with the jury hung on the remainder. While this result does not categorically
prove the absence of a taint, it strongly suggests the jury thought critically and
individually about the evidence of each defendant’s culpability. Stanley offers no
reason to believe the jury misunderstood or disregarded the district court’s curative
instruction. See United States v. Stone, 9 F.3d 934, 938 (11th Cir. 1993) (“Few
tenets are more fundamental to our jury trial system than the presumption that
juries obey the court’s instructions.”). “We have no reason to believe that the jury
31
Case: 12-11126 Date Filed: 01/06/2014 Page: 32 of 44
in this case was incapable of obeying the curative instructions.” Greer v. Miller,
483 U.S. 756, 766 n.8 (1987). The court acted well within its considerable
discretion in proceeding with the joint trial when its instruction mitigated possible
prejudice to Stanley’s good faith defense.
This case is far from United States v. Tarango, 396 F.3d 666 (5th Cir. 2005),
the only precedent cited by Stanley on this issue. In Tarango, Patel (a doctor) and
Tarango (his office manager) were charged with health care fraud. Patel
absconded after the jury was selected but before trial began. The district court
allowed the joint trial to proceed with only Tarango present, even though a
disproportionate number of witnesses testified only against the missing doctor, not
the present office manager. After the jury found Tarango guilty, the judge ordered
a new trial based on the failure to sever, and the Fifth Circuit affirmed. Id. at 668.
The procedural stance and the facts in Tarango stand in sharp contrast to the
present case. Tarango found that the district court did not abuse its discretion in
ordering a retrial; here, Stanley must make the more difficult showing that the
district court did abuse its discretion. Id. at 675. Moreover, in Tarango, Patel
missed the entire trial, and there “was little witness testimony that Tarango had
engaged in wrongdoing.” Id. at 670 n.7. Here, Harris actively participated in the
first eight days of trial, and many witnesses established Stanley’s heavy
involvement in the fraud. The district court did not abuse its discretion.
32
Case: 12-11126 Date Filed: 01/06/2014 Page: 33 of 44
Stanley also claims that he was prejudiced by the district court’s refusal to
allow Harris’s standby counsel to present a closing argument. He cites no case law
indicating that a defendant, whose counsel gave a closing argument, is or could be
unfairly prejudiced when a co-defendant does not present a closing. If anything,
Stanley’s counsel took advantage of Harris’s silence during closing by attempting
to pin the entire scheme on the absent CEO.
V.
Finally, Harris argues that, by factoring in his lack of remorse during
allocution, the district court held Harris’s exercise of his Fifth Amendment
privilege against self-incrimination against him. We review de novo whether the
district court’s consideration of a sentencing factor, such as Harris’s lack of
remorse, is impermissible. United States v. Clay, 483 F.3d 739, 743 (11th Cir.
2007). However, a sentence will only be unreasonable in this context if it was
“substantially affected by the consideration of impermissible factors.” Id. at 745.
Harris’s argument confuses the nature of the Fifth Amendment privilege.
During sentencing, a court “may not weigh the exercise of [Fifth Amendment]
rights against the defendant.” United States v. Rodriguez, 959 F.2d 193, 197 (11th
Cir. 1992) (per curiam). But a court may take into account a defendant’s freely
offered statements indicating a lack of remorse. See id. (“The sentencing court is
justified in considering the defendant’s conduct prior to, during, and after the trial
33
Case: 12-11126 Date Filed: 01/06/2014 Page: 34 of 44
to determine if the defendant has shown any remorse through his actions or
statements.”); cf. United States v. Barrington, 648 F.3d 1178, 1197 (11th Cir.
2011), cert. denied, 123 S. Ct. 1066 (2012); United States v. Hill, 643 F.3d 807,
882-83 (11th Cir. 2011), cert. denied, 132 S. Ct. 1988 (2012); United States v.
Mateos, 623 F.3d 1350, 1367 (11th Cir. 2010). Just as a jury weighs a defendant’s
testimony once he waives his Fifth Amendment privilege at trial, a judge may
consider a defendant’s freely offered allocution regarding remorse during
sentencing.
Harris chose to allocute at his sentencing hearing without pressure from the
court. In the face of the substantial evidence presented at trial and the jury’s
verdict, Harris repeatedly denied any wrongdoing, insisting that “[t]his elaborate
story is not what happened . . . . I was completely transparent.” “I didn’t steal no
money from nobody.” He imagined that “[t]he jury convicted me because I got
scared and I fled, I panicked. That’s the only reason.” Finally, he implored the
court, “[y]our Honor, I am not this person y’all are making me out to be. I don’t
do fraud. Never have. Never will. I don’t take money from people. I am just not
that person.” At no point did the court indicate that his silence would have been
held against him.
34
Case: 12-11126 Date Filed: 01/06/2014 Page: 35 of 44
With these facts, the two principal cases relied on by Stanley are inapposite.
In Rodriguez and Thomas v. United States, 368 F.2d 941 (5th Cir. 1966),4 district
courts conditioned the grant of a lower sentence on the defendants’ waiver of Fifth
Amendment rights. See Rodriguez, 959 F.2d at 197 (vacating sentences when the
trial court “balanced the Appellants’ statements of remorse against their refusal to
admit their guilt in open court and their intent to appeal their sentences”); Thomas,
368 F.2d at 942 (vacating a sentence “because prior to imposing sentence the judge
advised the defendant that the judge had no doubt whatsoever as to his guilt, and
that if he then confessed his guilt the court would take that into account in the
length of sentence to be imposed”). Unlike in Rodriguez and Thomas, Harris
freely chose to profess his innocence at length during his allocution. The district
court in no way conditioned his sentence on his decision to exercise his
constitutional rights. Instead, it permissibly considered Harris’s voluntary,
repeated, emphatic, and unbelievable statements of innocence.
Harris cites United States v. Laca, in which the former Fifth Circuit stated:
[B]y opining that these defendants had not shown an inclination
towards repentance, the court erred by predicating the length of these
sentences on whether the defendants had confessed their crimes. This
conditioning of sentences on defendants’ confessions violated their
right to avoid self-incrimination under the Fifth Amendment.
4
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.
35
Case: 12-11126 Date Filed: 01/06/2014 Page: 36 of 44
499 F.2d 922, 927 (5th Cir. 1974). However, Laca does not mention whether the
defendants invoked their Fifth Amendment privilege during sentencing and
remained silent as to their culpability, or whether, like Harris, they freely and on
their own initiative insisted they did nothing wrong. Laca says little about a
district court’s consideration of a defendant’s voluntary statements made at his
own initiative during allocution. As with his Sixth Amendment waiver arguments,
the Constitution ensures Harris a fair trial. It cannot always protect Harris from
himself.
Because the district court’s consideration of Harris’s lack of remorse was
permissible, we need not inquire as to whether the court’s consideration of that
factor “substantially affected” his sentence, rendering it unreasonable. Clay, 483
F.3d at 745.
VI.
Stanley makes two claims concerning his sentencing. We are persuaded by
neither.
A.
First, he argues that the district court erred in failing to recognize him as a
minor participant for purposes of the Sentencing Guidelines. According to
Stanley, although he was an active and significant figure with CSHC, and although
he benefited handsomely from sales of stock, he had only a negligible role in the
36
Case: 12-11126 Date Filed: 01/06/2014 Page: 37 of 44
perpetration of criminal conduct, and did not know that CSHC’s assets were
worthless or that the stock price was artificially inflated. In other words, he claims
he was responsible for creating and executing the clean business model, not
capitalizing the company with the dirty assets. But because evidence showed
Stanley substantially participated in and profited from the criminal fraud, the
district court did not clearly err in denying him a minor role reduction.
We review for clear error the district court’s determination of Stanley’s role
in the offense as a finding of fact. United States v. Rodriguez De Varon, 175 F.3d
930, 937 (11th Cir. 1999) (en banc).
As the Supreme Court has recognized, a trial court’s choice between
“two permissible views of the evidence” is the very essence of the
clear error standard of review. So long as the basis of the trial court’s
decision is supported by the record and does not involve a
misapplication of a rule of law, we believe that it will be rare for an
appellate court to conclude that the sentencing court’s determination
is clearly erroneous.
Id. at 945.
At sentencing, Stanley bore the burden of proving that he played a minor
role in the offense by a preponderance of the evidence. Id. at 939. The Sentencing
Guidelines allow for downward adjustments in a defendant’s offense level by 4
levels “[i]f the defendant was a minimal participant in any criminal activity,” by 2
levels “[i]f the defendant was a minor participant in any criminal activity,” and by
3 levels “[i]n cases falling between.” U.S. Sentencing Guidelines Manual § 3B1.2.
37
Case: 12-11126 Date Filed: 01/06/2014 Page: 38 of 44
The Commentary to the Guidelines explains that a “minimal participant” is a
defendant who is “plainly among the least culpable of those involved in the
conduct of a group.” Id. § 3B1.2 cmt. 4. In making this assessment, “the
defendant’s lack of knowledge or understanding of the scope and structure of the
enterprise and of the activities of others is indicative of a role as minimal
participant.” Id. A “minor participant” is one “who is less culpable than most
other participants, but whose role could not be described as minimal.” Id. § 3B1.2
cmt. 5.
Under De Varon, in determining a defendant’s mitigating role in the offense,
the district court first “must measure the defendant’s role against the relevant
conduct for which [he] was held accountable at sentencing,” and second, “may also
measure the defendant’s role against the other participants, to the extent that they
are discernable, in that relevant conduct.” 175 F.3d at 945. The first step of this
analysis requires that the district court has held the defendant accountable only for
activity or losses he participated in. “Only if the defendant can establish that [he]
played a relatively minor role in the conduct for which [he] has already been held
accountable -- not a minor role in any larger criminal conspiracy -- should the
district court grant a downward adjustment for minor role in the offense.” Id. at
944. In declining to make a minor role adjustment, the district court held Stanley
38
Case: 12-11126 Date Filed: 01/06/2014 Page: 39 of 44
accountable for the millions of dollars in damages jointly caused by the
defendants’ securities fraud.
Stanley relies chiefly on his own testimony of his limited knowledge to
establish his minor role. Yet, as the Government noted at the sentencing hearing,
“much of [Stanley’s] argument simply denies the jury’s finding of guilt.” The
district court found that Stanley recruited investors and lenders for CSHC, falsely
stated that CSHC owned bond assets and had multiple projects and signed
contracts in place, and made false statements to individual investors. Stanley
served as CSHC’s COO and was named as a contact person on several false press
releases. Stanley and Harris jointly provided false financial information to an
outside accountant who prepared financial statements for the SEC reflecting
misrepresentations. Finally, the court found that Stanley profited significantly
from the fraud, drawing more than $300,000 in salary and reaping gains when his
ex-wife and daughters sold CSHC’s stock at fraudulently inflated prices. The court
did not clearly err in finding that Stanley failed to play “a relatively minor role in
the conduct” for which he had been convicted. Id.
Stanley’s arguments are similarly unavailing at the second step, which
provides that courts may compare a defendant’s role against other participants.
“The fact that a defendant’s role may be less than that of other participants
engaged in the relevant conduct may not be dispositive of role in the offense, since
39
Case: 12-11126 Date Filed: 01/06/2014 Page: 40 of 44
it is possible that none are minor or minimal participants.” Id. We quoted in De
Varon the following illustration:
[I]f three individuals had entered a bank with the intent to commit
robbery and one stood guard at the door, another sprayed paint on the
camera, and the third gathered the money from a teller’s cage, no
adjustment for Role in the Offense would be warranted. Even if one
of the participants deserved an aggravating adjustment because of
other acts he committed, the other participants would not be entitled to
minimal or minor Role in the Offense adjustments.
Id. (quoting United States v. Daughtrey, 874 F.2d 213, 216 (4th Cir. 1989)). The
Eleventh Circuit has rejected a test that “would require sentencing courts to regard
the least culpable member of any conspiracy as a minor participant, regardless of
the extent of that member’s participation.” United States v. Zaccardi, 924 F.2d
201, 203 (11th Cir. 1991) (per curiam). While the district court concluded that
Stanley’s actions were not as egregious as Harris’s and sentenced him to a
substantially shorter prison term, it recognized that Stanley played a key part in the
elaborate securities fraud. The fact that Stanley did less than Harris is not enough
to yield the conclusion that the trial court committed clear error in denying him a
minor role reduction.
B.
Finally, Stanley argues that his sentence was substantively unreasonable.
We review the substantive reasonableness of a sentence for abuse of discretion.
Gall v. United States, 552 U.S. 38, 51 (2007). This Court may “set aside a
40
Case: 12-11126 Date Filed: 01/06/2014 Page: 41 of 44
sentence only if we determine, after giving a full measure of deference to the
sentencing judge, that the sentence imposed truly is unreasonable.” United States
v. Irey, 612 F.3d 1160, 1191 (11th Cir. 2010) (en banc). As a result, we may
reverse only if “left with the definite and firm conviction that the district court
committed a clear error of judgment in weighing the § 3553(a) factors by arriving
at a sentence that lies outside the range of reasonable sentences dictated by the
facts of the case.” Id. at 1190 (quoting United States v. Pugh, 515 F.3d 1179, 1191
(11th Cir. 2008)).
The district court must impose a sentence that is “sufficient, but not greater
than necessary, to comply with the purposes” listed in § 3553(a)(2), including the
need to reflect the seriousness of the offense, promote respect for the law, provide
just punishment for the offense, deter criminal conduct, and protect the public from
the defendant’s future criminal conduct. 18 U.S.C. § 3553(a). The court must also
consider the nature and circumstances of the offense, the history and characteristics
of the defendant, the kinds of sentences available, the applicable Guidelines range,
the pertinent policy statements of the Sentencing Commission, the need to avoid
unwarranted sentencing disparities, and the need to provide restitution to victims.
Id. § 3553(a)(1), (3)-(7).
In reviewing the reasonableness of a sentence, we first ensure that the
sentence was procedurally reasonable: the district court properly calculated the
41
Case: 12-11126 Date Filed: 01/06/2014 Page: 42 of 44
Guidelines range, treated the Guidelines as advisory and not mandatory,
considered the § 3553(a) factors, did not select a sentence based on clearly
erroneous facts, and adequately explained the chosen sentence. Gall, 552 U.S. at
51. Then, we examine whether the sentence was reasonable in light of the totality
of the circumstances. Id. Stanley argues chiefly that the Sentencing Guidelines
themselves fail to take into account critical factors about the offense and the
defendant: “the scope and duration of the offense; the motivation for the offense;
and the extent to which the offense was exacerbated by factors beyond the
defendant’s control.” Stanley observes that the average sentence length for fraud
offenses is 23.2 months, and the average variance is 52.9%. Finally, Stanley
identifies cases in which defendants who committed “similar” crimes received
much lower sentences. See United States v. Parris, 573 F. Supp. 2d 744 (E.D.N.Y.
2008); United States v. Adelson, 441 F. Supp. 2d 506 (S.D.N.Y. 2006); see also 18
U.S.C. § 3553(a)(6) (listing as a factor to be considered “the need to avoid
unwarranted sentence disparities among defendants with similar records who have
been found guilty of similar conduct”).
The Government responds that greater deterrence is needed for fraud-based
crimes that are “more rational, cool, and calculated than sudden crimes of passion
or opportunity” and thus are “prime candidate[s] for general deterrence.” United
States v. Martin, 455 F.3d 1227, 1240 (11th Cir. 2006). To rebut Stanley’s
42
Case: 12-11126 Date Filed: 01/06/2014 Page: 43 of 44
arguments about other sentences around the country, the Government cites United
States v. Hill, a case in which this Court rejected a similar claim that a sentence
was unreasonable because of disparities in national fraud sentences. 643 F.3d at
885. Hill had been convicted of mortgage fraud that caused a $38 million loss, and
was sentenced to 336 months’ imprisonment, within his Guidelines range of 324 to
405 months. Id. at 884-85. In finding the sentence reasonable, we stated that
comparisons to out-of-jurisdiction cases were “difficult to gauge,” and that “we are
not convinced that a sentence imposed in this circuit is subject to a national grade
curve.” Id. at 885. Moreover, the crimes underlying the cases relied upon by
Stanley differed substantially from his own conduct. In Adelson, the defendant did
not originate the fraud, “only joined the conspiracy toward its end,” 441 F. Supp.
2d at 507, had a role like an “accessory after the fact,” id. at 513, and had an
“exemplary” history, id., unlike Stanley, who played a significant part and had a
history of similar activity with the Broadband Wireless scheme. And in Parris, the
fraud resulted in only a $5 million loss. 573 F. Supp. 2d at 748.
“Review for reasonableness is deferential. . . . [W]e recognize that there is a
range of reasonable sentences from which the district court may choose, and when
the district court imposes a sentence within the advisory Guidelines range, we
ordinarily will expect that choice to be a reasonable one.” United States v. Talley,
431 F.3d 784, 788 (11th Cir. 2005) (per curiam). A sentence imposed well below
43
Case: 12-11126 Date Filed: 01/06/2014 Page: 44 of 44
the statutory maximum penalty is an indicator of a reasonable sentence. United
States v. Gonzalez, 550 F.3d 1319, 1324 (11th Cir. 2008) (per curiam). The
district court imposed a sentence eighteen months below the bottom of the
Guidelines range, forty-eight months below the Government’s request, and seventy
months below the top of the Guidelines. We have no reason to find, as Stanley
suggests, that the Guidelines are substantively unreasonable for all economic fraud
crimes involving large losses. See Talley, 431 F.3d at 787 (“[W]e agree that the
use of the Guidelines remains central to the sentencing process.”).
At the end of the day, we can discern no abuse of discretion: Stanley’s below
Guidelines sentence was reasonable in light of the statutory purposes recognized in
§ 3553(a). Again, Stanley’s conduct resulted in an estimated 5,894 victim
accounts losing many millions of dollars, while Stanley and his family reaped
significant financial benefit. The district court reviewed the § 3553(a) factors, and
the “biggest” factors in its analysis were the massive losses and the deliberation
involved in the offense. Stanley has failed to show that his sentence “is
unreasonable in light of the record and the § 3553(a) factors.” United States v.
Tome, 611 F.3d 1371, 1378 (11th Cir. 2010).
AFFIRMED.
44