United States v. Hatala ( 2014 )

13-613-cr
United States of America v. Hatala
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ASUMMARY ORDER@). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 15th day of January, two thousand fourteen.
PRESENT: GUIDO CALABRESI,
REENA RAGGI,
CHRISTOPHER F. DRONEY,
Circuit Judges.
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UNITED STATES OF AMERICA,
Appellee,
v. No. 13-613-cr
ALEX HATALA, also known as Sealed Defendant 1, also
known as koolkake,
Defendant-Appellant.*
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APPEARING FOR APPELLANT: DANIEL NOBEL, ESQ., New York, New York.
*
The Clerk of Court is directed to amend the official caption as shown above.
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APPEARING FOR APPELLEE: SERRIN TURNER (Justin Anderson, on the
brief), Assistant United States Attorneys, for
Preet Bharara, United States Attorney for the
Southern District of New York, New York, New
York.
Appeal from a judgment of the United States District Court for the Southern District
of New York (Katherine B. Forrest, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment entered on February 8, 2013, is AFFIRMED.
Defendant Alex Hatala, who stands convicted after a guilty plea of fraud in
connection with identification information, see 18 U.S.C. § 1028(a)(7), appeals his
30-month prison sentence as procedurally and substantively unreasonable. We assume
the parties’ familiarity with the facts and record of prior proceedings, which we reference
only as necessary to explain our decision to affirm.
1. Procedural Unreasonableness
Hatala contends that the district court committed procedural error by mistakenly
applying a two-level sophisticated means enhancement to his Guidelines calculations.
See U.S.S.G. § 2B1.1(b)(10)(C); see generally United States v. Cavera, 550 F.3d 180, 189
(2d Cir. 2008) (en banc) (recognizing Guidelines miscalculation as procedural error that
can render sentence unreasonable). Because Guidelines interpretation is a matter of law,
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we review the applicability of § 2B1.1(b)(10)(C) to the facts of this case de novo, see
United States v. Hsu, 669 F.3d 112, 120 (2d Cir. 2012), and we identify no error.1
The Guidelines define “sophisticated means” to be “especially complex or
especially intricate offense conduct pertaining to the execution or concealment of an
offense.” U.S.S.G. § 2B1.1 cmt. n.8(B). The district court found that Hatala “used a
sophisticated program and hacking technique in connection with the crime.” J.A. 118.
The record, which includes Hatala’s own sentencing submission detailing his commission
of the crime, easily supports this determination. Stealing hundreds of thousands of
usernames and password combinations, Hatala used his extensive knowledge of computer
programming and database systems, as well as self-written codes, to bypass
professionally-designed security systems. Such conduct demonstrates the use of
sophisticated means to commit fraud. See United States v. Jackson, 346 F.3d 22, 23–25
(2d Cir. 2003) (upholding sophisticated means enhancement where defendant used internet
to identify targets and steal financial information to make fraudulent purchases); see also
United States v. Barrington, 648 F.3d 1178, 1199 (11th Cir. 2011) (affirming
§ 2B1.1(b)(10)(C) enhancement where defendant repeatedly hacked into university
computer system to change grades using stolen usernames and passwords); United States
v. Jones, 530 F.3d 1292, 1305–07 (10th Cir. 2008).
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Because we identify no error, we need not resolve the parties’ dispute about whether
Hatala’s procedural challenges are unpreserved and, therefore, reviewable only for plain
error.
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In urging otherwise, Hatala submits that four other district judges declined to apply
the enhancement to defendants apprehended in the same investigation as himself. The
argument warrants little discussion because Hatala fails to demonstrate that he and the
defendants in these other cases were similarly situated. Indeed, the government’s brief
signals otherwise. In any event, Hatala’s specific conduct demonstrated the use of
sophisticated means.
Hatala further maintains that the enhancement was procedurally unreasonable
because it constitutes double counting with the enhancements for loss and use of an access
device. See U.S.S.G. §§ 2B1.1.(b)(1)(F), (b)(11)(B). “Impermissible double counting
occurs when one part of the guidelines is applied to increase a defendant’s sentence to
reflect the kind of harm that has already been fully accounted for by another part of the
guidelines.” United States v. Volpe, 224 F.3d 72, 76 (2d Cir. 2000) (internal quotation
marks omitted). The argument fails because “double counting is legitimate where a single
act is relevant to two dimensions of the Guidelines analysis.” United States v. Jackson,
346 F.3d at 25 (internal quotation marks omitted). Although loss amount and the use of
sophisticated means are often linked, they “aim at different harms.” United States v.
Volpe, 224 F.3d at 76. Here, the sophisticated means enhancement was justified by
Hatala’s intricate and complex computer programming, whereas the individualized loss
enhancement was justified by the significant monetary damage his actions inflicted, and
the access device enhancement was justified by his trafficking in log-in information for
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online accounts. Accordingly, the fact that his computer skills allowed him to obtain
log-in information for many online accounts reflects a different harm from his trafficking
of that information or the loss resulting therefrom. Cf. United States v. Jackson, 346 F.3d
at 25 (holding that defendant’s “various acts of exploiting different strangers so as to
accomplish the fraud while keeping his unwitting accomplices in the dark can serve as a
foundation for both a ‘sophisticated means’ enhancement and a role enhancement for
‘extensive’ activity”).
Finally, Hatala invokes judicial estoppel to support his claim of procedural error,
arguing that the government was barred from encouraging the district court to apply the
sophisticated means enhancement by its failure to seek the enhancement in any of the
related cases. Assuming arguendo that judicial estoppel even applies to the government in
the criminal context—a matter the government disputes and we do not here decide—no
such estoppel is warranted here. The government did not itself seek the sophisticated
means enhancement, but simply responded to an inquiry about the enhancement by
providing relevant factual history. Such conduct does not satisfy the requirements for
judicial estoppel. See New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (holding that
where party assumes position in legal proceeding, “and succeeds in maintaining that
position, he may not thereafter, simply because his interests have changed, assume a
contrary position”) (internal quotation marks omitted); Republic of Ecuador v. Chevron
Corp., 638 F.3d 384, 397 (2d Cir. 2011) (stating that judicial estoppel prevents party from
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asserting factual position clearly inconsistent with a position previously advanced by that
party and adopted by the court). In sum, we conclude that Hatala fails to demonstrate any
procedural error rendering his sentence unreasonable.
2. Substantive Unreasonableness
“In reviewing the substantive reasonableness of a sentence, ‘we take into account
the totality of the circumstances, giving due deference to the sentencing judge’s exercise of
discretion, and bearing in mind the institutional advantages of district courts.’” United
States v. Chu, 714 F.3d 742, 746 (2d Cir. 2013) (quoting United States v. Cavera, 550 F.3d
at 190). We will set aside a district court’s sentence on substantive grounds “only in
exceptional cases where the trial court’s decision cannot be located within the range of
permissible decisions.” United States v. Cavera, 550 F.3d at 189 (internal quotation
marks omitted). That is not this case.
Insofar as Hatala argues that the district court failed to avoid unwarranted disparities
between his sentence and lesser sentences subsequently imposed by other judges in the
same district on other defendants prosecuted for the same crime, we have already observed
that he fails to demonstrate that he is similarly situated to his comparators. See United
States v. Fernandez, 443 F.3d 19, 31–32 (2d Cir. 2006) (emphasizing that comparison must
be to similarly situated defendants). In any event, the disparity referenced by 18 U.S.C.
§ 3553(a)(6) is national, not case- or district-specific. See United States v. Frias, 521 F.3d
229, 236 (2d Cir. 2008). Moreover, such disparity is one factor, not the determinative
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factor, to be considered in identifying the appropriate sentence under § 3553(a). Here, the
district court expressly stated that it had considered all of the § 3553(a) factors in
determining Hatala’s sentence. In light of the totality of the circumstances, including
aggravating factors pertinent to Hatala, we identify no merit in the claim that sentencing
disparity renders Hatala’s 30-month prison sentence substantively unreasonable.
We reach the same conclusion with respect to Hatala’s claim that the district court
gave undue weight to the need for deterrence in light of his cessation of criminal activities
before arrest. See 18 U.S.C. § 3553(a)(2)(A)–(C). The weight to give relevant
sentencing factors is a matter generally left to the sound discretion of the district court to
which we will defer unless the factor cannot, as a matter of law, bear the weight assigned.
See United States v. Fernandez, 443 F.3d at 32. Where, as here, a sentence falls within the
Guidelines, we will rarely identify such an error in weighing the sentencing factors. See
United States v. Jones, 531 F.3d 163, 178 (2d Cir. 2008) (stating that “in the overwhelming
majority of cases, a Guidelines sentence will fall comfortably within the broad range of
sentences that would be reasonable in the particular circumstances” (internal quotation
marks omitted)). With regard to specific deterrence, the district court found that, although
Hatala had abandoned logging into the site at issue several months before his arrest, he had
built up his hacking skills over a long period of time, posing a risk of future hacking that
warrants specific deterrence. This concern was aggravated by post-arrest conduct
evincing disregard for the law, as evident from a positive test for drug use and attempt to
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circumvent a drug test. With regard to general deterrence, the district court explained that
the imposed sentence was necessary because of the particular danger posed to increased
internet commerce by the type of crime at issue and the difficulty in identifying and
locating criminal perpetrators. These circumstances suffice to support a Guidelines
sentence of 30 months. See United States v. Jones, 531 F.3d at 178.
We have considered Hatala’s remaining arguments and reject them as without
merit. Accordingly, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O=HAGAN WOLFE, Clerk of Court
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