United States v. Melhado, Flynn & Associates, Inc. , 455 F. App'x 81 ( 2012 )

10-2076-cr
United States v. Motz
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 “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Daniel Patrick Moynihan
3 United States Courthouse, 500 Pearl Street, in the City of
4 New York, on the 19th day of January, two thousand twelve.
5
6 PRESENT: RICHARD C. WESLEY,
7 PETER W. HALL,
8 Circuit Judges,
9 STEFAN R. UNDERHILL,*
10 District Judge.
11
12
13
14 UNITED STATES OF AMERICA,
15
16 Appellee,
17
18 v. 10-2076-cr
19
20 MELHADO, FLYNN & ASSOCIATES, INC.,
21
22 Defendant,
23
24 GEORGE M. MOTZ,
25
26 Defendant-Appellant.
27
28
29
*
Judge Stefan R. Underhill, of the United States District Court for the District of
Connecticut, sitting by designation.
1 FOR APPELLANT: STEVEN Y. YUROWITZ, Newman & Greenberg,
2 New York, N.Y. (Richard A. Greenberg,
3 Newman & Greenberg, New York, N.Y.; G.
4 Robert Gage, Jr., Laura-Michelle Horgan,
5 Gage Spencer & Fleming LLP, New York,
6 N.Y., on the brief).
7
8 FOR APPELLEE: ROGER BURLINGAME, Assistant United States
9 Attorney (Susan Corkery, William E.
10 Schaeffer, Assistant United States
11 Attorneys, on the brief), for Loretta E.
12 Lynch, United States Attorney for the
13 Eastern District of New York, Brooklyn,
14 N.Y.
15
16 Appeal from the United States District Court for the
17 Eastern District of New York (Spatt, J.).
18
19 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
20 AND DECREED that the judgment of United States District
21 Court for the Eastern District of New York imposing a
22 sentence of 96 months’ incarceration is AFFIRMED. We VACATE
23 the district court’s restitution order and REMAND for
24 proceedings consistent with this order.
25 Appellant George Motz contests only the district
26 court’s restitution order and imposition of an incarcerative
27 sentence of 96 months. We assume the parties’ familiarity
28 with the underlying facts, the procedural history, and the
29 issues presented for review.
30 Motz first argues that the district court erred in
31 applying a 16-level enhancement under United States
2
1 Sentencing Guidelines (“the Guidelines”) § 2B1.1(b)(1) for
2 causing approximately $2.4 million in losses to the victims
3 of his fraudulent trade allocation scheme. Specifically,
4 Motz claims that (1) the theory of loss advanced by the
5 government and adopted by the district court is unsound; (2)
6 the loss amount of $2.4 million included losses incurred by
7 Motz’s victims prior to the passage of 18 U.S.C. § 1348,
8 thus violating the Constitution’s Ex Post Facto Clause; and
9 (3) the loss total was “intolerably ambiguous.”
10 The government bears the burden of demonstrating by a
11 preponderance of the evidence that a specific Guideline
12 enhancement applies. See United States v. Butler, 970 F.2d
13 1017, 1026 (2d Cir. 1992). “We review the district court’s
14 factual findings on loss for clear error and its conclusions
15 of law de novo.” United States v. Carboni, 204 F.3d 39, 46
16 (2d Cir. 2000). “Although the district court’s factual
17 findings relating to loss must be established by a
18 preponderance of the evidence, the court need not establish
19 the loss with precision but rather need only make a
20 reasonable estimate of the loss, given the available
21 information.” United States v. Uddin, 551 F.3d 176, 180 (2d
22 Cir. 2009) (internal quotation marks and citations omitted);
23 see U.S.S.G. § 2B1.1 comment n.3(C).
3
1 We reject Motz’s argument that the theory of loss
2 adopted by the district court is unsound. The clients
3 victimized by Motz’s cherry-picking scheme paid a higher
4 price for the securities Motz allocated to them than the
5 security was worth at the time of allocation. The
6 difference between the price the clients were charged for
7 the security and its worth at the time of allocation is a
8 reasonable estimate of loss.
9 Motz’s Ex Post Facto argument, advanced for the first
10 time on appeal and thus subject to plain error review, see
11 United States v. Olano, 507 U.S. 725, 731 (1993), is
12 similarly unavailing. To prevail on plain error review, the
13 defendant must show: “(1) there is an error; (2) the error
14 is plain . . . ; (3) the error affected the [defendant’s]
15 substantial rights, which in the ordinary case means it
16 affected the outcome of the district court proceedings; and
17 (4) the error seriously affects the fairness, integrity or
18 public reputation of judicial proceedings.” United States
19 v. Marcus, 628 F.3d 36, 42 (2d Cir. 2010) (internal
20 quotation marks and brackets omitted).
21 Even assuming that the district court’s inclusion of
22 losses that occurred prior to Congress’s enactment of 18
23 U.S.C. § 1348 was error and such error was plain, Motz
4
1 cannot demonstrate that the inclusion of those losses
2 affected his substantial rights because the losses incurred
3 after 18 U.S.C. § 1348 was enacted totaled approximately
4 $1.4 million—a loss amount comfortably within the $1 million
5 to $2.5 million loss range warranting a 16-level enhancement
6 under the Guidelines. See U.S.S.G. § 2B1.1(b)(1).
7 Finally, the loss figure adopted by the district court
8 is not, as Motz contends, “intolerably ambiguous.” The
9 Guidelines do not require that losses be calculated with
10 precision, and we find no error in the district court’s
11 reliance on the government expert’s analysis as a reasonable
12 estimate of loss. Because a legitimate trade is as likely
13 to gain value during the course of any particular day as it
14 is to lose value, and because the expert was conservative in
15 identifying the total number of assignable trades in the
16 first place, any legitimate trades included in the loss
17 calculation would not introduce intolerable ambiguity into
18 the court’s estimations of loss.
19 We next turn to, and reject, Motz’s argument that the
20 district court erred in applying a 4-level enhancement under
21 § 2B1.1(b)(2)(B) of the Guidelines because it incorrectly
22 concluded that the scheme involved 50 or more victims. The
23 Guidelines define “victim” as “any person who sustained any
5
1 part of the actual loss.” U.S.S.G. § 2B1.1 comment n.1.
2 Though Motz advances a number of arguments in his brief as
3 to why the district court erred on this point, we address
4 only his two most potent arguments here: (1) that the victim
5 list likely contained individuals who were not injured by
6 Motz’s scheme, and (2) that the victim list included victims
7 harmed before the passage of 18 U.S.C. § 1348, thus
8 violating the Ex Post Facto Clause. Putting aside the
9 question of whether Motz properly raised these objections
10 below, the district court did not commit reversible error.
11 There were a number of losing trades that Motz assigned to
12 more than 50 discretionary accounts after the passage of 18
13 U.S.C. § 1348. Indeed, the record demonstrates that Motz
14 assigned losses to seventy-six distinct accounts on
15 September 25, 2003; losses to sixty-eight distinct accounts
16 on February 19, 2004; and losses to sixty-nine distinct
17 accounts on June 17, 2004. Therefore, the government
18 carried its burden in demonstrating by a preponderance of
19 the evidence that a 4-level enhancement under §
20 2B1.1(b)(2)(B) of the Guidelines was warranted. See United
21 States v. Iannuzzi, 372 Fed. App’x 98, 100 (2d Cir. 2010).
22 We do, however, vacate the district court’s order
23 requiring Motz to pay $864,806 in restitution. The
6
1 Mandatory Victims Restitution Act (“MVRA”) provides, in
2 relevant part, that “the court shall order . . . that the
3 defendant make restitution to the victim of [a fraud]
4 offense.” 18 U.S.C. § 3663A(a)(1). The MVRA defines
5 “victim” as “a person directly and proximately harmed as a
6 result of the commission of an offense for which restitution
7 may be ordered.” 18 U.S.C. § 3663A(a)(2). The district
8 court is required to determine the amount of each victim’s
9 loss and include it in the restitution order. See 18 U.S.C.
10 § 3664(f)(1)(A); United States v. Pescatore, 637 F.3d 128,
11 141 (2d Cir. 2011); United States v. Catoggio, 326 F.3d 323,
12 329 (2d Cir. 2003). Because the district court failed to do
13 so here, we vacate its restitution order.
14 We are troubled by the government’s failure below to
15 make any effort to demonstrate the amount of loss each
16 individual victim incurred as a result of Motz’s cherry-
17 picking scheme. Nevertheless, we remand to the district
18 court to consider in the first instance whether to allow the
19 government to supplement the sentencing record with new
20 evidence or whether sufficient evidence has already been
21 presented to carry the government’s burden under the MVRA.
22 See United States v. Spitsyn, 403 Fed. App’x 572, 575 (2d
23 Cir. 2010).
7
1 We have considered Motz’s remaining arguments and,
2 after a thorough review of the record, find them to be
3 without merit.
4 For the foregoing reasons, the judgment of the district
5 court imposing a sentence of 96 months’ incarceration is
6 hereby AFFIRMED. We VACATE the district court’s restitution
7 order and REMAND for proceedings consistent with this order.
8
9 FOR THE COURT:
10 Catherine O’Hagan Wolfe, Clerk
11
12
8