United States v. Afriyie , 929 F.3d 63 ( 2019 )


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  • 17‐2444 (L)
    United States v. Afriyie
    UNITED STATES COURT OF APPEALS
    FOR THE SECOND CIRCUIT
    ____________________
    August Term, 2018
    (Argued: November 14, 2018                                 Decided: July 8, 2019)
    Docket Nos. 17‐2444, 17‐4045
    ____________________
    UNITED STATES OF AMERICA,
    Appellee,
    v.
    JOHN AFRIYIE,
    Defendant‐Appellant.
    ____________________
    Before: JACOBS, POOLER, and WESLEY, Circuit Judges.
    John Afriyie appeals from a judgment of conviction entered on July 28,
    2017, an order of forfeiture entered on July 27, 2017, and a restitution order
    entered on December 11, 2017, by the United States District Court for the
    Southern District of New York (Paul A. Engelmayer, J.), following a one‐week
    jury trial. The jury found Afriyie guilty of both counts with which he was
    charged: (1) securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and 17
    C.F.R. § 240.10b‐5, and (2) wire fraud, in violation of 18 U.S.C. § 1343. Afriyie was
    sentenced principally to 45 months’ imprisonment, to be followed by three years’
    supervised release. The district court imposed forfeiture in the amount of
    $2,780,720.02 and restitution in the amount of $663,028.92.
    We affirm the judgment of conviction, finding no error in the district
    court’s jury instructions, admission of lay testimony, and calculation of loss. We
    hold that, as a matter of law, forfeiture is not limited to the amount of funds
    acquired through illegal transactions in an insider‐trading scheme; rather,
    forfeiture may extend to appreciation of those funds. We therefore affirm the
    forfeiture calculation and order in this case. Because Lagos v. United States, 138 S.
    Ct. 1684 (2018), decided after Afriyie’s sentencing, addresses the categories of
    fees recoverable under the Mandatory Victims Restitution Act, limited remand to
    recalculate restitution is appropriate.
    Affirmed in part, vacated in part, and remanded.
    ____________________
    ROBERT A. CULP, Garrison, N.Y., for Defendant‐
    Appellant.
    2
    EDWARD A. IMPERATORE, Assistant United States
    Attorney (Christine Magdo, Daniel B. Tehrani, Assistant
    United States Attorneys), for Geoffrey S. Berman,
    United States Attorney for the Southern District of New
    York, New York, N.Y., for Appellee.
    POOLER, Circuit Judge:
    John Afriyie appeals from a judgment of conviction entered on July 28,
    2017, an order of forfeiture entered on July 27, 2017, and a restitution order
    entered on December 11, 2017, by the United States District Court for the
    Southern District of New York (Paul A. Engelmayer, J.), following a one‐week
    jury trial. We affirm the judgment of conviction, finding no reversible error in the
    district court’s jury instructions, admission of lay testimony, and calculation of
    loss. We hold that, as a matter of law, forfeiture is not limited to the amount of
    funds acquired through illegal transactions in an insider‐trading scheme; rather,
    forfeiture may extend to appreciation of those funds. We therefore affirm the
    forfeiture calculation and order in this case. Because Lagos v. United States, 138 S.
    Ct. 1684 (2018), decided after Afriyie’s sentencing, addresses the categories of
    fees recoverable under the Mandatory Victims Restitution Act, we vacate the
    restitution order and remand for the district court to recalculate restitution.
    3
    BACKGROUND
    In January 2015, Afriyie began working as an investment analyst for MSD
    Capital (“MSD”). As an investment analyst, Afriyie researched potential
    investments for MSD and made recommendations regarding those investments.
    MSD barred its employees from trading in any individual securities from their
    own accounts.
    In January 2016, Apollo Global Management (“Apollo”), a private equity
    firm, was considering acquiring ADT Corp. (“ADT”), a publicly traded company
    in the home security and alarm industry. Apollo contacted several investment
    firms, including MSD, to raise capital in order to make this acquisition. After
    MSD expressed an interest in investing, Apollo agreed to provide MSD with
    material nonpublic information (“MNPI”) about the ADT deal.
    Around this time, MSD’s compliance department sent a “potential
    restriction” email to its investment professionals. The email indicated that MSD
    would receive MNPI about a “U.S. listed alarm monitoring services company”
    because of a “financing opportunity in connection with a potential take‐private
    transaction by . . . Apollo Global” that was “expected to close in [the first half of]
    4
    2016.” App’x at 186‐87; Trial Tr. at 473‐77, ECF No. 109.1 Afriyie received this
    email.
    The next morning, on January 28, Afriyie accessed the ADT and Apollo
    research folders on MSD’s shared drive. After doing so, he purchased his first
    ADT call option. That afternoon, MSD added ADT to its list of “restricted”
    securities, and Afriyie received an email to this effect. Taken together, the
    restriction emails Afriyie received informed him that Apollo was planning to
    acquire ADT. The next day, Afriyie purchased an additional 35 ADT call options.
    On February 2, although he was not assigned to work on the ADT project,
    Afriyie accessed documents specific to the Apollo‐ADT deal stored on MSD’s
    shared drive. He subsequently purchased over 2,000 additional ADT call options
    over the course of the ensuing two weeks.
    On February 16, Apollo publicly announced its planned acquisition of
    ADT. ADT’s stock price rose by 47.5%, and the value of Afriyie’s investment in
    ADT call options increased by 6,000% in one day. Over the course of the
    following week, Afriyie sold his options for a total profit of $1,564,071.60. In late
    1All ECF citations are to the district court docket, United States v. Afriyie, No. 16‐
    cr‐377 (S.D.N.Y. Feb. 27, 2017).
    5
    February and March 2016, he wired a portion of the proceeds out of his
    brokerage account and into a separate savings account.
    Afriyie was arrested and released on bail on April 13, 2016. Two days later,
    he changed the name on the email address associated with the brokerage account
    from his own name to his mother’s name and later deactivated the email account.
    Afriyie also called TD Ameritrade and, on several occasions, pretended to be his
    mother on the phone.
    On June 1, 2016, an indictment was filed charging Afriyie with two counts
    of criminal activity stemming from trading on MNPI obtained from his
    employer. Count One charged him with securities fraud, in violation of 15 U.S.C.
    §§ 78j(b) and 78ff, and 17 C.F.R. § 240.10b‐5. Count Two charged him with wire
    fraud, in violation of 18 U.S.C. § 1343. Following a week‐long trial, a jury found
    Afriyie guilty of both counts. The district court sentenced him principally to a
    term of 45 months’ imprisonment, followed by three years’ supervised release,
    and it imposed forfeiture in the amount of $2,780,720.02 and restitution in the
    amount of $663,028.92. Afriyie is serving his sentence.
    6
    DISCUSSION
    On appeal, Afriyie primarily argues that 1) there was reversible plain error
    in the district court’s jury instructions; 2) the district court plainly erred in
    admitting certain lay testimony; 3) the district court erred in calculating the loss
    and forfeiture amounts; and 4) remand in order to recalculate restitution is
    appropriate. For the following reasons, we reject Afriyie’s first three arguments.
    However, as the government concedes, limited remand for recalculation of
    restitution is appropriate in light of Lagos v. United States, 
    138 S. Ct. 1684
    (2018),
    decided after Afriyie’s sentencing.
    I.      Jury Instructions
    “We review challenged jury instructions de novo but will reverse only if all
    of the instructions, taken as a whole, caused a defendant prejudice.” United States
    v. Bok, 
    156 F.3d 157
    , 160 (2d Cir. 1998). It is the defendant’s burden to show
    prejudice. United States v. Nektalov, 
    461 F.3d 309
    , 313‐14 (2d Cir. 2006) (internal
    quotation marks omitted). “[A] jury instruction is erroneous if it misleads the
    jury as to the correct legal standard or does not adequately inform the jury on the
    law.” 
    Bok, 156 F.3d at 160
    (internal quotation marks omitted).
    7
    First, Afriyie argues that the district court committed plain error2 in failing
    to explain to the jury what constitutes a fiduciary duty under the legal standard
    set forth in United States v. Chestman, 
    947 F.2d 551
    (2d Cir. 1991). Under Chestman,
    “a person violates [17 C.F.R. § 240.10b‐5] when he misappropriates material
    nonpublic information in breach of a fiduciary duty or similar relationship of
    trust and confidence and uses that information in a securities transaction.” 
    Id. at 566.
    At the charge conference, Afriyie did not object to the district court’s
    proposed instruction regarding fiduciary relationship, which the court had
    issued to the parties in advance of the meeting. Accordingly, we review only for
    plain error. See United States v. Crowley, 
    318 F.3d 401
    , 412 (2d Cir. 2003). At trial,
    the district court instructed the jury:
    In order to find that the government has established . . . that the
    defendant engaged in an insider trading scheme, you must find that
    the government has proven beyond a reasonable doubt each of the
    following two factors, that taken together, constitute an insider
    trading scheme under the federal securities law. The two facts are as
    follows:
    One, that the defendant had a relationship of trust and confidence
    with MSD Capital;
    2“To establish plain error, the defendant must establish (1) error (2) that is plain
    and (3) affects substantial rights.” United States v. Villafuerte, 
    502 F.3d 204
    , 209 (2d
    Cir. 2007).
    8
    Two, that the defendant violated his duty of trust and confidence by
    using material, nonpublic information that he obtained by virtue of
    his relationship with MSD Capital to trade ADT securities for his
    own personal benefit.
    Now, in order for you to establish the first factor concerning the
    existence of a relationship of trust and confidence, you must
    welcome all of the facts and circumstances and ask whether both the
    defendant and MSD Capital recognized that their relationship
    involved trust and confidence.
    App’x at 52‐53.
    Afriyie argues that the district court’s instruction failed to explain what
    constitutes a fiduciary duty or similar relationship of trust and confidence,
    omitted the key elements of reliance and de facto control, and failed to instruct
    the jury that there can be no breach absent a duty to disclose. An express
    agreement of confidentiality may establish fiduciary status. See 
    Chestman, 947 F.2d at 571
    . Afriyie does not dispute that on his first day of employment with
    MSD, he signed a confidentiality agreement. The agreement stated: “I
    understand that my employment with MSD creates a relationship of confidence
    and trust between MSD and me.” Trial Tr. at 192, ECF No. 101. Afriyie presented
    no evidence to counter this agreement or to indicate that he lacked a fiduciary or
    other similar relation of trust and confidence with MSD. Accordingly, any error
    in the district court’s instruction did not result in prejudice; viewing the charge
    9
    actually given as a whole, see United States v. Feliciano, 
    223 F.3d 102
    , 116 (2d Cir.
    2000), the outcome of the trial would have been the same had Afriyie received
    the instruction he sought.
    Second, Afriyie argues that the district court failed to instruct the jury that
    the burden of proof remained on the government at all times, and thus it failed to
    convey his theory‐of‐the‐defense instruction. Afriyie did not object or renew his
    request for his submitted instruction following the charge conference.
    Accordingly, we review only for plain error. See 
    Crowley, 318 F.3d at 412
    ‐14. At
    trial, the court instructed the jury:
    If the government proves beyond a reasonable doubt . . . that the
    defendant engaged in an insider trading scheme, it must then prove
    that the defendant engaged in that scheme knowingly, willfully, and
    with intent to defraud MSD Capital . . . . It is for you to determine
    whether the government has established beyond a reasonable doubt
    such knowledge and intent on the part of the defendant.
    Because an essential element of the crime charged is intent to
    defraud, good faith on the part of the defendant is a complete
    defense to the charge of insider trading. That is, the law is not
    violated if the defendant held an honest belief that his acts were
    proper and not [in] furtherance of any unlawful scheme. A person
    who acts on a belief or reason honestly held that turns out to be
    wrong is not punishable under these statutes.
    App’x at 55‐57.
    10
    There was no error. “[T]he district court must advise the jury in
    unambiguous terms that the government at all times bears the burden of proving
    beyond a reasonable doubt that the defendant had the state of mind required for
    conviction on a given charge.” United States v. Scully, 
    877 F.3d 464
    , 476 (2d Cir.
    2017). The district court did so here. See App’x at 55‐57; see also App’x at 30
    (“[T]he burden remains on the government to prove all elements of each offense
    beyond a reasonable doubt.”). Furthermore, as detailed above, the district court
    explained that “good faith on the part of the defendant is a complete defense,”
    App’x at 56‐57, thus conveying Afriyie’s theory that he lacked knowledge that he
    was trading based on MNPI. There was therefore no error in the district court’s
    good faith instruction.
    II.      Admission of Lay Testimony
    “We review evidentiary rulings for abuse of the district court’s broad
    discretion, reversing only when the court has acted arbitrarily or irrationally.”
    
    Nektalov, 461 F.3d at 318
    (internal quotation marks omitted). Where, as here, the
    defendant did not object, we review only for plain error. See United States v. Hsu,
    
    669 F.3d 112
    , 118 (2d Cir. 2012).
    11
    Afriyie challenges the admission of nonexpert testimony on whether
    certain information provided by Apollo was nonpublic; the likelihood of the
    Apollo‐ADT deal; and projections of Apollo’s pricing of ADT stock. To begin,
    Afriyie asserts that MSD employee‐witness Sharmit Grover “was permitted,
    without basis, to offer expert opinions about documents, usurping the jury’s
    province and calling them ‘material’ or ‘nonpublic’ when the documents were
    created by or for Apollo and consequently the witness[] had no basis for the
    opinions.” Appellant’s Br. at 35.
    “The Federal Rules of Evidence allow the admission of fact testimony so
    long as the witness has personal knowledge, while opinion testimony can be
    presented by either a lay or expert witness.” United States v. Cuti, 
    720 F.3d 453
    ,
    457‐58 (2d Cir. 2013) (citations and footnote omitted). “[T]he distinction between
    statements of fact and opinion is, at best, one of degree.” Beech Aircraft Corp. v.
    Rainey, 
    488 U.S. 153
    , 168 (1988). “[P]ersonal knowledge of a fact is not an absolute
    to Rule 602’s foundational requirement, which may consist of what the witness
    thinks he knows from personal perception. Similarly, a witness may testify to the
    fact of what he did not know and how, if he had known that independently
    established fact, it would have affected his conduct or behavior.” Cuti, 
    720 F.3d 12
    458‐59 (internal quotation marks and citation omitted). If the witness is not
    testifying as an expert, the witness’ opinion is limited to those opinions which
    are “(a) rationally based on the witness’s perception; (b) helpful to clearly
    understanding the witness’s testimony or to determining a fact in issue; and (c)
    not based on scientific, technical, or other specialized knowledge within the
    scope of Rule 702.” Fed. R. Evid. 701. An employee’s testimony “grounded in”
    an investigation he undertook in his role as an employee is admissible under
    Rule 701; to the extent the employee’s testimony reflects “specialized knowledge
    [resulting from] extensive experience,” however, it is not. Bank of China v. NMB
    LLC, 
    359 F.3d 171
    , 181‐82 (2d Cir. 2004).
    Grover is a managing director at MSD Partners, an entity related to MSD
    Capital, and he worked on the Apollo‐ADT transaction.3 Grover testified that
    around January 2016, Apollo entered into a nondisclosure agreement with MSD
    and had confidential discussions with Grover and others about whether MSD
    would provide financing for the acquisition. Grover reviewed many nonpublic
    documents as part of his work determining whether MSD should provide
    financing. He testified that the nonpublic deal documents were saved on MSD’s
    3   We refer to both entities collectively as “MSD.”
    13
    shared drive. Grover further explained how he used and evaluated the
    documents in evaluating the economics of the proposed transaction.
    The documents about which Grover testified were already in evidence
    because they were introduced by an MSD IT specialist who retrieved them from
    the shared drive. Furthermore, Grover testified based upon his firsthand
    participation in the evaluation of the potential transaction. Therefore, the district
    court did not err in permitting Grover to testify as to whether certain information
    was nonpublic.
    With respect to Grover’s testimony regarding the likelihood of the Apollo‐
    ADT deal and his projections of Apollo’s pricing of ADT stock, Grover referred
    to his firsthand participation in the evaluation of the potential transaction. Unlike
    in cases cited by Afriyie, Grover had contemporaneous involvement with the
    transactions at issue, compare with Bank of 
    China, 359 F.3d at 181
    ‐82; he explained
    how he compiled the summary chart, compare with United States v. Citron, 
    783 F.2d 307
    , 316‐17 (2d Cir. 1986); and he did not provide his opinion as to Afriyie’s
    role in the charged fraud, compare with United States v. Groysman, 
    766 F.3d 147
    ,
    158‐62 (2d Cir. 2014).
    14
    Nevertheless, Grover’s testimony about the investigation he undertook in
    his role as an employee also referred to his specialized knowledge. For example,
    when asked whether “[i]n [his] experience, there are instances in which a private
    equity firm may say one thing publicly and do a different thing privately,”
    Grover responded, “Yes . . . . [S]aying that transactions are difficult to do [is
    intended to make] sellers . . . reduce their expectations on sale price . . . . It’s the
    . . . type of dynamic that plays out in the investments world.” Trial Tr. at 489‐90
    (emphasis added). Similarly, Grover testified that his analysis of Apollo’s pricing
    of ADT stock was “the type of analysis that an analyst would perform,” and that
    his underlying assumptions—including assumptions regarding fees and
    expenses, as well as estimates of the number of outstanding ADT purchase
    options—were “commonly used metrics in the industry.” Trial Tr. at 511‐12.
    Although Grover’s testimony at times noted or was colored by his
    specialized knowledge, any error in admitting it was not plain. The government
    presented overwhelming evidence that Afriyie had accessed MSD’s confidential
    information regarding ADT before making the trades at issue, and Grover’s
    opinion about how these documents could have helped Afriyie commit insider
    trading merely went toward explaining an internal process. The jury could
    15
    readily have determined that Afriyie used confidential information to
    fraudulently trade, even if the precise ways in which he used that information
    were unclear. Because any error was not plain and did not affect Afriyie’s
    substantial rights, we affirm.
    III.   Loss and Forfeiture
    “We review the district court’s factual findings at sentencing for clear
    error, bearing in mind that the standard of proof at sentencing is a
    preponderance of the evidence.” United States v. Cacace, 
    796 F.3d 176
    , 191 (2d Cir.
    2015) (internal quotation marks omitted). Afriyie argues that, at minimum, his
    case should be remanded for resentencing proceedings because he “was
    sentenced as if it were a certainty that the jury convicted on every transaction,”
    which “infected the sentencing record as to loss calculations, forfeiture, and
    restitution.” Appellant’s Br. at 45.
    A. Loss Calculation
    The Presentence Report determined that a 16‐level enhancement applied
    because Afriyie’s insider‐trading gain was $1.53 million. See U.S.S.G. §§
    2B1.4(b)(1) and 2B1.1(B)(1)(I). This figure, $1.53 million, is the profit Afriyie made
    by selling the ADT call options. Afriyie objected to the loss calculation. Because
    16
    the jury returned a general verdict, he argued, first, the district court should have
    enhanced his sentence only for the smallest gain he made on a single trade, and
    second, if the district court were to consider all of his trades as relevant conduct,
    it should have applied a clear and convincing evidentiary standard.
    At sentencing, the district court, agreeing with the Presentence Report,
    found that the evidence reflected a $1.53 million gain. The district court
    discussed two reasons in particular underlying its conclusion as to loss:
    I am not persuaded by that argument [that the court is limited to
    considering only the gain attributed to the trade that yielded the
    smallest gain] for two independent reasons: First, at sentencing the
    Court is to make an independent calculation of how the guidelines
    apply. Here, even on the theory that the defense posits that the jury
    found Mr. Afriyie guilty based on just one trade and did not base its
    guilty verdict on any other trades, the Court finds based on the
    overwhelming evidence at trial that this was a unitary scheme.
    Every trade by Mr. Afriyie in [ADT], every one of the exotic call
    options that he customized and purchased was based on . . . MNPI
    that he had obtained from MSD’s database; to wit, information that
    Apollo planned [to acquire] ADT at a significant stock price
    premium.
    The Court finds without any hesitation that each and every one of
    those trades occurred when Mr. Afriyie was in possession of that
    MNPI and that that confidential and highly material and market‐
    moving information was the impetus for each and every one of Mr.
    Afriyie’s purchase of call options. And, of course, after the
    announcement of the Apollo‐ADT transaction, those call options
    were very much in the money and proved to be extremely valuable,
    and Mr. Afriyie exercised them.
    17
    ....
    The second reason—and again, it’s independent of the first—is that
    the jury’s forfeiture finding compels the same result. That finding
    was made by a preponderance of the evidence. That is the same
    standard that governs the Court’s guidelines determination as to
    gain. The jury found that the full $1.53 million represented gains
    from the insider trading scheme, and it did so in the face of the same
    argument made here, which is that the information known to Mr.
    Afriyie and known to the public were at times of the different trades.
    So, the bottom line, the Court finds a 16‐level upward adjustment
    for gain to be appropriate.
    App’x at 99‐101.
    Afriyie relies on United States v. Sturdivant, 
    244 F.3d 71
    (2d Cir. 2001) to
    argue that where a jury returns a general verdict, “sentencing must be based on
    the least punitive possible verdict.” Appellant’s Br. at 46. But here, unlike in
    Sturdivant, the district court did not “erroneously assume[] that [the] defendant
    had been convicted based on” multiple transactions. 
    Sturdivant, 244 F.3d at 77
    .
    Instead, the district court acknowledged the general verdict and cited two
    independent bases for its calculation: the evidence at trial and the jury’s
    forfeiture verdict. The loss calculation was not clearly erroneous; indeed,
    remanding for resentencing would simply require the district court to reiterate
    the determinations that it already has made.
    18
    B. Forfeiture Calculation
    Afriyie next asserts that the “same flaws” as to the loss calculation
    “afflicted the forfeiture determination albeit more profoundly.” Appellant’s Br.
    at 49. We disagree.
    “[18 U.S.C.] § 981(a)(2)(B) supplies the definition of ‘proceeds’ in cases
    involving fraud in the purchase or sale of securities.” United States v. Contorinis,
    
    692 F.3d 136
    , 145 n.3 (2d Cir. 2012). Pursuant to Section 981(a)(2)(B), “[t]he
    definition of proceeds for insider trading violations is the amount of money
    acquired through the illegal transactions resulting in the forfeiture, less the direct
    costs incurred in providing the goods or services.” 
    Id. at 145
    (internal quotation
    marks omitted). “In any case tried before a jury, if the indictment or information
    states that the government is seeking forfeiture, the court must determine before
    the jury begins deliberating whether either party requests that the jury be
    retained to determine the forfeitability of specific property if it returns a guilty
    verdict.” Fed. R. Crim. P. 32.2(b)(5)(A).
    In the forfeiture phase of the trial, the court issued the following jury
    instruction, to which Afriyie did not object:
    The term “proceeds” means the amount of money acquired through
    the illegal transaction or transactions engaged in by the defendant,
    19
    less the direct costs he incurred in engaging in this transaction or
    transactions.
    The proceeds of transactions that you do not determine to constitute
    insider trading, if any, are, of course, not proceeds of crimes. Your
    determination at this stage of whether a particular transaction
    constitutes insider trading by the defendant, is governed by the
    preponderance of the evidence standard.
    ....
    Assets purchased with crime proceeds are forfeitable even if they
    increase or appreciate in value, to grow greater than the original
    monies obtained from the crime. Where the present balance of a
    particular account is attributable to the appreciation made from the
    criminal proceeds in that account, the assets and funds in that
    account constitute or are derived from fraud proceeds and,
    therefore, are forfeitable.
    App’x at 76‐77, 79. The jury then received a forfeiture special verdict form, which
    required it to make specific findings as to the funds in the savings and brokerage
    accounts and whether the money in those accounts constituted proceeds directly
    or indirectly obtained as a result of the convictions on Counts One and Two. The
    jury had to indicate whether the full amount of funds, or some lesser portion,
    was forfeitable. It concluded that the full amount was derived from the proceeds
    of Afriyie’s crimes.
    The district court imposed forfeiture in the amount of $2,780,720.02. This
    amount represents $2,632,893.39, which is the liquidated value of the assets
    20
    formerly held in the brokerage account and seized on May 16, 2016, together
    with $147,826.63, the amount of proceeds of the offenses wired from the
    brokerage account into the savings account between February 17 and March 24,
    2016.
    Afriyie’s key challenge on appeal concerns the appreciated value. As noted
    above, proceeds here include “the amount of money acquired through the illegal
    transactions resulting in the forfeiture, less the direct costs incurred in providing
    the goods or services.” 
    Contorinis, 692 F.3d at 145
    (internal quotation marks
    omitted). The jury instruction as to “proceeds” was thus correct. Afriyie goes on
    to argue, however, that insider‐trading forfeiture is limited to the funds acquired
    through illegal transactions and excludes any appreciation of those funds.
    Under 18 U.S.C. § 981(a)(1)(C), as incorporated by 28 U.S.C. § 2461(c),4 a
    defendant convicted of insider trading must forfeit “[a]ny property, real or
    personal, which constitutes or is derived from proceeds traceable” to the offense.
    18 U.S.C. § 981(a)(1)(C) (emphasis added). We have yet to squarely address the
    import of “derived from” as it relates to appreciated value in an insider‐trading
    4“While § 981(a)(1)(C) is a civil forfeiture provision, it has been integrated into
    criminal proceedings via 28 U.S.C. § 2461(c). This roundabout statutory
    mechanism allows a court to order forfeiture in criminal securities fraud
    proceedings.” 
    Contorinis, 692 F.3d at 145
    n.2.
    21
    scheme. Cf. United States v. Kalish, No. 6‐cr‐656(RPP), 
    2009 WL 130215
    , at *6
    (S.D.N.Y. Jan. 13, 2009) (“[I]t is a fair conclusion that the present balance in the
    Lehman Brothers account is attributable to appreciation made from the TFS
    proceeds in various investment accounts. Therefore, this Court finds that the
    entire $2.4 million in assets currently in the Lehman Brothers account constitutes
    or was derived from fraud proceeds and thus is forfeitable.”), aff’d, 
    626 F.3d 165
    ,
    168 (2d Cir. 2010).
    We hold that as a matter of law, forfeiture may extend to the appreciation
    of funds acquired through illegal transactions in an insider‐trading scheme.
    There is simply no basis in the text to conclude, as Afriyie argues, that Section
    981(a)(2), which defines “proceeds,” restricts Section 981(a)(1)(C) from applying
    to funds that have appreciated in value. A defendant convicted of insider trading
    must forfeit property “which constitutes . . . proceeds,” 18 U.S.C. § 981(a)(1)(C),
    defined as “the amount of money acquired through the illegal transactions,” 
    id. § 981(a)(2)(B).
    Thus, if Section 981(a)(1)(C) applied only to property “which
    constitutes . . . proceeds,” Afriyie’s argument may have teeth. But the text
    provides that a defendant convicted of insider trading must also forfeit property
    which is “derived from proceeds traceable” to the offense. 
    Id. § 981(a)(1)(C).
    The
    22
    plain text compels our conclusion that a defendant convicted of insider trading
    must forfeit the appreciation of funds acquired through illegal transactions in an
    insider‐trading scheme, because such funds are “derived from proceeds
    traceable” to the offense. 
    Id. Afriyie’s final
    two arguments urging us to conclude the contrary are
    unavailing. First, he argues that this Court should apply the rule of lenity
    because “proceeds” is ambiguous. This is because, Afriyie argues, Section
    981(a)(2)(B) “strictly limits ‘proceeds’ to ‘the amount of money acquired through
    the illegal transactions . . . less the direct costs incurred in providing the goods
    or services,’” while Section 981(a)(2)(A) “extends ‘proceeds’ to include ‘property
    of any kind obtained directly or indirectly, as the result of the commission of the
    offense.’” Appellant’s Reply Br. at 24 (alteration in original) (quoting 18 U.S.C. §
    981(a)(2)). According to Afriyie, Congress wanted “indirect” acquisition to apply
    under Section 981(a)(2)(A), but not Section 981(a)(2)(B). For the reasons above,
    however, it cannot be said that “after seizing everything from which aid can be
    derived, we can make no more than a guess as to what Congress intended,” such
    that the rule of lenity applies here. Reno v. Koray, 
    515 U.S. 50
    , 65 (1995) (citation
    and internal quotation marks omitted).
    23
    Second, Afriyie argues that when defense counsel indicated that Afriyie
    accepted the verdict but wanted to testify that certain trades were not insider
    trading, the government “threatened [him] with a perjury enhancement” and
    thus “he was intimidated into only testifying as to forfeiture calculation rather
    than specific trades as intended.” Appellant’s Reply Br. at 27. This, Afriyie
    asserts, mandates retrial on forfeiture.
    “[A] defendant pressing such a claim must show bad faith on the part of
    the government.” United States v. Williams, 
    205 F.3d 23
    , 29 (2d Cir. 2000). “[I]n
    order to elevate this misconduct to a due process violation, the defendant must
    demonstrate that the absence of fundamental fairness infected the trial; the acts
    complained of must be of such quality as necessarily prevents a fair trial.” 
    Id. at 29‐30
    (internal quotation marks omitted). Here, there is no indication that the
    precautionary statements about perjury rose to the level of intimidation. Afriyie
    has failed to show bad faith or the absence of fundamental fairness with respect
    to such precautions, and we affirm the district court’s calculation of forfeiture.
    IV.     Restitution
    The district court ordered that Afriyie pay $663,028.92 in restitution to his
    former employer, MSD. This amount “correspond[ed] to expenses [MSD]
    24
    incurred as a result of its participation in investigations into, and the eventual
    trial concerning, Afriyie’s insider trading while working as an analyst at MSD.”
    Order of Restitution at 1, ECF No. 178.5 After Afriyie’s sentencing, the Supreme
    Court issued its decision in Lagos v. United States, 
    138 S. Ct. 1684
    (2018). In Lagos,
    the Court interpreted the Mandatory Victims Restitution Act and held that a
    private firm’s legal fees as to a corporate victim’s private investigation and
    related civil case were not compensable as “necessary” restitution. 
    Id. at 1688‐89.
    Afriyie submitted a supplemental brief addressing Lagos and seeking remand to
    determine the correct restitution amount. The government “consents to a limited
    remand to allow the District Court to determine whether certain categories of
    expenses encompassed in the original restitution award were incurred ‘during
    participation in the investigation or prosecution of the offense,’ 18 U.S.C. §
    3663A(b)(4), consistent with the Supreme Court’s guidance in Lagos.” Appellee’s
    Br. at 58‐59. Accordingly, remand to recalculate restitution is appropriate.
    5Although the district court held at Afriyie’s sentencing hearing that MSD was
    entitled to $691,046.62 in restitution, MSD “voluntarily disclaimed restitution for
    expenses associated with counsel’s monitoring of, and attendance at,
    proceedings in this case.” Order of Restitution at 2, ECF No. 178. Accordingly,
    MSD sought $663,028.92, rather than $691.046.42. 
    Id. 25 CONCLUSION
    We have considered the remainder of Afriyie’s arguments and find them
    to be without merit. For the foregoing reasons, the judgment of conviction and
    order of forfeiture are hereby AFFIRMED, the restitution order is VACATED,
    and the case is REMANDED.
    26