United States v. Ebrahim Shabudin ( 2017 )

FILED
NOT FOR PUBLICATION
JUL 05 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, Nos. 15-10460
16-10075
Plaintiff-Appellee,
D.C. No. 4:11-CR-00664-JSW
v.
MEMORANDUM*
EBRAHIM SHABUDIN,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Jeffrey S. White, District Judge, Presiding
Argued and Submitted April 20, 2017
San Francisco, California
Before: SCHROEDER and RAWLINSON, Circuit Judges, and STAFFORD,
District Judge.**
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable William H. Stafford, Jr., United States District Judge
for the Northern District of Florida, sitting by designation.
Ebrahim Shabudin, a former officer of United Commerical Bank (“UCB” or
the “bank”), was convicted by a jury of seven offenses, including two conspiracies
and five substantive offenses.1 He appeals his conviction on the five substantive
counts. He also appeals his ninety-seven-month sentence of imprisonment as well
as the district court’s forfeiture, restitution, and cash-bond-transfer orders. Because
we write for the parties, we assume their familiarity with the underlying facts and
recite only what is necessary to explain our decision. We have jurisdiction under
28 U.S.C. § 1291, and we affirm Shabudin’s conviction and sentence of
imprisonment. We also affirm the district court’s forfeiture order, but we vacate the
district court’s restitution and cash-bond-transfer orders.
1. Shabudin first contends that his convictions on the five substantive counts
must be reversed because the district court’s Pinkerton instruction misinformed the
jury that it could convict Shabudin on all five substantive counts if his
coconspirator committed one of those counts. Defense counsel objected to
the Pinkerton instruction used at trial, albeit on different grounds. Plain error
1
The jury convicted Shabudin of (1) conspiracy to commit securities fraud,
in violation of 18 U.S.C. § 1349; (2) securities fraud, in violation of 18 U.S.C. §
1348; (3) falsifying corporate books and records, in violation of 15 U.S.C. §
78m(b)(2)(A); (4) false statements to accountants at a publicly traded corporation,
in violation of 15 U.S.C. § 78ff; (5) circumventing accounting controls, in
violation of 15 U.S.C. § 78m(b)(2)(B); (6) conspiracy to falsify bank entries,
reports, and transactions, in violation of 18 U.S.C. § 371; and (7) making false
bank entries, reports, and transactions, in violation of 18 U.S.C. § 1005.
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review thus applies. United States v. Anderson, 741 F.3d 938, 946 (9th Cir. 2013).
Assuming, for the sake of argument, that the Pinkerton instruction was
plainly erroneous,2 Shabudin has not shown that there is a “reasonable probability”
that the jury’s verdict would have been different had the erroneous Pinkerton
instruction not been given. United States v. Olano, 507 U.S. 725, 736 (1993).
Indeed, the evidence heard by the jury amply supported its finding that Shabudin
was guilty of each of the substantive offenses, either as a principal or an
aider/abettor.
2. Shabudin next challenges the district court’s application of a twelve-level
sentencing enhancement pursuant to U.S.S.G. § 2B1.1(b)(1) for the loss caused by
Shabudin’s fraud offenses.3 “We review the district court's interpretation of the
Sentencing Guidelines de novo, the district court's factual determinations for clear
error, and the district court's applications of the Guidelines to the facts for abuse of
discretion.” United States v. Christensen, 598 F.3d 1201, 1203 (9th Cir. 2010).
The Guidelines define “loss” as “the greater of actual or intended loss.” §
2
In United States v. Gallerani, 68 F.3d 611, 619 (2d Cir. 1995), the Second
Circuit determined that a Pinkerton instruction much like the one given to the jury
in this case was plainly erroneous.
3
Shabudin also challenges the district court’s application of sentencing
enhancements pursuant to U.S.S.G. §§ 2B1.1(b)(16)(B)(i) and 2B1.1(b)(2). We
find no merit to these challenges.
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2B1.1(b)(1), cmt. n. 3(A). The district court found, and we agree, that (1) there was
no intended loss in this case; and (2) the actual loss attributable to Shabudin could
not be reasonably determined.
Although the text of § 2B1.1(b)(1) says nothing about gain, the notes to the
section provide that “[t]he court shall use the gain that resulted from the offense as
an alternative measure of loss only if there is a loss but it reasonably cannot be
determined.” § 2B1.1(b)(1), cmt. n. 3(B). The district court applied a twelve-level
enhancement pursuant to § 2B1.1(b)(1) based on its finding that Shabudin’s
$348,000 salary from September 2008 to September 2009 represented a gain
resulting from Shabudin’s fraud offenses. The district court opined, without
explanation, that Shabudin “would not have received [that salary] but for his
unlawful conduct.” We affirm Shabudin’s sentence because the district court did
not commit clear error in using Shabudin’s salary as an alternate measure of loss.
3. Pursuant to 18 U.S.C. § 981(a)(1)(C), the sentencing court must order
forfeiture of all “proceeds traceable” to Shabudin’s offenses. The term “proceeds”
is defined in part as “property of any kind obtained directly or indirectly, as the
result of the commission of the offense giving rise to forfeiture, and any profit
traceable thereto, and is not limited to the net gain or profit realized from the
offense.” 18 U.S.C. § 982(a)(2)(A). We review the district court’s factual findings
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regarding forfeiture for clear error and its interpretation of federal forfeiture law de
novo. United States v. Alcaraz-Garcia, 79 F.3d 769, 772 (9th Cir. 1996).
Having determined that the district court did not commit clear error in
finding, for purposes of a § 2B1.1(b)(1) sentence enhancement, that Shabudin’s
salary represented a “gain” traceable to Shabudin’s fraud, we likewise conclude
that the district court did not commit clear error in finding that Shabudin’s final
year’s salary constituted proceeds traceable to his offenses under 18 U.S.C. §§
981(a)(1)(C). We thus affirm the district court’s forfeiture order.
4. The district court ordered Shabudin to pay restitution to the Federal
Deposit Insurance Corporation (“FDIC”) and the Trouble Asset Relief Program
(“TARP”) under the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. §
3663A, in the amount of $946,737,000. Shabudin challenges the district court’s
restitution award, arguing that the government did not prove that the offense
conduct caused the bank’s failure, such failure having in turn caused the losses to
the FDIC and TARP. We review “the legality of a restitution order de novo and the
factual findings supporting the order for clear error.” United States v. Luis, 765
F.3d 1061, 1065 (9th Cir. 2014).
The MVRA requires the district court to “order restitution to each victim in
the full amount of each victim’s losses as determined by the court.” 18 U.S.C. §
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3664(f)(1)(A). Restitution under the MVRA “may be awarded only for losses for
which the defendant's conduct was an actual and proximate cause.” United States
v. Swor, 728 F.3d 971, 974 (9th Cir. 2013) (internal citations omitted).
When seeking restitution, the government bears the burden of proving by a
preponderance of the evidence that a victim’s loss was caused by the defendant’s
offense conduct. United States v. Peterson, 538 F.3d 1064, 1074–75 (9th Cir.
2008); § 3664(e). The government must show “not only that a particular loss
would not have occurred but for the conduct underlying the offense of conviction,
but also that the causal nexus between the conduct and the loss is not too
attenuated (either factually or temporally).”4 Swor, 728 F.3d at 974. A defendant
should not be required to pay restitution for losses that he did not cause; nor should
he be liable “for an amount drastically out of proportion to his own individual
causal relation to the victim’s losses.” Paroline v. United States, 134 S. Ct. 1710,
1729 (2014); see also S. Rep. No. 104–179, at 19 1996 U.S.C.C.A..N. 924, 932
(“Losses . . . in which the victim’s loss is not clearly causally linked to the offense,
should not be subject to mandatory restitution.”).
In this case, the evidence established, and the district court recognized, that
4
The government in this case did not establish that the bank’s failure—and
the resulting losses to the FDIC and TARP—“would not have occurred but for the
conduct underlying the offense of conviction.” Swor, 728 F.3d at 974.
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there were multiple causes for UCB’s failure. The district court stated in its
restitution order that “[t]he market conditions contributed to the demise of UCB
and were ‘another cause’ of the harm to the victims, together with Defendant’s
crimes.” At sentencing, the district court stated: “Although the defendant’s actions
were material to the enormous financial loss in this case, the court finds that the
portion of that loss that can be directly attributable to the defendant individually
cannot reasonably be determined” because “other factors also contributed to [the
loss].” In Shabudin’s PSR, the probation officer noted:
UCB’s failure was a result of not only the criminal conduct in this
case, but of the overall financial crisis that caused significant damage
not only to UCB, but the entire banking industry; and as a result of
loans that were in place and deteriorating before [Shabudin] took over
the role as CCO. Additionally, UCB’s aggressive growth through bad
real estate loans contributed to this downfall, and many of the bad
loans were increased . . . before Shabudin took on the role of CCO. As
a result, this officer does not believe that the magnitude of the loss
was reasonably foreseeable by [Shabudin].
Thomas Killian, who was hired “to engineer a corporate transaction to recapitalize
and possibly save [the bank],” explained that “increasing third quarter losses [and]
additional asset quality problems” were among the “many factors” contributing to
his inability to save the bank.
Although the evidence clearly established that Shabudin’s offense conduct
did not alone cause UCB’s failure, the district court nonetheless ordered Shabudin
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to pay restitution in the full amount of the losses to the FDIC and TARP, to the
tune of nearly a billion dollars. We find this result at odds not only with the
evidence but also with the Supreme Court’s Paroline decision. We accordingly
vacate the district court’s order of restitution. On remand, consistent with Paroline,
the district should “assess as best it can from available evidence the significance of
the individual defendant’s conduct in light of the broader causal process that
produced the victim’s losses.” 134 S. Ct. at 1727–28. If such assessment proves
difficult, if not impossible, the district court should consider whether the MVRA’s
“complexity exception” is applicable. That exception permits a sentencing court to
decline to award restitution to a victim of fraud “if the court finds, from facts on
the record, that . . . determining complex issues of fact related to the cause . . . of
the victim’s losses would complicate or prolong the sentencing process to a degree
that the need to provide restitution to any victim is outweighed by the burden on
the sentencing process.” § 3663A(c)(3)(B).
5. Shabudin challenges the district court’s post-judgment order granting the
government’s motion to have Shabudin’s cash appearance bond applied toward his
criminal monetary obligations. We vacate the district court’s bond transfer order
and remand for the district court to reconsider the government’s motion for bond
transfer once the matter of restitution is resolved.
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Shabudin’s conviction is AFFIRMED. The district court’s forfeiture order
is AFFIRMED. The district court’s restitution order is VACATED; and we
REMAND for reconsideration of the appropriate amount, if any, of restitution.
Shabudin’s sentence is otherwise AFFIRMED. The district court’s bond transfer
order is VACATED and REMANDED for reconsideration once the matter of
restitution, if any, is resolved.
Each party shall bear its own costs.
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FILED
U.S. v. Shabudin, Case Nos. 15-10460 and 16-10075
JUL 05 2017
Rawlinson, Circuit Judge, concurring:
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I concur in the result.