United States v. John Zidar , 432 F. App'x 651 ( 2011 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT APR 13 2011
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
UNITED STATES OF AMERICA, No. 09-30279
Plaintiff - Appellee, D.C. No. 2:01-cr-00108-RSM-1
v.
MEMORANDUM*
JOHN WAYNE ZIDAR,
Defendant - Appellant.
Appeal from the United States District Court
for the Western District of Washington
Ricardo S. Martinez, District Judge, Presiding
Submitted April 11, 2011**
Seattle, Washington
Before: KLEINFELD, TASHIMA, and SILVERMAN, Circuit Judges.
A jury convicted Zidar and his co-defendant Steven Moreland for their roles
in a $73 million Ponzi scheme; the counts of conviction were mail fraud, wire
fraud, conspiracy to commit mail and wire fraud, promotional money laundering,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2)(C).
international money laundering, and conspiracy to commit money laundering.
This is the third appeal in these cases. In United States v. Zidar, 178 F. App’x 673
(9th Cir. 2006), we affirmed Zidar’s convictions, affirmed the district court’s
application of the Sentencing Guidelines, but vacated Zidar’s 360-month sentence
and remanded for resentencing in light of United States v. Booker, 543 U.S. 220
(2005), which was decided after the district court imposed sentence. More
recently, in United States v. Moreland, 622 F.3d 1147 (9th Cir. 2010), we reversed
Moreland’s promotional money laundering convictions in light of United States v.
Santos, 553 U.S. 507 (2008), but we held that Santos did not affect the convictions
for international money laundering or conspiracy to commit money laundering.
Moreland, 622 F.3d at 1166-68.
This appeal follows Zidar’s resentencing by a new district judge to a 360-
month term of imprisonment, the same term he received under the pre-Booker
framework. Like Moreland, Zidar now challenges his money laundering
convictions under Santos. He also challenges the procedural and substantive
reasonableness of the 360-month sentence. We have jurisdiction pursuant to 28
U.S.C. § 1291. Following Moreland, we reverse the promotional money
laundering convictions, but affirm the remaining convictions. We reject Zidar’s
procedural sentencing challenges, but remand for resentencing in light of the
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reversed convictions. Because of our remand, we do not reach substantive
reasonableness.
I. Money Laundering Convictions
Zidar argues that Santos requires reversal of his remaining promotional
money laundering convictions, Counts 29 and 31, because the instructions did not
require the jury to find that the underlying financial transactions involved the
“profits” of his fraud. The government agrees that Santos undermines these
convictions, but argues that the law of the case under our prior decision affirming
Zidar’s convictions precludes us from reaching this issue.
The law of the case, however, does not apply because Santos is intervening
controlling authority. United States v. Van Alstyne, 584 F.3d 803, 813 (9th Cir.
2009) (“Santos represents precisely the type of intervening change that the law of
the case exception recognizes.”) (deciding Santos issues despite prior panel
decision that affirmed convictions and remanded for resentencing only). Because
Zidar did not raise a timely challenge to the jury instructions for Counts 29 and 31,
our review is for plain error. Moreland, 622 F.3d at 1166.
We agree with both parties that the jury instructions for Counts 29 and 31
were plainly erroneous. See id. at 1166-67. Moreland was acquitted of these
counts at trial, so our prior opinion in his appeal does not directly address them.
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But the jury instructions for Counts 29 and 31 were the same as the instructions for
Counts 26 and 27, which Moreland found plainly erroneous under Santos.
Although the underlying transactions are somewhat different – Counts 26 and 27
involved commission payments, whereas Count 29 involved payment of return and
principal to an investor and Count 31 involved a marketing expenditure – all four
transactions were “central to carrying out the scheme’s objective of encouraging
further investment.” Id. at 1166. Accordingly, Moreland requires reversal of the
convictions under Counts 29 and 31 and the dismissal of those counts. Id.1
Zidar also challenges his convictions for international money laundering
(Counts 32-36) and conspiracy to commit money laundering (Count 38). As he
concedes, however, Moreland forecloses these challenges. Id. at 1167-68; see
United States v. Schaff, 948 F.2d 501, 506 (9th Cir. 1991) (“We have previously
found the law of the case doctrine to be applicable when the appeal of one co-
defendant is decided prior to the appeal of the other co-defendant, if both were
convicted at the same trial.”). In sum, we reverse the convictions under Counts 29
and 31, but affirm the other convictions.
II. Sentencing Issues
1
Counts 26 and 27 have already been dismissed against Zidar, as per
the government’s stipulation on remand.
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Zidar raises four challenges to his 360-month sentence, which the district
court imposed based on a Guidelines Range of 360 months to life.
1. Relying on Justice Scalia’s concurrence in Rita v. United States, 551
U.S. 338, 373 (2007), Zidar argues that the sentence violated his Sixth Amendment
right to trial by jury because the sentence “would have been unreasonable in the
absence of [] judge-found facts,” which in his case triggered Guidelines
enhancements that increased the applicable advisory range from 51 - 63 months to
360 months to life. Our recent decision in United States v. Treadwell forecloses
this argument. 593 F.3d 990, 1017-18 (9th Cir. 2010) (rejecting the Rita
concurrence as “too creative for the law as it stands” and holding that a district
court’s findings of fact during sentencing do not violate the Sixth Amendment so
long as the court imposes a sentence below the statutory maximum) (quotations
omitted).
2. Zidar argues that the district court should have found the amount of
loss caused by his crimes – which ultimately triggered a 10-level increase in the
total offense level – by clear and convincing evidence, rather than by a mere
preponderance, because the finding had a disproportionate impact on the sentence.
Treadwell forecloses this argument as well. Id. at 1001-02 (holding that
“preponderance of the evidence” was the appropriate standard of proof for a fraud
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loss determination that resulted in a 22-level enhancement of ponzi scheme
defendants’ total offense levels) (“We have repeatedly held that sentencing
determinations relating to the extent of a criminal conspiracy need not be
established by clear and convincing evidence.”).
3. Zidar next argues that the district court calculated fraud loss
incorrectly under U.S.S.G. § 2F1.1(b)(1) (1998),2 because the court failed to deduct
“the amount of funds returned to investors up to the amount invested” from the
total loss. Van Alstyne, 584 F.3d at 818. But Zidar also acknowledges that this
error did not affect the Guidelines calculation. Had the district court made the
proper deduction under Van Alstyne, it would have calculated a fraud loss of $68
million instead of $73 million. Both figures support a 17-level enhancement.
U.S.S.G. § 2F1.1(b)(1)(k) (17-level enhancement for loss between $40 million and
$80 million). We therefore agree that the miscalculation was harmless. See United
States v. Matsumaru, 244 F.3d 1092, 1106-07 (9th Cir. 2001).
4. Finally, Zidar challenges the substantive reasonableness of his 360-
month sentence. Primarily, he argues that the sentence is unreasonable because
fraudsters in other jurisdictions received shorter sentences despite causing greater
2
The parties do not dispute the propriety of the district court’s
application of the 1998 Guidelines.
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losses. Treadwell probably foils this argument also. 593 F.3d at 1011-12
(“Because the Guidelines range was correctly calculated, the district court was
entitled to rely on the Guidelines range in determining that there was no
‘unwarranted disparity’ between Treadwell and other offenders convicted of
similar frauds . . . . The mere fact that Treadwell can point to a defendant
convicted at a different time of a different fraud and sentenced to a term of
imprisonment shorter than Treadwell’s does not create an ‘unwarranted’
sentencing disparity.”). But our reversal of Counts 29 and 31 requires us to
remand for resentencing in any event. See Moreland, 622 F.3d at 1173 (remanding
for resentencing after vacating convictions for promotional money laundering);
United States v. Bennett, 363 F.3d 947, 956 (9th Cir. 2004) (“Because we are
affirming one of Bennett's counts of conviction and reversing the other, Bennett's
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sentence has become ‘unbundled,’ and he must be resentenced.”).3 We therefore
decline to reach the substantive reasonableness of Zidar’s sentence. See United
States v. Crandall, 525 F.3d 907, 915 n.9 (9th Cir. 2008) (declining to decide
substantive reasonableness after vacating sentence on other grounds).
We REVERSE Zidar’s convictions under Counts 29 and 31 with directions
to dismiss those counts, VACATE the sentence, and REMAND for resentencing.
We AFFIRM the district court in all other respects.
3
The government argues incorrectly that plain error review governs our
decision as to whether to remand for resentencing. Plain error governed our review
of Zidar’s convictions. See Moreland, 622 F.3d at 1166. Having reversed two of
those convictions, we must decide whether that reversal requires resentencing.
Following Moreland, we conclude that it does. 622 F.3d at 1173. However, the
district court should decide in the first instance whether the reversal should alter
the overall sentencing package. See United States v. Hernandez-Orellana, 539
F.3d 994, 1011 (9th Cir. 2008) (remanding for resentencing after dismissing two of
eleven counts) (“Because we cannot conclude on this record that the district court
would impose the same sentence on remand (though it is not restricted from doing
so), we . . . vacate the sentences imposed [] and remand for re-sentencing.”). We
do not find persuasive the government’s argument that the structure of the
sentencing judgment – which imposed the sentences on Counts 29 and 31 to run
concurrent to sentences on other counts – establishes that a remand would not
result in a different sentence. The district court plainly fashioned the structure of
the judgment to fit its conclusion as to the appropriate total term of imprisonment,
not the other way around. See Zidar, 178 F. App’x at 679 (“The district court
imposed consecutive sentences to achieve the thirty-year sentence that the district
court selected from the recommended Guidelines range.”).
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