United States v. Reed

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT February 11, 2015
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. Nos. 13-8073 & 14-8018
(D.C. No. 1:12-CR-00058-SWS-1)
ROBERT ARTHUR REED, (D. Wyo.)
Defendant - Appellant.
ORDER AND JUDGMENT*
Before HARTZ, McKAY, and McHUGH, Circuit Judges.
Defendant Robert Arthur Reed appeals from two district-court orders. The
first (Appeal No. 13-8073) entered judgment on his conviction, by guilty plea, of
conspiracy to commit mail and wire fraud in violation of 18 U.S.C. §§ 1349, 1341,
and 1343, and conspiracy to commit money laundering in violation of id. § 1956(h).
Defendant was sentenced to two concurrent terms of 151 months’ imprisonment
followed by three years’ supervised release, and was ordered to pay restitution of
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
$4,425,034.63. The second order (Appeal No. 14-8018) forfeited various assets of
Defendant in favor of the United States. The two appeals have been consolidated for
purposes of briefing, record, and submission. We reject all of Defendants’
assignments of error and affirm the orders of the district court.1
Defendant’s convictions arose from a scheme to sell investments in wind-farm
projects that did not exist. Notwithstanding his guilty plea admitting the elements of
the charged offenses, he now challenges his convictions and resultant forfeitures on
the grounds that (1) the alleged offenses were not “ripe” or “justiciable,” because the
investment scheme had not culminated in any criminal securities violations when this
prosecution was initiated; and (2) the district court lacked subject-matter jurisdiction,
because the Attorney General initiated this prosecution without first obtaining a
referral from the Securities and Exchange Commission (SEC) under 15 U.S.C.
§ 77t(b). Defendant also objects to several sentence enhancements imposed by the
district court. Finally, he claims that he received ineffective assistance of counsel in
the proceedings below. Because this last claim was not raised and ruled on in the
district court, however, it is not properly brought in this direct criminal appeal and
must be pursued on collateral review. See United States v. Battles, 745 F.3d 436, 457
(10th Cir.), cert. denied, 135 S. Ct. 355 (2014).
1
Defendant is proceeding pro se. He was initially represented by counsel for
Appeal No. 13-8073, from the judgment of conviction and sentence, but this court
granted counsel’s motion to withdraw and Defendant’s motion to proceed pro se. He
has from the outset appeared pro se in Appeal No. 14-8018.
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A. Ripeness/Justiciability
When Defendant pleaded guilty, he waived all defenses except those relating
to subject-matter jurisdiction and a narrow class of constitutional claims involving
the right not to be hauled into court. See United States v. De Vaughn, 694 F.3d 1141,
1145-46, 1153 (10th Cir. 2012). His guilty plea constitutes a binding admission that
he did in fact commit the offenses of conviction. Id. at 1152 n.6. The government
contends that Defendant’s ripeness/justiciability objection is nothing more than a
belated (and facially dubious) factual-innocence defense barred by his admission of
guilt. We agree.
The thrust of Defendant’s position is that he committed no crime because the
government initiated this prosecution before an obligation to pay a return to
defrauded investors arose. If they lost millions of dollars investing in nonexistent
wind-farm projects based on misrepresentations by members of the conspiracy, the
fault, he insists, lay with the government; nothing criminal could have been done by
him and his associates until their fraud ripened into unpaid returns.
There are numerous problems with this argument, but it suffices to say that
Defendant cites no authority that a criminal conspiracy does not arise until the
contemplated substantive crime is committed and the victims of that crime
irrevocably incur their losses. Indeed, the law is squarely to the contrary: “One can
be guilty of a conspiracy to commit an offense without committing the substantive
offense itself.” United States v. Lake, 472 F.3d 1247, 1263 (10th Cir. 2007).
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Defendant does not challenge the factual basis of his plea, which conclusively
established his guilt with respect to the elements of the charged criminal conspiracy.
B. SEC Referral
Defendant insists that “once the SEC has investigated, determined, and
referred a [securities] violation, then and only then can the appropriate district
empanel a grand jury and investigate” for any criminal prosecution relating to the
violation of securities laws. Aplt. Opening Br. at 17. He contends that this
unsatisfied prerequisite to criminal prosecution—applicable here, he argues, because
the charged conspiracy concerned investments qualifying as securities2—is a
limitation on the district court’s subject-matter jurisdiction. This argument is
meritless.
Under 18 U.S.C. § 3231 the district courts have jurisdiction over “all offenses
against the laws of the United States.” Absent an express limitation imposed on that
jurisdiction by some other statute, § 3231 is “the beginning and the end of the
jurisdictional inquiry” in criminal cases, United States v. Tony, 637 F.3d 1153, 1158
(10th Cir. 2011) (internal quotation marks omitted). The other statute invoked by
Defendant imposes no such limitation. All it says is that “the [SEC] may transmit
such evidence as may be available concerning [illegal securities] acts or practices to
the Attorney General, who may, in his discretion, institute the necessary criminal
2
The basis for our rejection of Defendant’s jurisdictional contention does not
require us to delve into the intricacies of what constitutes a “security” implicating the
authority of the SEC.
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proceedings.” 15 U.S.C. § 77t(b). Nothing in this discretionary language suggests
that an SEC referral is a prerequisite to criminal prosecution by the Attorney General
of offenses relating to securities—much less a prerequisite to the district court’s
jurisdiction over such an offense.
This court rejected a similar argument in connection with referrals by the
Federal Election Commission (FEC) for prosecution of campaign-finance crimes in
Bialek v. Mukasey, 529 F.3d 1267 (10th Cir. 2008). Our analysis in that case is
applicable here. First, we “emphasize[d] that we cannot presume that Congress has
divested the Attorney General of his prosecutorial authority absent a clear and
unambiguous expression of legislative will.” Id. at 1270 (internal quotation marks
omitted). We then examined the language of the Federal Election Campaign Act
(FECA) for an expression of such legislative will, and found none:
FECA[] speaks only to the power of the FEC. It requires a vote of four
commissioners before the FEC may refer a matter for criminal
prosecution, but this provision, by its clear terms, restricts only the
FEC. Nowhere in FECA do we find a single phrase limiting the
Attorney General’s powers. If Congress had wished all campaign
finance litigation, both civil and criminal, to originate with the FEC,
only a few lines of statutory text would have been required. Instead,
Congress explicitly granted the FEC only exclusive jurisdiction with
respect to civil enforcement of FECA’s provisions. The obvious
implication, uncontroverted by any words in the statute, is that the FEC
and Attorney General retain concurrent jurisdiction to investigate
criminal matters.
Id. at 1271 (citation, footnote, emphasis, and internal quotation marks
omitted).
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Like the FECA provision at issue in Bialek, nothing in § 77t(b) purports to
limit the prosecutorial authority of the Attorney General. The Attorney General is
mentioned in § 77t(b), but in recognition—not limitation—of his discretionary
authority to initiate criminal prosecutions.
Intertwined with his SEC-referral objection, Defendant also argues that a
securities violation is a necessary predicate for guilt on the conspiracy counts and, he
contends, no such violation occurred. This argument is meritless for at least two
reasons. First, “[o]ne can be guilty of a conspiracy to commit an offense without
committing the substantive offense itself.” Lake, 472 F.3d at 1263. Second, this is
really just another version of the argument that he is innocent of the conspiracy
counts to which he pleaded guilty—that “[t]here was never any criminal conduct in
this case.” Aplt. Opening Br. at 18. Again, his participation in a criminal conspiracy
is precisely what his guilty plea established.
C. Sentence Enhancements
Some of Defendant’s challenges regarding sentence enhancements also rely on
his meritless position that the crimes to which he pleaded guilty had not occurred.
For example, he insists that the 18-level enhancement in U.S. Sentencing Guidelines
Manual (USSG) § 2B1.1(b)(1)(J) for fraud crimes generating losses in excess of
$2,500,000 is inapplicable because there were in fact no losses arising from a crime.
But he participated in a fraudulent conspiracy obtaining over $4,000,000 from
investors and there is no claim that the money was repaid or that the fraudulently
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promoted venture ever materialized for their benefit. Similarly, he argues that the
four-level enhancement in USSG § 2B1.1(b)(2)(B) for fraud offenses involving 50 or
more victims is inapplicable because there were in fact no victims of a crime. Again,
his plea established the crime, while the evidence at sentencing established that the
crime had 83 victims.
Defendant’s challenge to use of the two-level enhancement in USSG
§ 2S1.1(b)(2)(B) for money laundering in violation of 18 U.S.C. § 1956 is meritless
for a different reason. He contends that this enhancement is precluded by an
application note directing that “[s]ubsection (b)(2)(B) shall not apply if the
Defendant was convicted of a conspiracy under 18 U.S.C. § 1956(h) and the sole
object of that conspiracy was to commit [a money laundering] offense set forth in
18 U.S.C. § 1957.” USSG § 2S1.1, cmt. n.3(C) (emphasis added). But the
conspiracy in this case did not have § 1957 as its sole object; it also encompassed
conspiracy to violate § 1956.
Finally, Defendant challenges imposition of the four-level enhancement in
USSG § 3B1.1(a) for being an organizer or leader of the criminal conspiracy. He
insists that the evidence at sentencing failed to support this enhancement. “The
government bears the burden of proving sentencing enhancements by a
preponderance of the evidence.” United States v. Ramos, 695 F.3d 1035, 1039
(10th Cir. 2012) (internal quotation marks omitted). Applying a clear-error standard
of review to this factual question, we may reverse the district court only if “on the
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entire evidence, we are left with the definite and firm conviction that a mistake has
been committed.” United States v. Shengyang Zhou, 717 F.3d 1139, 1149 (10th Cir.)
(internal quotation marks omitted), cert. denied, 134 S. Ct. 458 (2013). We are left
with no such conviction here.
As we noted recently, indicia of a leadership or organizational role in a
criminal enterprise include:
“the exercise of decision making authority, the nature of participation
in the commission of the offense, the recruitment of accomplices, the
claimed right to a larger share of the fruits of the crime, the degree of
participation in planning or organizing the offense, the nature and scope
of the illegal activity, and the degree of control and authority exercised
over others.”
Id. (quoting USSG § 3B1.1, cmt. n.4 (2012)). The government presented sufficient
evidence to establish the following: Defendant exercised control over all the invested
funds, most of which came into accounts he opened as the sole signatory with the
authority to withdraw funds for distribution to other members of the conspiracy. He
also was responsible for setting up the many drop boxes used as company addresses
for collecting and forwarding investor funds to the accounts he controlled—drop
boxes set up with his credit card and phone number by someone with a name
identified as an alias he used for this purpose. As for solicitation activities, while a
Greg Doss ran the “boiler room” where sales people worked, the sales pitches and
what investors should be told came from Defendant, who also participated in periodic
conference calls to provide investors with information and to answer questions the
sales people were not equipped to handle. In addition, in the one illustrative example
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of a defrauded investor detailed at the sentencing hearing, a letter sent to assure the
investor that a (nonexistent) wind turbine had been purchased with his $250,000
investment was written and sent to Mr. Doss’s office by Defendant with the direction
that it be cut and pasted and forwarded to the investor under the name of one of
Mr. Doss’s staff. Another participant, whose various duties included travelling to
South Dakota to erect a sign indicating progress where a wind farm was supposed to
be under construction, specifically told an investigator that he “worked for Robert
Reed.” Finally, while Defendant insisted he was merely a consultant paid a yearly
salary of $125,000 by Mr. Doss, evidence regarding the accounts under his sole
control showed cash withdrawals (which, of course, only Defendant could make) as
well as direct transfers of funds into his own personal account totaling approximately
$700,000 over a period of just two and one-half years.
The nature and extent of Defendant’s authority over, participation in, and
remuneration through the conspiracy persuade us that the district court did not
commit clear error in finding him a leader or organizer. Defendant sought to deflect
this role onto Mr. Doss, but even if Mr. Doss might also be deemed a leader or
organizer, we have recognized that “[m]ore than one person can qualify as a leader or
organizer of a single criminal association or conspiracy,” Shengyang Zhou, 717 F.3d
at 1149.
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The judgments of the district court are affirmed. Defendant’s motion to
supplement the record, which raises numerous matters unrelated to the issues on this
appeal and nothing that affects our disposition, is denied.
Entered for the Court
Harris L Hartz
Circuit Judge
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