United States v. Holloway

FILED
United States Court of Appeals
Tenth Circuit
June 20, 2016
Elisabeth A. Shumaker
Clerk of Court
PUBLISH
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 14-4164
ROBERT LEE HOLLOWAY,
Defendant - Appellant.
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:11-CR-00984-RJS-1)
Gregory W. Stevens of Salt Lake City, Utah, for Defendant-Appellant.
Dave Backman, Assistant United States Attorney (John W. Huber, United States
Attorney, with him on the brief), District of Utah, Salt Lake City, Utah, for
Plaintiff-Appellee.
Before TYMKOVICH, Chief Judge, SEYMOUR and LUCERO, Circuit Judges.
SEYMOUR, Circuit Judge.
A jury convicted Robert Lee Holloway of four counts of wire fraud in
violation of 18 U.S.C. § 1343 and one count of making and subscribing a false tax
return in violation of 26 U.S.C. § 7206(1). The district court sentenced Mr.
Holloway to 225 months of imprisonment on all five counts. On appeal, Mr.
Holloway contends he was denied his Sixth Amendment right to counsel of his
choice and that the district court allowed impermissible victim impact testimony,
denied him his constitutional right to confront witnesses, and improperly
enhanced his sentence. We affirm.
BACKGROUND
The charges against Mr. Holloway were the result of a scheme he created
through his company, US Ventures, that defrauded over 250 investors and caused
losses in excess of $15 million. Mr. Holloway began soliciting investors in 2005
by guaranteeing incredible returns in futures markets due to a mathematical
algorithm he had created. When Mr. Holloway failed to realize the gains he
promised, he started defrauding his investors by stating that his trading was
profitable even though he lost substantial amounts of money, using money from
new investors to pay other investors, and fabricating reports to investors stating
that his daily returns were between 0 to 1.15% and that his trading never resulted
in a loss. He also diverted investor funds for his own personal use.
At his initial appearance on December 16, 2011, the district court provided
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Mr. Holloway with an attorney. Approximately twenty months later, Mr.
Holloway’s first attorney withdrew and another attorney was appointed to
represent him. At a hearing on November 19, 2013, the magistrate judge told Mr.
Holloway that it would be the last time his court-appointed attorney would be
replaced and stressed to him that if he wished to retain his own attorney, he must
do so by the end of 2013 to avoid interfering with the trial date. On June 23,
2014, the district court entered a trial order requiring that any motion to substitute
counsel be filed at least 21 days before trial. On July 2, the court appointed an
additional attorney as co-counsel for Mr. Holloway through trial.
Between March 2014 and July 2014, Mr. Holloway’s appointed attorney
attempted numerous times, without success, to show that Mr. Holloway was not
competent to stand trial. Mr. Holloway appeared to be opposed to this trial
strategy, stating on June 3 that “I certainly feel no lack of competency in going to
court and telling the real story.” Aplt. Br. at 11. On July 25, six days before
trial, Mr. Holloway’s court-appointed attorneys filed a motion to withdraw and to
obtain a continuance, stating that Mr. Holloway had retained his own attorney. At
a hearing to examine the motion, the district court recognized that “Mr. Holloway
is entitled to counsel of his choice” and held that his new attorney, who attended
the hearing, could appear and work alongside his current attorneys. Rec., vol. 4
at 194. But the court refused to reschedule the trial date and it denied the
appointed attorneys’ motion to withdraw and to continue the trial. After its
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ruling, the court took a fifteen minute recess so Mr. Holloway and all three
attorneys could decide how to proceed. After the recess, one of Mr. Holloway’s
appointed attorneys stated “[t]he decision has been made that [Mr. Holloway’s
retained attorney] will not be entering her appearance at this time,” and that
“[d]iscussion was had as to whether Mr. Holloway might wish to make a record
on his own behalf and he has declined to do so.” Id. at 200.
At trial, the government presented seven witnesses to show that Mr.
Holloway had made false representations to investors. Over the objection of Mr.
Holloway, four of those witnesses were allowed to testify to the impact Mr.
Holloway’s fraudulent scheme had on their lives. Their testimony is outlined
infra in our discussion of this issue. The government also introduced thousands
of pages of trading records and reports to investors that were designed to show
Mr. Holloway’s specific intent to defraud, the only element of wire fraud that Mr.
Holloway denied. Mr. Holloway was convicted on all five counts, and the district
court subsequently sentenced him to 225 months in prison.
Mr. Holloway filed a timely appeal, claiming: (1) the district court’s denial
of his motion to substitute counsel deprived him of his Sixth Amendment right to
counsel of choice; (2) the district court’s admission of the victim-impact
statements was an abuse of discretion; (3) the district court violated the
Confrontation Clause by not allowing him to fully cross-examine two witnesses;
and (4) the district court erroneously included a six-level enhancement of his
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sentence based on the claimed number of victims. We address each issue in turn.
DISCUSSION
A. Sixth Amendment Right to Counsel of Choice
The Sixth Amendment guarantees that “[i]n all criminal prosecutions, the
accused shall enjoy the right to . . . have Assistance of Counsel for his defence.”
U.S. Const. amend VI. The Supreme Court has explained that “an element of this
right is the right of a defendant who does not require appointed counsel to choose
who will represent him.” United States v. Gonzalez-Lopez, 548 U.S. 140, 144
(2006). This right “stems from a defendant’s right to decide what kind of defense
he wishes to present.” United States v. Collins, 920 F.2d 619, 625 (10th Cir.
1990) (citing United States v. Nichols, 841 F.2d 1485, 1502 (10th Cir. 1988)).
We have recognized that “‘[a]ttorneys are not fungible;’ often ‘the most important
decision a defendant makes in shaping his defense is his selection of an
attorney.’” Id. (quoting United States v. Laura, 607 F.2d 52, 56 (3d Cir. 1979));
accord United States v. Jones, 160 F.3d 641, 646 (10th Cir. 1998) (“[T]he
selection of one attorney over another can profoundly affect the course and
outcome of a trial.”).
When a defendant is wrongly denied his right to counsel of choice, his
deprivation is “complete” at the time of the denial “regardless of the quality of
the representation he received.” Gonzalez-Lopez, 548 U.S. at 148; see also
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United States v. McKeighan, 685 F.3d 956, 966 (10th Cir. 2012). Because
“erroneous deprivation of the right to counsel of choice [has] ‘consequences that
are necessarily unquantifiable and indeterminate, [the deprivation] unquestionably
qualifies as structural error.’” Gonzalez-Lopez, 548 U.S. at 150 (quoting Sullivan
v. Louisiana, 508 U.S. 275, 282 (1993)). Accordingly, ‘[i]f a defendant is
wrongly denied his counsel of choice, no showing of prejudice is necessary to
establish constitutional error.” McKeighan, 685 F.3d at 966.
“Although there is a presumption in favor of a defendant’s counsel of
choice, the right is not absolute.” Id. at 966. The Supreme Court has long
recognized “a trial court’s wide latitude in balancing the right to counsel of
choice against the needs of fairness and against the demands of its calendar.”
Gonzalez-Lopez, 548 U.S. at 152 (internal citations omitted). As we have
explained:
A defendant’s choice of counsel may be denied by a court’s refusal
to grant a continuance necessary to allow the chosen attorney to
participate in the case. This issue has arisen when a defendant had
not obtained an attorney by the time of trial, United States v. Kelm,
827 F.2d 1319, 1320-21 (9th Cir. 1987); United States v. Leavitt, 608
F.2d 1290, 1293-94 (9th Cir. 1979); when a chosen attorney claimed
that he or she had inadequate time to prepare for trial, Birt, 725 F.2d
at 591-92; United States v. LaMonte, 684 F.2d 672 (10th Cir. 1982);
Linton, 656 F.2d at 208; . . . or when a defendant sought to obtain a
new attorney immediately before, Urquhart v. Lockhart, 726 F.2d
1316, 1319 (8th Cir. 1984), or during trial United States v. Lowe, 569
F.2d 1113, 1116 (10th Cir. [(1978]).
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Nichols, 841 F.2d at 1504. Thus, “[o]nly when the trial court unreasonably or
arbitrarily interferes with a defendant’s right to counsel of choice do we agree a
conviction cannot stand, ‘irrespective of whether the defendant has been
prejudiced.’” United States v. Mendoza-Salgado, 964 F.2d 993, 1016 (10th Cir.
1992) (quoting Collins, 920 F.2d at 625).
On appeal, Mr. Holloway states he “is not claiming that the District Court
unreasonably or arbitrarily interfered with his right to counsel.” Aplt. Br. at 37.
In fact, he concedes the court’s actions in denying his motion to withdraw and to
continue trial were appropriate because “Mr. Holloway missed the deadline set by
the Court for retaining counsel, his delay would have inconvenienced the
government and its witnesses, and Mr. Holloway’s then-existing counsel stated
that they were willing and able to proceed.” Id. at 37-38. Thus, as his own brief
admits, the district court did not deprive Mr. Holloway of his Sixth Amendment
right to counsel of choice. 1
Instead, Mr. Holloway’s argument is more properly characterized as a claim
of ineffective assistance of counsel. He contends there was a total breakdown in
1
The record fully supports the conclusion that the district court did not
deny Mr. Holloway his right to counsel of choice. As we have explained, the
court told Mr. Holloway that his retained counsel could appear and work
alongside his court-appointed attorneys. After the court took a recess to allow
Mr. Holloway a chance to consult with counsel and weigh the option, Mr.
Holloway decided to continue with just his court-appointed counsel.
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communication between him and his appointed counsel, as evidenced by the
disagreement about trial strategy and his competency to stand trial, as well as the
fact that his appointed attorneys were unaware he had secured a separate attorney.
Mr. Holloway asserts that “[a] complete breakdown in communication between
defendant and his or her counsel thus implicates the consideration whether
counsel is ineffective under the Sixth Amendment.” Id. at 38 (emphasis added).
Every case that Mr. Holloway cites in support of his argument involved an
ineffective assistance of counsel claim. See, e.g., Romero v. Furlong, 215 F.3d
1107, 1113 (10th Cir. 2000) (“In deciding whether a complete breakdown in
communication rendered Appellant’s representation constitutionally ineffective,
we consider four factors.” (emphasis added)); Brown v. Craven, 424 F.2d 1166,
1170 (9th Cir. 1970) (“[T]o compel one charged with grievous crime to undergo a
trial with the assistance of an attorney with whom he has become embroiled in
irreconcilable conflict is to deprive him of the effective assistance of any counsel
whatsoever.”); United States v. Soto Hernandez, 849 F.2d 1325, 1328 (10th Cir.
1988) (complete breakdown in communication between attorney and client may
give rise to presumption of ineffectiveness). Mr. Holloway’s argument is thus
that he was denied effective assistance of counsel, not that he was denied counsel
of choice.
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While the current record does not support Mr. Holloway’s complete
breakdown claim, 2 we do not reach that issue because “[i]neffective assistance of
counsel claims should be brought in collateral proceedings, not on direct appeal.”
United States v. Galloway, 56 F.3d 1239, 1240 (10th Cir. 1995) (en banc). The
reason for this general rule is that “[a] factual record must be developed in and
addressed by the district court in the first instance for effective review. Even if
evidence is not necessary, at the very least counsel accused of deficient
performance can explain their reasoning and actions, and the district court can
render its opinion on the merits of the claim.” Id. Accordingly, if Mr. Holloway
wishes to establish there was a complete breakdown in communication between
him and his appointed attorneys that rendered their representation ineffective, he
must do so in collateral proceedings.
B. Victim Impact Statements
Relying on United States v. Copple, 24 F.3d 535 (3d Cir. 1994), Mr.
Holloway contends the district court erred by allowing the government to present
the testimony of several victims concerning the emotional impact the financial
loss had on their personal lives. He maintains the error was not harmless because
of the importance of the testimony “in establishing Mr. Holloway’s guilt and the
2
We note that after the district court sentenced Mr. Holloway, he thanked
his court-appointed counsel, contrary to his claims on appeal regarding their
relationship.
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emphasis placed on that . . . testimony during closing [arguments] by the
government.” Aplt. Br. at 31. Although we question whether the district court
should have allowed emotionally charged testimony, our review of the record
persuades us any error was harmless in light of the overwhelming evidence of Mr.
Holloway’s specific intent to defraud investors.
At trial, a number of victims testified about the impact the fraud had on
their lives. 3 David Story testified that he and approximately forty of his investors
received only 3.1 million of the four million invested with US Ventures, that he
had to sell everything to pay back the second-tier investors, that he lost
relationships as a result, and that he ultimately filed for bankruptcy. Stanley
Miller testified that he lost the $136,000 he invested in US Ventures while
unemployed, and that he had cashed out his IRA and sold his house for the
proceeds in order to invest. He further stated that “it separated our family” and
that “we didn’t end up with enough money to be able to afford to buy another
3
After opening statements, Mr. Holloway moved to prohibit “the victim
witnesses in this case from testifying to such matters as struggling to keep a roof
over their head, losing everything, [and] having borrowed money to invest” as
“not relevant to any of the elements of the charged offenses” because he believed
it was “clearly designed to elicit the very sort of emotional impact that . . . should
be avoided.” Rec., vol. 4 at 538-39. He also argued the testimony was improper
not only because it was not relevant under Fed. R. Evid. 401 but also because it
was unfairly prejudicial under Fed. R. Evid. 403. The district court ruled that the
government could ask the witnesses “open-ended questions” such as the amount
the victim lost and how it impacted him or her but could not ask leading questions
such as, “did you lose your shirt and everything you ever had?” or “[i]s it your
life savings?” Id. at 541-42.
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house, and I wasn’t getting enough from Social Security to afford an apartment.”
Rec., vol. 4 at 868-69. Mr. Miller broke down emotionally during this testimony.
In addition, Timothy Kohl testified he invested $94,000 in US Ventures through
Winsome Investment Trust, Robert Andres’s investment company, 4 and that he
had taken out a second mortgage on his home. All of this had “caused a great
deal of marital distress.” Id. at 834. Finally, Ralph Wayne Thompson testified:
Those who know me still understand my integrity. But those who
don’t makes it a little more challenging to do future business that I
had – I’ve always – I spend my life, it was important to me that my
word meant something. Now to have that doubt there it’s frustrating
based on someone else’s promises to me.
Id. at 361-62.
Mr. Holloway contends the government improperly emphasized the
personal impact the financial loss had on the victims’ lives during closing
arguments. For example, the government stated Mr. Miller “sold his house to
invest more money in this fraud.” Rec., vol. 4 at 1134. The government also
argued that “[t]he time has come for Mr. Holloway to be held responsible for
those lies and the enormous pain that he has caused families across this country
4
Between 2005 and 2009, Robert Andres operated an investment company
called the Winsom Investment Trust, which placed $24.7 million with US
Ventures in what was later described as a ponzi scheme. See Klein v. Widmark,
No. 211-cv-01097, 2015 WL 5038543, *1 (D. Utah Aug. 26, 2015). Because of
his involvement in soliciting investors through Winsom for US Ventures, Mr.
Andres pled guilty to wire fraud. See United States v. Andres, No. 2:11-cr-00985-
RJS-PMW (D. Utah); see also Klein, 2015 WL 5038543 at *1.
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through his lies.” Id. at 1167. Mr. Holloway specifically claims the combined
emotionally charged testimony of the four witnesses, the government’s emphasis
at closing on the emotional aspect of the testimony, “and the complete lack of a
cautionary instruction on the issue leaves us at least with grave doubt that Mr.
Holloway’s guilt was established not by evidence relevant to the charges against
him but by evidence that overtly and unnecessarily played to the sympathies of
the jury.” Aplt. Br. at 49.
Mr. Holloway rightly points out that in Copple, 24 F.3d at 545, the Third
Circuit held the district court abused its discretion by allowing victim impact
testimony in a mail fraud case 5 “beyond anything that was reasonable to prove
Copple’s specific intent to defraud.” Copple was charged with numerous counts
of mail fraud and tax evasion and found guilty on all counts. Id. at 540. His
defense at trial “was that he had simply made a bad business decision when he, as
trustee, had relied on the advice of experts to invest,” and therefore had no
specific intent to defraud. Id. at 545. The district court allowed the government
to present the victims’ testimony about their “losses, and about the impact of
those losses on their lives.” Id. at 544. Copple argued on appeal that the victims’
5
“Because the requisite elements of the two statutes [mail fraud and wire
fraud] are virtually identical, this court has held ‘[i]nterpretations of § 1341 are
authoritative in interpreting parallel language in § 1343.’” United States v.
Fishman, 645 F.3d 1175, 1186 n.7 (10th Cir. 2011) (alterations in original)
(quoting United States v. Weiss, 630 F.3d 1263, 1271 n.5 (10th Cir. 2010)).
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loss testimony was not relevant under Fed. R. Evid. 401 because proof of actual
loss is not required to prove the elements of mail fraud. Id. He also argued “the
testimony about the impact of the losses was both irrelevant . . . and unfairly
prejudicial, and hence excludable under [Fed. R. Evid.] 401 and 403.” Id.While the court agreed in Copple that “[p]roof of actual loss by the
intended victims is not necessary,” id. (citing United States v. Kelley, 929 F.2d
582, 585 (10th Cir. 1991); United States v. King, 860 F.2d 54, 55 (2d Cir. 1988)),
it explained that the evidence of loss was still relevant, id. at 545. It noted that
“[p]roving specific intent in mail fraud cases is difficult, and, as a result, a liberal
policy has developed to allow the government to introduce evidence that even
peripherally bears on the question of intent.” Id. But the court held that by
allowing the loss testimony, the district court’s “ruling encouraged the
government to introduce a wide range of victim impact testimony in addition to
the testimony about the size of the losses,” and thus “[s]ome of the victim impact
testimony went beyond anything that was reasonable to prove Copple’s specific
intent to defraud.” Id. The court emphasized that “[t]estimony such as this had
either no, or very little, probative value and was unfairly prejudicial.” Id. at 546.
Notably, notwithstanding these conclusions, the court held “the error of
admitting the victim impact statements was harmless because of the overwhelming
evidence of both the scheme to defraud and Copple’s specific intent.” Id.
(emphasis added). There was evidence that Copple had falsified financial
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statements, prepared wholly fictitious reports about investments, and used the
victims’ funds on extravagant personal expenses. Id. at 546-47. The court held
the “evidence overwhelmingly indicates that Copple knowingly devised or
participated in a scheme to defraud and did so with the specific intent to defraud,”
concluding “it was highly probable Copple would have been convicted for
violating the mail fraud statute even if the victim impact testimony had been
excluded.” Id. at 547.
“A trial court’s admission of inadmissible evidence will disturb a
defendant’s conviction only if the error is not harmless,” United States v.
McVeigh, 153 F.3d 1166, 1203 (10th Cir. 1998) (quoting United States v. Cass,
127 F.3d 1218, 1225 (10th Cir. 1997)), and the government bears the burden of
establishing harmlessness, id. at 1204. “A non-constitutional error . . . is
harmless unless it had a ‘substantial influence’ on the outcome or leaves one in
‘grave doubt’ as to whether it had such effect.” United States v. Medina-Copete,
757 F.3d 1092, 1108 (10th Cir. 2014) (quoting United States v. Rivera, 900 F.2d
1462, 1470 (10th Cir. 1990) (en banc)). “[C]autionary instructions are ordinarily
sufficient to cure any alleged prejudice to the defendant.” McVeigh, 153 F.3d at
1204.
Here, in order to prove wire fraud in violation of 18 U.S.C. § 1343, 6 the
6
Section 1343 reads in relevant part:
(continued...)
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government had to establish beyond a reasonable doubt the following four
elements, which were stated in jury instruction number twenty-nine:
First, that there was a scheme or artifice to defraud or a scheme to
obtain money or property by means of false pretenses,
representations, or promises as alleged in the Indictment;
Second, that the defendant knowingly and willfully participated in
the scheme or artifice to defraud with knowledge of its fraudulent
nature and with specific intent to defraud;
Third, that in execution or furtherance of that scheme, the defendant
used or caused the use of interstate wires as specified in the
Indictment; and
Fourth, that the scheme employed false or fraudulent pretenses,
representations, or promises that were material.
Rec., vol. 2 at 983 (emphasis added).
At trial, Mr. Holloway’s defense specifically contested only the second
element, noting during opening statements “that despite the prosecution’s
mountains of evidence, they won’t be able to show beyond a reasonable doubt
that Mr. Holloway acted with that specific intent to defraud.” Rec., vol. 4 at 496.
Accordingly, the central issue with respect to the wire fraud charges was whether
6
(...continued)
Whoever, having devised or intending to devise any scheme or
artifice to defraud, or for obtaining money or property by means of
false or fraudulent pretenses, representations, or promises, transmits
or causes to be transmitted by means of wire . . . communication in
interstate . . . commerce, any writings, signs, signals, pictures, or
sounds for the purpose of executing such scheme or artifice, shall be
fined under this title or imprisoned not more than 20 years, or both.
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Mr. Holloway acted with the specific intent to defraud investors.
As we have repeatedly recognized, “fraudulent intent is difficult to prove
with direct evidence,” and thus “it may be inferred from circumstantial evidence
considered in its totality.” United States v. Kalu, 791 F.3d 1194, 1205 (10th Cir.
2015). One means of establishing intent to defraud is by proof of economic harm
to victims of the fraud. See United States v. Welch, 327 F.3d 1081, 1104-05 (10th
Cir. 2003) (citing cases); Copple, 24 F.3d at 544-45.
The government offered the testimony of several individuals concerning
their financial losses, as well as the impact those losses had on their lives, in
order to prove Mr. Holloway’s specific intent to defraud investors. But the
government introduced a considerable amount of other evidence as well.
Included were excerpts from a deposition Mr. Holloway gave in the civil
enforcement action brought against him by the Commodities Futures Trading
Commission, in which he admitted that he sent investors false reports concerning
asset statements and that he consistently lied to investors about their returns. In
fact, on five of his worst trading days when he lost millions of dollars, Mr.
Holloway actually reported gains to investors. He also sent particularly
incriminating emails, admitting in one:
I have lied to David ever [sic] single day and also Bob telling them
that we have all the money. I lost another 25k today. . . . I do not
think that you or Lou have any idea how serious this is[.] We are
doing a ponzi deal by taking new clients [sic] money and “paying out
salaries and distributions[.]” I am very close to shutting down and
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coming clean with them[.]
Rec., vol. 6, Ex. 106. In another email Mr. Holloway admitted the following to
his brother-in-law:
First of all I lied to you, and did not disclose to you how bad things
were [and how things were] getting worse. . . . [I] lied right to your
face more than once about how things were when they were melting
down. . . . My actions and lack of being forthright has [sic] caused
you all this . . . but I am afraid that forgiveness for my dishonesty,
and for the pain that all this caused is most likely out of the question.
...
Id. at Ex. 117 at 1-2.
Previous employees also testified regarding Mr. Holloway’s specific intent
to defraud investors. For example, Jeff Torroll testified that Mr. Holloway
wanted to know how to tell investors that US Ventures was generating a one
percent daily return without getting the attention of an auditor. Mr. Torroll
responded that “[w]e can’t legally fudge the numbers, [sic] if statements are going
to be audited outside of us, we’ll get sued and maybe worse.” Rec., vol. 4 at 424;
vol. 6 Ex. 125. Another employee, Arnel Cruz, testified that Mr. Holloway did
not disclose many of the losses to investors.
Our review of the record here convinces us that the emotionally charged
victim impact testimony and the emphasis of some of this testimony during
closing arguments did not have a “‘substantial influence’ on the outcome or
leave[] one in ‘grave doubt’ as to whether it had such effect.” Rivera, 900 F.2d at
1469 (quoting Kotteakos v. United States, 328 U.S. 750, 765 (1946); see also
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McVeigh, 153 F.3d at 1204 (holding emotional impact testimony harmless
because it “could not have affected the outcome of the trial”) (citing Copple, 24
F.3d at 546). In addition to the evidence of Mr. Holloway’s specific intent to
commit fraud, the district court gave a cautionary instruction telling the jury that
‘[t]he law does not permit jurors to be governed by sympathy, prejudice, or public
opinion.” Rec., vol. 2 at 954. See McVeigh, 153 F.3d at 1204 (‘[T]he district
court delivered strong cautionary instructions to the jury, which we presume the
jury followed.”). Mr. Holloway’s counsel emphasized this instruction to the jury
in his closing argument.
In sum, we are confident Mr. Holloway would have been found guilty of
wire fraud even without the emotional victim impact testimony given the
overwhelming amount of evidence of his specific intent to defraud investors. 7
Accordingly, even assuming it was error to admit this testimony, the error was
harmless.
C. Default Judgments
Mr. Holloway next contends the district court erred when it excluded
7
Given our conclusion that any error was harmless, we need not address
Mr. Holloway’s contention that the emotionally charged testimony was irrelevant
and unfairly prejudicial under Rules 401 and 403 of the Federal Rules of
Evidence. See United States v. Magleby, 241 F.3d 1306, 1318 (10th Cir. 2001)
(“Notwithstanding our doubts regarding the relevancy of this testimony, we need
not decide whether the district court abused its discretion in admitting it because
we find that it was harmless error.”).
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evidence of default judgments entered against two of the government’s main
witnesses, Robert Andres and Robert Hall. The first default judgment involved
Mr. Andres, the man who operated the Winsome Investment Trust and recruited
more than 240 investors to invest in US Ventures through Winsome. Mr.
Holloway and Mr. Andres were defendants in a civil action filed by the
Commodities Futures Trading Commission against them and their companies, US
Ventures and Winsome Investment Trust, for violations of the Commodity
Exchange Act, 7 U.S.C. §§ 1 et seq. (2012). After no party answered the
complaint, the court entered default judgments. The court accepted allegations in
the complaint as true and made several factual findings against Mr. Andres and
Mr. Holloway, including that Mr. Andres fraudulently solicited investors for Mr.
Holloway’s trading scheme, misappropriated investors’ funds, falsely concealed
their misappropriations and trading losses, made Ponzi scheme payments to other
investors, and improperly invested in unrelated and undisclosed businesses.
The second default judgment involved an SEC enforcement action against
Mr. Holloway and Robert Hall, a man who operated several entities that recruited
investors to invest in US Ventures. After Mr. Hall failed to respond to the SEC’s
complaint, the court entered default judgment against him based on factual
findings that he failed to tell investors a majority of their funds would be placed
in high-risk futures trading; failed to disclose to investors the significant losses
US Ventures and other investments had sustained or that payments made to them
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were not interest payments but were funds from new investors; and that Mr. Hall
knew, or was reckless in not knowing, that US Ventures lost over $9 million in
investor funds during 2006.
Before Mr. Holloway’s trial, the government filed multiple motions in
limine, two of which were motions to exclude evidence of both default judgments
and another to exclude evidence of the criminal information subsequently filed
against Mr. Hall for his alleged involvement in Mr. Holloway’s fraudulent
scheme. Due to an agreement among the parties at the motions hearing, the
district court denied the government’s motion seeking to exclude Mr. Hall’s
criminal information. But the court granted both motions to exclude evidence of
the default judgments because it was of the view that the probative value of the
default judgment finding was low and was outweighed by the risk of prejudice
under Fed. R. Evid. 403. With respect to potential of prejudice, the court
explained:
I’m quite concerned about whether we confuse the jury if we start
bringing folks in here and start talking about judgments against them,
which I think will require us to get into a discussion about what are
the judgments, where did they come from, on what basis, what were
the merits of those claims or allegations, what resulted in the
judgment and the like.
Rec., vol. 4 at 235.
At trial, the district court allowed both the government and Mr. Holloway
to question Mr. Hall and Mr. Andres about the facts underlying the default
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judgments to the extent they went to the credibility of the witnesses. The court
also permitted Mr. Holloway to impeach Mr. Hall with the fact that the criminal
charges brought against him were dropped before Mr. Holloway’s trial at which
Mr. Hall had agreed to testify for the government, and that those charges could be
refiled at any time. The court also allowed Mr. Holloway to cross-examine Mr.
Andres concerning the plea and cooperation agreements he had signed with the
government when he pled guilty to wire fraud arising out of his involvement with
Mr. Holloway and US Ventures.
Mr. Holloway now claims the district court violated his constitutional right
to compulsory process and to confront adverse witnesses by not allowing him to
cross-examine Mr. Hall and Mr. Andres regarding the findings entered against
them in the default judgments. Specifically, he contends the exclusion prevented
him from showing the full extent of Mr. Hall and Mr. Andres’ involvement in the
fraudulent scheme, and also prevented him from exploring the biases and
undermining the credibility of the two men. Our review of the record persuades
us otherwise.
As a preliminary matter, we note that because Mr. Holloway does not argue
he was prevented from introducing witnesses or evidence in his favor, the
Compulsory Process Clause is not at issue. 8 Rather, Mr. Holloway claims he was
8
The Compulsory Process Clause states that “[i]n all criminal prosecutions,
(continued...)
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not allowed to fully cross-examine Mr. Hall and Mr. Andres, in violation of the
Confrontation Clause of the Sixth Amendment. See, e.g., Delaware v. Van
Arsdall, 475 U.S. 673 (1986). Because Mr. Holloway asserts the district court
violated a constitutional right with its evidentiary ruling, we review its decision
de novo. See United States v. Markey, 393 F.3d 1132, 1135 (10th Cir. 2004); see
also United States v. Gault, 141 F.3d 1399, 1403 (10th Cir. 1998) (reviewing de
novo whether a defendant’s Sixth Amendment confrontation rights were violated
by cross-examination restrictions).
The Sixth Amendment to the United States Constitution states that “[i]n all
criminal proceedings, the accused shall enjoy the right . . . to be confronted with
the witnesses against him.” U.S. Const. amend. VI. “Confrontation means more
than being allowed to confront the witness physically.” Davis v. Alaska, 415 U.S.
308, 315 (1974). “The main and essential purpose of confrontation is to secure
for the opponent the opportunity of cross-examination.” Id. at 315-316 (quoting 5
J. Wigmore, Evidence § 1395, p. 123 (3d ed. 1940)). The Supreme Court has
8
(...continued)
the accused shall enjoy the right to . . . have compulsory process for obtaining
witnesses in his favor . . . .” U.S. Const. amend. VI. This right can properly be
viewed as a right to present evidence rather than the right to challenge it. See
Richmond v. Embry, 122 F.3d 866, 872 (10th Cir. 1997) (referring to the
Compulsory Process Clause and stating “the state may not arbitrarily deny a
defendant the ability to present testimony that is ‘relevant and material, and . . .
vital to the defense.’” (quoting United States v. Valenzuela-Bernal, 458 U.S. 858,
867 (1982)) (emphasis added)).
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specifically “recognized that the exposure of a witness’ motivation in testifying is
a proper and important function of the constitutionally protected right of cross-
examination.” Van Arsdall, 475 U.S. at 678-79 (quoting Davis, 415 U.S. at 316-
17). But it has also held that the Confrontation Clause does not prevent a “trial
judge from imposing . . . limits on defense counsel’s inquiry into the potential
bias of a prosecution witness.” Id. at 679. District courts retain wide latitude “to
impose reasonable limits on such cross-examination based on concerns about,
among other things, harassment, prejudice, confusion of the issues, the witness’
safety, or interrogation that is repetitive or only marginally relevant.” Id.
Accordingly, “the Confrontation Clause guarantees an opportunity for effective
cross-examination, not cross-examination that is effective in whatever way, and to
whatever extent, the defense might wish.” Delaware v. Fensterer, 474 U.S. 15,
20 (1985).
Unlike many constitutional violations, a defendant does not have to show
prejudice with respect to the trial as a whole to state a violation of the
Confrontation Clause. Van Arsdall, 475 U.S. at 680. Instead, “the focus of the
prejudice inquiry in determining whether the confrontation right has been violated
must be on the particular witness, not on the outcome of the entire trial.” Id. In
evaluating whether a defendant’s confrontation right has been violated, therefore,
our task on review “is to determine ‘whether the jury had sufficient information to
make a discriminating appraisal of the witness’ motives and bias.’” United States
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v. Oliver, 278 F.3d 1035, 1041 (10th Cir. 2001) (quoting Gault, 141 F.3d at
1403).
In Oliver, we faced a situation like the one in this case. Mr. Oliver was
charged with bank robbery after the police arrested one of his accomplices and
offered him a downward departure at sentencing if he agreed to testify against Mr.
Oliver. Id. at 1038. At trial, Mr. Oliver attacked this witness’s truthfulness by
eliciting facts regarding his failures to appear in court after specifically agreeing
to do so, and by questioning him about his plea bargain and his motives for
entering into it. Id. at 1041. While the district court allowed exploration of these
general areas, it did not permit Mr. Oliver to “inquire about the specific nature of
charges pending against [the witness], the specific amounts of jail time [the
witness] might serve, or the specific nature of the underlying charges in his
failures to appear.” Id.
We held in Oliver that the district court “imposed only reasonable limits on
cross-examination and afforded Oliver ample opportunity to portray [the witness]
as biased and motivated to lie.” Id. Just as the limitations imposed in Oliver “did
not significantly impede Oliver’s ability to challenge the ‘believability of [the]
witness and the truth of his testimony[,]’” id. (quoting Davis v. Alaska, 415 U.S.
at 316), neither did the limitations imposed on Mr. Holloway significantly impede
his ability to challenge the believability and truthfulness of Mr. Hall and Mr.
Andres.
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As to Mr. Hall, the jury heard that his companies were in a symbiotic
relationship with US Ventures whereby they would collect money from investors,
promise those investors a certain return based on the returns his companies were
realizing from US Ventures, and then keep any gains above the rate of the
promissory note. This allowed the jury to see the level of Mr. Hall’s involvement
in Mr. Holloway’s fraudulent scheme, a level of involvement that Mr. Holloway
claims was absent due to the exclusion of Mr. Hall’s default judgment.
Moreover, the district court did not restrict Mr. Holloway from questioning Mr.
Hall regarding the criminal information filed against him. Mr. Holloway was
allowed to, and did, question Mr. Hall about the nature of the criminal charges
brought against him, the circumstances in which those charges were dropped, and
how they could be refiled at any time. Mr. Holloway further developed Mr.
Hall’s potential bias by obtaining an admission from him that the government had
asked him to testify against Mr. Holloway in connection with dropping the
criminal charges, ultimately asking, “it would be in your interest to testify
strongly against my client, Mr. Holloway, wouldn’t it?” Rec., vol. 4 at 730.
As to Mr. Andres, the jury heard him admit he recruited investors based on
false information and disseminated Winsome balance sheets that falsely
represented its total assets. As with Mr. Hall, this line of questioning showed that
Mr. Andres was not an innocent bystander in Mr. Holloway’s fraudulent scheme.
The jury also heard that Mr. Andres had pled guilty to wire fraud charges related
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to the US Ventures scheme and that part of his plea agreement with the
government involved a possible downward departure for testifying against Mr.
Holloway, questioning that gave the jury good reason to question Mr. Andres’
credibility.
Ultimately, the district court permitted Mr. Holloway to establish, through
other lines of questioning, everything he wanted to establish with the default
judgments–the witnesses’ bias, lack of credibility, and active roles in the
fraudulent scheme. As the district court explained in the motions hearing, the
reason for restricting the evidence of the default judgments was potential
confusion of the jury. The Confrontation Clause does not require the admission
of confusing and redundant testimony when a defendant has other avenues to
attack a witness’s credibility. Consistent with that principle, the district court in
this case imposed only reasonable limits on cross-examination and afforded Mr.
Holloway ample opportunity to portray Mr. Hall and Mr. Andres as biased and
non-credible. Accordingly, the Confrontation Clause was not violated.
D. Sentencing Enhancement
Mr. Holloway’s final claim is that we should remand his case for
resentencing because the district court erred in calculating the applicable
Guideline range. The court calculated Mr. Holloway’s Guideline range as 188 to
235 months and sentenced him to a term of imprisonment of 225 months. Part of
that calculation came from a six-level enhancement that applies if a crime
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“involved 250 or more victims.” U.S.S.G. § 2B1.1(b)(2)(C) (2014). A victim
was defined as “any person who sustained any part of the actual loss,” § 2B1.1
n.1, and “actual loss” was defined as “the reasonably foreseeable pecuniary harm
that resulted from the offense.” Id. at n.3. 9
A district court must make independent findings to support its loss
calculation and should attempt to connect the number of victims to the loss
calculation. United States v. Foley, 508 F.3d 627, 633 (10th Cir. 2007). Mr.
Holloway contends there was no evidence presented at any time showing that
each of the 250-plus investors suffered an “actual loss.” Aplt. Br. at 58. In fact,
Mr. Holloway asserts, the only evidence the government offered of investors
suffering actual losses was from the seven witnesses it called at trial. Because
there would have been no enhancement if the number of victims was fewer than
ten, see § 2B1.(b)(2)(A), Mr. Holloway concludes that his Guideline range should
have been 135 to 168 months.
After examining the transcripts from the sentencing hearing, however, it is
clear that Mr. Holloway failed to make an objection regarding the total number of
victims. When the district court asked both parties if they had any objections,
Mr. Holloway replied, “I reviewed the presentence report yesterday and again
9
This particular guideline was completely revised in 2015, redefining the
relevant number of victims as well as the type of loss required. See U.S.S.G.
§ 2B1.1(b)(2) and n.4(F) (defining “substantial financial loss”).
-27-
today and there’s nothing major. Well, I guess I would say one thing is there is a
question in my mind anyway about how many victims did Mr. Holloway really
consciously know about.” 10 Rec., vol. 4 at 135. The court replied, “[i]nsofar as
that’s an objection to the calculation to the guidelines as it now exists in view of
the modifications we’ve made today, I’m overruling that objection.” Id. at 136.
Thus, while Mr. Holloway did contend there was insufficient evidence showing
that he was aware there were 250 “victims,” he failed to object, as he does on
appeal, to the number of “victims” being over 250. These two objections are
substantially different. The former assumes there are over 250 “victims” (i.e.,
those suffering an actual loss) but that Mr. Holloway was not aware of them; the
latter deals with whether the investors were “victims” at all. Mr. Holloway’s
objection was thus not sufficiently specific to provide the district court an
opportunity to correct its action in the first instance. See United States v.
Robertson, 568 F.3d 1203, 1209 (10th Cir. 2009) (“Fairness and judicial
efficiency demand that litigants notify the district court of a procedural
sentencing error with reasonable specificity, thereby providing that court the
opportunity to correct its action in the first instance.”).
“We have repeatedly held that if a defendant fails to object to his
10
Mr. Holloway admits on appeal, and rightly so, that “[t]he Guidelines do
not require that defendants intended to cause particular victims’ losses or even
have knowledge of those victims when calculating the defendant’s offense level.”
Aplt. Br. at 56-57
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presentence report, he waives his right to challenge the district court’s reliance on
it, unless the district court’s decision to do so amounts to plain error.” United
States v. Ivy, 83 F.3d 1266, 1297 (10th Cir. 1996) (citing United States v.
Saucedo, 950 F.2d 1508, 1518 (10th Cir. 1991), overruled on other grounds by
Stinson v. United States, 508 U.S. 36 (1993)). “A factual dispute concerning the
applicability of a particular guideline, not brought to the attention of the district
court, does not rise to the level of plain error.” Saucedo, 950 F.2d at 518 (citing
United States v. Lopez, 923 F.2d 47, 50 (5th Cir. 1991) (“Questions of fact
capable of resolution by the district court upon proper objection at sentencing can
never constitute plain error.”); see also United States v. Svacina, 137 F.3d 1179,
1187 (10th Cir. 1998); United States v. Yarnell, 129 F.3d 1127, 1137-38 (10th
Cir. 1997). The PSR stated that the US Ventures scheme defrauded over 250
victims for a loss of over $15,000,000. Mr. Holloway did not object to this
factual assertion in the district court. Accordingly, if the district court erred in
adopting this assertion in the PSR, any error was not plain.
We AFFIRM.
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