United States v. Denis Kelliher

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 19-3301
_______________
UNITED STATES OF AMERICA
v.
DENIS KELLIHER,
Appellant
________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Criminal Action No. 2-17-cr-00485-001)
District Judge: Honorable Michael M. Baylson
________________
Argued: September 21, 2020
Before: AMBRO, PORTER, and ROTH, Circuit Judges
(Filed: March 9, 2021)
Christy Martin [Argued]
Federal Community Defender Office
for the Eastern District of Pennsylvania
601 Walnut Street
The Curtis Center, Suite 540 West
Philadelphia, PA 19106
Counsel for Appellant
Anita D. Eve
Robert A. Zauzmer [Argued]
Office of United States Attorney
615 Chestnut Street, Suite 1250
Philadelphia, PA 19106
Counsel for Appellee
________________
OPINION*
________________
PORTER, Circuit Judge.
While Denis Kelliher was on supervised release from a prior fraud conviction, he
participated in a fraudulent boat-selling scheme. After he pleaded guilty to wire fraud, the
District Court sentenced him to 96 months in prison. Kelliher appealed that sentence,
contending that the record lacked sufficient evidence to prove the existence of ten or
more victims, so a two-level enhancement was improper. The government conceded that
there was insufficient evidence to support the enhancement. We accepted the
government’s concession, vacated Kelliher’s sentence, and remanded for resentencing.
Kelliher now contends that the District Court erred when it (1) reopened the record at
resentencing, (2) counted ten or more victims, and (3) provided an alternative basis for
the 96-month sentence, so that even if the ten-victim enhancement were improper,
Kelliher would still receive the same 96-month sentence. Finding no reversible error, we
will affirm.
*
This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding
precedent.
2
I
While Kelliher was on supervised release from a previous fraud conviction, he
began working at Trenton Marine Center. At Trenton Marine, Kelliher brokered the sale
of high-end boats and marine equipment. But after Kelliher sold a boat, he sometimes
kept the money for himself instead of reimbursing the boat’s owner. When the boat
owners demanded the money Kelliher owed them, he issued payment through bank
accounts that he knew were underfunded or already closed. Kelliher eventually pleaded
guilty to one count of wire fraud in violation of 18 U.S.C. §§ 1343 and 2.
At the initial sentencing, the District Court determined that Kelliher was subject to
a two-level enhancement under U.S.S.G. § 2B1.1(b)(2)(A)(i) based on its finding that
Kelliher’s scheme harmed ten or more victims. Because of this enhancement and a three-
level reduction for acceptance of responsibility, Kelliher’s total offense level was 26,
yielding a Sentencing Guidelines range of 78–97 months’ imprisonment. The court
imposed a 96-month sentence. Kelliher appealed, contending that the court erred when it
imposed the two-level enhancement because the government presented insufficient
evidence to support a finding of ten or more victims. The government conceded the errors
and recommended that we vacate and remand for resentencing. We agreed.
On remand, the government did not again seek the ten-victim enhancement.
Instead, the government requested an upward variance based on the sentencing factors in
18 U.S.C. § 3553(a) and newly identified losses. The court allowed the government to
present supplemental evidence of victim losses, and Kelliher had the opportunity to
respond to and rebut the supplemental evidence. The court readopted its 96-month
3
sentence based on its determination that there were ten victims and that the calculations
in the Presentence Investigation Report were still correct. The court also stated that even
if the two-level enhancement were inappropriate, the court would still reach the same 96-
month sentence by imposing an upward variance based on Kelliher’s prior criminal
record and the details of his scheme. Kelliher timely appealed and asks that we once
again remand for resentencing.1
II
We will affirm the District Court’s judgment. And because it correctly counted ten
or more victims, we need not reach Kelliher’s third argument about the District Court’s
alternate grounds for the 96-month sentence.
A
Kelliher first contends that the District Court abused its discretion by reopening
the record and allowing the government to present supplemental evidence of victim
losses. “An abuse of discretion occurs only where the district court’s decision is
‘arbitrary, fanciful, or clearly unreasonable’—in short, where ‘no reasonable person
would adopt the district court’s view.’” United States v. Green, 617 F.3d 233, 239 (3d
Cir. 2010) (quoting United States v. Starnes, 583 F.3d 196, 214 (3d Cir. 2009)). And
“decisions to reopen proceedings are traditionally a discretionary matter for the district
1
The District Court had subject-matter jurisdiction under 18 U.S.C. § 3231. We have
appellate jurisdiction under 28 U.S.C. § 1291.
4
court.” United States v. Trant, 924 F.3d 83, 90 (3d Cir. 2019) (quoting United States v.
Coward, 296 F.3d 176, 180 (3d Cir. 2002)).
When determining whether to reopen a proceeding, a district court must consider
whether (1) reopening would prejudice the party opposing it, and (2) the party supporting
reopening provided “a reasonable explanation for its failure to initially present the
evidence.” United States v. Smith, 751 F.3d 107, 114 (3d Cir. 2014). The prejudice prong
is the “paramount factor” for the court to consider, and “[t]iming is key to this analysis.”
Id. If the opposing party has the ‘“opportunity to respond and attempt to rebut the
evidence introduced,’ the possibility of prejudice is greatly lessened.” Id. (quoting
Coward, 296 F.3d at 181). And for the reasonable-explanation prong, we recognize that a
district court is in a much better position to weigh the merits of the party’s rationale.
Coward, 296 F.3d at 182; United States v. Vastola, 915 F.3d F.2d 865, 876 (3d Cir.
1990). The District Court did not abuse its discretion in granting the government’s
request to reopen the record.
Most importantly, Kelliher was not prejudiced by the evidence presented on
remand. Kelliher had the opportunity to respond to and rebut the new testimony through
extensive cross-examination.
The District Court also acted reasonably, not arbitrarily or fancifully, in accepting
the government’s reasoning. First, the government explained that it was introducing
supplemental evidence in support of its request for an upward variance, not the ten-victim
enhancement. So the government took a more arduous path in seeking the same sentence.
Second, the government said that it did not initially include Frank Martins as a victim
5
because it believed that Martins was reimbursed for the funds he gave Kelliher. And
third, the government explained that it failed to offer the evidence of additional victims in
part because it thought it already had evidence of ten victims without including them.
The dissent does not believe the government gave a reasonable explanation for its
failure to initially present the evidence. But here, the District Court has already decided
that the government’s reasoning was sufficiently persuasive. Our job is merely to ask
whether the court’s decision was an abuse of discretion—not whether we would do things
differently. Abuse of discretion is a high bar: we will not encroach on the court’s
discretion unless “no reasonable person would adopt the district court’s view.” Starnes,
583 F.3d at 214. Here, the court’s decision to accept the government’s explanation
satisfies that standard.
As the dissent correctly notes, we said in United States v. Dickler that the
government “should ordinarily have to stand or fall on the record it makes the first time
around. It should not normally be afforded ‘a second bite at the apple.’” 64 F.3d 818, 832
(3d Cir. 1995) (emphasis added). We conceded, however, that “we perceive no
constitutional or statutory impediment to the district court's providing the government
with an additional opportunity to present evidence on remand if it has tendered a
persuasive reason why fairness so requires.” Id.Kelliher contends that we must remand for resentencing because the government’s
reasons for reopening the sentencing record were insufficiently persuasive, violating the
principles of Dickler. But Dickler is procedurally distinct from this case. In Dickler, the
district court had not yet ruled on whether the record should be reopened; we remanded
6
the case for resentencing and provided guidance because we anticipated that “the
question may arise whether the district court is restricted to resentencing the defendants
based on the current record.” Id. at 831. But we were careful not to “suggest that the
government should or should not be permitted to offer further evidence in this case on
remand.” Id. at 832. Instead, we emphasized that “[t]he district court is in a far better
position than we to assess the situation in the light of the circumstances surrounding the
original sentencing hearing.” Id.Here, we are not writing on a blank slate and anticipating arguments that might be
raised on remand. The District Court already ruled in favor of reopening; the only
question is whether it abused its discretion in doing so. While we may not find the
government’s reasons particularly compelling,2 the District Court—which is in a far
better position than we to assess the situation—reasonably found those justifications
persuasive. Our conclusion is supported by a combination of factors: the court’s wide
discretion at sentencing, the government’s decision to seek a variance rather than
continue to pursue an enhancement, and, most importantly, the lack of prejudice to
Kelliher. See Trant, 924 F.3d at 90 (holding that the government’s reason for failing to
introduce evidence was “hardly compelling”—it “simply forgot”—but the district court
did not abuse its discretion when it reopened the record because no prejudice resulted).
2
We have previously rejected a reopening of the record for lack of a sufficiently
“persuasive reason.” See United States v. Rowe, 919 F.3d 752, 763 (3d Cir. 2019).
7
B
Kelliher claims the District Court clearly erred in finding ten or more victims
because two of the alleged victims—Jeff McCoun and Frank Martins—do not qualify as
victims under the Sentencing Guidelines. We are not persuaded. “A finding is ‘clearly
erroneous’ when although there is evidence to support it, the reviewing court . . . is left
with the definite and firm conviction that a mistake has been committed.” United States v.
U.S. Gypsum Co., 333 U.S. 364, 395 (1948). Further, the “information relied upon at
sentencing must have ‘sufficient indicia of reliability to support its probable accuracy.’”
United States v. Berry, 553 F.3d 273, 280 (3d Cir. 2009) (quoting United States v.
Warren, 186 F.3d 358, 364–65 (3d Cir. 1999)).3
The District Court determined—partly based on the supplemental testimony of
McCoun and Martins—that the offense “involved 10 or more victims” under U.S.S.G.
§ 2B1.1(b)(2)(A)(i). Under the Guidelines’ commentary, a “victim” includes “any person
who sustained any part of the actual loss determined under subsection (b)(1).” Id. § 2B1.1
cmt n.1. The bar for actual loss “is not high . . . . [M]onetary harm can include even ‘the
expenditure of time and money to regain misappropriated funds and replace
compromised bank accounts.’” United States v. Moreno, 809 F.3d 766, 776 (3d Cir.
2016) (quoting Smith, 751 F.3d at 119); see also Smith, 751 F.3d at 120 (account holders
who were not reimbursed for “the expenses involved with their trips or the time spent in
communication with the banks” were victims under the Guidelines).
3
“[F]acts that are considered at sentencing, as a general matter, must be proved by a
preponderance of the evidence.” Berry, 553 F.3d at 280.
8
Kelliher contends that the District Court clearly erred by counting McCoun as a
victim because the evidence presented did not constitute actual loss and it lacked
sufficient indicia of reliability. We disagree. FBI Agent Kurt Kuechler testified about
McCoun’s actual loss based on his years of involvement in the case and his interviews
with McCoun. According to Agent Kuechler, McCoun reported that he and his associates
took time off work, traveled to New Jersey, and prepared for the delivery of a boat that
never arrived. McCoun also said that although Kelliher’s business partner, Gerald Tipton,
reimbursed him for the travel and accommodations from his last trip to New Jersey,
Tipton never reimbursed him for other expenses—his time off work, his efforts preparing
for the boat delivery, and the travel expenses from the first trip he took to New Jersey to
buy the boat. These expenses appear to overcome the “actual loss” bar, which, as we
noted, “is not high.” See Moreno, 809 F.3d at 776.
The evidence also shows sufficient indicia of reliability. McCoun’s testimony
contained no internal inconsistencies, and Agent Kuechler corroborated McCoun’s
statements with his own findings, seized reimbursement records, sales receipts from the
boats, and interviews with Tipton. We are thus not “left with a definite and firm
conviction that a mistake has been committed” by the District Court. U.S. Gypsum Co.,
333 U.S. at 395. The District Court did not clearly err by counting McCoun as a victim.
Kelliher also contends that the District Court clearly erred by counting Martins as
a victim because the government failed to prove that the Martins transaction was part of
the charged offense or that Kelliher even had access to the Martins funds. We again
disagree. The government showed that Martins (1) wired money to Trenton Marine at the
9
direction of Kelliher while the scheme was ongoing; (2) received pictures of the boat
from Kelliher; (3) never received the promised boat and engines; and (4) has a court
judgment against Kelliher and Trenton Marine for $780,000 in losses. Based on this
testimony, we are not left with a firm conviction that the District Court made a mistake in
concluding Martins was a victim. Thus, the District Court did not clearly err.
* * *
In sum, the District Court did not abuse its discretion in admitting the
supplemental evidence or clearly err in applying the ten-victim enhancement. We will
affirm the District Court’s judgment sentencing Kelliher to 96 months’ imprisonment.4
4
As we previously stated, we need not address Kelliher’s procedural attack on the
District Court’s alternative basis for the 96-month sentence. But had we reached the
issue, we would have determined that the District Court did not plainly err in its
alternative basis for the 96-month sentence.
10
ROTH, Circuit Judge, dissenting.
The government concedes that its “failure to meet its burden” at the defendant’s
initial sentencing was “clear”1 and offers no persuasive excuse for that failure.
Nevertheless, at resentencing, the District Court permitted the government to introduce
additional evidence and reinstated the original sentence. Because the Majority supports
that result, it defies our well-established precedent that the government may not have a
second bite at the apple without a persuasive reason. I respectfully dissent.
I
“[W]here the government has the burden of production and persuasion as it does on
issues like enhancement of the offense level . . . , its case should ordinarily have to stand
or fall on the record it makes the first time around.”2 “We have recognized a limited
exception to our distaste for ‘a second bite at the apple’” at resentencing where the
government “has tendered a persuasive reason why fairness” requires that it be permitted
to offer new evidence.3 “If the government, for want of notice or any other reason beyond
its control, does not have a fair opportunity to fully counter the defendant’s evidence and
1
Gov’t’s Mot. to Vacate J. & Remand for Resentencing at 5, United States v.
Kelliher, No. 18-2512 (3d Cir. Mar. 13, 2019).
2
United States v. Dickler, 64 F.3d 818, 832 (3d Cir. 1995)
3
United States v. Rowe, 919 F.3d 752, 763 (3d Cir. 2019) (emphases added) (citing
Dickler, 64 F.3d at 832 (quoting United States v. Leonzo, 50 F.3d 1086, 1088 (D.C. Cir.
1995))).
1
the government’s theory does not carry the day, the district court is entitled to permit further
record development on remand.”4
The government chose to include McCoun, Martins, Ciasulli, and Carolla on its
victims list at the first hearing, even though its threadbare investigation into their
transactions indicated that at least three of them were not “victims” under our precedents.5
The government did not even interview McCoun before the hearing, and its cursory
investigation resulted in grossly inaccurate testimony about Martins. The government does
not argue that it was unable to collect and present additional evidence about these
individuals at the first hearing; it simply chose not to do so. Both McCoun and Martins
apparently were willing to provide more information: McCoun participated in interviews
after remand, and Martins testified at the second hearing. I would hold the government to
its own investigatory choices and require the District Court to impose a sentence based on
the evidence that had been presented at the first hearing.
A
The government offers two contradictory excuses for its failure at the first hearing
to offer evidence that McCoun and Martins suffered unreimbursed losses. The government
4
Dickler, 64 F.3d at 832 (emphases added); see also United States v. Johnson, 587
F.3d 203, 213 (3d Cir. 2009) (finding adequate excuse where government was unable to
produce a plea colloquy because of “personnel turnover in the office that provides
transcription services for the court in which [the defendant’s] simple assault conviction
arose”).
5
See United States v. Smith, 751 F.3d 107 (3d Cir. 2014); United States v. Kennedy,
554 F.3d 415 (3d Cir. 2009).
2
first argues that it felt it already had ten victims without McCoun and Martins. This is the
only excuse it offered in the District Court.
The government’s second excuse, however, shows that its first excuse was
pretextual. Specifically, it argues for the first time on appeal that it failed to present
additional evidence because Kelliher did not object to the insufficient evidence at the first
hearing.6 Which is it: Did the government think that it met its burden without McCoun
and Martins, or did it fail even to think about its burden until Kelliher raised it on the first
appeal? It is clear that the government did not think about this issue until the appeal, which
is why it immediately conceded that its “failure to meet its burden” was “clear.”7
The government’s second excuse should also fail. As an initial matter, Kelliher did
raise some of these issues in his Sentencing Memorandum: He objected to the number of
victims and argued that McCoun was not a victim, citing Kennedy, and that Ciasulli was
not a victim for other reasons that the government included in its Motion to Vacate. In any
event, defendant’s failing to object is no excuse for the government’s failure to meet its
burden.8 The government has an obligation to meet its burden of proof, independent of
any objection.9 The government is on notice of that obligation, and its ability to comply
6
Gov’t’s Br. at 25–26.
7
Gov’t’s Mot. Vacate J. at 5.
8
See United States v. Chem. & Metal Industs., Inc., 677 F.3d 750, 753 (5th Cir. 2012)
(holding that the government may not present new evidence on remand even where the
defendant failed to object to the original sentencing).
9
Cf. Berger v. United States, 295 U.S. 78, 88 (1935) (“The United States Attorney is
the representative not of an ordinary party to a controversy, but of a sovereignty . . . whose
interest . . . in a criminal prosecution is not that it shall win a case, but that justice shall be
done.”); United States v. Coward, 296 F.3d 176, 182 (3d Cir. 2002) (stating in dictum that
3
with our precedents was not “beyond its control.”10 The government should not be allowed
to treat the first sentencing as a dress rehearsal. At the very least, where, as here, the
government’s failure to meet its burden was abundantly clear, it should be limited to the
evidence presented at the first hearing. When we granted the government’s Motion to
Vacate, it “ha[d] already been given one full and fair opportunity to offer whatever proof
about [McCoun and Martins] it could assemble. . . . One bite at the apple is enough.”11
B
The government argues that it need not offer a persuasive reason where the
defendant is not prejudiced by reopening the record, such as where the defendant can cross-
examine the witnesses. I disagree. First, this argument is inconsistent with our rule that
the government “ordinarily is only afforded one opportunity to carry its burden.”12
Defendants will be able to cross-examine witnesses at most (if not all) resentencing
“[t]he government may not shift the blame to the District Court for its own failure to advise
the court of the applicable law and to bear its burden of proof on a clearly established
requirement”); Am. Bar Ass’n, CRIMINAL JUSTICE STANDARD FOR THE PROSECUTION
FUNCTION 3-7.2(a) (“The severity of sentences imposed should not be used as a measure
of a prosecutor’s effectiveness.”); ABA Standard 3-4.3(a) (“A prosecutor should seek or
file criminal charges only if the prosecutor reasonably believes that . . . admissible evidence
will be sufficient to support conviction beyond a reasonable doubt . . . .” (emphasis added)).
10
Dickler, 64 F.3d at 832; accord United States v. Archer, 671 F.3d 149, 168 (2d Cir.
2011) (“The consensus among our sister circuits is that generally where the government
knew of its obligation to present evidence and failed to do so, it may not enter new evidence
on remand.”).
11
United States v. Parker, 30 F.3d 542, 553–54 (4th Cir. 1994).
12
United States v. Rowe, 919 F.3d 752, 762–63 (3d Cir. 2019) (emphasis added)
(citation omitted).
4
hearings. Accepting the government’s argument would thus turn our ordinary rule into a
rare exception.
Second, defendants are almost always prejudiced by reopening the record where the
new evidence is used to impose a higher sentence. If defendants must show the type of
“prejudice” contemplated by the government, we would read Dickler nearly out of
existence.
Third, the government’s position is inconsistent with our precedent. As the
government concedes, in our mandates remanding cases for sentencing, without addressing
potential prejudice, we have preempted district courts ex ante from reopening the record
where the government did not offer a persuasive reason.13 Although a “district court is in
a far better position” to assess whether the record should be reopened,14 its discretion is not
unlimited, and it should not be able to reopen the record without a persuasive reason from
the government.
The Majority relies on United States v. Smith,15 and United States v. Trant.16 Both
are inapposite. The Smith court did not hold that a lack of prejudice was a substitute for a
persuasive excuse. To the contrary, it reaffirmed the requirement that “a party seeking to
reopen a proceeding must provide a reasonable explanation for its failure to initially
13
See id. at 763 (ordering district court not to reopen record on remand because
government lacked a “persuasive reason”); see also United States v. Cespedes, 663 F.3d
685, 691 (3d Cir. 2011) (holding that under Dickler the government could not again seek
sentencing enhancement on remand).
14
Dickler, 64 F.3d at 832.
15
751 F.3d 107 (3d Cir. 2014).
16
924 F.3d 83 (3d Cir. 2019); see also Gov’t Br. at 26.
5
present the evidence.”17 There, the government had a persuasive excuse: Other circuits
had not unanimously agreed on the reimbursement issue, and we decided the controlling
case (Kennedy) after Smith’s initial sentencing.18 But the government apparently did not
learn its lesson: It once again asks us to reopen the record to correct its mistakes under
Kennedy. This time, however, the government has no excuse. Both Kennedy and Smith
were decided long before Kelliher’s first sentencing, which is why the government
conceded in the first appeal that its error was “clear.”
In Trant, we held that the government, immediately after resting, could reopen its
case-in-chief to submit a stipulation it had forgotten to put on the record. We limited our
holding, however, to trials, in part because of the many “opportunities for technical
requirements or details to be overlooked during the often high pressure of a trial
proceeding[.]”19 By contrast, Kelliher’s sentencing was short and informal, involved only
a few witnesses, and was not governed by rules of evidence. Moreover, the government
did not merely forget to enter a piece of evidence immediately after resting: It failed to
even investigate the evidence at issue until after remand. “The government’s burden of
proof . . . is not merely a ‘technical requirement’ . . . but a critical requirement of criminal
law.”20
17
Smith, 751 F.3d at 114 (emphasis added).
18
Id. at 115.
19
Trant, 924 F.3d at 89.
20
United States v. Coward, 296 F.3d 176, 182 (3d Cir. 2002).
6
In sum, our cases require a persuasive reason to reopen the sentencing record on
remand, not just a lack of prejudice. We cannot and should not deviate from that
requirement.
II
The government asks us alternatively to affirm Kelliher’s sentence based on the
District Court’s upward variance. It suggests that there is some meaningful distinction
between seeking a variance based on the number of victims and re-seeking the
enhancement. But the government cannot evade Dickler by relabeling its motion. Just as
the government had an obligation at the initial hearing to introduce evidence in support of
the enhancement, it also had an obligation to introduce any evidence that it wanted the
District Court to consider under § 3553(a).
In order to give us a basis to determine that the District Court’s decision to reopen
the record was harmless error, the government must show that it is “clear that the error did
not affect the district court’s selection of the sentence imposed.”21 In view of the facts and
argument presented at the resentencing, I cannot conclude that the variance was not tainted
by the new evidence. I would, therefore, vacate the sentence and remand for
resentencing.22
21
United States v. Langford, 516 F.3d 205, 215 (3d Cir. 2008).
22
See United States v. Juwa, 508 F.3d 694, 701–02 (2d Cir. 2007) (remanding where
the basis of sentence was unclear); United States v. Curran, 967 F.2d 5, 7 (1st Cir. 1992)
(same); cf. United States v. Negroni, 638 F.3d 434, 446 (3d Cir. 2011) (holding that district
court erred in failing to explain reasons for downward variance);United States v. Merced,
603 F.3d 203, 219–20 (3d Cir. 2010) (reversing where district court failed “to ‘plainly state
7
III
In conclusion, I take no position as to what sentence Kelliher should have received.
However, because I believe that the government was not entitled to a second bite at the
apple and that the District Court’s variance probably was tainted by the new evidence, I
respectfully dissent.
the reasoning’ behind its sentence” (quoting United States v. Levinson, 543 F.3d 190, 197
(3d Cir. 2008))).
8