United States v. James Turek

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 14a0308n.06
Case No. 12-6275 FILED
Apr 23, 2014
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE EASTERN
JAMES NORMAN TUREK, ) DISTRICT OF KENTUCKY
)
Defendant-Appellant. )
)
) OPINION
BEFORE: Daughtrey, McKeague, and Griffin, Circuit Judges.
McKeague, Circuit Judge. James Turek was convicted of securities and tax fraud and
sentenced to 216 months in prison. He challenges the district court’s assessment of his sentence-
level enhancements as to the number of victims harmed and the total amount of loss. Turek did
not raise an objection to the district court concerning the presentence report, and we cannot
discern plain error from the record below. We affirm.
I.
James Turek was the president, CEO, and director of Plasticon International, Inc., a
company based in Lexington, Kentucky. Plasticon’s stock was publicly traded on the Pink
Sheets over-the-counter market. As part of his fraud scheme, Turek falsely claimed that
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United States v. Turek
Plasticon owed him more than $8 million to repay loans he had made to the company. Id. He
directed his secretary to backdate promissory notes payable to him, and then from 2004 to 2006
had Plasticon issue him more than 5.6 billion shares of stock pursuant to the promissory notes.
To circumvent the Securities and Exchange Commission’s rules, Turek gave his shares of stock
to various people, including his children and deceased aunt, who then sold the stock to other
investors and the general public. Turek and his shell company, LexReal Co., LLC received
$11.4 million from the stock sales.
In an effort to stimulate demand for Plasticon’s stock, Turek issued press releases falsely
stating that Plasticon was profitable, even though it was losing millions of dollars, and that it
held patents valued as much as $20 million. During an Internet broadcast, Turek falsely stated
that he invested millions of dollars in the company and received no compensation for three and a
half years. He filed falsified financial statements with the SEC. He also filed false personal tax
returns, failing to report more than $12.7 million in income.
In June 2012, the district court held a ten-day jury trial. The government called fifteen
witnesses, including several victims of Turek’s fraud and a financial investigator. Peter Melley
of the Financial Industry Regulatory Authority (FINRA) testified that from May 2006 to
November 2007, more than 8,500 accounts lost more than $18.6 million from the purchase of
Plasticon stock. The following exchange between the government’s lawyer and Peter Melley
ensued:
Q. How many people lost money by purchasing Plasticon stock during this time
period?
A. My analysis of trading account information for this period of time showed that
approximately 8,500 victim accounts lost money in Plasticon stock, and those
investor accounts accounted for approximately $18.6 million in losses.
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Trial Tr. at 55–56, PageID # 1604–05. On June 22, 2012, a jury convicted Turek of 13 counts of
securities and tax fraud.
The Presentence Investigation Report (“PSR”) grouped the counts into two categories—
tax fraud and securities fraud—and used the offense level of 41 from the securities fraud group
because it was higher. This offense level included a twenty-level increase for a total loss amount
between $7 million and $20 million and a six-level increase for more than 250 victims. Based on
an offense level of 41, the advisory sentencing guidelines range was 324 to 405 months. The
government asked the court to sentence Turek to 324 months. At sentencing, Turek asked for a
sentence of 120 months. The district court sentenced Turek to 216 months in prison. The
following exchange between the district court and defense counsel ensued:
THE COURT: All right. Ms. Hughes, do you have -- that's the sentence I propose
to impose. Do you have any objections or requests for additional findings?
MS. HUGHES [DEFENSE COUNSEL]: I have no objections to the sentence and
no requests for additional findings, other than the Court indicated it would
recommend a medical facility.
Sentencing Tr. at 29, PageID # 2535. This appeal followed.
II.
This court has held that if a defendant fails to object to a presentence report, he accepts
all of the factual allegations contained in it. United States v. Vonner, 516 F.3d 382, 385 (6th Cir.
2008) (en banc). Moreover, when a sentencing judge asks counsel if she has any objections and
she fails to object, as happened here, “then plain-error review applies on appeal to those
arguments not preserved in the district court.” Id. We therefore accept the facts stated in the
presentence report as true and review for plain error. See id. “To withstand plain-error review,
the litigant must show ‘(1) error, (2) that is plain, and (3) that affect[s] substantial rights’ and that
‘(4) the error seriously affects the fairness, integrity, or public reputation of judicial
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proceedings.’” United States v. Brock, 501 F.3d 762, 773 (6th Cir. 2007) (quoting Johnson v.
United States, 250 U.S. 461, 467 (1997)). A plain error is an error that is “clear” or “obvious.”
Johnson, 520 U.S. at 467. Such plain, obvious errors are only found “in exceptional
circumstances” in which “the trial judge . . . was derelict in countenancing it.” Vonner, 516 F.3d
at 386 (quoting United States v. Gardiner, 463 F.3d 445, 459 (6th Cir. 2006).
Turek argues that the district court plainly erred in applying the two sentence
enhancements. We find that no plain error occurred here, either with respect to the amount of
loss or the number of victims. First, as to the amount of loss, “[u]nder the Sentencing
Guidelines, the district court is to determine the amount of loss by a preponderance of the
evidence, and the district court’s findings are not to be overturned unless they are clearly
erroneous.” United States v. Peppel, 707 F.3d 627, 645 (6th Cir. 2013) (quoting United States v.
Rothwell, 387 F.3d 579, 582 (6th Cir. 2004). The district court found that a twenty-level
increase in the guideline level applied because the total amount of loss exceeded $7 million.
U.S. Sentencing Guidelines Manual § 2B1.1(b)(1)(K). The district court based its determination
on the presentence report, which stated that “8,500 accounts lost more than $18.6 million,” and
on Melley’s testimony that he determined the loss amount by conducting an “analysis of trading
account information.” Trial Tr. at 55–56, PageID # 1604–05. This clearly provides support for
the $18.6 million figure and withstands review for plain error.
Second, as to the number of victims, when a fraud offense “involve[s] 250 or more
victims,” a six-level increase to the guidelines offense applies. U.S. Sentencing Guidelines
Manual § 2B1.1(b)(2)(C). It is true that “victim” means “any person who sustained any part of
the actual loss,” such as an individual, corporation, firm, or company, rather than a bank account.
Id. § 2B1.1 cmt. n.1. Turek makes much of the fact that Melley testified that “approximately
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8,500 victim accounts lost money in Plasticon stock,” noting that an account is not a person and
arguing that this constitutes reversible error. Trial Tr. at 55–56, PageID # 1604–05. Under this
standard of review, however, an error regarding the number of victims must be plain, and we
cannot say the fact that 8,500 accounts were affected obviously does not support a finding that
250 victims were harmed.1 See Puckett v. United States, 556 U.S. 129, 135 (2009) (noting that
under plain error review, “the legal error must be clear or obvious, rather than subject to
reasonable dispute”). As the government notes, accepting Turek’s argument requires the
inference that each investor would have had to hold over thirty accounts to reduce the number of
victims below 250; this possibility does not constitute the sort of “extraordinary circumstances”
warranting reversal under plain error review. See Vonner, 516 F.3d at 386 (quoting Gardiner,
463 F.3d at 459). The cases Turek cites are unhelpful because they concern the resolution of
facts that the parties disputed in district court or the sufficiency of facts, rather than facts
accepted as true under plain-error review. See United States v. Rodriguez, 732 F.3d 1299, 1303
(11th Cir. 2013) (“Mr. Rodriguez objected and argued that there was insufficient evidence in the
record to show that the offense involved more than 50 victims.”); see also United States v. Zolp,
479 F.3d 715, 719–20 (9th Cir. 2007) (“While Zolp did not contest the applicability of a § 2B1.1
enhancement for financial loss, the pre-sentence report (“PSR”), the government, and Zolp each
proposed a different method of calculating that loss.”); United States v. Yagar, 404 F.3d 967, 969
(6th Cir. 2005) (discussing judge-found facts that were not presented to the jury). The
1
Notably, the question asked of Melley was how many people lost money, not how many
accounts were affected. R. 71, Trial Tr. at 55, PageID # 1604. While it is true that the form of
Melley’s answer identified the number of victim accounts, in light of the exchange, it cannot
even be said that construing Melley’s answer to mean 8,500 victims is plain error. See id. at 55–
56, PageID # 1604–05.
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determination that over 250 victims were harmed is supported by the record, not obviously
incorrect, and withstands plain-error review.
III.
Turek did not object to the presentence report, and we discern no plain error from the
record below. The judgment of the district court is AFFIRMED.
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