Ed Sapone’s DECISIONS OF THE WEEK -July 12, 2019

by | Jul 12, 2019 | Ed Sapone’s Decisions of the Week

SCOTUS and NYCA are in recess for the summer, and each court has cleared its holdover decisions. Therefore, the only appellate action until after Labor Day 2019 will likely come from the Second Circuit and New York’s appellate divisions resolving their own undecided holdovers. This week the Circuit released three signed opinions, which, although somewhat interesting, broke no significant new ground. And nothing page-turning came out of the appellate divisions, although they handed down some reversals, which is always nice.

Second Circuit

On Monday, in United States v. Afriyie, the Circuit affirmed the SDNY judgment convicting defendant of securities fraud and wire fraud, and the 45-month prison sentence imposed by Judge Paul A. Engelmayer. The Circuit also affirmed the $2.8 million forfeiture order and the approximately $660,000 restitution order. The Circuit rejected defendant’s contentions that forfeiture in an insider-trading case is limited to the amount of funds actually acquired and does not extend to appreciation of those funds. The Circuit remanded the case, however, for the limited purpose of the district court’s recalculation of restitution in light of the Supreme Court’s decision in Lagos v. United States, 138 S.Ct. 1684 (2018), which was decided after sentencing here.

By way of background, defendant was an investment analyst working from MSD Capital, a private investment firm established to manage the assets of Michael S. Dell and his family. Defendant was charged with trading on inside information obtained from his employer. The information related to ADT, the alarm monitoring company we see on television commercials. Using that information, defendant purchased call options. Subsequent events led the value of those call options to increase by a whopping 6,000%. Within a week, defendant sold the options for a total profit exceeding $1.5 million. Defendant invested the profits, which returned further profits.

The question of the amount of forfeiture was presented to the jury in a forfeiture special verdict form. The jury awarded, and the district court imposed, forfeiture of approximately $2.8 million, which was the appreciated value of the amount acquired through insider trading.

The Circuit held that, as a matter of law, forfeiture may extend to the appreciation of funds acquired through illegal transactions in an insider‐trading scheme.

The district court also ordered defendant to pay approximately $660,000 in restitution, representing the cost to MSD of its investigation into and the eventual trial concerning defendant’s insider trading. In Lagos, however, the Supreme Court interpreted the Mandatory Victims Restitution Act to exclude a private firm’s legal fees. A corporate victim’s private investigation and related civil case were not compensable as “necessary” restitution.

The Circuit remanded to afford the district court an opportunity to recalculate the appropriate amount of restitution in light of Lagos.

The Circuit’s decision can be found here.

In United States v. Bleau, the Circuit affirmed NDNY’s conclusion that the four‐level U.S.S.G. § 2G2.2(b)(4) enhancement may be applied based on images of sexual activity that would cause the depicted minor to experience mental, but not physical, pain. The Circuit, nonetheless, remanded for further consideration of a special condition of supervised release that prohibited defendant from having direct contact with minors without pre‐approval from the Probation Office.

Defendant pleaded guilty to receiving and possessing child pornography, and was sentenced to concurrent 78‐month terms of imprisonment, plus a 15‐year term of supervised released. Defendant primarily challenged a four-level enhancement applied for material portraying “sadistic or masochistic conduct or other depictions of violence.”

The Circuit previously had defined the term “sadism” to include “‘the infliction of pain’ for sexual gratification, ‘delight in physical or mental cruelty,’ and the use of “excessive cruelty.” It also had held that the enhancement applies where “(1) an image depicts sexual activity involving a minor and (2) the depicted activity would have caused pain to the minor.”

The Circuit had not expressly decided whether the depiction of mental, but not physical, cruelty suffices to trigger the enhancement under § 2G2.2(b)(4). It resolved that question by concluding that it did, but cautioned that the enhancement should not be interpreted in such a way as to make it applicable in “routine” child pornography cases, which are awful in their own right but which may not necessarily contain depictions of mental cruelty.

Defendant also challenged the special condition of supervised release prohibiting him from having direct contact with minors without obtaining pre-approval from his probation officer. The Circuit held that the district court did not adequately explain why a condition prohibiting direct contact with minors without pre‐approval from the Probation Department was reasonably necessary to promote the relevant 18 U.S.C. § 3553(a) sentencing considerations; nor was it obvious from the record why such a condition was reasonably necessary.

The Circuit remanded to the district court to consider the special condition with instructions that it provide a statement of reasons if it decides to adhere to the special condition; or, if not, to modify the sentence to eliminate that condition.

The Circuit’s decision can be found here.

On Tuesday, in United States v. Williams, the Circuit affirmed the EDNY judgment convicting defendant of being a felon in possession of a firearm. The Circuit rejected defendant’s contentions that (1) Judge DeArcy Hall erroneously denied his motion to suppress a gun found in his car because, as defendant argued, it was discovered during a second warrantless search of the car that was conducted only after detectives overheard defendant make a phone call that aroused their suspicions that they may have missed something of value in the car during an initial inventory search; (2) his post‐arrest statements denying ownership of the gun should have been admitted at the same time as his oral and written confessions; and (3) evidence as to his gang affiliation and willingness to assist police in finding guns and drugs should have been excluded under Fed. R. Evid. 403 and 404(b).

As to the suppression issue, defendant argued that detectives had completed one inventory search of his car at the precinct and found nothing. The second search, which was prompted when they overheard defendant discussing the car, was not a valid inventory search; instead, it was a purposeful investigatory search absent a warrant. Defendant further argued that there was nothing in the NYPD patrol guide that validated multiple inventory searches.

The Circuit held that the ultimate question under the Fourth Amendment was one of reasonableness: “[…] here, it was eminently reasonable for the detectives to conclude, as they did, that [defendant]’s own behavior suggested a need to go back and check their work in connection with the inventory search that they had just performed.”

On the evidentiary issues, the Circuit found that the district court had not abused its discretion. The Circuit rejected defendant’s arguments that his post-arrest statements denying ownership of the gun should have been admitted at the same time as his statements admitting ownership. Although it was within the court’s discretion to allow defendant to introduce the prior exculpatory statements, it was not an abuse of discretion to decide otherwise. Defendant did not show that his initial statements denying ownership of the gun were necessary to explain his later statements that the gun was his.

The Circuit also held that it was not an abuse of discretion for the district court to admit defendant’s post-arrest statements that he was a member of the Crips gang and that he was willing to work with the police to track down guns. The Circuit ruled that defendant’s admission of gang membership and offer to assist police in finding drugs and weapons was admitted not to show that he had a propensity to act in a particular way, but to meet the defense argument that defendant’s “so called” confession was not a confession at all.

The Circuit’s decision can be found here.

On Monday, in United States v. Boria, in a summary order, the Circuit affirmed the SDNY judgment convicting defendant of a narcotics conspiracy, and the 30-month prison sentence imposed by Judge Cathy Seibel. The Circuit rejected defendant’s claims that (1) the evidence was insufficient to support his conspiracy conviction; (2) the district court erred with respect to its buyer-seller jury instruction; (3) the district court abused its discretion when it admitted a detective’s testimony that he recognized defendant; (4) the district court erred in failing to hold an evidentiary hearing regarding his motion to suppress; and (5) his sentence was unreasonable because the district court erred in approximating the drug quantity and in denying a two-level reduction for acceptance of responsibility.

The Circuit’s decision can be found here.

United States Supreme Court

On Friday (6/28) in a summary disposition, as anticipated, the Supreme Court GVR’d the Second Circuit’s decision in United States v. Barrett, 903 F.3d 166 (September 10, 2018), in light of the Supreme Court’s decision in United States v. Davis, 588 U.S. _ (2019), which found that the residual clause of § 924(c)(3)(B) was unconstitutionally vague.

To be clear, a SCOTUS GVR (grant, vacate, remand) order is one in which the Court grants a cert petition, vacates the lower court’s decision, and then remands for further action. This usually occurs following a change in law or precedent, and SCOTUS sends the case back so the lower court can reconsider its decision in light of the changed law/precedent.

The Supreme Court’s end-of-term orders can be found here.

Appellate Division, Second Department

On Wednesday, in People v. Ramsey, AD2 reversed defendant’s Queens County first-degree robbery conviction, in the interest of justice, concluding that Justice Ronald Hollie “conducted excessive and prejudicial questioning of trial witnesses.” (It has come to my attention from an experienced Queens CDL that Hollie is alleged to have done this in many a trial.)

By AD2’s description, Hollie engaged in extensive questioning of witnesses, usurped the roles of the attorneys, elicited and assisted in developing facts damaging to the defense on direct examination of the People’s witnesses, bolstered the witnesses’ credibility, interrupted cross-examination, and generally created the impression that it was an advocate on behalf of the People. AD2 found that, even though defense counsel largely did not object, the court’s improper interference deprived the defendant of a fair trial, and warranted a new trial before a different trial judge.

AD2’s decision can be found here.

In People v. Ramsey, AD2 reversed defendant’s Kings County attempted murder conviction because the court improperly admitted evidence that a second witness to the alleged robbery had stated during a lineup in which she did not make an identification, that she would “lean toward”

picking the defendant from the lineup, because of the look of his jaw. When a witness is unable to make an identification at trial due to a failure of memory, CPL 60.25(1)(a)(iii) permits the witness to testify about a prior identification.

Here, because the witness at trial never identified the defendant at the lineup, her testimony about the prior identification procedure was inadmissible.

Although AD2 reversed on the improper identification testimony issue, it also scolded the prosecutor for “multiple instances of inappropriate and unacceptable advocacy throughout her summation,” some of which it described, including improperly arguing to the jury that there were “no coincidences,” that the defendant was not the “unluckiest guy” in Brooklyn, that “the evidence fits together . . . all the pieces connect,” that “all the evidence points directly at [the defendant] . . . because he’s guilty. Because he did these crimes,” (emphasis added) and that the jury would have to do “a lot of mental gymnastics to believe the defendant did not commit this crime.”

AD2’s decision can be found here.

Appellate Division, Fourth Department

On Friday, in People v. Grimes, AD4 reversed defendant’s Genesee County second-degree burglary conviction for an O’Rama error. AD4 concluded that the absence of record proof that the trial court complied with its “meaningful notice” obligation, under CPL 310.30 in response to two substantive jury notes, required reversal. The stenographer was unable to transcribe the final day of the trial that included County Court’s handling of the jury notes due to an error that rendered the subject electronic stenographic notes unrecoverable, and a reconstruction hearing failed to establish the court’s on-the-record handling of those notes.

AD4’s decision can be found here.


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