Ed Sapone’s DECISIONS OF THE WEEK -July 18, 2019

by | Jul 18, 2019 | Ed Sapone’s Decisions of the Week

With summer in full swing, there was only a single criminal case reported this week from the Second Circuit, and only one reversal from New York’s appellate divisions. During this lull, we preview a handful of interesting cases SCOTUS will be considering this fall.

Second Circuit

In United States v. Shkreli, in a summary order, the Circuit affirmed Martin Shkreli’s EDNY securities fraud conviction and the 84-month sentence, $75k fine, $388k restitution, and $7.3 million forfeiture imposed by Judge Kiyo A. Matsumoto. The Circuit rejected Shkreli’s appellate claims that the jury had been incorrectly instructed and that $6.4 million of the larger forfeiture order was improperly imposed.

Shkreli argued that the court should not have given the jury a “no ultimate harm instruction,” which generally instructs that “no amount of honest belief on the part of the defendant that the scheme would not cause a loss for investors will excuse fraudulent actions or false representations by him to obtain money or property.” The Circuit found that the instruction was proper, even as to the securities fraud charge, as the absence of an instruction would have been a windfall for Shkreli, whose defense was exactly the kind of argument that the NUH instruction was designed to address: that, despite his many misrepresentations and omissions, he did not have the requisite intent to defraud those investors because he believed that the investors would ultimately make money from their investments.

Shkreli argued that $6.4 million, representing the total amount of money invested in his hedge funds, should not have been included in the forfeiture order, because: (1) not all investors testified, and thus the government did not prove that the funds associated with the non-testifying investors were acquired by fraud; (2) the amount should be reduced to account for losses he incurred by making trades for the funds; and (3) the large returns seen by investors in the funds should cause his forfeiture amount to be reduced to zero.

The Circuit found that the government did not need to call as witnesses all those who were harmed. Promises routinely made to some investors demonstrate promises made to all. The Circuit also rejected Shkreli’s claim that the forfeiture amount should be reduced by losses he

incurred. Shkreli failed to show exactly what his actual net gain was; a cursory argument was not enough. As to Shkreli’s arguments about large returns, the Circuit held that, because forfeiture is based on defendant’s gain, and not losses or gains to victims, returns to investors were irrelevant.

The Circuit’s decision can be found here.

Appellate Division, Second Department

In People v. Rose, AD2 remitted to County Court defendant’s Suffolk County narcotics sale conviction to assess whether defendant should be entitled to withdraw his guilty plea on the grounds that it was coerced. At sentencing, defendant made a pro se application to withdraw his guilty plea. He told the court, among other things, that the prosecutor had coerced him into pleading guilty by threatening to prosecute his father, and that his attorney had failed to provide effective assistance of counsel. Rather than support defendant, or make no comment, defense counsel took a position adverse to the defendant. Counsel told the court that he had told the defendant that he was willing to try the case, but that the defendant had come to the conclusion that the plea was in his best interest after talking to his mother. Defense counsel also stated that the defendant had accused everyone but himself, and had refused to accept responsibility for his actions. Defense counsel then requested that the County Court go forward with the imposition of sentence.

AD2 remitted to County Court to evaluate the merits of the plea withdrawal motion, at which defendant was entitled to be represented by new counsel.

AD2’s decision can be found here.

Supreme Court October 2019 Term Preview

In Ramos v. Louisiana, scheduled for argument on October 7, the Court will consider the question of whether the 14th Amendment fully incorporates the Sixth Amendment entitlement to a unanimous verdict. In non-capital cases, Louisiana permits a finding of guilt if at least 10 of 12 jurors concur in the guilty verdict.

In Kahler v. Kansas, scheduled for argument the same day, the Court will consider whether the Eighth and 14th Amendments prohibit a state from abolishing the insanity defense.

In Kansas, along with four other states, it is not a defense to criminal liability that mental illness prevented defendant from knowing their actions were wrong, even in a capital murder case.

In Mathena v. Malvo, to be argued October 16, the Court will consider retroactivity arguments surrounding Miller v. Alabama, which held that a mandatory-life-without-parole sentence for defendants under age 18 at the time they committed their crimes violated the Eighth Amendment’s prohibition against cruel and unusual punishments.

In Kansas v. Glover, to be argued November 4, the Court will consider whether, for purposes of an investigative stop under the Fourth Amendment, it is reasonable for an officer to suspect that the registered owner of a vehicle is the one driving the vehicle absent any information to the contrary.

In Holguin-Hernandez v. United States, not yet scheduled for argument, the Court will consider whether a formal objection after pronouncement of sentence is necessary to invoke appellate-reasonableness review of the length of a defendant’s sentence.

Warm regards,

Edward V. Sapone


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