Ed Sapone’s DECISIONS OF THE WEEK -September 19, 2019

by | Sep 19, 2019 | Ed Sapone’s Decisions of the Week

In a week of routine summary affirmances, the Second Circuit showed surprising empathy for a WDNY defendant in Feldman. The Circuit went out of its way to fault the district court for summarily dismissing defendant’s challenges to the unfairness of the government’s handling of the forfeiture and restitution imposed upon defendant for defrauding the University of Rochester Medical Center.

With the First and Second Departments not due to begin deciding September Term’s arguments until next week, it was a quiet week in the NY State appellate courts with only a single Second Department reversal in Price, a serious case with a pointless and unnecessary error by the Queens trial judge, a judge who is frequently reversed.

Second Circuit

On Tuesday, in United States v. Feldman, the Circuit vacated a WDNY order that denied defendant’s motion to stay and vacate a writ of execution on defendant’s retirement account. CA2 found that the district court erroneously concluded that funds defendant had forfeited as part of his guilty plea should not be credited to his order of restitution.

Defendant, an anesthesiologist, pleaded guilty to having conspired with the head of the hospital’s Anesthesiology Department to defraud the University. Defendant contended that, in the negotiations that resulted in the plea agreement, AUSA Resnick, who was in charge of the prosecution, undertook to recommend to the decision‐makers in DOJ’s Asset Forfeiture and Money Laundering Section (AFMLS) that, through a practice known as “restoration,” the proceeds of defendant’s forfeiture would be paid to the victims of his crime and would thus reduce the amount of the restitution obligation imposed on him. Defendant also claimed that the AUSA, while making clear that AFMLS had absolute discretion to reject his recommendation of restoration, nonetheless expressed optimism that AFMLS would accept the recommendation.

The plea agreement provided that defendant would forfeit the proceeds of three specified accounts (not including what came to be referred to as the Great Lakes Account), which amounted to approximately $1 million, and would pay restitution to the University in the amount of $1,460,000, the entire amount of the loss the University sustained. Addressing restoration, the agreement stated that “the government may, in its discretion, recommend to the Attorney General” that funds forfeited by defendant be applied to his restitution obligation.

The plea agreement was accepted by the district court and defendant pleaded guilty. The court ordered a preliminary order of forfeiture and then a final order.

In an email to defendant’s attorney before sentencing, the government said, among other things, that, “hopefully,” AFMLS would approve the restoration request, which would be made after sentencing.

The ultimate version of defendant’s PSR listed among his assets the $1.131 million Great Lakes retirement account at issue in this case. Three previous versions of the PSR also listed the Great Lakes Account. At sentencing, the AUSA said, among other things, “we anticipate applying the forfeited funds to the restitution amount, if we get the approval from DOJ down in Washington.”

In a subsequent letter to AFMLS, an AUSA recommended that defendant’s forfeited funds be applied against the restitution amount. The list of defendant’s assets in that letter, however, did not include the Great Lakes account. In a subsequent letter, an AUSA recognized the omission, but brought it to the attention of AMFLS in a way that incorrectly suggested that the Great Lakes account was previously unknown to the government.

AFMLS denied restoration. Its letter explained that it was the apparent discovery of the Great Lakes account after sentencing that led to that decision.

Defendant argued that the new letter was effectively a revocation of the prior recommendation for restoration. While noting the government’s acknowledgment of having represented to defendant during the plea negotiations that it would request restoration, the court found that defendant was not entitled to rely on these representations because “no such promise was included in the written plea agreement.”

The district court further found that, even if the USAO had promised to recommend restoration, it fulfilled that promise by sending the first letter to AFMLS, notwithstanding the subsequent letter.

The Circuit disagreed, finding that the fair inference from the second letter was that the USAO was no longer recommending restoration. The Circuit noted the unfairness of the district court’s decision, stating that, while its “analysis might have been compelling with respect to a contract arising out of commercial negotiations among private parties, we believe the court did not correctly apply the standards that govern the interpretation of plea agreements with the government.” Even though the agreement’s merger clause stated that the written agreement contained the entire agreement between the parties, it was appropriate to look outside those communications in this context.

In the final analysis, however, this may be a hollow victory, as the Circuit remanded to the district court for it to undertake a more thorough factual inquiry, including on the questions of “whether the [US Attorney’s] Office’s undertaking to recommend restoration was fulfilled, whether its expression of optimism that its recommendation of restoration would be accepted was misleading, and whether the defendant is entitled to any relief.”

The Circuit’s decision can be found here.

On Friday, in United States v. Williams, in a summary order, the Circuit affirmed defendant’s SDNY conviction for conspiracy to distribute and possess with intent to distribute, cocaine, before Judge Lorna Schofield. CA2 rejected defendant’s contentions that the government had impermissibly bolstered the testimony and vouched for the credibility of its cooperating witnesses by inquiring into the truth-telling provisions of their cooperation agreements, because defense counsel had challenged their credibility in opening statements.

The Circuit’s decision can be found here.

In United States v. Kiture, in a summary order, the Circuit affirmed defendant’s SDNY conviction, following a bench trial before Judge Katherine Polk Failla, convicting him of being a felon in possession of a firearm. CA2 rejected defendant’s contentions that (1) the district court erred in determining that he was not “seized” for purposes of the Fourth Amendment when NYPD officers pulled him over during a traffic stop; and (2) the district court clearly erred in crediting the testimony of an NYPD officer who claimed that he pulled defendant over after observing that his taillight was malfunctioning. Citing its prior decision in United States v. Baldwin, 496 F.3d 215 (2d Cir. 2007), the Circuit concluded that a suspect who stopped his car briefly in response to a police car’s lights and sirens, but who “refused to comply” with police directives to turn off the engine, and who sped away shortly after stopping, was not “seized” for purposes of the Fourth Amendment.

The Circuit’s decision can be found here.

In United States v. Jones, in a summary order, the Circuit affirmed the sentence imposed by EDNY Judge Nicholas G. Garaufis, following a 2017 remand after the Circuit had held that first-degree robbery as defined in New York was categorically a crime of violence under the residual clause, and the sentence was substantively reasonable. CA2 nevertheless remanded the case “for further consideration as may be just under the circumstances.” Upon remand, the district court denied defendant’s application for a resentencing hearing and reaffirmed his sentence. The Circuit held that, because it had not remanded with a specific mandate to resentence, the district court was not required to resentence defendant.

The Circuit’s decision can be found here.

In United States v. Bergstein, in a summary order, the Circuit affirmed defendant’s SDNY investment advisory, securities, and wire fraud convictions, and the 96-month aggregate sentence imposed by Judge P. Kevin Castel, as well as the forfeiture of $22.5 million and restitution of $15 million. CA2 rejected challenges (1) to the admissibility of various pieces of evidence; (2) the district courtʹs decision to quash defendant’s third-party subpoenas; (3) the sufficiency of the evidence as to the securities fraud offenses; (4) the governmentʹs use of alternative theories of guilt to prove a violation of the Investment Advisors Act; and (5) the district courtʹs factual conclusions with respect to sentencing.

The Circuit’s decision can be found here.

On Tuesday, in United States v. Skyers, in a summary order, the Circuit affirmed defendant’s EDNY conspiracy to import and distribute cocaine conviction following a jury trial before Judge Margo Brodie, rejecting defendant’s contentions that (1) the evidence was legally insufficient to support the inference that he knew that the object of the conspiracy was to import and distribute cocaine, and (2) the district court erred in failing to sua sponte strike certain portions of the expert testimony about the flow of drug trafficking money as irrelevant, because the evidence generally explained the way the drug trafficking circle works.

The Circuit’s decision can be found here.

On Wednesday, in United States v. Callahan, in a summary order, the Circuit affirmed EDNY Judge Arthur Spatt’s denial of defendant’s motion for bail pending the resolution of his habeas petition. Defendant had argued, among other things, that:

-the government had breached the plea agreement,

-the agreement was not knowingly agreed to because of ineffective assistance of counsel,

-the adjusted offense level should have been 14, with a guidelines range 15 to 21 months, the bulk of which he had already served.

The district court denied the motion finding that defendant had not shown that his victory could be expected or extraordinary circumstances justified release.

The Circuit did not dismiss the validity of defendant’s claims, which were expertly argued by his appellate counsel, Andy Frisch, Esq. And the Circuit suggested that defendant’s guidelines challenge might indeed be valid. But it found that defendant had not shown extraordinary circumstances justifying his immediate release.

The Circuit’s decision can be found here.

In United States v. Dervishaj, in a summary order, the Circuit affirmed defendant’s EDNY convictions for multiple counts, including Hobbs Act extortion conspiracy, and brandishing of a firearm in furtherance of a crime of violence, and the 57-year mandatory minimum sentence imposed by Judge Eric N. Vitaliano. CA2 rejected defendant’s pro se claims, among others, that: (1) the government committed prosecutorial misconduct by suborning perjury; (2) the evidence resulting from the government’s seizure of a vehicle at 5:47 a.m., 13 minutes before the time authorized in the warrant should have been suppressed as the fruit of an unlawful search; (3) the district court abused its discretion in admitting one photograph found on a co‐conspiratorʹs cellphone showing a single handgun resting on a target at a gun range; and (4) the sufficiency of the evidence to support his § 924 convictions.

The Circuit’s decision can be found here.

Second Department

On Wednesday, in People v. Price, AD2 reversed defendant’s Queens County second degree murder convictions in the interest of justice, finding that Justice Hollie improvidently exercised the court’s discretion in denying defendant’s belated peremptory challenge.

During voir dire, after the questioning of a group of jurors was completed and each side had the opportunity to exercise challenges for cause with respect to that group, the court asked whether the People had any peremptory challenges. The People responded that they did not, and the court asked defense counsel the same question. Defense counsel asked, “We are looking at what numbers?,” and the court responded, “We are looking at one and four.” The court assigned prospective juror number a seat and said, “We now have ten, need two. Looking at Chavez – -,” when defense counsel interrupted, stating that he had made an error and had intended to exercise a peremptory challenge to prospective juror number one. Defense counsel acknowledged that the challenge was “a couple of seconds” late, and requested permission to excuse prospective juror number one. The court summarily denied the request.

Where a belated peremptory challenge to as-yet unsworn prospective jurors would interfere with or delay the process of jury selection, it is a proper exercise of the court’s discretion to refuse to permit the challenge.

Here, because there was “no discernible interference or undue delay caused by defense counsel’s momentary oversight that would justify [the court’s] hasty refusal to entertain [the] defendant’s challenge,” it was an improvident exercise of discretion to deny it. The delay in challenging prospective juror number one was de minimis, and there was no discernible interference or undue delay caused by defense counsel’s momentary oversight.

AD2’s decision can be found here.

HSBC profited about $7 million on the transaction with Cairn. The government’s primary theory of liability under the wire fraud statute was that defendant had misappropriated Cairn’s confidential information, in breach of a duty of trust and confidence owed to Cairn, by driving up the exchange rate to generate secret profits for HSBC (the misappropriation theory). The jury was instructed that to convict defendant under that theory, defendant and Cairn must have entered into a relationship of “reliance and de facto control and dominance.” Defendant argued that there was insufficient evidence to convict him under the misappropriation theory and under a right‐to‐control theory because Cairn received the benefit of its bargain, and any misrepresentations were immaterial.

The Circuit concluded that there was sufficient evidence to convict defendant on the right‐to‐control theory because a reasonable jury could have concluded that his misrepresentations to Cairn related to the price of the transaction, which was an essential element of the parties’ bargain, and were capable of influencing Cairn’s decision-making. It, therefore, found it unnecessary to reach the misappropriation theory.

The Circuit’s decision can be found here.

On Tuesday, in United States v. Salinas-Garcia, in a summary order, the Circuit affirmed Judge Loretta A. Preska’s denial of defendant’s motion for reconsideration of the denial of his motion for a sentence reduction under § 3582(c)(2). The Circuit found that, although defendant was eligible for resentencing, the court had not abused its discretion in denying the request for resentence, because the court had properly considered the §3553(a)(2)(C) factors, and, in particular, the need to protect the public from any further crimes.

The Circuit’s decision can be found here.

In Spencer v. Capra, in a summary order, the Circuit reversed the order of EDNY Judge Brian M. Cogan that had granted petitioner’s § 2254 habeas petition. The Circuit found that the district court had incorrectly applied the harmless error standard when it concluded that an admitted violation of defendant’s constitutional right to present a defense warranted relief in federal court.

Petitioner was convicted in 2007 of criminal possession of a weapon in the second degree in Queens County Supreme Court. In 2011, AD2 affirmed. In 2012, the NY COA found that Supreme Court had improperly precluded evidence in violation of petitioner’s constitutional right to present a defense, but that the error was harmless. In 2018, Judge Cogan granted petitioner’s habeas petition, finding that the error was not harmless under the U.S. Constitution.

The Circuit disagreed, finding that the district court had improperly applied the AEDPA harmless-error standard. On direct review, Chapman v. California, 386 U.S. 18 (1967), sets forth the standard for determining whether a federal constitutional error is harmless. The standard requires the government “to prove beyond a reasonable doubt that the error complained of did not contribute to the verdict obtained.” But on collateral review, an error is harmless unless it ‘had substantial and injurious effect or influence in determining the jury’s verdict.” Brecht v.

Abrahamson, 507 U.S. 619, 631 (1993). A federal court may not award habeas relief under § 2254 unless the state harmlessness determination itself was unreasonable.

The Circuit concluded that, applying this standard, given the strength of the evidence presented at defendant’s trial, fair-minded jurists could disagree that the decisions of the New York Appellate Division and New York Court of Appeals constituted an unreasonable application of federal law. Accordingly it was required to reverse the habeas grant.

The Circuit’s decision can be found here.

In United States v. Petrossi, in a summary order, the Circuit affirmed defendant’s EDNY money laundering and securities and wire fraud convictions before Judge Brian M. Cogan. The Circuit rejected defendant’s contentions that: (1) his conviction was predicated on an invalid fraud-by-omission legal theory; (2) the court erroneously instructed the jury as to willfulness; and (3) the court erroneously admitted evidence of his prior deception of another victim on the ground that the evidence was “inextricably intertwined” with the charged offense; and (4) the court abused its discretion in excluding an exhibit as irrelevant and inadmissible hearsay.

The Circuit’s decision can be found here.

On Thursday, in United States v. Calix, in a summary order, the Circuit affirmed defendant’s SDNY bank robbery convictions before Judge Loretta A. Preska. The Circuit rejected defendant’s contentions that: (1) his statutory right to a speedy was twice violated when, prior to trial, more than 70 days elapsed, and the time was not automatically excludable or otherwise justified, because those times were automatically excludable as relating to competency proceedings; (2) his Fifth Amendment right to due process was violated when the district court failed to order a fourth competency evaluation on the eve of trial; and (3) his Sixth Amendment right to an impartial jury was violated when the district court denied his request for a new venire panel after the existing panel heard him making noises in a nearby room.

The Circuit’s decision can be found here.

In United States v. Cannon, in a summary order, the Circuit affirmed defendant’s SDNY conspiracy to distribute cocaine convictions, rejecting his contention that statements that he made at sentencing to Judge William H. Pauley III, undermined the factual basis of his plea.

Rule 11 “requires the court to assure itself simply that the conduct to which the defendant admits is in fact an offense under the statutory provision under which he is pleading guilty.” United States v. Maher, 108 F.3d 1513, 1524 (2d Cir. 1997). To prove a single conspiracy, the government must show that each alleged member agreed to participate in what he knew to be a collective venture directed toward a common goal. The co-conspirators need not have agreed on the details of the conspiracy, so long as they agreed on the essential nature of the plan. In light of these standards, the Circuit found that defendant’s statements during sentencing, among others,

that he did not personally manage certain co-conspirators, and did not personally possess firearms, were insufficient to call the validity of the plea into question.

The Circuit’s decision can be found here.

In United States v. Kerrigan, in a summary order, the Circuit affirmed defendants’ SDNY bank burglary convictions and the sentences imposed by former Judge Katherine B. Forrest. The Circuit rejected various procedural challenges to the sentences, including the denial of downward adjustments for acceptance of responsibility, grouping analysis, and the granting of an upward departure for physical injury to victims.

The Circuit’s decision can be found here.

New York Court of Appeals

In People v. Monforte, in a memorandum decision, the NY COA reversed defendant’s first-degree manslaughter convictions, following a guilty plea. The COA concluded that it was a violation of the State Constitution and the CPL to allow defendant to waive indictment and plead guilty to a superior court information where he had been charged with a class A murder. A defendant who is held for the action of the grand jury on a class A felony punishable by life imprisonment may not waive indictment by the grand jury and agree to be prosecuted for a lesser-included offense to facilitate a plea bargain on the homicide offense.

NYCA’s decision can be found here.

Appellate Division, Second Department

On Wednesday, in People v. Copeland, AD2 reversed defendant’s Kings County first-degree murder conviction for an O’Rama error, finding that supreme court erred when it summarized to counsel, rather than read verbatim, two substantive jury notes from deliberating jurors. Reversal was required even though counsel did not ask to read the notes.

AD2’s decision can be found here.

In People v. Perkins, AD2 remitted defendant’s Queens County convictions for possessing a sexual performance by a child, to conduct a hearing on defendant’s CPL § 30.30 motion. AD2 found that it was error to summarily deny defendant’s motion because he’d met his initial burden by alleging that the People failed to declare readiness within the statutory six-month time period, and error to have denied the motion based on the court’s reliance on a clerk’s ambiguous notation purportedly regarding the defendant’s alleged waiver of his CPL 30.30 rights for a relevant time period.

AD2’s decision can be found here.

Appellate Division, Third Department

On Thursday, in People v. Youngs, AD3 reversed some, but not all of defendant’s Madison County sex crimes. AD3 found that the County Court erred when it denied defendant’s request to call a witness who was prepared to testify that she had known the complainant since birth, that they were both members of a large extended family, and that she was aware of the complainant’s bad reputation for truthfulness among that extended family. AD3 found that, because defendant had demonstrated the proper foundation for admission of testimony regarding complainant’s bad reputation for truthfulness, reversal was required.

AD3’s decision can be found here.

Warm regards, Edward V. Sapone Sapone & Petrillo, LLP One Penn Plaza/ 53rd Floor/ 23rd Floor New York, NY 10038

(O): 646-844-3445

(C): (917) 597-7676