DECISIONS OF THE WEEK ENDED NOVEMBER 6, 2020

| Feb 2, 2021 | Ed Sapone’s Decisions of the Week

It was an unusually busy week in the Circuit, with five precedential opinions. None of them, however, benefitted defendants. Most interesting among the opinions was Moseley, where CA2 addressed conflict of laws provisions in payday loan agreements, finding that NY usury protections governed the agreements, even though the agreements specified otherwise.

The state courts were quiet during this election week. The sole reversal was in the Second Department in King, reversing the denial of a motion to suppress the results of an inventory search of a car after it was unlawfully impounded.

Second Circuit

In United States v. Cabral, CA2 affirmed defendant’s SDNY bank fraud conviction, following his conditional plea before Judge Alvin K. Hellerstein. CA2 rejected defendant’s contention that an 11-year delay between defendant’s indictment and his 2018 arrest violated his Sixth Amendment right to a speedy trial where defendant had been the source of the delay.

From January to July 2006, defendant deposited approximately $57,000 in stolen credit card convenience checks into his bank accounts and immediately withdrew money from the accounts before the checks could be rejected by the banks as fraudulent. Following an interview at which US Postal Inspectors seized defendant’s Brazilian passport, defendant, nonetheless, obtained travel documents and fled to Brazil. He later reported that the USPIS interview left him “scared,” and he decided to leave and return to Brazil because his United States travel permit was expiring soon. USPIS inspectors immediately attempted to locate defendant, eventually confirming that he had returned to Brazil. He was thereafter indicted for one count of bank fraud in 2007.

USPIS periodically attempted to locate defendant over the years that followed, searching databases. Notwithstanding those efforts, defendant lawfully traveled to the US seven times. Because there was an active National Crime Information Center (“NCIC”) entry in the wanted persons database, his entries should have been flagged, but were not.

In 2018, personnel at the Fugitive Locator Unit—a joint task force of several federal agencies—determined that defendant’s name was not properly showing the outstanding arrest warrant when it was run in the NCIC database. NCIC then manually entered defendant’s name in a separate Customs and Border Patrol screening database. That manual entry in the CBP system led to defendant’s arrest on October 11, 2018, at an airport in Houston, on his way back to Brazil from the United States.

Defendant moved to dismiss the indictment, arguing that the delay between his indictment and arrest violated his Sixth Amendment right to a speedy trial. The district court denied his motion. CA2, analyzing the issue using the factors outlined in Barker v. Wingo, 407 U.S. 514 (1972), agreed. First, the 11-year pre-arrest delay was wholly attributable to defendant’s flight to Brazil. Second, despite its mistakes, the government was sufficiently diligent in attempting to locate defendant. It found that the government should not be found to be negligent based solely on an apparent malfunction, technological or otherwise, with the NCIC system, especially where USPIS checked on multiple occasions over the period of delay to ensure that the entry was active and valid. Third, defendant was unable to show prejudice from the delay because the documentary evidence that existed in 2006 still existed in 2018.

CA2 found that the district court’s findings—including that defendant was at fault for the 11-year delay, that the government exercised reasonable diligence in attempting to locate him, and that defendant identified no prejudice from the delay—were not clearly erroneous based upon the record.

CA2’s decision can be found here.

In United States v. Moseley, CA2 affirmed defendant’s SDNY conviction for RICO, Truth in Lending Act (TILA), and other offenses in connection with an illegal payday-loan scheme, following a jury trial before Judge Edgardo Ramos. CA2 rejected defendant’s contention that the district court erred as a matter of law by instructing the jury that New York usury laws governed his business’s loans to New York borrowers rather than the laws of the jurisdictions specified in the loan agreements, which, unlike New York, set no interest rate caps. Despite choice-of-law provisions in the loan agreements that fixed the law in places where there were no usury statutes, NY law applied to NY residents because to do otherwise would violate public policy against usury.

Beginning in 2004, defendant ran a payday-loan business using domestic and foreign entities. Throughout this period, defendant and his employees administered the enterprise solely from offices physically located in Kansas City, Missouri. In September 2014, the Consumer Financial Protection Bureau shut the business down based on the conduct later prosecuted by SDNY against defendant individually.

The net interest rate charged by defendant’s business, due to the periodic addition of monthly fees, was frequently as much as 780%. Many states cap the legal interest rate at a level far below the effective rates defendant sought to charge. New York law, where a number of the borrowers resided, for example, sets the civil usury rate at 16 % for unlicensed lenders and treats all usurious contracts (that is, contracts violative of that rate) as void. See N.Y. Gen. Oblig. Law §§ 5-501, 5-511; N.Y. Banking Law § 14-a(1). NY sets the criminal usury rate at 25%. See N.Y. Penal Law § 190.40.

In 2016, defendant was indicted on RICO, wire fraud, identity theft, and TILA charges in the Southern District of New York. He pleaded not guilty, went to trial, and was convicted. His primary challenge on appeal was to the jury instructions. As to the legality of the rates charged by his business, defendant contended that the district court erred by instructing the jury that New York usury laws applied to his payday loans to borrowers domiciled in New York. He argued that the jury instructions were incorrect because they gave no effect to the choice-of-law provisions set out in the loan agreements. Those provisions specified that their terms and enforcement were to be governed by the laws of the jurisdictions of Nevada, Nevis, and New Zealand, none of which has usury laws. The district court held that NY law applied, and that the enforceable rate of interest on consumer loans is no more than 25 percent per year, and loans above that rate are unenforceable.

Because NY law governed the choice-of-law question, the issue was whether, under NY law, the choice-of-law provision in the written agreements governed. On that question, NY law provides that, “absent fraud or violation of public policy, contractual selection of governing law is generally determinative so long as the State selected has sufficient contacts with the transaction.”

CA2 found that, because of a longstanding public policy in New York in favor of enforcing its usury laws to protect those of its residents who enter into consumer debt contracts, choice-of-law provisions specifying foreign jurisdictions without usury laws are unenforceable in New York as against its public policy. Because NY law applied, and NY fixed the criminal interest rate at 25%, defendant had charged a criminally usurious interest rate.

CA2’s decision can be found here.

In United States v. Wasylyshyn, CA2 affirmed defendant’s NDNY conviction for creating a loud noise or nuisance in a courthouse, rejecting her contentions that the Noise Regulation was not conspicuously posted, that she had not acted with the requisite mental state, and that the Noise Regulation was unconstitutionally vague.

Defendant entered the lobby of the Binghamton courthouse to retrieve tax forms but was told by court security officers (CSOs) that she was not allowed to go to the IRS office inside the building without an appointment. Defendant engaged in a loud argument with a CSO that was aggressive on both sides. A CSO arrested her. Another issued a violation notice charging her with creating a loud or unusual noise or nuisance in a federal courthouse, in violation of 41 CFR § 102-74.390(a).  She was convicted of the violation following a bench trial before a magistrate. That conviction was upheld following an initial appeal to NDNY Chief Judge Glenn T. Suddaby.

CA2 rejected defendant’s argument that she did not have the requisite mens rea for the violation because she lacked knowledge that the action was wrongful. Although the statute itself contained no mens rea requirement, CA2 read a general intent requirement into it: that the defendant possessed knowledge with respect to the actus reus of the crime. The magistrate judge credited the CSOs’ testimony that defendant was shouting at them, that her voice could be heard from 40 to 45 feet away, and that she kept shouting after being told to calm down. This was sufficient to support the district court’s conclusion that the record contained evidence sufficient for a reasonable trier of fact to conclude beyond a reasonable doubt that defendant knowingly created a loud noise or a nuisance.

CA2 also rejected defendant’s contention that the Noise Regulation was unconstitutionally vague as applied to her conduct in this case. CA2 found that a reasonable people could discern with relative ease whether a noise is “loud” or “unusual” and whether conduct constitutes a nuisance. It had “little doubt” that, inside a federal courthouse, a reasonable person would discern that “yelling” at a CSO constitutes creating a “loud noise.”

CA2 declined to reach defendant’s contention that the Noise Regulation was not posted conspicuously because the issue was not raised at trial.

CA2’s decision can be found here.

In United States v. Requena, CA2 affirmed defendants’ NDNY convictions for conspiracy to possess with intent to distribute a controlled substance analogue, rejecting their contentions that (1) the Analogue Act’s “substantial similarity” requirement was unconstitutionally vague on its face; (2) the trial evidence was insufficient to prove their knowledge that they were dealing in a “controlled substance”; (3) the district court erroneously permitted the government’s experts to opine that the six synthetic cannabinoids at issue had features “substantially similar” to those of a scheduled substance; (4) the district court erroneously permitted the jury to convict Defendants without unanimous agreement on which of the six synthetic cannabinoids at issue qualified as a controlled substance analogue; and (5) the district court erroneously sentenced them based on the total quantity of controlled substance analogues involved in the conspiracy without determining which of the substances involved actually qualified as a controlled substance analogue.

Defendants’ convictions arose from their management of a business directed at the production and sale of synthetic marijuana, which defendants and their employees manufactured using at least six distinct synthetic cannabinoids. At the time defendants conspired to distribute them, these synthetic cannabinoids were not listed on the federal controlled substance schedules.

Instead, the government alleged that these substances were “controlled substance analogues” under the Controlled Substance Analogue Enforcement Act of 1986 (Analogue Act). The Analogue Act identifies a controlled substance analogue as a substance with chemical and pharmacological properties “substantially similar” to those of a substance listed on schedule I or II, 21 U.S.C. § 802(32), and directs, in part, that these substances—if “intended for human consumption”—“be treated[] for the purposes of any Federal law as a controlled substance in schedule I. § 813(a). Defendants were, in turn, charged based on the distribution of schedule I controlled substances.

First, CA2 rejected defendants’ vagueness challenge. Defendants claimed that since no objective standard governs a juror’s determination of whether a substance has a chemical structure and pharmacological effects that are “substantially similar” to those of a scheduled substance, the Act’s definition of a “controlled substance analogue” invites impermissibly arbitrary enforcement and provides potential defendants with no warning about what conduct is prohibited. CA2 found that, despite defendants’ contention that the Analogue Act is vague as applied to all possible prosecutions, precedent definitively established that defendants could not “establish that no set of circumstances exists under which the Act would be valid.”

Second, CA2 found the evidence sufficient to prove that defendants knew they were dealing in a controlled substance. Everyone involved in the synthetic marijuana transactions knew that it was being sold with the intent that the consumer would ingest it for the purpose of getting high. Among other things, defendants’ purposeful misdirection, labelling the synthetic marijuana in packages stating, “not for human consumption,” showed that defendants knew what they were doing was unlawful.

Third, CA2 found that the district court did not improperly permit two government experts to testify that the synthetic cannabinoids were “substantially similar” in structure and pharmacological effect to controlled substances. Although substantial similarity is not itself a scientific standard, the district court had ample basis to conclude that the experts’ opinions were nonetheless “the product of reliable principles and methods . . . applied . . . to the facts of the case.”

Fourth, reviewing for plain error, CA2 rejected defendants’ contention that the district court erred in instructing the jury that it must unanimously agree that at least one of the charged synthetic cannabinoids qualified as a controlled substance analogue, but that it need not unanimously agree on precisely which substances so qualified. A jury can convict a defendant for violating § 841 even if some jurors believe that the defendant distributed one drug (say, cocaine) and others believe that he actually distributed another (say, heroin). These same rules apply to analogues. In a prosecution for a violation of 21 U.S.C. § 841(a) subject to the statutory penalties in § 841(b)(1)(C), a substance’s analogue status is nothing more than a means of fulfilling the element that the defendant’s conduct involved a “controlled substance” in schedule I or II.

Fifth, CA2 rejected defendant’s argument that the trial court committed procedural error by failing to determine before sentencing which of the six synthetic cannabinoids at issue qualified as a controlled substance analogue, and that in the absence of such findings, the district court’s calculation of the total quantity of illegal substances in defendants’ possession could not have been proper. The district court explicitly adopted the PSR’s factual findings that identified the relevant substances as controlled substance analogues. The court likewise identified all six of the charged substances in a post-trial order as “the controlled substance analogues defendants conspired to possess with the intent to distribute”. CA2 found that the district court heard more than sufficient testimony at trial to find that each of these substances was a controlled substance analogue by a preponderance of the evidence. And because the resolution of disputed facts at sentencing is a task for the district court alone, the fact that the jury made no explicit findings as to which specific cannabinoids qualified as controlled substance analogues was irrelevant.

CA2’s decision can be found here.

In United States v. Scott, CA2 affirmed defendants’ SDNY conviction for conspiracy to violate the civil rights of an inmate at Downstate Correctional Facility and related offenses, following a jury trial before Judge Kenneth M. Karas. CA2 rejected defendants’ contentions that (1) their convictions under 18 U.S.C. § 241 for conspiracy to violate civil rights were invalid because there was insufficient time for a conspiracy to form; (2) the district court committed reversible error in instructing the jury that the government was not required to prove the defendant knew his or her conduct would obstruct a federal investigation to prove that he or she falsified records in violation of 18 U.S.C. § 1519; and (3) § 1519 was unconstitutionally vague.

The government presented evidence that defendants, along with other officers of the New York State Department of Corrections and Community Supervision (DOCCS), assaulted an inmate at the Downstate Correctional Facility in Fishkill, New York. The evidence – which included the testimony of fellow DOCCS officers – further revealed that defendants took numerous steps to cover up the assault, including falsifying the initial use-of-force incident report.

In arguing that there was insufficient evidence to support their convictions for conspiracy to deprive the inmate of his civil rights in violation of 18 U.S.C. § 241, defendants principally contended that the assault was spontaneous and that there was insufficient evidence of an agreement among the corrections officers. Section 241 makes it unlawful for “two or more persons [to] conspire to injure, oppress, threaten, or intimidate any person . . . in the free exercise or enjoyment of any right or privilege secured to him by the Constitution or laws of the United States.”

CA2 rejected defendants’ contention that there must be an extended period of premeditation or a distinct verbal agreement prior to the impetus of the assault. While not every group beating is per se a conspiracy, the record demonstrated that defendants entered into a tacit agreement to violate the inmate’s civil rights. Although the initial punch may have been spontaneous, the evidence at trial revealed that the other officers acted in concert and purposefully joined the assault. The evidence demonstrated that the group consciously colluded for at least a couple of minutes to deprive the inmate of his civil rights and that one defendant used her supervisory authority to facilitate that assault.

CA2 found, reviewing for plain error, that there was no requirement to instruct the jury that defendants knew that their records falsification would obstruct a federal investigation. CA2 concluded that the language of § 1519 was “unambiguous[ly]” broad, and that the legislative history made clear that the statute was “specifically meant not to include any technical requirement . . . to tie the obstructive conduct to a pending or imminent proceeding or matter.”

Nor is the statute unconstitutionally vague. § 1519 makes it illegal to knowingly make a false entry in a record “with the intent to impede, obstruct, or influence the investigation or proper administration of any matter.” One of the defendants contended that a literal application of the statute would permit a conviction where a defendant knowingly makes a false entry “in relation to or contemplation of any such matter” even if the defendant did not have the intent to impede a future investigation. She maintained that the lack of a specific intent requirement for contemplated investigations renders the statute impermissibly vague. CA2 disagreed. The statutes requires that a defendant must knowingly act with the intent to impede an investigation to be liable under the statute – just as the district court instructed. Such a reading did not raise vagueness concerns.

CA2’s decision can be found here and an accompanying summary order here.

In United States v. Acosta, in a summary order, CA2 affirmed defendants’ SDNY convictions for conspiracy to commit murder for hire and related offense, following a jury trial before Judge P. Kevin Castel. In doing so, CA2 rejected defendant’s contentions that (1) the evidence was insufficient to support the convictions; (2)  the district court erred in its handling of alleged juror misconduct where, on the first day of deliberations, two jurors may have had a conversation regarding the case outside the presence of other jurors; (3) the district court erred by allowing an NYPD Detective to read to the jury prior consistent statements made by an identifying witness regarding his identification of one defendant and another individual as involved in the murders because there was insufficient evidence in the record that the witness was the person who made the identifications; and (4) defendant Acosta’s Confrontation Clause rights were violated by the district court when it admitted three statements made by co-defendant Diaz following his arrest.

Regarding the sufficiency of the evidence, the trial evidence clearly established that an interstate telephone call, between New York and Florida, was used to facilitate the murder-for-hire plot, satisfying the jurisdictional element under 18 U.S.C. § 1958. CA2 also found that there was ample evidence that Defendant Acosta was engaged in an ongoing narcotics conspiracy at the time of the murders. And, although it was Acosta’s original intention that Hinton Ventura (not Alex Ventura) be killed, the jury could have rationally inferred that his motive and broader intent was to kill the individual responsible for the burglary of his narcotics proceeds (whom he initially believed to be Hinton Ventura), and thereby aided and abetted in the murder of Alex Ventura for that burglary. Finally, CA2 found unpersuasive defendant Diaz’s argument that the evidence supporting his conviction was insufficient insofar as it was based on unreliable accomplice testimony. Diaz failed to persuasively explain why the accomplice’s testimony could not be credited, and relied on, by the jury. The accomplice was subject to two days of vigorous cross-examination by defense counsel, in which counsel sought to undermine his credibility and attack his character. Based on its verdict, the jury ultimately credited the accomplice’s testimony, which was corroborated by other witnesses and exhibits admitted into evidence.

CA2 similarly found that the district court did not abuse its discretion in handling the alleged juror misconduct. The alleged misconduct at issue appeared to be a few brief statements from one juror to another after deliberations commenced and were ambiguous as to whether they constituted improper deliberations. According to CA2, the district court acted prudently, and within its discretion in addressing the intra-jury communications by reminding the jury that it may not deliberate without the entire group present and making clear that such conduct would be a violation of the district court’s rules.

Regarding the defendants’ third contention, CA2 found that defendants failed to raise the argument at trial, and that, in any case, identity can be inferred from circumstantial evidence, and here there was sufficient circumstantial evidence from which to infer the informant’s identity.

Finally, CA2 found that none of defendant Diaz’s three post-arrest statements, which were introduced at trial, implicated defendant Acosta in any crime. Therefore, any Confrontation Clause error was harmless.

CA2’s decision can be found here.

In United States v. Pocinoc, in a summary order, CA2 affirmed EDNY Judge Brian M. Cogan’s order denying defendant’s post-sentencing motion to amend the Probation Department’s presentence report.

Defendant pleaded guilty to illegal gambling. The PSR included, among other things, four categories of defendant’s uncharged conduct outside of the crime of conviction: (1) referring a member of another organized criminal enterprise to one of his co-defendants to facilitate debt-collection; (2) running a fraudulent patent and trademark business and knowing that it was fraudulent; (3) submitting a false immigration statement by omitting his participation in that business; and (4) making misrepresentations in applications for public benefits. Arguing that the district court should have stricken such discussions of the uncharged conduct from the PSR, defendant relied on Rule 32(d)(3) of the Federal Rules of Criminal Procedure, which provides that the PSR “must exclude the following: . . . any . . . information that, if disclosed, might result in physical or other harm to the defendant . . . .” Fed. R. Crim. P. 32(d)(3). In his view, the PSR’s discussions of his uncharged conduct outside of the crime of conviction would “harm” him by influencing the resolution of his pending immigration applications.

CA2 found that the district court did not err. Defendant was found by the district court to have engaged in the four categories of the uncharged conduct by a preponderance of the evidence, and they were clearly relevant to sentence and could be considered by the court.

CA2’s decision can be found here.

In Shapiro v. United States, in a summary order, CA2 affirmed SDNY Judge Kimba M. Wood’s denial of defendant’s § 2255 motion, rejecting his contention that his attorney was ineffective at sentencing.

CA2 found that defendant’s claim failed because he could not demonstrate prejudice resulting from his counsel’s alleged deficiencies at sentencing. Defendant’s argument that he was prejudiced by his counsel’s failure to present the proper legal authority was belied by the record. There can be no prejudice for a failure to request that the court consider specific precedent when “the court rule[s] as if such a request had been made.” United States v. Patasnik, 89 F.3d 63, 67 (2d Cir. 1996).

And, as for defendant’s argument that his counsel was ineffective because he failed to present the sort of expert testimony offered as part of defendant’s § 2255 motion, CA2 already explained on direct appeal that presentation of such evidence would not have made a difference. As such, defendant could not show a reasonable probability that, but for his counsel’s conduct, the result of his sentencing would have been different.

CA2’s decision can be found here.

In United States v. Spells, in a summary order, CA2 affirmed SDNY Judge P. Kevin Castel’s denial of defendant’s motion for a reduction of his sentence under the First Step Act, concluding that Judge Castel did not abuse his discretion in denying the motion.

Defendant pleaded guilty in 2005 to various firearms offenses, a heroin offense, and one count of possessing at least five grams of cocaine base with intent to distribute, in violation of 21 U.S.C. §§ 841(a)(1) & (b)(1)(B)(iii). In 2006, the district court sentenced defendant to a total of 232 months of imprisonment.

In 2019, defendant moved for a sentence reduction pursuant to Section 404 of the First Step Act. The district court denied defendant’s motion. The district court concluded that defendant was eligible for Section 404 relief but exercised its discretion to deny the motion. The district court noted that Section 404 “does not set forth the factors that a court should consider in exercising its discretion,” but considered “the purpose of the statute,” “the reasons why the sentence was imposed in the first place,” and the sentencing factors set forth at 18 U.S.C. § 3553(a). The district court noted that defendant’s offenses “remain worthy of just punishment and his sentence promotes respect for the law,” and that “[t]here remains a serious and important need to protect the public from further crimes of the defendant.”

CA2 found that the district court explained in its written order how specific § 3553(a) factors supported the denial of a discretionary reduction. Nothing in the record suggested that the district court failed to consider any relevant factors in arriving at its decision or that it assigned impermissible weight to any one factor.

CA2’s decision can be found here.

In United States v. Walker, in a summary order, CA2 dismissed defendant’s appeal from his SDNY conspiracy to commit Hobbs Act robbery conviction and the 108-month sentence imposed by Senior District Judge John F. Keenan, finding that defendant had validly waived his right to appeal any sentence within or below a stipulated guidelines range of 151 to 188 months.

CA2’s decision can be found here.

Appellate Division, Second Department

In People v. King, AD2 reversed defendant’s Queens County weapon possession conviction, finding that Supreme Court erroneously denied suppression of a weapon found in defendant’s legally parked car.

At the suppression hearing, the arresting officer testified that the defendant’s vehicle was legally parked at the time of the defendant’s arrest, and there was no testimony regarding posted time limits pertaining to the parking space. Although the officer testified that he impounded the defendant’s vehicle for “safekeeping,” the People presented no evidence demonstrating any history of burglary or vandalism in the area where the defendant had parked his vehicle. AD2 found that the People failed to establish that the impoundment of the defendant’s vehicle was in the interests of public safety or part of the police’s community caretaking function. While the arresting officer testified that “[t]here is [an] NYPD procedure when someone is arrested and you have to take the car into safekeeping,” the People failed to present evidence of what such a procedure required or whether the arresting officer complied with such a procedure when he impounded the defendant’s vehicle.

AD2’s decision can be found here.

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