Friday, December 04, 2015

Today's squib focuses mostly on a 94-page opinion, issued 17 months after oral argument, in a securities-fraud case, but also includes a short nod to an issue of Fourth Amendment standing decided in a § 1983 case.

1.  United States v. Lloyd et al., Nos. 12-50499, -50500, -50509, -50514, -50526, and -50566 (Rosenthal (S.D. Tex.) with Berzon and Clifton)) --- The Ninth Circuit affirmed the sentence imposed following their guilty pleas on the manager of a telemarketing "boiler rooms" but vacated the conviction of the other.  The Ninth Circuit also addressed appeals brought by three employees who went to trial -- it vacated the conviction of one employee but affirmed the conviction of a second; the third employee who went to trial did not properly challenge his conviction on appeal.  Of the two employees whose convictions survived, the court vacated the sentence on one and affirmed the sentence on the other.  The securities fraud revolved around raising money for various filmmakers; none of the films that were actually made turned a profit, and all of the unsophisticated investors lost their money.

The fraud scheme took place in two states, California and Florida, using scripts and resources provided by the mastermind of the fraud scheme (who committed suicide shortly after the indictments were handed down).  The court held that the district court erred in this case by attributing to the manager of the Florida boiler room the solicitation and sales activity of the California boiler room, because the evidence showed that they were managed independently and the two managers did not share information, resources, or profits.  Thus the district court did not correctly compute the Florida manager's loss amount and restitution, and so he had to be resentenced.  As to the manager of the California scheme, the court found his sentence to be procedurally and substantively reasonable.

The trial judge properly allowed the victims to testify about their financial situations and the impact of losing their investments.  This testimony was relevant to proving how the fraud scheme was perpetrated and not overly prejudicial. 

Another boiler-room manager was allowed to testify as a layperson about management, activity, and strategy.  His testimony was based on "statements he heard from unidentified telemarketers and investors, well beyond his own personal experience," and thus lacked proper foundation for lay expert testimony under Rule 701, and was not admissible hearsay. 

The trial judge improperly admitted evidence of one defendant's subsequent employment at another telemarketing operation that also proved to be fraudulent, because that testimony did not relate to any of the permissible purposes under Rule 404(b).

The trial judge properly admitted testimony from another employee of the California boiler room about what they would say to potential investors in order to get them to invest in the films.  This was admissible hearsay from a coconspirator.

An email about one of the defendants sent by another manager at the California boiler room was inadmissible hearsay.

The trial judge properly excluded one defendant's testimony about his family situation, because it was not relevant to proving (or disproving) the fraud scheme and was overly prejudicial.  Excluding this testimony did not violate the defendant's right to present a defense.

The jury instructions were not faulty because they failed to define "reckless disregard."

As to one employee, the court found overwhelming evidence of guilt, and thus found the evidentiary errors harmless.  As to the other, the court did not find overwhelming evidence of guilt, and thus vacated his conviction in light of the cumulative evidentiary error.  But as to that defendant, the court found the evidence sufficient to sustain the conviction, and so ruled that he could be retried without creating a double-jeopardy problem.

As to the employee whose conviction was affirmed, the court held that the sentencing judge properly applied a vulnerable-victim enhancement but that the record was unclear whether his criminal-history score was correctly calculated.  Thus the court vacated and remanded for resentencing.

With respect to the remaining employee, the court held that the amount of loss and victim-related adjustments under both Chapters 2 and 3 were properly applied, and affirmed the sentence and the restitution award.

Congratulations to Deputy Federal Public Defender Kathryn Young of the Central District of California, whose client's conviction was vacated.

The opinion is here:

2.  Lyall v. City of Los Angeles, No. 13-56122 (Bybee with Bea and Foote (W.D. La.)) --- The Ninth Circuit reversed a grant of summary judgment in favor of the City of Los Angeles and two of its police officers in a civil-rights action under 42 U.S.C. § 1983 in which two organizers of a concert sued for a violation of their Fourth Amendment rights when the police entered the concert venue without a warrant and ordered the organizers to submit to a field lineup relating to the investigation of some shoplifting at a nearby convenience store.  Under United States v. Jones, 132 S. Ct. 945 (2012), the organizers had standing to challenge the warrantless entry into the concert venue because they had leased the space and thus were the "owners" of the property onto which the police had trespassed.

The opinion is here:


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