DECISIONS OF THE WEEK ENDED AUG 7, 2020

| Aug 7, 2020 | Ed Sapone’s Decisions of the Week

We have an interesting decision related to federal sentencing this week from CA2 in United States v. Huberfeld, where the Circuit vacated the sentence imposed by SDNY Senior U.S. District Judge Alvin K. Hellerstein. CA2 found that the sentencing court improperly relied on unproven allegations against Defendant Huberfeld to which he did not admit. Huberfeld’s co-defendant, former Corrections Officers Union President Norman Seabrook, did not fare as well in his appeal, which was resolved by a summary affirmance.

The New York State courts remained relatively quiet, with relief granted to appellants by only the Second Department (Greenspan) and Third Department (Harris).

Second Circuit

On Tuesday, in United States v. Huberfeld, CA2 vacated the sentence imposed by Judge Hellerstein following defendant’s conviction for conspiracy to commit wire fraud. CA2 agreed with defendant that the court erred by: (1) applying the commercial-bribery sentencing guideline based on an uncharged bribery scheme that the government dropped in exchange for the guilty plea, and (2) ordering $19 million in restitution to be paid to the Corrections Officers Benevolent Association (COBA), an entity that was not a victim of the conduct for which defendant was convicted.

By way of background, Defendant Huberfeld co-founded the Manhattan-based hedge fund, Platinum Partners. As of the time period relevant to the allegations, Huberfeld had stepped down from a management role at Platinum and had assumed a legacy role as limited partner. His primary responsibility in that role was to solicit investors and refer potential clients to the then-current management team. Defendant Norman Seabrook was the long-time President of COBA, NYC’s largest corrections officers union. His control of COBA extended to its finances, including the administration of its Annuity Fund, a retirement benefits program for corrections officers. COBA’s holdings exceeded $70 million.

Huberfeld was charged with bribing Seabrook to make COBA investments with Platinum Partners. An SDNY grand jury returned an indictment charging Seabrook and Huberfeld with substantive and conspiratorial honest services wire fraud. The indictment alleged a commercial bribery scheme that deprived members of COBA of their intangible right to the honest services of Seabrook. The scheme alleged that Platinum would pay Seabrook between $100,000 and $150,000 annually. COBA invested a total of $20 million with Platinum. Because the Platinum fund underperformed, only $60,000 was paid to Seabrook in the first year. After a former COBA board member filed a lawsuit against the union for its poor investments, and an investigation into Seabrook became known, Platinum filed for bankruptcy and COBA lost $19 million on a $20 million investment.

A trial on the charges ended in a hung jury.

Huberfeld then agreed to plead guilty to a superseding information that charged him with a smaller scheme, instead of the overarching bribery scheme: conspiracy to commit wire fraud for presenting a false $60,000 invoice to Platinum. The only reference to COBA in the superseding information was the allegation that Huberfeld knew that the actual purpose of the payment was a reimbursement for having paid Seabrook for his efforts to get COBA to invest millions of dollars in Platinum.

In the plea agreement, the parties stipulated that the applicable sentencing guideline was the §2B1.1 fraud guideline. After a two-level reduction for Huberfeld’s acceptance of responsibility (not minus three, given that the offense level was not 16 or higher), the parties stipulated that, based on a $60,000 loss, the total offense level was 10, resulting in a Guidelines range of 6 to 12 months of imprisonment.

The Probation Department also calculated a Guidelines range of 6 to 12 months. But it made an unusual upward variance recommendation to a 24-month prison sentence in part because the 6- to 12-month Guidelines range did not adequately take into account the full scope of the overall scheme.

At sentencing, the district court made it clear that it was not satisfied using the agreed-upon fraud guideline to calculate the Guidelines. Judge Hellerstein insisted that he must take into consideration the purpose of the larger scheme. While both parties asserted that the district court could not rely on the uncharged conduct in determining the appropriate offense guideline section. The court disagreed, and concluded that, although it was permitted to take account of COBA’s $19 million loss as “relevant conduct” under Section 1B1.3, the fraud guideline still was inappropriate because, when the $19 million loss was applied to the fraud guideline, it yielded a sentencing range that was “excessive.” Instead, the district court decided to use § 2B4.1, the commercial-bribery guideline, and sentenced Huberfeld to 30 months. Judge Hellerstein stated that he would have arrived at the same sentence irrespective of whether he used the fraud guideline or the commercial bribery guideline. Addressing restitution, he took the view that COBA was a victim of the charged wire-fraud offense.

CA2 found that the sentence was procedurally unreasonable, because it was wrong to use the commercial-bribery guideline given that the superseding indictment to which Huberfeld pleaded guilty did not establish the elements of any commercial-bribery offense. Because the count in the superseding information to which defendant pleaded guilty did not allege conduct that established the elements of any commercial bribery offense, the district court was not permitted to invoke the cross-reference to apply the commercial-bribery guideline. While the court was permitted to look elsewhere to vary the range, it was not permitted to use the commercial-bribery guideline to set a benchmark for how much to vary the sentence from the advisory Guidelines. The court’s comment that the guidelines range “made no difference” to its determination of sentence, did not insulate the error from review.

All the court had to do was apply the correct guideline, the §2B1.1 fraud guideline, and then impose an upward variance to 30 months, relying on the factors of 18 USC §3553(a), and more specifically, the nature and circumstances of the offense and the need to promote respect for the law and for general deterrence. Had that happened, the Circuit would have affirmed the sentence. But it didn’t, so nice win for the defense.

CA2 also found that the district court erred in ordering defendant to pay $19 million in restitution to COBA because COBA was not a direct or proximate victim of the wire-fraud offense. COBA’s losses could not have been caused by the wire-fraud conduct, because the wire fraud postdated COBA’s investment.

CA2’s decision can be found here.

On Thursday, in Mata v. United States, CA2 affirmed the denial of defendant’s motion to file a second or successive motion to vacate, set aside, or correct his sentence, finding that defendant had not made a prima facie showing that § 2255(h)’s requirements had been met.

Defendant moved to file a successive motion to correct his sentence under §2255(h), contending that his conviction for violating 18 USC § 922(g) must be vacated in light of the Supreme Court’s decision in Rehaif v. United States, 139 S.Ct. 2191 (2019). He argued that Rehaif announced a new rule of constitutional law, so he was entitled to file a successive motion.

By way of background, in 2014, defendant was convicted, pursuant to a guilty plea, of conspiracy to commit Hobbs Act robbery and for being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g). SDNY Judge Victor Marrero sentenced defendant primarily to a whopping 360 months of incarceration. On direct appeal, defendant submitted a pro se supplemental brief arguing that he had received ineffective assistance of counsel. CA2 affirmed in a summary order. United States v. Mata, 614 F. App’x 35 (2d Cir. 2015).

Defendant subsequently filed a motion pursuant to § 2255 that the district court denied. He moved for reconsideration, which was also denied. CA2 denied a certificate of appealability.

He then sought to bring a second motion. As required by statute, he sought permission from CA2. He contended that his conviction needed to be vacated in light of Rehaif, and that he received ineffective assistance of counsel.

CA2 found that defendant did not qualify for relief under § 2255(h)(2). Rehaif resolved only a question of statutory interpretation and did not announce a rule of constitutional law (much less a new one, or one that the Supreme Court has made retroactive on collateral review or that was previously unavailable). Rehaif clarified the mens rea applicable to a violation of 18 U.S.C. § 922(g), holding that the government must prove that a defendant knew both that he possessed a firearm and that he belonged to the relevant class of persons barred from possessing a firearm.

Because Rehaif did not announce any rule of constitutional law, defendant did not make the required prima facie showing that his claim satisfies the gatekeeping requirements of § 2255(h)(2).

CA2’s decision can be found here.

On Monday, in United States v. Figueroa, in a summary order, CA2 affirmed defendant’s EDNY convictions for being a felon in possession of a firearm and for violating the terms of his supervised release, and the 72-month and 18-month sentences imposed by Judge Allyn R. Ross. CA2 summarily rejected defendant’s claims that: (1) the district court erred in failing to suppress a handgun, ammunition, and other items obtained from the search of an SUV, as well as one of his post-arrest statements; (2) there was insufficient evidence supporting his felon-in-possession conviction; (3) his motion for a new trial based on ineffective assistance of counsel was improperly denied; (4) the district court miscalculated the applicable Guidelines range for his felon-in-possession conviction by incorrectly finding that his prior second-degree assault conviction under NY Penal Law § 120.05(2) was a crime of violence; (5) his conviction must be reversed in light of the Supreme Court’s recent decision in Rehaif v. United States, because the government did not prove that he knew he belonged to the category of persons banned from possessing a firearm, and, on the violation of supervised release appeal, that (6) the district court wrongly found that his felon-in-possession conviction violated a term of his supervised release; and (7) his consecutive 18-month sentence for violating his supervised release was substantively unreasonable.

CA2’s decision can be found here.

On Tuesday, in United States v. Seabrook (companion case to United States v. Huberfeld, discussed above), in a summary order, CA2 affirmed defendant Seabrook’s SDNY convictions for conspiracy to commit honest services wire fraud and one count of honest services wire fraud and the sentence, imposed by Judge Hellerstein, of 58 months of imprisonment, three years of supervised release, and $19 million in restitution.

CA2 rejected defendant’s claims that the district court erred by admitting into evidence, in violation of Federal Rules of Evidence 402 and 403, testimony regarding the bankruptcy of Platinum Partners and the COBA’s loss of $19 million. The government was required to prove that Seabrook acted with intent to steer the funds to Platinum in exchange for kickbacks, and that Seabrook did not act, as he claimed at trial, as an honest and faithful officer. The loss evidence was relevant to that point.

CA2 likewise rejected defendant’s claim that the district court’s repeated statements to the prosecutor, made in open court in the jury’s presence, instructing the prosecutor to focus on the “suitability” of COBA’s investment in Platinum Partners and its direct questions to witnesses addressing the same issue were plain error. (We can’t stand it when judges do that, can we?) CA2 did not find plain error because the district court’s comments did not take a position on whether the investments were suitable, but instead directed witnesses to address the topic of suitability. The district court also explicitly instructed the jury, both during the course of the trial and in its final instructions, that it had no opinion with respect to the credibility of witnesses or the proof.

CA2’s decision can be found here.

On Friday, in United States v. Rubel, in a summary order, CA2 affirmed SDNY Judge Cathy Seibel’s sentence of 12-months of incarceration to be followed by lifetime supervised release with special conditions. This sentence followed defendant’s admission to four violations of the conditions of his first lifetime term of supervised release, which the district court revoked before imposing the above-described sentence.

Defendant argued on appeal that the second lifetime term of supervised release was both procedurally and substantively unreasonable. CA2 found that the term was not plain error, and that the district court had provided an adequate explanation for it. CA2 found that the district court had provided ample reasons for the sentence, including that defendant presented a high risk for recidivism and a danger to the community. CA2 also found the sentence substantively reasonable, as it had in the past, even for simple possession or receipt of child pornography.

CA2 also rejected various challenges to the special conditions of supervised release, including a monitoring condition that allowed probation to install software on defendant’s computers and other connected devices, an access condition which prohibited defendant from visiting categories of websites, a treatment-provider condition, that delegated to his sex-offender-treatment provider decisions about websites that defendant could visit while in treatment, and a social-media condition that limited defendant’s access to websites that forbid access for persons with criminal histories like defendant’s.

CA2’s decision can be found here.

Appellate Division, Second Department

On Wednesday, in People v. Greenspan, AD2 reversed defendant’s Suffolk County second-degree murder conviction in the interest of justice, finding that the County Court’s act of entering into a plea agreement with a testifying co-defendant violated defendant’s right to due process.

The codefendant had been charged with, among other things, murder in the second degree. The People had promised to recommend a determinate sentence of imprisonment between two and seven years in exchange for the codefendant’s guilty plea to the reduced charge of attempted robbery in the second degree. The court promised the codefendant a sentence of only probation in exchange for her testimony against the defendant.

AD2 found that, under the circumstances, the County Court committed reversible error when it negotiated and entered into a plea agreement with a codefendant requiring her to testify against defendant in exchange for a more favorable sentence. By doing so, the trial court abandoned the role of a neutral arbiter and assumed the function of an interested party, thereby creating a “specter of bias.”

AD2’s decision can be found here.

Appellate Division, Third Department

On Thursday, in People v Harris, AD3 modified defendant’s Albany County convictions, by reducing his conviction from assault in the first degree to attempted assault in the first degree. Based upon allegations that defendant attacked the complainant with a filet knife, causing wounds to complainant’s nose, cheek and chest, defendant was charged with assault in the first degree, attempted assault in the first degree, assault in the second degree and criminal possession of a weapon in the third degree. Following a jury trial, defendant was convicted of assault in the first degree, assault in the second degree and criminal possession of a weapon in the third degree.

AD3 found that the proof of facial scarring did not support a conviction for assault in the first degree, requiring proof of “serious and protracted disfigurement.” The People did not introduce a photograph depicting the complainant’s nose and right cheek at the time of trial or any time after the sutures had been removed and the lacerations healed. Although the complainant displayed the facial scars to the jury the People failed to make a contemporaneous record of what the jury observed. In the absence of a photograph depicting the victim’s facial scars or an on-the-record description of the victim’s scars at the time of trial, AD3 found that it could not conclude that the record evidence supported a finding of serious disfigurement.

AD3’s decision can be found here.

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