US v. Jeffrey Martinovich
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 4:12-cr-00101-RGD-TEM-1. [999731547]. [13-4828]
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4828
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
JEFFREY A. MARTINOVICH,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News. Robert G. Doumar, Senior
District Judge. (4:12-cr-00101-RGD-TEM-1)
Argued:
September 17, 2015
Decided:
January 7, 2016
Before WYNN, FLOYD, and THACKER, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published
opinion.
Judge Thacker wrote the majority opinion, in which
Judge Floyd joined.
Judge Wynn wrote a separate concurring
opinion.
ARGUED: Lawrence Hunter Woodward, Jr., SHUTTLEWORTH, RULOFF,
SWAIN, HADDAD & MORECOCK, PC, Virginia Beach, Virginia, for
Appellant.
V. Kathleen Dougherty, OFFICE OF THE UNITED STATES
ATTORNEY, Norfolk, Virginia, for Appellee.
ON BRIEF: Dana J.
Boente, United States Attorney, Alexandria, Virginia, Brian J.
Samuels, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Newport News, Virginia, for Appellee.
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THACKER, Circuit Judge:
During
Government
sought
(“Appellant”)
firm’s
the
course
to
engaged
clients
out
of
prove
in
of
a
a
four-week
that
scheme
millions
Jeffrey
to
of
jury
trial,
A.
defraud
dollars.
the
Martinovich
his
The
investment
jury
found
Appellant guilty of one count of conspiracy to commit mail and
wire
fraud,
four
counts
of
wire
fraud,
five
fraud, and seven counts of money-laundering.
counts
of
mail
On September 30,
2013, Appellant was sentenced to 140 months of imprisonment,
three years of supervised release, and monetary penalties.
Appellant appeals his convictions, alleging a litany
of
errors.
court
Above
improperly
all,
Appellant
interfered
with
contends
the
that
trial
the
district
proceedings
and
misstated the law during his sentencing hearing.
We conclude that the jury’s verdict must stand, but
because the district court treated the United States Sentencing
Guidelines (“Guidelines”) as mandatory, we vacate the sentence
and remand with instructions that the matter be assigned to a
different judge.
I.
A.
In or around 2000, Appellant partnered with Witt Mares
&
Company,
Investment
a
public
Consulting
accounting
Group
firm,
(“MICG”),
2
to
a
form
Martinovich
financial
services
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company that provided investment services to its clients.
As a
broker-dealer, MICG was licensed by the Securities and Exchange
Commission and regulated by the Financial Industry Regulatory
Authority (“FINRA”).
MICG
utilized
First
Clearing,
LLC,
a
non-bank
affiliate of Wells Fargo, to provide brokerage account services,
such as compiling and issuing investor statements and portfolio
information, to MICG’s clients.
In 2005, Appellant became the sole owner and Chief
Executive Officer of MICG.
Thereafter, MICG rapidly expanded,
and as a result, incurred increased expenses for salaries, rent,
marketing, celebratory events, and corporate retreats.
In November 2006, Bruce Glasser began employment with
MICG
as
managing
recommended
that
director
of
Appellant
privately
held
solar
EPV’s
value
to
invest
energy
expected
offering (“IPO”) in 2008.
investment
in
company.
increase
banking.
EPV
Solar,
Appellant
with
Glasser
EPV’s
Inc.,
and
initial
a
Glasser
public
In order to take advantage of the EPV
investment opportunity, MICG created a hedge fund for MICG’s
clients
Fund”).
and
launched
MICG
Venture
Strategies,
LLC
(“Venture
The Venture Fund consisted of only non-public assets
that were not otherwise tradeable.
The governing document for
the Venture Fund was the Private Placement Memorandum (“PPM”).
The
PPM
defined
the
Venture
Fund’s
3
investment
strategy
and
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objectives, including defining the manager’s role.
Pursuant to
the PPM, Appellant had sole authority for investment decisions,
asset valuations, incentive allocation, and management fees for
the Venture Fund.
million
shares
EPV became its first investment with over 1.8
purchased
at
$1.15
per
share
in
June
and
September 2007.
As the Venture Fund manager, Appellant received both a
1% management fee and 20% incentive fee based on the Venture
Fund’s
performance.
First
Clearing
managed
the
brokerage
account services for the Venture Fund, and Appellant maintained
the only check writing privileges for receiving and disbursing
money related to the Venture Fund account.
Pursuant to the PPM, Appellant needed an independent
valuation
of
EPV
in
order
to
calculate
incentive fees and value to the clients.
through
First
Clearing,
would
provide
his
management
and
In turn, Appellant,
statements,
which
reflected the Venture Fund’s holdings and performance, to MICG’s
clients.
A rise in the value of the holding meant additional
incentive and management fees to Appellant.
Despite
the
PPM’s
requirement
for
an
independent
valuation, Appellant, through Glasser and Steven Gifis (an EPV
shareholder and broker of the MICG/EPV deal), had Peter Lynch
(an EPV shareholder, consultant, and a solar industry expert)
4
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conduct
the
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valuation. 1
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During
the
course
of
the
valuation
process, Lynch was unaware of the true intent of the valuation.
Rather, Gifis told Lynch that the valuation was being done so
that EPV’s president could value his personal holdings.
did
not
know
the
valuation
was
being
produced
Lynch
pursuant
to
Appellant’s request, was to be used to value assets held in a
hedge fund, or that it would be used outside EPV.
Under
these
false
pretenses,
Lynch
provided
valuation share price of $2.13 for end-of-year 2007.
a
Based on
this end-of-year valuation, Appellant took an incentive and/or
management fee of $357,019, withdrawn from First Clearing.
In
early
2008,
Appellant
added
an
ownership
in
a
privately held soccer team, the General Sports Derby Partnership
(“Derby Rams”), and an interest in a construction bond to the
Venture
Fund.
dissolved,
In
its
IPO
September
failed
forecasted growth potential.
return
of
their
money.
In
to
2008,
when
launch,
EPV’s
thereby
financing
damaging
its
As a result, MICG clients sought a
response,
Appellant
proceeded
to
deny, discourage, and delay his clients’ redemptions, yet in
October
Moreover,
2008,
even
he
redeemed
with
EPV’s
$100,000
decline,
1
of
his
own
Appellant
investment.
continued
to
Appellant did not compensate Gifis, Glasser, or Lynch to
produce these valuations.
5
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encourage and recruit individuals to invest capital into the
Venture Fund.
investors;
In doing so, Appellant (1) sought unsophisticated
(2)
(3) misinformed
failed
to
investors
disclose
about
EPV’s
their
dire
redemption
condition;
ability;
and
(4) used new investment money to pay other investors.
Needing
another
valuation
for
end-of-year
2008,
in
December 2008, Appellant again orchestrated an EPV share price
valuation.
From
a
share
price
of
$2.13
in
December
2007,
Appellant requested that EPV show an increased share value of
$2.16
for
end-of-year
2008,
and
this
recommendation was submitted to Lynch.
$2.16
share
price
In order to support his
predetermined incentive and management fees, along with EPV’s
predetermined
valuation,
Appellant
also
Derby Rams were valued at $7,595,000.
were
actually
valued
at
$6,000,000.
represented
that
the
However, the Derby Rams
On
January
2,
2009,
Appellant took three draws totaling $478,363.47 from the Venture
Fund’s First Clearing account to pay Appellant’s management and
incentive fees.
Lynch
once
again
approved
Appellant’s
predetermined
price of $2.16, thinking it was only being used internally.
January
4,
2009,
Appellant
approved the $2.16 valuation.
received
confirmation
that
On
Lynch
However, because of the decreased
value of Derby Rams, Appellant required even more inflation to
EPV’s valuation to justify the incentive and management fees of
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$478,363.47 that Appellant had already paid himself.
January
7,
2009,
Appellant
authored
and
Thus, on
transmitted
another
increased EPV valuation at $2.42, which was signed by Lynch on
January 15, 2009.
But a $2.42 share price was still not high
enough
Appellant’s
to
support
incentive
and
management
fees.
So, several hours later, on January 15, 2009, Appellant authored
and transmitted yet another increased valuation at a $2.88 share
price.
Appellant
excessive.
was
aware
the
$2.88
share
value
was
Even so, MICG clients received their statements from
First Clearing indicating this $2.88 share value, and Appellant
continued to assure investors of the Venture Fund’s security.
For instance, on January 16, 2009, Gifis sought MICG investors
to purchase EPV shares at $1.00 per share, well below the $2.88
share
value.
identified
and
And
on
arranged
January 22, 2009,
for
six
Appellant
individuals
to
himself
purchase
EPV
stock at $1.15 per share, at the same time he was promoting the
$2.88 per share value.
On or about January 23, 2009, Appellant
received Lynch’s revised EPV valuation of $2.88 per share value.
The deception continued during the month of February
2009.
Michael
On February 6, 2009, Appellant received an email from
Feldman,
MICG’s
Chief
Financial
Officer,
in
which
Feldman disclosed that an independent auditor was concerned that
Appellant was selling shares for less than the $2.88 valuation.
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Nonetheless,
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on
February
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25,
2009,
Appellant
brokered
the
above-referenced deal to six investors for EPV stock at $1.15
per share.
In
2009,
FINRA
opened
an
investigation
into
MICG,
Appellant, and the valuations within the Venture Fund holdings.
Meanwhile, EPV filed for bankruptcy in February 2010.
2010,
FINRA
forced
MICG
to
close
its
doors,
and
In May
Appellant
surrendered his broker’s license.
In February 2011, Appellant filed for bankruptcy under
Chapter 7 of the United States Bankruptcy Code.
During his
bankruptcy proceedings, Appellant failed to disclose $5,800 in
income and approximately $21,100 in losses that he had incurred
while gambling.
Ultimately,
in
October
2012,
Appellant
was
charged
with conspiracy to commit mail and wire fraud, multiple counts
of mail and wire fraud, and lying in a bankruptcy proceeding.
B.
At the jury trial held over four weeks in April and
May 2013, the district court frequently interrupted counsel and
questioned counsel’s tactics.
For example, at one point the
district court asked Appellant’s counsel to clarify his line of
questioning.
the
district
But when Appellant’s counsel attempted to do so,
court
interrupted,
8
“No,
don’t
say
anything.”
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J.A. 2639. 2
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Appellant’s counsel responded, “You asked me why,”
and the district court responded, “I did, and I made a mistake.”
Id.
On
another
Appellant’s
Shortly
counsel
thereafter,
occasion,
for
the
district
developing
however,
the
a
court
criticized
sequential
district
court
timeline.
reproached
Appellant’s counsel for proceeding in a non-sequential manner,
asserting, “Could we start trying to go in order?
switching
back
and
forth. . . .
So,
if
you
can,
forward so that we can follow chronologically?”
We’re now
can
you
go
Id. at 3012.
Although the Government voiced its concerns at one point with
regard to the district court’s conduct, 3 Appellant never timely
objected to any of the district court’s comments, questions, or
disruptions.
After deliberating for over two and a half days, the
jury found Appellant guilty of one count of conspiracy to commit
mail and wire fraud, four counts of wire fraud, five counts of
2
Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.
3
After the district court repeatedly questioned a witness,
the Government, outside the presence of the witness, explained
“given the Court’s comments and concerns about [the witness],”
it “want[ed] to be certain that the record is clear that we will
raise these and object to those concerns when we feel they’re
appropriate and raise it during cross-examination.”
J.A. 2705.
The Government explained that it was protecting the record and
that it was “bring[ing] this up now in terms of the Court’s
concerns and the Court’s questions of [the witness].” Id.
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fraud,
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and
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seven
of
counts
money-laundering; 4
found
Appellant not guilty of one count of wire fraud and two counts
of
money-laundering;
and
could
not
reach
a
verdict
on
three
counts of wire fraud and two counts of fraudulent oaths in a
bankruptcy proceeding.
C.
At
sentencing,
the
district
court
--
in
staunch
disagreement with both parties -- stated numerous times that it
viewed the Guidelines as mandatory and that its discretion was
restricted to a sentence that fit within the range set forth in
the Guidelines.
For example, the district court opined (1) that
the Guidelines were “no longer advisory,” J.A. 3645; (2) “It’s
all where do you fit [in the Guidelines],” id.; and (3) “I will
follow the Guidelines only because I have to.
I find that
they’re not discretionary, they’re mandatory,” id. at 3646.
In light of these comments, both parties reminded the
district court that the Guidelines are advisory.
Appellant’s
counsel pointed out that the Guidelines were but one factor for
the district court to consider and that the district court had
“significant discretion . . . to depart significantly from the
[G]uidelines.”
J.A. 3654.
Likewise, the Government noted that
4
On September 11, 2013, the district court granted a motion
for judgment of acquittal on one money-laundering count.
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the
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Guidelines
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were
only
one
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factor
to
consider,
see
id.
at 3700, and that the “[G]uidelines are absolutely advisory,”
id. at 3729.
Guidelines
Ultimately, the district court determined that the
range
for
Appellant
was
135-168
months
of
imprisonment and sentenced him to 140 months.
Appellant now challenges his convictions and sentence,
asserting
a
multitude
of
errors.
However,
warrant extended discussion on appeal. 5
only
two
issues
First, Appellant alleges
that the district court’s interruptions and courtroom management
style deprived him of a fair trial.
Second, Appellant contends
that the district court erred when it treated the Guidelines as
mandatory.
We address each challenge in turn.
II.
A.
Judicial Interference
1.
We review the alleged judicial interference for plain
error because Appellant neglected to raise a timely objection at
trial.
See United States v. Smith, 452 F.3d 323, 330-31 (4th
Cir. 2006); United States v. Godwin, 272 F.3d 659, 673 (4th Cir.
5
For instance, Appellant argues that the evidence presented
at trial was insufficient to support his convictions for
conspiracy, wire fraud, and mail fraud.
We find that the
evidence was clearly sufficient, and thus do not address this
contention at length.
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2001).
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Under this standard, we review the record for plain
error that affects substantial rights, such that “the error must
have been prejudicial: It must have affected the outcome of the
district court proceedings.”
United States v. Olano, 507 U.S.
725, 734 (1993).
And “we may not intervene unless the judge’s
comments
prejudicial
were
so
as
to
deny
the
opportunity for a fair and impartial trial.”
331 (internal quotation marks omitted).
--
not
the
Government
--
must
show
defendant[]
an
Smith, 452 F.3d at
Furthermore, Appellant
“that
the
convicted [him] based upon the trial error.”
jury
actually
Godwin, 272 F.3d
at 680 (internal quotation marks omitted).
2.
Appellant
contends
the
district
court’s
improper
interference with his trial deprived him of a fair trial.
We
agree that the district court crossed the line and was in error.
We disagree, however, that the conduct of the trial deprived
Appellant of a fair trial.
Under
the
Federal
Rules
of
Evidence,
“[t]he
court
should exercise reasonable control over the mode and order of
examining witnesses and presenting evidence so as to: (1) make
those procedures effective for determining the truth; (2) avoid
wasting time; and (3) protect witnesses from harassment or undue
embarrassment.”
Fed. R. Evid. 611(a).
“The court may examine a
witness regardless of who calls the witness.”
12
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614(b).
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“A party may object to the court’s calling or examining
a witness either at that time or at the next opportunity when
the jury is not present.”
Appellant
Fed. R. Evid. 614(c).
argues
that
the
district
court’s
general
interference in the trial -- which included examining witnesses,
interrupting
counsel,
and
controlling
the
presentations -- deprived him of a fair trial, and but for this
interference,
he
would
not
have
been
convicted.
However,
Appellant did not object to the district court’s interference.
Although counsel may be reticent to object to such interference
by the court, failing to do so creates a high bar for appellate
review.
a
single
district
See Smith, 452 F.3d at 330 (“[F]ail[ing] to bring even
alleged
court’s
error
[of
attention
judicial
during
preserve[] this issue for appeal.”).
interference]
trial
. . .
to
[does
the
not]
As such, this error “must
have affected the outcome of the district court proceedings.”
Olano, 507 U.S. at 734.
3.
Here, we are once again 6 confronted with a case replete
with the district court’s ill-advised comments and interference.
6
See, e.g., United States v. Cherry, 720 F.3d 161, 167-69
(4th Cir. 2013); United States v. Ecklin, 528 F. App’x 357, 363
(4th Cir. 2013); United States v. Garries, 452 F. App’x 304,
309-11 (4th Cir. 2011) (per curiam); Murphy v. United States,
383 F. App’x 326, 334 (4th Cir. 2010) (per curiam); United
(Continued)
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First,
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the
district
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court
unnecessarily
interrupted
defense counsel’s presentation of the defense at trial.
For
instance, when defense counsel was questioning a witness about
an email, the district court intervened:
District
e-mail?
court:
Stop.
Did
he
get
this
Defense counsel: No, sir.
District court: Then you’re asking him about
an e-mail he did not get, correct?
Defense counsel: Correct.
District court: Why?
Defense counsel: Because it says this should
be totally -District court: No, don’t say anything.
Defense counsel: You asked me why.
District court: I did, and I made a mistake.
I’m
sorry,
[defense
counsel],
but
I
appreciate it.
This e-mail doesn’t have
anything to do with [the witness].
J.A. 2639.
On another occasion, the district court interjected:
Defense counsel [to the witness]: And why is
the date -District court: Stop.
Have we got a date
when this all took place?
Defense counsel: That’s what I’m asking him.
Id. at 2640.
States v. Dabney, 71 F. App’x 207, 210 (4th Cir. 2003) (per
curiam).
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Considering
the
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numerous
witnesses
and
exhibits
involved in the case, we understand the district court’s desire
to keep the trial focused.
At times, however, the district
court became so disruptive that it impermissibly interfered with
the manner in which Appellant sought to present his evidence.
Defense
counsel
[to
Appellant
who
was
testifying]: All right.
Now, at that point
in 2005 what number of offices did you have?
District court: Can we get on to somewhere
near here, get up to 2007.
. . . .
I don’t mind doing history, and it’s very
nice, and I understand that, but I’d like to
get to the case.
Defense counsel: Yes, sir.
The expansion
plan is part of the case, Your Honor.
. . . .
Defense counsel [to the defendant]: Could
you tell us about the expansion plan you had
to other offices?
Appellant: Yes.
We had expanded --
District court: We’re in 2007 now?
Defense
point.
counsel:
We’re
moving
up
to
that
District court: Well, get there. Excuse me.
I want to get there, okay?
We know he had
expansion plans; he’s talked about it.
Let’s get to 2007.
J.A. 2952-53.
Shortly thereafter, the district court chastised
defense counsel for not creating a succinct timeline:
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District court: Could we start trying to go
in order?
We’re now switching back and
forth.
You’re now in -- the last one was
February, and then there was some talk about
June. So, if you can, can you go forward so
that we can follow chronologically?
Defense counsel: I’m doing my best up here,
Judge. I promise you I’ll try very hard.
District court: I’m not trying to interrupt
you, I’m just trying to have some -Defense counsel: Continuity.
I understand.
District court: -- continuity.
Id. at 3012.
At
another
point,
the
district
court
expressed
its
concern over the defense counsel’s litigation tactics, accusing
him of going outside the trial court procedure:
Defense counsel
Could you look
please.
[to the
for that
witness]: Sure.
letter for me,
District court: Right now don’t you think a
discovery deposition is not in order?
Defense
counsel:
I’m
deposition, Your Honor.
not
conducting
a
District court: Yes, you are.
. . . .
District court: You’ve asked him to go look
for something, and that is discovery.
Now,
I don’t mind you discovering, but do it in a
deposition before the trial.
. . . .
Okay.
That’s the end of that.
All right.
If he’s got it I’ll let you refer to it, but
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we’re not going to have any more discovery
in this case.
J.A. 1946-47.
In sum, the district court’s repeated comments were
imprudent and poorly conveyed.
Considering the breadth of the
district court’s actions, from questioning witnesses and counsel
to interrupting unnecessarily, we find that the district court
strayed
too
far
from
convention.
Ultimately,
we
find
the
district court’s actions were in error.
Appellant must now overcome the second prong of the
plain error standard of review.
For us to overturn Appellant’s
convictions, the error must be so prejudicial that it affected
Appellant’s
substantial
rights,
outcome of the trial.
F.3d at 331.
i.e.,
it
had
to
change
the
See Olano, 507 U.S. at 734; Smith, 452
For several reasons, we cannot conclude the error
has prejudiced Appellant.
4.
First,
“[q]uestions
of
trial
management
quintessentially the province of the district courts.”
452
F.3d
at
short-tempered
administration
(internal
332;
see
also
judge’s
. . .
quotation
do
marks
id.
at
ordinary
not
333
efforts
establish
omitted)
(“[E]ven
bias
(alteration
at
or
in
a
are
Smith,
stern
and
courtroom
partiality.”
original)).
The district court, pursuant to the Federal Rules of Evidence,
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has the obligation to control the courtroom to make the case
clear for the jury.
See generally Fed. R. Evid. 611(a); Fed. R.
Evid. 614.
Here, the district court was engaged and active in
controlling
a
multi-week
trial
that
involved
highly
complex
factual issues, private equity valuations, hedge fund audits,
business management structuring, numerous witnesses, and several
hundred exhibits.
Cf. United States v. Parodi, 703 F.2d 768,
776 (4th Cir. 1983) (analyzing the entire record rather than a
few
isolated
interrupted
comments).
and
Moreover,
interrogated
both
the
defense
district
and
court
Government
witnesses.
Additionally,
we
have
held,
“[i]t
is
particularly
vital that the trial judge also instruct the jurors that his
comments are not binding upon them, but are only personal views
expressed for the purpose of assisting them, and that they are
the sole judges of the evidence.”
F.2d 85, 88 (4th Cir. 1983).
United States v. Tello, 707
Here, the district court gave such
an instruction, reminding the jury at both the beginning and end
of the jury charge that the district court’s opinion or comments
were not important:
Do not assume that I hold any opinion of the
matters to which my questions may have
related.
Whatever you may think my opinion
is or may be is not to be considered by you.
What I think is not important.
What you
18
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think
is
important.
It’s
not
my
province -- and I emphasize this -- to
judge
the
guilt
or
innocence
of
the
defendant
in
this
case.
It’s
yours.
Remember at all times you’re at liberty to
disregard any comment I have made during the
trial, any comment on the evidence, but you
can’t disregard the instructions.
. . . .
Lastly, I want to emphasize this: Don’t
interpret anything I have said or done
during the trial as suggesting to you what I
think your verdict should be.
That is not
my responsibility.
Certainly, I have an
opinion. I heard the same evidence you did.
What my opinion is doesn’t count, should not
be considered under any circumstances.
The
verdict in this case is your duty and your
responsibility, not someone else’s.
I want
to emphasize that.
Supp. J.A. 7-8, 53. 7
We recognize that one curative instruction at the end
of an extensive trial may not undo the district court’s actions
throughout
the
entire
trial,
but
we
are
also
cognizant
that
Appellant failed to alert the district court of what Appellant
now perceives as improper.
Beyond that, the evidence supporting the convictions
in this case is overwhelming.
Testimony from 28 witnesses and
approximately 250 exhibits revealed that Appellant engaged in a
manipulation
of
EPV’s
valuation
7
and
deceived
investors
in
Citations to the “Supp. J.A.” refer to the Supplemental
Joint Appendix filed by the parties in this appeal.
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continuation of his fraudulent scheme.
On several occasions
prior to actually receiving a share price valuation from Lynch,
Appellant reported increases of EPV’s valuation to his brokers
and clients.
the
The evidence showed clearly that Appellant knew
valuations
were
excessive,
driving force behind them.
and
that
Appellant
was
the
Ultimately, the Government presented
ample testimony and evidence that Appellant engaged in a scheme
to do what was necessary to enrich himself and that he concealed
this fraud from his associates and investors, among others.
In contrast, Appellant has not demonstrated, and we
cannot conclude, that the district court’s comments throughout
several weeks of trial impacted the trial’s outcome.
evident,
in
part,
by
the
jury’s
divided
This is
verdict.
The
jury
independently and thoroughly deliberated for nearly three days
and found Appellant guilty on seventeen charges, not guilty on
three charges, and could not reach a verdict on five charges.
Such
a
comments
split
were
Appellant’s
verdict
illustrates
that
not
prejudicial
as
so
remaining
convictions.
the
to
See
district
warrant
court’s
overturning
United
States
v.
Cornell, 780 F.3d 616, 627 (4th Cir. 2015) (concluding that a
long deliberation provides “adequate assurance” that the jury
was not coerced, and a split verdict “reflect[s] a thoughtful
and
deliberate
jury”
(citations
marks omitted)).
20
omitted)
(internal
quotation
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Therefore, although the district court’s interferences
in this case went beyond the pale, in light of the plain error
standard
of
review
and
the
overwhelming
evidence
against
Appellant, the district court’s conduct did not create such an
impartial
and
unfair
environment
as
to
affect
Appellant’s
substantial rights and undermine confidence in the convictions.
Accordingly, we must uphold the jury’s verdict.
B.
Sentencing
1.
We
discretion.
(“[C]ourts
review
a
criminal
sentence
for
an
abuse
of
See Gall v. United States, 552 U.S. 38, 41 (2007)
of
appeals
must
review
all
sentences
--
whether
inside, just outside, or significantly outside the Guidelines
range --
under
a
deferential
abuse-of-discretion
standard.”);
United States v. Dodd, 770 F.3d 306, 309 (4th Cir. 2014); United
States v. McManus, 734 F.3d 315, 317 (4th Cir. 2013).
In reviewing Appellant’s sentence, we must
first
ensure
that
the
district
court
committed no significant procedural error,
such as . . . treating the Guidelines range
as mandatory . . . .
Assuming that the
district
court’s
sentencing
decision
is
procedurally
sound,
the
appellate
court
should
then
consider
the
substantive
reasonableness of the sentence imposed under
an abuse-of-discretion standard.
Gall, 552 U.S. at 51 (emphasis supplied).
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Upon a finding of a procedural error, the error shall
be subject to harmlessness review.
771
F.3d
162,
175
(4th
See United States v. Dowell,
Cir.
2014);
United
States
v.
Montes-Flores, 736 F.3d 357, 370 (4th Cir. 2013); United States
v.
Hargrove,
701
F.3d
156,
161
(4th
Cir.
2012)
(explaining
“procedural errors at sentencing . . . are routinely subject to
harmlessness review”) (alteration in original) (quoting Puckett
v. United States, 556 U.S. 129, 141 (2009)).
The government has
the burden to show that the error was harmless such that it “did
not affect a defendant’s substantial rights.”
F.3d
at
161
(internal
quotation
marks
Hargrove, 701
omitted).
We
have
concluded, “if the resulting sentence [is] not longer than that
to which [the defendant] would otherwise be subject,” then the
error is harmless.
Dowell, 771 F.3d at 175 (alterations in
original).
When a district court has treated the Guidelines range
as
mandatory,
the
subject to vacatur.
sentence
is
procedurally
unreasonable
and
See McManus, 734 F.3d at 318; United States
v. Clay, 627 F.3d 959, 970 (4th Cir. 2010) (pursuant to Gall,
holding that the improper calculation of the advisory guideline
range constitutes significant procedural error); see also United
States v. Mendoza-Mendoza, 597 F.3d 212, 220 (4th Cir. 2010)
(remanding
when
“left
only
to
22
speculate
as
to
whether
the
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sentence . . . was imposed as a matter of obligation or as an
exercise of judgment”).
If we determine a procedural error exists, a review
for
the
second
unnecessary.
Cir.
2010)
prong
--
substantive
reasonableness
--
is
See United States v. Lewis, 606 F.3d 193, 201 (4th
(“[I]f
a
sentencing
court
commits
a
significant
procedural sentencing error[,] . . . our practice is to vacate
and remand for resentencing before reviewing the sentence for
substantive reasonableness.”).
2.
Appellant
claims
that
the
district
court
erred
in
treating the Guidelines as mandatory, and that error denied him
a variant sentence below the applicable Guidelines range.
agree.
We
The district court repeatedly considered the Guidelines
as mandatory.
From
the
outset
of
the
sentencing
hearing,
district court lectured on its inability to have discretion:
It appears to me that the guidelines have
now become more than guides.
You know, the
Supreme
Court
indicates
that
they
are
advisory; however, I find that they’re more
than advisory.
They’re reversible error if
you don’t follow them or give a good reason
why you’re not following them, so they’re no
longer advisory.
J.A. 3645 (emphasis supplied).
23
the
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Thereafter, the district court continued to reference
what it viewed as the mandatory nature of the Guidelines:
•
“This hearing here is a great example of
the problems that -- or the difference
between
the
non-guidelines
and
the
guidelines.
The non-guidelines were
discretionary sentencing depending upon
the person and the commission of the
offense.
Now it doesn’t make any
difference who the person is.
It
doesn’t make any difference.
It’s all
where do you fit.”
J.A. 3645 (emphasis
supplied);
•
“I will follow the guidelines only
because I have to. I find that they’re
not discretionary, they’re mandatory,
although
people
think
they’re
discretionary and although the courts
have said they’re only advisory. But if
you don’t follow them you have to give
so many reasons why you don’t follow
them. It’s tough. It really is tough.”
J.A. 3646 (emphasis supplied);
•
“I’m saying that what [the probation
officer/Government are] putting forth
today is merely an outline of what the
guidelines mandate, if the guidelines
are to be considered. And I’m going to
consider them. I don’t agree with them.
I think they’re absolutely ridiculous,
but
I’m
going
to
consider
them.”
J.A. 3656 (emphasis supplied); and
•
“What I’m alluding back to is what
occurred
prior
to
1986
when
the
guidelines started to work.
If this
case had come up then, what would the
sentence have been and why? And what is
happening now?
The sentences now are
draconian. What are we accomplishing by
these extremely excessive sentences that
seem
to
be
dictated?”
J.A. 3699
(emphasis supplied).
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Although the district court at times alluded to the
fact that it had discretion, at the same time it bemoaned that
such discretion was highly disfavored.
See J.A. 3654 (“I have
some discretion but hardly.”); id. at 3655-56 (“I will try to
use
some
discretion,
3553(a),
and
guidelines. . . .
at 3733
apply
give
the
factors
some
in
Title
consideration
I’m going to consider them.”).
(recognizing
that
the
court
“has
to
18,
Section
to
the
But see id.
take
into
consideration . . . the nature and circumstances of the . . .
defendant,” but at the same time the court failed to “see any
attributes
that
are
given
point-wise
in
the
sentencing
guidelines for doing good”).
In the end, we cannot gloss over the district court’s
repeated misstatements as to how it perceived the Guidelines -that is, as mandatory.
And “treating the Guidelines range as
mandatory” is a “significant procedural error.”
at 51.
Gall, 552 U.S.
Even though the district court analyzed other factors
during the sentencing hearing, the record indicates that such
analysis did not save the error.
Thus, we conclude that the
district court’s treatment of the Guidelines as mandatory is a
“significant procedural error.”
Id.
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3.
Having
concluded
that
the
district
court
committed
procedural error in treating the Guidelines as mandatory, we
turn now to considering whether the error was harmless.
See,
e.g., Dowell, 771 F.3d at 175.
A review of the record reveals that, had the district
court
considered
sentence
may
the
have
Guidelines
been
lower.
as
The
discretionary,
district
Appellant’s
court
expressed
concern that the Guidelines did not provide an assignment of
points for Appellant “doing good.”
Government
defense
recognized
counsel
consideration
attributes.”
that
that
the
the
J.A. 3733.
district
[G]uidelines
[Appellant’s]
good
Appellee’s Br. 45.
Likewise, the
court
had
character
“agreed
with
taken
into
not
and
positive
Yet, the district court then
sentenced Appellant to 140 months of imprisonment.
This was
near, but not at, the bottom of the Guidelines range of 135-168
months of imprisonment.
Thus, in consideration of the district court’s flawed
understanding of the Guidelines, we cannot say with certainty
that Appellant’s sentence was “not longer than that to which
[Appellant] would otherwise be subject.”
175
(internal
quotation
marks
omitted).
Dowell, 771 F.3d at
Accordingly,
we
conclude that the district court’s treatment of the Guidelines
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mandatory
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affected
Appellant’s
Hargrove, 701 F.3d at 161.
Therefore,
Pg: 27 of 32
we
substantial
rights.
See
The error was not harmless.
are
obliged
sentence and remand for resentencing.
to
vacate
Appellant’s
See McManus, 734 F.3d at
318; see Mendoza-Mendoza, 597 F.3d at 219 (deciding that when
“there is a serious possibility the district court felt it was
under an obligation to impose a Guidelines sentence, . . . the
prudent
course
defendant’s]
is
to
remand
sentence,
procedurally sound.”).
th[e]
whatever
it
case
to
may
ensure
that
ultimately
be,
[the
is
Finally, in light of finding that the
sentence was procedurally unreasonable, we do not review the
sentence for substantive reasonableness.
See Lewis, 606 F.3d at
201; United States v. Abu Ali, 528 F.3d 210, 260-61 (4th Cir.
2008).
C.
Appellant also asserts that the district court erred
in calculating the restitution, forfeiture, and loss amount and
by imposing a two-level enhancement for obstruction of justice
based on Appellant’s perjurious testimony.
Because we vacate
Appellant’s sentencing on other grounds, we need not reach these
issues, but leave those for the re-sentencing court to decide in
the first instance.
Additionally, we have considered each of
Appellant’s other claims on appeal, and conclude that they lack
merit.
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D.
Finally, we consider whether, in light of the district
court’s demeanor at trial and its statements during sentencing
regarding the nature of the Guidelines, it is necessary for a
different
judge
resentencing.
to
In
be
doing
assigned
so,
we
to
look
handle
to
this
the
matter
following
upon
three
factors:
(1) [W]hether the original judge would
reasonably be expected upon remand to have
substantial difficulty in putting out of his
or her mind previously expressed views or
findings determined to be erroneous or based
on
evidence
that
must
be
rejected;
(2) whether reassignment is advisable to
preserve the appearance of justice; and
(3) whether reassignment would entail waste
and duplication out of proportion to any
gain
in
preserving
the
appearance
of
fairness.
United States v. Nicholson, 611 F.3d 191, 217 (4th Cir. 2010)
(internal quotation marks omitted).
With these considerations in mind, we are compelled to
remand for resentencing by a different judge.
See United States
v. Guglielmi, 929 F.2d 1001, 1008 (4th Cir. 1991), abrogated by
United States v. Pridgen, 64 F.3d 147, 150 n.3 (4th Cir. 1995).
In
the
rare
case
where
a
judge
has
repeatedly adhered to an erroneous view
after the error is called to his attention,
reassignment
to
another
judge
may
be
advisable in order to avoid “an exercise in
futility [in which] the Court is merely
marching up the hill only to march right
down again.”
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Id. at 1007-08 (alteration in original) (quoting United States
v. Robin, 553 F.2d 8, 11 (2d Cir. 1977)).
case.
This is that rare
The district court was informed by both parties that the
Guidelines are not mandatory, and it claimed to be aware that
the Supreme Court has so held.
The Supreme Court’s holdings,
moreover, are not ambiguous: “The Guidelines are not only not
mandatory on sentencing courts; they are also not to be presumed
reasonable.”
Nelson v. United States, 555 U.S. 350, 352 (2009)
(per curiam).
We have been clear on this matter as well: “[A]
court commits statutory error if it treats the Guidelines as
mandatory,
rather
than
as
advisory.”
United
States
v.
Rodriguez, 433 F.3d 411, 414 (4th Cir. 2006).
When a district
court
are
can
still
advisory,”
J.A.
dictates
and
conclude
3645,
the
in
that
the
the
parties’
Guidelines
face
of
unanimous
such
“no
longer
straightforward
objection
to
its
misstatement of law, remanding the case to that court with our
own
reminder
of
the
correct
law
would
most
likely
be
“an
exercise in futility,” Guglielmi, 929 F.2d at 1007.
We recognize that the district court judge is keenly
aware of Appellant’s case, having managed the four-week trial
and subsequent sentencing.
Accordingly, assigning a new judge
will “wipe[] the slate clean,” but in light of what transpired
in the original trial, “[w]e do not believe that any waste or
29
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duplication
would
Filed: 01/07/2016
be
out
of
Pg: 30 of 32
proportion
fairness a reassignment will preserve.”
to
the
appearance
of
United States v. Lentz,
383 F.3d 191, 222 (4th Cir. 2004); see also Nicholson, 611 F.3d
at 218.
III.
For the foregoing reasons, we affirm the convictions
on all counts, vacate the sentence as procedurally unreasonable,
and remand with instructions for further proceedings consistent
with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
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WYNN, Circuit Judge, concurring:
I concur in the majority opinion, including its holding
that “although the district court’s interferences in this case
went beyond the pale, in light of the plain error standard of
review
and
district
the
overwhelming
court’s
conduct
substantial rights.”
clear
that
in
evidence
did
not
Ante at 21.
our
role
as
against
. . .
Appellant,
affect
the
Appellant’s
I write separately to make
judges,
we
must
avoid
even
the
appearance of improper interference and excessive interruptions
of court proceedings.
Here, there was much more than an appearance of improper
interference.
At its core, such conduct tends to undermine the
public’s confidence in the integrity of the judiciary.
importantly,
such
conduct
challenges
the
fairness
But more
of
the
proceeding.
In United States v. Cherry, for example, we noted that the
judge’s remarks about the defendant’s criminal history prior to
a poll of the jury may have influenced the jurors, and we found
those comments improper and in error.
Cir. 2013).
720 F.3d 161, 167 (4th
But in light of the “overwhelming” evidence and the
plain error standard, we concluded that the comments, though
prejudicial, ultimately did not affect the outcome.
69.
Id. at 168-
Just a day later, in United States v. Ecklin, we again
recognized
that
the
judge
had
engaged
in
“problematic
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questioning” that “undermine[d] the substance and credibility of
[the defendants’] testimonies.”
Cir.
2013).
We
stated
that
528 F. App’x 357, 363-64 (4th
“the
court’s
skepticism
or
disbelief” of the defendants were “sentiments that should not
have been expressed to the jury.”
Id. at 364.
we were constrained by plain error review.
Again, however,
Id. at 365.
It is well accepted that we, as judges, “must maintain such
a demeanor that ‘every one shall recognize that what is said
from the bench is the cool and well-balanced utterance of an
impartial
judge,
and
has
in
partisanship of the advocate.’”
it
naught
of
the
heat
and
United States v. Godwin, 272
F.3d 659, 677 (4th Cir. 2001) (quoting Wallace v. United States,
281 F.2d 656, 665 (4th Cir. 1960)).
In this matter, as in
Ecklin, the judge’s “problematic questioning” and impermissible
interferences constituted “sentiments that should not have been
expressed to the jury.”
judge’s
problematic
528 F. App’x at 364.
“interference”
may
not
And while the
have
changed
outcome here, it was, no doubt, plainly imprudent.
the
At some
point, repeated injudicious conduct must be recognized by this
Court as a compelling basis for finding plain error.
32
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