USA v. Bryan Laurienti

Filing

FILED OPINION (MARSHA S. BERZON, PAUL J. WATFORD and JAMES G. CARR) AFFIRMED. Judge: JGC Authoring. FILED AND ENTERED JUDGMENT. [8801225]

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

No. 11-50294

v.

D.C. No.
2:03-cr-00620-TJH-3

BRYAN LAURIENTI,
Defendant-Appellant.

OPINION

Appeal from the United States District Court
for the Central District of California
Terry J. Hatter, Senior District Judge, Presiding
Argued and Submitted
February 11, 2013—Pasadena, California
Filed September 30, 2013
Before: Marsha S. Berzon and Paul J. Watford, Circuit
Judges, and James G. Carr, Senior District Judge.*
Opinion by Judge Carr

*

The Honorable James G. Carr, Senior District Judge for the U.S.
District Court for the Northern District of Ohio, sitting by designation.

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SUMMARY**

Criminal Law
The panel affirmed a sentence imposed for conspiracy to
commit securities fraud and securities fraud by use of
manipulative and deceptive devices.
The panel held that the district court properly denied the
defendant’s motion for an evidentiary hearing to determine
whether the defendant knew of Rule 10b-5, where he had
ample opportunity to present information showing he lacked
knowledge of the substance of the rule, and his lack-ofknowledge claim is implausible. The panel held that the
district court did not err in failing to provide specific reasons
for rejecting the defense.
The panel held that the district court did not err in
applying to the defendant, a stock broker, an enhancement for
abuse of a position of trust under U.S.S.G. § 3B1.3, given the
professional discretion the defendant exercised in selecting
the securities to recommend, and the deference his
recommendations received in light of his special knowledge
and expertise.
The panel rejected the defendant’s contentions that the
district court was not attentive to his mitigation arguments
and that the sentence was substantively unreasonable.

**

This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

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COUNSEL
Lisa Shinar (argued) and Sean K. Kennedy, Federal Public
Defender, Los Angeles, California, for Defendant-Appellant.
Ellen R. Meltzer, (argued) Special Counsel, Fraud Section,
Criminal Division; Lanny A. Breuer, Assistant Attorney
General; John D. Buretta, Acting Deputy Assistant Attorney
General; André Birotte, Jr., United States Attorney; and Keri
Curtis Axel, Assistant United States Attorney, Central
District of California, United States Department of Justice,
Washington, D.C., for Plaintiff-Appellee.

OPINION
CARR, Senior District Judge:
Defendant-appellant, Bryan Laurienti, appeals the district
court’s order sentencing him to thirty-six months’
imprisonment and three years’ supervised release. A jury
convicted Laurienti of conspiracy to commit securities fraud,
in violation of 18 U.S.C. § 371, and two counts of securities
fraud by use of manipulative and deceptive devices in
violation of 15 U.S.C. §§ 78j(b), 78ff, and 17 C.F.R.
§ 240.10b-5 (Rule 10b-5). For the following reasons, we
affirm.
I. Factual Background
Laurienti worked as a stock broker at Hampton Porter, an
investment firm in San Diego. The firm began selling

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extremely cheap and thinly-traded securities.1 The firm
obtained the securities and aggressively stimulated a market
for them by promoting them to clients and later dissuading
clients from reselling. The firm, and several individuals,2
bought the securities in their own names at the lower price
and later resold their shares at the higher, artificial price they
had generated.
The firm did not allow its brokers, including Laurienti, to
sell a client’s securities while the firm continued promoting
them unless the brokers could find another buyer to offset the
sale. If the broker failed to follow this policy, and allowed the
net number of shares owned by firm clients to decrease, the
broker would lose the substantial bonus commission he would
have received for selling the securities. In addition to
participating in this activity, defendant made unauthorized
purchases of client securities and executed cross-trades
between clients without notifying them that they were selling
to each other. The plan the firm and brokers employed is
known as a securities fraud “pump and dump” scheme.
After the stock market declined substantially in 2000, the
prices of the inflated securities fell, and clients lost money on
their investments. Following the market’s overall decline,
Hampton Porter went out of business. After an investigation,
the government indicted several of Hampton Porter’s owners,
managers, and senior brokers.

1
Corporations gave the securities to Hampton Porter for a deeply
reduced price, and sometimes for free, in return for the firm’s promise to
promote the securities vigorously.
2

It does not appear Laurienti bought the securities in his individual
capacity.

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Before trial, three defendants, John Laurienti,3 Adam
Gilman, and Troy Peters, reached plea agreements with the
government. The five remaining defendants, appellant Bryan
Laurienti, Michael Losse, David Montesano, Curtiss Parker,
and Donald Samaria, stood trial. On December 7, 2006, the
jury acquitted Losse, but found the remaining defendants
guilty on several counts.
The district court initially sentenced Laurienti to forty
months’ imprisonment, followed by three years’ supervised
release, and ordered him to pay $1,136,582 in restitution.
Laurienti appealed his conviction and sentence to this court.
We affirmed the conviction but vacated the sentence and
ordered resentencing. United States v. Laurienti, 611 F.3d
530, 559 (9th Cir. 2010). We held that the district court
miscalculated his restitution. Further, we held that this court’s
intervening en banc decision in United States v. Contreras,
593 F.3d 1135 (9th Cir. 2010), required the district court to
reevaluate whether Laurienti abused a position of trust in
committing his crime. Laurienti, 611 F.3d at 555, 559.
At resentencing, Laurienti requested an evidentiary
hearing to determine whether he knew of Rule 10b-5 at the
time he committed his offenses. The district court denied the
request. The court then sentenced him to thirty-six months’
imprisonment on each count, with the sentences to run
concurrently. The district court also imposed concurrent
supervised release terms of three years on each count. Finally,
the court ordered Laurienti to pay $204,682 in restitution.4 In

3

John Laurienti is Laurienti’s brother, whom Laurienti described as the
“mastermind” behind the scheme.
4

The parties stipulated to the restitution amount at resentencing.

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fashioning its sentence, the court imposed a two-level
enhancement for abusing a position of trust.
Laurienti appeals his sentence. In addition to challenging
the court’s refusal to grant an evidentiary hearing and its
imposition of the abuse of trust enhancement, Laurienti raises
other, less substantial contentions. We find none of his
arguments persuasive, and no error on the part of the district
court.
II. Discussion
A. Evidentiary Hearing
Laurienti first argues the district court erred in failing to
hold an evidentiary hearing to determine whether he knew of
Rule 10b-5. We disagree, and hold that the district court
properly denied his motion for a hearing.
This court reviews a district court’s decision whether to
hold an evidentiary hearing at sentencing for abuse of
discretion. United States v. Sarno, 73 F.3d 1470, 1502–03
(9th Cir. 1995).
Section 78ff(a) of Title 15 precludes imprisonment for
certain securities violations if the defendant “proves that he
had no knowledge of such rule or regulation.” See also
United States v. O’Hagan, 521 U.S. 642, 665–66 (1997) (“To
establish a criminal violation of Rule 10b-5, the Government
must prove that a person ‘willfully’ violated the provision.”)
(internal citations omitted). A defendant bears the burden of
proving his lack of knowledge by a preponderance of the
evidence. United States v. Reyes, 577 F.3d 1069, 1081 (9th
Cir. 2009).

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We have consistently held that “[t]here is no general right
to an evidentiary hearing at sentencing.” United States v.
Real-Hernandez, 90 F.3d 356, 362 (9th Cir. 1996). When a
defendant disputes a fact relevant to sentencing, the district
court need only provide the parties a “‘reasonable
opportunity’ to present information to the court.” Id. (quoting
Fed. R. Crim. P. 32(c)(3)(A)).
Contrary to Laurienti’s argument, he had ample
opportunity to present information showing he lacked
knowledge of the substance of Rule 10b-5. First, Laurienti
could have attempted to present such evidence at trial. After
trial, he could have submitted an affidavit stating that he did
not know the requirements set forth in the Rule and providing
information corroborating that claim. In his brief in support
of his motion for an evidentiary hearing, he could have
disclosed information to the court indicating that he lacked
knowledge of the restrictions contained in the Rule. Because
Laurienti failed to present any evidence tending to prove he
did not know the requirements of the Rule, the district court
did not abuse its discretion in refusing to provide him with
another opportunity to do so. See United States v. Salcido,
506 F.3d 729, 735 (9th Cir. 2007).
Moreover, Laurienti’s claim that he did not know the
requirements set forth in Rule 10b-5 is implausible. In a case
concerning a defendant similarly experienced in the stock
market, this court characterized the defendant’s § 78ff(a)
claim that he was unaware of Rule 10b-5 as “frivolous.”
United States v. D’Honau, 459 F.2d 73, 75 (9th Cir. 1972). So
it is here. Laurienti simply cannot credibly claim, in light of
his professional experience, that he was unaware that federal
law prohibits securities fraud. He passed the Series 7 and 63
qualifying examinations required to practice as a registered

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representative of the National Association of Securities
Dealers. These exams include questions about federal and
state securities regulations. See Exch. Services, Inc. v. S.E.C.,
797 F.2d 188, 189, n.2 (4th Cir. 1986). Six other securities
firms employed Laurienti before he began working with
Hampton Porter. Laurienti’s clients testified he was
extremely knowledgeable and experienced in the field, and he
held himself out as such. Given the absence of any
submission indicating ignorance and in light of Laurienti’s
experience in the securities industry at the time of his
offenses, the district court was entitled to infer that he did
know of the restrictions contained in Rule 10b-5 without
holding an evidentiary hearing.
The district court did not err in failing to provide specific
reasons for rejecting the lack of knowledge defense. The
court adequately considered the 18 U.S.C. § 3553 sentencing
factors before imposing the sentence, as required by the
statute. More importantly, when the court reached the “no
knowledge” defense, the only question that remained was
whether Laurienti knew his actions violated the rule. By
rejecting Laurienti’s argument, the court necessarily found he
knew of the rule. Laurienti has failed to cite any case in
which this or any other court required a sentencing court to
make an explicit finding regarding a defendant’s knowledge,
rather than simply denying the lack of knowledge defense
generally.
B. Abuse of Trust Enhancement
Laurienti next argues the district court erred in imposing
a two-level sentencing enhancement for abuse of trust under
United States Sentencing Guideline § 3B1.3, which applies
when “the defendant abused a position of public or private

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trust . . . in a manner that significantly facilitated the
commission or concealment of the offense.” Laurienti argues
that he is ineligible for this enhancement because he did not
hold a position of professional or managerial discretion. We
disagree and hold that he occupied and abused a position of
trust.
This court reviews a district court’s interpretation of the
Sentencing Guidelines de novo, its factual findings for clear
error, and its application of the Guidelines to the facts of the
case for abuse of discretion. United States v. Gomez-Leon,
545 F.3d 777, 782 (9th Cir. 2008). Whether a defendant acted
from a “position of trust” as defined by the Guidelines is a
question of law we review de novo. See United States v.
Contreras, 581 F.3d 1163, 1164 (9th Cir. 2009), aff’d in part,
vacated in part en banc, 593 F.3d 1135 (2010).5 If we decide
that the defendant held a position of trust, we review for clear
error the court’s decision whether the defendant’s abuse of
this position significantly facilitated the offense. Id. at 1165.
Laurienti argues that this court’s decision in Contreras
precludes the abuse-of-trust enhancement in this case. In
Contreras, the defendant worked as a prison cook, where she
had unmonitored contact with prisoners in the prison kitchen.
Id. at 1164. Contreras smuggled heroin, methamphetamine,
and marijuana into the prison, which she sold to prisoners. Id.
at 1164–65. The district court imposed a two-level
enhancement for abuse of a position of trust under § 3B1.3.
Id. at 1165.

5

The en banc court affirmed the substance of the panel’s opinion,
vacating only a portion of it on procedural grounds. See United States v.
Contreras, 593 F.3d 1135, 1135 (2010) (en banc).

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We vacated the sentence, and articulated the proper
inquiry a sentencing court should undertake before applying
the enhancement: “First, did the defendant hold a ‘position of
public or private trust’ within the meaning of the Guidelines?
Second, if so, did the position ‘significantly facilitate’ the
commission of the crime?” Id. We made clear that the
presence or lack of “professional or managerial discretion”
represents the decisive factor in deciding whether a defendant
occupied a position of trust. Id. at 1166. A defendant has this
discretion when, “because of his or her special knowledge,
expertise, or managerial authority, [he or she] is trusted to
exercise substantial discretionary judgment that is ordinarily
given considerable deference.” Id. at 1168 n.5 (internal
quotations and citations omitted). We concluded that
Contreras, as a prison cook, did not occupy such a position of
trust merely because she enjoyed access to the prison without
a thorough search. Id. at 1168.
Although we have not had occasion to apply this test in
the context of a client-stock broker relationship, the Second
Circuit has decided such a case. That court held that the stock
broker occupied a position of trust vis-a-vis his client
investors. United States v. Santoro, 302 F.3d 76, 81–82 (2d
Cir. 2002). The court stated that when deciding whether a
stock broker occupied a position of trust, the relevant
question is “whether a reasonable customer, based on his
relationship with his broker, would trust the broker to disclose
all information in the broker’s possession, public and nonpublic, bearing on the broker’s recommended purchase.” Id.
at 82. In concluding that the defendant exercised “substantial
discretionary judgment” in deciding which securities to
recommend to his clients, the Santoro court highlighted the
fact that the defendant’s coconspirators intentionally
developed a personal relationship with the victims. Id at 81.

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It held that under those circumstances, the defendant’s failure
to disclose that he would receive a substantial commission for
selling the security deprived the victims of material
information they needed in deciding whether to purchase the
security, which amounted to an abuse of a position of trust.
Id.
We adopt the Second Circuit’s approach. Applying it to
this case, we hold that the district court properly found
Laurienti held a position of trust that afforded him
professional discretion. At sentencing, the government
highlighted witness testimony stating that Laurienti
recommended securities. The testimony indicated that the
witness accepted his recommendations because Laurienti
stated he had substantial experience and knowledge in the
field. A second witness testified that, although he reserved the
right to make the decision whether to execute a transaction,
he relied on Laurienti’s advice to identify securities that
would further his investment objectives.6 These clients did
not merely hire Laurienti to make trades at their direction.
Rather, they sought his investment advice, and—as one of the
clients put it—“trusted his discretion.” This is precisely the
kind of relationship we said was required in Contreras—one
characterized by “substantial discretionary judgment that is
ordinarily given considerable deference.” Contreras,
581 F.3d at 1168 n.5.
In sum, the professional discretion Laurienti exercised in
selecting which securities to recommend, and the deference

6

We reject Laurienti’s argument that the inquiry turns on the question
of who made the “final” decision to purchase or sell a security. While this
represents one factor in assessing whether a defendant occupies a position
of trust, it is not determinative.

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his recommendations received in light of his special
knowledge and expertise, afforded him a position of trust. See
id. at 1165. That position “provide[d] the freedom to commit
a difficult-to-detect wrong.” Santoro, 302 F.3d at 80 (quoting
United States v. Laljie, 184 F.3d 180 (2d Cir. 1999)). And as
in Santoro, by failing “to inform his clients that his
recommendation was based on the receipt of a significant
commission, rather than a fair assessment of the price and
quality of the stock,” Laurienti abused this position, enabling
his fraud. Id. at 81; see also Contreras, 581 F.3d at 1165. The
district court, therefore, did not err in applying the
enhancement.
C. Responding to Mitigation Argument
For the first time on appeal, Laurienti claims that the
district court did not listen to his statement in mitigation. This
court “review[s] for plain error claims of procedural error at
sentencing raised for the first time on appeal.” United States
v. Benford, 574 F.3d 1228, 1231 (9th Cir. 2009); Fed. R.
Crim. P. 52. To establish plain error, a defendant must show:
1) an unwaived error; 2) that is “clear or obvious, rather than
subject to reasonable dispute;” 3) that affected his substantial
rights; and 4) that “seriously affects the fairness, integrity, or
public reputation of judicial proceedings.” Puckett v. United
States, 556 U.S. 129, 135 (2009) (internal quotation marks
and citations omitted). If a defendant meets these
requirements, we may exercise our discretion in deciding
whether to correct the error. Id.
When determining whether a district court committed
procedural error requiring reversal, we consider, inter alia,
whether the court took the 18 U.S.C. § 3553(a) sentencing
factors into account and adequately explained the sentence.

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United States v. Apodaca, 641 F.3d 1077, 1081 (9th Cir.
2011). A district court must “state in open court the reasons
for its imposition of the particular sentence.” 18 U.S.C.
§ 3553(c). When a defendant requests a specific departure
from the Guidelines-recommended sentence, the district court
must explain its decision to reject the request. Apodaca,
641 F.3d at 1081. The explanation, however, need only “set
forth enough to satisfy the appellate court that [the district
court] considered the parties’ arguments and ha[d] a reasoned
basis for exercising [its] own legal decisionmaking
authority.” Id. (internal quotation marks omitted). Because
imposing a sentence within the Guidelines “will not
necessarily require lengthy explanation,” in this context the
district court need only “listen[] to the defendant’s arguments
and . . . simply [find the] circumstances insufficient to
warrant a sentence lower than the Guidelines range.” United
States v. Valencia-Barragan, 608 F.3d 1103, 1108 (9th Cir.
2010) (internal quotation marks omitted).
The district court did not fail to be attentive to Laurienti’s
contentions as to mitigation. The sentencing transcript
demonstrates the court listened to and considered Laurienti’s
arguments in mitigation but ultimately rejected those
arguments. The court twice explicitly stated it considered the
§ 3553(a) factors. The court explained that it found
Laurienti’s arguments unpersuasive in light of evidence
suggesting he had accepted below-market wages from his
family business in an attempt to avoid restitution payments
owed his victims. Moreover, having considered Laurienti’s
arguments in favor of mitigation at length, the court did not
err in rejecting the request for leniency.

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D. Refusal to Consider Materials

Laurienti claims for the first time on appeal that the
district court committed plain error when it did not read the
last two pages of his sentencing memorandum or view a DVD
he had submitted. We review these contentions under the
same plain error standard applicable to his claim that the
district court did not listen to his evidence in mitigation. We
reject these contentions for two reasons.
First, the court provided Laurienti the opportunity to
present the substance of those materials during sentencing.
Laurienti did so, and the court listened to his position.7
Second, and more importantly, the court explained why
further considering those materials would not change its
decision. The court specifically stated that it had reviewed
numerous letters from Laurienti’s family, friends, and
business associates. The court did not, however, find these
materials persuasive in light of Laurienti’s apparent attempts
to avoid making restitution payments. Considering the
cumulative nature of the DVD, and the fact that the court
allowed Laurienti to discuss his sentencing position at length,
Laurienti has failed to establish that the court’s refusal to
consider the exhibits amounted to plain error requiring
reversal.

7

We note in passing that the time that the attorneys and this court have
spent on the issue of the unread two pages and unwatched DVD was, in
all likelihood, far more extensive (and, for the parties, expensive) than if
the court had simply read and watched what was before it. As Benjamin
Franklin astutely observed, “An ounce of prevention is worth a pound of
cure.”

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E. Length of Sentence
Laurienti claims his sentence is unreasonably excessive,
and its imposition constitutes substantive error.
We review the length of the sentence imposed by a
district court for substantive reasonableness. United States v.
Cope, 527 F.3d 944, 952 (9th Cir. 2008). Reversal is not
justified simply because this court “think[s] a different
sentence is appropriate.” United States v. Carty, 520 F.3d
984, 993 (9th Cir. 2008) (en banc). Rather, this court should
only vacate a sentence if the district court’s decision not to
impose a lesser sentence was “illogical, implausible, or
without support in inferences that may be drawn from the
facts in the record.” United States v. Treadwell, 593 F.3d 990,
1011 (9th Cir. 2010) (internal quotation marks omitted).
The district court’s sentence, which fell in the middle of
the Guidelines range, was substantively reasonable.
“Although we do not automatically presume reasonableness
for a within-Guidelines sentence, ‘in the overwhelming
majority of cases, a Guidelines sentence will fall comfortably
within the broad range of sentences that would be reasonable
in the particular circumstances.’” Treadwell, 593 F.3d at 1015
(quoting Carty, 520 F.3d at 994).
The sentence is reasonable in light of the circumstances
in this case. Laurienti engaged in fraudulent conduct,
including unauthorized trading in clients’ accounts, for
approximately two years. He caused substantial losses in his
clients’ accounts and profited at his clients’ expense. He
continues, despite the jury’s verdict, to deny responsibility for
his actions. As the government notes, the mitigating factors
he cites are either accounted for by the Guidelines (lack of

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criminal history) or common among white-collar defendants
(community and family support). The district court listened
to and considered Laurienti’s mitigating factors, but rejected
his plea for leniency. It had good reason to do so, as it
appears Laurienti has transferred assets to his ex-wife and
engaged in a post-conviction plan to avoid paying restitution.
In light of Laurienti’s long-term involvement in an elaborate
scheme to defraud those who placed their trust in him, we
cannot classify the thirty-six month sentence as unreasonable.
Nor does the fact that the district court sentenced
Laurienti’s brother, John Laurienti, to sixteen months’
imprisonment render Laurienti’s sentence unreasonable by
comparison. To the contrary, “a sentencing disparity based on
cooperation is not unreasonable. . . . [S]o long as there is no
indication the defendant has been retaliated against for
exercising a constitutional right, the government may
encourage plea bargains by affording leniency to those who
enter pleas. Failure to afford leniency to those who have not
demonstrated those attributes on which leniency is based is
unequivocally constitutionally proper.” United States v.
Carter, 560 F.3d 1107, 1121 (9th Cir. 2009) (internal
quotation marks and alterations omitted). John Laurienti
entered into a plea agreement with the government early in
his case, and cooperated with the government’s investigation.
Laurienti has not argued his sentence was imposed in
retaliation for exercising his constitutional rights. The
difference in sentences, therefore, does not establish that
Laurienti’s sentence was substantively unreasonable.
AFFIRMED.

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