446 F.3d 65 (2nd Cir. 2006), 03-1244, United States v. Reifler

Docket Nº:03-1244(L), 03-1487, 03-1567, 03-1569.
Citation:446 F.3d 65
Party Name:UNITED STATES of America, Appellee, v. Lionel REIFLER, Glenn B. Laken, John M. Black, Jr., Defendants-Appellants.
Case Date:April 18, 2006
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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446 F.3d 65 (2nd Cir. 2006)

UNITED STATES of America, Appellee,

v.

Lionel REIFLER, Glenn B. Laken, John M. Black, Jr., Defendants-Appellants.

Nos. 03-1244(L), 03-1487, 03-1567, 03-1569.

United States Court of Appeals, Second Circuit.

April 18, 2006

Argued: April 22, 2005.

Final briefs submitted: May 3, 2005.

Appeals from judgments and amended judgments entered in the United States District Court for the Southern District of New York, convicting defendants of various fraud-related offenses in connection with investment of pension funds and manipulation of securities prices, see 18 U.S.C. §§ 371, 1343, 1346, 1954, 1962(d); 15 U.S.C. § 1644(a), and ordering certain defendants to pay restitution to fraud victims.

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David C. Esseks, Assistant United States Attorney, New York, New York (David N. Kelley, United States Attorney for the Southern District of New York, Christopher J. Clark, Joshua Goldberg, Peter G. Neiman, Assistant United States Attorneys, New York, New York, on the brief), for Appellee

Martin R. Raskin, Miami, Florida (Raskin & Raskin, Miami, Florida, on the brief), for Defendant-Appellant Reifler.

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Richard Ware Levitt, New York, New York (Gary G. Becker, New York, New York, on the brief), for Defendant-Appellant Laken.

Jane Simkin Smith, South Salem, New York (Vivian Shevitz, South Salem, New York, on the brief), for Defendant-Appellant Black.

Before: KEARSE, JACOBS, and CALABRESI, Circuit Judges.

KEARSE, Circuit Judge.

Defendants Glenn B. Laken and John M. Black, Jr., charged along with more than a dozen other individuals in a 26-count indictment that was eventually redacted at trial to seven counts, appeal from judgments entered in the United States District Court for the Southern District of New York (A) convicting both Laken and Black, following a jury trial before William H. Pauley III, Judge, on one count of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d) (Count One) ("RICO conspiracy"), one count of wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (Count Five), one count of wire fraud, in violation of 18 U.S.C. §§ 1343, 1346, and 2 (Count Three), two counts of illegal kickbacks, in violation of 18 U.S.C. §§ 1954 and 2 (Counts Four and Seven), one count of theft of honest services, in violation of 18 U.S.C. §§ 1343, 1346, and 2 (Count Six), and one count of conspiracy to commit the above substantive offenses and to commit union pension fund fraud, securities fraud, and fraud by an investment advisor, in violation of 18 U.S.C. § 371 (Count Two) (the "pension fund fraud/kickbacks conspiracy"); and (B) convicting Laken, following his plea of guilty before Sidney H. Stein, Judge, on one count of conspiracy to commit securities fraud, wire fraud, and commercial bribery in connection with stock issued by FinancialWeb.com, Incorporated ("FWEB"), in violation of 18 U.S.C. § 371 (the "FWEB conspiracy"). Judge Pauley sentenced Black principally to serve 37 months' imprisonment, to be followed by a three-year term of supervised release. Laken's offenses were consolidated for sentencing before Judge Pauley, who entered judgment ordering Laken principally to serve a total of 63 months' imprisonment, to be followed by a two-year term of supervised release, and entered an amended judgment ordering him also to pay $6,620,675.33 in restitution to victims of the FWEB conspiracy.

Defendant Lionel Reifler appeals from a judgment, entered in the same court following his plea of guilty before Judge Stein, convicting him on one count of conspiracy--the FWEB conspiracy--to commit securities fraud, wire fraud, and commercial bribery, in violation of 18 U.S.C. § 371, and two counts of credit card fraud, in violation of 15 U.S.C. § 1644(a). Judge Stein entered judgment sentencing Reifler principally to 63 months' imprisonment, to be followed by a three-year term of supervised release, and entered an amended judgment ordering him also to pay $2 million in restitution to victims of the FWEB conspiracy.

On appeal, Laken and Black contend principally (1) that the district court (a) violated their Sixth Amendment rights of confrontation by admitting in evidence the plea allocutions of two of their alleged coconspirators, and (b) deprived them of a fair trial by allowing the government to introduce certain evidence, including evidence that Black and others had ties to organized crime; (2) that the evidence was insufficient to support their convictions on (a) the RICO conspiracy count, (b) one of the wire fraud counts, and (c) both of the illegal kickbacks counts; and (3) that the insufficiency of the evidence to support their convictions on those counts requires, on a theory of retroactive misjoinder, the

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invalidation of their convictions on all other counts. All three appellants (a) challenge various aspects of the sentencing judges' calculations under the United States Sentencing Guidelines ("Guidelines") (2000), and (b) seek remands for resentencing in light of United States v. Booker, 543 U.S. 220, 244, 259, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) (invalidating mandatory application of the Guidelines), and United States v. Crosby, 397 F.3d 103, 119 (2d Cir.2005) ("Crosby ") (establishing procedures in connection with Booker error). In addition, Laken and Reifler make several challenges, including a Booker challenge, to the orders of restitution.

For the reasons that follow we find no basis for reversal of any of appellants' convictions; we remand for consideration of resentencing in accordance with Crosby ; and we vacate the restitution orders imposed on Laken and Reifler and remand for further proceedings in accordance with 18 U.S.C. §§ 3663A and 3664.

I. BACKGROUND

The prosecutions at issue on these appeals arose out of a lengthy securities-fraud investigation by the Federal Bureau of Investigation ("FBI"), culminating in the June 2000 arrests of approximately 120 persons, including Laken, Black, and Reifler, and the filing of more than a score of indictments and criminal complaints. Laken and Black were indicted and tried on charges that they, along with others, engaged in a scheme to bribe officials of unions to invest pension fund assets in corrupt investment vehicles. In one format, coconspirators employed in the securities industry planned to receive substantial sums from excessive commissions generated by the churning of securities in a corrupt hedge fund. In another format, they planned simply to retain some 10-20 percent of the amount that each pension fund meant to invest, and they hoped that sufficiently profitable returns on the moneys actually invested would mask that initial diversion. In either case, those coconspirators were to use part of the illegally gained moneys to fund their bribery payments to the union officials. In addition, the indictment alleged that the coconspirators schemed to manipulate the prices of various securities and to pay secret bribes to brokers in furtherance of those schemes.

A separate indictment charged Laken and Reifler with, inter alia, conspiring to manipulate the price of FWEB stock.

A. The Pension Fund Fraud/Kickbacks Trial

Laken and Black were tried in a 15-week trial in 2001-2002, along with defendants William M. Stephens, Gene Phillips, and A. Cal Rossi, all of whom won acquittals on all counts. Defendant Angelo Calvello also began the trial, but prior to its conclusion he entered into a plea agreement with the government. At trial, the principal government witness was Jeffrey Pokross.

Pokross, until he was arrested in 1996 and agreed to cooperate with the government, had been an associate of the Bonanno organized crime family (see Trial Transcript ("Trial Tr.") at 2504-05). Pokross was a principal in DMN Capital Investments, Inc. ("DMN Capital" or "DMN"), a small firm in Manhattan that provided investment banking and stock promotion services to small companies. His partners in that firm included James ("Jimmy") Labate, "a high level . . . associate" of the Gambino Crime Family (id. at 2504); and the affairs of DMN Capital were overseen by Robert Lino, a "captain or capo in the Bonan[n]o crime family" (id. at 2930). With Pokross's cooperation many conversations were recorded, as the government

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obtained court authorization to install microphones in DMN Capital's offices, and Pokross wore a wire for meetings at other locations. The resulting tapes introduced as government exhibits with the prefixes "GX Conf," "GX Desk," or "GX" were recordings of conversations that took place in the DMN conference room, in the DMN desk area, or beyond DMN's premises, respectively; transcripts given to the jury as aids in listening to the tapes bear the corresponding numbers and prefixes, with the further designation "-T" (and with "..." denoting a pause and "UI" signifying that some words were unintelligible).

The tape recordings and the testimony of Pokross were the principal evidence at trial. Taken in the light most favorable to the government, the trial evidence showed the following.

1. The Targeted Union Pension Funds

Laken, Black, Labate, and others schemed principally to engage in fraudulent activity with respect to the pension funds of three unions: Local 400 of the Production Workers Union ("Local 400"); the Detectives' Endowment Association ("DEA"), which handled an annuity fund for Detectives in the New York City Police Department; and Local 137 of the Operating Engineers Union ("Local 137"). Pokross described the beginnings and progress of the scheme with respect to each of these unions, and recordings of pertinent conversations were played for the jury. Except where indicated...

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