U.S. v. Amato

• Decision Date: 21 August 2008
• Docket Number: Docket No. 07-2152-cr.,Docket No. 06-5741-cr.,Docket No. 06-5600-cr(L).,Docket No. 07-2311-cr.
• Citation: 540 F.3d 153
• Parties: UNITED STATES of America, Appellee, v. Joseph AMATO and John Fasciana, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

540 F.3d 153

UNITED STATES of America, Appellee, v. Joseph AMATO and John Fasciana, Defendants-Appellants.

Docket No. 06-5600-cr(L).

Docket No. 06-5741-cr.

Docket No. 07-2152-cr.

Docket No. 07-2311-cr.

United States Court of Appeals, Second Circuit.

Argued May 15, 2008.

Decided August 21, 2008.

Joshua L. Dratel, New York, N.Y. (Renita K. Thukral, Erik B. Levin, Aaron Mysliwiec, Law Office of Joshua L. Dratel, P.C., New York, NY, of counsel), for Defendant-Appellant Joseph Amato.

Brian C. Wille, New York, N.Y. (Usman Mohammad, Kostelanetz & Fink, LLP, New York, NY, of counsel), for Defendant-Appellant John Fasciana.

Marcus A. Asner, Assistant United States Attorney, New York, N.Y. (Michael J. Garcia, United States Attorney, Katherine Polk Failla, Assistant United States Attorney, Southern District of New York, New York, NY, of counsel), for Appellee.

Before: CARDAMONE, MINER, and POOLER, Circuit Judges.

CARDAMONE, Circuit Judge:

Defendants Joseph Amato and John Fasciana appeal from judgments of conviction entered December 5, 2006, and December 12, 2006, respectively (both amended May 22, 2007), in the United States District Court for the Southern District of New York (Swain, J.) following an 11-week jury trial. On this appeal we write primarily on the subject of restitution.

Three individuals — a business executive, his lawyer, and an officer in the business from which the criminal activity in this case originated — conspired together and perpetrated a series of frauds against several states and a corporation that had purchased the small company which employed the three individuals. Before trial the executive died. The lawyer — Fasciana — and the officer — Amato — were convicted for the frauds, and the trial court ordered them to make restitution.

Restitution is a complex subject because civil and criminal restitution are somewhat different. The civil rule is often stated under the rubric of unjust enrichment: "A person who has been unjustly enriched at the expense of another is required to make restitution to the other." Restatement (First) of Restitution § 1 (1937). In the criminal law, victims' rights are generally the focus of restitution provisions, including those contained in the Mandatory Victims Restitution Act of 1996 (MVRA), Pub.L. No. 104-132, Title II, Subtitle A, 110 Stat. 1227, the criminal statute with which we deal on this appeal. Its purpose is primarily to restore the victim to his or her prior state of well-being, and to that end to require federal "criminal defendants to pay full restitution to the identifiable victims of their crimes." S.Rep. No. 104-179, at 12-13 (1995), as reprinted in 1996 U.S.C.C.A.N. 924, 925-26.

Under the MVRA, restitution must be ordered without consideration of the defendant's economic circumstances. See 18 U.S.C. § 3664(f)(1)(A). Consequently, while going down the road to committing a crime may be as easy as the "descent to Avernus," the payment of restitution under the MVRA can be as hard as the return to view "etherial light."¹ The question we must address is not whether the defendants are capable of making this payment but merely whether the items included in the restitution order fall within the scope of the MVRA, as well as whether the order was otherwise properly calculated.

BACKGROUND

A. Facts

FCI, Inc. (FCI), a small Manhattan consulting firm, was purchased in 1995 by Electronic Data Systems Corporation (EDS), headquartered in Plano, Texas, and became part of EDS's Global Securities Industry Group (GSIG). At the time of the purchase, Michael Reddy was FCI's Chief Executive Officer, John Fasciana was its legal counsel as well as Reddy's personal attorney, and Joseph Amato was a shareholder and officer of FCI. Each of these individuals assumed similar positions within GSIG after the purchase.

The purchase agreement included an incentive plan under which EDS would pay large bonuses to Reddy and other GSIG employees if GSIG met certain performance targets. These performance targets were linked to GSIG's work helping client banks and brokerage firms minimize their losses due to escheatment. The work entailed reviewing escheated funds, such as unclaimed dividends or interest payments, and assisting clients in reclaiming from states those funds that were not properly subject to escheatment. It also entailed reviewing accounts in which clients placed funds marked for escheatment before turning them over to states, and identifying those funds that could be removed from these accounts to avoid escheatment in the first place. This work was typically performed on a contingency fee basis, which meant that GSIG's compensation — and thus its progress towards meeting its performance targets — was tied to the amount of funds its clients were able to recover or save from escheatment.

GSIG never met its performance targets. But Reddy, Fasciana, Amato, and other FCI employees conspired to deceive EDS into believing it had so that EDS would pay out the incentive plan bonuses. They did this by: (1) urging clients to retain pre-escheatment funds to which these clients had no right, (2) creating and submitting to various states fraudulent claims for the return of clients' escheated funds, (3) recording income from non-existent fees, (4) stealing EDS checks and laundering them through Fasciana's attorney trust accounts to make it look as though the checks were payments for GSIG's work, and (5) misleading EDS auditors in an attempt to conceal all of this fraudulent activity.

B. Criminal Charges Against Defendants

As a result of this criminal activity the defendants were charged as follows: Count One of a 13-count superseding indictment filed on December 4, 2001 charged Amato, Fasciana, and Reddy with conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 371. Count Two charged Fasciana and Reddy, and Count Three charged Fasciana, Amato, and Reddy, with the substantive offense of mail fraud, in violation of 18 U.S.C. §§ 1341, 1346, and 2. Count Four charged Fasciana, Amato, and Reddy, and Counts Five through 13 charged Fasciana and Reddy, with additional substantive mail and wire fraud offenses, in violation of 18 U.S.C. §§ 1341, 1343, 1346, and 2.

Reddy died before trial. Amato and Fasciana's first trial in 2002 ended with a hung jury. Following that first trial, Judge Swain granted Fasciana's motion for acquittal on Count Two of the indictment. Trial on the remaining 12 counts commenced on April 25, 2005 and ended on July 7, 2005, when the jury convicted both defendants on all counts remaining against them.

C. Sentences

On November 20, 2006 Judge Swain sentenced Fasciana to 48 months of imprisonment, followed by three years of supervised release, and a mandatory special assessment of $1,100. Judge Swain sentenced Amato on November 21, 2006 to a term of imprisonment of one year and one day, followed by three years of supervised release, and a mandatory $300 special assessment. On May 18, 2007 Judge Swain held a restitution hearing, at which time she ordered the defendants to pay restitution of $12,799,795 to EDS as the victim of the offenses. This figure included $3,088,466 in attorney fees and accounting costs that the district court found EDS to have incurred as a result of its participation in the investigation and prosecution of defendants' offenses. From their convictions and sentences both defendants appeal.

DISCUSSION

On their consolidated appeal, Amato and Fasciana's strongest challenge is to the district court's restitution order. That is the principal subject of this opinion, and we address it in Part I below. Defendants also raise additional issues that we dispose of in Part II. Those issues are, principally: whether the district court erred by (1) refusing to grant a new trial based on the government's alleged withholding of impeachment material and newly discovered exculpatory evidence, (2) refusing to sever Amato's trial from Fasciana's, (3) improperly instructing the jury as to the meaning of "false statements" and "fraudulent omissions," (4) preventing the defense from fully cross-examining prosecution witnesses, or (5) allowing the prosecution to display photographs of the conspirators during closing arguments, and (6) whether these purported errors require reversal when considered cumulatively.

We turn first to the restitution issue.

I Restitution

Defendants primarily challenge the $3,088,466 of EDS's attorney fees and accounting costs included in the restitution order. They argue such expenses are not authorized under the Mandatory Victims Restitution Act, 18 U.S.C. § 3663A, and, even if they are, the expenses were not sufficiently documented to support the restitution ordered in this case. These arguments implicate the district court's conclusions of law, which we review de novo, as well as its findings of fact, which we review for clear error. See United States v. Boccagna, 450 F.3d 107, 113 (2d Cir.2006). Overall, we review the district court's restitution order deferentially, reversing only if in our view the trial court abused its discretion. See id.

A. The MVRA in Context

When Congress enacted the MVRA, it was adding to a statutory sentencing structure in which restitution had only recently begun to play a prominent role. See S.Rep. No. 104-179, at 12-14, 1996 U.S.C.C.A.N. at 925-27. Restitution has deep roots in the common law, but it was not until the Victim and Witness Protection Act of 1982 (VWPA), Pub.L. No. 97-291, 96 Stat. 1248 (1982), that Congress first gave the federal district courts general statutory authority to order restitution as part of a criminal sentence outside of the probation context. See S.Rep. No. 97-532, at 30 (1982), as reprinted in 1982 U.S.C.C.A.N. 2515, 2536; see also United States v. Brown, 744 F.2d 905, 910 (2d Cir.1984) (discussing restitution's common law roots).

The exercise of this authority under the VWPA is discretionary, and the act lists the particular types of restitution...