United States v. Laurienti

• Decision Date: 30 September 2013
• Docket Number: No. 11–50294.,11–50294.
• Citation: 731 F.3d 967
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Bryan LAURIENTI, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

731 F.3d 967

UNITED STATES of America, Plaintiff–Appellee,

v.Bryan LAURIENTI, Defendant–Appellant.

No. 11–50294.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 11, 2013.

Filed Sept. 30, 2013.

Lisa Shinar (argued) and Sean K. Kennedy, Federal Public Defender, Los Angeles, CA, 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.

Appeal from the United States District Court for the Central District of California, Terry J. Hatter, Senior District Judge, Presiding. D.C. No. 2:03–cr–00620–TJH–3.

Before: MARSHA S. BERZON and PAUL J. WATFORD, Circuit Judges, and JAMES G. CARR, Senior District Judge.^*

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 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.

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 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, 117 S.Ct. 2199, 138 L.Ed.2d 724 (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).

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 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 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 ...