United States v. Everett Miller
2016 U.S. App. LEXIS 14847
| 3rd Cir. | 2016Background
- Everett C. Miller, owner/CEO of Carr Miller Capital, raised over $41.2 million from >190 investors by selling unregistered "Carr Miller Capital promissory notes" promising 7–20% returns and principal after nine months; promises were false.
- Carr Miller operated as a Ponzi scheme in part, paid earlier investors with new investor funds, lost large sums in risky ventures, and commingled investor funds which Miller spent on personal luxury items.
- Miller pled guilty to securities fraud (15 U.S.C. § 78j(b)) and tax evasion (26 U.S.C. § 7201), stipulated to offense level 29 then accepted a 3-level reduction (U.S.S.G. § 3E1.1), and entered a cooperation agreement leading the Government to file a § 5K1.1 motion requesting a 3-level downward departure to offense level 23.
- The PSR recommended a 4-level Sentencing Guidelines enhancement for being an "investment adviser" (U.S.S.G. § 2B1.1(b)(19)(A)(iii)); the District Court applied the 4-level enhancement, granted only a 3-level downward departure (from the enhanced level), and imposed a 2-level upward variance under 18 U.S.C. § 3553(a), yielding a 120-month sentence.
- Miller appealed, challenging (1) the investment-adviser enhancement—arguing he was not an "investment adviser" under the Investment Advisers Act definition; (2) an alleged Government breach of the plea/cooperation agreement regarding the 5K1.1 recommendation; and (3) substantive unreasonableness of his sentence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Miller was an "investment adviser" under the Investment Advisers Act (triggering +4-level enhancement) | Miller: Not "in the business" of giving securities advice; did not give advice "for compensation"; not registered as an investment adviser | Government/District Court: Miller held himself out as an adviser, gave personalized advice (relevant conduct), received economic benefit when investors’ principal was commingled and spent, registration not required | Court: Affirmed enhancement—Miller was "in the business" under SEC guidance, advice was for "compensation," and registration was not dispositive. |
| Whether the Government breached the plea/cooperation agreement by failing to recommend offense level 23 | Miller: Government promised in its §5K1.1 motion to request offense level 23 and failed to do so at sentencing | Government: Repeatedly requested level 23; any equivocation was minor and in response to the court’s suggestion; no clear breach | Court: Miller failed to preserve objection (plain error review). On the merits, no clear or obvious breach—Government consistently sought level 23. |
| Whether the 120-month sentence was substantively unreasonable | Miller: Sentence excessive given cooperation and health issues | Government/District Court: Sentence within Guidelines after considering §3553(a) factors—large, predatory fraud on many victims, Miller’s conduct and history; health factored in limiting variance | Court: No abuse of discretion; sentence reasonable and adequately explained. |
Key Cases Cited
- Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (statutory interpretation starts with text)
- SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (Investment Advisers Act background and fiduciary duties)
- Skidmore v. Swift & Co., 323 U.S. 134 (deference to agency interpretations under persuasive-weight standard)
- Gonzales v. Oregon, 546 U.S. 243 (factors supporting deference to agency guidance)
- Puckett v. United States, 556 U.S. 129 (plain-error preservation standard)
- Gall v. United States, 552 U.S. 38 (standard for reviewing substantive reasonableness of sentence)