United States v. Paul
2011 U.S. App. LEXIS 4473
| 2d Cir. | 2011Background
- Paul and Stan Lee founded Stan Lee Media and manipulated stock via nominee accounts to inflate liquidity and debt leverage, leading to margin loans totaling $12.6 million.
- Stock manipulation occurred through inter-user trading and uptick schemes to create false demand before market close.
- Paul pled guilty to securities fraud in 2005 after extradition and home detention, with sentencing in 2009.
- District Court imposed 120 months’ imprisonment, three years’ supervised release, restitution of about $11.48 million, and a $100 assessment.
- Paul challenges Rule 11(c)(1) propriety, the speediness of sentencing, and the calculation/authority of restitution under MVRA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rule 11(c)(1) coercion potential at plea discussions | Paul asserts court remarks pressured plea | Paul argues remarks coerced voluntary plea | No Rule 11(c)(1) violation; remarks were contextual and harmless |
| Right to speedy sentencing due process | Delay violated speedy sentencing rights | Delay largely due to government, and defendant’s adjournments | No plain error; delay not prejudicial under the circumstances |
| MVRA restitution scope for securities fraud losses | Losses to Merrill Lynch/Spear, Leeds were direct victims of securities fraud | Losses may be caused by stock decline; collateral impact not tied to fraud | District Court not abuse; losses properly attributed to fraud-related loans |
Key Cases Cited
- United States v. Werker, 535 F.2d 198 (2d Cir.1976) (fact-specific analysis for Rule 11(c)(1) scrutiny)
- United States v. Bierd, 217 F.3d 15 (1st Cir.2000) (context of remarks similar; not vacatur-worthy coercion)
- Frank, 36 F.3d 898 (9th Cir.1994) (comments in plea discussions must be evaluated in context)
- United States v. Rutkoske, 506 F.3d 170 (2d Cir.2007) (causation in restitution—losses tied to fraud proceeds)
- United States v. Turk, 626 F.3d 743 (2d Cir.2010) (losses caused by loans secured by fraud accountable to defendant)
- Ebbers, 458 F.3d 110 (2d Cir.2006) (stock decline not sole basis for loss calculation in restitution)
- United States v. Pearson, 570 F.3d 480 (2d Cir.2009) (standard for appellate review of restitution decisions under MVRA)