Case Information
*1 FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT U NITED S TATES OF A MERICA , No. 11-50294 Plaintiff-Appellee , D.C. No.
v. 2:03-cr-00620-TJH-3 B RYAN L AURIENTI
Defendant-Appellant . OPINION Appeal from the United States District Court for the Central District of California Terry J. Hatter, Senior District Judge, Presiding Argued and Submitted February 11, 2013—Pasadena, California Filed September 30, 2013 Before: Marsha S. Berzon and Paul J. Watford, Circuit Judges, and James G. Carr, Senior District Judge. [*] Opinion by Judge Carr
[*] The Honorable James G. Carr, Senior District Judge for the U.S. District Court for the Northern District of Ohio, sitting by designation. SUMMARY [**]
Criminal Law
The panel affirmed a sentence imposed for conspiracy to commit securities fraud and securities fraud by use of manipulative and deceptive devices.
The panel held that the district court properly denied the defendant’s motion for an evidentiary hearing to determine whether the defendant knew of Rule 10b-5, where he had ample opportunity to present information showing he lacked knowledge of the substance of the rule, and his lack-of- knowledge claim is implausible. The panel held that the district court did not err in failing to provide specific reasons for rejecting the defense.
The panel held that the district court did not err in applying to the defendant, a stock broker, an enhancement for abuse of a position of trust under U.S.S.G. § 3B1.3, given the professional discretion the defendant exercised in selecting the securities to recommend, and the deference his recommendations received in light of his special knowledge and expertise.
The panel rejected the defendant’s contentions that the district court was not attentive to his mitigation arguments and that the sentence was substantively unreasonable. [**] This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
COUNSEL
Lisa Shinar (argued) and Sean K. Kennedy, Federal Public Defender, Los Angeles, California, 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.
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 4
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, 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.
[1] Corporations gave the securities to Hampton Porter for a deeply *4 reduced price, and sometimes for free, in return for the firm’s promise to promote the securities vigorously.
[2] It does not appear Laurienti bought the securities in his individual capacity.
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
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 [3] John Laurienti is Laurienti’s brother, whom Laurienti described as the “mastermind” behind the scheme.
[4] The parties stipulated to the restitution amount at resentencing. *5 6 U NITED S TATES V . L AURIENTI 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
,
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
,
We have consistently held that “[t]here is no general right
to an evidentiary hearing at sentencing.”
United States v.
Real-Hernandez
,
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
,
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
,
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 *7 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
de novo
, its factual findings for clear
error, and its application of the Guidelines to the facts of the
case for abuse of discretion.
United States v. Gomez-Leon
Laurienti argues that this court’s decision in Contreras precludes the abuse-of-trust enhancement in this case. In Contreras , the defendant worked as a prison cook, where she had unmonitored contact with prisoners in the prison kitchen. Id. at 1164. Contreras smuggled heroin, methamphetamine, and marijuana into the prison, which she sold to prisoners. Id . at 1164–65. The district court imposed a two-level enhancement for abuse of a position of trust under § 3B1.3. Id . at 1165.
[5]
The en banc court affirmed the substance of the panel’s opinion,
vacating only a portion of it on procedural grounds.
See United States v.
*8
Contreras
,
10 U NITED S TATES V . L AURIENTI We vacated the sentence, and articulated the proper inquiry a sentencing court should undertake before applying the enhancement: “First, did the defendant hold a ‘position of public or private trust’ within the meaning of the Guidelines? Second, if so, did the position ‘significantly facilitate’ the commission of the crime?” Id. We made clear that the presence or lack of “professional or managerial discretion” represents the decisive factor in deciding whether a defendant occupied a position of trust. Id. at 1166. A defendant has this discretion when, “because of his or her special knowledge, expertise, or managerial authority, [he or she] is trusted to exercise substantial discretionary judgment that is ordinarily given considerable deference.” Id. at 1168 n.5 (internal quotations and citations omitted). We concluded that Contreras, as a prison cook, did not occupy such a position of trust merely because she enjoyed access to the prison without a thorough search. Id . at 1168.
Although we have not had occasion to apply this test in
the context of a client-stock broker relationship, the Second
Circuit has decided such a case. That court held that the stock
broker occupied a position of trust
vis-a-vis
his client
investors.
United States v. Santoro
,
We adopt the Second Circuit’s approach. Applying it to
this case, we hold that the district court properly found
Laurienti held a position of trust that afforded him
professional discretion. At sentencing, the government
highlighted witness testimony stating
that Laurienti
recommended securities. The testimony indicated that the
witness accepted his recommendations because Laurienti
stated he had substantial experience and knowledge in the
field. A second witness testified that, although he reserved the
right to make the decision whether to execute a transaction,
he relied on Laurienti’s advice to identify securities that
would further his investment objectives.
[6]
These clients did
not merely hire Laurienti to make trades at their direction.
Rather, they sought his investment advice, and—as one of the
clients put it—“trusted his discretion.” This is precisely the
kind of relationship we said was required in
Contreras
—one
characterized by “substantial discretionary judgment that is
ordinarily given considerable deference.”
Contreras
In sum, the professional discretion Laurienti exercised in selecting which securities to recommend, and the deference [6] We reject Laurienti’s argument that the inquiry turns on the question of who made the “final” decision to purchase or sell a security. While this represents one factor in assessing whether a defendant occupies a position of trust, it is not determinative.
his recommendations received in light of his special
knowledge and expertise, afforded him a position of trust.
See
id.
at 1165. That position “provide[d] the freedom to commit
a difficult-to-detect wrong.”
Santoro
,
C. Responding to Mitigation Argument
For the first time on appeal, Laurienti claims that the
district court did not listen to his statement in mitigation. This
court “review[s] for plain error claims of procedural error at
sentencing raised for the first time on appeal.”
United States
v. Benford
, 574 F.3d 1228, 1231 (9th Cir. 2009); Fed. R.
Crim. P. 52. To establish plain error, a defendant must show:
1) an unwaived error; 2) that is “clear or obvious, rather than
subject to reasonable dispute;” 3) that affected his substantial
rights; and 4) that “seriously affects the fairness, integrity, or
public reputation of judicial proceedings.”
Puckett v. United
States
,
When determining whether a district court committed
procedural error requiring reversal, we consider,
inter alia
,
whether the court took the 18 U.S.C. § 3553(a) sentencing
factors into account and adequately explained the sentence.
United States v. Apodaca
, 641 F.3d 1077, 1081 (9th Cir.
2011). A district court must “state in open court the reasons
for its imposition of the particular sentence.” 18 U.S.C.
§ 3553(c). When a defendant requests a specific departure
from the Guidelines-recommended sentence, the district court
must explain its decision to reject the request.
Apodaca
The district court did not fail to be attentive to Laurienti’s contentions as to mitigation. The sentencing transcript demonstrates the court listened to and considered Laurienti’s arguments in mitigation but ultimately rejected those arguments. The court twice explicitly stated it considered the § 3553(a) factors. The court explained that it found *11 Laurienti’s arguments unpersuasive in light of evidence suggesting he had accepted below-market wages from his family business in an attempt to avoid restitution payments owed his victims. Moreover, having considered Laurienti’s arguments in favor of mitigation at length, the court did not err in rejecting the request for leniency.
14
D. Refusal to Consider Materials Laurienti claims for the first time on appeal that the district court committed plain error when it did not read the last two pages of his sentencing memorandum or view a DVD he had submitted. We review these contentions under the same plain error standard applicable to his claim that the district court did not listen to his evidence in mitigation. We reject these contentions for two reasons.
First, the court provided Laurienti the opportunity to present the substance of those materials during sentencing. Laurienti did so, and the court listened to his position.
Second, and more importantly, the court explained why further considering those materials would not change its decision. The court specifically stated that it had reviewed numerous letters from Laurienti’s family, friends, and business associates. The court did not, however, find these materials persuasive in light of Laurienti’s apparent attempts to avoid making restitution payments. Considering the cumulative nature of the DVD, and the fact that the court allowed Laurienti to discuss his sentencing position at length, Laurienti has failed to establish that the court’s refusal to consider the exhibits amounted to plain error requiring reversal.
[7] We note in passing that the time that the attorneys and this court have spent on the issue of the unread two pages and unwatched DVD was, in all likelihood, far more extensive (and, for the parties, expensive) than if the court had simply read and watched what was before it. As Benjamin Franklin astutely observed, “An ounce of prevention is worth a pound of cure.”
U NITED S TATES V . L AURIENTI 15
E. Length of Sentence
Laurienti claims his sentence is unreasonably excessive, and its imposition constitutes substantive error.
We review the length of the sentence imposed by a
district court for substantive reasonableness.
United States v.
Cope
, 527 F.3d 944, 952 (9th Cir. 2008). Reversal is not
justified simply because this court “think[s] a different
sentence is appropriate.”
United States v. Carty
, 520 F.3d
984, 993 (9th Cir. 2008) (en banc). Rather, this court should
only vacate a sentence if the district court’s decision not to
impose a lesser sentence was “illogical, implausible, or
without support in inferences that may be drawn from the
facts in the record.”
United States v. Treadwell
,
The district court’s sentence, which fell in the middle of
the Guidelines range, was substantively reasonable.
“Although we do not automatically presume reasonableness
for a within-Guidelines sentence, ‘in the overwhelming
majority of cases, a Guidelines sentence will fall comfortably
within the broad range of sentences that would be reasonable
in the particular circumstances.’”
Treadwell
,
The sentence is reasonable in light of the circumstances in this case. Laurienti engaged in fraudulent conduct, including unauthorized trading in clients’ accounts, for approximately two years. He caused substantial losses in his clients’ accounts and profited at his clients’ expense. He continues, despite the jury’s verdict, to deny responsibility for his actions. As the government notes, the mitigating factors he cites are either accounted for by the Guidelines (lack of criminal history) or common among white-collar defendants (community and family support). The district court listened to and considered Laurienti’s mitigating factors, but rejected his plea for leniency. It had good reason to do so, as it *13 appears Laurienti has transferred assets to his ex-wife and engaged in a post-conviction plan to avoid paying restitution. In light of Laurienti’s long-term involvement in an elaborate scheme to defraud those who placed their trust in him, we cannot classify the thirty-six month sentence as unreasonable.
Nor does the fact that the district court sentenced Laurienti’s brother, John Laurienti, to sixteen months’ imprisonment render Laurienti’s sentence unreasonable by comparison. To the contrary, “a sentencing disparity based on cooperation is not unreasonable. . . . [S]o long as there is no indication the defendant has been retaliated against for exercising a constitutional right, the government may encourage plea bargains by affording leniency to those who enter pleas. Failure to afford leniency to those who have not demonstrated those attributes on which leniency is based is unequivocally constitutionally proper.” United States v. Carter , 560 F.3d 1107, 1121 (9th Cir. 2009) (internal quotation marks and alterations omitted). John Laurienti entered into a plea agreement with the government early in his case, and cooperated with the government’s investigation. Laurienti has not argued his sentence was imposed in retaliation for exercising his constitutional rights. The difference in sentences, therefore, does not establish that Laurienti’s sentence was substantively unreasonable.
AFFIRMED .