United States v. Goffer , 531 F. App'x 8 ( 2013 )

11-3591-cr(L)
United States v. Goffer
1
2 UNITED STATES COURT OF APPEALS
3 FOR THE SECOND CIRCUIT
4
5
6 August Term, 2012
7
8 (Argued: March 11, 2013 Decided: July 1, 2013)
9
10 Docket No. 11-3591-cr(L)
11
12
13 UNITED STATES OF AMERICA,
14
15 Appellee,
16
17 -v.-
18
19 ZVI GOFFER, CRAIG DRIMAL, MICHAEL KIMELMAN,
20
21 Defendants-Appellants,
22
23 JASON GOLDFARB, ARTHUR CUTILLO, EMANUEL GOFFER, DAVID PLATE,
24
25 Defendants.*
26
27
28 Before:
29 WALKER, SACK, AND WESLEY, Circuit Judges.
30
31
32
33
34
35 Defendants Zvi Goffer, Michael Kimelman, and Craig Drimal
36 appeal from convictions of conspiracy to commit securities
37 fraud in violation of 18 U.S.C. § 371 and securities fraud
38 in violation of 15 U.S.C. §§ 78j(b) and 78ff and sentences
39 entered in the Southern District of New York (Richard J.
40 Sullivan, Judge). Defendants allege that (1) wiretap
*
The Clerk of the Court is directed to amend the caption in
the case to conform with the above.
1
1 evidence is inadmissible in prosecutions of securities
2 fraud; (2) the jury lacked sufficient evidence to prove
3 Defendants’ knowledge of the insider source; (3) the jury
4 instructions on conscious avoidance were improper after the
5 Supreme Court’s decision in Global-Tech Appliances, Inc. v.
6 SEB S.A., -- U.S. --, 131 S.Ct. 2060 (2011); (4) the
7 district court improperly excluded a rejected plea bargain;
8 and (5) the sentences were higher than other white-collar
9 defendants receive for comparable thefts. We hold that (1)
10 wiretap evidence is admissible where the wiretap was
11 lawfully obtained, and wire fraud remains a predicate
12 offense to obtain a wiretap; (2) there was sufficient
13 evidence from which a jury could reasonably infer
14 Defendants’ mens rea; (3) conscious avoidance law was not
15 altered by Global-Tech; (4) the district court properly
16 excluded evidence of a rejected plea bargain; and (5)
17 Defendants’ sentences were reasonable in light of the
18 magnitude of their theft and the 18 U.S.C. § 3553(a)
19 factors. The judgment of the district court is accordingly
20 AFFIRMED.
21
22
23
24
25 ALEXANDER MARTIN DUDELSON, Law Office of Alexander
26 M. Dudelson, Brooklyn, NY, for Appellant Zvi
27 Goffer.
28
29 MICHAEL S. SOMMER (Morris J. Fodeman, Scott D.
30 Tenley, on the brief), Wilson Sonsini Goodrich
31 & Rosati, P.C., New York, NY, for Appellant
32 Michael Kimelman.
33
34 ARLENE VILLAMIA-DRIMAL, Weston, CT, for Appellant
35 Craig Drimal.
36
37 ANDREW L. FISH, Assistant United States Attorney
38 (Richard C. Tarlowe, Assistant United States
39 Attorney, on the brief), for Preet Bharara,
40 United States Attorney for the Southern
41 District of New York, New York, NY, for
42 Appellee United States of America.
43
44
45
2
1 WESLEY, Circuit Judge:
2 Defendants Zvi Goffer, Michael Kimelman, and Craig
3 Drimal were convicted in the United States District Court
4 for the Southern District of New York (Richard J. Sullivan,
5 Judge) of conspiracy to commit securities fraud in violation
6 of 18 U.S.C. § 371 and securities fraud in violation of 15
7 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5 and
8 240.10b-5-2, and 18 U.S.C. § 2.1 Goffer and Kimelman were
9 convicted after a 13-day jury trial; Drimal pled guilty.
10 Goffer was convicted of two counts of conspiracy to commit
11 securities fraud and twelve counts of securities fraud;
12 Kimelman was convicted of conspiracy to commit securities
13 fraud and two counts of securities fraud; and Drimal pled
14 guilty to conspiracy to commit securities fraud and five
15 counts of securities fraud. Drimal and Goffer appeal their
16 sentences and Kimelman and Drimal challenge their
17 convictions based on evidentiary rulings, jury instructions,
18 and sufficiency of the evidence.2
1
Jason Goldfarb also filed a notice of appeal but no brief;
his appeal was dismissed by an order of this court dated March
16, 2012.
2
We address Defendants’ additional arguments in a related
order. United States v. Goffer, 2013 WL --(2d Cir. 2013)
(summary order).
3
1 Background
2 Goffer, Kimelman, and Drimal, along with non-party
3 defendants, conducted a double-blind, high-volume insider
4 trading network that led the participants to acquire over
5 $10 million in profits. Goffer, who worked as a proprietary
6 trader3 at the Schottenfeld Group, LLC (“Schottenfeld”),
7 spearheaded the conspiracy.
8 In 2007, Drimal traded from the offices of the Galleon
9 Group (“Galleon”), a firm led by Raj Rajaratnam. Kimelman,
10 previously an attorney at a New York law firm, traded for
11 Quad Capital (“Quad”), a proprietary trading firm. In late
12 2007, Kimelman, Goffer, and Goffer’s brother Emanuel
13 established a new trading firm, Incremental Capital
14 (“Incremental”), though they retained their other positions.
15 In early 2008, Kimelman left Quad to trade with Emanuel,
16 and Goffer began trading at Galleon. Kimelman and Goffer
17 spoke often and shared information that led them to trade in
18 the same stocks. In 2007 and 2008, Kimelman and Goffer
19 traded 151 stocks within five days of each other, including
20 88 stocks that they both traded on the same day.
3
Proprietary traders use the firm’s capital to make trades
and retain half of the profits that they earn.
4
1 I. The Conspiracy
2 In the summer of 2007, Arthur Cutillo and Brian
3 Santarlas, attorneys at Ropes & Gray LLP, met with Jason
4 Goldfarb, a workers’ compensation attorney who had attended
5 law school with Cutillo. Goldfarb indicated to the Ropes &
6 Gray attorneys that he had a friend who traded stocks and
7 would pay for information about corporate acquisitions. The
8 Government showed at trial that Goffer was this friend.
9 What followed was a series of “tips” in which Cutillo and/or
10 Santarlas would obtain material non-public information and
11 pass it to Goldfarb, who, in turn, would pass it to Goffer.
12 Goffer distributed these “tips,” which frequently related to
13 impending takeovers, to friends and partners. Based on
14 these tips, Goffer and his co-conspirators would acquire
15 positions in the targeted companies and profit from the
16 takeover’s effect on the share price.
17 Goffer’s network used prepaid cellular telephones to
18 avoid detection; these phones – used by the attorneys and
19 the traders – were destroyed after each successful tip.
20 See, e.g., Tr. 429-31, 436-37; Gov’t Ex. 114, 127.
21 Throughout the relevant time period, Goffer spoke with co-
22 conspirators, especially Kimelman, guardedly when on the
5
1 phone. For instance, he described the P.F. Chang’s tip as “a
2 good thing” but “nothing I’m going to talk about on the
3 telephone.” Gov’t Ex. 145. Goffer often asked Kimelman to
4 meet in person or “in the street” when conveying sensitive
5 information. They also discussed countermeasures and ways
6 to avoid detection, suspecting that high-volume trades in
7 little-traded companies immediately prior to their
8 acquisition could raise regulatory eyebrows. Goffer relied
9 on Kimelman to provide him with insights into the meaning of
10 legal documents associated with the acquisitions, including
11 revised merger agreements, settlement agreements, signature
12 pages, and limited guarantees, inter alia.
13 II. The 3Com Tip
14 The first tip presented at trial related to Bain
15 Capital’s bid to acquire 3Com. When Cutillo and Santarlas
16 learned about the progress of the deal – for example, by
17 finding documents entitled “closing agenda” or “signature
18 papers” on Ropes & Gray’s document management system or on a
19 communal printer - they reported this progress to Goldfarb,
20 who passed it on to Goffer. Goffer shared information
21 relating to the takeover bid with some of his co-
22 conspirators. Goffer frequently convened a group of co-
6
1 conspirator traders (typically including Emanuel, Kimelman,
2 and David Plate, another Schottenfeld trader) at a bar where
3 the group would discuss the progress of the takeover bid and
4 any new information that Goffer had received regarding the
5 plans.
6 On August 7, 2007, Goffer, Drimal, Emanuel, and Plate
7 began acquiring 3Com stock based on the material nonpublic
8 information that Goffer received from Goldfarb. Gov’t Ex.
9 10. That evening, Goffer had a 25-minute phone conversation
10 with Kimelman.4 The next day, Kimelman purchased 94,200
11 shares of 3Com stock. That week, forbidden from purchasing
12 more 3Com stock by Quad’s risk management team, Kimelman
13 sent an otherwise wordless email to Goffer into which he had
14 pasted an instant message conversation with Quad’s risk
15 management expert.
16 Goffer also provided details about the acquisition and
17 the sources of his information to Drimal; Drimal passed both
18 on to David Slaine, a cooperating witness. Drimal explained
19 that the information came from an attorney from “Ropeson”
20 who risked “his whole . . . career and maybe going to jail”
21 by sharing these tips. Gov’t Ex. 206, 208.
4
This conversation predated, and therefore was not recorded
by, the wiretaps employed by Government investigators in this
case.
7
1 On September 27, 2007, Goffer told Plate and other co-
2 conspirators that the acquisition of 3Com would happen the
3 next day. Goffer had learned that the signature papers were
4 prepared and he confirmed with Kimelman, who verified, based
5 on his background as an attorney, that signature papers
6 “were what they sounded like; they were something that took
7 place at the end of a deal.” Tr. 831-32, 1067. Kimelman
8 was either present or was consulted over the phone. Bain
9 announced its acquisition of 3Com the next day; the co-
10 conspirators all profited.5 Goffer told Plate that he
11 needed to pay his source, and identified those who were
12 contributing (including Drimal); the co-conspirators paid
13 Santarlas, Cutillo, and Goldfarb $25,000 each.
14 III. Other Tips
15 In November 2007, Santarlas overheard other Ropes &
16 Gray associates discussing a client’s upcoming acquisition
17 of Axcan. Santarlas, who did not work on mergers and
18 acquisitions, accessed at least four documents on the Ropes
19 & Gray document management system relating to the
20 acquisition; he and Cutillo shared the tip with Goldfarb.
5
Goffer earned $378,608; Kimelman earned $243,716 in his
Quad account and $16,687 in another account; and Drimal earned
$4,535,000. Gov’t Ex. 10.
8
1 Goldfarb passed the attorneys’ information to Goffer, who
2 disseminated it (at a minimum) to Drimal and Slaine. Drimal
3 shared the information with Michael Cardillo, a Galleon
4 trader, though he again attributed the tip to “Ropeson”
5 attorneys. Tr. 1106. Drimal and Plate purchased Axcan
6 stock and benefitted from the Axcan acquisition announced on
7 November 29, 2007; Drimal gained $1,984,867. Goffer did not
8 trade Axcan because it was a small, rarely-traded stock and
9 he did not want to attract regulatory attention. Tr. 657-
10 58.
11 In February 2008, Santarlas learned about a possible
12 takeover of P.F. Chang’s China Bistro, Inc. (“P.F. Chang’s”)
13 from a colleague; he conveyed this information to Goldfarb,
14 who shared it with Goffer. Tr. 131-34, Gov’t Ex. 2. A few
15 days later Goffer called Kimelman to seek his advice, but
16 noted that it was “nothing I’m going to talk about on the
17 telephone.” Gov’t Ex. 145. Kimelman agreed to come into
18 Manhattan to “figure out our plan of attack.” Id. Goffer,
19 Emanuel, and Kimelman decided to purchase P.F. Chang’s stock
20 as part of an acquisition of a broad restaurant portfolio to
21 disguise their use of the inside information. Tr. 849-50.
22 Goffer instructed the group that “everything’s got to be
9
1 printed out” to help them “go about . . . justifying a
2 trade.” Gov’t Ex. 149. No P.F. Chang’s acquisition was
3 announced in 2008.
4 In March 2008, Cutillo and Santarlas observed that deal
5 documents for Bain Capital’s acquisition of Clear Channel
6 Communications, Inc. (“Clear Channel”) were laid out in a
7 “closing room” at the law firm, apparently ready for
8 execution, and reported that closing was imminent.
9 Unbeknownst to these tippers, neither of whom worked on the
10 deal, the Clear Channel acquisition was staged so that the
11 lenders could be sued for specific performance. When the
12 deal did not close as anticipated, Goffer, Kimelman, and
13 Drimal all suffered losses on their Clear Channel
14 investments.
15 In May, there was more Clear Channel activity at the
16 Ropes & Gray offices. Cutillo passed the information to
17 Goldfarb, who told Goffer. Tr. 494-95, Gov’t Ex. 198.
18 Goffer summoned Kimelman for an “urgent meeting;”
19 immediately afterwards, he called another trader and told
20 him to purchase Clear Channel call options for “everybody.”
21 Gov’t Ex. 199, 201. Over the next two business days, Clear
22 Channel publicly announced that it was in settlement talks
10
1 with the lenders and that an amended merger agreement had
2 been reached. The market reacted favorably to this news and
3 Goffer earned over $1 million in profits in his Galleon
4 account trading on this tip.
5 Schottenfeld trader Gautham Shankar provided several
6 tips to Goffer, including acquisitions of Kronos, Inc. and
7 Hilton Hotels Corp. (“Hilton”). Tr. 650-51. Goffer,
8 Kimelman, Drimal, and Emanuel benefitted from trading on
9 this inside information. Profits from these illegal trades
10 were included in calculating the loss amount for sentencing
11 purposes, but the trades were not charged at trial.
12 IV. Recruitment of David Slaine
13 In the fall of 2007, Goffer and Kimelman recruited
14 David Slaine to join Incremental Capital. The co-
15 conspirators hoped that Slaine, who unbeknownst to them was
16 working as a cooperating witness after his own arrest for
17 insider trading, would provide them with the financial
18 backing to get their insider trading-fueled business off the
19 ground. Kimelman urged Goffer to tell Slaine that he would
20 “get great information” by investing with Incremental.
21 Gov’t Ex. 114A. Goffer mentioned that he had received tips
22 about certain acquisitions before they happened, including
11
1 3Com, Axcan, and Hilton. Gov’t Ex. 212. Goffer jokingly
2 told Slaine that the information came from a construction
3 worker, but when pushed he elaborated “you [are] probably
4 better off not knowing where they were coming from...[Y]ou
5 don’t want to know where it’s coming from obviously.” Gov’t
6 Ex. 222. Kimelman chimed in, asserting that the source was
7 that “[g]uy fixing that pothole down there.” Id.8 V. Trial and Sentencing
9 The Government’s evidence at trial included testimony
10 from Slaine, Santarlas, Plate, Cardillo, and a Ropes & Gray
11 partner. It also included recordings of Slaine’s
12 conversations with Goffer, Kimelman, Drimal, and Emanuel;
13 wiretap recordings of Goffer’s conversations with Kimelman,
14 Drimal, Emanuel, and others; instant messages and e-mails
15 sent between the co-conspirators; telephone records; and
16 trading records.
17 Defendants were convicted on all counts. The district
18 court sentenced Drimal (who pled guilty) to 66 months’
19 imprisonment, Goffer to 120 months’ imprisonment, and
20 Kimelman to 30 months’ imprisonment. The district court
21 also entered forfeiture orders of $11 million, $10,022,931,
22 and $289,079 against Drimal, Goffer, and Kimelman,
23 respectively.
12
1 Discussion
2 Defendants challenge (1) the admission of wiretap
3 evidence in support of their securities-fraud convictions;
4 (2) the sufficiency of the evidence to support Kimelman’s
5 conviction on the substantive counts of insider trading; (3)
6 the district court’s jury instructions on conscious
7 avoidance;6 (4) the district court’s exclusion of evidence
8 that Kimelman rejected a plea bargain; and (5) the sentences
9 they were issued. Other arguments raised by Defendants are
10 addressed in a related summary order. Goffer, 2013 WL --.
11 I. Lawfully-Obtained Wiretap Evidence Is Admissible in a
12 Securities Fraud Prosecution
13
14 Defendants contend that the district court erred in
15 permitting the Government to introduce evidence obtained
16 through wiretaps because securities fraud is not a predicate
17 offense under Title III of the Omnibus Crime Control and
18 Safe Streets Act of 1968, 18 U.S.C. § 2510 et seq. (“Title
19 III”), and because the evidence was not intercepted
20 incidentally to an otherwise lawful wiretap. See 18 U.S.C.
21 §§ 2516(1), 2517(5). Concurring with the analysis of a
6
“The Supreme Court appears to now prefer the appellation
‘willful blindness.’” United States v. Ferguson, 676 F.3d 260,
278 n.16 (2d Cir. 2011). However, “[b]ecause the parties used
the term ‘conscious avoidance’ below, we continue to use that
term for purposes of this case.” United States v. Coplan, 703
F.3d 46, 89 n.39 (2d Cir. 2012).
13
1 recent and related case in the Southern District of New
2 York, we hold that the evidence was lawfully obtained and
3 therefore properly admitted. See United States v.
4 Rajaratnam, No. 09-cr-1184(RJH), 2010 WL 4867402, at *1-6
5 (S.D.N.Y. Nov. 24, 2010), aff’d, No. 11-4416-cr, -- F.3d –-,
6 2013 WL 3155848 (2d Cir. June 24, 2013).
7 Defendants assert two flaws with the wiretap evidence
8 that the Government adduced at trial.7 First, they allege
9 that the wiretap evidence should be excluded because
10 securities fraud is not a predicate offense under Title III.
11 Second, they allege that the intercepts are not admissible
12 in a securities fraud prosecution unless interception of
13 information relating to securities fraud is inadvertent.
14 Neither argument is persuasive.
15 Title III contains an exclusionary rule prohibiting the
16 use at trial of “unlawfully intercepted” communications. 18
7
Drimal also contends that the wiretap intercepts were
predicated on “dishonest manipulation by the government” and (we
presume) that they should therefore have been excluded. “A
defendant who pleads guilty unconditionally . . . waives all
challenges to prosecution except those going to the court’s
jurisdiction.” United States v. Lasaga, 328 F.3d 61, 63 (2d Cir.
2003). Drimal, who entered an unconditional guilty plea, waived
this meritless argument. Moreover, the wiretap applications
specify the nature of Goffer’s scheme and explicitly note that
securities fraud (a) will be uncovered and (b) is not a predicate
offense for Title III.
14
1 U.S.C. §§ 2518(10)(a)(i), 2515. To benefit from the
2 exclusionary rule, Defendants have to establish that the
3 wiretaps were illegal.
4 Section 2517(5) of Title III governs the use of
5 evidence obtained on a wiretap “relating to offenses other
6 than those specified in the order of authorization or
7 approval.” 18 U.S.C. § 2517(5). “[T]he purpose of
8 § 2517(5) . . . is to prevent ‘subterfuge searches,’ in
9 which the government uses a warrant authorizing seizure of
10 one type of evidence as a license to collect evidence of an
11 offense not covered by the authorization.” United States v.
12 Smith, 726 F.2d 852, 865 (1st Cir. 1984). “‘[O]ther’
13 offenses under Section 2517(5) may include offenses, federal
14 as well as state, not listed in Section 2516 so long as
15 there is no indication of bad faith or subterfuge by the
16 federal officials. . . .” In re Grand Jury Subpoena Served
17 on Doe, 889 F.2d 384, 387 (2d Cir. 1989).
18 When an authorized wiretap intercepts “communications
19 relating to offenses other than those specified in the order
20 of authorization,” 18 U.S.C. § 2517(5), “disclosure or use”
21 of those communications is permissible provided “a
22 subsequent application . . . made to a judge of competent
15
1 jurisdiction [demonstrates] the good faith of the original
2 application.” United States v. Marion, 535 F.2d 697, 700
3 (2d Cir. 1976). “Such subsequent application would include
4 a showing that the original order was lawfully obtained,
5 that it was sought in good faith and not as a subterfuge
6 search, and that the communication was in fact incidentally
7 intercepted during the course of a lawfully executed order.”
8 Id. (quoting S. Rep. No. 90-1097, at 2189 (1968)). We
9 perceive no reason why the principle undergirding this rule
10 - that disclosure or use of communications intercepted
11 incidentally to an otherwise lawful, good faith wiretap
12 application does not violate Title III - should not apply
13 when the Government forthrightly discloses the probability
14 of intercepting “communications relating to other offenses”
15 ex ante, at the time it makes its initial wiretap
16 application. “Congress did not intend that a suspect be
17 insulated from evidence of one of his illegal activities
18 gathered during the course of a bona fide investigation of
19 another of his illegal activities merely because law
20 enforcement agents are aware of his diversified criminal
21 portfolio.” United States v. McKinnon, 721 F.2d 19, 23 (1st
22 Cir. 1983).
16
1 In this case, Government investigators indicated in the
2 wiretap applications that, in addition to wire fraud, they
3 expected to uncover evidence of securities fraud (which,
4 they expressly noted, is “not a predicate offense under 18
5 U.S.C. § 2516”). This representation ensured that the
6 wiretaps were not obtained as a “subterfuge” or to
7 surreptitiously investigate crimes other than those about
8 which they informed the court.8
9 “[W]hen the government investigates insider trading for
10 the bona fide purpose of prosecuting wire fraud, it can
11 thereby collect evidence of securities fraud, despite the
12 fact that securities fraud is not itself a Title III
13 predicate offense.” Rajaratnam, 2010 WL 4867402, at *6.
14 The ten judges reviewing wiretap applications in this case
15 found that the Government proved that it had a good-faith
16 investigation of wire fraud and/or money laundering. The
17 fact that the Government also informed the approving courts
18 that Defendants were involved in a conspiracy to commit
19 securities fraud did not immunize Defendants from otherwise
8
Kimelman argues that not every case of insider trading will
involve wire fraud. We do not reach the question of whether insider
trading not involving wire fraud might permit a court to approve a
wiretap; we instead focus on the case at hand in which Defendants’
conduct constituted both.
17
1 lawful interception of communications related to their wire
2 fraud. The wiretap evidence was lawfully obtained and
3 properly admitted.
4 II. The Jury Had Sufficient Evidence to Convict Kimelman of
5 Securities Fraud
6
7 Kimelman challenges the sufficiency of the evidence
8 supporting his substantive securities fraud conviction for
9 his purchase of 15,000 shares of 3Com stock on August 10,
10 2007 and 5,000 shares of 3Com stock on September 25, 2007.
11 Specifically, he contends that the Government did not prove
12 that Goffer had tipped him about 3Com or that he knew or
13 consciously avoided knowing that Goffer had material
14 nonpublic information about 3Com that was disclosed in
15 violation of a fiduciary duty.9 More specifically, he
16 argues that the Government’s main evidence, an unrecorded
17 phone call he had with Goffer on August 7 and an email he
18 wrote to Goffer on August 15, does not indicate that he
19 received a tip from Goffer or knew that any such tip was
20 based on illegally-disclosed information. He also insists
21 that a discussion he had with the other co-conspirators on
9
Kimelman does not challenge, and we therefore do not
discuss, any elements of insider trading aside from the knowing
use of material nonpublic information obtained in violation of a
fiduciary duty.
18
1 September 27, on the eve of the deal’s announcement, cannot
2 count as proof of his awareness of the earlier fraud.
3 “[A] liable tippee must know that the tipped
4 information is material and non-public . . . ‘and the tippee
5 knows or should know that there has been a breach’” of
6 fiduciary duty. SEC v. Obus, 693 F.3d 276, 287 (2d Cir.
7 2012) (emphasis retained) (quoting Dirks v. SEC, 463 U.S.
8 646, 660 (1983)). The Government did not need to prove that
9 Kimelman knew the identity or nature of the source if he
10 knew that the information was illegally obtained. Id. In
11 denying Kimelman’s Rule 29 motion, the district court
12 described this as “a verdict that could go either way” and
13 “certainly a close case,” but decided that the “jury’s
14 verdict [was not] unreasonable such that it should be
15 overturned.” Reviewing de novo and “crediting ‘every
16 inference that the jury may have drawn’ in the government’s
17 favor,” we agree. United States v. Hassan, 578 F.3d 108,
18 122 (2d Cir. 2008) (quoting United States v. Finley, 245
19 F.3d 199, 202 (2d Cir. 2001)).
20 A court examines each piece of evidence and considers
21 its probative value before determining whether it is
22 unreasonable to find “the evidence in its totality, not in
19
1 isolation,” sufficient to support guilt beyond a reasonable
2 doubt. United States v. Autuori, 212 F.3d 105, 114 (2d Cir.
3 2000). This requirement is particularly critical where, as
4 here, some evidence derives its probative force from other
5 evidence. “‘[T]he jury’s verdict may be based entirely on
6 circumstantial evidence.’” United States v. Santos, 541
7 F.3d 63, 70 (2d Cir. 2008)(quoting United States v.
8 Martinez, 54 F.3d 1040, 1043 (2d Cir. 1995)). Moreover, we
9 need not find that every reasonable jury would have
10 convicted Kimelman; we affirm “if we find that any rational
11 trier of fact could have found the essential elements of the
12 crime beyond a reasonable doubt.” United States v. Stewart,
13 590 F.3d 93, 109 (2d Cir. 2009) (internal quotation marks
14 omitted, emphasis in original).
15 Kimelman argues that we should exclude from our
16 analysis evidence related to activity after the trades at
17 issue. We reject this argument. Kimelman’s knowledge of
18 the illicit nature of Goffer’s source after the trades is
19 still probative (though not in itself sufficient to
20 establish his knowledge before the trades).
21 Evidence indicating a defendant’s knowing participation
22 in a later stock manipulation scheme is relevant to the
20
1 earlier scheme where, for example, it shows that a defendant
2 was “conversant in the language of stock manipulation.”
3 United States v. Rutkoske, 506 F.3d 170, 177 (2d Cir. 2007).
4 This analysis applies equally in the context of insider
5 trading. “Relevancy cannot be reduced to [a] mere
6 chronology; whether the similar act evidence occurred prior
7 or subsequent to the crime in question is not necessarily
8 determinative to its admissibility[ and therefore its
9 probative value].” United States v. Ramirez, 894 F.2d 565,
10 569 (2d Cir. 1990). Subsequent acts are frequently
11 probative as to intent. See, e.g., United States v.
12 Germosen, 139 F.3d 120, 127-28 (2d Cir. 1998). Here,
13 Kimelman’s participation in Goffer’s ongoing scheme led to
14 later transactions that “so closely paralleled the charged
15 conduct that it was probative regardless of the temporal
16 difference.” United States v. Curley, 639 F.3d 50, 61 (2d
17 Cir. 2011).
18 If we focus on the evidence in the record from prior to
19 the public announcement of Bain’s bid for 3Com on September
20 28, 2007, and credit every inference that the jury could
21 have drawn in the Government’s favor, we find ample support
22 for the jury to conclude that Kimelman was tipped by Goffer
21
1 and knew or consciously avoided knowing that Goffer’s tip
2 about 3Com was based on nonpublic information illegally
3 disclosed in breach of a fiduciary duty.
4 The Kimelman-Goffer telephone call of August 7, though
5 unrecorded, marked a change in Kimelman’s 3Com stock trading
6 behavior. Prior to August 7, Kimelman day-traded 3Com stock
7 in smaller quantities of 1,000, 2,000 and 5,000 shares,
8 including on August 5, just two days before the call.
9 Kimelman did not maintain those positions but sold them
10 before the end of each trading day. On August 8, the day
11 after the evening phone call, however, Kimelman bought
12 94,200 shares of 3Com, easily his largest single-day
13 purchase, which he did not sell. In the subsequent days and
14 weeks, he continued to add to that position - buying another
15 24,000 shares on August 9 and 15,000 more shares on August
16 10. He maintained the accumulated position until after the
17 3Com merger bid was announced; when the share price shot up,
18 he sold the position and profited.
19 Kimelman was so aggressive in acquiring 3Com that his
20 employer at Quad restrained him from making further
21 purchases of 3Com stock. Despite the warning from Quad,
22 Kimelman managed to buy 5,000 more shares of 3Com on
22
1 September 25. From August 7 to 8, Kimelman's behavior
2 changed from being very cautious about 3Com to suddenly
3 becoming very confident. Such a sudden change in a
4 defendant’s stock trading pattern, which cannot be readily
5 explained by other reasons, could be probative of trading on
6 insider information. See United States v. Smith, 155 F.3d
7 1051, 1069 (9th Cir. 1998)(recognizing “situations in which
8 unique trading patterns or unusually large trading
9 quantities suggest that an investor had used inside
10 information”).
11 His e-mail to Goffer on August 15, with news of Quad’s
12 restraint indicates at the very least, that the two were
13 actively discussing the trading in 3Com shares. Kimelman’s
14 new 3Com trading behavior matched that of Goffer and of the
15 other co-conspirators who were tipped by Goffer on August 7.
16 And like the others, Kimelman cashed out of his 3Com
17 positions shortly after Bain’s bid was announced. Parallel
18 trading patterns among co-conspirators can be another
19 indicator of insider trading. See, e.g., SEC v. Warde, 151
20 F.3d 42, 47-48 (2d Cir. 1998). In this case, the manner in
21 which Kimelman sold the stock is at least suggestive of the
22 motive he had for buying it, which was not for long term
23 investment value, but in anticipation of a particular event.
23
1 Also revealing is the discussion Kimelman had with
2 Goffer on the eve of the 3Com deal’s announcement on
3 September 27. Goffer asked about the significance of
4 signature pages in a pending transaction, and Kimelman
5 explained that the preparation of the signature pages meant
6 that a deal signing was imminent. As a former associate at
7 a leading corporate law firm, Kimelman had to know that
8 Goffer, in asking such a question, was privy to the inner
9 workings of a pending transaction to be aware of the status
10 of signature pages. Since Goffer had no legal basis to have
11 access to such information, Kimelman must therefore have
12 known or was aware of a high probability that this insider
13 information was made available to Goffer in breach of a
14 fiduciary duty. Indeed, it was from this exchange that
15 Plate, who testified about the conversation, became
16 convinced that Goffer’s tip was illegally obtained.
17 Kimelman also argues that much of the Government’s
18 evidence applied equally convincingly to Plate, who claimed
19 at trial that he did not know of Goffer’s inside source
20 until the “signature pages” conversation. However, a
21 rational juror could readily infer from the trust that
22 Goffer showed in Kimelman by asking him about the signature
23 pages and the matter-of-fact manner in which Kimelman
24
1 answered - without astonishment as to Goffer’s knowledge or
2 expression of concern about the sensitivity of such
3 information - that Kimelman shared a relationship of trust
4 with Goffer that Plate did not. This, in turn, would
5 support an inference that Kimelman had some degree of prior
6 awareness of Goffer’s illegal source of information, even if
7 the jury also concluded that Plate had no such awareness.
8 Moreover, the jury was free not to credit Plate’s
9 self-serving testimony that he did not know about the source
10 of the inside information. “[W]e defer to a jury’s
11 assessments with respect to credibility [as long as they
12 are] ‘reasonably based on evidence presented at trial.’”
13 United States v. Torres, 604 F.3d 58, 67 (2d Cir. 2010)
14 (quoting United States v. Ceballos, 340 F.3d 115, 125 (2d
15 Cir. 2003)).
16 After September 2007, evidence of his knowledge of the
17 fraud becomes overwhelming and Kimelman does not deny the
18 sufficiency of the showing in support of his conspiracy
19 conviction. Goffer later described Kimelman and Emanuel as
20 members of his “inner circle” or “tight circle.” A rational
21 juror could find that this circle came together well before
22 those statements were made and prior to the beginning of the
23 3Com trades. The government produced evidence from July
25
1 2007 showing that the trio bought and profited from shares
2 of Hilton Hotels shortly after Goffer received an insider
3 tip. Goffer and Emanuel, along with co-conspirators outside
4 the “inner circle,” bought shares of 3Com on August 7.
5 Kimelman’s habit of feigning indifference to the source of
6 Goffer’s information in the presence of co-conspirators not
7 within the “inner circle” also continued in the subsequent
8 months.
9 Viewed in its totality, the Government’s proof provides
10 enough evidence for a reasonable jury to conclude that
11 Kimelman was guilty beyond a reasonable doubt of insider
12 trading in 3Com. The jury’s verdict is supported by
13 sufficient evidence and is not unreasonable; we affirm
14 Kimelman’s conviction.
15 III. The Conscious Avoidance Jury Instructions Were Proper
16 Over Kimelman’s objections,10 the district court
17 instructed the jury on the theory of “conscious avoidance,”
10
The Government urges plain error review, maintaining that
Kimelman did not specifically object to the conscious avoidance
instruction as to each charge or request that the district court
limit the instructions to the conspiracy charge. However,
Defendants went to lengths to ensure that their objections to all
conscious avoidance instructions were preserved, and the district
court acknowledged that “[e]verybody’s preserving their
objections [to the conscious avoidance instructions].” We
therefore engage in de novo review. United States v. Kozeny, 667
F.3d 122, 130 (2d Cir. 2011).
26
1 which permits a jury to convict a defendant for
2 “deliberately clos[ing] his eyes to what would otherwise
3 have been obvious to him.” United States v. Gansman, 657
4 F.3d 85, 94 (2d Cir. 2011). Kimelman appeals the issuance
5 and the substance of jury instructions on conscious
6 avoidance as to the illicit origins of Goffer’s tips.
7 Finding no flaw in either, we affirm.
8 A. There Was a Factual Predicate for the Instruction
9 “A conscious avoidance instruction ‘may only be given
10 if (1) the defendant asserts the lack of some specific
11 aspect of knowledge required for conviction [] and (2) the
12 appropriate factual predicate for the charge exists, i.e.
13 the evidence is such that a rational juror may reach the
14 conclusion beyond a reasonable doubt that the defendant was
15 aware of a high probability of the fact in dispute and
16 consciously avoided confirming that fact.’” United States
17 v. Svoboda, 347 F.3d 471, 480 (2d Cir. 2003) (quoting United
18 States v. Ferrarini, 219 F.3d 145, 154 (2d Cir. 2000))
19 (internal alterations and some quotation marks omitted). In
20 this case, the first prong is met; Kimelman claimed
21 ignorance at trial as to the source of the 3Com tip.
22 However, Kimelman contends that there was insufficient
23 evidence (1) for a juror to conclude that he was aware of a
27
1 high probability that the 3Com tip came from an insider and
2 chose to avoid confirming that fact, and (2) for a juror to
3 conclude that he ever knew about the illicit nature of
4 Goffer’s information. We disagree.
5 For substantially the same reasons discussed above,
6 there was ample evidence supporting the inference that if
7 Kimelman did not know about those facts, that he had to have
8 consciously avoided becoming aware of them. First, given
9 the 25-minute telephone conversation he had with Goffer on
10 the evening of August 7, the abrupt and pronounced change in
11 his trading pattern of 3Com stock immediately thereafter,
12 his subsequent outreach to Goffer about 3Com trading on
13 August 15, and the fact that Goffer had shared the tip with
14 other co-conspirators whom Kimelman knew, a rational juror
15 was entitled to conclude that Kimelman was aware of a high
16 probability that Goffer had insider information about 3Com.
17 Second, the fact that Goffer asked about signature pages on
18 the eve of the 3Com deal announcement and the routine manner
19 in which Kimelman answered the question, again provides the
20 basis for a juror to conclude that he was aware of a high
21 probability that the source of Goffer's information was
22 illegal.
28
1 With respect to Kimelman’s conscious avoidance of
2 knowledge of Goffer’s sources throughout the conspiracy,
3 Kimelman’s challenge lacks any merit. While he and Kimelman
4 were recruiting Slaine for Incremental, Goffer told Slaine
5 that he was “better off not knowing where [his tips] were
6 coming from.” Gov’t Ex. 222. That way, Goffer continued,
7 if “someone from the government ever ask[ed] you where did
8 [that tip] come from. You [would] be like, I don’t freakin’
9 know where it came from.” Building on Goffer’s (facetious)
10 assertion that his source was a construction worker,
11 Kimelman added that it was a “[g]uy fixing that pothole down
12 there.” His additions to this conversation about the need
13 for plausible deniability underscore Kimelman’s conscious
14 avoidance of knowledge as to Goffer’s source. The jury was
15 entitled to hear the conscious avoidance instruction.
16 Kimelman’s argument that the Government’s evidence
17 sought to prove actual knowledge rather than conscious
18 avoidance is both unsupported and irrelevant. “Red flags
19 about the legitimacy of a transaction can be used to show
20 both actual knowledge and conscious avoidance.” United
21 States v. Ferguson, 676 F.3d 260, 278 (2d Cir. 2011) (citing
22 United States v. Nektalov, 461 F.3d 309, 316-17 (2d Cir.
23 2006)).
29
1 B. The Content of the Instructions Was Proper
2 Kimelman alleges that the district court erred in
3 declining to amend its jury instructions to accord with the
4 Supreme Court’s ruling in Global-Tech Appliances, Inc. v.
5 SEB S.A., -- U.S. --, 131 S. Ct. 2060 (2011). Specifically,
6 Kimelman contends that the Global-Tech decision required
7 that jury charges indicate that “the mental state of
8 recklessness is insufficient for a finding of conscious
9 avoidance.” Because Global-Tech did not alter the conscious
10 avoidance standard, we hold that the district court’s
11 refusal to amend the jury instructions to accord with
12 Global-Tech was not error.
13 In Global-Tech, the Supreme Court synthesized conscious
14 avoidance holdings from eleven circuit courts in order to
15 import the doctrine from criminal law to patent law. 131 S.
16 Ct. at 2070 n.9 and 2068-72. The Court did not alter or
17 clarify the doctrine, but instead identified the common
18 ground among the Courts of Appeals:
19 [A]ll [Courts of Appeals] appear to agree on two
20 basic requirements: (1) the defendant must
21 subjectively believe that there is a high probability
22 that a fact exists and (2) the defendant must take
23 deliberate actions to avoid learning of that fact.
24 We think these requirements give willful blindness an
25 appropriately limited scope that surpasses
26 recklessness and negligence.
27
28 Id. at 2070 (emphasis added).
30
1 Kimelman urges us to believe that this language, built
2 upon, inter alia, Second Circuit precedent in Svoboda, 347
3 F.3d at 477-78, was designed to alter the substantive law.
4 Global-Tech simply describes existing case law. In so
5 holding, we follow other decisions in this Circuit since
6 Global-Tech that have applied the traditional conscious
7 avoidance doctrine. See, e.g., United States v. Coplan, 703
8 F.3d 46, 90 (2d Cir. 2012); Ferguson, 676 F.3d at 278-79.
9 The district court’s instructions in this case properly
10 imposed the two requirements discussed by the Global-Tech
11 decision.11 Kimelman requested that the district court
11
The district court instructed that:
[A] defendant’s knowledge may be established by proof
that the defendant you are considering deliberately
closed his eyes to what otherwise would have been obvious
to him. If you find beyond a reasonable doubt that the
defendant’s ignorance was solely and entirely the result
of a conscious purpose to avoid learning the truth, then
this element may be satisfied. However, guilty knowledge
may not be established by demonstrating that the
defendant was merely negligent, foolish or mistaken.
If, for example, you find beyond a reasonable doubt
that the defendant you are considering was aware that
there was a high probability that he obtained information
that had been disclosed in violation of a duty of trust
and confidential [sic] but deliberately and consciously
avoided confirming this fact, then you may find that the
defendant acted knowingly. However, if you find that the
defendant actually believed that the information he
obtained was not disclosed in violation of a duty of
trust and confidence, he may not be convicted. It is
entirely up to you whether you find that the defendant
you are considering deliberately closed his eyes and any
inferences to be drawn from the evidence on this issue.
Tr. 2019-20 (emphasis added).
31
1 insert the word “reckless” into a list of mental states that
2 were insufficient. However, Global-Tech makes clear that
3 instructions (such as those in this case) that require a
4 defendant to take “deliberate actions to avoid confirming a
5 high probability of wrongdoing” are inherently inconsistent
6 with “a reckless defendant . . . who merely knows of a
7 substantial and unjustified risk of such wrongdoing.” 131
8 S. Ct. at 2070-71. The district court’s instructions were
9 consistent with Global-Tech; we therefore affirm Kimelman’s
10 conviction.
11 IV. Evidence of Kimelman’s Rejection of a Plea Bargain Was
12 Properly Excluded
13
14 Kimelman contends that the district court erred in
15 excluding his rejection of a plea bargain. “The trial
16 court’s . . . assessment that the probative value of
17 relevant evidence is [] substantially outweighed by the
18 danger of unfair prejudice [is] reviewed only for an abuse
19 of discretion.” United States v. Khalil, 214 F.3d 111, 122
20 (2d Cir. 2000) (internal quotation marks omitted). Kimelman
21 argues by analogy to United States v. Biaggi, 909 F.2d 662,
22 690-93 (2d Cir. 1990), in which we held that the defendant’s
23 decision to forgo immunity out of an insistence that he was
24 innocent was probative of his “consciousness of innocence.”
25 Id. at 690.
32
1 The defendant in Biaggi was offered complete immunity.
2 Id. Relying on the difference between this and “an offer to
3 plead guilty to reduced charges,” we held that a defendant’s
4 decision to reject an offer of immunity was probative. Id.5 at 690-91. We did “not decide whether a defendant is
6 entitled to have admitted a rejected plea bargain.” Id. at
7 691.
8 This case differs from Biaggi because the excluded
9 evidence here lacked any probative value. Kimelman has
10 detailed the “devastating collateral consequences” flowing
11 from the entry of a criminal conviction against him.12
12 Although the parties disagree as to the terms of the
13 rejected plea offer, both parties concede that it would have
14 entailed a conviction. This was not a case where the
12
Kimelman wrote that:
The effects of [his] arrest, trial and conviction have
been devastating to him, personally, emotionally,
professionally and financially. [He] will never again
work in the securities industry, and will be stripped of
his trading licenses. He will no longer hold his
credential as a Chartered Financial Analyst. In
addition, [he] will no longer be entitled to the
privilege of practicing law. Upon the conclusion of his
sentence, [he] will be left with the daunting task of
finding a career without the ability to return to any of
the professions he has known for the past fourteen years.
His finances are in shambles . . . with several hundred
thousand dollars of debt outstanding. And he has
suffered the personal embarrassment and shame that
accompanies a high profile arrest, trial and conviction.
Kimelman Sentencing Memorandum at 14.
33
1 defendant was permitted to walk away scot free and declined
2 to do so out of a strong belief of his innocence. Rejecting
3 this offer was, in this case, an indication “that the
4 defendant prefer[red] to take his chances on an acquittal by
5 the jury, rather than accept the certainty of punishment
6 after a guilty plea.” Id.7 The district court briefly discussed the prejudicial
8 effects of admitting this evidence, including the likelihood
9 of jury confusion. Admission would require the “collateral
10 consequences” of a conviction to be discussed at length,
11 requiring an already complex trial to gain additional and
12 unnecessary dimensions. We find that the trial court was
13 within its “latitude” in excluding Kimelman’s rejection of a
14 plea agreement under Federal Rule of Evidence 403. See
15 Holmes v. South Carolina, 547 U.S. 319, 324-25 (2006).
16 V. Defendants’ Sentences Were Reasonable
17 Goffer and Drimal challenge the substantive and
18 procedural reasonableness of their sentences. The role of
19 appellate courts in sentencing is important but limited.
20 “We review the work of district courts under a ‘deferential
21 abuse-of-discretion standard.’” United States v. Cavera,
22 550 F.3d 180, 189 (2d Cir. 2008) (en banc) (quoting Gall v.
23 United States, 552 U.S. 38, 41 (2007)).
34
1 A. Defendants’ Sentences Were Procedurally Reasonable
2 Defendants contend that the district court committed
3 procedural error in sentencing them. In reviewing
4 sentencing for procedural errors, we first look for “error
5 in the district court’s calculation of the [United States
6 Sentencing] Guidelines range.” Id. at 194. Here, Drimal
7 argues that the district court erred in its loss
8 calculations and Goffer contends that the district court
9 failed to consider disparities between co-defendants.
10 1. The Loss Calculation Was Proper
11 In calculating the “loss” attributable to Drimal’s
12 trading, the district court took account of the Probation
13 Office’s Presentence Investigation Report as well as
14 submissions from the parties. The district court accepted
15 the Government’s assertion that Drimal realized gains of
16 between $7 and $20 million, resulting in a Guidelines
17 enhancement of 20 points. See U.S.S.G. §§ 2B1.4(b)(1),
18 2B1.1(b)(1)(K). Drimal asserted that his gains were between
19 $2.5 and $7 million, for an enhancement of 18 points.
20 U.S.S.G. § 2B1.1(b)(1)(J). Drimal alleges two errors in the
21 calculation of the loss amount.
22
35
1 First, Drimal contends that the district court
2 committed procedural error by failing “to deduct losses
3 resulting from trades that emanated from the same” insider
4 sources as provided the tips that gave him $11 million in
5 profits. We interpret this argument as relating to the
6 Clear Channel trades Drimal made based on the attorneys’
7 misunderstanding of inside information. We find no
8 precedent indicating that additional illegal trades made on
9 material nonpublic information that result in losses should
10 mitigate the sentences of insider traders. Cf. U.S.S.G. §
11 2B1.1 n.3. If two defendants are identical save that
12 Defendant A engaged in one more insider trade than Defendant
13 B, there is no case in which Defendant A deserves a lesser
14 punishment than Defendant B. That Defendant A’s additional
15 criminal activity backfired does not affect that calculus.
16 The district court did not err in excluding these losses
17 from its calculation.
18 Drimal also contends the district court erred in
19 considering the Hilton trades for the calculation of the
20 loss amount. This contention relies on Drimal’s assertion
21 that he did not know that the Hilton trades were based on
22 inside information until two months later (when he was
36
1 recorded making statements that clearly demonstrate his
2 awareness that his profits from the Hilton trade were
3 illegally-obtained profits of insider trading). Reviewing
4 the district court’s fact-finding at sentencing, we find no
5 error in the court’s extensive and well-reasoned analysis.
6 2. The District Court Considered Disparities
7 Between Defendants
8
9 Goffer asserts that the district court did not account
10 for sentencing disparities between similarly-situated
11 defendants. This argument contains both a procedural and
12 substantive challenge. To the extent that Goffer asserts
13 that the district court did not consider the sentences of
14 similarly-situated defendants, his claim lacks merit.13 The
15 district court weighed “the need to avoid unwarranted
16 sentencing disparity between Mr. Goffer and similarly
17 situated defendants.” The district court distinguished
18 between Goffer and his co-defendants and also described
19 Goffer’s role as a “leader[] of a fraudulent enterprise” who
20 “recruited people” and poisoned other traders. Sentencing
21 Tr. 228. The district court demonstrated that it weighed
13
To the extent that it is an assertion that Goffer, as a
white collar defendant, should benefit from the leniency of other
courts towards other white collar defendants, we address this
argument as part of the substantive reasonableness inquiry.
37
1 the need for similar sentences among similarly-situated
2 defendants; however, the court rejected Goffer’s contentions
3 as to who was situated similarly.
4 B. Defendants’ Sentences Were Substantively Reasonable
5 Goffer and Drimal challenge their sentences as
6 substantively unreasonable, contending that their (120-month
7 and 66-month, respectively) sentences are disproportionate
8 to sentences meted out to other white collar criminals.14
9 Believing that the district court’s well-reasoned analysis
10 was appropriate, we affirm.
11 In reviewing a sentence for substantive reasonableness,
12 we do “not substitute our own judgment for the district
13 court’s on the question of what is sufficient to meet the
14 [18 U.S.C.] § 3553(a) considerations in any particular
15 case.” Cavera, 550 F.3d at 189 (citing United States v.
16 Fernandez, 443 F.3d 19, 27 (2d Cir. 2006)). “We will
17 instead set aside a district court’s substantive
18 determination only in exceptional cases where the trial
19 court’s decision ‘cannot be located within the range of
14
Although defendants’ challenges to their sentences also
sound of Eighth Amendment jurisprudence, so construed they are
devoid of merit. See United States v. DiTommaso, 817 F.2d 201,
217 (2d Cir. 1987). We therefore assume the challenges focus on
the substantive reasonableness of the sentences.
38
1 permissible decisions.’” Id. (quoting United States v.
2 Rigas, 490 F.3d 208, 238 (2d Cir. 2007)).
3 “[A] district court may vary from the Guidelines range
4 based solely on a policy disagreement with the Guidelines,
5 even where that disagreement applies to a wide class of
6 offenders or offenses.” Id. at 191 (citing Kimbrough v.
7 United States, 552 U.S. 85, 107-08 (2007)). Defendants in
8 this case assert that several district court judges have
9 chosen to exercise this ability to issue below-Guidelines
10 sentences to white collar criminals. Goffer and Drimal
11 raise broad questions as to how harsh federal courts are,
12 and how harsh they should be, in sentencing white collar
13 defendants. We need not answer either question.
14 Assuming arguendo that some judges have chosen as a
15 policy matter not to sentence white collar criminals to the
16 harshest permissible punishments, this does not entitle
17 other white collar criminals to lighter punishments than are
18 reasonable under the Guidelines, 18 U.S.C. § 3553(a), and
19 the totality of the circumstances of their individual case.
20 See, e.g., United States v. Rigas, 583 F.3d 108, 121-24 (2d
21 Cir. 2009); United States v. Bonilla, 618 F.3d 102, 110 (2d
22 Cir. 2010).
39
1 1. Goffer’s Sentence Was Substantively Reasonable
2 Goffer faced a maximum of 20 years’ imprisonment for
3 each of 12 counts of securities fraud. Goffer had an
4 offense level of 32 and a criminal history category of I,
5 yielding a Guidelines range of 121 to 151 months’
6 imprisonment. The Probation Office recommended that he be
7 sentenced to 121 months’ imprisonment.
8 In reaching its determination, the district court
9 considered “Goffer’s entire life from the circumstances of
10 his birth, his upbringing, educational background and
11 opportunities, work history, family relationships . . .
12 [and] the facts and circumstances of these crimes.”
13 Sentencing Tr. 12. The court also considered “[t]he need to
14 avoid unwarranted sentencing disparity between Mr. Goffer
15 and similarly situated defendants.” Id. at 13.
16 The totality of the circumstances in this case included
17 reasons to believe that Goffer had played a positive role in
18 the lives of his family and friends, but also that Goffer
19 orchestrated and ran a large-scale cash-for-tips scheme to
20 fuel an insider trading conspiracy. Goffer took steps to
21 disguise his wrongdoings by distributing disposable cell
22 phones, using fake research to cover his illegal trades, and
23 refusing to speak about sensitive topics on the telephone.
40
1 Goffer’s corrosive influence on the integrity of the
2 financial markets and on the expectation of trust and
3 confidence between attorney and client required a
4 significant punishment. We do not find that his below-
5 Guidelines sentence of 120 months’ imprisonment was
6 unreasonable or disproportionate to the severity of his
7 crimes.
8 2. Drimal’s Sentence Was Substantively Reasonable
9 Drimal contends that his sentence of 66 months’
10 imprisonment was substantively unreasonable in light of his
11 community service and his commitment to his family. Drimal
12 faced a maximum of 20 years’ imprisonment on five counts of
13 securities fraud. His offense level of 25 and Criminal
14 History Category of I led to a Guidelines range of 57 to 71
15 months’ imprisonment. The Probation Office recommended a
16 57-month sentence.
17 Drimal, who traded more heavily based on insider
18 information than any other defendant in the conspiracy,
19 asserts that his community service and commitment to his
20 family should mitigate his wrongdoing. The district court
21 took note of his positive activities in sentencing Drimal.
22 The district court also noted that Drimal, who “earned”
23 approximately $11,497,888 from trading on insider
41
1 information, did not have the same compelling social
2 disadvantages that frequently lead to and help explain
3 criminal behavior.15
4 In light of the magnitude of his insider trading, which
5 had major deleterious effects on the market, Drimal was no
6 small-time criminal. The district court noted Drimal’s lack
7 of respect for the law and his deliberate decision, weighing
8 the risks, that insider trading “was a game worth playing.”
9 Sentencing Tr. 48. The district court’s assertion that
10 insider trading requires high sentences to alter that
11 calculus is a Congressionally-approved example of giving
12 meaning to the 18 U.S.C. § 3553(a) factors. The district
13 court’s well-reasoned sentencing took account of the
14 totality of circumstances, including Drimal’s motivations,
15 his positive role in his family and the community, his
16 knowledge that what he was doing was wrong, and the severity
17 of his crimes. We affirm.
18
19
15
Contrary to Drimal’s assertions on appeal, the district
court did not reveal a vendetta against the rich when it noted
that Drimal did not have compelling reasons to warp the financial
markets. Instead, Judge Sullivan recognized the same moral
principles that make Jean Valjean more sympathetic than Gordon
Gekko.
42
1 Conclusion
2 For the foregoing reasons, the judgments of conviction
3 and the sentencing orders of the district court are AFFIRMED.
4 Defendants’ additional arguments are addressed in the
5 corresponding summary order. See Goffer, 2013 WL --.
43