United States v. Swartz ( 2018 )

17-2297-cr
United States v. Swartz
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 18th day of December, two thousand eighteen.
PRESENT:
ROBERT A. KATZMANN,
Chief Judge,
GUIDO CALABRESI,
RAYMOND J. LOHIER, JR.,
Circuit Judges.
UNITED STATES OF AMERICA,
Appellee,
v. No. 17-2297-cr
CHRISTOPHER SWARTZ,
Defendant-Appellant.
For Defendant-Appellant: James M. Branden, Law Office of James M.
Branden, New York, NY.
For Appellee: Richard E. Zuckerman, Principal Deputy
Assistant Attorney General, S. Robert Lyons,
Chief, Criminal Appeals & Tax Enforcement
Policy Section, Stan Okula, Gregory Victor
Davis, Katie Bagley, Attorneys, Tax Division,
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Department of Justice, Washington, DC;
Grant C. Jaquith, United States Attorney for
the Northern District of New York, Syracuse,
NY.
Appeal from a judgment of the United States District Court for the Northern District of
New York (Hurd, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED.
Christopher Swartz appeals from a judgment of conviction entered July 19, 2017 for one
count of wire fraud in violation of 18 U.S.C. § 1343 and one count of tax evasion in violation of
26 U.S.C. § 7201. We assume the parties’ familiarity with the underlying facts, the procedural
history of the case, and the issues on appeal.
I. Evidentiary Hearing
In a counseled brief, Swartz argues that the district court erred in not holding an
evidentiary hearing prior to imposing sentence. But the record is clear that the district court
specifically asked Swartz whether he sought an evidentiary hearing prior to sentencing and
Swartz, through counsel, informed the court that such a hearing was “unnecessary.” Supp. App’x
1.1 Although only a defendant can waive certain rights such as the right to counsel or the right to
appeal, it is well established that actions involving “strategic and tactical matters” can be waived
by counsel. United States v. Plitman, 194 F.3d 59, 63 (2d Cir. 1999). As the question of whether
to present additional evidence at sentencing involves quintessentially tactical considerations, see,
e.g., United States v. Broxmeyer, 699 F.3d 265, 279 (2d Cir. 2012), Swartz waived any right he
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Specifically, Swartz’s counsel wrote: “Given the voluminous sentencing memoranda
submitted in this matter, we respectfully submit that an evidentiary hearing is unnecessary and
request that the sentencing proceed on July 12, 2017, as originally scheduled.” Supp. App’x 1.
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may have had to an evidentiary hearing, see United States v. Yu-Leung, 51 F.3d 1116, 1122 (2d
Cir. 1995) (explaining that a true waiver negates “even plain error review”).
II. Guidelines Calculation
Swartz also challenges various enhancements—based on the loss amount of his fraud, the
number of his victims, and the amount of his unpaid tax obligations—applied by the district
court in calculating the applicable sentencing range under the U.S. Sentencing Guidelines (the
“Guidelines”).
A. Loss Amount
Swartz received a 20-point offense level increase under the guidelines because the
amount of his victims’ losses was between $9.5 million and $25 million. In applying this
enhancement, the district court adopted the findings of the Probation Office regarding loss
amount. We note as an initial matter that a “district court’s factual findings at sentencing need be
supported only by a preponderance of the evidence, and such findings may be overturned only if
they are clearly erroneous.” United States v. Ryan, 806 F.3d 691, 694 (2d Cir. 2015).2 The loss
calculations here were based on extensive victim impact statements, financial records, grand jury
testimony, and promissory notes signed by Swartz. These documents demonstrate that the
victims’ losses clearly exceeded $9.5 million. Accordingly, even if the district court erred in
calculating over $20 million in victims’ losses, the error was harmless. See United States v.
Corsey, 723 F.3d 366, 375 & n.5 (2d Cir. 2013) (finding that the district court “fulfilled its duty
to calculate the Sentencing Guidelines sufficiently fully to determine the correct recommended
2
Unless otherwise indicated, case quotations omit all internal quotation marks,
alterations, footnotes, and citations.
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period of incarceration” and that therefore any misstep in “arriving at that determination . . . did
not constitute reversible error”).3
B. Number of Victims
Swartz argues that, because his fraud involved “sophisticated lenders” whose transactions
were monitored by attorneys and certified public accountants, and because the loans at issue
were solicited through brokers, he had “no reason to believe that the lenders were vulnerable.”
Appellant’s Supp. Br. at 7-8. But the district court did not enhance Swartz’s sentence under
U.S.S.G. § 3A1.1(b), which requires the district court to find that the defendant “knew or should
have known that a victim of the offense was a vulnerable victim.” Rather, the district court
enhanced Swartz’s sentence under U.S.S.G. § 2B1.1(b)(2), which required the district court to
find that Swartz’s fraud had more than ten victims and that it resulted in substantial financial
hardship to five or more victims. This enhancement did not require the district court to make any
findings regarding vulnerability.
C. Tax Loss
Swartz argues that the loss the district court attributed to his tax evasion scheme was too
high. But even assuming Swartz is right, his tax evasion count did not increase his offense level
and, consequently, did not increase his Guidelines range. See U.S.S.G. § 3D1.4(c) (disregarding
application of lower offense level when it is nine or more levels below top offense).
Accordingly, even if the district court miscalculated the loss attributable to Swartz’s tax evasion
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Swartz also argues that he diverted only $2.8 million for “personal use” and that,
accordingly, $2.8 million is the correct loss amount. But the “Guidelines do not require loss to be
offset by any legitimate expenditures,” they require loss to be offset by only “money or property
returned or services rendered.” United States v. Byors, 586 F.3d 222, 226 (2d Cir. 2009); see
United States v. Turk, 626 F.3d 743, 748 (2d Cir. 2010) (the loss amount is “the principal value
of the loans [the victims] made to [defendant] which were never repaid”).
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scheme, its error was harmless. See Corsey, 723 F.3d at 375 (explaining that sentencing error is
harmless where it has no effect on appellants’ ultimate guidelines range).
III. Reasonableness
Swartz contends that his sentence was both procedurally and substantively unreasonable,
reasserting his arguments regarding loss amount and further arguing that the district court failed
to consider that his “lulling payments” were good faith efforts to repay debts, that he employed
hundreds of people over the course of 20 years, and that defendants convicted of similar conduct
received average sentences of 63 months. We disagree.
Swartz’s argument regarding his partial payments to creditors is without merit because he
pleaded guilty to “lulling” his creditors to discourage them from taking legal action against him.
Similarly, Swartz’s contention that the district court failed to consider that he “employed
hundreds of people” and was a “community leader,” Appellant’s Supp. Br. at 12, is wrong. At
sentencing, the court acknowledged, for example, Swartz’s “lengthy work history,” App’x at
309, and his “good works in the community” id. at 308; see generally id. at 308-10. The record
also belies Swartz’s argument that the district court failed to consider the need to avoid
unwarranted sentence disparities. See id. at 307 (“I have considered . . . the need to avoid
unwarranted sentencing disparities.”). Because the district court properly calculated the
applicable Guidelines range, correctly identified a loss amount of at least $10 million, considered
the § 3553(a) factors, and adequately explained its reasons for a below-guidelines sentence of
150 months, we conclude that its sentence was procedurally and substantively reasonable. See
Gall v. United States, 552 U.S. 38, 51 (2007).
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IV. Relevant Conduct
Swartz next argues that the district court violated his due process rights and his right to be
presumed innocent of conduct for which he was not convicted by considering uncharged conduct
in determining his sentence. But it is well established that a district court’s consideration of
uncharged conduct as the basis for a sentence enhancement does not deny a defendant the
presumption of innocence. See United States v. Martinez, 525 F.3d 211, 215 (2d Cir. 2008)
(rejecting defendant’s argument that district court’s reliance on his use of a firearm in a separate
offense to enhance his sentence “stripped” his presumption of innocence). Moreover, even a
jury’s acquittal “does not prevent the sentencing court from considering conduct underlying the
acquitted charge, so long as that conduct has been proved by a preponderance of the evidence.”
United States v. Watts, 519 U.S. 148, 157 (1997); see also United States v. Vaughn, 430 F. 3d
518, 527 (2d Cir. 2005) (“[D]istrict courts may find facts relevant to sentencing by a
preponderance of the evidence, even where the jury acquitted the defendant of that conduct.”).
Accordingly, the district court’s consideration of uncharged conduct here did not violate
Swartz’s rights.4
V. Judicial Fact Finding
Swartz next argues that the district court, by conducting judicial fact-finding and by
relying on the Probation Office’s presentence investigation report (“PSR”), violated his right to a
fair trial and to due process. Specifically, Swartz contends that court personnel, in preparing the
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Swartz also argues that Nelson v. Colorado, 137 S. Ct. 1249 (2017), overruled the
Supreme Court’s decision in Watts because, according to Swartz, it held that “due process
entitles a defendant who has been acquitted, or whose conviction has been reversed on appeal, to
a presumption of innocence.” Appellant’s Supp. Br. at 14. But Nelson did not address what type
of evidence or conduct may be considered when a court sentences a defendant whose conviction
is otherwise valid, and therefore Nelson is inapplicable here.
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PSR, conducted improper fact-finding beyond the scope of his plea agreement, and that those
facts were not supported by a preponderance of the evidence.
We disagree. District courts are permitted to find facts relevant to sentencing, even those
beyond the scope of the plea agreement, if the facts are supported by a preponderance of the
evidence, the sentence does not exceed the statutory maximum, and the district court treats the
guidelines as advisory. See Vaughn, 430 F.3d at 527; 18 U.S.C. § 3661 (“No limitation shall be
placed on the information concerning the background, character, and conduct of a person
convicted of an offense which a court of the United States may receive and consider for the
purpose of imposing an appropriate sentence.”). Because the relevant findings here were
supported by a preponderance of the evidence, Swartz’s sentence was not based on materially
false information, and the district court afforded Swartz “notice of and an opportunity to respond
to” the facts in the PSR, Swartz’s rights were not violated. See Hili v. Sciarotta, 140 F.3d 210,
215 (2d Cir. 1998).
VI. Ineffective Assistance of Counsel
Finally, Swartz argues that his trial counsel was ineffective for (1) waiving a statute of
limitations defense; (2) failing to argue that the tax liability attributed to him belonged to his
corporations; and (3) failing to adequately prepare for sentencing. The record on these questions,
however, is not fully developed. Additional fact-finding is necessary to ascertain, for example,
how many late documents were submitted before sentencing, the extent of defense counsel’s
review of those materials, and defense counsel’s rationale for declining an adjournment. Swartz
should therefore raise this issue in the district court as part of a subsequent petition for writ of
habeas corpus. See United States v. Morris, 350 F.3d 32, 39 (2d Cir. 2003) (explaining that when
an ineffective assistance of counsel claim is raised on direct appeal, this Court may, inter alia,
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“decline to hear the claim, permitting the appellant to raise the issue as part of a subsequent
petition for writ of habeas corpus”); see also Massaro v. United States, 538 U.S. 500, 505 (2003)
(noting that the district court “is best suited to developing the facts necessary to determining the
adequacy of representation”).
We have considered all of Swartz’s remaining contentions on appeal and have found in
them no basis for vacatur. Accordingly, the judgment of the district court is AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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