all right our third case for this morning is united states against mo important i think it's no secret to the court that moss amounts and fraud cases drive sentencing it is the single most important factor that everything else flows from in determining what the defendant senses what's not talked about as much and part of the reason why it's so important here is that loss amount also dictates restitution and has to pay whatever the district court decides that the loss amount is under the mandatory victimise to sion act that's something the defendant has so that's part of the reason that we're here today because the district court decided the four hundred thousand dollars loss amount in this case not only did that dictate what mr sense was but also dictates what the rest to show us so we understand that it's important mean here's the here's the practical problem with your position he takes two hundred thousand from from people and does something with it he buys the c e p t shares which then go to the company the runs everybody is calling i w t the infinity company then it takes more money the four hundred some thousand dollars a pockets it and your theory is that as long as you pocket it it is always you pocket some of the money that you've stolen and if you do well enough with the rest of the money you haven't injured the people that you stole the money that you pocketed from and that just doesn't really compute for me if we were supposed to look at the game from the two hundred we should look at least the potential gain from the other four hundred and some possibly by market measure not even this company somehow or another and it seems to me the district court was taking actually a fairly conservative approach to say that whatever else this man did he talk four hundred and eighty thousand dollars and some from people and kept it for him self maybe he gave back this of course is contested because timing matters as well maybe get back something these of the two hundred maybe he didn't i'm not even sure about that but but he didn't get back anything of the that the value of the property at that time was approximately six hundred ten thousand dollars if suppose it was zero if it was your own then if that was factually proven yes that would be the answer so the loss amount then would depend upon the vagaries of the investments the values of the investments in markets i wouldn't say it's the i suppose the best way to put it is the adjusted loss amount of purpose of sentencing would and the idea that i'm seeing from the cases your honor and that specifically i'm talking about ny state versus mt here the question is what is the position that the investors are in when the fraud is discovered my position and at this point based on my understanding of the record is that the investors gave mr murray six hundred eighty thousand dollars to let me try to differentiate what stolen property was returned that is the the unit interests and i t which oh and those weren't stolen well that's the property returned i what he took no you weren't stolen that's the problem what he took was the money or in exchange for that money he returned to them the stock interesting to see and that's the question here and i think that he didn't he returned if he returned anything he returned shares and i don't leave we have no notion directly of what those shares were worth at the time other than by making the assumption  that the c p values flowed through somehow into the idea of bt shares and we have to make the assumption that your timing is right and we also have to make the assumption that we get to count the gain from the stock that he did buy that we don't do anything with the other four hundred eighty some that he just lived off of the guidelines tell us to use the higher of the actual intended  loss that is true but why then four hundred eighty thousand the intended last year were actually in a different part of the guidelines and that's i think part of the issue in the district court was clarifying this is we first have to figure out what the actually the actual intended loss is that's the gross loss around application of three then tells us we have to take figure out what the adjusted losses by looking at what the so tracking the from the gross loss  what was given back which gives us the just a loss and that's exactly what this court set him out ok let me let me let me make this works ok let's suppose the plan is not to buy stock but it's to buy options trading options so it's highly leveraged there's exene if we have exposure to loss and the defendant pockets a lot of money  but he and his customers are exposed to additional liability on the options markets i think i'm following your honor are you saying that the loss is worse so let's say you would be a loss instead of being six hundred eighty thousand of these circumstances be two million two and a half million i my understand from the guidelines and that's if that was the actual loss the investor suffered that would matter now that that you then have to consider if the defendant did give back some sort of property which i  ered talking about the options you can the next step is to figure out what the fair market value of that is and if it's this way make it if it's way negative then the answer is the actual loss because the the fair market value or i'm sorry the adjustment would be  that's my understanding of so he steals half a million roughly and the loss is two and a half million i believe if i understand your hypothetical correctly that would be computed the actual last portion calculation not the adjustment under a because you know three and that's part of the reason why this got a little complicated in the district court was we're talking about several different things here we're talking about what first of all what is the actual intended loss  the big problem with this is i just keep having this feeling that we're talking or that some people but talking about apples and oranges because we've got the initial amounts of money that he took from the investors six hundred eighty thousand some he seems to of done what he said he was going to do with two hundred thousand others so whether that's a loss or just record says i'm not going to count that as a loss because you can't do what you said you're going to do the  is down it doesn't matter once you've invested in the market you're assuming some market risk which is why i have a problem with giving him the credit for the upside of the market risk on that two hundred thousand then he takes the rest of it the four hundred eighty and he lives he doesn't do what he said it was going to is it doesn't get converted into shares of stock or doesn't get converted anything but his you know it's cars and vacations or whatever else he's doing with it  purposes here is the net detriment to the victims would you remind me by the way because we have a list of victims it's redacted we've got initials in in the sentencing humans are the very same people the ones who gave the chill hundred it's gave the four eighty that gets a little complicated your honor i've streamlined this in the briefs as best i can there are a lot of transactions going back forth the best answer i can give he is not just you you've talked with him about that we talked about this before you brought it up he caught it in some respects an unbelievable break with this at least a very generous sentence here and it's far from clear to me that another judge would be as understanding in this case but if you want to pursue it so be it with respect to the time of the supervised release  term at the end of the sentencing hearing the judge asked has the court missed anything if i had been representing mr moose a good point i would have said absolutely not i want to get out of here before he changes his mind about the sentence in the defense counsel said no so why should we not treat that as as shutting down this argument about failure to explain two years of supervised release then the objection to the visitation condition misstated what the actual condition was which includes a condition that had to be reasonable times at home and at work so hard to see a reason for objection there  that and the problem is we don't know why the the trial court said no and that's that's the argument how about because the objection misunderstood if that's the correct answer then that's what the truck fortune said your honor and that's that's the basic point is we don't know so if that is the reason that has to be in the record and that's i think what this court has said not just in supervised release context but in other contexts as well that to review it we have to know what the reason was we've also said that district judges don't have to belabor the obvious so in this district court correctly based its last calculation on the amount of the stolen funds so the government respectfully request that the sentence be affirmed that that last calculation be deemed correct now there are all sorts of arguments the government did and i didn't see where you made the argument that the see the stock was never returned well the government's primary argument was based on the four hundred eighty thousand dollars your honor in its sentencing papers it pointed out to the court that two hundred thousand of that had been used to purchase stock but the balance of that which primarily consisted of new investors who didn't pay into that two hundred thousand dollars they never had any right to any interest in i did because the defendant told some of them i'm selling you my personal shares which was a lie so they got nothing in return for their investment so what the government demonstrated for the district court w that that four hundred eighty thousand dollars of the defendant diverted from his business account into other business accounts and for his own personal use what if this had just been one big transfer of money six hundred thousand dollars of which he takes two hundred and buys stock in c p which seems to have been doing relatively well for a while it has a five to one split at some point it's you know everybody's sailing along  and you know then things go go badly but why shouldn't you take the gain from at least the shares that he did buy and offset against the loss well evidence about market value the shares right it started off at five dollars this year then later went up to ten dollars a share and they went back downwards like four dollars and seven cents a share at some point when they had some testimony about that  and twelve you know those statements from the c e o yes and then we had minutes from board meetings in two thousand and ten when the defendant sat on the board where they discussed the company's negative cash flow in financial difficulties they had not brought the technology to market so it wasn't producing anything during this period of investment between two thousand and seven and two thousand and eleven but i believe your question was what if all six hundred eighty thousand dollars had been adjusted i come in at once but why not offset you know let's let's assume i realize you're making a different tact to four dollars and seven cents a share is not a good number but but if it is a good number that just report never really delves into this this shouldn't we know that shouldn't we look into that well if the six hundred eighty thousand dollars was actually used to purchase shares of c e n t stock on behalf of this l l c and every investor had a valid interest in then there would be no prosecution here the government is focusing the my on the money that the defendant obtained as a result of his fraudulent statements to the investors that he was going to use their money to purchase stock or  provide them an interest in ajdabiya u t those second half of the investors between september two thousand and eight and through two thousand and ten they don't have a valid claim to any  me ask you the same question i understood from mr van zandt that this list of victims in the sentence includes some people who were in on the first two hundred tranche and other people and on the four that post september two thousand and eight payments if they paid into the fund for preaching thousand and eight in the defendant use that money to actually it's part of the two hundred thousand dollars that he used to purchase and shares a c in p for the l l c they still hold on to that interest the government did not see the claim of restitution for that earlier money but it's divided into nine who paid into two hundred the two hundred thousand dollar amount in seven who paid four hundred eighty thousand nine hundred forty five dollar amount with an overlap with  so i mean what it comes down to is the four hundred eighty thousand dollars figure was obtained by the defendant as a result of fraudulent statements to those investors that's all the government was seeking to hold him accountable for under the courts are free to consider or reject policy arguments against the guidelines but they're not required to comment on them or to deviate from the guidelines is the basis of those policy arguments in this particular case the district court acknowledged that the guidelines were not mandatory and based on the arguments in mitigation that he cited for his below guideline sentence for the defendant that shows that he was not driven solely by the loss amount in this case so i don't think that the second circuit's comments in this case overruled with this court has previously said about policy arguments not being taken into account by the district court being detrimental to the exports and position and stand and so i want to talk to you a little bit about this supervised release business because you know defense counsel makes three objections to the terms of supervised release and what does she get from the just record over rule means she doesn't get any explanation why for example the drug testing condition couldn't be lifted yes he had an alcohol problem no one has said he had a problem with any other kind of drug some kind of explanation the probation officer visits and just the one word over rule doesn't count as an explanation it's a result that it's it's not and the interest on restitution i think she also raised and  judge just didn't didn't go into anything and i guess the government does make this argument that he's discussed some of the thirty five fifty three a factors when he's talking about imprisonment but it's not clear how that carries over to his decisions on supervised release on some records it does obviously carry over at this time you know he she he just gave her the back of his hand but to the district court to respond overrule to each of the objections going into the pronouncement of the supervised release conditions and the sentencing transcript of the defendant's appendix page sixty the court announced that it would be reading the conditions into the record  the reading them into the record isn't the same thing as explaining them right that's the problem he let the defendant know that the defense counsel know that she would have an opportunity to be heard  the court went through all of the conditions and toward the end of things counsel noted your honor i have objections i didn't want to interrupt you and he permitted her to go through each of them and then he says as you just con objection is overruled gone i mean like why what's the point of going through this if that's enough or with respect to the interest on the find that was not actually a condition so that objection really has no part in as far as their objections to the terms a supervisor we've conditions the drug testing condition yes was mandatory that p s r documented the defendant's history of alcohol  only say that it's supported by the record the reasons for needing drug treatment based on his history of alcoholism was reported in the p s r and as far as the objection to the probation officers visits to his workplace the conditions of supervised release also specified other there are other options i mean i think he's concerned that if the probation officer were to pick on the workplace too often that would make work difficult to sustain you know employers don't want probation officers or anyone else for that matter dropping in every so often right her probation officers are presumed to apply the conditions in a reasonable way so looking into the future that did pose a problem for the defendant that condition could be changed and there are other options listed on the conditions of supervisors can also reading the sensing transcript would look like the defense was dancing on the edge of giving up acceptance of responsibility at this stage of the case if we were to remain and what would the government's position be on the acceptance of responsibility just at the sentencing the government have reserved its position on acceptance because there is a blind plea entered in this case no plea agreement and we anticipated there would be an attack on the last amount and we're prepared to reserve acceptance if there are factual disputes that th defendant raised about his culpability in causing that loss amount at the sentencing the defendant through counsel acknowledged that he pocketed the four hundred eighty thousand dollars and proceeded with its legal argument on credit  sure the defense was very clear that we are raising a legal argument that side to something from counsel that we want to make sure is very clear as a legal matter it's not a factual matter so that's i think something we've expressed the district court as well but to make that record clear it's surely legal and mr lew says are you willing two years of supervised release was unreasonable right and i think the issue is more the conditions your honor and i think based on our discussion here that's really where the core problem is really he's worried about the visitation and the drug condition i know my time talking about the the lack of well the drug conditions may be an issue too but the lack of explanation is the real problem here and this is leaving aside the problem of so you realize the judge could say look if this is such a big problem then maybe you need to spend more time in prison and less time on supervised release i suppose that's a that is a possibility or are i guess we'd have to cross the road when it if this was a case where mr was just put forty thousand five thousand dollars as pocket and investors got nothing i wouldn't be here that's that's an easy case what the government indicted him on as the first group was dilution their situation where the second group got nothing the first got everything second group to get something and the only reason because everybody on shares in the company in the asset held by the company was the see that's the idea of charity what the government is saying and they said this again a few minutes ago w is the second group got nothing and that's not true based on the the dilution allegation they have to have got something or there would have been no dilution is there any evidence that any investor was able to recoup any money other than the seventy five thousand dollars so you'll it's unclear at that point after the twenty five in your honor i don't have any more information in the record i do know that i should be revisited under your theory at a recent event that may have to be looked into and under your theory that it if nobody got anything for the shares it could be a six hundred eighty thousand i think it's still matters what the fair market value was at the time the at the time the fence was detected that's that's  you know we've we've got fragmentary evidence on that point in this record i think the best evidence we have is that at the time around the time the offense was detected the value of what the investors had was six hundred ten thousand dollars what they did with it after that i don't know i do know that's pretty thin evidence i mean i realize some councils trying to get that kind of that that it's into the record that it really wasn't explored that much know and that's part of the problem is that we've we know what we know and that's what the