11

‐ 4872(L)

United States v. Certified Environmental Services, Inc.

UNITED STATES COURT OF APPEALS

F OR THE S ECOND C IRCUIT

_______________

August Term, 2012

(Argued: June 14, 2013 Decided: May 28, 2014)

Docket Nos. 11

‐ 4872(Lead), 11

‐ 4875(Con), 11

‐ 4877(Con), 11

‐ 4974(Con),

11

‐ 4976(Con), 11

‐ 4968(XAP), 11

‐ 4969(XAP), 11

‐ 4972(XAP)

_______________

U NITED S TATES OF A MERICA

,

Appellee

‐ Cross

‐ Appellant,

—v.—

C ERTIFIED E NVIRONMENTAL S ERVICES

, I NC

., N ICOLE C OPELAND

, E LISA D UNN

,

Defendants

‐ Appellants

‐ Cross

‐ Appellees

,

B ARBARA D UCHENE

, T HOMAS J ULIANO

,

Defendants,

S ANDY A LLEN

, F RANK O NOFF

,

Defendants

‐ Appellees.

_______________2 B e f o r e :

R AGGI and C ARNEY

, Circuit Judges

, and R AKOFF

, District Judge

. 1

_______________

Appeals and cross

‐ appeal from judgments of conviction and sentence

entered by the United States District Court for the Northern District of New York

(Hurd, J. ) on November 3, 2011. The defendants, consisting of an asbestos air

monitoring company, five of its employees, and an employee of an asbestos

abatement contractor, were convicted, collectively, of fifteen counts of

conspiracy, mail fraud, and false statements. The charges related to a scheme by

which the defendants undertook to violate various state and federal

environmental regulations and to certify that proper air monitoring had been

conducted when it had not. Defendants

‐ Appellants

‐ Cross

‐ Appellees Certified

Environmental Services, Inc. (“CES”), Nicole Copeland, and Elisa Dunn appeal

their convictions, arguing that the district court improperly excluded evidence

that the defendants acted in the good

‐ faith belief that they were complying with

applicable state regulations, and that the prosecutors engaged in misconduct.

The Government appeals the sentences given to Defendants

‐ Appellees Sandy

Allen and Frank Onoff, arguing that the district court miscalculated the amount

of restitution, committed procedural errors in determining the applicable

advisory guidelines ranges, and imposed sentences that were substantively

unreasonable.

We hold that the district court erred in excluding the proffered evidence of

the defendants’ good faith, and that, as the Government concedes on appeal, the

prosecutors committed multiple instances of misconduct throughout the trial.

We further hold that the prejudice resulting from the district court’s erroneous

evidentiary ruling and the prosecutors’ misconduct was sufficient to violate the

defendants’ right to a fair trial. We therefore vacate the judgments of conviction

of CES, Copeland, and Dunn, and remand for a new trial as to them. With

respect to the Government’s appeal from the sentences of Allen and Onoff, we

1 The Honorable Jed S. Rakoff, of the Southern District of New York, sitting by designation.3 hold that the district court erred in calculating the amount of restitution and in

calculating the advisory guidelines range. We therefore vacate the sentences of

Allen and Onoff and remand for resentencing as to them.

VACATED and REMANDED

.

_______________

G ABRIEL M. N UGENT (Daniel J. French, on the brief ) Hiscock &

Barclay, LLP, Syracuse, NY, for

Defendant

‐ Appellant

‐ Cross

‐ Appellee Certified Environmental

Services, Inc.

B RIAN J. F ISCHER

, M ATTHEW D. C IPOLLA

, Jenner & Block LLP,

New York, NY (Carl N. Wedoff, Jenner & Block LLP, New

York, NY; Donald T. Kinsella, Stockli, Greene, Slevin & Peters

LLP, Albany, NY on the brief ), for

Defendant

‐ Appellant

‐ Cross

‐ Appellee Nicole Copeland

.

D ENNIS B. S CHLENKER

, ESQ

., Albany, NY, for

Defendant

‐ Appellant

‐ Cross

‐ Appellee Elisa Dunn

.

C RAIG A. B ENEDICT

, Assistant United States Attorney (Rajit S.

Dosanjh, Assistant United States Attorney, on the brief ), for

Richard S. Hartunian, United States Attorney for the Northern

District of New York, Syracuse, NY, for

Appellee

‐ Cross

‐ Appellant the United States of America

.

J AMES R. M C G RAW

, ESQ

., Syracuse, NY, for Defendant

‐ Appellee

Sandy Allen

.

_______________4 R AKOFF

, District Judge :

Certified Environmental Services, Inc. (“CES”); Nicole Copeland, former

CES Technical Services Manager; and Elisa Dunn, former CES air monitor and

field supervisor, appeal from their convictions of conspiracy, aiding and abetting

violations of the Clean Air Act, mail fraud, and making false statements to

federal officials. Seeking a new trial, these defendants contend that the district

court improperly excluded evidence that they acted under a good

‐ faith belief

that they were complying with state law and that, in any event, their convictions

and sentences were irreparably tainted by prosecutorial misconduct. The

Government cross

‐ appeals the sentences given to CES, Copeland, and Dunn, and

appeals from the sentences given to Sandy Allen, a CES air monitor, and Frank

Onoff, a supervisor at a contractor that performed improper asbestos abatement

work. The Government argues that the district court erred in determining

restitution, erred in calculating loss, misapplied the advisory sentencing

guidelines, and imposed sentences that were substantively unreasonable.5 For the reasons that follow, we vacate the convictions of CES, Copeland,

and Dunn, and remand for a new trial. We also vacate the sentences of Allen and

Onoff and remand for resentencing.

BACKGROUND

I. Regulatory Framework

Certain technical state and federal regulations governing the removal of

asbestos underlie the charges in this case. Asbestos is severely toxic, and

“medical science has not established any minimum level of exposure to asbestos

fibers which is considered to be safe.” 20 U.S.C. § 3601(a)(3). Its complete

removal is therefore required by both federal and state regulations.

A. Federal Regulations

Under the Clean Air Act, 42 U.S.C. §§ 7401

‐ 7515, the Environmental

Protection Agency (“EPA”) is authorized to adopt what the agency has called

“national emission standards for hazardous air pollutants,” including asbestos.

See 40 C.F.R. pt. 61; 42 U.S.C. § 7412(c) & (d). The standards for asbestos are

enforced in part by work

‐ practice standards that govern covered renovation and

demolition activities involving asbestos. See 40 C.F.R. § 61.145; see also 42 U.S.C. §6 7412(h). As relevant here, these work

‐ practice standards provide that, when

removing regulated asbestos

‐ containing material, the site owner or operator

must wet the material to prevent it from escaping into the air and must ensure

that the material remains adequately wetted until it is packed and sealed in

leak

‐ tight containers. See 40 C.F.R. §§ 61.145(c)(6)(i), 61.150. Asbestos

‐ containing

material is not adequately wetted “[i]f visible emissions are observed coming

from [the] material.” Id. § 61.141. The owner or operator also must ensure that no

visible emissions are discharged to the outside air and must deposit the material

with an authorized disposal site as soon as practicable. Id. § 61.150(a)–(b). The

Clean Air Act provides criminal penalties for any person who knowingly

violates these work

‐ practice standards. See 42 U.S.C. § 7413(c)(1).

Under the Toxic Substances Control Act (“TSCA”), 15 U.S.C. §§ 2601

‐ 2697,

the EPA has promulgated additional regulations governing asbestos removal

from elementary and secondary school facilities. See 40 C.F.R. pt. 763, subpt. E;

see also 15 U.S.C. § 2643. As relevant here, these regulations require that, after any

asbestos abatement project is completed, the school must confirm that the area is

free of asbestos by, among other things, designating a person to “collect air7 samples using aggressive sampling.” 40 C.F.R. § 763.90(i)(2)(i). “[A]ggressive

sampling” involves taking steps before and during sample collection to dislodge

asbestos particles that may have settled on the surfaces in the work area.

Beforehand, the “floors, ceiling and walls [must] be swept with the exhaust of a

. . . leaf blower,” and during collection, “[s]tationary fans” must be situated, one

for each ten thousand cubic feet of worksite, with the “[f]an air

. . . directed

toward the ceiling.” Id. pt. 763, subpt. E, App. A, III.B.7(d)(iii), (iv).

EPA regulations under the TSCA also contain provisions to avoid conflicts

of interest. The regulations provide that “[s]ampling operations must be

performed by qualified individuals completely independent of the abatement

contractor.” Id. II.B.2, III.B.1. Similarly, “[a]ll sample preparation and analysis

[must] be performed by a laboratory independent of the abatement contractor.”

Id. II.E.1.

Asbestos abatement activities are also regulated by the Occupational

Safety and Health Administration (“OSHA”) under the Occupational Safety and

Health Act. See 29 C.F.R. § 1926.1101; 29 U.S.C. § 655. OSHA regulations impose

numerous requirements on employers to ensure the wellbeing of employees who8 perform abatement work. See 29 U.S.C. § 654(a). For example, the regulations

require employers to “provide or require the use of protective clothing, such as

coveralls or similar whole

‐ body clothing, head coverings, gloves, and foot

coverings.” 29 C.F.R. § 1926.1101(i)(1). Employers must ensure that their

employees enter and exit the work area through “[d]econtamination areas”

designed to prevent asbestos from escaping into the surrounding environment.

Id. § 1926.1101(j)(1)(i). Employers must also provide respirators to employees

who work with certain categories of asbestos

‐ containing materials. Id. §

1926.1101(h).

In addition, OSHA regulations require employers to “perform monitoring

to determine accurately the airborne concentrations of asbestos to which

employees may be exposed.” Id. § 1926.1101(f)(1)(i). Employees must wear air

sampling devices to collect representative “breathing zone air samples,” id. §

1926.1101(f)(1)(ii), which are then subjected to laboratory analysis to determine

each employee’s asbestos exposure. Individuals who perform this analysis must

receive specialized training. See id. § 1926.1101, App. A.II.3.9 B. State Regulations

Asbestos abatement activities in New York are also subject to state

regulation under New York Industrial Code Rule 56 (the “Code Rule”), 12

N.Y.C.R.R. pt. 56 (1994), enforced by the New York State Department of Labor

(“DOL”). The Code Rule at times mirrors federal requirements and at times is

stricter. As relevant here, the Code Rule imposes requirements for preparing the

work area, for performing abatement work, for cleaning up after the abatement

work is complete, and for air monitoring. The Code Rule also contains certain

standard variances and exceptions.

With respect to pre

‐ abatement procedures, the Code Rule requires

contractors to construct containment structures around the work area, known as

“isolation barriers.” Id. § 56

‐ 8.1(j). These barriers consist of two layers of plastic

sheeting (referred to as “poly”), which must be placed over “all openings” in the

work area, including windows, doors, skylights, corridors, and ducts (often

referred to as “criticals”). Id. In addition to the criticals, contractors also must

place two layers of poly over all surfaces in the work area, including floors,

walls, and ceilings, exposing only the asbestos to be removed. Id. § 56

‐ 8.1(k)(5).10 All seams in the poly must be staggered from one another and sealed with tape.

Id.

Like the OSHA regulations, the Code Rule also requires contractors to

construct decontamination areas, which must be separated from the work area

by “airlocks” to ensure that asbestos does not escape into the surrounding

environment. Id. §§ 56

‐ 9.1

‐ 56

‐ 10.1. To the same end, the Code Rule also requires

contractors to establish negative air pressure in the work area relative to the

areas outside, “to ensure that contaminated air in the work area does not filter

back to an uncontaminated area.” Id. § 56

‐ 6.1(c). Once the isolation barriers have

been erected and negative pressure is established, the contractor must wait

twelve hours before beginning abatement work to ensure that the barriers

remain secure and intact. Id. § 56

‐ 11.1(b). The contractor then must maintain

negative air pressure “continuously, 24 hours a day, from the start of the

abatement work through the cleanup operations and clearance air monitoring.”

Id. § 56

‐ 6.1(b).

With respect to the abatement itself, the Code Rule makes plain that “[n]o

dry removal or disturbance of asbestos material shall be permitted.” Id.11 § 56.12.1(a). Rather, “[t]he asbestos material shall be wetted frequently,” id.

§ 56

‐ 12.1(b), and must be either bagged immediately once removed or dropped

into a flexible catch basin, id. § 56

‐ 12.1(c). All abatement workers, including air

monitors, must enter and exit the work area through the decontamination area,

and must sign a log each time they do so. Id. § 56

‐ 4.1(a)–(b). Workers exiting the

work area must decontaminate themselves, their equipment, and the bags

containing asbestos waste before leaving. Id. § 56

‐ 5.1(a)–(f).

Once asbestos material has been removed from the work area, the Code

Rule imposes detailed requirements for cleanup activities. First, the contractor

must place all asbestos waste in proper containers. Id. § 56

‐ 15.2(a). Then the

contractor must “wet

‐ clean[]” the work area, id. § 56

‐ 15.2(b)

— in other words,

the contractor must “eliminat[e] asbestos contamination from surfaces,

equipment or other objects by using cloths, mops, or other cleaning tools which

have been dampened with amended water,” id. § 56

‐ 1.4(bz). After the first

wet

‐ cleaning, the contractor can remove the first layer of poly from the surfaces

of the work area, leaving the criticals in place. Id. § 56

‐ 15.2(c). The contractor

must then observe a twelve

‐ hour waiting period to allow agitated asbestos fibers12 to settle. After the waiting period, the contractor performs a second wet

‐ cleaning,

after which the second layer of poly can be removed from the surfaces in the

work area. Id. § 56

‐ 15.2(d). After a second twelve

‐ hour waiting period, the

contractor performs a third wet

‐ cleaning, after which all tools, equipment, and

containers of asbestos waste are decontaminated and removed. Id.

§ 56

‐ 15.2(e)–(g). It is at this point that an air monitor like Defendant CES

performs “[c]learance air monitoring.” Id. § 56

‐ 15.2(h). Only after clearance air

monitoring yields passing results can the contractor finally remove the criticals

and eliminate negative air pressure. Id. § 56

‐ 15.2(i).

With respect to air monitoring, the Code Rule prescribes several different

kinds of monitoring. For most abatement projects, the Code Rule requires

“background” air sampling to determine asbestos concentrations both inside and

outside before the project commences, as well as “[p]re

‐ abatement” air sampling

while the work area is being set up. See id. § 56

‐ 17.1 tbl. 1. For non

‐ minor

abatement projects, the Code Rule also requires air sampling during the course

of the project. Id. Most important, the Cod Rule, with minor exceptions not here

relevant, requires “clearance air monitoring” on all abatement projects. Id.13 Clearance air monitoring consists of “[t]he collection of a volume of air using

aggressive sampling techniques,” which is then “analyzed to determine the

airborne concentration of fibers upon conclusion of an asbestos abatement

project.” Id. § 56

‐ 1.4(x).

Because clearance air monitoring serves to confirm that all prior abatement

work has been successful and that the work area is safe, the Code Rule carefully

restricts how it is conducted. To begin with, the Code Rule, with minor

exceptions not here relevant, provides that “[a]ir sampling and analysis shall not

be performed by any party involved with the asbestos project.” Id. § 56

‐ 17.4(a). In

addition, the individual who conducts air sampling must have “been trained in

the selected methodology of sampling and analysis of asbestos,” and must

possess a state

‐ issued technician’s certificate. Id. § 56

‐ 17.4(b). Clearance air

sampling may not commence until “no visible pools of liquid or condensation

remain,” at least twelve hours after the third wet cleaning. Id. § 56

‐ 17.2(a). At that

point, the technician collects an air sample by using a pump to draw air through

a filter cassette that captures airborne asbestos fibers. Id. § 56

‐ 17.5(a). The Code14 Rule specifies the rate at which air is drawn through the cassette by the pump,

which the technician must calibrate before and after each use. Id. § 56

‐ 17.5(b).

The Code Rule also requires the use of “aggressive sampling techniques,”

similar to those mandated under the EPA’s TSCA regulations, to dislodge

asbestos fibers that have settled out of the air. Before sampling begins, “the

exhaust of forced

‐ air equipment shall be directed against all walls, ceilings,

floors, ledges and other surfaces in the rooms” for a minimum of “five minutes

per 1,000 square feet of floor.” Id. § 56

‐ 17.2(f)(1). During sampling, a minimum

20

‐ inch diameter fan “shall be placed in the center of each room,” with one fan

per ten thousand cubic feet of work area. Id. § 56

‐ 17.2(f)(2). The fans must be

“operated on slow speed and pointed toward the ceiling.” Id. Clearance air

monitoring results are considered satisfactory when every sample taken shows

an airborne asbestos concentration of less than 0.01 fibers per cubic centimeter, or

the background level measured before the project commenced, whichever is

greater. Id. § 56

‐ 17.8(a).

While the foregoing regulations generally apply to all asbestos abatement

projects in New York, New York law recognizes two types of exceptions from15 these general rules. First, before 2006, the DOL recognized certain “applicable

variances,” which set forth standard ways in which the Code Rule’s

requirements could be modified. 2 Most important for present purposes, these

applicable variances included AV

‐ 120, which applied to projects for “the

abatement of asbestos floor covering and mastic.” AV

‐ 120, pmbl. As relevant

here, AV

‐ 120 allows the abatement contractor not to fully cover the walls of the

work area with poly. See id. § 6. But the contractor still must maintain “negative

air [pressure]

. . .

within the abatement work areas.” Id. § 7. And, except as otherwise provided,

“[a]ll other applicable provisions” of the Code Rule, including those requiring

aggressive sampling techniques, continue to apply. Id. § 17.

The Code Rule also contains a set of exceptions for so

‐ called “[i]n

‐ plant

operations.” Code Rule § 56

‐ 3.1(a). These operations are defined narrowly to

include (1) projects that involve small amounts of asbestos material and are

performed by the employees of the facility in question rather than by an outside

contractor, and (2) projects involving the removal of specified types of asbestos

2 When the Code Rule was repromulgated in 2006, these variances were incorporated into the

the Code Rule itself. See 28 N.Y. Reg. 8 (Jan. 11, 2006).16 material. Id. These exceptional materials do not include the floor coverings and

mastics whose removal is governed by AV

‐ 120. As relevant here, in

‐ plant

operations are exempt from the Code Rule’s general requirements to erect

isolation barriers around the work area and to maintain negative air pressure, so

long as “the project is performed in a manner which will not expose the public to

fiber concentrations exceeding background levels or .01 fibers per cubic

centimeter, whichever is greater.” Id. § 56

‐ 3.1(b)(4). The Code Rule repeatedly

provides, however, that in

‐ plant operations are not exempt from the Code Rule’s

general air monitoring requirements, including those requiring aggressive

sampling techniques. See id. § 56

‐ 3.1(b)(2), (f); id. § 56

‐ 1.4(as)(2).

II. Proceedings Below

On June 10, 2010, a federal grand jury in the Northern District of New

York returned a fifteen

‐ count superseding indictment against CES, Copeland,

Dunn, and Allen, as well as co

‐ defendants Barbara Duchene and Thomas Juliano.

Count One charged all of the defendants with conspiring in violation of 18 U.S.C.

§ 371 to defraud the United States by impeding the regulatory functions of the

EPA and OSHA and to violate the Clean Air Act, the TSCA, and the mail fraud17 statute, 18 U.S.C. § 1341. As overt acts, the indictment charged the defendants

with performing unlawful and fraudulent air monitoring on dozens of asbestos

abatement projects in and around Syracuse, New York. Counts Two through

Seven charged CES and Copeland with aiding and abetting Clean Air Act

violations related to six abatement projects, in violation of 42 U.S.C. § 7413(c)(1),

(2) and 18 U.S.C. § 2. Allen, Dunn, and Juliano were also charged in three of the

aiding and abetting counts. Counts Eight through Thirteen charged CES and

various defendants with substantive acts of mail fraud for mailing false clearance

air monitoring reports, logs, and invoices in connection with six abatement

projects, in violation of 18 U.S.C. §§ 1341 and 2. Copeland was charged with five

counts of mail fraud, Allen with two, and Dunn and Juliano with one each.

Finally, Counts Fourteen and Fifteen charged CES and Dunn with making false

written statements to the EPA and OSHA regarding Dunn’s visual inspection of

two project work areas, in violation of 18 U.S.C. § 1001.

As for Onoff, the original indictment, filed on May 28, 2009, charged Onoff

with conspiracy, two counts of aiding and abetting Clean Air Act violations,

three counts of aiding and abetting mail fraud, and one count of making false18 statements. On November 12, 2009, before the superseding indictment was

returned, Onoff pled guilty to the conspiracy count pursuant to a plea

agreement, and the remaining charges against him were dismissed.

A four

‐ week trial against CES, Copeland, Dunn, Allen, and Juliano

commenced on September 13, 2010. 3 With respect to the conspiracy count, the

Government presented evidence that the defendants conspired to aid two

asbestos abatement companies, AAPEX Environmental Services, Inc. (“AAPEX”)

and Paragon Environmental Services, Inc. (“Paragon”), in performing numerous

illegal asbestos removals. These abatement companies engaged in what is known

as “rip

‐ and

‐ run” removals, in which asbestos is stripped and removed dry, often

without the safeguards needed to ensure that the surrounding area is not

contaminated. Because they are cheaper to perform than proper removals,

rip

‐ and

‐ runs can be lucrative, but can only go undetected if the abatement

contractor can obtain passing final clearance air monitoring results from a

company like CES.

3 On April 6, 2010, the district court granted Duchene’s motion to sever her trial. On March 7,

2011, the charges against Duchene were dismissed after she pled guilty to state

‐ law charges

arising from the same conduct.19 To show an unlawful agreement among the alleged conspirators, the

Government presented testimony from the owner and employees of AAPEX,

who testified that the company had performed “at least two hundred”

rip

‐ and

‐ run projects and used CES to perform air monitoring for the “majority”

of them. G.A. 454, 483. The witness explained that AAPEX “used CES because

we knew that we would get our final airs passed regardless of the methods used

to take the asbestos down.” G.A. 454. With respect to another contractor,

Paragon Environmental Services, Inc., a CES air monitor testified that Copeland

told her that CES “had a close [working] relationship with” Paragon, G.A. 717,

and as a result, the monitor did not even need to enter Paragon’s work areas to

collect air samples. The monitor testified that, accordingly, she would instead

hand blank air filter cassettes to Onoff (a Paragon supervisor) or a subordinate,

whom the monitor would then trust to run the samples while she waited outside.

The Government also presented testimony from CES air monitors about

the company’s air monitoring practices. The monitors testified that, following

instructions from Copeland, CES air monitors routinely (1) began clearance air

sampling without observing the required waiting periods and despite the visible20 presence of asbestos contamination and condensation throughout the work area;

(2) failed to use aggressive air sampling techniques as required by the TSCA and

the Code Rule; (3) falsified entries in sampling logs to conceal shoddy

monitoring; and (4) failed to wear protective equipment, to decontaminate

themselves and their equipment when exiting work areas, and to sign in and out

of work areas.

The Government also presented testimony from a former CES lab

technician. He testified (1) that, at Duchene’s direction, CES lab technicians

analyzed thousands of samples without having received required training; (2)

that Copeland, who also had not received training, improperly directed

technicians not to count certain asbestos fibers; and (3) that the lab’s logbook,

used to maintain quality control, was habitually out of date because of the lab’s

high workload.

With respect to the Clean Air Act charges, the Government presented

evidence that CES, Copeland, Dunn, and Allen aided and abetted rip

‐ and

‐ run

asbestos removals at six worksites. The Government presented testimony that

CES monitors failed to conduct visual inspections, collected air samples despite21 visible asbestos debris, failed to use aggressive air sampling techniques, and

certified clearance air monitoring samples that should not have passed. In one

instance, an employee of an abatement contractor testified that Dunn, a CES air

monitor and supervisor, had helped him to reclean a dusty work area, in

violation of the Code Rule’s conflict of interest regulations.

With respect to the mail fraud charges, the Government presented

evidence that CES, Copeland, Allen, and Dunn prepared and mailed air

monitoring reports, invoices, and logs representing that CES had conducted air

monitoring in accordance with legal, regulatory, and industry standards. In

actuality, according to the Government’s evidence, CES had done no such thing.

Finally, with respect to the false statement charges, the Government

presented evidence that Dunn completed two “Visual Inspection/Clearance Air

Sampling” certifications in connection with a particular abatement project. In

these certifications, Dunn stated that she had “visually inspected the basement

work area and found [that] the abatement appears to meet the scope of work

provided” and “no visible debris” or “dust” was “apparent.” G.A. 1078–79. An

employee of the contractor, however, testified that Dunn had in fact helped him22 try to clean up visible debris. And an EPA agent testified that when confronted

with photographs showing the condition of the work area, Dunn admitted that

the area “should never have passed final air clearances.” G.A. 777.

For the defendants’ part, they argued both that the Government’s evidence

was unreliable and that, in any event, they had acted in the good

‐ faith belief that

their conduct was consistent with relevant legal requirements. 4 The defendants

attacked the credibility of all of the Government’s key witnesses, noting that

many witnesses had motives to lie and were testifying about events that had

allegedly occurred many years earlier. The defendants also noted that several

witnesses left CES before any of the charged projects commenced. The

defendants similarly attacked the accuracy and relevance of the Government’s

documentary and photographic evidence. For example, the defendants noted

that photographs of the worksites were not contemporaneous with the events in

issue and that debris could have been concealed from CES air monitors behind

the containment barriers. Similarly, the defendants noted that the documents like

4 While the “intent” element of the various charges differed depending on the charge, the complex

regulatory background made defendant’s protestations of good faith and lack of criminal intent directly

or indirectly relevant to the jury’s evaluation of each of the charges.23 sample logs and lab reports did not show whether proper air sampling or

analysis techniques were used.

The defendants also presented their own evidence to rebut the

Government’s case. For example, the defendants presented evidence that CES

frequently gave failing grades to clearance air samples collected from AAPEX

projects—including two of the projects alleged in the indictment. The defendants

also maintained that they had little financial incentive to engage in the charged

misconduct, as CES in fact was turning down work from other contractors

during the relevant period. In addition, CES worked on more than a third of the

charged projects under a lucrative long

‐ term contract with Syracuse University,

which would have been jeopardized by substandard work. Copeland and

another CES supervisor, Dan Hoosock, also testified that Copeland actually

reported AAPEX to the DOL in 2005, after AAPEX’s owner attempted to direct a

CES air monitor to conduct air sampling improperly.

More broadly, Copeland and Hoosock testified that CES had conducted air

sampling in accordance with a good

‐ faith interpretation of the Code Rule,

whereby aggressive sampling was not required unless the work area had24 containment barriers erected over all critical openings and all floors, walls, and

ceilings. The defendants contended that any other interpretation would require

agitating contaminated air in ways that would risk dispersing

asbestos

‐ containing material from work areas into the surrounding environment.

The defendants also noted that under any reading of the Code Rule, aggressive

sampling is not required in all cases, and presented evidence that there was

long

‐ running discussion within the industry about when aggressive sampling

should be conducted.

On October 12, 2010, the jury found CES, Copeland, Dunn, and Allen

guilty of all counts against them, and acquitted Juliano of all charges against

him. On October 26, 2010, CES, Copeland, Dunn, and Allen moved for a

judgment of acquittal or in the alternative for a new trial, which the district

denied on December 3, 2010.

With respect to sentencing, on August 1, 2011, after holding an evidentiary

hearing, the district court issued a Memorandum Decision and Order

determining the total restitution owed to the victims and apportioning

responsibility for that restitution among the defendants. On October 21, 2011,25 CES was sentenced principally to five years of probation, a fine of $20,000, and

restitution of approximately $117,000. Copeland principally received five years

of probation, twelve consecutive weekends of intermittent confinement, no fine,

and approximately $23,000 in restitution. Dunn and Allen each principally

received “time served (1 day),” representing the brief time each had spent being

processed by the U.S. Marshals following their initial appearances, no fine, and

approximately $6,000 in restitution. On November 8, 2011, Onoff was sentenced

principally to “time served (1 day),” no fine, and approximately $4,000 in

restitution.

These appeals and cross

‐ appeal followed.

DISCUSSION

I. The Defendants’ Appeal

In their appeal, CES, Copeland, and Dunn seek a new trial based upon (1)

improper prosecutorial bolstering of Government witnesses based on those

witnesses’ cooperation agreements; (2) the exclusion of evidence related to the

defendants’ good faith; (3) the Government’s belated production of certain

discovery material, allegedly in violation of Brady v. Maryland

, 373 U.S. 83, 8726 (1963); and (4) improper remarks in the Government’s rebuttal summation. The

Government concedes error in many of these instances, but argues that the errors

were harmless. We first consider each category of alleged trial error separately,

and then consider the cumulative prejudice caused by those errors that we find

have been established.

A. Bolstering Based on Witness Agreements

Most of the Government’s witnesses were given either immunity or the

possibility of reduced sentences conditioned on their cooperating with the

Government by providing testimony. “Cooperation agreements

. . . demand

careful treatment under principles governing attack on and rehabilitation of

witnesses’ credibility.” United States v. Cosentino

, 844 F.2d 30, 32 (2d Cir. 1988).

These principles are well established in this Circuit, and can be summarized in a

few straightforward propositions.

First, the existence of a cooperation agreement is a “double

‐ edged sword,”

United States v. Arroyo

‐ Angulo

, 580 F.2d 1137, 1146 (2d Cir. 1978), which can be

wielded by the defense and the Government. On the one hand, a cooperation

agreement can provide ammunition for the defense to impeach the credibility of27 a Government witness, both by specifying the benefits the cooperator has

received or will receive if he testifies at the Government’s behest and also “by

revealing the witness[‘s] criminal background” or other prior wrongdoing.

Cosentino

, 844 F.2d at 32. On the other hand, the Government can use cooperation

agreements to rehabilitate witnesses whose credibility has been questioned. Id. at

33

. That is because cooperation agreements generally contain so

‐ called

“truth

‐ telling” provisions, which “set[] out promises to testify truthfully as well

as penalties for failure to do so, such as prosecution for perjury and

reinstatement of any charges dropped pursuant to the deal.” Id. at 32. Overall,

“the entire cooperation agreement bolsters more than it impeaches.” Id

. at 33

(quoting United States v. Edwards

, 631 F.2d 1049, 1052 (2d Cir. 1980)) (emphasis

added).

Second, the Government may not introduce the bolstering aspects of a

cooperation agreement unless and until the witness’s credibility has been

questioned in ways that “open the door” to the admission of the agreement. This

proposition stems from “well established rules of evidence” relating to relevance,

hearsay, bias, completeness, and otherwise, that taken together, provide that28 “absent an attack on the veracity of a witness, no evidence to bolster his

credibility is admissible.” Arroyo

‐ Angulo

, 580 F.2d at 1146 (citing McCormick on

Evidence, § 49 at 102 (2d ed. 1972); 3 Weinstein’s Evidence ¶ 607(08)). An attack

opening the door to such rehabilitation may take different forms. “A witness’[s]

credibility is often tested by a sequence of attack on cross

‐ examination followed

by rehabilitation on redirect.” Cosentino

, 844 F.2d at 33. An attack also “may

come in a defendant’s opening statement. If the opening sufficiently implicates

the credibility of a government witness, we have held that testimonial evidence

of bolstering aspects of a cooperation agreement may be introduced for

rehabilitative purposes during direct examination.” Id. But whatever form the

attack takes, unless and until it occurs the Government may not rehabilitate a

witness by introducing the bolstering aspects of an agreement, whether by

introducing the truth

‐ telling provisions in particular or the agreement as a

whole.

Third, although the Government may not introduce the bolstering aspects

of an agreement until after the witness’s credibility has been attacked, this

restriction does not apply to an agreement’s impeaching aspects, which the29 Government is free to introduce even on the witness’s direct examination. We

have recognized that “[i]t may sometimes be useful

. . . to develop impeaching

matter in direct examination of a ‘friendly’ witness in order to deprive an

adversary of the psychological advantage of revealing it to the jury for the first

time during cross

‐ examination.” Id. For this reason, the “impeaching aspects of

cooperation agreements may be brought out in the government’s direct

examination of a witness who testifies pursuant to such an agreement.” Id. As we

have explained,

[e]ven in the absence of a prior attack on credibility, “the elicitation

of the fact of the agreement and the witness’[s] understanding of it,

as a motivation for the witness to testify for the Government, should

be permitted on direct examination in order to anticipate

cross

‐ examination by the defendant which might give the jury the

unjustified impression that the Government was concealing this

relevant fact.”

Id. (quoting Edwards, 631 F.2d at 1052).

Finally, while the Government may, after a witness’s credibility is

attacked, rehabilitate the witness using a cooperation agreement, “it is well

established that prosecutors may not [personally] ‘vouch for their witnesses’30 truthfulness.’” United States v. Carr

, 424 F.3d 213, 227 (2d Cir. 2005) (quoting

United States v. Modica

, 663 F.2d 1173, 1179 (2d Cir. 1981)).

In the case at bar, the Government violated these principles repeatedly,

often in direct contravention of clear orders from the district court. During the

Government’s opening statement, the prosecutor permissibly told the jury that it

would call witnesses who “engaged in absolutely deplorable behavior. I am not

going to shine it up at all. They were involved in a conspiracy. Their conduct was

despicable. They are here under plea agreements. They pled guilty to felonies.”

J.A. 170. But the prosecutor then went further, telling the jury, “Their obligation

is to tell the truth.” Id. Defense counsel objected, and the district court sustained,

telling the prosecutor, “Don’t get into any bolstering, Mr. Benedict, about your

witnesses. Just tell who is going to testify. Don’t try to tell any bolstering about

them. You understand that.” Id. The prosecutor replied, “Yes, Your Honor, I do.”

Id.

But then he continued: “We will introduce their plea agreements, and you

will see through their plea agreements what their obligations are, what benefits

they get, and what happens if they don’t tell the truth.” Id. Defense counsel again31 objected, and the district court again sustained, stating, “You better stand away

from that, Mr. Benedict. We are not going to have any bolstering of these

witnesses before we even hear them. And you are not even supposed to do it

afterwards. Let’s go.” J.A. 170

‐ 71.

But the prosecutor continued on the same topic yet again: “You are going

to hear that the witnesses will be immuned [sic]

. . ., and they will tell you under

what conditions they were given immunity.” Id

. at 170

. Defense counsel objected

yet again, and the district court stated, “All right. That is the end of it. Do you

want me to conclude your opening statement right now, Mr. Benedict?” Id. The

district court explained, “Stay away from all of those witnesses. They will be on

the stand. The jury can decide their credibility at that time, and we don’t need

any more statements from you about their credibility or lack thereof. Do you

understand?” Id. The prosecutor responded in the affirmative, and apologized to

the judge and the jury.

The defendants did not attack the credibility of the Government’s

witnesses in their opening statements. But after trial commenced, the

Government introduced into evidence on the direct examination of nine of its32 witnesses the entirety of their largely–bolstering cooperation agreements,

notwithstanding strenuous defense objections on all but two occasions. 5 The

Government even went so far as to ask one witness on direct examination about

his “understanding of what happens to your immunity if you provide false

information today.” 6 G.A. 499.

Finally, in its opening summation, the prosecutor personally vouched for

the truthfulness of these witnesses, stating that “the immunity agreements are

very simple. We wanted to ensure that people taking the stand provided the

truth.” J.A. 264. Defense counsel objected, and the district court sustained the

objection.

On appeal, the Government now concedes that the prosecutor’s discussion

of the bolstering aspects of the immunity agreements during the Government’s

5 For the first two witnesses, defense counsel did not object to the admission of the witness’s

cooperation agreement. Beginning with the third immunized witness, however, defense counsel

began objecting to the admission of the agreements, but each time those objections were

overruled. The district court explained that “since these exhibits had come in with earlier

witnesses” without objection, “there was no reason why the jury should be deprived of these

exhibits with later witnesses.” G.A. 832. Since the Government now concedes that its

introduction of the agreements on direct examination was improper, we need not address

whether the defense’s failure to object to the introduction of the agreements with the first two

witnesses (which the defendants claim was motivated by the different stance the defense was

taking as to their credibility compared with that of the later witnesses) amounted to a waiver or

forfeiture.33 opening statement was improper. Similarly, the Government does not dispute

that the introduction of the immunity agreements on direct examination of its

witnesses, as well as some of the questions on direct examination relating to the

agreements, were premature, though the Government notes that defense counsel

sometimes failed to object. The Government also concedes that the prosecutor’s

statement that “ we wanted to ensure that people taking the stand provided the

truth,” id. (emphasis added), constituted impermissible vouching.

B. Exclusion of Evidence of Good Faith

We review a district court’s rulings on the admissibility of evidence for

abuse of discretion. See Boyce v. Soundview Tech. Grp., Inc.

, 464 F.3d 376, 385 (2d

Cir. 2006). Here, the defendants challenge the district court’s exclusion of three

pieces of evidence they claim supported their argument that they acted in the

good

‐ faith belief that they were conducting air monitoring in compliance with

the Code Rule.

First, the district court excluded testimony from Daniel Hoosock, a CES air

monitoring supervisor, regarding a conversation he had with an unknown DOL

employee in 1994. Hoosock was prepared to testify that during this conversation,

6 The prosecutor’s improper remarks on rebuttal summation are canvassed separately, infra

.34 he asked the DOL for clarification regarding the circumstances under which air

monitors were required to use aggressive sampling techniques. In particular,

Hoosock supposedly asked whether air monitors must use aggressive sampling

for projects where the work area was not fully enclosed under negative air

pressure. Hoosock explained that he was concerned that in the absence of a

negative pressure full enclosure, aggressive sampling ran the risk of spreading

asbestos fibers out of the work area into the surrounding environment. The DOL

employee purportedly advised Hoosock “[t]hat if the work did not require a

negative pressure enclosure,

. . . aggressive clearance wouldn’t be required.” J.A.

248. Although Hoosock did not memorialize this conversation in writing, the

defendants contend that it is corroborated by a CES document called the “Cheat

Sheet,” according to which it was CES policy to use aggressive air sampling only

for projects “with Full Containment.” J.A. 486.

Second, the district court excluded an email exchange between Hoosock

and the DOL in 2006. The exchange began on August 17, 2006, approximately

one year after government investigators began interviewing CES employees35 about the company’s air monitoring practices, when Hoosock sent an email to

the DOL as follows:

I was wondering if you could provide some clarification regarding

clearance air sampling requirement for asbestos abatement projects.

Prior to the amending of the Code Rule 56 in 1994, the vast majority

of abatement projects were completed under full negative pressure

containments. When the Code Rule was amended in 1994, and in

particular under the In

‐ Plant and Emergency Operations guidelines

. . ., many projects were completed without the use of containments

and/or negative pressure, often times with only barrier tape and

signs demarcating the active work area. Some time shortly after the

1994 revisions, I spoke with someone at the Department regarding

the proper procedures to be utilized for collecting clearance air

samples.

The specific concern at the time was [that] the utilization of

aggressive air sampling techniques, on projects completed without

the presence of a negative pressure enclosure, could

potentially/likely result in the spreading of asbestos fibers into areas

outside of the regulatory work area

. . . .

As a result of my inquiry, I was advised at the time that the use of

aggressive air sampling techniques would only be prudent and

required when abatement efforts were completed within a negative

pressure enclosure (full containment or tent enclosure). On projects

where a negative pressure containment was not utilized, I was

advised that the work area should be free of visible asbestos/debris,

no visible pools of liquid or condensation should remain, and

clearance air samples should be collected in the same manner as

Background air samples

. . . .36 While I believe it to be the case, I was wondering if you could clarify

for me whether or not the interpretation I previously received is still

valid.

J.A. 480

‐ 81. The next day, Christopher Alonge, DOL Senior Safety and Health

Engineer, responded, stating in relevant part:

Yes, you are correct. For regulated abatement work areas that are

not required to have a negative pressure containment enclosure of

some kind, then aggressive methods are not required to be utilized.

For example, all negative pressure tent enclosures would be subject

to a[g]gressive methods, as well as any room, area, or space subject

to negative pressure ventilation requirements during abatement.

This clarification will be added to the first revision of the [Code

Rule] guidance document

. . . .

J.A. 479.

Third, the district court excluded the Code Rule guidance document

referenced at the close of the 2006 email exchange, which the DOL had published

on January 30, 2009. The 2009 guidance document simply restated the above

email exchange with nonsubstantive modifications as part of a list of “Frequently

Asked Questions.” J.A. 484.

The Government defends these evidentiary rulings on the grounds that the

proffered evidence was inadmissible hearsay and was irrelevant. But the

statements were not hearsay since they were offered, not for their truth, but for37 their effect on defendants’ state of mind, which was very much in dispute.

Hearsay, of course, is an out

‐ of

‐ court statement offered to prove the truth of the

matter asserted. Fed. R. Evid. 801(c). An out

‐ of

‐ court statement offered for some

other purpose, such as to show that a statement was made, United States v. Kohan

,

806 F.2d 18, 22 (2d Cir. 1986), to demonstrate the statement’s effect on the

listener, United States v. Puzzo

, 928 F.2d 1356, 1365 (2d Cir. 1991), or to show the

circumstances under which subsequent events occurred, United States v. Pedroza

,

750 F.2d 187, 200 (2d Cir. 1984), is not hearsay. In this case, the proffered

evidence was not offered for its truth but to show that the statements occurred

and that, given their effect on the defendants’ state of mind, they provided a

good faith basis for the defendants’ actions. Indeed, the district court

acknowledged as much. See J.A. 153 (noting that the evidence was not

inadmissible hearsay to the extent “offered to prove the state of mind of the

defendant”). But the district court also found that the proffered evidence was

irrelevant because it was “too remote in time and in substance.” J.A. 251.

Temporally, the district court noted that the 1994 conversation occurred five

years before the charged conspiracy began in 1999, and “the 2006 e

‐ mails38 occurred after the majority of the charged conduct in this case, and applied only

to alleged conduct that occurred prior to the e

‐ mails.” J.A. 153. And the 2009

guidance document was published after the last charged project had been

completed. Moreover, the district court found that the proffered evidence

concerned “[in

‐ plant] operations,” an exceptional designation under the Code

Rule that did not apply to any of the projects charged in the indictment. J.A. 251.

The district court further explained that, according to Hoosock’s own proffered

testimony, “aggressive air monitoring is required on all projects with negative

and containment or enclosure. And that is the vast majority of the projects here.”

Id.

In general, evidence is relevant if it has any tendency to make a material

fact more or less probable than it would be otherwise. See Fed. R. Evid. 401.

“[E]vidence need not be conclusive in order to be relevant. An incremental effect

. . . is sufficient.” Doe v. N.Y.C. Dep ʹ t of Soc. Servs.

, 649 F.2d 134, 147 (2d Cir. 1981).

With respect to temporal relevance, we have held that “[a] suggestion that an

item of evidence relates to a period that is too remote goes to both the item’s

relevance and its weight.” Fitzgerald v. Henderson

, 251 F.3d 345, 365 (2d Cir. 2001).39 At the same time, our case law “recognizes the possibility that an expression of

state of mind on one occasion may be relevant to state of mind at a later time

where the statement reflects ‘a continuous mental process.’” United States v.

Farhane

, 634 F.3d 127, 172 (2d Cir. 2011) (Raggi, J.

, concurring) (quoting United

States v. Cardascia

, 951 F.2d 474, 488 (2d Cir. 1991)).

While evidentiary rulings are reviewed for abuse of discretion, the

question of the defendants’ intent and good faith was a contested issue in this

case, and the definition of relevance under Fed. R. Evid. 401 is very broad. On

review, we find that the district court abused its discretion in finding that the

proffered evidence was temporally irrelevant. With respect to the 1994

conversation, while that evidence predated the charged conspiracy by five years,

it concerned the nature of an ongoing regulatory requirement and, according to

the defendants, informed the creation of a consistent company policy. In

addition, while CES air monitors attended state

‐ mandated refresher courses

during the relevant period, no pertinent portion of the Code Rule changed

between the 1994 conversation and the commencement of the charged

conspiracy in 1999, nor did the DOL promulgate any updated guidance that40 would disabuse the defendants of the understanding purportedly conveyed to

Hoosock. The 1994 conversation thus concerned “a pattern of activity that

continued up to the time of the charged conduct.” United States v. Curley

, 639

F.3d 50, 59 (2d Cir. 2011). In these circumstances, we do not perceive how the

passage of time rendered the 1994 conversation irrelevant.

As for the 2006 email exchange, it is true that that evidence post

‐ dated all

of the relevant projects charged in the indictment. But, again, the defendants

presented evidence that CES conducted air monitoring pursuant to a

longstanding interpretation of the Code Rule embodied in a standard company

policy. The 2006 email exchange thus provides evidence of the content of a

longstanding continuous mental process. Moreover, the DOL representative’s

favorable response to Hoosock’s inquiry is consistent with Hoosock’s proffered

testimony regarding the 1994 conversation, and therefore would tend to

corroborate that testimony.

Furthermore, while the Government notes that the 2006 email exchange

took place after Hoosock was aware of the Government’s investigation into CES,

that fact at most raises questions about Hoosock’s credibility. But again, the41 email exchange was not offered for the truth of the matters asserted therein by

Hoosock or the DOL representative. And the most probative part of the

exchange is not Hoosock’s initial inquiry, but DOL’s response thereto.

Finally, because the 2009 guidance document memorialized the 2006 email

exchange, it served to corroborate that evidence, and therefore was admissible

for the same reasons.

As for the district judge’s finding that the DOL guidance only concerned

“[in

‐ plant] operations,” J.A. 251, this finding invaded the province of the jury.

While Hoosock’s email in 2006 mentions that particular exception under the

Code Rule, the guidance he sought was arguably broader. In the email Hoosock

states his understanding that aggressive air sampling techniques are required

“when abatement efforts [a]re completed within a negative pressure enclosure

(full containment or tent enclosure),” but not “where a negative pressure

containment [i]s not utilized.” J.A. 480. The DOL representative responds, “Yes,

you are correct.” J.A. 479. At the very least, this guidance reasonably can be read

to allow air monitors to forgo aggressive monitoring where a negative pressure

enclosure is not employed, regardless of whether or not the project falls within42 the in

‐ plant operations exception. While this may not be the only way, or even

the best way, to read the guidance, the defendants were entitled to present their

reading to the jury.

Similarly unpersuasive is the district court’s conclusion that the guidance

was inapposite because a full negative pressure enclosure was required on “the

vast majority of the projects here.” J.A. 251. Regardless of when negative

pressure enclosures were in fact required under the Code Rule, Copeland and

Hoosock testified that they believed in good faith that enclosures sufficient to

trigger aggressive sampling were not required under AV

‐ 120, and the evidence

showed that many of the charged projects were in fact conducted without any

kind of negative pressure enclosure. The defendants contended that to have

conducted aggressive sampling in such circumstances would have implicated

the concerns Hoosock voiced about “spreading of asbestos fibers into areas

outside of the regulatory work area,” J.A. 481, concerns the DOL had recognized

as legitimate.

C. Brady Claim43 Under Brady and its progeny, “the Government has a constitutional duty

to disclose favorable evidence to the accused where such evidence is ‘material’

either to guilt or to punishment.” United States v. Coppa

, 267 F.3d 132, 139 (2d Cir.

2001). “Favorable evidence includes not only evidence that tends to exculpate the

accused, but also evidence that is useful to impeach the credibility of a

government witness.” Id. “[E]vidence is ‘material’ within the meaning of Brady

when there is a reasonable probability that, had the evidence been disclosed, the

result of the proceeding would have been different,” such that the failure to

disclose “‘undermine[s] confidence in the verdict.’” Cone v. Bell

, 556 U.S. 449,

469–70 (2009) (quoting Kyles v. Whitley

, 514 U.S. 419, 435 (1995)). Thus, “[t]here

are three components of a true Brady violation: (1) The evidence at issue must be

favorable to the accused, either because it is exculpatory or because it is

impeaching; (2) that evidence must have been suppressed by the [Government],

either willfully or inadvertently; and (3) prejudice must have ensued.” United

States v. Jackson

, 345 F.3d 59, 71 (2d Cir. 2003) (quoting Strickler v. Greene

, 527 U.S.

263, 281–82 (1999)).44 “Although the government’s obligations under Brady may be thought of as

a constitutional duty arising before or during the trial of a defendant, the scope

of the government’s constitutional duty

. . . is ultimately defined retrospectively,

by reference to the likely effect that the suppression of particular evidence had

on the outcome of the trial.” Coppa

, 267 F.3d at 140. As a result, “strictly

speaking, there is never a real ‘ Brady violation’ unless the [Government’s]

nondisclosure was so serious that there is a reasonable probability that the

suppressed evidence would have produced a different verdict.” Strickler

, 527

U.S. at 281. This aspect of Brady affects not only what the Government is

obligated to disclose, but when it is required to do so. Temporally, “the timing of

a disclosure required by Brady is

. . . dependent upon the anticipated remedy for

a violation of the obligation to disclose: the prosecutor must disclose

. . .

exculpatory and impeachment information no later than the point at which a

reasonable probability will exist that the outcome would have been different if

an earlier disclosure had been made.” Coppa

, 267 F.3d at 142.

Here, the defendants claim that the Government violated its Brady

obligations by failing in a timely manner to turn over certain handwritten45 interview notes taken by EPA Agent Michael Dwyer. During pretrial discovery,

the Government turned over typewritten summaries of investigative interviews

Agent Dwyer conducted, but no handwritten notes. During the Government’s

case

‐ in

‐ chief, Agent Dwyer testified about interviews he conducted with three

CES air monitors

— Dunn, Juliano, and Michael Pettit. As relevant here, Dwyer

testified that Juliano and Pettit told him that they had never used aggressive air

sampling techniques while employed at CES. Dwyer also testified that Dunn had

initially stated that she had “primarily not” used aggressive sampling

techniques, J.A. 177, but in a later interview stated that she “always utilized

aggressive air monitoring techniques when required.” G.A. 408.

Several days after Dwyer testified, the Government called an investigator

with the New York State Department of Environmental Conservation, James

Masuicca, who was present with Dwyer at the interviews of Dunn and Juliano.

Masuicca testified that Dwyer had taken handwritten notes during the

interviews, and that Masuicca had reviewed those notes before testifying.

Having previously been unaware of Dwyer’s notes, defense counsel requested

that they be produced. After a colloquy, the Government agreed to turn the notes46 over, explaining that it had not realized that Masuicca had reviewed the notes

before testifying. Based on this belated disclosure, defense counsel moved to

strike Dwyer’s testimony and dismiss the indictment. The district court denied

that motion, but gave the defendants time to review the notes and leave to recall

Dwyer if they so desired.

It transpired that Dwyer’s notes of the interview with Juliano contained an

unexplained reference to the CES “Cheat Sheet,” which is not mentioned in

Dwyer’s typewritten interview reports. As noted above, the Cheat Sheet

indicates that it was CES policy to use aggressive sampling techniques for all

projects “with Full Containment.” The defendants maintain that Juliano’s

reference to the Cheat Sheet supported their theory that the defendants operated

under a good

‐ faith belief that, under the Code Rule, air monitors were not

required to use aggressive sampling techniques in the absence of a full enclosure

with negative air pressure. Defense counsel cross

‐ examined Masuicca about

Dwyer’s notes and the reference to the Cheat Sheet, but elected not to recall

Dwyer. Nevertheless, the defendants contend that the Government’s belated47 disclosure of the notes prevented them from effectively using the notes to

undermine Dwyer’s testimony.

The Government argues that Dwyer’s handwritten notes were not material

under Brady and that the timing of their disclosure did not prevent their effective

use at trial. We agree. To begin with, Dwyer’s notes were at best marginally

helpful to the defense. There was no dispute at trial that the Cheat Sheet existed

or that it had been referenced in investigative interviews. Indeed, defense

counsel cross

‐ examined Pettit about statements he made regarding the Cheat

Sheet during his interview with Dwyer. Moreover, the reference to the Cheat

Sheet was not inconsistent with Dwyer’s testimony that Juliano had admitted

that he had never used aggressive sampling techniques while employed at CES.

The Cheat Sheet concerned CES’s written policy with regard to air sampling;

Dwyer testified as to what Juliano stated he actually did, which may or may not

have complied with company policy or with the Code Rule and other applicable

regulations. And to the extent defense counsel believed that Dwyer’s notes truly

contradicted Dwyer’s testimony, the district court afforded the defense the

opportunity to recall Dwyer to try to impeach him. Whatever effect an earlier48 disclosure of the notes would have had on the trial, it falls far short of

“‘undermin[ing] confidence in the verdict.’” Cone

, 556 U.S. at 470 (quoting Kyles

,

514 U.S. at 435).

This is not to suggest, however, that the prosecutors did nothing wrong in

failing to disclose Dwyer’s handwritten notes along with the typewritten

summaries. To begin with, we see no reason

— and the Government offers none

— why the prosecutors here could not and should not have “acted in favor of

disclosing the Brady material earlier.” United States v. Rittweger

, 524 F.3d 171, 182

(2d Cir. 2008).

Moreover, Brady is not the only source of the Government’s disclosure

obligations. Federal Rule of Criminal Procedure 16(a)(1)(B) provides that,

“[u]pon a defendant’s request, the government must disclose to the defendant

. . . (ii) the portion of any written record containing the substance of any relevant

oral statement made before or after arrest if the defendant made the statement in

response to interrogation by a person the defendant knew was a government

agent.” Fed. R. Crim. P. 16(a)(1)(B) (emphasis added). By its plain terms, this rule49 encompasses both typewritten summaries and contemporaneous handwritten

notes. 7 The prosecutors violated their obligations under this rule in this case.

Moreover, the Government’s failure to disclose Dwyer’s interview notes

raises a further concern under 18 U.S.C. § 3500. Insofar as Dwyer testified as a

witness to various air monitors’ statements, his interview notes can be viewed as

a witness’s prior “statement” relating to the subject matter of his testimony,

which statement the Government was obliged to disclose pursuant to § 3500.

Nonetheless, for the reasons already explained, the district court’s ruling

here reduced any prejudice to a minimum. Accordingly, while “we are

disappointed by the government’s failure to disclose [Dwyer’s handwritten

notes] in a more timely fashion,” Rittweger

, 524 F.3d at 183, that failure does not

support the defendants’ request for a new trial in this case.

D. The Government’s Rebuttal Summation

7 In United States v. Koskerides

, 877 F.2d 1129 (2d Cir. 1989), we held that the Government had

fully complied with Rule 16 “by providing [the defendant] with the typewritten memoranda of

interviews prepared from the agent’s handwritten notes.” Id. at 1133. That case, however,

applied an earlier version of the rule, which required the Government to disclose only “the

substance of any oral statement” that was made by the defendant during interrogation and that

the Government intended to offer at trial. Id. (quoting the then

‐ operable language of the rule).

Rule 16 was amended in 1991 to add the language referencing “any written record,” broadening

the Government’s disclosure obligations and superseding Koskerides in this respect. See Fed. R.

Crim P. 16, Advisory Comm. Notes (1991 Amendments).50 As already noted in connection with the Government’s opening statement

and opening summation, “[i]t is well established that prosecutors may not

‘vouch for their witnesses’ truthfulness.’” Carr

, 424 F.3d at 227 (quoting Modica

,

663 F.2d at 1179)). A prosecutor also may not “express his or her personal belief

or opinion as to the truth or falsity of any testimony or evidence or guilt of the

defendant.” Modica

, 663 F.2d at 1178 (quoting ABA Standards for Criminal

Justice, Standard 3

‐ 5.8(b) (1980)). These proscriptions are central to the fair

administration of justice, as comments that “convey the impression that evidence

not presented to the jury, but known to the prosecutor, supports the charges

against the defendant

. . . jeopardize the defendant’s right to be tried solely on

the basis of the evidence presented to the jury.” United States v. Young

, 470 U.S. 1,

18 (1985). Moreover, “the prosecutor’s opinion carries with it the imprimatur of

the Government and may induce the jury to trust the Government ʹ s judgment

rather than its own view of the evidence.” Id. at 18–19. As we have explained,

The prosecutor is cloaked with the authority of the United States

Government; he stands before the jury as the community’s

representative. His remarks are those, not simply of an advocate, but

rather of a federal official duty

‐ bound to see that justice is done. The

jury knows that he has prepared and presented the case and that he

has complete access to the facts uncovered in the government’s

investigation. Thus, when the prosecutor conveys to the jurors his51 personal view that a witness spoke the truth, it may be difficult for

them to ignore his views, however biased and baseless they may in

fact be. Personal expressions of opinion are especially improper if

phrased to leave the impression that the prosecutor’s opinion is

based on matters in the investigative file and not in the trial

evidence.

Modica

, 663 F.2d at 1178

‐ 79 (2d Cir. 1981) (internal citation omitted).

Despite these clear proscriptions, the prosecutor here, as the Government

now concedes, made repeated improper comments in his rebuttal summation.

Such improprieties, arising when defense counsel no longer has an opportunity

to reply, are particularly egregious.

First, the prosecutor began his rebuttal summation by stating:

[L]adies and gentleman, apparently we have made a terrible

mistake. Apparently we have misunderstood the evidence. The

agents who have worked as you have heard for thirteen years in this

field don’t know how to investigate a case. Don’t know how to find

out if asbestos debris and other materials were left behind or if

illegal activities occurred. How did this happen? How was it that we

came to this situation where Department of Justice people, Assistant

U.S. Attorneys from this town and this community—

J.A. 277. Defense counsel objected, and the district court sustained, stating,

“Come on, Mr. Benedict. Just argue the case.” Id. The Government now concedes

that the prosecutor’s reference to the local community constituted impermissible52 vouching insofar as it impermissibly injected the prosecution team’s own beliefs

into the case.

Second, after noting that the punishment AAPEX and its owner received

was outside the record of this case, the prosecutor then explained to the jury:

There are all sets of circumstances that you don’t know anything

about that we can’t go into, that we can’t explain to you. It is just a

fact. [EPA Agent] Derx has been prosecuting cases for thirteen years

and is a recognized expert in the field. I assure you, he has more to

do than he knows what to do with.

Id. The Government now concedes that this comment too, which referenced facts

not in evidence, was improper.

Finally, the prosecutor made reference to the effects the verdict would

have:

[D]id they act over the course of nine years with sympathy for their

victims? Did they in any way show a dedication to complying with a

law that protects the public from a known carcinogen? Did they in

any meaningful way instruct their employees to follow the rules?

. . . [Copeland] instructed everybody to violate the law. She gathered

them. She marshalled them. She still works for CES. CES is still in

business. Your verdict is going to have consequences, ladies and

gentlemen.

J.A. 281. Defense counsel then objected, and the district court overruled the

objection. Id. The Government concedes that the “consequences” comment was53 improper in that it urged the jury to reach a decision based on impermissible

considerations

— viz.

, protecting the public and deterring future lawbreaking.

While the criminal justice system as a whole strives to achieve such protection

and deterrence, the jury role in that process is specifically and singularly focused,

not on the possible “consequences” of a verdict, but on whether the government

has sustained its burden to prove guilt beyond a reasonable doubt.

In light of these concessions, we need not address the additional remarks

on rebuttal summation that the defendants challenge. The conceded errors are

sufficient to establish that the Government’s rebuttal summation included

repeated improprieties that “divert[ed] the jury from consideration of the

evidence.” United States v. Terry

, 702 F.2d 299, 313 (2d Cir. 1983).

F. Cumulative Prejudice

We now turn to the cumulative prejudice caused by the foregoing errors

and improprieties. These various errors carry different prejudice standards.

When reviewing claims of prosecutorial misconduct based on inappropriate

remarks in the Government’s opening statement or summations, we will reverse

if the misconduct caused “substantial prejudice by so infecting the trial with54 unfairness as to make the resulting conviction a denial of due process.” United

States v. Elias

, 285 F.3d 183, 190 (2d Cir. 2002) (internal quotation marks omitted);

see also United States v. Helmsley

, 941 F.2d 71, 96 (2d Cir. 1991). “In assessing

whether prosecutorial misconduct caused ‘substantial prejudice,’ this Court has

adopted a three

‐ part test,” which considers “the severity of the misconduct, the

measures adopted to cure the misconduct, and the certainty of conviction absent

the misconduct.” Elias

, 285 F.3d at 190.

With respect to erroneous evidentiary rulings improperly admitting or

excluding evidence, we ordinarily will reverse only where the improper

admission or exclusion “affect[ed] substantial rights” and therefore was not

harmless. See United States v. Miller

, 626 F.3d 682, 688 (2d Cir. 2010) (quoting Fed.

R. Crim. P. 52(a)). Where the appellant fails to preserve an evidentiary challenge

by lodging a timely objection, we review for plain error. See United States v.

Gaind

, 31 F.3d 73, 76 (2d Cir. 1994). Under that standard, we consider whether

there was “(1) ‘error,’ (2) that is ‘plain,’ and (3) that ‘affect[s] substantial rights.’”

Johnson v. United States

, 520 U.S. 461, 466–67 (1997) (quoting United States v.

Olano

, 507 U.S. 725, 732 (1993)) (alteration in the original). If these conditions are55 met, we may then exercise “discretion to notice a forfeited error, but only if (4)

the error ‘seriously affects the fairness, integrity, or public reputation of judicial

proceedings.’” Id. (quoting Olano

, 507 U.S. at 732).

With these standards in mind, we would hesitate to vacate and remand

this case for a new trial based on any one of the errors discussed above in

isolation, or perhaps even any one category of those errors. But considering the

record as a whole, we are compelled to conclude a new trial is warranted.

To begin with, evidentiary errors and prosecutorial misconducted infected

every stage of the trial below. In the Government’s opening statement, the

prosecutor made repeated improper comments; on direct examination of

numerous key government witnesses, improper evidence was introduced and

improper questions were asked; during the defense case, evidence supporting

one of the defendants’ principal trial defenses was improperly excluded; during

the Government’s initial summation, the prosecutor made yet another improper

comment; and during the Government’s rebuttal summation, the prosecutor

made still more improper comments. Impropriety permeated the proceedings

here.56 Moreover, the improprieties were not insubstantial. The prosecutor’s

comments in the Government’s opening statement repeatedly bolstered the

credibility of key government witnesses, in direct contravention of repeated

admonitions from the district court. Although defense counsel at times failed to

object, plainly improper bolstering continued through the Government’s

case

‐ in

‐ chief and into the Government’s summation. We will not lightly overlook

such repeated violations of clearly announced rules. See Borello

, 766 F.2d at 58

(“For us to disapprove of the present procedure permitting the bolstering of the

witness’s testimony and then to declare it harmless error would make our

remarks in the previous cases purely ‘ceremonial.’”).

The improperly excluded evidence of good faith was also significant. In its

absence, the jury was left without vital context and corroboration for the

defendants’ defense of good faith and lack of criminal intent. As already noted,

while the intent element differed among the various charges

– for example, only

the mail fraud charge required a specific intent to defraud

– the complex

regulatory background against which the defendants conducted their activites

made their professions of good faith relevant, directly or indirectly, to every57 question of knowledge and intent in dispute in the case. Furthermore, the

defendants’ protestations of good faith bore directly on assessment of their

credibility, and the improper exclusion of corroboration of their good faith

undermined the fairness of that evaluation. As the Tenth Circuit stated in similar

circumstances, with the aid of such corroboration “[a] jury would be more

inclined to give weight and consideration to statements and conversations upon

which a conclusion was based than to a mere statement by the accused of his

conclusion, unsupported by such statements.” Miller v. United States

, 120 F.2d

968, 970–71 (10th Cir. 1941).

The comments in the Government’s rebuttal summation were troubling as

well. We recognize that summations, and particularly rebuttal summations, are

not fully constructed in advance. See Donnelly v. DeChristoforo

, 416 U.S. 637,

646–47 (1974). But the improvisatory nature of a rebuttal summation is no license

for improper vouching, referencing facts not in the record, or appealing to

extraneous “consequences” of a verdict.

We further find that the curative measures employed by the district court

were insufficient to overcome the prejudicial effect of these significant errors. To58 be sure, the district court sustained defense objections to the prosecutor’s

improper remarks in the Government’s opening, while making clear that

credibility determinations were for the jury alone to make. But improper

bolstering continued into later stages of the trial without similarly “emphatic”

curative steps. United States v. Friedman

, 909 F.2d 705, 710 (2d Cir. 1990). As for

the three concededly improper comments in the Government’s rebuttal

summation, the district court sustained two objections, but overruled the

objection to the prosecutor’s impermissible reference to the “consequences” of

the jury’s verdict. And the jury instructions included only standard charges on

the nature of evidence, the testimony of government witnesses, and the burdens

of proof, with no special curative charges.

As for the alleged certainty of conviction absent the errors, the

Government’s case was quite strong but not overwhelming. The Government’s

evidence, while extensive, contained no “smoking gun,” and relied heavily upon

testimony from witnesses taking the stand pursuant to immunity and

cooperation agreements. Copeland and Hoosock also testified for the defense

and denied any wrongdoing, requiring the jury to judge their credibility and59 weigh it against the credibility of the Government’s witnesses. Furthermore,

while the defendants attempted to present their good

‐ faith defense to the jury,

the presentation was substantially undercut by the district court’s evidentiary

rulings, which prevented the defendants from providing important context and

corroboration. See Miller

, 120 F.2d at 970–71.

Under the circumstances, we are compelled to conclude that the totality of

the Government’s misconduct in this case, combined with the district court’s

erroneous exclusion of evidence favorable to the defense, denied the defendants

their right to a fair trial. Accordingly, the judgments of conviction as to CES,

Copeland, and Dunn are vacated, and a new trial is ordered.

II. The Government’s Appeal

Because we vacate the convictions of CES, Copeland, and Dunn, we need

not consider the Government’s cross

‐ appeal of those defendants’ sentences. But

we must address the Government’s appeal with respect to the sentences of Allen

and Onoff. Though convicted at trial, Allen has not challenged his conviction on

appeal, and Onoff was convicted pursuant to a guilty plea. The Government

challenges four aspects of Allen and Onoff’s sentences

— the amount of60 restitution awarded; the loss calculated for purposes of the advisory sentencing

guidelines; the use of the fraud guideline, U.S.S.G. § 2B1.1, rather than the

hazardous substances guideline, U.S.S.G. § 2Q1.2; and the substantive

reasonableness of the sentences. To place these issues in context, we first describe

the sentencing proceedings below in greater detail.

After trial, the Government argued that, for purposes of calculating

restitution and the applicable guidelines ranges, the losses caused by the

defendants’ criminal activity generally fell into three categories: (1) the costs of

cleaning up the contamination caused by AAPEX and Paragon’s rip

‐ and

‐ run

projects; (2) payments to CES for fraudulent air monitoring services on

abatement projects conducted at Syracuse University by contractor

Environmental Protection Services, Inc., which performed the underlying

abatement work properly; and (3) payments made by victims to AAPEX and

Paragon for rip

‐ and

‐ run projects facilitated by CES’s fraudulent air monitoring.

For defendant Onoff

— who, unlike the other individual defendants, was not a

CES employee but a supervisor at Paragon

— the Government advocated a61 narrower set of losses, calculated as the cleanup costs and contract amounts paid

in connection with three Paragon abatement projects.

The Probation Office adopted this categorization of losses in the

defendants’ initial Presentence Reports (“PSRs”). For Allen, the Probation Office

initially calculated the losses as totaling approximately $439,000 for category one,

$141,000 for category two, and $210,000 for category three. In all, this amounted

to approximately $790,000 in losses, resulting in a 14

‐ level increase to his base

offense level. See U.S.S.G. § 2B1.1(b)(1)(H). For Onoff, the Probation Office

calculated his losses as totaling approximately $228,000, resulting in a 12

‐ level

increase. Id. The Allen’s guidelines imprisonment range was calculated as 121 to

151 months; Onoff’s was 51 to 63 months. These calculations were based on the

fraud guideline, U.S.S.G. § 2B1.1, rather than the hazardous substances

guideline, U.S.S.G. § 2Q1.2, because, given the large loss amounts, the fraud

guideline produced the higher total offense level. See U.S.S.G. § 3D1.3(a).

The defendants objected to the initial loss calculations. After holding a

hearing, the district court issued an order setting each defendant’s restitution

liability. As relevant here, the district court concluded that, with respect to the62 losses in category one (cleanup costs), the Government was “precluded” from

claiming losses greater than $87,345, which was the amount of restitution the

Government had previously agreed to collect from AAPEX and Paragon in plea

agreements with those defendants. Special App. 15. Similarly, with respect to the

losses in category two (payments to CES for fraudulent services), the district

court determined that these losses should only include payments for fraudulent

final clearance air monitoring services and should not include payments for

other air monitoring services, such as background monitoring prior to

abatement. In the district court’s view, payments made to CES for services other

than final clearance air monitoring were “not related to the offense conduct,” id.

at 11, and therefore the district court limited the losses in category two to

approximately $25,000, id. at 12.

In total, the district court ordered restitution of approximately $117,000.

The district court held CES responsible for this entire amount, but reduced the

joint and several liability of the individual defendants based upon each

defendant’s role in the charged scheme and financial circumstances. As relevant63 here, the court apportioned five percent of the total restitution liability to Allen

and thirty percent of the Paragon

‐ specific restitution liability to Onoff.

After the restitution order, the Probation Office, in line with the district

court’s order, issued amendments to each defendant’s PSR, recalculating each

defendant’s guideline range by substituting the defendant’s apportioned

restitution amount for the previously calculated loss amount. As a result, Allen’s

range became 33 to 41 months, and Onoff’s range became 12 to 18 months.

On October 21, 2011, the district court sentenced the various CES

defendants. At each sentencing, the district court adopted the factual statements

in the PSRs, as well as their guidelines calculations. Both in its sentencing

submissions and at each sentencing hearing, the Government objected to the

guidelines calculation in the PSRs, arguing that restitution and loss are distinct,

and that if the amounts set in the restitution order were used as loss amounts,

then the defendants’ guidelines ranges should be determined by the hazardous

substances guideline rather than the fraud guideline. At the sentencings of CES,

Copeland, and Dunn, the district court “so noted” the Government’s objections.

G.A. 937, 952, 979. When the Government again raised the same objection at64 Allen’s sentencing, however, the court stated, after a colloquy, that, “[n]ow that

you have brought that up for the first time as far as I am aware, I will take care of

that.” G.A. 1000. The court explained that it would “add to the record for all of

the other sentencings that I will also accept and take into account the factors and

advisory guidelines under [the hazardous substances guideline].” G.A. 1002. The

court explained that “[t]his is an acceptable, flexible approach by the Second

Circuit, especially at arriving at a more appropriate sentence outside of the

guidelines.” Id. The district court later made a similar statement at Onoff’s

sentencing on November 21, 2011.

Ultimately, the court imposed below

‐ guidelines sentences on all five

defendants. As relevant here, Allen, and Onoff each received incarcerative

sentences of “time served (1 day),” representing the brief time each spent being

processed by the U.S. Marshals following their initial appearances. Allen and

Onoff received no fines. G.A. 303, 09. Each defendant was ordered to pay

restitution as calculated in the court’s prior order.65 A. Restitution Order

We turn first to the district court’s restitution order, which we review for

for abuse of discretion. See United States v. Lucien

, 347 F.3d 45, 52 (2d Cir. 2003).

“To identify such abuse, we must conclude that a challenged ruling rests on an

error of law, a clearly erroneous finding of fact, or otherwise cannot be located

within the range of permissible decisions.” United States v. Pearson

, 570 F.3d 480,

486 (2d Cir. 2009) (quoting United States v. Boccagna

, 450 F.3d 107, 113 (2d Cir.

2006)).

By statute, district courts “shall order restitution to each victim in the full

amount of each victim’s losses as determined by the court and without

consideration of the economic circumstances of the defendant.” 18 U.S.C.

§ 3664(f)(1)(A). Where more than one defendant contributes to a given victim’s

loss, however, courts “may apportion liability among the defendants to reflect

the level of contribution to the victim’s loss and economic circumstances of each

defendant.” Id. § 3664(h). In ordering restitution, “a district court must consider

that the purpose of restitution is essentially compensatory: to restore a victim, to

the extent money can do so, to the position he occupied before sustaining66 injury.” United States v. Gonzalez

, 647 F.3d 41, 66 (2d Cir. 2011) (quoting Boccagna

,

450 F.3d at 115) (internal quotation marks omitted).

Here, the Government first argues that the district court erred in relying

on the plea agreements with AAPEX and Paragon to determine the restitution

necessary to cover cleanup costs. The defendants respond that, because the

guidelines provide that “stipulations shall

. . . not contain misleading facts,”

U.S.S.G. § 6B1.4(a), the stipulations constituted presumptively reasonable factual

representations by the Government as to the relevant loss amounts. The

defendants contend that these representations constitute adequate evidence

supporting the district court’s findings.

But as the Government points out, the court below did not treat the

stipulations here merely as persuasive evidence of the relevant loss amounts. The

only basis the district court provided for its finding as to the losses for cleanup

costs was the legal conclusion that the Government was “precluded” from

seeking more in restitution from these defendants than it had previously sought

from AAPEX and Paragon. Special App. 15. Although the reasoning behind this

legal conclusion is not entirely clear from the record, it appears that the district67 court was adopting the defendants’ argument, pressed below but now

abandoned on appeal, that the Government should be “estopped” from seeking

restitution in excess of the earlier stipulations. G.A. 251–52. The district court

thus apparently relied on the doctrine of nonmutual collateral estoppel, in which

“one party is barred from relitigating an issue decided in a previous proceeding,

where the parties were not the same in the prior proceeding.” United States v.

Ustica

, 847 F.2d 42, 49 n.14 (2d Cir. 1988).

The district court’s apparent reliance on this doctrine in setting restitution

in this case was erroneous. To begin with, the Supreme Court has held that

nonmutual collateral estoppel is generally unavailable against the Government,

see United States v. Mendoza

, 464 U.S. 154, 159–64 (1984), and has long rejected

application of nonmutual collateral estoppel against the Government in criminal

trials, see Standefer v. United States

, 447 U.S. 10, 21–25 (1980). Several of our sister

circuits have rejected the application of nonmutual collateral estoppel in criminal

sentencing. See United States v. Pierce

, 409 F.3d 228, 233–34 (4th Cir. 2005); United

States v. Montes

, 976 F.2d 235, 239 (5th Cir. 1992); United States v. Elfand

, 1 F.

App ʹ x 650, 652

‐ 53 (9th Cir. 2001) (per curiam). And we have been wary of giving68 preclusive effect to factual findings made in a criminal sentencing even when the

parties to the subsequent proceeding are the same, holding that “precluding

relitigation on the basis of [sentencing] findings should be presumed improper.”

United States v. U.S. Currency in the Amount of $119,984

, 304 F.3d 165, 172 (2d Cir.

2002) (quoting SEC v. Monarch Funding Corp.

, 192 F.3d 295, 306 (2d Cir. 1999))

(alteration in the original). In light of this substantial authority, we hold that

principles of nonmutual collateral estoppel do not prohibit the Government from

relitigating a factual issue in one criminal sentencing that has been decided in a

prior sentencing of another defendant.

This does not mean, of course, that a Governmental factual representation

in one part of a case is not relevant to factual determinations in other parts of the

case. Indeed, a decision in the Seventh Circuit suggests that where a district court

accepts inconsistent factual representations from the Government, and fails to

provide an explanation, the unexplained discrepancy may indicate a clear error.

See United States v. Barnes

, 602 F.3d 790, 797 (7th Cir. 2010) (holding that, where a

district court without explanation rejected a stipulated drug quantity for one69 co

‐ conspirator that it had accepted for other co

‐ conspirators based on the same

factual record, “such a discrepancy in factual findings is clearly erroneous”).

But the decision below cannot be justified as an attempt to avoid

problematic inconsistent factual findings. Apart from the fact that the district

court did not frame its decision in those terms, the district court was simply

mistaken in finding that the plea agreements with AAPEX and Paragon had

“accepted $87,345.00 as being the amount of loss these victims suffered.” Special

App. 11. In fact, the record shows that the losses stipulated in the plea

agreements and the losses caused by the defendants here were different. AAPEX

was charged with two counts: conspiracy to violate the Clean Air and Clean

Water Acts, and mail fraud against its insurance carrier. While AAPEX pled

guilty to both of these crimes, the stipulated restitution on which the district

court relied pertained only to the mail fraud offense and was to be paid to

AAPEX’s insurer, Team Transportation Trust. The AAPEX plea agreement says

nothing about the losses for cleanup costs suffered by the property owners who

were the victims of the defendants’ crimes here.70 As for the Paragon plea agreement, Paragon pled guilty to conspiring to

violate the Clean Air Act in connection with three rip

‐ and

‐ run abatement

projects. The stipulated restitution amount, however, pertained to only one of

those projects. Nothing in the agreement suggests that the amount on which the

district court relied represented the total loss for cleanup costs suffered by all of

the property owners for Paragon projects. 8

Beyond the finding as to category one (cleanup costs), the Government

also challenges the district court’s decision to exclude from its restitution award

certain costs in category two (payments to CES for fraudulent services)

— costs

not associated with final clearance air sampling. The district court gave three

reasons for finding these costs to be unrelated to the offense conduct, but each is

unpersuasive.

First, the district court found that non

‐ air sampling services, such as bulk

asbestos sampling and analysis

— that is, testing of solid materials for asbestos

content

— “did not pertain to the crimes charged.” Special App. 11. But the

8 The defendants urge us to affirm the district court’s finding as to the losses for cleanup costs

on alternative grounds independent of the plea agreements with AAPEX and Paragon. We

decline to do so, as the factual issues the defendants raise are appropriately addressed by the

district court in the first instance.71 indictment charged that the defendants falsely represented to CES’s clients that

CES would perform all of its work in compliance with the law, not just air

monitoring. And at trial, the Government presented evidence that CES’s

laboratory violated applicable regulations when analyzing all kinds of samples,

not just final clearance air samples. Elsewhere in its restitution order, the district

court acknowledged and accepted this evidence. See id. at 9 n.2.

Second, the district court noted that air monitoring services other than

final clearance air sampling, such as background sampling and pre

‐ abatement

sampling, “are required prior to any asbestos abatement work,” and are

“generally done without entering the contained abatement work area and

therefore would not be affected by improper asbestos abatement.” Id. at 11–12.

But for all of the projects in category two, it was undisputed that the underlying

abatement work had been conducted properly and that the defendants’

wrongdoing consisted of fraudulently certifying the propriety of its own

services. Contrary to the district court’s apparent assumption in this instance, the

defendants’ crimes were broader than merely aiding and abetting unlawful

abatement work. As the district court noted, even where “the actual asbestos72 abatement was done properly,” the “sampling and laboratory analysis done by

CES were not done properly.” Id. at 9 n.2.

Third, the district court found that “the government failed to establish any

wrongdoing pertaining to the sampling and analysis of background air

sampling, pre

‐ abatement air sampling, and environmental air sampling.” Id. at

12. But again, the district court itself found that, beyond air sampling, the

“laboratory analysis done by CES w[as] not done properly.” Id. at 9 n.2.

In light of these legal errors and conflicting factual findings, we conclude

that the district court clearly erred in setting the amount of restitution.

B. Procedural and Substantive Reasonableness

In addition to the restitution order, the Government also challenges the

procedural and substantive propriety of the defendants’ sentences. We review a

district court’s sentence for procedural and substantive reasonableness, a

standard “akin to review for abuse of discretion.” United States v. Cavera

, 550 F.3d

180, 188 (2d Cir. 2008) (en banc) (quoting United States v. Fernandez

, 443 F.3d 19,

27 (2d Cir. 2006)). With respect to procedural reasonableness, a district court

commits procedural error when, among other things, it “makes a mistake in its73 Guidelines calculation.” Id. at 190. We review district court’s factual findings

informing its guidelines calculation for clear error, and its conclusions of law de

novo

. See United States v. Uddin

, 551 F.3d 176, 180 (2d Cir. 2009). With respect to

substantive reasonableness, a sentence is substantively unreasonable only in the

“exceptional case[] where the trial court’s decision ‘cannot be located within the

range of permissible decisions.’” Cavera

, 550 F.3d at 189 (quoting United States v.

Rigas

, 490 F.3d 208, 238 (2d Cir. 2007)).

We turn first to the Government’s procedural challenges, starting with the

challenge to the district court’s loss calculation for purposes of the fraud

guideline, U.S.S.G. § 2B1.1. As noted, the district court used the amounts

calculated in its restitution order as the relevant loss amounts. For the reasons

already explained, the restitution calculations rested on reversible legal and

factual errors. Those errors carried forward into the loss calculations.

In addition, even if the restitution calculations had been accurate, the

district court erred in mechanically using each defendant’s restitution liability

under 18 U.S.C. § 3664 as the relevant loss amount under U.S.S.G. § 2B1.1.

Though restitution and loss involve closely related calculations, which ultimately74 produce the same figure in many cases, the inquiries are not identical.

Restitution serves a compensatory function, Gonzalez

, 647 F.3d at 66, and

“focuses on the victim and the harm proximately caused by the defendant ʹ s

conduct.” United States v. Gossi

, 608 F.3d 574, 580 (9th Cir. 2010) (emphasis

omitted). Loss under the fraud guideline, by contrast, focuses on the defendant,

and seeks, however imperfectly, to measure the seriousness of his or her criminal

conduct. See United States v. Byors

, 586 F.3d 222, 225 (2d Cir. 2009). Because “[a]

defendant’s culpability will not always equal the victim’s injury,” United States v.

Catherine

, 55 F.3d 1462, 1465 (2d Cir. 1995), “an amount

‐ of

‐ loss calculation for

purposes of sentencing does not always equal such a calculation for restitution,”

United States v. Germosen

, 139 F.3d 120, 130 (2d Cir. 1998).

These different purposes are reflected in the relevant statutory and

guidelines provisions. Congress has authorized restitution for “the full amount

of each victim’s loss,” 18 U.S.C. § 3664(f)(1)(A), which we have held encompasses

only the “actual loss,” United States v. Marino

, 654 F.3d 310, 320 (2d Cir. 2011)

(quoting Germosen

, 139 F.3d at 130), that was “directly caused by the conduct

composing the offense of conviction,” id. (quoting United States v. Silkowski

, 3275 F.3d 682, 689 (2d Cir. 1994)). Loss for purposes of the fraud guideline, by

contrast, is defined as “the greater of actual loss or intended loss.” U.S.S.G.

§ 2B1.1 cmt. 3(A). Actual loss, in turn, is defined as “the reasonably foreseeable

pecuniary harm that resulted from the offense,” while intended loss is “the

pecuniary harm that was intended to result from the offense.” Id. § 2B1.1, cmt.

3(A)(i), (ii). The term “offense” in these provisions includes all of the defendant’s

offense conduct, as well as “all reasonably foreseeable acts and omissions of

others in furtherance of [any] jointly undertaken criminal activity.” U.S.S.G. §

1B1.3(a)(1)(B).

Furthermore, of particular relevance here, district courts may apportion

the full amount of restitution among multiple defendants “to reflect the level of

contribution to the victim’s loss and economic circumstances of each defendant.”

18 U.S.C. § 3664(h). Consideration of a defendant’s “economic circumstances,”

however, is not permitted with respect to the guideline calculation. See U.S.S.G.

§ 5H1.10 (providing that “socio

‐ economic status” is “not relevant in the

determination of a sentence” as calculated under the guidelines).76 Notwithstanding these distinctions between restitution and loss, the

defendants argue that we may affirm the district court’s loss calculations on the

ground that each defendant’s restitution liability naturally reflects the district

court’s assessment of the losses that each defendant intended or could

reasonably foresee. We decline to reframe the district court’s findings in this

way. While the district court’s apportionment of restitution in part reflected each

defendant’s role in the scheme alleged, which also may affect what losses each

defendant could foresee, the apportionment also reflected economic

considerations that have no place in calculating loss. See Special App. 14

(discussing Allen’s financial circumstances); id. 15 (discussing Onoff’s financial

circumstances). Although a sentencing court need not perform any “robotic

incantations” to fulfill its obligations under the guidelines, United States v. Crosby

,

397 F.3d 103, 113 (2d Cir. 2005), and “need only make a reasonable estimate of

the loss,” U.S.S.G. § 2B1.1, cmt. 3(C), we cannot presume that each defendant’s

restitution and loss amounts are the same absent some indication that the district

court made such a determination under the proper standards.77 The Government also challenges the district court’s reliance on the fraud

guideline rather than the hazardous substances guideline. The district court,

following the approach taken in the PSRs, grouped the counts against each

defendant under U.S.S.G. § 3D1.2(c). For counts grouped under that guideline,

U.S.S.G. § 3D1.3(a) provides that “the offense level applicable to a Group is the

offense level

. . . for the most serious of the counts comprising the Group, i.e.

, the

highest offense level of the counts in the Group.” Under the loss amounts

calculated by the district court, the fraud guideline produced an offense level of

20 for Allen and 13 for Onoff, while, according to the Government, the

hazardous substances guideline produced an offense level of 22 for Allen and 21

for Onoff. Nevertheless, the district court applied the fraud guideline, though it

stated, both at Allen and Onoff’s sentencings and in the respective statements of

reasons, that it would also consider the hazardous substances guideline.

The defendants contend that this approach to the guidelines calculation is

permissible under this Court’s decision in United States v. Dhafir

, 577 F.3d 411 (2d

Cir. 2009). In that case, we considered whether to calculate a defendant’s

guidelines range under U.S.S.G. § 2S1.1(a)(1), which sets the offense level for a78 money laundering offense based on the level of the underlying offense from

which the laundered funds were derived, where that level can be determined; or

under § 2S1.1(a)(2), which in other circumstances sets the offense level based on

the loss table in the fraud guideline. See Dhafir

, 577 F.3d at 414. We found that

certain “factual ambiguities” rendered it difficult to determine whether (a)(1) or

(a)(2) applied. Id. at 415. To begin with, it was unclear from the record “whether

[the] defendant used the proceeds of his fraud crimes to engage in promotional

money laundering.” Id

. In addition, if the laundered funds in fact represented

proceeds from another offense, applying subsection (a)(2) would have produced

the “odd” and “illogical result” that the defendant “would receive a lower

sentence if the laundered money was ‘criminally

‐ derived’ than if it was ‘legally

obtained.’” Id. (quoting district court opinion).

Given these unusual circumstances, we held that the district court was

“not bound in ambiguous circumstances

. . . to choose one Guidelines range in

particular,” but was “free to take the more flexible—and often more,

direct—approach of arriving at a more appropriate sentence outside the

Guidelines.” Id. Under such an approach, “the judge could simply look at all of79 the facts, take both suggestions into account, consider the § 3553(a) factors, and

come up with a ‘hybrid’ approach if he so chose.” Id. We noted that this possible

tack aligned with prior cases stating that omission of the guidelines calculation

may be justified in some instances “to avoid the need to resolve all of the factual

issues necessary to make precise determinations of some complicated matters.”

Id. (quoting Crosby

, 397 F.3d at 112); see also Cavera

, 550 F.3d at 190 (reaffirming

Crosby in this regard); id. at 200 n.4 (Raggi, J.

, concurring) (same).

But the flexible approach we endorsed in Dhafir is unsuited to this case. By

the time it calculated the defendants’ guidelines ranges, the district court had

resolved (albeit erroneously) all of the necessary factual issues. Nor did the

application of the grouping rules under § 3D1.3(a) or the hazardous substances

guideline present any unique or novel conceptual issues. Dhafir

, Crosby

, and

Cavera lay out a limited exception to the general rule that “a district court should

begin all sentencing proceedings by correctly calculating the applicable

Guidelines range.” Gall v. United States

, 552 U.S. 38, 49 (2007). In appropriate

cases, that exception can conserve judicial resources and avoid turning a difficult

guidelines calculation into an end unto itself, divorced from the considerations80 Congress has directed must ultimately determine an appropriate criminal

sentence. See Cavera

, 550 F.3d at 188–89; 18 U.S.C. § 3553(a). That limited

exception, however, is not a license for district courts to avoid calculating the

proper guidelines range when the facts have been determined and the law is

clear.

In short, the factual and procedural errors detailed above require us to

vacate the sentences of defendants Allen and Onoff and remand for

resentencing. Accordingly, we need not, and do not, consider whether their

sentences were substantively unreasonable.

CONCLUSION

For the foregoing reasons, the judgments of conviction as to CES,

Copeland, and Dunn, and the sentences of Allen and Onoff are VACATED

. The

case is REMANDED for a new trial as to CES, Copeland, and Dunn and for

resentencing as to Allen and Onoff.