17

‐ 1786

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U.S. v. Quatrella

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT

. C ITATION TO A SUMMARY

ORDER FILED ON OR AFTER J ANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY F EDERAL R ULE

OF A PPELLATE P ROCEDURE 32.1 AND THIS COURT ʹ S L OCAL R ULE 32.1.1. W HEN CITING A

SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT

, A PARTY MUST CITE EITHER THE

F EDERAL A PPENDIX OR AN ELECTRONIC DATABASE ( WITH THE NOTATION ʺ SUMMARY ORDER ʺ ). A

PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED

BY COUNSEL

.

At a stated term of the United States Court of Appeals for the Second

Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in

the City of New York, on the 9 th day of February, two thousand eighteen.

PRESENT: JOHN M. WALKER, JR.,

GERARD E. LYNCH,

DENNY CHIN,

Circuit Judges

.

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UNITED STATES OF AMERICA,

Appellee

,

v. 17

‐ 1786

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DAVID QUATRELLA,

Defendant

‐ Appellant

.

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FOR APPELLEE: DAVID E. NOVICK, Assistant United States

Attorney (Avi M. Perry, Sandra S. Glover,

Assistant United States Attorneys, on the brief ),

for John H. Durham, Interim United States

Attorney for the District of Connecticut, New

Haven, Connecticut.‐ 2

‐ FOR DEFENDANT

‐ APPELLANT: RICHARD A. HAMAR, San Diego, California.

Appeal from the United States District Court for the District of

Connecticut (Thompson, J. ).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment and order of the district court are

AFFIRMED

.

Defendant

‐ appellant David Quatrella appeals the district court ʹ s May 25,

2017 judgment, entered upon his guilty plea, convicting him of conspiracy to commit

wire fraud in violation of 18 U.S.C. § 371 for his participation in an insurance fraud

scheme and sentencing him principally to 36 months ʹ imprisonment. Quatrella also

appeals the district court ʹ s July 14, 2017 order directing him to pay $1,976,558.62 in

restitution to investor victims pursuant to the Mandatory Victim Restitution Act

( ʺ MVRA ʺ ), 18 U.S.C. § 3663A. Quatrella principally contends that (1) the district court

used an erroneous intended loss amount to calculate the Sentencing Guidelines range

and (2) the restitution proceedings were procedurally flawed and, in any event, the

investors are not victims under the MVRA. He also argues that he received ineffective

assistance of counsel at sentencing. We assume the parties ʹ familiarity with the

underlying facts, procedural history, and issues on appeal.

From approximately 2008 to 2016, Quatrella, an attorney, conspired with

others to defraud life insurance providers by fraudulently inducing the providers to‐ 3

‐ issue three stranger

‐ originated life insurance ( ʺ STOLI ʺ ) policies. 1 Quatrella and his co

‐

conspirators made (or caused to be made) material misrepresentations on three life

insurance policy applications ʺ as to the purpose of the policies, the means by which the

premiums would be paid, and the intent of the insured persons to sell the policies to

investors. ʺ Gov ʹ t App. 21. For example, the policy applications falsely represented that

premiums would not be financed by third parties. Quatrella recruited the initial pool of

investors to pay the policy premiums from among his law firm ʹ s clients.

Quatrella received $272,000 in commissions for his role in the scheme.

There was no actual loss to the providers because no death benefits were paid on any of

the three policies before the scheme was discovered

‐‐ two policies lapsed and one

policy remains in effect. The Presentence Report ( ʺ PSR ʺ ) estimated intended loss for the

three policies at $14,982,714.27, an amount calculated using the government ʹ s proposed

formula.

On January 4, 2017, Quatrella waived indictment and pleaded guilty to a

one

‐ count information charging him with conspiracy to commit wire fraud in violation

1 ʺ A STOLI policy is one obtained by the insured for the purpose of resale to an investor

with no insurable interest in the life of the insured

‐‐ essentially, it is a bet on a stranger ʹ s life. ʺ

United States v. Binday

, 804 F.3d 558, 565 (2d Cir. 2015). STOLI policies became popular

investment vehicles for investors ʺ eager to bet that the value of a policy ʹ s death benefits would

exceed the value of the required premium payments, ʺ but many insurance providers ʺ adopted

rules against issuing STOLI policies and took steps to detect them. ʺ Id. ; see also id. at 574

( ʺ [I]nsurers expected STOLI policies to differ economically, to the insurers ʹ detriment, from non

‐

STOLI policies. ʺ ). Insurance brokers working on commission therefore had a ʺ financial

incentive to place STOLI policies by disguising them to the insurer as non

‐ STOLI policies. ʺ Id.

at 565–66.‐ 4

‐ of 18 U.S.C. § 371. The plea agreement expressly stated that the court ʺ shall order that

the defendant make restitution under 18 U.S.C. § 3663A, ʺ Gov ʹ t App. 23, although the

government represented during the plea hearing that ʺ it appears that there is no actual

loss in this case, so restitution may not be applicable, ʺ id. at 46.

On March 17, 2017, two months after Quatrella ʹ s guilty plea and two

months before his sentencing, investors in the policies advised the United States

Probation Office by email, copying Quatrella and the government, that they would seek

a restitution order as victims under the MVRA. On May 11, 2017, the investors moved

to intervene and be heard during Quatrella ʹ s proceeding, alleging more than $3 million

in losses based on the two lapsed insurance policies. The government did not advocate

for the investors to be treated as victims.

On May 25, 2017, following a hearing on May 23, 2017, the district court

concluded that the investors were ʺ victims ʺ within the meaning of the MVRA and

granted their motion to be heard regarding the restitution order. The court rejected

Quatrella ʹ s argument that the investors were harmed by changed market conditions

rather than Quatrella ʹ s criminal conduct, explaining that the ʺ STOLI investors were

harmed the moment they made their investment ʺ because Quatrella ʹ s

misrepresentations induced them to unknowingly enter into an investment that was

ʺ much riskier and worth less because of the fraudulent nature of the scheme. ʺ Gov ʹ t

App. 319.‐ 5

‐ On May 25, 2017, the district court sentenced Quatrella principally to 36

months ʹ imprisonment and ordered him to pay restitution to investor victims in an

amount to be determined within 90 days of sentencing. For Guidelines purposes, the

PSR, which the district court adopted, calculated a total offense level of 27

‐‐ a number

that included a 20

‐ level increase under U.S.S.G. § 2B1.1(b)(1)(K) for the estimated

intended loss of $14,982,714.27

‐‐ and a corresponding sentencing range of 70 to 87

months. Because the statutory maximum term of imprisonment under 18 U.S.C. § 371

was 60 months, the effective Guidelines sentence was reduced to 60 months. The

district court elected to impose a sentence well below the Guidelines range because,

among other factors, the estimate of intended loss substantially overstated the

seriousness of the offense in this case. 2

On June 5, 2017, after replacing prior counsel with current counsel,

Quatrella moved for resentencing pursuant to Federal Rule of Criminal Procedure 35(a),

principally challenging the district court ʹ s intended loss calculation and contending that

the investors participated in the fraud and therefore were not victims under the MVRA.

2 At sentencing, the district court noted there are ʺ several ways of measuring loss in this

case: The intended loss of over $14 million, which resulted in a 20

‐ level increase; the actual

gross loss to the investors of over $4 million which would result in an 18

‐ level increase; the net

loss to the victims in the amount of $2.7 million, which would result in a 16

‐ level increase; and

the gain to the defendant in the amount of $272,000, which would result in a 12

‐ level increase. ʺ

Gov ʹ t App. 370.‐ 6

‐ He also raised ineffective assistance of counsel and due process claims. On July 13,

2017, following a hearing, the district court denied Quatrella ʹ s Rule 35(a) motion.

On July 14, 2017, the district court ordered Quatrella to pay $1,976,558.62

in restitution pursuant to the MVRA. 3 This appeal followed. 4

I. Calculation of Intended Loss

We review a district court ʹ s factual findings as to loss amount for clear

error and its legal conclusions de novo

. United States v. Binday

, 804 F.3d 558, 595 (2d Cir.

2015). For the purposes of calculating the Guidelines range, loss is defined as ʺ the

greater of actual loss or intended loss. ʺ United States v. Certified Envtl. Servs., Inc.

, 753

F.3d 72, 103 (2d Cir. 2014) (quoting U.S.S.G. § 2B1.1 cmt. 3(A)). ʺ Intended loss ʺ means

ʺ the pecuniary harm that the defendant purposely sought to inflict. ʺ U.S.S.G. § 2B1.1

cmt. 3(A)(ii). The district court is ʺ not required to calculate loss with ʹ absolute

precision, ʹʺ Binday

, 804 F.3d at 595 (quoting United States v. Coppola

, 671 F.3d 220, 250 (2d

Cir. 2012)), but it must ʺ make a reasonable estimate of the loss ʺ that is based on

ʺ available information ʺ and supported by a preponderance of the evidence, id. (quoting

U.S.S.G. § 2B1.1 cmt. 3(C)).

3 Both parties stipulated to the amount of restitution, which Quatrella does not challenge

on appeal.

4 Because the government has elected not to enforce the appeal waiver contained in

Quatrella ʹ s plea agreement at this stage, we proceed directly to the merits.‐ 7

‐ The district court ʹ s estimate of intended loss was reasonable and

supported by a preponderance of the evidence. Adopting the PSR, the district court

found that Quatrella purposely sought to commit fraud that would have caused the

insurance providers to pay out $35 million for the three policies. This face

‐ value

intended loss figure was then adjusted down to about $15 million by first subtracting

premiums that the insurance companies would have received, as well as the

compounded interest on that income, and then adding the expenses and commissions

the companies paid on the policies. See United States v. Jenkins

, 578 F.3d 745, 749 (8th

Cir. 2009) (affirming district court ʹ s finding that ʺ a reasonable estimate of intended loss

could be made by totaling the face value of the death benefits on all of the fraudulently

‐

obtained policies and subtracting the value of the insurance premiums that

[defendant ʹ s] co

‐ schemers intended to pay the insurers ʺ ); United States v. Bazemore

, 608

F. App ʹ x 207, 214 (5th Cir. 2015) ( ʺ At a minimum, the intended loss figure must account

for the premium payments [defendant] intended the policyholder to make to keep the

policy in place until the insured died and death benefits could be paid. ʺ ).

Quatrella has never offered an alternative method for estimating intended

loss, and ʺ the absence of a better alternative weighs in favor of concluding that the

method used here is a reasonable one. ʺ Binday

, 804 F.3d at 597. Moreover, the district

court sentenced Quatrella to 36 months ʹ imprisonment, well below the Guidelines‐ 8

‐ recommendation corresponding to the intended loss calculation. We find no clear error

in the district court ʹ s estimate of intended loss.

II. Restitution Order

ʺ We review a district court ʹ s restitution order for abuse of discretion,

which we will identify only if the order ʹ rests on an error of law, a clearly erroneous

finding of fact, or otherwise cannot be located within the range of permissible

decisions. ʹʺ United States v. Messina

, 806 F.3d 55, 67 (2d Cir. 2015) (quoting United States

v. Thompson

, 792 F.3d 273, 277 (2d Cir. 2015)). We review challenges to the district

court ʹ s findings of fact for clear error and its interpretations of law de novo

. United States

v. Gushlak

, 728 F.3d 184, 190–91 (2d Cir. 2013).

The MVRA mandates restitution to victims of ʺ certain crimes, such as ʹ an

offense against property under this title

. . . including any offense committed by fraud

or deceit. ʹʺ United States v. Battista

, 575 F.3d 226, 230 (2d Cir. 2009) (quoting 18 U.S.C.

§ 3663A(c)(1)(A)(ii)). A ʺ victim ʺ is ʺ a person directly and proximately harmed as a

result of the commission of an offense, ʺ including, for conspiracy offenses, ʺ any person

directly harmed by the defendant ʹ s criminal conduct in the course of the

. . .

conspiracy. ʺ 18 U.S.C. § 3663A(a)(2).

An order of restitution should not be granted that ʺ has the effect of

treating coconspirators as ʹ victims, ʹ and thereby requires ʹ restitutionary ʹ payments to the

perpetrators of the offense of conviction, ʺ United States v. Reifler

, 446 F.3d 65, 127 (2d Cir.‐ 9

‐ 2006), but restitution ʺ may not be denied simply because the victim had greedy or

dishonest motives, where those intentions were not in pari materia with those of the

defendant, ʺ United States v. Ojeikere

, 545 F.3d 220, 223 (2d Cir. 2008). ʺ [A] defendant ʹ s

restitution liability under the MVRA is capped at the actual loss incurred by his

victims. ʺ United States v. Thompson

, 792 F.3d 273, 280 (2d Cir. 2015).

The district court properly concluded that the investors were ʺ victims ʺ

under the MVRA, and it did not abuse its discretion by ordering Quatrella to pay

$1,976,558.62 in restitution. Quatrella recruited the initial pool of investors to pay the

premiums for the STOLI policies from among his clients and friends, who trusted him

with their money and said they would not have invested had they been aware of the

fraudulent scheme. On the record before us, there is no evidence that any of the

investors were knowing participants in the scheme for which Quatrella was convicted.

We find no clear error in the district court ʹ s finding that Quatrella directly and

proximately harmed the investors by using false and fraudulent statements to induce

them to make an investment that was ultimately ʺ much riskier and worth less because

of the fraudulent nature of the scheme. ʺ Gov ʹ t App. 319. 5

We also reject Quatrella ʹ s arguments that the restitution order was

procedurally unreasonable. Although neither Quatrella nor the government initially

5 Quatrella pleaded guilty to conspiracy; his co

‐ conspirators were not investors but

insurance brokers.‐ 10

‐ believed any restitution would be required, once the investors made known their desire

to be treated as victims under the MVRA, Quatrella was given the opportunity to be

heard on that issue and exercised it. A district court has broad discretion in the

sentencing procedures it employs to resolve contested issues regarding restitution

awards, ʺ so long as the defendant is given an adequate opportunity to present his

position. ʺ United States v. Maurer

, 226 F.3d 150, 151 (2d Cir. 2000). Quatrella was given

that opportunity here.

III. Ineffective Assistance of Counsel

ʺ When faced with a claim for ineffective assistance of counsel on direct

appeal, we may: ʹ (1) decline to hear the claim, permitting the appellant to raise the issue

as part of a subsequent petition for writ of habeas corpus pursuant to 28 U.S.C. § 2255;

(2) remand the claim to the district court for necessary factfinding; or (3) decide the

claim on the record before us. ʹʺ United States v. DeLaura

, 858 F.3d 738, 743 (2d Cir. 2017)

(quoting United States v. Adams

, 768 F.3d 219, 226 (2d Cir. 2014) (per curiam)). In this

case, we choose to ʺ decide the claim on the record before us, ʺ id.

, because Quatrella

raised and the district court rejected his ineffective assistance of counsel claim during

Rule 35(a) proceedings.

To prevail on an ineffective assistance of counsel claim, a defendant must

demonstrate that ʺ (1) counsel ʹ s representation fell below an objective standard of

reasonableness; and (2) there is a reasonable probability that, but for counsel ʹ s errors,‐ 11

‐ the result of the proceeding would have been different. ʺ United States v. Pitcher

, 559

F.3d 120, 123 (2d Cir. 2009) (citing Strickland v. Washington

, 466 U.S. 668, 694 (1984)). We

ʺ indulge a strong presumption that counsel ʹ s conduct falls within the wide range of

reasonable professional assistance. ʺ United States v. Gaskin

, 364 F.3d 438, 468 (2d Cir.

2004) (quoting Strickland

, 466 U.S. at 689).

We agree with the district court that Quatrella cannot satisfy the ʺ heavy

burden ʺ of demonstrating ineffective assistance of counsel. Gaskin

, 364 F.3d at 468. We

discern no error in the district court ʹ s findings that Quatrella ʹ s prior counsel ʺ did an

excellent job, ʺ ʺ made

. . . wise strategic choices, ʺ and ʺ was entirely effective, ʺ and its

conclusion that the ʺ attack on [prior counsel ʹ s] performance is entirely without merit. ʺ

Gov ʹ t App. 440–41. Quatrella faults prior counsel for failing to understand that

intended loss could increase his sentence, but the record belies this contention. Indeed,

prior counsel not only understood the relevance of intended loss, but he advanced the

same position accepted by the district court at sentencing and now pressed by Quatrella

on appeal: that the Guidelines range corresponding to intended loss substantially

overstated the seriousness of the offense. And while Quatrella complains now that his

prior counsel should have confronted the investor victims, the decision not to challenge

the victims ʹ credibility before the court to avoid opening the door to further testimony

recounting the victims ʹ pain and loss was clearly a strategic decision that fell ʺ within the

wide range of reasonable professional assistance. ʺ Gaskin

, 364 F.3d at 468.‐ 12

‐ In light of our resolution, we need not address Quatrella ʹ s request to

reassign this matter to a different judge on remand.

We have considered Quatrella ʹ s remaining arguments and find them to be

without merit. Accordingly, we AFFIRM the judgment of the district court.

FOR THE COURT:

Catherine O ʹ Hagan Wolfe, Clerk