17‐1786‐cr

U.S. v. Quatrella

      

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

SUMMARY ORDER

          

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.  CITATION TO A SUMMARY

ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE

OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.  WHEN CITING A

SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE

FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ).  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 9th 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‐cr

          

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.
   

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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 courtʹs 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 monthsʹ imprisonment.  Quatrella also

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

restitution to investor victims pursuant to the Mandatory Victim Restitution Act

(ʺMVRAʺ), 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 partiesʹ 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
   

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issue three stranger‐originated life insurance (ʺSTOLIʺ) policies.1  Quatrella and his co‐

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

insurance policy applications ʺas 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  Govʹt 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 firmʹs 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 (ʺPSRʺ) estimated intended loss for the

three policies at $14,982,714.27, an amount calculated using the governmentʹs 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   ʺA 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 strangerʹs life.ʺ  

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

investment vehicles for investors ʺeager to bet that the value of a policyʹs death benefits would

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

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 insurersʹ detriment, from non‐

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

incentive to place STOLI policies by disguising them to the insurer as non‐STOLI policies.ʺ  Id.

at 565–66.  
   

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

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

government represented during the plea hearing that ʺit 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 Quatrellaʹs 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 Quatrellaʹs 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 ʺvictimsʺ within the meaning of the MVRA and

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

Quatrellaʹs argument that the investors were harmed by changed market conditions

rather than Quatrellaʹs criminal conduct, explaining that the ʺSTOLI investors were

harmed the moment they made their investmentʺ because Quatrellaʹs

misrepresentations induced them to unknowingly enter into an investment that was

ʺmuch riskier and worth less because of the fraudulent nature of the scheme.ʺ  Govʹt

App. 319.  
   

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

monthsʹ 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 courtʹs 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 ʺseveral 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  

Govʹt App. 370.  
   

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

2017, following a hearing, the district court denied Quatrellaʹs 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 courtʹs 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 ʺthe

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)).  ʺIntended lossʺ means

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

cmt. 3(A)(ii).  The district court is ʺnot required to calculate loss with ʹabsolute

precision,ʹʺ Binday, 804 F.3d at 595 (quoting United States v. Coppola, 671 F.3d 220, 250 (2d

Cir. 2012)), but it must ʺmake a reasonable estimate of the lossʺ that is based on

ʺavailable informationʺ 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

Quatrellaʹs plea agreement at this stage, we proceed directly to the merits.
   

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The district courtʹs 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 courtʹs finding that ʺa 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

[defendantʹs] co‐schemers intended to pay the insurersʺ); United States v. Bazemore, 608

F. Appʹx 207, 214 (5th Cir. 2015) (ʺAt 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 ʺthe 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 monthsʹ imprisonment, well below the Guidelines
   

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

in the district courtʹs estimate of intended loss.  

II. Restitution Order

ʺWe review a district courtʹs restitution order for abuse of discretion,

which we will identify only if the order ʹrests 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

courtʹs 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 ʺcertain crimes, such as ʹan

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 ʺvictimʺ is ʺa person directly and proximately harmed as a

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

directly harmed by the defendantʹs 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 ʺhas the effect of

treating coconspirators as ʹvictims,ʹ and thereby requires ʹrestitutionaryʹ payments to the

perpetrators of the offense of conviction,ʺ United States v. Reifler, 446 F.3d 65, 127 (2d Cir.
   

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2006), but restitution ʺmay 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] defendantʹs

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 ʺvictimsʺ 

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 courtʹs 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 ʺmuch riskier and worth less because

of the fraudulent nature of the scheme.ʺ  Govʹt App. 319.5   

We also reject Quatrellaʹs 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.  
   

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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, ʺso 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  

ʺWhen 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 ʺdecide 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) counselʹs representation fell below an objective standard of

reasonableness; and (2) there is a reasonable probability that, but for counselʹs errors,
   

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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

ʺindulge a strong presumption that counselʹs 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 ʺheavy

burdenʺ of demonstrating ineffective assistance of counsel.  Gaskin, 364 F.3d at 468.  We

discern no error in the district courtʹs findings that Quatrellaʹs prior counsel ʺdid an

excellent job,ʺ ʺmade . . . wise strategic choices,ʺ and ʺwas entirely effective,ʺ and its

conclusion that the ʺattack on [prior counselʹs] performance is entirely without merit.ʺ  

Govʹt 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 victimsʹ credibility before the court to avoid opening the door to further testimony

recounting the victimsʹ pain and loss was clearly a strategic decision that fell ʺwithin the

wide range of reasonable professional assistance.ʺ  Gaskin, 364 F.3d at 468.  
   

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In light of our resolution, we need not address Quatrellaʹs request to

reassign this matter to a different judge on remand.  

We have considered Quatrellaʹs remaining arguments and find them to be

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

FOR THE COURT:

     Catherine OʹHagan Wolfe, Clerk