NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 18-3454

_____________

UNITED STATES OF AMERICA

v.

LOUIS F. PETROSSI,

Appellant

_____________________________________

On Appeal from the United States District Court for the

Middle District of Pennsylvania

(District Court No.: 1-17-cr-00192-001)

District Judge: Honorable Christopher C. Conner

_____________________________________

Submitted under Third Circuit L.A.R. 34.1(a)

on July 9, 2019

Before: McKEE, ROTH and RENDELL, Circuit Judges

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O P I N I O N*

________

RENDELL, Circuit Judge:

Louis F. Petrossi was indicted in the Eastern District of New York for his part in a 

fraudulent scheme involving the securities of an energy company, Forcefield Energy, Inc. 

 

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent.
2

Even though a post-bond release agreement in that matter barred him from employment 

directly involving investors, Petrossi continued to own and operate two investment funds: 

Chadwicke Partners and Chadwicke Ventures (collectively “Chadwicke”). While on 

post-bond release, he falsely overstated the cost and value of securities owned by 

Chadwicke to recruit investors and told them that their money would go to equity in 

privately-held startups. Much of their money, in fact, went to Petrossi’s personal 

expenses. 

The Chadwicke scheme was uncovered and Petrossi was indicted in the United 

States District Court for the Middle District of Pennsylvania for investment advisor fraud, 

securities fraud, and wire fraud. The indictment included a statutory penalty 

enhancement because the crimes occurred while he was on post-bond release. See 18 

U.S.C. § 3147. The jury convicted Petrossi on all three counts of fraud and found that he 

was subject to the enhancement. The District Court sentenced him to one hundred 

months and three days’ imprisonment. 

On appeal, Petrossi claims that he is not an “investment advisor,” that he owed no 

duty to Chadwicke’s investors to disclose his indictment, and that the District Court erred 

by admitting testimony regarding the Forcefield scheme. He further claims that we 

should remand for re-sentencing because the Court improperly enhanced his sentence and 

improperly calculated the amount of loss caused by his conduct. We disagree and will

affirm Petrossi’s conviction and sentence.1

 

1 The District Court had jurisdiction pursuant to 18 U.S.C. § 3231. We have jurisdiction 

pursuant to 28 U.S.C. § 1291. 
3

A. Sufficient evidence supported Petrossi’s conviction. 

Petrossi argues that the evidence is insufficient to establish that he is an 

“investment advisor.” But he failed to challenge the sufficiency of evidence in the 

District Court. We thus will only vacate the conviction if the evidence is “so insufficient 

that for us to uphold his conviction would result in a miscarriage of justice or be 

fundamentally wrong.” United States v. Barel, 939 F.2d 26, 31 (3d Cir. 1991). Viewing 

the evidence in a light most favorable to the Government,2there is more than sufficient 

evidence to conclude that Petrossi is a “person who, for compensation, engages in the 

business of advising others, either directly or through publications or writings, as to the 

value of securities or as to the advisability of investing in, purchasing, or selling 

securities.” 15 U.S.C. § 80b-2(a)(11). The Government established that Petrossi: (1) sent 

investors business plans that “recommend[ed] 10% of one’s portfolio for prudent asset 

allocation in late stage companies,” Supp. App. 231; (2) received both a single-time fee 

and a fee after profits for the investments, Supp. App. 49; and (3) held himself out as an 

investment advisor who can “help accredited investors invest in companies.” Supp. App. 

230 (emphasis added). See United States v. Miller, 833 F.3d 274, 282 (3d Cir. 2016) 

(finding a person is an investment advisor if “he held himself out as a person who 

 

2 Petrossi fails to heed this standard of review for a sufficiency of evidence challenge by 

pointing only to the evidence that supports the conclusion that he is not an investment 

advisor, and ignoring the wealth of evidence in the other direction. Compare App. Br. at 

27–30 (citing to defense witnesses and cross-examination testimony) with App. 88–90 

(victim describing Petrossi’s presentation that discussed investing in startup companies, 

followed by a personal pitch to get involved in Chadwicke and advice about a specific 

company); App. 96–97 (describing Petrossi as “pushing” late stage pre-IPO’s and 

personally discussing investment options). 
4

provides investment advice.”). Because the above evidence shows Petrossi “engage[d] in 

the business of advising others” about the “value of securities” for “compensation,” 15 

U.S.C. § 80b-2(a)(11), it is not plain error to conclude Petrossi is an investment advisor 

that owed a fiduciary duty to his investors. 

Petrossi argues that, even if he is an investment advisor, he had no duty to disclose 

the EDNY indictment to investors because he was not a registered investor under the 

applicable SEC rules. Petrossi claims that because he had no duty to disclose, the jury 

may have convicted him on a legally insufficient theory—fraud by omission—which

warrants reversal. But under plain error review, any error “must have been prejudicial: It 

must have affected the outcome of the district court proceedings.” United States v. 

Olano, 507 U.S. 725, 734 (1993). Here the evidence is overwhelming that the jury 

convicted Petrossi for fraud by misrepresentation. The indictment itself targets two 

misrepresentations: “(a) falsely claiming to investors that the money they had invested in 

Chadwicke would be used to invest in the equity of privately-held startup companies 

when, in reality, Petrossi used investors’ money to pay for personal expenses; and (b) 

disseminating to investors fraudulent statements that overstated both the cost of the 

securities held by Chadwicke and the value of those securities.” App. 34. The 

government presented evidence to support those theories throughout the trial. The FBI 

forensic accountant testified that, after reviewing Petrossi’s accounts, over $1.3 million of 

the approximately $1.8 million in investor funds received went to non-stock, non-fund 

purchases. Ruth Higby, a victim of the scheme, testified that the distribution of 

investment and non-investment funds “is not how it was represented to [her], and [she]
5

would not have invested” in Chadwicke if Petrossi accurately portrayed his intent. Supp. 

App. 29. Petrossi also led victims to believe he would invest significant portions of their 

money in “major players [and] Silicon Valley insiders.” Supp. App. 259. They felt 

misled when they learned that Chadwicke primarily invested in three companies that 

Petrossi had past dealings with: Search Initiatives, Grom Social, and R. Post. See Supp. 

App. 11–12, 202–03. Taken together, there is overwhelming evidence to conclude that 

Petrossi is an investment advisor who misrepresented material facts to his investors in 

order to obtain investments that went to his personal expenses. Thus, Petrossi fails to 

establish prejudice because there is overwhelming evidence to conclude that the jury 

convicted Petrossi on the legally sufficient theory of fraud by misrepresentation.3 See, 

e.g., United States v. Skelly, 442 F.3d 94, 99 (2d Cir. 2006) (affirming the conviction 

where “it is overwhelmingly likely that any reasonable juror would have convicted on the 

basis of the Government’s primary theory.”).4

B. The District Court did not abuse its discretion by admitting Sanchez’s and St.

Julien’s testimony.

Petrossi argues that the District Court abused its discretion by admitting pretrial 

service officer Misty Sanchez’s testimony under Federal Rule of Evidence 404 and 

 

3 Even so, Petrossi’s claim that his failure to disclose the indictment constitutes fraud by 

omission rings hollow when, as part of the indictment and post-bond release, he was 

barred from handling investments. Thus, when he claimed he could “help accredited 

investors invest in companies,” Supp. App. 230, his omission could reasonably be viewed 

as an active misrepresentation. 

4 For the same reasons, we conclude there was sufficient evidence to convict Petrossi for 

securities fraud and wire fraud. 
6

failing to exclude it under Rule 403. Sanchez testified that, as a condition of post-bond 

release in the EDNY matter, Petrossi signed an agreement prohibiting him from violating 

state or federal law and from any employment “directly involving the handling of 

investors.” App. 39. She testified that she consistently reviewed the conditions of 

release with Petrossi but that he claimed “he did consulting work” and was not handling 

investor money. Supp. App. 8–9.

Rule 404 prohibits “[e]vidence of a crime, wrong, or other act . . . to prove a 

person’s character in order to show that on a particular occasion the person acted in 

accordance with the character.” Fed. R. Evid. 404(b). Evidence of uncharged crimes is 

admissible under Rule 404(b) if it: (1) has a proper evidentiary purpose; (2) is relevant; 

(3) satisfies Rule 403; and (4) is accompanied by a limiting instruction if requested. See 

United States v. Green, 617 F.3d 233, 249 (3d Cir. 2010) (citing United States v. Butch, 

256 F.3d 171, 175 (3d Cir. 2001)). Thus, evidence of a prior act may nonetheless be 

admitted if the government identifies a proper evidentiary purpose. Here, Sanchez’s 

testimony was admissible because it established the terms of the post-bond agreement 

that Petrossi violated. See United States v. Gibbs, 190 F.3d 188, 217–18 (3d Cir. 1999) 

(admitting past uncharged offenses when they served as direct proof of the charged 

offense). Petrossi nonetheless argues that the District Court should have excluded the 

evidence under Rule 403 because its probative value is outweighed by its unfair 

prejudice. Moreover, he claims that because he offered to stipulate to the terms of the 

agreement, Sanchez’s testimony was especially prejudicial. See Old Chief v. United 

States, 519 U.S. 172, 191 (1997) (excluding testimony when stipulation was offered and 
7

“the functions of the competing evidence are distinguishable only by the risk inherent in 

the one and wholly absent from the [stipulation].”). But here, Sanchez’s testimony 

offered much more than a stipulation could offer: It established that Petrossi and Sanchez 

reviewed the conditions of the agreement and that he nonetheless continued to handle 

investments and lied about his work. The District Court further offered a limiting 

instruction to ensure the jury would not use the evidence of the prior indictment as 

propensity evidence.5 Thus, the district court did not abuse its discretion by permitting 

Sanchez to testify. 

Petrossi also argues that the testimony of Richard St. Julien was inadmissible 

under Rule 404(b). St. Julien testified as a cooperating witness who participated in the 

Forcefield scheme. He testified that, as in the Chadwicke scheme, Petrossi “introduced 

[us] to some investors and also to these investment conference[s] I was not familiar with. 

So he was making—number one, he introduce[d] us to these conference[s], registered 

him or us at these conferences, ma[d]e presentation introduction[s] of the company and 

where we also made presentation[s] and offer[ed] . . . financing.” App. 63. At these 

conferences, Petrossi solicited “potential investors . . . accredited investors and some nonaccredited investors . . . looking to invest in [the] potential business.” App. 64. St. Julien 

also presented significant testimony about Search Initiatives, R. Post, and Grom Social. 

 

5 See App. 122 (“This evidence of other acts will be admitted for a very limited purpose.

You may consider this evidence for the purpose of deciding whether the defendant had 

the knowledge or the intent to commit fraud as charged in the indictment in this case. Do 

not consider this evidence for any other purpose.”); App. 129 (policing the bounds of 

Sanchez’s testimony by restricting the admission of Forcefield related testimony). 
8

He testified that the “C.E.O. of Forcefield Energy was a director of Grom [Social],” App. 

83, and that Petrossi asked St. Julien if an overseas holding corporation used in the 

Forcefield scheme could “receive some of the warrants that [were] owed by R. Post to 

[Petrossi] for previous work he did.” App. 85. He also testified that Mr. Petrossi told 

him that he received compensation from Search Initiatives and that “the company was 

growing quick and it was going well and that he had a banker interested in taking them 

public and they would go public.” App. 82. 

Petrossi argues that this testimony is nothing more than propensity evidence: an 

attempt to admit the past wrongdoings of Petrossi in the Forcefield scheme so that the 

jury will draw an adverse inference in this scheme. But the evidence about Forcefield 

addresses Petrossi’s common scheme to defraud as it is “part[] of a single series of 

events” and “tend[s] to show a motive for the charged crime and hence establish the 

commission of that crime, the identity of the actor, or his intention.” Government of V.I. 

v. Pinney, 967 F.2d 912, 916 (3d Cir. 1992). St. Julien described identical activity as the 

victim investors in the Chadwicke scheme, including solicitations through presentations 

and investment conferences. St. Julien further testified that Petrossi received 

compensation from R. Post, Grom Social, and Search Initiatives during this time period. 

These three companies comprised Chadwicke’s primary investments, and tend to show 

Petrossi’s motive for investing in these companies, rather than the “Silicon Valley 

Insiders.” Supp. App. 259. In addition to the proper evidentiary purpose, the District 

Court offered limiting instructions to correct any risk the jury would use the Forcefield 
9

scheme as propensity evidence.6 Thus, the District Court did not abuse its discretion in 

admitting St. Julien’s Testimony.

C. The District Court did not err when applying the sentencing guidelines. 

We exercise plenary review over a district court’s interpretation of the sentencing 

guidelines. Miller, 833 F.3d at 279. We review its factual findings for clear error. Id. If 

a claim was not raised below, we review for plain error. United States v. Flores-Mejia, 

759 F.3d 253, 256–59 (3d Cir. 2014) (en banc). Petrossi first argues that the District 

Court erred when it concluded he was an “investment advisor” and enhanced his 

sentence. For the reasons outlined in Section A, Petrossi is an investment advisor, and 

thus the District Court did not err.

Petrossi next argues that the District Court erred when it concluded that the 

Forcefield scheme was “relevant conduct” for purposes of assessing loss and enhancing 

his sentence. But Petrossi expressly waived this argument in the District Court. When 

this issue was presented, Petrossi’s attorney stated that:

I was not as clear in my objections as I probably should have been. My 

concern is this. If the court is not inclined to follow 5G1.3 in a concurrent 

sentence because of the relevant conduct incorporating both ForceField as 

well as Chadwicke, then I would raise this objection. So my concern is that 

if the court does not believe that 5G1.3 would then apply for any sentence 

that this court would impose should run concurrent with the New York case, 

then I would want to raise it as an issue . . . I don’t wish to lose the benefit of 

 

6 See ECF 1:17-cr-00192-CCC Doc. 80 p. 139 (“Specifically you may not use this 

evidence to conclude that because the defendant may have committed the other acts, he 

must also have committed the acts charged in the indictment. Remember, the defendant is 

on trial here only for securities fraud, investment advisor fraud, and wire fraud between 

January 2015 and January 2017, not for these other acts. Do not return a guilty verdict 

unless the government proves the crimes charged in the indictment beyond a reasonable 

doubt.”).
10

what I believe should be a concurrent sentence . . . Because if the court is 

inclined to follow 1.3 then I will not raise this as a challenge to the loss 

amount . . . .” 

App. 207–08. The Government stated “[i]f Your Honor agrees with our position, we 

would not object to having Your Honor’s sentence imposed in this action run concurrent 

to the sentence that’s been imposed on the defendant in the ForceField action.” App. 

208–09. The Court agreed, and Petrossi stated, “then I would withdraw that objection 

and that would be fine moving on to the second one.” App. 209. In essence, Petrossi 

received the benefit of an agreement from the Government and the Court that the 

sentence would run concurrently, rather than consecutively, if it concluded that the 

Forcefield conduct is “relevant conduct.” He withdrew his objection on that basis. Thus, 

Petrossi’s argument that the Forcefield scheme is not “relevant conduct” is waived.7

Finally, Petrossi argues that the District Court failed to state adequate findings on 

the record when it calculated total loss to investors. In doing so, Petrossi relies on expert 

testimony that provided a present day valuation of Chadwicke’s assets. The District 

Court did not clearly err when it relied on the presentencing report’s evaluation of total 

loss to investors and discredited the expert’s testimony, which was primarily related to 

present day valuation and restitution, not total loss. Contrary to Petrossi’s claim that the 

District Court’s reasoning was inadequate, it was well supported by the record, which

indicated that the Court considered all arguments from both sides before determining 

total loss. App. 252 (“I’ve taken into consideration the testimony just received, the 

 

7 Petrossi’s argument that the Court applied the wrong Guideline provision to establish

“relevant conduct” is also waived. 
11

arguments of counsel.”); cf. Chavez-Meza v. United States, 138 S. Ct. 1959, 1965 (2018) 

(“In some cases, it may be sufficient for purposes of appellate review that the judge 

simply relied upon the record, while making clear that he or she has considered the 

parties’ arguments and taken account of the § 3553(a) factors, among others.”). Thus, the 

District Court did not err when it calculated total loss for purposes of restitution to 

investors.

Conclusion

We will affirm Petrossi’s conviction and the District Court’s sentencing order.