Opinion ID: 3160112
Heading Depth: 2
Heading Rank: 4

Heading: Albert Greenhouse’s Sentencing Appeal20

Text: Greenhouse worked from his home in Florida from 2005 to 2007, soliciting investments in partnership units for From Mexico with Love. His work succeeded in getting victims to send Cinamour approximately $1,340,000. Greenhouse was indicted on one count of conspiracy under 18 U.S.C. § 371, three counts of mail fraud under 18 U.S.C. § 1341, and two counts of offering and selling (or aiding and abetting the offer and sale of) an unregistered security under 15 U.S.C. § 77e and 77x and 18 U.S.C. § 2. He was tried and convicted on two counts of willfully engaging in the offer and sale of unregistered securities and aiding and abetting and causing those sales. The jury acquitted him on the remaining charges. The district court calculated his Guidelines range as 63 to 78 months, including enhancements under U.S.S.G. §§ 2B1.1 and 3A1.1 for the fraud-loss amount, for the number of victims (10 or more), and for the victims’ vulnerability. The court overruled Greenhouse’s objections to the enhancements. The government recommended a 78-month sentence and an $8,981,676.68 restitution obligation, based on the total loss for all investors in both the Florida and California boiler rooms during the time Greenhouse was involved. Greenhouse argued for a $10,000 fine and no restitution. The district court sentenced Greenhouse to serve a below-Guidelines 60-month prison term and to pay $530,000 in restitution. 20 Greenhouse did not challenge his conviction in his opening brief. In his reply brief, he sought reversal of his conviction based on an SEC proposal to lift the Regulation D ban on general solicitations and advertising in limited certain circumstances. At oral argument, however, Greenhouse abandoned that challenge to his conviction. We consider only his challenge to his sentence. UNITED STATES V. LLOYD 91 We review Greenhouse’s sentencing challenges to the district court’s interpretation of the Sentencing Guidelines de novo, to the factual findings during sentencing for clear error, and to the application of the Sentencing Guidelines for abuse of discretion. United States v. Lynn, 636 F.3d 1127, 1138 (9th Cir. 2011). “The legality of an order of restitution is reviewed de novo, and factual findings supporting the order are reviewed for clear error.” United States v. Brock-Davis, 504 F.3d 991, 996 (9th Cir. 2007) (emphasis removed). “Provided that it is within the bounds of the statutory framework, a restitution order is reviewed for abuse of discretion.” Id. Greenhouse first argues that the district court should not have increased the offense level based on the loss amount. Citing no authority, he argues that the district court improperly applied § 2B1.1(b) because it requires a conviction involving fraud or moral turpitude, and he was acquitted of fraud and convicted only of selling unregistered securities. Greenhouse ignores the fact that he was convicted of violating 15 U.S.C. §§ 77e and 77x, which are cross-referenced with § 2B1.1 in the Statutory Index. See U.S.S.G. App. A-Statutory Index; U.S.S.G. § 2B1.1, cmt. Statutory Provisions; United States v. McEntry, 659 F.3d 893, 897 (9th Cir. 2011) (“When deciding which guideline to apply, a district court must determine the guideline section in Chapter Two (Offense Conduct). . . . To do this, the court is to refer to the Statutory Index, Appendix A of the Guidelines, to find the offense of conviction . . . .” (citation omitted)). He also ignores the relationship between the sale of unregistered securities and the absence of disclosures about, or review of, those securities, designed to prevent and address fraudulent misrepresentations. The district court did not err in applying the 16-level enhancement under § 2B1.1(b). 92 UNITED STATES V. LLOYD Greenhouse also argues that even if § 2B1.1(b)’s loss enhancement does apply to his securities convictions, the district court erred in concluding that he caused $1,340,000 in investor losses. Greenhouse stipulated that he personally solicited $1,340,000 from victims and that they all lost everything they invested. Greenhouse argues that the failure to register the securities and the way they were marketed did not cause these losses. Instead, he asserts, the investors lost money because the movie “bombed at the box office.” The district court rejected Greenhouse’s argument that he was not responsible for any of the investors’ losses. We review the district court’s loss-causation finding for clear error. See Miller v. Thane Int’l, Inc., 615 F.3d 1095, 1104 (9th Cir. 2010). The evidence showed that the victims invested after Greenhouse made promises that their money was safely invested, with no risk of loss, and they would get a guaranteed and fast return on their investment. Greenhouse specifically promised victims that the money they invested would go to making and distributing the movie, not to paying the promoters or sales personnel. Contrary to his promises, most of the investments went to pay the telemarketers and promoters and very little went to make or distribute the movie, contributing to the box-office disaster Greenhouse identifies as the only reason for his losses and as unrelated to his acts or omissions. The evidence showed that Greenhouse sold unregistered securities when he “knew or, under the circumstances, reasonably should have known,” that “pecuniary harm” was at least “a potential result.” U.S.S.G. § 2B1.1, cmt. n.3(A)(iv). It was reasonably foreseeable to Greenhouse that making these misrepresentations in selling unregistered securities would cause investors to lose their money. These losses were not “caused by the intervening, UNITED STATES V. LLOYD 93 independent, and unforeseeable criminal misconduct of a third party,” United States v. Hicks, 217 F.3d 1038, 1049 (9th Cir. 2000), or by the vagaries of the movie-watching public. The record supports the district court’s conclusion that Greenhouse was a causal factor in his victims’ losses and did not err in applying the loss enhancement. Nor did the district court err in applying either the two-level increase under § 2B1.1(b)(2)(A)(i) for ten or more victims or the two-level increase under § 3A1.1(b)(1) for vulnerable victims, or in imposing $530,000 in restitution as a condition of supervised release. Greenhouse admits that he sold partnership interests in From Mexico with Love to ten or twelve investors who lost a total of $1,340,000. Greenhouse admits that he solicited some victims who had already invested money in From Mexico with Love. These victims were vulnerable under the applicable law. Ciccone, 219 F.3d at 1086; Randall, 162 F.3d at 560. Finally, the restitution amount did no more than compensate for the loss caused by the specific conduct that was the basis of Greenhouse’s “offense[s] of conviction.” United States v. Batson, 608 F3d 630, 636 (9th Cir. 2010). We affirm Greenhouse’s sentence.