Opinion ID: 1033239
Heading Depth: 4
Heading Rank: 2

Heading: Objections

Text: In a May 25, 2012 letter to the District Court, Kluger complained that the presentence report did not adequately address his objections. As noted above, Kluger objected to the characterization of the scheme, which he alleged was based on an underlying agreement regarding the division and targeted range of profits, thereby altering the calculation of the gains attributable to him and explaining the absence of a loss stipulation in the plea agreement. Kluger also objected to the presentence report‟s description of him as the initiator of the scheme, a characterization that he would have attempted to rebut in testimony at a presentence evidentiary hearing. The presentence report read: In the summer of 1994, Kluger, who was then in law school at NYU and working as a summer associate at Cravath [,Swaine & Moore], contacted Robinson and told him „I‟ve got something,‟ meaning that he had access to inside information through his employment at the law firm. Kluger explained that he could learn of merger activity before the information was public through his work at the firm. At Kluger‟s request, Robinson agreed to help find individuals willing to buy and sell stocks based on the inside information Kluger provided. Robinson 30 approached Bauer, a professional stock trader and Robinson‟s friend, who agreed to trade based on the inside information provided by Kluger. PSR ¶ 34. Kluger, however, proposed the following paragraph: Kluger and Robinson remained friends after their brief stint working together at the Manhattan real estate company, REQuest, and would speak on the phone from time to time. In the summer of 1994, Kluger was in law school at NYU and working as a summer associate at Cravath, Swaine & Moore. In several telephone conversations in which Kluger and Robinson discussed each other‟s work and current lives, Robinson became aware that Kluger was working on potentially high profile [merger and acquisition] deals and that he was learning of merger activity before the information became public through his work at the firm. Robinson then told Kluger about his friend Garrett Bauer, a professional stock trader and Robinson‟s friend. Robinson approached Bauer who agreed to trade based on the inside information provided by Kluger. Kluger, Bauer and Robinson agreed that profits from any inside information provided by Kluger would be split equally among the three of them. From the beginning of the scheme, Bauer did not honor his agreement to split profits equally among the three participants and, instead, kept the majority of the profits for himself. 31 Kluger was unaware that Bauer was trading over and above the amounts discussed between Kluger and Robinson. PSR ¶ 57. The Probation Department, however, is not required to resolve all objections. Following Fed. R. Crim. P. 32(g), the probation officer “submit[ted] to the court and to the parties the presentence report and an addendum containing any unresolved objections, the grounds for those objections, and the probation officer‟s comments on them.” Fed. R. Crim. P. 32(g). In considering the presentence report the District Court complied with the applicable federal rules of criminal procedure. Fed. R. Crim. P. 32(i)(3)(B) provides that the sentencing court “must--for any disputed portion of the presentence report or other controverted matter--rule on the dispute or determine that a ruling is unnecessary either because the matter will not affect sentencing, or because the court will not consider the matter in sentencing . . . .” The District Court made its disposition with respect to the dispute concerning the existence of a limiting agreement among the conspirators by refusing to grant a hearing on the grounds that Kluger could not prove anything at the hearing that would impact on the Court‟s determination of his sentence. The Court reached its conclusion as to how to proceed by relying on the plain language of § 2B1.4 and by taking into account its concern over the potential for unreliable testimony regarding the agreement. At the sentencing hearing, the Court explained that it was “fully satisfied that the background note to the insider trading . . . guideline[] fully covers Mr. Bauer‟s 32 activities and Mr. Kluger‟s activities. And that the gain attributable to Bauer‟s activities is attributable to Kluger in terms of the exposure to the guideline,” regardless of the existence of an agreement. App. at 63. Clearly, in Kluger‟s proposed changes to the presentence report quoted above he attempts to describe his role in the scheme in more benign terms than the report described his role. Thus, Kluger suggests that the presentence report should have recited that “Robinson became aware,” of Kluger‟s access to inside information whereas the report states that Kluger directly contacted Robinson and informed him that he had access to inside information. The presentence report also states that Kluger asked Robinson to locate an individual capable of executing the trades on their behalf whereas Kluger claims that Robinson told him about Bauer and approached Bauer on his own. Kluger concedes that he did not object to the presentence report at sentencing but attributes his failure to object to his expectation that the Court would resolve factual disputes at the evidentiary hearing that he contemplated that the Court would hold before imposing sentence. Kluger argues that even though the District Court did not directly address his alleged initiating role in the scheme, the Court could not have failed to consider it. Kluger, however, is in no position to make assumptions as to what the District Court did or did not take into consideration in rendering its sentence. Ultimately, Kluger was the source of the information that Bauer used to make his trades; the identification of the originator of the underlying scheme was of minimal significance in view of the circumstance that Kluger 33 was a full participant in the conspiracy, and therefore an inquiry into the originator of the scheme did not merit an individualized sentencing hearing.