Opinion ID: 4531772
Heading Depth: 1
Heading Rank: 3

Heading: Objections Raised by Lacerda

Text: Lacerda raises several additional issues on appeal. He asserts that the District Court (1) abused its discretion when it disqualified his counsel, Marc Neff, based on Neff’s conflict of interest; (2) abused its discretion when it denied replacement counsel’s motion for a continuance; (3) abused its discretion by excluding from evidence an email sent by Lacerda to VOG’s former CFO, Jeff Sawyer; (4) abused its sentencing 3 Lacerda takes issue with additional portions of Mesisca’s testimony unpreserved by timely objection but has not attempted to show plain error entitling him to review of these unpreserved issues. So we decline to address these unpreserved issues in this opinion. 14 discretion; and (5) erred by ordering the forfeiture of all VOG’s gross proceeds. We will address each issue in turn.
Lacerda argues that the District Court arbitrarily disqualified his counsel of choice or at least abused its discretion by disqualifying Neff. When a defendant challenges the District Court’s decision to disqualify his counsel of choice, we apply a bifurcated standard of review: first, we exercise plenary review when determining whether the District Court’s decision was arbitrary, and then, if not arbitrary, we review the decision for an abuse of discretion. United States v. Stewart, 185 F.3d 112, 120 (3d Cir. 1999). Here, we find that the District Court’s decision was neither arbitrary nor an abuse of discretion, so we will affirm. The Sixth Amendment to the United States Constitution guarantees the right of counsel to every criminal defendant. That guarantee has generally been understood to encompass a right to the counsel of choice. Powell v. Alabama, 287 U.S. 45, 53 (1932). But the right to counsel of choice is not absolute. Wheat v. United States, 486 U.S. 153 (1988). “The essential aim of the [Sixth] Amendment is to guarantee an effective advocate for each criminal defendant rather than to ensure that a defendant will inexorably be represented by the lawyer whom he prefers.” Id. at 159 (internal citations omitted). Before disqualifying a defendant’s counsel of choice, the trial court must balance that defendant’s right to his counsel of choice against the fair and proper administration of justice. United States v. Voigt, 89 F.3d 1050, 1074 (3d Cir. 1996). When “considerations of judicial administration supervene,” such as when an attorney has a serious potential conflict of interest, the presumption in favor of counsel of choice is rebutted and the right must give way. Id. at 1074–75 (citing Fuller v. Diesslin, 868 F.2d 604, 607 n.3 (3d Cir. 1989)). Here, the District Court weighed Lacerda’s right to counsel of choice against Neff’s serious actual and potential conflicts of interest and, ultimately, determined those conflicts could neither be waived nor cured by anything short of disqualification. That conclusion was neither arbitrary nor an abuse of discretion. 15 After the FBI raid on VOG in November 2010, Lacerda retained Neff as his counsel. The following month, Neff met with VOG employees to ease any concerns they had, assuring them that (1) only the Lacerdas were under investigation by the FBI and (2) the post-raid revised phone scripts were lawful. VOG continued operations using the phone scripts whose legality had been vouched for by Neff. Contrary to Neff’s representations, 18 VOG employees, including the Lacerdas, were eventually indicted in this criminal case based in part on their use of the phone scripts. In proffers to the government, several of those defendants told of the December meeting with Neff. In United States v. Merlino, 349 F.3d 144, 151 (3d Cir. 2003), we recognized that “[a]n attorney who faces criminal or disciplinary charges for his or her actions in a case will not be able to pursue the client’s interests free from concern for his or her own.” We also recognized the potential conflicts that arise when counsel realistically could be called as a witness, as “it is often impermissible for an attorney to be both an advocate and a witness.” Id. at 152. And we noted “that disqualification may also be appropriate where it is based solely on a lawyer’s personal knowledge of events likely to be presented at trial, even if the lawyer is unlikely to be called as a witness.” Id. (citing United States v. Locascio, 6 F.3d 924, 933 (2d Cir. 1993)). Each consideration applies here and was central to the District Court’s thorough and well-reasoned decision disqualifying Neff.
Discretion in Managing the Trial Calendar After Neff was disqualified, Lacerda’s new counsel, Mark Cedrone, requested a lengthy continuance to prepare for trial. The District Court denied this request. Lacerda now challenges that denial on appeal. “We review the trial court’s refusal to grant a continuance for an abuse of discretion.” United States v. Olfano, 503 F.3d 240, 245 (3d Cir. 2007). Finding no abuse of the District Court’s discretion, we will affirm. “When presented with a motion for continuance, a court should consider the following factors: the efficient 16 administration of criminal justice, the accused’s rights, and the rights of other defendants whose trials may be delayed as a result of the continuance.” Olfano, 503 F.3d at 246. The District Court considered these factors and, given the time Cedrone had had to prepare Lacerda’s defense, denied the motion based on the government’s right to a speedy trial, efforts to streamline the case, the District Court’s calendar, and the need to “protect the rights of the parties in other cases.” App. 670:23–671:9. Lacerda now argues that the District Court abused its discretion and prejudiced his defense because, he claims, Cedrone had only four months to prepare for trial. But that is inaccurate. Cedrone entered his appearance on Lacerda’s behalf in November 2012—about eight months before jury selection began in July 2013—and Cedrone told the District Court in January 2013 that the scope of his representation was general and not limited to the disqualification motion. The District Court did not abuse its discretion.
Properly Excluded as Hearsay In its case-in-chief, the government presented evidence showing that Lacerda sometimes used the alias “Robert Klein” when contacting VOG customers. During the presentation of his defense, Lacerda testified that he was not the only person at VOG using that alias. On direct examination, he testified that he only began using the Robert Klein alias to respond to customer complaints that otherwise weren’t being addressed by other employees who would not admit having used the moniker. He further claimed that he did not use the alias before 2010. The government used that assertion to impeach Lacerda, confronting him with a check made out to “Robert Klein” in 2009, which he had deposited into his account. On redirect, Lacerda tried to enter a 2010 email he wrote to VOG’s former CFO, Jeff Sawyer, asking Sawyer to investigate who else was using the Robert Klein alias. But the District Court excluded the email as hearsay. Lacerda now challenges the District Court’s ruling on appeal. We review this evidentiary ruling for an abuse of discretion. United States v. Frazier, 469 F.3d 85, 87 (3d Cir. 17 2006). Finding no abuse of the District Court’s discretion, we will affirm. At the time of Lacerda’s trial, a witness’s prior consistent statement was admissible as non-hearsay only when the witness testified and was subject to cross-examination, and the out-of-court statement was offered to rebut a charge of recent fabrication or recent improper motive. See Fed. R. Evid. 801(d)(1)(B) (2011).4 The Supreme Court had explained that the purpose of the exception was to rebut a charge of recent fabrication. Tome v. United States, 513 U.S. 150, 157–58 (1995). “Prior consistent statements [could] not be admitted to counter all forms of impeachment or to bolster the witness merely because she has been discredited.” Id. at 157. In this case, the government did not accuse Lacerda of recently fabricating the claim that he began using the Robert Klein alias in 2010. Rather, it employed impeachment by contradiction: of course, Lacerda was using the Robert Klein alias before 2010; he profited from using the alias in 2009. Thus, under the former rules of evidence, Lacerda’s email to Sawyer was hearsay, and the District Court properly excluded it.
and Substantively Reasonable The District Court sentenced Lacerda to 324 months’ imprisonment for his leading role in VOG’s fraudulent enterprise. On appeal, Lacerda challenges his sentence as procedurally unsound and substantively unreasonable. Our standard of review on sentencing challenges is bifurcated. We “must first ensure that the district court committed no significant procedural error …. Assuming that the district court’s sentencing decision is procedurally sound, the appellate court should then consider the substantive reasonableness of the sentence imposed under an abuse-of-discretion standard.” 4 Though the Rule was broadly expanded in 2014 to allow for the use of prior consistent statements to rehabilitate the witness against other forms of impeachment, see Fed. R. Evid. 801(d)(1)(B)(ii) (2014), the former rule, with its limitation, applied in Lacerda’s case. 18 Gall v. United States, 552 U.S. 38, 51 (2007). Applying these standards, we will affirm the District Court’s sentence. 1. The District Court’s sentence was procedurally sound Lacerda argues that the District Court imposed a procedurally unreasonable sentence because, he alleges, it was based on a miscalculation of the number of victims of the VOG scheme and the total financial loss suffered by those victims. The government bears the initial burden of proving loss by a preponderance of the evidence. United States v. Ali, 508 F.3d 136, 145 (3d Cir. 2007). The district court must then calculate the amount of loss associated with the crime of conviction and any relevant conduct that was “part of the same course of conduct or common scheme or plan.” United States v. Siddons, 660 F.3d 699, 704 (3d Cir. 2011) (quotation omitted). While this does not have to be an exact figure, it must be a reasonable estimate. Ali, 508 F.3d at 145. Lacerda first asserts that only those victims who testified during trial or whose victimization underlay a specific count of the indictment should have been counted as victims, claiming that including any other victims in the presentence investigative report (“PSR”) was based on “rank hearsay.” Appellant Lacerda’s Br. 62–64. Of course, a district court may rely on hearsay statements during sentencing, if “they bear some minimal indicium of reliability beyond mere allegation.” United States v. Smith, 751 F.3d 107, 116 (3d Cir. 2014) (internal quotations and citation omitted). Victim statements are reliable when they “involve[ ] matters within the knowledge of each declarant and were made in the course of interviews by one or more law enforcement officials.” Id. In this case, for each victim identified in the PSR, the government submitted the following: (1) a declaration of victim losses, completed by the victims, executed under penalty of perjury, and submitted to the Probation Office; (2) an FD-302 summarizing an officer’s interview with the victim; and 19 (3) a canceled check verifying the amount the victim paid to VOG. That is more than mere allegation and enough under Smith to show reliability. The District Court’s calculation of victims was therefore reasonable. Lacerda next argues that the District Court’s calculation of loss was erroneous because it failed to offset the victims’ losses with credits for new timeshares and cancellation of prior debts. This argument is unavailing. The supposed cancellation of debt was one of the bases for the fraud charges. Cancellation was not achieved through VOG’s efforts, but through the victims’ credit-destroying defaults with the timeshare companies after those victims stopped paying their bills— relying on VOG’s misrepresentations that their timeshare debts had been paid off. And the VOG victims were trying to get rid of their timeshares, not acquire new timeshares. Neither of these were “services” rendered by VOG; they were part of the fraudulent scheme. Perpetrators of fraudulent schemes are not entitled to credits against loss for payments made to perpetuate their schemes. See United States v. Hartstein, 500 F.3d 790, 800 (8th Cir. 2007) (“[W]hen a defendant’s only subjective intent regarding repayments relates to this illegal purpose of perpetuating the scheme, a sentencing court may refuse to credit repayments against sums received from the victims.”); United States v. Whatley, 133 F.3d 601, 606 (8th Cir. 1998) (“[W]e are not inclined to allow the defendants a profit for defrauding people or a credit for money spent perpetuating a fraud.”); United States v. Blitz, 151 F.3d 1002, 1012 (9th Cir. 1998) (same). 2. The District Court’s sentence was substantively reasonable We will not reverse a sentence as substantively unreasonable “unless no reasonable sentencing court would have imposed the same sentence on that particular defendant for the reasons the district court provided.” United States v. Tomko, 562 F.3d 558, 568 (3d Cir. 2009) (en banc). Lacerda’s Guidelines range was calculated between 324 and 405 months. As demonstrated above, Lacerda has shown no error in that calculation. The District Court’s sentence of 324 months rests 20 at the very bottom of the range. When “the sentence is within the Guidelines range, the appellate court may, but is not required to, apply a presumption of reasonableness.” Gall, 552 U.S. at 51. We will apply the presumption here. Lacerda presents a table of cases showing a range of sentences for other fraud cases and argues that his sentence, though at the bottom of his Guidelines range, is still “23 times greater than the median sentence for his type of offense.” Appellant Lacerda’s Br. 67–71. When a defendant seeks to argue disparate sentencing, he bears the “burden of demonstrating similarity by showing that other defendants’ circumstances exactly paralleled his, and a court should not consider sentences imposed on defendants in other cases in the absence of such a showing by a party.” United States v. Iglesias, 535 F.3d 150, 161 n.7 (3d Cir. 2008) (citing United States v. Vargas, 477 F.3d 94, 100 (3d Cir. 2007)) (internal brackets and quotations omitted). Lacerda has failed to demonstrate that any of the other defendants’ circumstances exactly paralleled his. So, “[a]ccording great deference” to the District Court—as the law requires, United States v. Lessner, 498 F.3d 185, 204 (3d Cir. 2007)—we hold that Lacerda has failed to overcome the presumption that his sentence was reasonable.
Clearly Erroneous After finding that VOG was a wholly fraudulent scheme, the District Court ordered all its gross proceeds forfeited under 18 U.S.C. §§ 981(a)(1)(C) & 982(a)(8) and 28 U.S.C. § 2461(c). Lacerda raises two challenges to the District Court’s forfeiture order on appeal. First, he asserts that he lacked sufficient notice that the government would seek forfeiture upon his conviction because the government cited the wrong criminal forfeiture statutes in its superseding indictment. Second, he asserts that the District Court’s finding that all VOG’s revenues were either directly or indirectly attributable to VOG’s fraud, and so subject to forfeiture, was clearly erroneous. Because forfeiture orders involve mixed questions of law and fact, our standard of review here is bifurcated. We review the District Court’s legal conclusions de novo and its findings of facts for clear error. See United States 21 v. Gordon, 710 F.3d 1124, 1165 (10th Cir. 2013). Applying this standard, we find no error by the District Court, and we will affirm.
government would seek forfeiture In its superseding indictment, the government gave notice that, upon conviction, it would seek forfeiture of “any property constituting or derived from proceeds obtained directly or indirectly as a result of such offenses” under 18 U.S.C. §§ 981(a)(1)(D) & 982(a)(2)(A) and 28 U.S.C. § 2461(c). App. 287. Lacerda notes, and the government concedes, that the cited criminal statutes are not the correct statutes for forfeiture of proceeds from mail and wire fraud involving telemarketing. The correct statute is 18 U.S.C. § 982(a)(8), the statute under which the District Court ordered forfeiture. Lacerda first argues that the forfeiture order cannot be based on the civil forfeiture statute because, under our precedent in United States v. Vampire Nation, 451 F.3d 189, 199 (3d Cir. 2006), forfeiture orders can be based on 28 U.S.C. § 2461(c) only when “there is no specific statutory provision that permits criminal forfeiture.” Lacerda further argues that, by citing incorrect forfeiture statutes for his crimes, the government failed to provide the notice required by the Federal Rules of Criminal Procedure. Lacerda is mistaken on both grounds. First, Lacerda’s reliance on Vampire Nation is misguided. Our Vampire Nation decision was based on the language of the prior version of 28 U.S.C. § 2461(c).5 Giving 5 The applicable statute read: If a forfeiture of property is authorized in connection with a violation of an Act of Congress, and any person is charged in an indictment or information with such violation but no specific statutory provision is made for criminal forfeiture upon conviction, the government may include the forfeiture in the indictment or information in accordance with the Federal Rules of Criminal Procedure, and upon 22 the words of that statute their plain meaning, we concluded that “criminal forfeiture is not permitted unless (1) a substantive provision exists for civil forfeiture of the criminal proceeds at issue; and (2) there is no specific statutory provision that permits criminal forfeiture of such proceeds.” Vampire Nation, 451 F.3d at 199. In 2006, Congress amended the statute and eliminated the second requirement. 6 The amendment to 28 U.S.C. § 2461(c) effectively abrogates the portion of Vampire Nation upon which Lacerda now relies. Under the current version of the statute, the District Court correctly conviction, the court shall order the forfeiture of the property in accordance with the procedures set forth in section 413 of the Controlled Substances Act ( 21 U.S.C. 853), other than subsection (d) of that section. 28 U.S.C. § 2461(c) (2000) (emphasis added). 6 The statute now reads: If a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure. If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case pursuant to to [sic] the Federal Rules of Criminal Procedure and section 3554 of title 18, United States Code. The procedures in section 413 of the Controlled Substances Act (21 U.S.C. 853) apply to all stages of a criminal forfeiture proceeding, except that subsection (d) of such section applies only in cases in which the defendant is convicted of a violation of such Act. 28 U.S.C. § 2461(c) (2006). 23 ordered restitution, and Lacerda had notice under the civil statute. Second, the government provided Lacerda with sufficient notice under the criminal rules. Federal Rule of Criminal Procedure 32.2 sets forth the notice requirement that must be met before forfeiture can be ordered by a district court. It states: A court must not enter a judgment of forfeiture in a criminal proceeding unless the indictment or information contains notice to the defendant that the government will seek the forfeiture of property as part of any sentence in accordance with the applicable statute. Fed. R. Crim. P. 32.2(a). This rule does not require the level of specificity demanded by Lacerda. Rather, as we have held, “[a] conclusory forfeiture allegation in the indictment that recognizably tracks the language of the applicable criminal forfeiture statute” is sufficient under the rule. United States v. Sarbello, 985 F.2d 716, 719 (3d Cir. 1993). We recognize that Sarbello specifically addressed then-Rule 7(c)(2), which was removed with the 2009 amendments. But that rule was removed only because it had become obsolete: “In 2000 the same language was repeated in subdivision (a) of Rule 32.2, which was intended to consolidate the rules dealing with forfeiture.” See Fed. R. Crim. P. 7 note (2009 Amendment). We now hold, consistent with Sarbello, that general notice of forfeiture is sufficient under Rule 32.2. Thus, Lacerda had sufficient notice that the government would seek forfeiture upon his conviction. 2. Based on its finding that VOG used its revenues to promote and facilitate its fraud, the District Court correctly ordered those revenues forfeited Lacerda next contends that the District Court erred by subjecting all VOG’s proceeds to forfeiture rather than limiting the order to the losses directly claimed by VOG’s victims. But the relevant statute is not so narrow. Rather, addressing the crimes committed by Lacerda at VOG, 18 U.S.C. § 982 requires the court to 24 order that the defendant forfeit to the United States any real or personal property— (A) used or intended to be used to commit, to facilitate, or to promote the commission of such offense; and (B) constituting, derived from, or traceable to the gross proceeds that the defendant obtained directly or indirectly as a result of the offense. 18 U.S.C. § 982(a)(8). The District Court found that VOG was a fraudulent enterprise from beginning to end, and that all its gross proceeds were used to further its fraud. Based on those findings, the District Court correctly ordered the forfeiture of all VOG’s proceeds. Lacerda does not appear to challenge the District Court’s findings on appeal. Instead, he argues that what it means for property to be “indirectly” derived, traceable, or obtained from an offense is ambiguous, so the rule of lenity should govern our interpretation of the forfeiture statute. We reject this argument. First, it is irrelevant. The District Court’s order focused on the fact that VOG had used all its revenues to promote and facilitate its fraud, not on whether those revenues were direct or indirect. Second, “[t]he rule of lenity … is inapplicable if there is only a mere suggestion of ambiguity because most statutes are ambiguous to some degree.” United States v. Cheeseman, 600 F.3d 270, 276 (3d Cir. 2010) (internal quotation omitted). Lacerda has failed to show that the forfeiture statute is ambiguous—much less sufficiently ambiguous—to warrant application of the rule of lenity. Recently, the Supreme Court of the United States explained that the purpose of forfeiture statutes is to separate the criminal from his ill-gotten gains, to return, in full, the property of defrauded victims, and to lessen the economic power of criminal enterprises. Honeycutt v. United States, 137 S. Ct. 1626, 1631 (2017) (citing Caplin & Drysdale, Ctd. v. United States, 491 U.S. 617, 629–30 (1989)). The District Court’s forfeiture order here meets those purposes. The District Court found that VOG was a thoroughly corrupt criminal 25 conspiracy from beginning to end, and that its revenue was used to promote and facilitate its crimes. That finding is supported by substantial evidence and does not appear to be challenged by Lacerda on appeal. The District Court correctly ordered the forfeiture of all of VOG’s revenues.