Court Opinion

ID: 4195625
Source: CourtListenerOpinion
Date Created: 2017-08-14 19:00:36.555138+00
Date Added: 2024-06-11T09:36:39.721861
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 16-1437

                    UNITED STATES OF AMERICA,

                            Appellee,

                               v.

                         AARON E. OLSON,

                      Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF NEW HAMPSHIRE

        [Hon. Landya B. McCafferty, U.S. District Judge]

                             Before

                Torruella, Thompson, and Barron,
                         Circuit Judges.

     Inga L. Parsons, Christian J. Urbano and Law Offices of
Inga L. Parsons on brief for appellant.
     Seth R. Aframe, Assistant United States Attorney, and John J.
Farley, Acting United States Attorney, on brief for appellee.

                         August 14, 2017
          TORRUELLA, Circuit Judge.           Defendant-Appellant Aaron

Olson ("Olson") committed securities and tax fraud, and he pled

guilty to tax fraud. Olson's plea agreement contained a sentencing

range of forty-two to sixty months of imprisonment, and the

district court sentenced him to sixty months.         Olson also agreed

to pay restitution, and the district court ordered him to pay

almost $23 million.       Olson now appeals his sentence and his

restitution schedule.     We affirm.

                             I.   BACKGROUND

A.   Factual Background

          In 1999, Olson began trading in commodities, and in 2002,

he was approached by his first client.            Although he was not

licensed as a trader, Olson continued adding clients.           By 2010, he

had invested several million dollars for family, friends, and their

businesses,   and   the    New    Hampshire     Bureau     of   Securities

investigated his unregulated trading.          However, Olson remained

unlicensed to trade in New Hampshire, and his business, AEO

Associates ("AEO"), was not registered to trade in the state.           As

a result of the New Hampshire Bureau of Securities investigation,

AEO effectively shut down and Olson created KMO Associates ("KMO"),

which he registered in Massachusetts but ran out of his home in

New Hampshire, where he remained unlicensed.             KMO was also not

registered in New Hampshire.

                                   -2-
            By 2011, many of Olson's investments had failed.               Rather

than truthfully report losses to his investors, however, he turned

his    investment   business   into   a     Ponzi    scheme,    creating    false

earnings statements showing significant returns and attracting new

investments    to   pay   investors.         Olson    also     converted    about

$2.6 million of investor funds for his personal use and comingled

clients' funds with his own.              In addition to his securities

violations, he attempted to evade or defeat taxes on income he

obtained from operating AEO and KMO.

            Olson's clients finally became suspicious and confronted

him.    On March 23, 2012, he confessed and self-reported to the

government and the Internal Revenue Service.

B.     Procedural History

            The government filed a four-count information on April

14, 2014, charging Olson with attempt to evade or defeat tax, in

violation of 26 U.S.C. § 7201.            On March 9, 2015, Olson entered

into a plea agreement pursuant to Fed. R. Crim. P. 11(c)(1)(C)

(the "Agreement"), in which he pled guilty to the four tax-fraud

counts.    The Agreement allowed Olson to withdraw his plea if the

district court did not accept it, and it contained, inter alia:                 a

sentencing range of forty-two to sixty months; a condition that

Olson would pay restitution to the victims "in amounts to be

determined at the time of sentencing"; and an appeal waiver that

                                      -3-
became effective if Olson was sentenced "within, or lower than,

the guideline range determined by the Court." At his plea hearing,

the district court informed Olson that "[u]nder some circumstances

[he] . . . may have the right to appeal any sentence," but that

Olson waived some appeal rights, "and those waivers are set forth

in your plea agreement."

             Thereafter, sentencing was delayed while Olson attempted

to sell his granite quarry to provide a fund for restitution.              The

district     court   then     held    Olson's    sentencing     hearing    on

April 1, 2016.    It calculated Olson's recommended sentencing range

to be thirty-seven to forty-six months under the U.S. Sentencing

Guidelines    (the   "Guidelines"),     the   same   range   recommended    in

Olson's presentence investigative report.             Both parties agreed

with the calculation and jointly recommended a sentence of forty-

two months.      The district court also heard testimony from two

victims,    Olson,   and    Olson's   wife,   read   letters   from   victims

submitted on Olson's behalf and victim impact letters provided by

the government, and probed Olson's unsuccessful attempt to sell

his granite quarry.

             Ultimately, the district court sentenced Olson to sixty

months of imprisonment, the highest possible sentence under the

Agreement and an upward variance from the recommended guidelines

range.     The district court specifically laid out the factors it

                                      -4-
considered, including the scope of the injury as partly evidenced

by the testimony of the two victims, the need to deter other white-

collar criminals, his continuation of the crime over an extended

period, and his decision to defraud even though he was "privileged"

and did not use drugs or alcohol.           The district court also found

that although Olson stated his remorse, he had not sold his granite

quarry, contributed any other money for restitution, or made any

other "acts of remorse."      Although Olson's decision to self-report

and help the government identify victims and their losses was a

mitigating factor, the district court found that Olson had already

benefited from it, presumably by avoiding charges for securities

violations.       Olson did not offer any legal objection to this

ruling.

           The     district   court     held    a   separate     hearing    on

restitution on October 31, 2016.            At the hearing, the parties

agreed that investors lost $22,811,405.26 from 2007 to 2012. Olson

argued, however, that he had invested some of his clients' money

in legitimate, though unsuccessful, investments.                 Because his

clients had assumed the risk of losing money, those "legitimate"

losses,   which    he   calculated   were   approximately      $5.5   million,

should not be included in restitution amount.          The district court

rejected that argument, reasoning that but for Olson's inducements

and misstatements, his clients would not have invested with him at

                                      -5-
all.       It    therefore    ordered      restitution     of   the    entire

$22,811,405.26.

                              II.    ANALYSIS

A.     We Assume Appellate Jurisdiction over All of Olson's Claims

            The Agreement contained an appeal waiver that applied if

Olson was sentenced "within, or lower than, the guideline range,"

which was thirty-seven to forty-six months.          Olson was sentenced

to sixty months' imprisonment, so the appeal waiver does not apply.

             The government nevertheless contends that this Court

lacks jurisdiction over Olson's appeal because his sentence was

within the forty-two to sixty months recommended in the Agreement's

Sentencing Stipulations and Agreements.           "In the case of a plea

agreement [such as Olson's] that includes a specific sentence under

rule 11(e)(1)(C) . . . a defendant may not [make certain arguments

on appeal] unless the sentence imposed is greater than the sentence

set forth in such agreement . . . ."         18 U.S.C. § 3742(c).1      Given

this bar, we may lack jurisdiction over some of Olson's claims of

error, although other claims may constitute "violation[s] of law"

over which we would retain jurisdiction.          18 U.S.C. § 3742(a)(1).

            In   addition,   the    Agreement's   appeal   waiver     and   the

colloquy at Olson's change-of-plea hearing implied a right to

1 Fed. R. Crim. P. 11 has been subsequently reorganized and the
provision referred to by § 3742(c)(1) is now Rule 11(c)(1)(C).

                                     -6-
appeal from any sentence above the applicable guidelines range,

which Olson's sentence was.     If Olson nevertheless cannot appeal,

his plea arguably was not knowingly made and could be withdrawn.

See United States v. Figueroa-Ocasio, 805 F.3d 360, 370-71 (1st

Cir. 2015) (vacating a guilty plea that was not "knowing and

voluntary"); United States v. Castro-Gómez, 233 F.3d 684, 687-88

(1st Cir. 2000) (allowing withdrawal of plea because "[a] failure

to inform a defendant of a mandatory minimum sentence at his plea

hearing 'implicates a core concern of Rule 11'") (quoting United

States v. McDonald, 121 F.3d 7, 11 (1st Cir. 1997)).

           Rather than decide which of Olson's claims, if any, we

can review and the effect of his appeal waiver, however, we can

"'forsake the jurisdictional riddle' when the merits will be

resolved   in    favor   of   the   party   challenging   the   court's

jurisdiction."    United States v. Woods, 210 F.3d 70, 74 (1st Cir.

2000) (quoting United States v. Stoller, 78 F.3d 710, 714 (1st

Cir. 1996)).     Although this rule is inapplicable to Article III

subject matter jurisdiction, Steel Co. v. Citizens for a Better

Environment, 523 U.S. 83 (1998), it remains in place when, as in

this case, only statutory jurisdiction is concerned.        Woods, 210
F.3d at 74 n.2.    Because we can easily dispose of Olson's appeal

on the merits, we bypass the complex jurisdictional issue.

                                    -7-
B.     Olson's Sentence Was Not Unreasonable

              For preserved challenges, "generally, both [procedural

and    substantive]      aspects    of    this    review       are   for    abuse      of

discretion."       United States v. Cortés-Medina, 819 F.3d 566, 568-

69 (1st Cir. 2016).        "When assessing the procedural reasonableness

of a sentence, however . . . we afford de novo consideration to

the    sentencing    court's   interpretation          and    application        of   the

sentencing guidelines . . . ."            Id. at 569.         Challenges that were

not preserved in the lower court are reviewed for plain error.

Id.    Here, Olson did not offer any legal objection below, so we

review his arguments under the plain-error standard.

              First, the sentence was not procedurally unreasonable.

We are not persuaded by Olson's argument that the district court

applied an "upward departure" rather than a variance.                           Although

the district court used the term "upward departure," its analysis

shows that it imposed a variance.                It never mentioned a single

departure provision from the Guidelines, but it specifically cited

the 18 U.S.C. § 3553(a) factors and carefully grounded its analysis

in    those   factors.      Right    before      its   oral    ruling      on   Olson's

sentence, it again referenced § 3553(a) factors and applied its

findings      to   those   factors       to    justify       its   above-Guidelines

sentence.      We therefore conclude that the district court in fact

imposed a variance rather than a departure.                   See United States v.

                                         -8-
Santini-Santiago, 846 F.3d 487, 491 (1st Cir. 2017) (holding that

basing a sentence on § 3553(a)'s factors "is the hallmark of a

variance, even when the sentencing court references [a departure

provision]"); United States v. Nelson, 793 F.3d 202, 206-207 (1st

Cir. 2015) (finding an above-Guidelines sentence to be an upward

variance   where     the   district     court   specifically   referenced

§ 3553(a) factors, notwithstanding the district court's use of the

term "depart").    In imposing the variance, the district court did

not have to give prior notice.          United States v. Aponte-Vellón,

754 F.3d 89, 94 (1st Cir. 2014) ("Rule 32(h) . . . placed the

district court under no obligation to provide advance notice of

the variance.").

           Nor did the district court rely on improper factors in

reaching its decision.        It did remark on Olson's privileged

background, his lack of alcohol or drug use, and his failure to

sell his granite quarry and provide funds for restitution, but

those remarks were to prove Olson's conscious decision to defraud

and his failure to show concrete remorse.         They properly relate to

"the nature and circumstances of the offense and the history and

characteristics of the defendant."          18 U.S.C. § 3553(a)(1).

           Second,     Olson's   sentence       was   not   substantively

unreasonable.      "In reviewing the reasonableness of a sentence

outside the Guidelines range, appellate courts may . . . take the

                                      -9-
degree of variance into account and consider the extent of a

deviation from the Guidelines."     Nelson, 793 F.3d at 207 (quoting

Gall v. United States, 552 U.S. 38, 47 (2007)).      "The linchpin of

a reasonable sentence is a plausible sentencing rationale and a

defensible result."      Id. (quoting United States v. Martin, 520
F.3d 87, 96 (1st Cir. 2008)). The district court's sentence passes

that test.     In making an upward variance, the district court took

into account multiple aggravating factors, such as the financial

harm caused by Olson's elaborate scheme, his continuation of the

crime over an extended period, his conscious decision to defraud,

and the need to deter other white-collar criminals.           It also

considered his lack of concrete actions showing remorse, and as a

mitigating factor, his cooperation with the government.     Together,

the district court's careful deliberation demonstrates a plausible

rationale and reaches a defensible result.

C.   The District Court Correctly Rejected Olson's Legitimate
     Investment Losses Argument

             The parties agreed on the total amount lost by investors,

so the only contested issue is whether that total should have been

discounted because investors would have incurred some "legitimate"

investment losses unrelated to Olson's fraud.        In other words,

Olson argues that his illegal scheme was not the but-for cause of

                                  -10-
all of the investors' losses.2           The district court rejected that

argument, as do we.

            Olson is right that there must be a causal link between

the    illegal   activity   and    the   resultant     losses.         18   U.S.C.

§     3663A(a)(2).   We   have    previously    held    that     two    "bedrock

principles" of restitution orders require the that the government

"show not only that a particular loss would not have occurred but

for the conduct underlying the offense of conviction, but also

that the causal connection between the conduct and the loss is not

too attenuated (either factually or temporally)."                United States

v. Cutter, 313 F.3d 1, 7 (1st Cir. 2002) (citing United States v.

Vaknin, 112 F.3d 579 (1st Cir. 1997)).         However, Olson's argument,

which focuses on the "but-for" prong of the analysis, fails.                    As

the district court found, investors would not have trusted him

with their money if he had disclosed that he was running an

2 Restitution typically contemplates a causal link between the
offenses of conviction and losses suffered by the victims of those
offenses. Here, Olson's plea was for tax evasion, making the IRS
the victim. However, pursuant to the parties' plea agreement, the
district court ordered Olson to pay restitution to the victims of
his Ponzi scheme. See 18 U.S.C §§ 3663A(a)(3) (allowing the court
to order restitution to "persons other than the victim of the
offense"), 3663(c)(2) (allowing the court to order restitution for
offenses falling under the Mandatory Victim Restitution Act for
which the defendant has not been convicted pursuant to the plea
agreement, but that nonetheless "gave rise" to that agreement).
Accordingly, the district court's causal link analysis focused on
the nexus between Olson's fraudulent Ponzi scheme conduct and his
investors' losses.

                                     -11-
unlicensed business and incurring substantial losses, or if he had

confessed that he comingled investors' funds, used new investments

to pay prior investors, and misappropriated funds for his own use.

Thus, Olson's misrepresentations were the but-for cause of all

investor losses, and we agree with the district court that his

legitimate investment losses argument is meritless.

                         III. CONCLUSION

          For the reasons stated, we affirm Olson's sentence and

restitution schedule.

          Affirmed.

                              -12-