Court Opinion

ID: 4110010
Source: CourtListenerOpinion
Date Created: 2016-12-22 14:01:03.788879+00
Date Added: 2024-06-11T07:45:44.051500
License: Public Domain

Case: 14-12259   Date Filed: 12/22/2016   Page: 1 of 19

                                                    [DO NOT PUBLISH]

          IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 14-12259
                     ________________________

                D.C. Docket No. 0:13-cr-60240-WPD-1

UNITED STATES OF AMERICA,

                                                          Plaintiff -Appellee,

versus

RICHARD ALTOMARE,

                                                       Defendant -Appellant.

                     ________________________

              Appeal from the United States District Court
                  for the Southern District of Florida
                    ________________________

                          (December 22, 2016)
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Before MARCUS, JORDAN, and WALKER, * Circuit Judges.

PER CURIAM:

       Richard Altomare appeals his convictions for one count of mail fraud, in

violation of 18 U.S.C. § 1341, and three counts of securities fraud, in violation of

15 U.S.C. § 75(j), as well as the 37–month sentence the district court imposed.

After a thorough review of the parties’ briefs, the record, and with the benefit of

oral argument, we affirm Mr. Altomare’s convictions and sentence.

                                              I

       In January of 2013 Mr. Altomare was approached by the officers of Sunset

Capital Assets to help improve the company. Sunset was a newly acquired entity

with a very low profile, and its stock traded at a cheap price and low volume as a

penny stock on over-the-counter Pink Sheets. Sunset had recently acquired a

company that had a collection of rare stones which it hoped to use to increase its

value. In order to do this, Sunset wanted Mr. Altomare to help find investors for

the company and to draft press releases about how Sunset was doing.

       Mr. Altomare was the former CEO of his own company, Universal Express,

which had been shut down by the SEC. He was personally fined millions of

dollars. The officers of Sunset, however, were not aware of the full extent of Mr.

*
 The Honorable John M. Walker, Jr., United States Circuit Judge for the Second Circuit, sitting
by designation.
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Altomare’s past troubles. At the conclusion of the initial meeting, Mr. Altomare

agreed to help draft press releases and to aid in finding investors for Sunset.

        Subsequent to his meeting with Sunset, Mr. Altomare met with his old

business partner, Robert Weidenbaum. Mr. Altomare and Mr. Weidenbaum had

previously worked together at Universal Express, where Mr. Weidenbaum aided

Mr. Altomare in artificially inflating the company’s stock price over a period of

four to five years. That inflation scheme resulted in the SEC proceeding that

caused the closure of Universal Express. Mr. Altomare and Mr. Weidenbaum were

both banned from trading penny stocks by the SEC civil judgments entered against

them.

        Mr. Weidenbaum had recently pled guilty in an unrelated case to conspiracy

to commit securities fraud, wire fraud, and mail fraud. In the hopes of receiving a

more lenient sentence, Mr. Weidenbaum agreed to help the FBI by working as an

informant. Mr. Altomare knew of Mr. Weidenbaum’s legal troubles, but was

unaware of his status as an informant.

        The FBI instructed Mr. Weidenbaum to record every interaction he had with

potential suspects. With the exception of the initial contact to set up the meeting,

Mr. Weidenbaum had a copy of every text message and e-mail between himself

and Mr. Altomare, and audio recordings of every phone call and in-person meeting

between them.

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      When the two met, Mr. Altomare initially attempted to sell Mr.

Weidenbaum on the idea of loaning Sunset money with the rare stones used as

collateral. The conversation eventually turned to the topic of stocks. He talked

about increasing the stock trading volume of Sunset. Mr. Altomare told Mr.

Weidenbaum that they could likely raise the price of the stock from around 50

cents per share to as high as two dollars per share, and that they could continue to

make money by letting the price fall, and raising it up again, and selling the stocks

off. During this meeting, Mr. Altomare told Mr. Weidenbaum, “if nothing else,

you and I will just pump the shit out of the stock and make money there too.” D.E.

89 at 69.

      Mr. Altomare wanted to manage a vast majority of Sunset’s stock in order to

better control how it was selling. Over the next two months Mr. Altomare and Mr.

Weidenbaum discussed the manner in which they would inflate Sunset’s stock

price. Mr. Altomare informed Sunset that he had found a legitimate investor in Mr.

Weidenbaum, and he began making arrangements to get shares of stock issued to

Mr. Weidenbaum. Mr. Altomare did not provide any information about Mr.

Weidenbaum to Sunset, aside from the fact that he was an investor.

      Mr. Altomare also arranged for an unknown person in Canada to participate

in the “pump and dump” scheme through a buy-ratio agreement. Mr. Altomare was

going to pay the Canadian participant one dollar or one share of Sunset stock for

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every three shares of Sunset he bought. This would help create the appearance, to

an investor, that the stock had liquidity. That, in turn, would make it easier to trade

the stock.

      Mr. Altomare set up a similar arrangement with Mr. Weidenbaum. He was

going to have 70,000 shares issued to Mr. Weidenbaum at a discounted rate of fifty

cents per share, which was about half of the market price. In exchange for those

70,000 shares, Mr. Weidenbaum agreed to purchase 140,000 shares. To circumvent

Mr. Weidenbaum’s penny stock ban, the certificate for the 70,000 shares was

issued to Neptune Capital, a company that was controlled (unbeknownst to Mr.

Altomare) by the FBI.

      Despite Sunset selling shares to Mr. Weidenbaum, there was no plan to

legitimately compensate the company for the stock. Ultimately, Mr. Altomare and

Mr. Weidenbaum were going to split the profits of the stock dump and have Mr.

Altomare pay Sunset with those proceeds. Mr. Altomare instructed Mr.

Weidenbaum to pay him his share of the proceeds in the form of a forgivable loan

so that he could create a paper trail with respect to his new income. Mr. Altomare

again reiterated that he thought the stock price might climb to over two dollars per

share, and that it might even go as high as ten dollars, but that even if it did not rise

that high, he and Mr. Weidenbaum would make a lot of money selling the inflated

stock if they had millions of shares.

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      The other component of the scheme was to time the stock purchases with

press releases. In order to make the increase in trading volume look legitimate, the

buying would have to coincide with positive news about Sunset. To maximize the

amount of inflation and to make the purchases look legitimate, Mr. Altomare and

Mr. Weidenbaum discussed the best time to buy, and whether Mr. Weidenbaum

should “prime the pump” and do a small bit of buying before a press release. Mr.

Altomare ultimately decided that it would be better to wait until the press releases

were issued to the public. Mr. Altomare chose to provide handwritten copies of the

releases and their anticipated dates to Mr. Weidenbaum to avoid leaving an

electronic paper trail.

      While the two men were crafting strategies to artificially inflate Sunset’s

stock price, Mr. Altomare pressured Mr. Weidenbaum for loans in various

amounts. Mr. Altomare intended to take the money Mr. Weidenbaum lent to him

and then lend it to Sunset. He wanted to do this in the hopes of making Sunset

dependent on him, which he believed would make the company easier for him to

control.

      Mr. Altomare sent the 70,000 shares for Mr. Weidenbaum to Neptune

Capital through Federal Express. At the behest of Mr. Altomare, an account

controlled by the FBI, but supposedly belonging to Mr. Weidenbaum, purchased

another 2,000 shares of Sunset on the open market. The stock certificate was issued

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for the 70,000 shares, and Mr. Weidenbaum told Mr. Altomare that he would buy

more stock. After another press release was issued, the FBI-controlled account

purchased another 3,500 shares. Mr. Altomare repeatedly checked in with Mr.

Weidenbaum about what he was doing and whether the stock price had moved.

      At one point, at the direction of the FBI, Mr. Weidenbaum cut all contact

with Mr. Altomare. Prior to his arrest Mr. Altomare had a meeting with an FBI

agent and he denied any wrongdoing.

      A jury convicted Mr. Altomare on one count of mail fraud and three counts

of securities fraud. The probation officer initially recommended a base offense

level of seven; an eight-level enhancement due to an intended loss greater than

$70,000 but less than $120,000; a two-level enhancement because the offense

involved the violation of a prior judicial order; and another two-level enhancement

because the offense involved sophisticated means. The enhancements raised Mr.

Altomare’s base level offense to 19. Based on an offense level of 19 and a criminal

history category of I, the advisory guideline range was 30 to 37 months’

imprisonment. The district court sentenced Mr. Altomare to 37 months’

imprisonment, at the top end of the advisory range.

                                        II

      Mr. Altomare first argues that the government presented insufficient

evidence to convict him of mail and securities fraud. He asserts that the

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government piled inference upon inference and that no substantial evidence was

offered in connection with the charged crimes. We disagree.

          We review the sufficiency of the evidence de novo. See United States v.

Pacchioli, 718 F.3d 1294, 1299 (11th Cir. 2013). We view the evidence in the light

most favorable to the verdict and draw all reasonable inferences and credibility

choices in the government’s favor. See id. Credibility determinations are the

province of the jury. United States v. Copeland, 20 F.3d 412, 413 (11th Cir. 1994).

We look only to see if a “reasonable fact-finder could have determined that the

evidence proved the defendant’s guilt beyond a reasonable doubt.” United States v.

Smith, 459 F.3d 1276, 1286 (11th Cir. 2006).

          In order to convict Mr. Altomare of securities fraud under 15 U.S.C. §§

78j(b) & 78ff(a) and 17 C.F.R. § 240.10b–5, the government was required to prove

that Mr. Altomare (1) used a scheme to defraud, (2) in connection with the

purchase of a security, (3) that employed the means of interstate commerce or any

facility of a national securities exchange; and (4) acted with the purpose of

defrauding buyers or sellers of securities. See D.E. 91 at 152. See also Aaron v.

Sec. & Exch. Comm’n, 446 U.S. 680, 691 (1980) (holding that scienter is an

element of violations of § 78j and Rule 10b–5).1

1
    Mr. Altomare does not take issue with the district court’s jury instructions.
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      Mr. Altomare maintains that his dealings with Mr. Weidenbaum were

designed only to raise money for the company, shrugs off his statements as

puffery, and argues that there was insufficient evidence of fraud. The record,

however, contains sufficient evidence to sustain Mr. Altomare’s convictions for

securities fraud.

      First, the government presented sufficient evidence for a reasonable jury to

conclude that Mr. Altomare employed a scheme to defraud in connection with the

purchase of Sunset stock. Mr. Altomare sought out his former business partner,

Mr. Weidenbaum, with whom he had previously engaged in a stock manipulation

scheme at Universal Express. The most damaging evidence came from Mr.

Weidenbaum’s testimony and the recordings in which Mr. Altomare explained his

scheme to artificially inflate Sunset’s stock price. Mr. Altomare spoke repeatedly

about how easy it would be to gain control of a vast majority of Sunset’s stock and

to set up buy-ratio agreements with Mr. Weidenbaum and the participant in Canada

in order to help generate volume trading. He strategized about when to distribute

press releases to the public and when and how many shares Mr. Weidenbaum

should purchase. Mr. Altomare, in his own words, planned to “pump the shit out of

the stock and make money.”

      Second, based on the evidence presented, a reasonable jury could find that,

in enacting this scheme, Mr. Altomare employed the means and instrumentalities

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of interstate commerce. Specifically, the government introduced evidence that

Sunset was traded as an over-the-counter Pink Sheet stock and that shares were

purchased on a lower-tier national securities exchange as a result of this scheme

and at the direction of Mr. Altomare. See generally Jaffee & Co. v. Sec. & Exch.

Comm’n, 446 F.2d 387, 392 (2d Cir. 1971).

      Third, the government presented sufficient evidence for a reasonable jury to

find that Mr. Altomare had the intent to commit securities fraud. In addition to the

evidence cited above, Mr. Altomare repeatedly and actively disguised the scheme.

For example, Mr. Altomare told Mr. Weidenbaum not to buy too many shares too

quickly for fear of drawing attention to the artificially increased trading of the

stock. He also had the 70,000 shares of stock issued to Neptune Capital due to Mr.

Weidenbaum’s ban from trading in penny stocks and instructed Mr. Weidenbaum

to transfer half of the proceeds to him, but cloaked as a forgivable loan. Mr.

Altomare attempted to conceal his own involvement by refusing to e-mail the press

releases to Mr. Weidenbaum for fear of leaving a paper trail, and instead providing

him with handwritten copies. A reasonable jury could conclude that, had Mr.

Altomare indeed acted merely with the intention of raising capital for Sunset, his

actions would not have necessitated such a veil of secrecy.

      Finally, Mr. Altomare took the witness stand in his own defense and

attempted to explain away the incriminating recordings. The jury was free to judge

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the credibility of Mr. Altomare, and it chose to reject his testimony. On review, we

do not substitute our opinion of the evidence for that of the jury. See Copeland, 20

F.3d at 413. See also United States v. Brown, 53 F.3d 312, 314 (11th Cir. 1995)

(“[A] statement by a defendant, if disbelieved by the jury, may be considered as

substantive evidence of the defendant’s guilt.”) (emphasis in original) (citation

omitted). Reviewing the evidence in the light most favorable to sustaining the

verdict, we conclude that the government presented sufficient evidence for a

reasonable jury to convict Mr. Altomare of the charged offenses.

      To the extent Mr. Altomare also challenges the sufficiency of the evidence

for his mail fraud conviction, that issue is mentioned only in the opening of his

argument section and not subsequently developed. Because Mr. Altomare does not

present any argument or authority challenging his mail fraud conviction, this claim

is deemed abandoned and we do not address it. See Fed. R. App. P. 28(a)(5). See

also Access Now, Inc. v. Southwest Airlines Co., 385 F.3d 1324, 1330 (11th Cir.

2004).

                                        III

      Mr. Altomare next asserts that his convictions should be reversed because

the government constructively amended the indictment, allowing him to be

convicted not for committing securities fraud, but for defrauding Sunset of 70,000

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stock shares. A thorough review of the indictment and the evidence presented at

trial, however, demonstrates that Mr. Altomare’s assertion lacks merit.

      The Fifth Amendment guarantees that a defendant can be convicted only of

crimes that are charged in the indictment. See United States v. Holt, 777 F.3d 1234,

1261 (11th Cir. 2015) (citing United States v. Ward, 486 F.3d 1212, 1226 (11th

Cir. 2007)). A constructive amendment occurs “when the essential elements of the

offense contained in the indictment are altered to broaden the possible bases for

conviction beyond what is contained in the indictment.” See id. (citing United

States v. Narog, 372 F.3d 1243, 1247 (11th Cir.2004) (internal quotation marks

omitted)). A constructive amendment may occur in one of two ways: (1) by the

prosecutor’s actions; or (2) through the district court’s instructions. See id. (citing

United States v. Behety, 32 F.3d 503, 508–09 (11th Cir. 2014)).

      A    properly    preserved    constructive    amendment      claim    presents   a

constitutional claim that triggers de novo review. See United States v. Williams,

527 F.3d 1235, 1239 (11th Cir. 2008). An unpreserved constructive amendment

claim, however, is reviewed only for plain error. See United States v. Madden, 733

F.3d 1314, 1322–23 (11th Cir. 2013). We will reverse a conviction under plain

error review only if we find “(1) an error (2) that is plain and (3) that has affected

the defendant's substantial rights; and if the first three prongs are satisfied, we may

exercise discretion to correct the error if (4) the error seriously affects the fairness,

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integrity, or public reputation of judicial proceedings.” Id. at 1322 (citing United

States v. Olano, 507 U.S. 725, 732 (1993)).

      Mr. Altomare raised the constructive amendment claim for the first time in

his opening brief. We will therefore review that claim for plain error.

      Our review here will not proceed beyond the first step of the plain error

analysis—actual error—because there was no error in this case.

      Relevant to Mr. Altomare’s argument are counts II-IV of the indictment,

which alleged that Mr. Altomare

      [d]id knowingly, willfully, and unlawfully, by the use of means and
      instrumentalities of interstate commerce, the mails, and the facilities
      of national securities exchanges, directly and indirectly, use and
      employ manipulative and deceptive devices, contrivances in
      connection with the purchase and sale of securities, and: (a) employ a
      device, scheme, and artifice to defraud; (b) make untrue statements of
      material facts and omit to state material facts necessary to make
      statements made, in light of the circumstances under which they were
      made, not misleading; and (c) engaged in acts, practices and courses
      of business which would operate as a fraud and deceit upon any
      person, in connection with the purchase and sale of securities.

D.E. 1 at 5–6. Mr. Altomare argues that his indictment was constructively

amended through the actions of and evidence presented by the government, which

encouraged the jury to convict him on unindicted allegations that he stole stock

from Sunset.

      In making this argument, Mr. Altomare again attempts to paint a rose-tinged

façade over his actions. He downplays the likelihood of success of his alleged

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“pump and dump” scheme, and argues that because the scheme was unlikely to be

successful, the government chose to alter its theory of the case in order to secure a

conviction.

      The record does not support Mr. Altomare’s arguments. The government

presented evidence that aligned with the indictment—specifically, that Mr.

Altomare devised a scheme to artificially pump up the value of Sunset stock by

asserting control over the stock, generating artificial trading volume, and issuing

strategic press releases. The bulk of Mr. Weidenbaum’s testimony and the

recordings included discussions about how Mr. Altomare and Mr. Weidenbaum

could obtain a vast majority of Sunset’s stock and dump it back into the market

after inflating the price. Mr. Altomare’s arrangement for ratio-buying with Mr.

Weidenbaum and the participant in Canada also supported the government’s

overall theory that Mr. Altomare attempted to defraud the general investing public.

Ratio-buying—with the ultimate goal of inflating Sunset’s stock price—simply

does not fit into, and would serve no purpose under, the interpretation of the record

advanced by Mr. Altomare.

      Mr. Altomare highlights portions of the government’s trial presentation in

which the prosecutor referred to the 70,000 Sunset shares, insisting that Mr.

Altomare had to lie, cheat, and deceive in order to obtain them. Although the

government did indeed make comments about Mr. Altomare stealing 70,000 shares

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and betraying the people at Sunset, that theft was intrinsic to the offense, so

comments and evidence to that effect were presented as part of the overarching

scheme to artificially inflate Sunset’s stock price for the purpose of dumping—

which amounted to securities fraud.

                                         IV

      We now turn to the district court’s decision to apply an eight-level

enhancement based on an amount of loss of over $70,000. Mr. Altomare argues

that there was no actual or intended loss in this case and that the district court’s

calculation of intended loss is speculative. We again disagree.

      “The district court’s interpretation of the Sentencing Guidelines is a question

of law which we review de novo.” United States v. Toussaint, 84 F.3d 1406, 1407

(11th Cir. 1996) (citation omitted). We review a district court’s calculation of loss

for clear error. See United States v. Barrington, 648 F.3d 1178, 1197 (11th Cir.

2011). There is no requirement that loss be determined precisely—the district court

need only make a reasonable estimate of the loss based upon the available

information. See id. In making its factual findings as to loss, the district court may

take into consideration evidence presented during trial, undisputed statements in

the presentence investigation report, or evidence presented during the sentencing

hearing. See United States v. Bradley, 644 F.3d 1213, 1290 (11th Cir. 2011). The

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district court, however, is not permitted to “speculate about the existence of a fact

that would result in a higher sentence.” Barrington, 648 F.3d at 1197.

      The district court applied an eight-level enhancement under U.S.S.G.

§ 2B1.1(b)(1)(E) for actual or intended loss that is more than $70,000 but less than

$120,000. “Actual loss” is defined as the “reasonably foreseeable pecuniary harm

that resulted from the offense.” U.S.S.G. § 2B1.1(b)(1), comment. (n. 3(A)(i)).

“Intended loss,” on the other hand, is defined as the “pecuniary harm that the

defendant purposely sought to inflict . . . and includes intended pecuniary harm

that would have been impossible or unlikely to occur (e.g., as in a government

sting operation . . . ).” Id., comment. (n. 3(A)(ii)). In fraud cases, there is no error

in applying an enhancement based upon intended loss even when no actual loss

occurs. See United States v. Menichino, 989 F.2d 438, 442 (11th Cir. 1993).

      We find no error in the district court’s application of an eight-level

enhancement based upon an intended loss of approximately $75,650 as a result of

Mr. Altomare’s “pump and dump” scheme. During the sentencing hearing, the

district court determined that Mr. Altomare and Mr. Weidenbaum controlled

75,560 shares of stock. It also found that Mr. Altomare intended to inflate the stock

price from approximately $1 per share to at least $2 per share—a total increase of

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$1 per share. The court then multiplied the two figures, resulting in an intended

gain of $75,650.2

       The methodology employed by the district court in this case is virtually

identical to the methodology approved by the Second Circuit in United States v.

Reifler, 446 F.3d 65, 108 (2d Cir. 2006). The defendants in Reifler participated in a

“pump and dump” scheme, planning to dump one and one-half to two million

shares of stock into the market after raising the price from about five dollars to ten

dollars per share. Id. at 71–82, 109. Similar to Mr. Altomare, the defendants in

Reifler were the unwitting targets of an investigation by the FBI, and were arrested

before they could completely execute the pump and dump scheme. See id. at 108.

       The Second Circuit held that, despite ultimately being unsuccessful in the

execution of the scheme, the conspirators, by attempting to artificially raise the

price of the stock, intended that the shareholders would suffer some amount of

loss, i.e. “the inflated price paid minus the unmanipulated market value of the

shares.” Id. at 109. The Court concluded it was therefore not an unreasonable

interpretation of the guidelines’ loss provision to find that the defendants were

responsible for more than $5 million in intended loss. See id.

       The district court applied the same line of reasoning in this case. Because

there was no actual loss, the court looked instead to what Mr. Altomare stood to

2
 The district court discounted Mr. Altomare’s stated ambition of controlling one million shares
and inflating the price as high as $10 per share when calculating the intended loss.
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gain from the failed scheme in order to determine the amount of financial loss he

intended to cause. We find Reifler persuasive, and conclude that the district court

did not err in its calculation of loss.

                                           V

       Mr. Altomare also contends that the district court erred in applying a

two-level enhancement for a crime involving sophisticated means. We are not

persuaded.

       We review a district court’s finding that a defendant used sophisticated

means for clear error. United States v. Ghertler, 605 F.3d 1256, 1267 (11th Cir.

2010). A finding of fact is clearly erroneous when we are “left with the definite

and firm conviction that a mistake has been committed.” United States v.

Robertson, 493 F.3d 1322, 1330 (11th Cir. 2007) (quotation omitted).

       The guidelines provide a two-level enhancement if the offense conduct

involved a “sophisticated means.” U.S.S.G. § 2B1.1(b)(10)(C). “Sophisticated

means” refers to “especially complex or especially intricate offense conduct

pertaining to the execution or concealment of an offense,” and ordinarily includes

“[c]onduct such as hiding assets or transactions, or both, through the use of

fictitious entities, corporate shells, or offshore financial accounts.” Id. § 2B1.1,

comment. (n.9(B)). When analyzing the applicability of this enhancement, we

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focus on the offense as a whole, and not on each individual step. See Barrington,

648 F.3d at 1199.

         Mr. Altomare’s plan can only be described as complex. He took several

steps to conceal his true motives from Sunset and to ultimately attempt to trick the

public into buying stock at an inflated price. He lied to Sunset concerning the

investors he had interested in the company and concealed the fact that his

“investor” had been barred from trading penny stocks. Mr. Altomare arranged for

buy-ratio agreements with at least two individuals in order to artificially increase

the trading volume. He attempted to time the ratio buying with the press releases

he gave to Mr. Weidenbaum. He provided Mr. Weidenbaum handwritten copies of

the schedule and releases so as not to create a paper trail. He also hatched the idea

of creating a forgivable loan to disguise the proceeds from his deal with Mr.

Weidenbaum. On this record, the district court did not clearly err in applying the

two-level enhancement for sophisticated means to Mr. Altomare’s base offense

level.

                                          VI

         Upon review of the record and consideration of the parties’ briefs, we affirm

Mr. Altomare’s convictions and sentence.

         AFFIRMED.

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