Court Opinion

ID: 9942130
Source: CourtListenerOpinion
Date Created: 2024-02-20 16:01:28.377906+00
Date Added: 2024-06-11T13:47:42.573982
License: Public Domain

22-1274
United States of America v. Pierre

                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT

                                         SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary
order filed on or after January 1, 2007, is permitted and is governed by federal rule of
appellate procedure 32.1 and this court’s local rule 32.1.1. When citing a summary
order in a document filed with this court, a party must cite either the federal appendix
or an electronic database (with the notation “summary order”). A party citing a
summary order must serve a copy of it on any party not represented by counsel.

       At a stated term of the United States Court of Appeals for the Second Circuit, held
at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 20th day of February, two thousand twenty-four.

PRESENT:
            BARRINGTON D. PARKER,
            GERARD E. LYNCH,
            MARIA ARAÚJO KAHN,
                  Circuit Judges.
__________________________________________

UNITED STATES OF AMERICA,

                             Appellee,

                   v.                                                22-1274

RULESS PIERRE, AKA SEALED DEFENDANT
1,

                  Defendant-Appellant.
___________________________________________

FOR APPELLEE:                                       DAVID ABRAMOWICZ (Drew Skinner,
                                                    on the brief), Assistant United States
                                                       Attorneys, for Damian Williams,
                                                       United States Attorney for the
                                                       Southern District of New York, New
                                                       York, NY.

FOR DEFENDANT-APPELLANT:                               RANDALL D. UNGER, Kew Gardens,
                                                       NY.

       Appeal from the May 26, 2022, judgment of the United States District Court for the

Southern District of New York (Sidney H. Stein, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the district court is AFFIRMED.

       Defendant-Appellant Ruless Pierre (“Pierre”) appeals from a judgment of

conviction entered on May 26, 2022, after a jury trial in the United States District Court

for the Southern District of New York (Stein, J.). The four-count Superseding Indictment

charged Pierre with oﬀenses related to various ﬁnancial misconduct.              Count One,

pertaining to a stock investment scheme (the “Amongst Friends” scheme), and Count

Two, pertaining to a franchise-investment scheme (the “Planet Wings” scheme), charged

Pierre with securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ﬀ, 17 C.F.R. § 240.10b-

5, and 18 U.S.C. § 2. Counts Three and Four, respectively, charged Pierre with wire fraud

in violation of 18 U.S.C. §§ 2, 1343, and with structuring bank deposits related to a scheme

to embezzle money from his former employer, in violation of 31 U.S.C. §§ 5313(a), 5324(a),

5325 and 18 U.S.C. § 2. The jury found Pierre guilty of all four counts, and the district

court sentenced Pierre to an aggregate term of 84 months’ imprisonment.

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       On appeal, Pierre argues that (1) the evidence was insuﬃcient to prove that the

Amongst Friends scheme in Count One involved “securities;” (2) the evidence was

insuﬃcient to prove that he acted with fraudulent intent as to Counts One and Two; (3)

the district court erroneously applied an “investment adviser” enhancement under §

2B1.1(b)(20)(A)(iii) of the United States Sentencing Guidelines (the “Guidelines”); and (4)

his below-Guidelines 84-month sentence was substantively unreasonable. We disagree.

We assume the parties’ familiarity with the underlying facts, procedural history, and the

issues on appeal, to which we refer only as necessary to explain our decision to aﬃrm.

                                       DISCUSSION

              I.     Sufficiency of the Evidence: Securities

       Pierre contends that the government introduced insufficient evidence that his

Amongst Friends scheme involved “securities,” as defined in the Securities Exchange Act

of 1934 (the “1934 Act”). We review this claim de novo and conclude that sufficient

evidence supported the jury’s conclusion that the Amongst Friends scheme involved

“securities,” specifically, investment contracts. See United States v. Dove, 884 F.3d 138, 150

(2d Cir. 2018).

       “A defendant seeking to overturn a jury verdict on suﬃciency grounds bears a

‘heavy burden[.]’” United States v. Anderson, 747 F.3d 51, 59 (2d Cir. 2014) (quoting United

States v. Aguilar, 585 F.3d 652, 656 (2d Cir. 2009)). This Court will uphold a verdict if “any

rational trier of fact could have found the essential elements of the crime beyond a

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reasonable doubt.” United States v. Persico, 645 F.3d 85, 105 (2d Cir. 2011) (internal

quotation marks omitted). When reviewing for suﬃciency, this Court must “draw all

permissible inferences in favor of the government and resolve all issues of credibility in

favor of the jury’s verdict.” United States v. Willis, 14 F.4th 170, 181 (2d Cir. 2021).

       Section 10(b) of the 1934 Act makes it unlawful “[t]o use or employ, in connection

with the purchase or sale of any security[,] . . . any manipulative or deceptive device.” 15

U.S.C. § 78j(b). The 1934 Act defines a “security” to include, inter alia, “stock[s],”

“investment contract[s],” and “note[s].” 15 U.S.C. § 78c(a)(10). The Supreme Court has

held that the definition of “security” enacted by Congress is “sufficiently broad to

encompass virtually any instrument that might be sold as an investment.” Reves v. Ernst

& Young, 494 U.S. 56, 61 (1990). In SEC. v. W.J. Howey Co., 328 U.S. 293 (1946), the Supreme

Court established a test for when a financial instrument qualifies as an “investment

contract” and, therefore, a “security” under the 1934 Act. Under the Howey test, an

“investment contract” is defined as a “contract, transaction[,] or scheme” involving: (1)

“an investment of money,” (2) “in a common enterprise,” (3) “with profits to come solely

from the efforts of others.” Howey, 328 U.S. at 299, 301; see also United States v. Leonard,

529 F.3d 83, 88 (2d Cir. 2008) (same).

       Here, the government’s evidence was sufficient to sustain Pierre’s conviction for

securities fraud as to Count One. Although Pierre titled financial instruments in his

Amongst Friends scheme as promissory notes, their substance evinces an investment

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contract, not a loan. See Tcherepnin v. Knight, 389 U.S. 332, 336 (1967) (explaining that

when analyzing whether an instrument qualifies as a “security,” “form should be

disregarded for substance and the emphasis should be on economic reality”). The

evidence also established that Pierre pooled investor money in his accounts, purchased

stocks with those funds, and made pro-rata distributions to his investors. See Revak v.

SEC Realty Corp., 18 F.3d 81, 87 (2d Cir. 1994). His victims testified that they were not

providing loans to Pierre but rather expected returns to stem from Pierre’s efforts in

investing their money in the stock market. From such evidence, the jury reasonably

concluded that Pierre’s Amongst Friends scheme involved “an investment of money in a

common enterprise with profits to come solely from the efforts of others” and, therefore,

the financial instruments were “securities” under the 1934 Act. 1 Howey, 328 U.S. at 301.

              II.    Sufficiency of the Evidence: Fraudulent Intent

       Pierre contends that the evidence of fraudulent intent as to his convictions under

Counts One and Two was insufficient. We review these claims for plain error. As to

Count One, Pierre never challenged the sufficiency of the evidence to establish fraudulent

intent in the district court. See United States v. Finley, 245 F.3d 199, 202 (2d Cir. 2001). As

to Count Two, although Pierre did challenge the sufficiency of the evidence of fraudulent

intent after the close of the government’s case, his renewed motion for judgment of

       1Because we conclude that the instruments qualiﬁed as “investment contracts,” we need
not reach the question of whether the scheme also involved “stocks” or “notes” under the 1934
Act.
                                              5
acquittal after the jury’s verdict made no mention of that issue. Cf. id. (holding that

because “defendant failed to renew his motion for acquittal on [a particular] ground at

the close of the defense case[,] . . . [he] has the burden of persuading a court of appeals on

the insufficiency issue that there has been plain error or manifest injustice”).

       “Liability for securities fraud . . . requires proof that the defendant acted with

scienter, which is defined as a mental state embracing intent to deceive, manipulate or

defraud.” United States v. Litvak, 808 F.3d 160, 178 (2d Cir. 2015) (internal quotation marks

omitted). This Court has held that “intent to harm is not a component of the scienter

element of securities fraud . . . .” Id. at 179 (internal quotation marks omitted); see also

United States v. Tagliaferri, 820 F.3d 568, 575 (2d Cir. 2016) (citing Litvak and holding “that

section 10(b) [of the 1934 Act] does not require intent to harm”). As noted, a defendant

bringing a sufficiency claim “bears a heavy burden.” United States v. Kozeny, 667 F.3d 122,

139 (2d Cir. 2011).

       There was sufficient evidence from which a rational jury could conclude that

Pierre intended to defraud investors in connection with his Amongst Friends and Planet

Wings schemes. The evidence established that Pierre, inter alia, deposited investor money

from the Amongst Friends scheme into his personal accounts and paid personal bills

shortly thereafter; lied to investors about how many Planet Wings stores he had

purchased; and asked investors to lie to the authorities about how much they had

invested with him after Pierre learned he was being investigated by law enforcement

                                              6
agents. To the extent that Pierre points to certain pieces of evidence in the record to argue

that he was merely trying to repay his investors and did not harbor intent to defraud, “it

is the task of the jury, not [this Court], to choose among competing inferences.” United

States v. Martinez, 54 F.3d 1040, 1043 (2d Cir. 1995).          We therefore affirm Pierre’s

convictions on Counts One and Two.

              III.    Sentencing: Investment Adviser Enhancement

       Pierre further contends that the district court erred in applying a four-level

investment adviser enhancement.          This Court reviews procedural and substantive

sentencing challenges for reasonableness. See United States v. Singh, 877 F.3d 107, 115 (2d

Cir. 2017); United States v. Broxmeyer, 699 F.3d 265, 278 (2d Cir. 2012). “If a defendant

failed to raise a claimed sentencing error below, however, we review for plain error.”

United States v. Hunt, 82 F.4th 129, 142 (2d Cir. 2023).

        The Guidelines provide for a four-level sentence enhancement “[i]f the oﬀense

involved . . . a violation of securities law and, at the time of the oﬀense, the defendant

was . . . an investment adviser, or a person associated with an investment adviser.”

U.S.S.G. § 2B1.1(b)(20)(A)(iii). The term “investment adviser” is, in turn, deﬁned by the

Investment Advisers Act of 1940 as “any person who, for compensation, engages in the

business of advising others, either directly or through publications or writings, as to the

value of securities or as to the advisability of investing in, purchasing, or selling securities,

or who, for compensation and as part of a regular business, issues or promulgates

                                               7
analyses or reports concerning securities.” 15 U.S.C. § 80b-2(a)(11).

          The record evidence supports the application of this enhancement because it

established that Pierre accepted investors’ money and used it to trade securities on their

behalf.     Contrary to what Pierre argues for the ﬁrst time on appeal, such activity

constitutes “investment advice.” See Abrahamson v. Fleschner, 568 F.2d 862, 870, 871 (2d

Cir. 1977) (holding that “persons who managed the funds of others for compensation are

‘investment advisers’ within the meaning of the statute,” and that “many investment

advisers ‘advise’ their customers by exercising control over what purchases and sales are

made with their clients’ funds”), abrogated on other grounds by Transamerica Mortg.

Advisors, Inc. v. Lewis, 444 U.S. 11 (1979).

          In addition, as the district court found, Pierre structured his Amongst Friends

scheme to provide investors with a 20 percent return every 60 days, with any excess

proﬁts being retained as “compensation” for himself. See Applicability of the Investment

Advisers Act, Investment Advisers Act Release No. IA-1092, 52 Fed. Reg. 38400, 38403 (Oct.

8, 1987) (“SEC Release”) (noting that the “compensation element is satisﬁed by the receipt

of any economic beneﬁt . . .”); Abrahamson, 568 F.2d at 870. Although the promised

returns may have been unrealistic, Pierre represented himself out to investors as a

compensated investment adviser. In any event, Pierre, in fact, derived economic beneﬁt

from the arrangement. The district court found that Pierre commingled investor funds.

This type of economic beneﬁt can constitute “compensation.” See SEC Release at 38401-

                                               8
02; see also United States v. Elliott, 62 F.3d 1304, 1306 (11th Cir. 1995) (“[Defendant]

compensated himself by commingling investor funds with personal funds.”), amended, 82

F.3d 989 (11th Cir. 1996). Accordingly, the district court did not err in applying a four-

level investment adviser enhancement to Pierre’s sentence.

             IV.    Sentencing: Substantive Reasonableness

      Finally, we conclude that Pierre’s below-Guidelines sentence of 84 months was not

substantively unreasonable. At sentencing, the government sought a sentence of at least

120 months, while Pierre sought a sentence “substantially below” what he argued was

the correct Guidelines range of 87 to 108 months. The district court ultimately calculated

the range to be 135 to 168 months’ imprisonment, but imposed a sentence of 84 months—

well below the applicable range. In doing so, the court balanced Pierre’s personal

characteristics, the seriousness of his crimes, the impact of his crimes on vulnerable

victims, and the need for deterrence against various mitigating factors, and arrived at a

below-Guidelines sentence. Based on our review of the record, we conclude that the

district court appropriately balanced the Section 3553(a) factors and acted well within its

discretion in imposing Pierre’s below-Guidelines sentence. See United States v. Perez–

Frias, 636 F.3d 39, 43 (2d Cir. 2011) (“It is . . . diﬃcult to ﬁnd that a below Guidelines

sentence is unreasonable.”)

                                      *      *      *

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      We have considered Pierre’s remaining arguments and consider them to be

without merit. Accordingly, we AFFIRM the judgment of the district court.

                                       FOR THE COURT:
                                       Catherine O’Hagan Wolfe, Clerk of Court

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