Court Opinion

ID: 2680321
Source: CourtListenerOpinion
Date Created: 2014-06-24 21:00:33.73198+00
Date Added: 2024-06-11T09:40:39.630087
License: Public Domain

NOT FOR PUBLICATION

                   UNITED STATES COURT OF APPEALS                             FILED
                           FOR THE NINTH CIRCUIT                               JUN 23 2014

                                                                          MOLLY C. DWYER, CLERK
UNITED STATES OF AMERICA,                        No. 13-50126               U.S. COURT OF APPEALS

              Plaintiff - Appellee,              D.C. No. 2:11-cr-01165-PSG-1

  v.
                                                 MEMORANDUM*
JOHN FARAHI,

              Defendant - Appellant.

                    Appeal from the United States District Court
                        for the Central District of California
                    Philip S. Gutierrez, District Judge, Presiding

                        Argued and Submitted June 5, 2014
                              Pasadena, California

Before:       KOZINSKI, Chief Judge, TROTT and CALLAHAN, Circuit
              Judges.

       1. In the factual basis supporting the plea agreement, Farahi admitted that he

had lied to Newpoint investors about the type and risk level of the instruments he

bought with the investors’ money, and that for years he sold unregistered securities

to investors without disclosing that he knew he was violating SEC regulations. In

          *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                                                  page 2
addition, there is substantial evidence of the breadth and duration of Farahi’s

fraudulent scheme in the record. Accordingly, the district court did not clearly err

in finding that over 80 Newpoint investors were victims of Farahi’s criminal

conduct and suffered losses of over $22 million. See U.S.S.G. §§ 2B1.1(b)(1)(L),

2B1.1(b)(2)(B).

      Nor did the district court abuse its discretion when it declined to reduce the

loss calculation by the amount of money Farahi returned to investors after his

crimes were discovered. Application Note 3(E)(i) to section 2B1.1, on which the

district court expressly relied, makes clear that only money returned before the

defendant’s offense is detected should be credited against the loss amount.

      2. Farahi admits that he knowingly lied to Sun West in order to convince the

bank to renew his $2 million credit line. Given that: (1) Sun West had a system of

annually approving such renewals, (2) Sun West relied on Farahi’s

misrepresentations in deciding to renew his line of credit, and (3) the loan would

have been due on demand absent renewal, the district court didn’t err in finding

that Farahi derived more than $1 million from Sun West as a result of his criminal

conduct. See U.S.S.G. § 2B1.1(b)(15)(A) (2012).
                                                                               page 3
      3. The factual basis of Farahi’s plea makes clear that he advised investors as

to the type and number of investment products to purchase, and he doesn’t

challenge the government’s evidence that he was a broker registered with FINRA.

The district court therefore had ample basis to apply a four-level enhancement for

Farahi’s status as an investment adviser and/or broker. See U.S.S.G.

§ 2B1.1(b)(18)(A) (2012); see also id., Application Note 14(A); 15 U.S.C. § 80b-

2(a)(11); 15 U.S.C. § 78c(a)(48).

      4. The record indicates the district court may have failed to include in its

Guidelines calculation the one-level downward departure it granted pursuant to

U.S.S.G. § 5K1.1. But the court went on to give Farahi a sentence that was far

below the Guidelines range for an offense level of either 37 or 38, so any error was

harmless. See United States v. Waknine, 543 F.3d 546, 553–54 (9th Cir. 2008).

      5. The district court expressly considered the factors it’s required to under

18 U.S.C. § 3553(a), and gave detailed consideration to Farahi’s character,

community participation and lack of criminal history. The court cited these

mitigating factors as reasons for providing a sentence that was substantially below

that which the Guidelines prescribed. Thus, the court fulfilled its obligation under

section 3553(a), and did not commit a “clear error of judgment in the conclusion it
                                                                               page 4
reached upon weighing the relevant factors.” United States v. Ressam, 679 F.3d
1069, 1087 (9th Cir. 2012) (en banc) (internal quotation marks omitted).

      6. The district court didn’t err in ordering $24,366,617.11 in restitution.

The financial investigator’s report on loan fraud losses and the Receiver’s report

on the amount still due to investors support this figure. Farahi’s argument that the

award should be decreased as the Receiver distributes funds is premature, as such a

reduction “only comes into play after the district court has already ordered

restitution in the full amount of the victim’s loss.” See United States v. Bright, 353
F.3d 1114, 1122 (9th Cir. 2004) (internal quotation marks omitted).

      AFFIRMED.