Court Opinion

ID: 4448238
Source: CourtListenerOpinion
Date Created: 2019-10-18 21:00:26.248967+00
Date Added: 2024-06-11T14:45:08.232130
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 14-1641

                   UNITED STATES OF AMERICA,

                           Appellee,

                               v.

                      DANIEL E. CARPENTER,

                     Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. George A. O'Toole, Jr., U.S. District Judge]

                             Before

                    Lynch, Stahl, and Lipez,
                         Circuit Judges.

     Kimberly Homan for appellant.
     Kirby A. Heller, Attorney, U.S. Department of Justice, with
whom Andrew E. Lelling, United States Attorney, Brian A.
Benczkowski, Assistant Attorney General, and Matthew S. Miner,
Deputy Assistant Attorney General, were on brief for appellee.

                        October 18, 2019
          LYNCH, Circuit Judge.   Daniel Carpenter's conviction for

nineteen counts of mail and wire fraud in 2008 was affirmed by

this court in 2013.   United States v. Carpenter, 736 F.3d 619 (1st

Cir. 2013) (Carpenter II).    He now challenges on several grounds

a forfeiture order entered against him on May 23, 2014 by the

district court in the amount of $14,053,715.52.    This is the sum

he obtained from only six of his investor/exchangor clients through

his fraudulent scheme.

          He initially argues that the district court lacked what

he calls "subject matter jurisdiction" to enter the forfeiture

order when it did.    He then argues that the forfeiture order of

over $14 million must be vacated because: (1) he never "acquired"

the funds to be forfeited, as required by 18 U.S.C. § 981(a)(2)(B);

(2) the amount forfeited violates the Excessive Fines Clause of

the Eighth Amendment; and (3) the imposition of the forfeiture

order by the district court violated his right to a jury trial

under the Sixth Amendment.

          He argues it is unfair to make him forfeit a much larger

sum than he gained and/or than his clients lost.    In doing so, he

loses sight of the fact that the purpose of forfeiture is not

merely restitution or disgorgement of ill-gotten gains.      It is

also to "deter future illegality."     Kaley v. United States, 571
U.S. 320, 323 (2014).    There would be no effective deterrence if

the sums forfeited were no greater than the sums he gained through

                               - 2 -
his scheme.     Forfeitures must have a greater bite than that in

order to deter future illegality by Carpenter and by others.

                                 I.

A.   Carpenter's Role at Benistar

            The factual basis for Carpenter's convictions for mail

and wire fraud is set forth in Carpenter II, and we describe here

only that evidence most pertinent to the forfeiture issue.

            In 1998, Carpenter and his business partner, Martin

Paley, founded Benistar, which performed property exchanges under

§ 1031 of the Internal Revenue Code, 26 U.S.C. § 1031(a)(1).             In

order to gain tax benefits in a property exchange business, clients

entrust funds from property sales to an "intermediary" company,

which invests the funds until the client purchases replacement

property.     See   id.   Carpenter   was   the   chairman   of   such   an

"intermediary" company, Benistar.       He worked out of Benistar's

Simsbury, Connecticut office, which was responsible for handling

client funds.   Carpenter and a single employee who reported to him

conducted Benistar's § 1031 exchange business from Simsbury.

            Carpenter opened accounts at Merrill Lynch in which he

deposited client funds.    Carpenter used one of the accounts, the

"B01" account, for depositing client funds, and used the other,

the "B10" account, primarily for trading.         He opened the accounts

under Benistar's corporate name and listed himself as the sole

signatory on the accounts.

                                - 3 -
             When checks and wire transfers were sent to Benistar,

the employee who reported to Carpenter deposited the funds at

Merrill    Lynch   (and    later,   PaineWebber).        Carpenter        had    sole

authority to invest these funds, once deposited, as he chose.

Acting in the name of Benistar, Carpenter routinely moved funds

from the B01 account to the B10 account.                He did so to pursue

aggressive option trading strategies with clients' money, contrary

to representations made to these clients.               These trades exposed

the funds to risk of significant losses, contradicting the promises

Benistar    made   about    the    security   of    exchangor      funds    in   its

marketing materials.

             In June 1999, Carpenter confirmed to his partner Paley

that he "want[ed] to continue having everything come through the

Simsbury office."       Carpenter's letter listed procedures and stated

that "[a]t no time are any procedures to be changed by any staff

of the Benistar Property Exchange without the prior approval of

Daniel Carpenter."

             At first, Carpenter's strategy made money, even after

paying exchangors their promised 3% or 6% return.               In consequence,

he made money in his role at Benistar.                But by September 2000,

Carpenter had lost about $4 million of the clients' money and

Merrill    Lynch   prohibited       him    from    opening   any    new     options

positions.      These     losses    were   hidden    from    existing      clients.

Further, Benistar continued to take on new clients.                  In the fall

                                      - 4 -
of 2000, Carpenter transferred funds to PaineWebber and again

listed himself as the point person for the accounts.   He continued

his risky trading, and the trades continued to lose money.      By

2001, Carpenter had lost about $9 million.

          His conviction established that Carpenter, through his

knowing use of marketing materials, had induced clients to invest

in his Benistar endeavor.   The superseding indictment alleged that

six of these clients invested $14,053,715.52.1

B.   Procedural History of the Forfeiture Order

          On February 26, 2014, following this court's affirmance

of Carpenter's conviction after his second trial, the district

court sentenced Carpenter to thirty-six months' imprisonment.   The

district court also ordered Carpenter to pay restitution in the

amount of $310,033.96, which represented the outstanding balance

owed to two exchangors.2     The sentencing judgment stated that

"[t]he defendant shall forfeit [his] interest in the following

     1    This figure represents the amount committed to Benistar
by investors as charged in sixteen of the nineteen counts. These
counts charged offenses that occurred after the effective date of
the Civil Asset Forfeiture Reform Act (CAFRA). There were seven
total exchangors whose losses formed the basis of the indictment
against Carpenter but only six of them were defrauded after the
passage of CAFRA, so the forfeiture amount is based only on the
funds sent to Benistar by those six individuals.
     2    This restitution order was separate from the forfeiture
order at issue here.    Carpenter asserts that he has paid the
restitution order. Through civil litigation before entry of the
restitution order, the other five exchangors were eventually able
to recoup their losses.

                               - 5 -
property to the United States," and specified, "[i]f there are any

proceeds, they are to be forfeited.           The court to scheduled [sic]

a hearing to determine the amount to be forfeited."                     That order

did not set the amount to be forfeited.               Carpenter filed a notice

of appeal on March 17, 2014.

          On    May   23,    2014,    the    district        court    ordered     that

Carpenter forfeit $14,053,715.52, pursuant to 18 U.S.C. § 981 and

28 U.S.C. § 2461(c).        Carpenter then filed a supplemental notice

of appeal on June 5, 2014 from the May 23 forfeiture order.                        In

2015, this court affirmed Carpenter's sentence in United States v.

Carpenter, 781 F.3d 599 (1st Cir. 2015) (Carpenter III), and

rejected his speedy trial challenges to his conviction.                       Id. at

608-18.   The    Carpenter     III    court     did    not    reach    the   May    23

forfeiture order because "both parties . . . agree[d] that the

forfeiture order [was] not properly before [the] court."                      Id. at

623.   Carpenter's appeal from the May 23 forfeiture order was

docketed as a separate appeal from the appeal decided in Carpenter

III.

          The   present     case     concerns    Carpenter's         June    5,   2014

appeal after entry of the May 23, 2014 forfeiture order, which set

the amount of the forfeiture at $14,053,715.52.

                                     - 6 -
                                  II.

A.   The District Court's Authority to Enter the Forfeiture Order

           Carpenter first argues that "the district court lacked

subject-matter jurisdiction to enter the forfeiture order" because

he filed his notice of appeal from the district court's February

26, 2014 sentencing judgment on March 17, 2014, before the court

entered the order setting the amount of the forfeiture. His theory

is that the filing of this earlier notice of appeal divested the

district court of jurisdiction to enter the May 23 forfeiture

order.

           Carpenter's    use    of     the    term      "subject    matter

jurisdiction" is a misnomer here.       There was no impediment to the

district   court's   authority   to   determine    the    amount    of   the

forfeiture on May 23.

           Carpenter relies on the appellate divestiture rule as

articulated in Griggs v. Provident Consumer Discount Co., 459 U.S.
56 (1982), where the Supreme Court stated that "[t]he filing of a

notice of appeal is an event of jurisdictional significance -- it

confers jurisdiction on the court of appeals and divests the

district court of its control over those aspects of the case

involved in the appeal."    Id. at 58.        That precise language has

been subjected to later clarification by the Court.          Recently, the

Court has emphasized that "[o]nly Congress may determine a lower

federal    court's    subject-matter      jurisdiction,"       Hamer      v.

                                 - 7 -
Neighborhood Hous. Servs. of Chi., 138 S. Ct. 13, 17 (2017)

(quoting Kontrick v. Ryan, 540 U.S. 443, 452 (2004)), and noted

that the Court in the past was "'less than meticulous' in [its]

use of the term 'jurisdictional.'"     Id. at 21 (quoting Kontrick,
540 U.S. at 454).    In Hamer, the Court determined that a thirty-

day limitation on extensions of time to file a notice of appeal

was not jurisdictional because it was "absent from the U.S. Code."

Id.

          This circuit has recognized that the filing of a notice

of appeal does not divest the district court of all authority.

The "divestiture rule" is similarly not "jurisdictional."       See

United States v. Rodríguez-Rosado, 909 F.3d 472, 477 (1st Cir.

2018) ("[B]ecause the judge-made divestiture rule isn't based on

a statute, it's not a hard-and-fast jurisdictional rule." (citing

Kontrick, 540 U.S. at 452-53)).   Rather, the divestiture rule "is

rooted in concerns of judicial economy, crafted by courts to avoid

the confusion and inefficiency that would inevitably result if two

courts at the same time handled the same issues in the same case."

Id. at 477-78.      Application of the rule is not mandatory and

efficiency concerns are central to determining whether we should

apply it here.   Id. at 478.

          The rule does not apply here.      There is no issue of

potential shared jurisdiction here because the Carpenter III court

                               - 8 -
expressly declined to reach the May 23 forfeiture order for the

reasons stated earlier.

          Carpenter argues that United States v. George, 841 F.3d
55 (1st Cir. 2016) (George I), decided before Hamer and Rodríguez-

Rosado, governs his case and requires that we vacate the forfeiture

order and remand to the district court.       The George I case is

easily distinguished.     In George I, the district court sentenced

the defendant after conviction of embezzlement and entered the

judgment on July 30, 2015.     Id. at 61, 70.    The George I court

noted that this "judgment did not contain any dispositive provision

with respect to forfeiture."     Id. at 70.   The defendant appealed

the next day.   Id.    Two months later, the district court amended

the very sentencing judgment which had been appealed so that it

"for the first time included an order of forfeiture."      Id.   The

George I court concluded that the district court lacked authority

under the divestiture rule to enter the forfeiture order because

"there was no forfeiture order included in the original judgment,

merely an allusion to the possibility that forfeiture might be

ordered at some unspecified future date."     Id. at 72.

          In contrast, here the district court's original judgment

stated "[i]f there are any proceeds, they are to be forfeited" and

stated that a hearing would be scheduled "to determine the amount

to be forfeited."     Forfeiture was a certainty; the only question

                                - 9 -
was the amount.         We need not consider whether George I has been

affected by Hamer.           George I is plainly distinguishable.

               Further, there is no point to a remand.            The district

court would almost certainly enter the same forfeiture order.                  The

district court has already considered and rejected Carpenter's

argument that he did not "acquire" the funds in its May 23, 2014

order, and later denied Carpenter's motion for reconsideration of

that       order   because    his   arguments   "merely   reexamine[d]   issues

already decided."

B.     Merits-Based Challenges to the Forfeiture Order

               We address in turn each of Carpenter's three arguments

outlined above.

       1.      Challenges to the District Court's Application of 18
               U.S.C. § 981

               Carpenter     argues    that   the   district   court   erred    in

ordering forfeiture because, he says, he never "acquired" the funds

as required by § 981(a)(2)(B) and so they are not proceeds.                    The

question before us is whether the sum ordered forfeited, of over

$14 million, is in error.             We review this preserved challenge to

the district court's legal conclusions de novo and the district

court's subsidiary factual findings for clear error. United States

v. George, 886 F.3d 31, 39 (1st Cir. 2018) (George II).3

       3  By   incorporation,  the  provisions  of   18  U.S.C.
§ 981(a)(1)(C) govern forfeiture following the conviction here.
The section applies to "any offense constituting 'specified

                                       - 10 -
           Under § 981(a)(1)(C), "[a]ny property, real or personal,

which constitutes or is derived from proceeds traceable to a

violation of" mail or wire fraud is subject to forfeiture to the

United States.       18 U.S.C. § 981(a)(1)(C).     The standards for

determining "proceeds" vary depending on whether the forfeiture

falls under § 981(a)(2)(A) or § 981(a)(2)(B).

           Section 981(a)(2)(A) applies to "cases involving illegal

goods, illegal services, unlawful activities, and telemarketing

and health care fraud schemes" and defines "proceeds" as "property

of any kind obtained directly or indirectly, as the result of the

commission of the offense giving rise to the forfeiture, and any

property traceable thereto."    Id. § 981(a)(2)(A) (emphasis added).

           In contrast, § 981(a)(2)(B) governs "cases involving

lawful goods or lawful services that are sold or provided in an

illegal   manner."     Id.   § 981(a)(2)(B).     Under   this   section,

"proceeds" means "the amount of money acquired through the illegal

unlawful activity' (as defined in section 1956(c)(7) of this
title)." 18 U.S.C. § 981(a)(1)(C). Specified unlawful activity
under § 1956(c)(7) includes "any act or activity constituting an
offense listed in section 1961(1) of this title," 18 U.S.C.
§ 1956(c)(7), which includes mail and wire fraud, id. § 1961(1).
Next, 28 U.S.C. § 2461 makes § 981, this civil forfeiture
provision, applicable in criminal cases and "authorizes criminal
forfeiture of the proceeds of any offense for which there is no
specific statutory basis for criminal forfeiture as long as civil
forfeiture is permitted for that offense." United States v. Cox,
851 F.3d 113, 128 n.14 (1st Cir. 2017).    Section 2461(c) makes
forfeiture mandatory for conviction of mail or wire fraud.     28
U.S.C. § 2461(c).

                                 - 11 -
transactions resulting in the forfeiture, less the direct costs

incurred in providing the goods or services."                          Id. (emphasis

added).

            The    district         court's     forfeiture         order     determined,

contrary to the position of the prosecution, that the statutory

provision governing Carpenter's case was 18 U.S.C. § 981(a)(2)(B).

The district court reasoned that as a textual matter, although

"[m]ail    and    wire    fraud      might     arguably       be    called    'unlawful

activities'"      under       § 981(a)(2)(A),          that    section       explicitly

mentions    "telemarketing           and      health     care       fraud     schemes."

Specifically listing these two fraud schemes "would be unnecessary

. . . if the generic term 'unlawful activities' had been intended

to be broad enough to encompass fraud schemes."                            Further, the

district court concluded that "lawful services" being "provided in

an illegal manner" was a more "apt" description for running a

§ 1031 intermediary through mail and wire fraud.

            There was no error in the district court's choice to use

§ 981(a)(2)(B).        In George II, we explained that to fall under

§ 981(a)(2)(B), "the crime must involve a good or service that

could, hypothetically, be provided in a lawful manner," while

activities falling under § 981(a)(2)(A) are "inherently unlawful."

George    II, 886 F.3d    at    40.      There,    we    determined       that   the

defendant's      crime,   embezzling          funds    from    a    federally    funded

organization, "[could not] be done lawfully" and so fell under

                                        - 12 -
§ 981(a)(2)(A).    Id. (quoting United States v. Boudova, 853 F.3d
76, 80 (2d Cir. 2017)).

           By contrast, Carpenter's conviction arose out of how he

solicited customers for and made misrepresentations about his

§ 1031 intermediary company.          Advertising and running such a

business   are    not   "inherently    unlawful"   activities;   rather,

Benistar provided what could have been a "legal service," but which

Carpenter operated in an illegal manner by misrepresenting to

exchangors how their funds would be invested and investing contrary

to those representations.

           The reasoning applied by other circuits by analogy to

insider trading cases supports our conclusion.        In United States

v. Mahaffy, 693 F.3d 113 (2d Cir. 2012), the defendants were

convicted of conspiring to commit securities fraud.        Id. at 119.

The court concluded that § 981(a)(2)(B) applied because "[t]rading

those securities, as a general matter, [was] not unlawful" and

"any illegality occurred when the defendants bought and sold

securities as part of a scheme involving illegal bribery and

frontrunning."    Id. at 138; see also United States v. Nacchio, 573
F.3d 1062, 1090 (10th Cir. 2009) ("[T]rading, by itself, would not

have been an unlawful activity.       Rather, the illegality inhered in

his selling securities ('lawful goods') in an unlawful manner,

i.e., 'on the basis of material, nonpublic information.'").

                                 - 13 -
             We turn to Carpenter's argument that he never "acquired"

the   exchangors'      money.4      The    district     court    concluded     that

Carpenter "acquired" the exchangors' funds because he "exercised

control" over the funds "not only by causing Benistar to be the

nominal custodian of the funds for purposes of the tax law but

also by himself using the funds in his options trading." Carpenter

challenges      this   conclusion     on    two   bases.        First,    he   says

"'[a]cquire'     carries     with   it     the    connotation      of   ownership:

something that one obtains as one's own," and he did not "own" the

exchangors' funds.         In the alternative, Carpenter argues that he

did not "acquire" the funds because he lacked the necessary control

over the exchangors' money, under the reasoning of another circuit

in United States v. Contorinis, 692 F.3d 136 (2d Cir. 2012).

Neither argument is convincing.

             Carpenter reasons that "acquire" must mean "ownership"

for    three    reasons.       He   first      points   to   the    language     in

§ 981(a)(2)(A) that subjects to forfeiture any property obtained

"directly or indirectly" as a result of the offense.                      Section

981(a)(2)(B) omits this phrase, and Carpenter concludes that this

shows Congress's intent to limit forfeiture under § 981(a)(2)(B)

to    "direct    proceeds,    i.e.,      money    directly   acquired     by   the

       4  We have no need to reach the government's alternative
argument that the result would be the same even if § 981(a)(2)(A)
were applicable.

                                      - 14 -
defendant."     Further, Carpenter says that because § 981(a)(2)(A)

uses   the   term   "obtained"   while    § 981(a)(2)(B)     uses    the   word

"acquired,"    this   difference   "must     mean   something."       Finally,

relying on selective dictionary definitions, Carpenter argues that

"acquire" means to "obtain[] as one's own." At the most, he argues

"the monies at issue were entrusted to [Benistar]" and "remained

the property of the exchangors which Carpenter invested to produce

the rate of return they had chosen."

             We start with the use of the word "acquired" in the text

of § 981(a)(2)(B).      The plain meaning of the word "acquire," at

both the time of enactment of this statute in 2000 and now, does

not, contrary to Carpenter's argument, carry a "connotation of

ownership."     See, e.g., Acquire, Black's Law Dictionary (10th ed.

2014) (defining "acquire" as "[t]o gain possession or control of;

to get or obtain"); Acquire, Black's Law Dictionary (7th ed. 1999)

(same);         Acquire,         Oxford          English           Dictionary,

www.oed.com/view/Entry/1731        (defining     "acquire"    as     "to   gain

possession of through skill or effort; to obtain . . . in a careful,

concerted,    often   gradual    manner");     Acquire,    Merriam    Webster,

http://merriam-webster.com/dictionary/acquire (defining "acquire"

as "to get as one's own; to come into possession or control of

often by unspecified means").

             Further, in Huddleston v. United States, 415 U.S. 814

(1974), the Supreme Court assessed the meaning of "acquire" in a

                                   - 15 -
similar statute, 18 U.S.C. § 922(a)(6).            Relying on a dictionary

which defined "acquire" as "to come into possession, control, or

power of disposal of," the Court stated that this definition had

"no intimation . . . that title or ownership would be necessary

for possession, or control, or disposal power."                 Id. at 820

(quoting Webster's New International Dictionary (3d ed. 1966,

unabridged)).

                We see no reason to vary from that dictionary plain

meaning, nor to do so by resort to a judicially interpretive guide,

which is not needed or appropriate here.            See Sebelius v. Auburn

Reg'l Med. Ctr., 568 U.S. 145, 156 (2013) (stating that the general

rule that the use of different language in a statute can indicate

that different meanings were intended is an "interpretive guide"

that is "'no more than [a] rul[e] of thumb' that can tip the scales

when a statute could be read in multiple ways" (quoting Conn. Nat'l

Bank       v.   Germain,   503 U.S. 249,   253   (1992))).   Although

§ 981(a)(2)(A) uses the word "obtained" and includes the phrase

"directly       or   indirectly"   while   § 981(a)(2)(B)   uses    the   word

"acquired" and omits this phrase, it does not follow that "acquire"

must mean ownership.5

       5  In the alternative, Carpenter invokes the rule of lenity
to argue that § 981(a)(2)(B) is "grievously ambiguous" as applied
to Carpenter because he "never personally acquired any portion of
the funds he has been ordered to forfeit." The rule of lenity
"applies only if, 'after considering text, structure, history and
purpose, there remains a grievous ambiguity or uncertainty in the

                                     - 16 -
            Rather, we hold that the definition of "acquired" in

§ 981(a)(2)(B), is met, at the least, where the property was at

some point under the defendant's control.           Both the plain meaning

of   the   word   "acquire"   and   the   Supreme    Court's    analysis   in

Huddleston support this view.6       Whether or not Carpenter owned the

funds invested by clients, he certainly controlled them.            See also

Contorinis, 692 F.3d at 147.

            The district court correctly found on this record that

Carpenter acquired the exchangors' funds because the funds were

"under [his] control."        Id.    Carpenter opened the accounts at

Merrill Lynch (and later, PaineWebber) and listed himself as the

sole signatory.     When checks or wires arrived at Benistar, they

were deposited in the accounts he created.          The deposits were made

by an employee who reported to Carpenter.           From there, Carpenter

statute such that the Court must simply guess as to            what Congress
intended.'" United States v. Musso, 914 F.3d 26, 32            n.3 (1st Cir.
2019) (quoting Abramski v. United States, 573 U.S. 169, 188 n.10
(2014)). The meaning of "acquire" is not grievously            ambiguous, so
the rule does not apply.
      6   Carpenter's reliance on the Supreme Court's decision in
Honeycutt v. United States, 137 S. Ct. 1626 (2017), is mistaken.
Honeycutt held that a co-conspirator cannot be required to forfeit
property under 21 U.S.C. § 853(a)(1) based on principles of joint
and several liability among co-conspirators if he never "actually
acquired [the property] as the result of the crime." Id. at 1635.
Carpenter makes no argument based on joint and several liability.
Further, Honeycutt provides no support for the view that "acquire"
means ownership.   Honeycutt in fact undercuts Carpenter's view
that "obtain" and "acquire" must have different meanings because
it relied on dictionaries that defined "obtain" by using the words
"acquire" or "acquisition." Id. at 1632.

                                    - 17 -
exercised complete authority over how the funds would be invested.

Carpenter moved the funds to the trading account and pursued

aggressive trading strategies.         He personally communicated with

employees at Merrill Lynch, and later PaineWebber, to execute his

chosen trades.       Carpenter sought to ensure his control going

forward by instructing his business partner in June 1999 that

"everything" should go through the Simsbury office and that no

procedure    could   be   changed     without   his    personal   approval.

Carpenter plainly had control over the exchangors' funds.

            Carpenter next argues that he did not "have 'control' of

the exchangors' funds" under his reading of the Second Circuit

opinion in Contorinis because he did not have "control over the

distribution of profits."     Contorinis does not apply.7

            The premise of the argument is itself wrong.          Forfeiture

orders go beyond disgorgement of profits.             They "help to ensure

     7    In Contorinis, the defendant was convicted of insider
trading and conspiracy to commit securities fraud after he
purchased and sold stock on behalf of his employer based on insider
information.   Contorinis, 692 F.3d at 139.     The Second Circuit
determined that the amount ordered to be forfeited by the district
court -- the total amount of profits made by the defendant's
employer -- was incorrect because "the 'proceeds' . . . were
'acquired' by the Fund over which appellant lacks control." Id.
at 146.    In contrast to the Contorinis defendant, "who was an
employee and small equity owner" and "made investment decisions
but did not control disbursement of profits," id. at 138, 145,
Carpenter was a founder of Benistar and he controlled how exchangor
funds would be invested and could have distributed profits above
the 3% or 6% owed to the exchangors, if there had been any profits.

                                    - 18 -
that crime does not pay: [t]hey at once punish wrongdoing, deter

future illegality, and 'lessen the economic power' of criminal

enterprises."    Kaley, 571 U.S. at 323 (quoting Caplin & Drysdale,

Chartered v. United States, 491 U.S. 617, 630 (1989)).

             Carpenter's final argument is that the amount of the

forfeiture should be reduced by the sum that Carpenter returned to

the exchangors because the returned funds "were part of the direct

costs of providing [Benistar's] services."           Even if these could be

counted as "direct costs," Carpenter has the burden to prove direct

costs. 18 U.S.C. § 981(a)(2)(B). He now asserts that the district

court erred when it concluded that he had failed to offer any

evidence of direct costs.        But "[a]rguments not 'spell[ed] out

. . . squarely and distinctly' in the district court are waived."

T G Plastics Trading Co. v. Toray Plastics (Am.), Inc., 775 F.3d
31, 39 (1st Cir. 2014) (quoting United States v. Samboy, 433 F.3d
154, 161 (1st Cir. 2005)).      Carpenter never argued to the district

court that the forfeiture order should be reduced by the direct

costs of operating Benistar or that the sums returned to investors

were direct costs, so he has waived this argument.

             Even if Carpenter were given the benefit of plain error

review, we see no error.      Other than making a single statement at

sentencing     that   $9   million    was     the   appropriate   amount   of

forfeiture, Carpenter did not provide any evidence that would

connect the payments he made to the exchangors to the counts upon

                                     - 19 -
which the forfeiture order was based or to show they were direct

costs.

       2.    Eighth Amendment Challenge

             Carpenter argues that the forfeiture order violated the

Excessive Fines Clause of the Eighth Amendment.                        Not so.     A

forfeiture order violates the Eighth Amendment "only if it is

'grossly     disproportional       to    the     gravity    of   the   defendant's

offense.'"     United States v. Heldeman, 402 F.3d 220, 223 (1st Cir.

2005) (quoting United States v. Bajakajian, 524 U.S. 321, 336-37

(1998)).     Because Carpenter raised the disproportionality argument

in the district court, our review "is de novo with due deference

given to any factual findings made by the district court."                  United

States v. Aguasvivas-Castillo, 668 F.3d 7, 16 (1st Cir. 2012).

             We conclude there was no disproportion under the three-

factored test this circuit applies to determine if a forfeiture

order is grossly disproportional: "(1) whether the defendant falls

into   the   class   of   persons       at   whom   the    criminal    statute   was

principally     directed;    (2)    other      penalties     authorized    by    the

legislature (or the Sentencing Commission); and (3) the harm caused

by the defendant."        Heldeman, 402 F.3d at 223.

             As to the first factor, Carpenter is plainly within the

class of persons targeted by the mail and wire fraud statutes.

Carpenter fraudulently represented to the exchangors how their

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money would be invested to induce them to use his company and then

used their money to make risky investments.

            As to the second factor, the penalties authorized were

similar; § 3571(d) authorizes a fine of "not more than the greater

of twice the gross gain or twice the gross loss" from an offense

if anyone derives pecuniary gain, or someone other than the

defendant suffers pecuniary loss.          18 U.S.C. § 3571(d).     Here,

even if we accept Carpenter's figure that the exchangors lost $9

million, the maximum fine authorized was twice this amount or $18

million.    We give great weight to this statutory judgment by

Congress.    "[J]udgments about the appropriate punishment for an

offense    belong   in   the   first   instance   to   the   legislature."

Bajakajian, 524 U.S. at 336; United States v. Jose, 499 F.3d 105,

111 (1st Cir. 2007).     The forfeiture amount is lower.8

     8    In a footnote in United States v. Beras, 183 F.3d 22
(1st Cir. 1999), this court stated that "Bajakajian . . . suggests
that the maximum penalties provided under the Guidelines should be
given greater weight than the statute because the Guidelines take
into consideration the culpability of the individual defendant."
Id. at 29 n.5. Here, it is true that the Guidelines authorize a
maximum fine of $100,000 for Carpenter's offense.         U.S.S.G.
§ 5E1.2(c)(3). But the Guidelines also state that the Sentencing
Commission "envision[ed] that for most defendants, the maximum of
the guideline fine range . . . will be at least twice the amount
of gain or loss resulting from the offense." Id. cmt. n.4. Where
that is not the case, the Guidelines state that "an upward
departure from the fine guideline may be warranted." Id. Given
that the Commission foresaw the situation, like Carpenter's, where
twice the loss caused by the offense is an amount far greater than
the authorized fine under the Guidelines and stated that upward

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               Finally, Carpenter's criminal conduct caused significant

harm.       Contrary to his assertions, how Carpenter ran Benistar was

hardly legitimate.         We reject his argument that no harm was done.

Exchangors were forced to sue civilly to recoup their losses and

to testify in the criminal proceedings.

        3.     Sixth Amendment Challenge

               Carpenter's final argument is that a jury was required

to set the amount of the forfeiture.9          The short answer is that

the Supreme Court's decision in Libretti v. United States, 516
U.S. 29 (1995), holds that the Sixth Amendment does not require

that the facts underlying a criminal forfeiture be found by a jury.

Id. at 49 ("[O]ur analysis of the nature of criminal forfeiture as

an aspect of sentencing compels the conclusion that the right to

a jury verdict on forfeitability does not fall within the Sixth

Amendment's      constitutional    protection.").   We   held   in   United

States v. Ortiz-Cintrón, 461 F.3d 78, 82 (1st Cir. 2006), that we

are bound by that holding in Libretti.       We are not free to override

Supreme Court precedent.

               Affirmed.

departures may be warranted, the statutory scheme is a better guide
to whether the forfeiture order is excessive.
        9 Carpenter relies on Apprendi v. New Jersey, 530 U.S. 466
(2000), Southern Union Co. v. United States, 567 U.S. 343 (2012),
and Alleyne v. United States, 570 U.S. 99 (2013).

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