Court Opinion

ID: 9948105
Source: CourtListenerOpinion
Date Created: 2024-03-06 16:00:44.970294+00
Date Added: 2024-06-11T14:29:14.239916
License: Public Domain

22-1242(L)
United States v. Avenatti

                        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 6th day of March, two thousand twenty-four.

       PRESENT:             Steven J. Menashi,
                            Eunice C. Lee,
                            Sarah A. L. Merriam,
                                   Circuit Judges.
____________________________________________

UNITED STATES OF AMERICA,

                 Appellee,

          v.                                               Nos. 22-1242(L), 22-2550(Con)

MICHAEL AVENATTI,

                 Defendant-Appellant.
____________________________________________
For Appellee:                            MATTHEW PODOLSKY, Assistant United
                                         States Attorney (Robert Sobelman, Andrew
                                         Rohrbach, Hagan Scotten, Assistant United
                                         States Attorneys, on the brief), for Damian
                                         Williams, United States Attorney for the
                                         Southern District of New York, New York,
                                         NY.

For Defendant-Appellant:                 KENDRA L. HUTCHINSON, Federal Defenders
                                         of New York, Inc., New York, NY.

      Appeal from a judgment of the United States District Court for the Southern
District of New York (Furman, J.).

      Upon due consideration, it is hereby ORDERED, ADJUDGED, and
DECREED that the judgment of the district court is AFFIRMED.

      Defendant-Appellant Michael Avenatti was convicted of wire fraud in
violation of 18 U.S.C. § 1343 and of aggravated identity theft in violation of 18
U.S.C. § 1028A. On appeal, Avenatti advances four arguments. First, he argues
that the district court erred by providing confusing and prejudicial jury
instructions about the professional obligations of lawyers. Second, he argues that
the district court wrongly pressured the jury into returning a verdict when it
appeared deadlocked. Third, he argues that, following his conviction, the trial
court unlawfully modified the sequence of his restitution payments. Fourth, he
argues that the Supreme Court’s recent decision in Dubin v. United States, 599 U.S.
110 (2023), mandates that his conviction for aggravated identity theft be vacated. 1

1 Additionally, Avenatti previously argued that the district court wrongly calculated the

loss amount for purposes of his sentencing, but he withdrew this argument. See Letter,
United States v. Avenatti, No. 22-1242 (2d Cir. Apr. 21, 2023), ECF No. 88.

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We assume the parties’ familiarity with the facts, procedural history, and issues
on appeal.

                                           I

      Prior to trial, the government requested that the district court instruct the
jury on certain professional obligations of attorneys. In a pretrial order, the district
court stated that it would provide that instruction if, after hearing the evidence, it
determined that the instruction would be relevant. Based on the trial evidence, the
district court determined that it was relevant and provided an instruction that
began as follows:

      Before we turn to the third and final element of wire fraud, I want to
      explain certain professional duties of lawyers that you may consider
      in connection with the first two elements of Count One. As you know,
      during most of the events relevant to this case, Mr. Avenatti served as
      Ms. Clifford’s lawyer. During that time, the defendant was a member
      of the California Bar and therefore, under California law owed certain
      duties to Ms. Clifford as his client. In considering the first two
      elements of Count One, you may consider whether the defendant
      breached any of these professional obligations to Ms. Clifford. You
      should keep in mind that proof that the defendant violated one or
      more of his professional duties under California law does not,
      without more, mean that he committed wire fraud. Nevertheless,
      such proof may be considered by you in determining whether the
      defendant engaged in a scheme to defraud and whether he did so
      with knowledge and an intent to defraud.
S. App’x 6-7. The district court emphasized that the ethical duties of lawyers were
relevant to the jury’s decision only insofar as that background aided the jury in
deciding whether Avenatti knowingly and intentionally engaged in a scheme to
defraud:

      Let me stress again: Proof that the defendant violated one or more of
      his professional duties under California law does not, without more,
      mean that he is guilty of any crime. That is, a lawyer can violate his

                                           3
      ethical duties under California law without having the intent required
      to commit a crime. The question you must decide with respect to the
      first two elements of Count One is whether the defendant knowingly,
      willfully, and with the intent to defraud, devised or participated in a
      scheme or artifice to defraud or obtain money or property by
      materially false and fraudulent pretenses, representations or
      promises as alleged in Count One of the indictment—not whether he
      violated his ethical obligations.
Id. at 10. Avenatti argues that the instruction was irrelevant in certain parts,
confusing, and prejudicial. “A harmless error standard of review applies if the
defendant objected to the instruction.” United States v. Zhong, 26 F.4th 536, 550 (2d
Cir. 2022). Accordingly, we will affirm a judgment of conviction—even assuming
that the jury was erroneously instructed—if it appears “beyond a reasonable doubt
that the error complained of did not contribute to the verdict obtained.” Neder v.
United States, 527 U.S. 1, 15 (1999) (quoting Chapman v. California, 386 U.S. 18, 24
(1967)). Reversal is not warranted if “the defendant suffered no prejudice as a
result of the District Court’s instruction,” United States v. Gansman, 657 F.3d 85, 91-
92 (2d Cir. 2011), making any claimed error harmless. See Fed. R. Crim. P. 52(a).

      In this case, we conclude that any error in the jury instructions was
harmless. The evidence against Avenatti was overwhelming. See United States v.
Dhinsa, 243 F.3d 635, 650 (2d Cir. 2001) (“The strength of the government’s case
against the defendant is probably the most critical factor in determining whether
an error affected the verdict.”) (quoting United States v. Colombo, 909 F.2d 711, 714
(2d Cir. 1990)). The evidence showed that Avenatti diverted funds that were owed
to his client to his own bank account, App’x 102-04, and then sought to prevent his
client from learning of the diversion so that he could conceal his fraud, id. at 110-
13. Avenatti “forceful[ly]” instructed his client’s literary agent not to speak with
her, id. at 117-18, insisting that only he communicate with his client, id. at 386-88,
825-30. Avenatti diverted his client’s funds by instructing an employee to forge
her signature, id. at 168-69, 818-19, and testimony confirmed that he never asked
his client for permission to sign on her behalf, id. at 316. After he obtained his

                                          4
client’s funds, Avenatti spent those funds on his own expenses. Id. at 235-40. He
then repeatedly lied to his client to conceal his fraud by, for example, falsely stating
that the funds had not yet been disbursed, id. at 297-99, and falsely stating that he
had threatened to sue the publisher for not making payments, id. at 714. Avenatti’s
conduct also demonstrated that he was aware that he was stealing client funds. He
purchased a cashier’s check, for example, to make it appear to his client that money
he had borrowed from a friend had been paid by his client’s publisher. Id. at 172-
73. We conclude that any purported “error was harmless in light of the
overwhelming evidence introduced.” United States v. Montague, 67 F.4th 520, 525
(2d Cir. 2023). Because the evidence was overwhelming, “the error complained of
did not contribute to the verdict obtained.” Chapman, 386 U.S. at 24.

                                           II

      Following trial, and after deliberating for approximately four hours, the jury
sent a note to the district court that read: “We are unable to come to a consensus
on Count 1. What are our next steps?” App’x 586. In response, the district court
gave the jury a modified Allen charge and told the jury to continue its
deliberations. Id. at 565-66. The following morning, the jury sent another note that
stated:

      We have one juror who is refusing to look at evidence and is acting
      on a feeling. We need assistance on moving forward. She does not
      believe she needs to prove her side using evidence and refuses to
      show us how she has come to her conclusion. Please help us move
      forward. Not going on any evidence, all emotions and does not
      understand this job of a jury.
Id. at 588. The district court then gave a supplemental jury instruction that
emphasized the duty of jurors to deliberate but explained that jurors have the right
to adhere to a minority position if they conclude it is correct:

      At the beginning of this case, you each took an oath to well and truly
      try this issue and a true verdict give according to the law and the
      evidence. Pursuant to that oath, each of you has a duty to deliberate.

                                           5
       That entails a duty to consult with one another, to consider each
       other’s views with an open mind, and to discuss the evidence with
       the objective of reaching a just verdict if you can do so. Under your
       oath as jurors, you are not to be swayed by sympathy or emotion. You
       should be guided solely by the evidence presented during the trial
       and the law as I gave it to you, without regard to the consequences of
       your decision. … If you let sympathy or emotion interfere with your
       clear thinking, there is a risk that you will not arrive at a just
       verdict. … I remind you the defendant has no burden to present any
       evidence. As I have told you many times, the burden of proof lies
       solely with the government. As you deliberate, you should examine
       the questions put to you with candor and with a proper regard and
       deference to the opinions of each other. If, after listening to your
       fellow jurors, and if, after stating your own view, you become
       convinced that your view is wrong, do not hesitate because of
       stubbornness or pride to change your view. On the other hand, if you
       have honest convictions and beliefs based on the evidence presented
       at trial, you should not surrender those convictions and beliefs solely
       because of the opinions of your fellow jurors or because you are
       outnumbered.
Id. at 580-81. The jury resumed deliberations. A few hours later, the jury returned
a unanimous verdict of guilty on both counts. Id. at 582, 593.

       Avenatti argues that the district court’s instruction “singled out [a] holdout
juror and was impermissibly coercive.” Appellant’s Br. 48-49. But the challenged
instruction was a “modified Allen charge,” App’x 580, that “carries with it a lesser
threat of coercing jurors to abandon their conscientious beliefs” than a traditional
Allen charge, United States v. Calderon, 944 F.3d 72, 93 (2d Cir. 2019). 2 “[C]ritically,
the district court’s oral instruction included a caution to jurors that they did not

2 The traditional Allen charge urges jurors in the minority to consider whether the
majority might be correct, without a reciprocal suggestion to the majority. See Allen v.
United States, 164 U.S. 492, 501 (1896). The district court’s instruction, by contrast, urged
all jurors to consider opposing views. App’x 580-81.

                                             6
have to relinquish individual beliefs.” United States v. Melhuish, 6 F.4th 380, 392 (2d
Cir. 2021). The district court expressly stated that “if you have honest convictions
and beliefs based on the evidence presented at trial, you should not surrender
those convictions and beliefs solely because of the opinions of your fellow jurors
or because you are outnumbered.” App’x 581. This language resembles other jury
instructions that we have judged permissible. See, e.g., Spears v. Greiner, 459 F.3d
200, 206 (2d Cir. 2006) (concluding that an instruction telling the jury “to continue
deliberations ‘with a view toward arriving at a verdict if that’s possible’” was not
coercive).

      Nor was there anything improper, in these circumstances, about the district
court’s decision to instruct the jury twice. “[A] repeated Allen charge [is not]
inevitably coercive.” United States v. Ruggiero, 928 F.2d 1289, 1299 (2d Cir. 1991);
see also United States v. Roman, 870 F.2d 65, 77 (2d Cir. 1989) (noting that “even a
second charge imploring a decision would not be per se error”); United States v.
O’Connor, 580 F.2d 38, 44 (2d Cir. 1978) (“[W]e find no merit to the objection to the
giving of two modified Allen charges.”); United States v. Robinson, 560 F.2d 507, 517-
18 (2d Cir. 1977) (concluding that a district court did not abuse its discretion in
giving a second Allen-type charge).

      “[J]urors have a duty to deliberate. Jurors ‘should examine the question
submitted with candor, and with a proper regard and deference to the opinions of
each other.’” United States v. Baker, 262 F.3d 124, 130 (2d Cir. 2001) (quoting Allen,
164 U.S. at 501). “It is their duty to decide the case if they can conscientiously do
so, and thus they should listen, with a disposition to be convinced, to each other’s
arguments.” Id. (internal quotation marks and alterations omitted). The district
court did not abuse its discretion in this case by reminding the jury of those duties
in response to the jury’s two notes.

                                          III

      At sentencing on June 2, 2022, the district court directed that Avenatti pay
restitution to his client in the amount of $148,750. See App’x 640. To avoid

                                          7
simultaneous restitution obligations, the district court granted Avenatti’s request
that his repayment to his client begin after he had fulfilled a prior restitution
obligation to Nike, Inc., which was related to a previous conviction. See id.

       On September 22, 2022, the government proposed a restitution order that
would require Avenatti to provide restitution to his client before he paid Nike. See
id. at 652. Prior to proposing that order, the government conferred with Avenatti’s
counsel, who raised no objection. 3 The district court issued the restitution order
on September 23, 2022.

       On appeal, Avenatti argues that we should vacate the restitution order
because it directs restitution payments to be paid in this case before the previous
one. Because the government consulted with Avenatti prior to proposing the
restitution order, and because Avenatti’s counsel “made a considered decision not
to object,” Avenatti has waived this objection. United States v. Bodnar, 37 F.4th 833,
844 (2d Cir. 2022). Even if he had not, the objection would be meritless. Though “a
district court may not alter an imposed sentence,” United States v. Kyles, 601 F.3d
78, 83 (2d Cir. 2010), a “modification of the terms of payment of restitution is not
a modification in sentence,” United States v. Lochard, 555 F. App’x 94, 96 (2d Cir.
2014) (citing Kyles, 601 F.3d at 83-84). To the contrary, “as long as [the] amount of
restitution remains [the] same, alteration in terms of repayment does not alter [the]
sentence.” Id. 4 For that reason, the change in the schedule of payments was not an
impermissible alteration of the sentence.

3 See Letter Motion at 1, United States v. Avenatti, No. 19-CR-00374 (S.D.N.Y. Sept. 22,

2022), ECF No. 450.
4 “Although we decided [Lochard] by nonprecedential summary order, rather than by

opinion, our ‘[d]enying summary orders precedential effect does not mean that the court
considers itself free to rule differently in similar cases.’” United States v. Payne, 591 F.3d
46, 58 (2d Cir. 2010) (quoting Order dated June 26, 2007, adopting 2d Cir. Local R. 32.1).

                                              8
                                          IV

         Finally, Avenatti argues that his conviction for aggravated identity theft
must be vacated in light of the Supreme Court’s recent decision in Dubin v. United
States, 599 U.S. 110 (2023). In Dubin, the Supreme Court vacated a conviction for
aggravated identity theft because identity theft did not play a “key role” in the
criminal conduct. Id. at 129 (explaining that “§1028A(a)(1)’s enhancement is not
indiscriminate, but targets situations where the means of identification itself plays
a key role”).

         In Dubin, the “crux” of the criminal conduct did not involve identity theft.
Id. at 114. Here, by contrast, identity theft was an essential part of Avenatti’s
criminal conduct. Avenatti initially sought to divert money from his client without
forging her signature, but his client’s literary agent refused to allow the diversion
unless the client authorized it. See App’x 103-04. Only then did Avenatti instruct
an employee to forge his client’s signature for the purpose of wrongfully obtaining
her money. Id. at 168-69, 818-19. Identity theft played a key role in Avenatti’s
crime; it was not impermissibly “ancillary.” Dubin, 599 U.S. at 114. For that reason,
Dubin does not require vacating Avenatti’s conviction.

                                     *     *     *

         We have considered Avenatti’s remaining arguments, which we conclude
are without merit. For the foregoing reasons, we affirm the judgment of the district
court.

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

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