Court Opinion

ID: 811775
Source: CourtListenerOpinion
Date Created: 2012-11-13 15:05:22+00
Date Added: 2024-06-11T18:00:42.488669
License: Public Domain

11-3031-cr
United States v. Barry

                          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 Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of
New York, on the 13th day of November, two thousand twelve.

PRESENT: JON O. NEWMAN,
                 BARRINGTON D. PARKER,
                 REENA RAGGI,
                                 Circuit Judges.
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UNITED STATES OF AMERICA,
                   Appellee,

                         v.                                               No. 11-3031-cr

PHILIP BARRY
                                 Defendant-Appellant
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APPEARING FOR APPELLANT:                          EDWARD S. ZAS, Federal Defenders of New
                                                  York, Inc., New York, New York.

APPEARING FOR APPELLEE:                           JOHN P. NOWAK, (Jo Ann M. Navickas,
                                                  Jeffrey A. Goldberg, on the brief), Assistant
                                                  United States Attorneys, for Loretta E. Lynch,
                                                  United States Attorney for the Eastern District
                                                  of New York, Brooklyn, New York.
       Appeal from a judgment of the United States District Court for the Eastern District

of New York (Raymond J. Dearie, Judge).

       UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, AND

DECREED that the judgment entered on July 22, 2011, is AFFIRMED.

       Defendant Philip Barry appeals his conviction of one count of securities fraud, see 15

U.S.C. §§ 78j(b) and 78ff, and 33 counts of mail fraud, see 18 U.S.C. § 1341, asserting that

evidentiary errors deprived him of a fair trial. He further appeals his cumulative 20-year

prison sentence as procedurally and substantively unreasonable.

1.     Evidentiary Errors

       Barry challenges the admission of certain testimony by former investors on the

grounds that it was not relevant to proving securities fraud. In particular, he challenges the

admission of Frances Monteleone’s testimony that “[her] life was ruined” by Barry’s fraud,

Appx. 655, and Philip Bray’s testimony that he felt “disgust” and “betrayal” upon learning

of Barry’s deceit, Appx. 726–27. Barry also challenges the admission of Robert Lundberg’s

prior statements to authorities about his criminal activities. The government now concedes

the inadmissibility of the Lundberg statements. See Fed. R. Evid. 801(d)(1)(B). Insofar as

the government maintains that the Monteleone and Bray statements were relevant and

admissible, we need not decide that question. Even if we were to resolve it in favor of Barry,

the alleged error is harmless because we “can conclude with fair assurance that the evidence

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did not substantially influence the jury.” United States v. Al-Moayad, 545 F.3d 139, 164 (2d

Cir. 2008) (internal quotation marks and citations omitted).

       In order to determine if an error is harmless, we consider: “(1) the overall strength of

the prosecution’s case; (2) the prosecutor’s conduct with respect to the improperly admitted

evidence; (3) the importance of the wrongly admitted [evidence]; and (4) whether such

evidence was cumulative of other properly admitted evidence.” Id. (citations omitted). Here,

the jury was presented with overwhelming documentary evidence of the large-scale Ponzi

scheme that Barry operated for more than 30 years. Seized records showed that over at least

six years, $27 million in investors’ funds were deposited into four different bank accounts

controlled by Barry. The cumulative balance of those accounts, however, never exceeded

$251,000, because the monies were not invested in stock options, as Barry represented on

client statements. Rather, they were recycled to satisfy the return expectations of earlier

investors and to pay Barry’s own expenses. Notes from Barry’s files listed pretextual reasons

why he could not send investors a list of the stocks in which he had purportedly invested.

Several of Barry’s investors testified about the various false assurances that he gave them

over the years about their investments. Meanwhile, the jury saw a seized note on which

Barry had written to himself, “I’m just a crook running a Ponzi scheme.” G.A. 5. Given this

overwhelming evidence of Barry’s guilt, we can confidently conclude that any evidentiary

error was harmless.

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2.     Sentence

       a.       Procedural Reasonableness

                i.     Bankruptcy-Fraud Enhancement

       Barry contends that the district court miscalculated his Sentencing Guidelines range

in applying a two-level enhancement for committing “a misrepresentation or other fraudulent

action during the course of a bankruptcy proceeding.” U.S.S.G. § 2B1.1(b)(8)(B).1 We

review sentencing challenges for reasonableness, a standard akin to abuse of discretion. See

United States v. Cavera, 550 F.3d 180, 187 (2d Cir. 2008) (en banc).

       In urging such abuse here, Barry first maintains that the district court failed to make

specific factual findings to support the enhancement. For purposes of a sentencing

enhancement, a “district court satisfies its obligation to make the requisite specific factual

findings when it explicitly adopts the factual findings set forth in the presentence report.”

United States v. Molina, 356 F.3d 269, 275 (2d Cir. 2004). Both the presentence report and

its addendum addressed Barry’s behavior in his bankruptcy proceedings in detail, see PSR

¶ 20 and Addendum 3, and at sentencing the district court “adopt[ed] the factual findings of

the report as revised in the addendum and the guideline as previously stated,” Appx. 1935.

Accordingly, we identify no procedural defect in the district court’s factfinding.

       Second, Barry contends that the evidence does not support a finding that his actions

in the bankruptcy proceeding evidenced intent to defraud. The record, however, reflects that

       1
           This provision is currently styled as § 2B1.1(b)(9)(B).

                                               4
Barry omitted basic information concerning his assets and creditors in his initial bankruptcy

petition, and that he repeatedly sought to reduce his culpability in the bankruptcy proceedings

by misrepresenting amounts of loss by over $10 million and by refusing to answer questions

directly. These omissions and misrepresentations were so blatant as easily to support a

preponderance finding that Barry acted with the deceitful intent necessary for a §

2B1.1(b)(8)(B) enhancement.

              ii.    Victims and Loss Amounts

       In a pro se supplemental brief, Barry challenges enhancements under the Sentencing

Guidelines for loss amount and number of victims. Because Barry failed to raise these

challenges in the district court, we review only for plain error. See United States v.

Verkhoglyad, 516 F.3d 122, 128 (2d Cir. 2008). Moreover, the record clearly supports the

application of the challenged enhancements because Barry cannot show any error, let alone

plain error. The factual findings of the PSR, which the district court adopted, presented

detailed information culled from victims’ loss affidavits showing a total loss of $24,731,184

to 333 separate investor victims. PSR ¶¶ 22–23. This was sufficient to support a 22-level

loss enhancement pursuant to U.S.S.G. § 2B1.1(b)(1)(L) (adding 22 levels for loss exceeding

$20 million) and a 6-level victim enhancement pursuant to U.S.S.G. § 2B1.1(b)(2)(C)

(adding 6 levels for offense involving more than 250 victims).

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       b.     Substantive Reasonableness

       Barry contends that, even if his 20-year prison sentence is not infected by procedural

error, the below-Guidelines term2 is substantively unreasonable under the parsimony clause

of 18 U.S.C. § 3553(a). “We will . . . set aside a district court’s substantive determination

only in exceptional cases where the trial court’s decision cannot be located within the range

of permissible decisions.” United States v. Wagner-Dano, 679 F.3d 83, 95 (2d Cir. 2012)

(quoting United States v. Cavera, 550 F.3d at 189). Here, the district court expressly

referenced the parsimony clause in explaining that despite certain mitigating factors in

Barry’s personal life, it needed to impose a sentence that was sufficient to punish Barry for

his long-term fraud and to “deter others who might be inclined to victimize honest, decent

people.” Appx. 1933. Considering the serious nature of Barry’s crime, the length of time

over which he perpetrated it, and its impact on so many victims, we cannot conclude that a

20-year sentence was outside the broad range of permissible decisions available to the

sentencing court.

       2
         With a total offense level of 41 and a criminal history category of I, Barry faced a
recommended Guidelines sentence of 324 to 405 months’ imprisonment, a range that would
have required the district court to impose at least some terms of incarceration consecutively
rather than concurrently as it did. The district court’s decision to impose a non-Guidelines
sentence precludes Barry’s pro se argument that his sentence violates Apprendi v. New
Jersey, 530 U.S. 466, 490 (2000). See also United States v. Booker, 543 U.S. 220, 268
(2005).

                                             6
      We have considered all of Barry’s remaining arguments and find 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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