Court Opinion

ID: 183775
Source: CourtListenerOpinion
Date Created: 2011-01-28 01:02:35+00
Date Added: 2024-06-11T09:27:27.102761
License: Public Domain

FILED
                    UNITED STATES COURT OF APPEALS                           JAN 27 2011

                                                                         MOLLY C. DWYER, CLERK
                            FOR THE NINTH CIRCUIT                         U.S . CO U RT OF AP PE A LS

UNITED STATES OF AMERICA,                        No. 07-50437

              Plaintiff - Appellee,              D.C. No. CR-06-00909-R-1
                                                 Central District of California,
  v.                                             Los Angeles

STEVEN M. FERGUSON,
                                                 ORDER
              Defendant - Appellant.

Before: RYMER, KLEINFELD, and SILVERMAN, Circuit Judges.

       The memorandum disposition filed on November 2, 2010 is amended as

follows:

       On page 1 of the memorandum disposition, striµe 'and travel.'

       On page 5 of the memorandum disposition, insert the following paragraph

after 'There is therefore no plain error under Van Alstyne:'

                    Ferguson argues that there was insufficient evidence to support
             his conviction for travel fraud, specifically, in that the government did
             not provide sufficient evidence to show 'that as a result of [his Ponzi]
             scheme, [his] victim[s] [were] induced to travel in interstate (or
             foreign) commerce.' United States v. Freeman, 434 F.3d 369, 376-77
             (9th Cir. 2004). The evidence was sufficient for a reasonable jury to
             find that the government had met its burden as to the travel fraud
               charges. Ferguson based his Ponzi scheme on appearing rich and
               successful to gain investors' trust and money. The all-expenses paid
               trip to Hawaii was one more means by which Ferguson lured victims
               into his confidence. After the Hawaii trip, Ferguson received
               hundreds of thousands of dollars in investments from the victim
               whom he had brought on the trip. At least one of the victims testified
               that he made those investments based on representations made to him
               by Ferguson on the trip. Based on this evidence, a reasonable jury
               could find that the victims' travel from Switzerland to Los Angeles
               and then from Los Angeles to Hawaii was induced by Ferguson's plan
               to gain their trust by false representations and thus receive further
               investment in his Ponzi scheme.

      With these amendments, the panel has voted unanimously to deny the

petition for rehearing. Judges Rymer and Silverman have voted to deny the

petition for rehearing en banc, and Judge Kleinfeld has recommended the same.

      The full court has been advised of the petition for rehearing en banc, and no

judge of the court has requested a vote on the petition for rehearing en banc. Fed.

R. App. P. 35(b).

       The petition for rehearing and petition for rehearing en banc are DENIED.

No further petitions for rehearing or petitions for rehearing en banc will be

entertained.

      The amended memorandum disposition is filed concurrently with this Order.

                                           2
                                                                           FILED
                           NOT FOR PUBLICATION                              JAN 27 2011

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S . CO U RT OF AP PE A LS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 07-50437

             Plaintiff - Appellee,               D.C. No. CR-06-00909-R-1

  v.                                             AMENDED
                                                 MEMORANDUM *
STEVEN M. FERGUSON,

             Defendant - Appellant.

                    Appeal from the United States District Court
                       for the Central District of California
                     Manuel L. Real, District Judge, Presiding

                           Submitted May 7, 2009**
                  Withdrawn from submission September 9, 2009
                          Resubmitted March 16, 2010
                              Pasadena, California

Before: RYMER, KLEINFELD, and SILVERMAN, Circuit Judges.

       Two relevant events occurred subsequent to Ferguson's conviction. First,

the Supreme Court issued United States v. Santos, 553 U.S. 507 (2008), addressing

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
        **
            The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).
whether for purposes of 18 U.S.C. y 1956, in the context of an illegal lottery,

'proceeds' meant profits or gross receipts. Ferguson argues that under Santos, the

evidence was insufficient for his money laundering counts. Second, we construed

Santos in United States v. Van Alstyne, 584 F.3d 803 (9th Cir. 2009). We

withdrew this case from submission pending issuance of the mandate in Van

Alstyne and supplemental letter briefs from the parties addressing its effect on this

case.

        Santos is, as we said in Van Alstyne, a decision 'with less than clear

results.' Van Alstyne, 584 F.3d at 807. The distinguishable facts and plurality

decision maµe Santos by itself difficult to apply, but we are bound in any event by

our Van Alstyne decision construing it. The question whether 'proceeds' means

one or the other does not matter for crimes committed after May 2009, because

Congress has amended 18 U.S.C. y 1956 establishing that 'proceeds' now means

gross receipts. 18 U.S.C. y 1956(c)(9). Ferguson's conduct, though, occurred

prior to this amendment, so Santos as construed by Van Alstyne matters to his

case.

                                           2
      Van Alstyne holds that under Santos, þproceedsþ in 18 U.S.C. y 1956 means

þgross receiptsþ except where the money transfers are þinherent in the scheme.þ In

that Ponzi scheme, payments to earlier investors were inherent to the scheme

because it is inherent in a Ponzi scheme that payouts to earlier investors lull later

investors into believing that the investment scheme is genuine. Van Alstyne holds

that although such payouts should not be counted as 'proceeds,þ a refund in full of

an investorùs money was not þinherent,þ so that money could not properly be

subtracted from 'proceeds.þ

      Ferguson challenges for insufficient evidence his convictions on counts 5

through 15 of his 24-count indictment. None of those counts were for payouts to

earlier investors, as were the counts for which the convictions were reversed in

Van Alstyne. All were for such expenditures as travel to distant locations, private

chef services, limousine services, lavishly benefitted staff, and impressive offices.

Ordinarily we review insufficiency of evidence challenges de novo, United States

v. Carranza, 289 F.3d 634, 641 (9th Cir.2002), but since Ferguson could not and

did not raise the concern over the meaning of 'proceeds' in his Rule 29 motion, we

review 'for plain error to prevent a 'miscarriage of justice.'' United States v.

                                           3
Roston, 986 F.2d 1287, 1289 (9th Cir.1993) (quoting United States v. Curtis, 568

F.2d 643, 647 (9th Cir.1978)), cert. denied, 519 U.S. 955 (1996). To find plain

error, we 'must find that (1) there is 'error'; (2) it was 'plain'; and (3) the error

affected 'substantial rights.' If these conditions are met, we may notice the

forfeited error only if the error 'seriously affect[s] the fairness, integrity or public

reputation of judicial proceedings.'' United States v. Recio, 371 F.3d 1093, 1100

(9th Cir. 2004) (quoting United States v. Olano, 507 U.S. 725, 732-36 (1993)).

Here, because there is no constitutional error and the law was unclear at trial and is

still unclear on appeal, error is not plain. United States v. Turman,122 F.3d 1167,

1170 (9th Cir. 1997) (holding that when the law is unclear at trial and becomes

clear only as a result of later authority, error is not plain).

       Under Van Alstyne, it is not 'plain' that these expenditures are inherent in

the scheme and should be subtracted from 'proceeds.' These extravagances could

be 'front' inherent in the Ponzi scheme, or front not inherent in the scheme, or

mere self-indulgences with victims' money, not inherent in the scheme. Liµewise

inducing 'investors' to taµe a luxury trip to Hawaii could be personal indulgence

                                             4
not inherent in the scheme for the purposes of 18 U.S.C. y 2314. There is

therefore no plain error under Van Alstyne.

      Ferguson argues that there was insufficient evidence to support his

conviction for travel fraud, specifically, in that the government did not provide

sufficient evidence to show 'that as a result of [his Ponzi] scheme, [his] victim[s]

[were] induced to travel in interstate (or foreign) commerce.' United States v.

Freeman, 434 F.3d 369, 376-77 (9th Cir. 2004). The evidence was sufficient for a

reasonable jury to find that the government had met its burden as to the travel fraud

charges. Ferguson based his Ponzi scheme on appearing rich and successful to

gain investors' trust and money. The all-expenses paid trip to Hawaii was one

more means by which Ferguson lured victims into his confidence. After the

Hawaii trip, Ferguson received hundreds of thousands of dollars in investments

from the victim whom he had brought on the trip. At least one of the victims

testified that he made those investments based on representations made to him by

Ferguson on the trip. Based on this evidence, a reasonable jury could find that the

victims' travel from Switzerland to Los Angeles and then from Los Angeles to

                                          5
Hawaii was induced by Ferguson's plan to gain their trust by false representations

and thus receive further investment in his Ponzi scheme.

         Ferguson argues that his sentence was improperly imposed because the

district court did not calculate the guidelines range, did not explain why the

sentence was chosen in light of the guidelines and y 3553, and improperly imposed

an upward adjustment for obstruction of justice. The district court is obligated to

'begin by determining the applicable Guidelines range,' then must 'consider the y

3553(a) factors to decide if they support the sentence suggested by the parties.'

United States v. Carty, 520 F.3d 984, 992 (9th Cir. 2008). If objections are raised,

the district court must 'explain why he accepts or rejects the party's position.' Id.

at 993. The district court however 'need not ticµ off each of the y 3553(a) factors

to show that it has considered them,' nor articulate 'how each y 3553(a) factor

influences its determination of an appropriate sentence.' Id. at 992. The y 3553

discussion may be cursory. See United States v. Mix, 457 F.3d 906, 912 (9th Cir.

2006).

                                          6
      Ferguson is correct that the district court must under Gall v. United States,

552 U.S. 38 (2007) and United States v. Waµnine, 543 F.3d 546 (9th Cir. 2008)

explain its calculation of the sentencing guidelines and its consideration of y 3553.

It did not do so here, even in the terse manner we have accepted where appropriate.

The district court did not even say that it accepted the presentence report

calculation of the guidelines, though it appears that it probably did. The district

court did not mention what y 3553 requires the district court to consider, and did

not discuss any of the considerations, so we do not µnow whether they were

considered. Though 'when a defendant's arguments are straightforward and

uncomplicated, the district court does not abuse its discretion when it listens to the

defendant's arguments and then 'simply [finds those] circumstances insufficient to

warrant a sentence lower than the guidelines range'' United States v. Stoterau,

524 F.3d 988, 999 (9th Cir. 2008) (quoting United States v. Carty, 520 F.3d 984,

995 (9th Cir. 2008) (en banc)), we do not even have such findings here. As for

whether the guidelines calculation amounted to plain error because the obstruction

of justice adjustment could not properly be imposed, the lacµ of any explanation

by the district court maµes this question incapable of review. The sentence must

therefore be vacated and the case must be remanded for resentencing.

                                           7
      Ferguson also challenges two conditions of supervised release, that he 'shall

not be self employed' and that he 'participate in a domestic violence program.'

The court did not say why these conditions were imposed, did not say that the

court was considering them, and they are not in the list of mandatory or

discretionary conditions in the guidelines. U.S.S.G. yy 5D1.3(a)(3) (providing for

domestic violence treatment only for a defendant 'who is convicted for a domestic

violence crime as defined in 18 U.S.C. y3561(b) for the first time'), 5D1.3(e)(4)

and 5F1.5 (on Occupational Restrictions, which include only 'the specified

occupation, business, or profession held by the defendant prior to conviction.'

United States v. Stoterau, 524 F.3d 988 (9th Cir. 2008)). The presentence report

does not suggest either condition.

      According to the presentence report, Ferguson had been physically abusive

to his wife, and the conviction established that he was dishonest, but while there

may have been a basis for conditions addressing employment and domestic

violence, he was entitled to notice that these conditions were under consideration

so that he could address their appropriateness and their exact terms. 'Where a

condition of supervised release is not on the list of mandatory or discretionary

                                          8
conditions in the sentencing guidelines, notice is required before it is imposed, so

that counsel and the defendant will have the opportunity to address personally its

appropriateness.' United States v. Wise, 391 F.3d 1027, 1033 (9th Cir. 2004).

      The self employment prohibition, in particular, might have been different

had notice been given, since Ferguson's dishonesty might well maµe some self

employment too dangerous to the public but other self employment safe for the

public. It is quite possible that no employer would want to hire Ferguson after he

is released from prison, so that some sort of self employment will be the only

legitimate means of supporting himself after release. See 18 U.S.C. y 3583(d)(1);

18 U.S.C. y 3553(a); United States v. T.M., 330 F.3d 1235, 1240 (9th Cir. 2003)

(explaining that conditions of supervised release 'are permissible only if they are

reasonably related to the goal of deterrence, protection of the public, or

rehabilitation of the offender').

      Accordingly, the conviction is AFFIRMED, but the sentence is VACATED

and the case is REMANDED FOR RESENTENCING.

                                           9