Opinion
No. 05-50220.
Argued and Submitted February 15, 2007. Pasadena, California.
March 7, 2007.
Appeal from the United States District Court for the Southern District of California, D.C. No. CR-01-01415-BTM, Barry T. Moskowitz, District Judge, Presiding.
MEMORANDUM.
This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.
Brent Douglas Morris was convicted of conspiracy, mail fraud, wire fraud, securities fraud, and money laundering in connection with a $49 million telemarketing scheme involving 3,000 defrauded investors. The trial lasted 74 days over a four-month period. Morris was sentenced to 148 months. He appeals his conviction and sentence. Because the parties are familiar with the extensive record in this case, we will not recount the underlying facts here.
I. Conviction Issues
The district court did not abuse its discretion in denying Morris' motions for severance from co-defendant James Leonard. Morris fails to show that the core of Leonard's defense was so irreconcilable with his own that the jury's acceptance of Leonard's theory precluded his acquittal. United States v. Throckmorton, 87 F.3d 1069, 1072 (9th Cir. 1996). He also fails to show the district judge's curative instructions were inadequate. United States v. Johnson, 297 F.3d 845, 855 (9th Cir. 2002). Contrary to Morris' assertion, the record does not reflect that Leonard's attorney acted as a second prosecutor. Leonard's attorney did not blame Morris; he mentioned Morris benignly once during his opening statement, and not at all during his closing argument. Morris was not prejudiced by a joint trial.
The district court did not err in admitting co-conspirator statements of Irving Einhorn, an attorney for the telemarketing organization. Morris argues admission of Einhorn's statements violated his Confrontation Clause rights. This issue was resolved in co-defendant Marc Levine's appeal. See United States v. Levine, 175 Fed. Appx. 166, 167-68 (9th Cir.), cert. denied, 127 S. Ct. 844 (2006) (district court did not err in finding Einhorn a member of the conspiracy; admission of his statements did not violate the Confrontation Clause). This court declines to consider Morris' Confrontation Clause claim under the law of the case doctrine. United States v. Scrivner, 189 F.3d 825, 827 (9th Cir. 1999); see also United States v. Schaff, 948 F.2d 501, 506 (9th Cir. 1991) (law of the case doctrine is applicable when the appeal of one co-defendant is decided prior to another co-defendant's appeal).
The district court did not err by denying defendants' motion to compel the government to immunize Einhorn. Defendants failed to show that the government distorted the judicial fact finding process by declining to immunize Einhorn. United States v. Westerdahl, 945 F.2d 1083, 1086 (9th Cir. 1991).
The district court did not abuse its discretion in admitting evidence under Fed.R.Evid. 404(b) concerning other telemarketing entities. Evidence regarding some entities was inextricably intertwined with evidence concerning the charged crimes, and therefore was not subject to exclusion under Rule 404(b). United States v. Sayakhom, 186 F.3d 928, 937-38 (9th Cir. 1999). The remaining evidence was admissible under Rule 404(b) to show common plan, knowledge, absence of mistake, and intent. Fed.R.Evid. 404(b). Potential prejudice to Morris was cured by the district judge's limiting instructions. Zafiro v. United States, 506 U.S. 534, 539-40 (1993); Tan v. Runnels, 413 F.3d 1101, 1115 (9th Cir. 2005).
II. Sentencing Issues
The district court did not abuse its discretion in applying sentencing enhancements. A district judge rather than a jury may make factual findings supporting sentencing enhancements. United States v. Booker, 543 U.S. 220, 233 (2005); United States v. Fifield, 432 F.3d 1056, 1066 (9th Cir. 2005) (judicial fact finding to enhance a sentence does not violate the Sixth Amendment). The district judge's finding that Morris was responsible for the stipulated $49 million loss and $43 million in laundered fraud proceeds was not error. Morris, who owned and managed one of the most profitable telemarketing sales offices in the scheme, knew other participants were raising money based on the same fraudulent securities. The record shows Morris attended meetings to initiate new offerings with high level promoters and managers of other sales offices, and regularly spoke with other managers by telephone about funds raised by their respective offices. The full scope of the scheme was reasonably foreseeable to Morris. U.S. Sentencing Guidelines Manual § 1B1.3 (1995); see also United States v. Blitz, 151 F.3d 1002, 1012-13 (9th Cir. 1998) (telemarketers responsible for reasonably foreseeable losses).
The district judge's factual findings supporting enhancements for the involvement of vulnerable victims and violation of an administrative order were not erroneous. Morris knew or should have known that his offenses involved vulnerable victims because many were elderly, and the record indicates some were targeted for "reloading" based on their prior investments with defendants. Morris continued to sell securities after numerous cease and desist orders were served upon the telemarketing organization. The district judge discredited Morris' testimony that he was unaware of these administrative sanctions. The evidence established that Morris was personally informed of cease and desist orders on several occasions, and he was served with a cease and desist order by the California Department of Corporations.
Morris' 148-month sentence was reasonable under all the circumstances. The district judge determined his sentence in light of both the advisory sentencing guideline range of 235 to 293 months and 18 U.S.C. § 3553(a) factors. United States v. Cantrell, 433 F.3d 1269, 1278 (9th Cir. 2006) (citing Booker, 543 U.S. at 260-63 (2005)). The government recommended a sentence of 235 months, just under twenty years.
Morris operated at a high level in a sophisticated and predatory scheme. In relative culpability, he fell just beneath the founders and promoters, Ira Itskowitz and Marc Levine, and those in the corporate office. Unlike other sales people, Morris visited the corporate office frequently and attended meetings. He never accepted responsibility for his conduct, he did not express remorse or apologize to victims, and he perjured himself at trial.
The district judge considered the sentences received by co-defendants. Levine, just above Morris in culpability, was sentenced to 292 months. Itskowitz, who was at the apex of the scheme, received a sentence of 71 months. But Itskowitz accepted responsibility for his conduct and provided substantial assistance to the authorities in the prosecution of this case. The district judge requested and considered information regarding sentences imposed in other large scale fraud cases, such as Enron, to avoid unwarranted sentencing disparities.
Full consideration was given to Morris' personal circumstances and health, as well as other mitigating factors, in fashioning a sentence. By rejecting the government's 235-month recommendation as unjust, the district judge implicitly found the 235 to 293 advisory guideline range unreasonable. The district judge reasonably determined that a 148-month sentence complied with 18 U.S.C. § 3553(a), by balancing the aggravating nature and scope of Morris' offense conduct with mitigating aspects of his personal circumstances.