The opinion of the court was delivered by: Dearie, District Judge.
MEMORANDUM & ORDER OF RESTITUTION
This matter is before me on remand from the Second Circuit. In United States v. Catoggio, 326 F.3d 323 (2d Cir.), cert. denied, 540 U.S. 939 (2003), the Circuit vacated the restitution portion of Defendant Roy Ageloff's sentence, and returned the matter to me for resentencing on restitution only.*fn1
A. Ageloff's Criminal Conduct
The fraudulent securities schemes carried out by Ageloff and his co-conspirators were massive, aggressive, and extremely lucrative. The Second Circuit's Catoggio decision, drawing upon the Presentence Report prepared by the Department of Probation, recounts the basic underlying facts, see 326 F.3d at 324-26, sparing the need for extensive restatement here. In the context of this restitution remand, however, I underscore that Ageloff's illegal profits came, as the Circuit recognized, "at the expense of unwary consumers." Catoggio, 326 F.3d at 324 (emphasis added). To be sure, Ageloff engaged in what is called "market manipulation," but that sanitizing label can obscure the fact that the sine qua non of fraud is a victim. Ageloff's crime was committed against unsuspecting individual investors, indeed scores of them. It is they who were lied to, their money and financial security that was stolen, and to them that long overdue amends are being ordered.
The scheme was of the straightforward "pump and dump" variety: relentlessly predatory and remarkably effective. In essence, once Ageloff and his cohorts managed to acquire control of blocks of "house stocks" (which included "companies that did no business at all," id.), the success of their scheme was realized through the lies they relentlessly told investors. Brokers "used high-pressure sales tactics" and "aggressively tout[ed]" the worthless house stocks to the public, id. at 325; the brokers were "encouraged" to do so by the large commissions they were paid, a fact they withheld from the customers, who were "routinely informed [ ] that a nominal commission or no commission would be charged." Id. Additionally, Ageloff's team "used . . . misleading statements to persuade customers not to sell house stocks." Id. Among other things, Ageloff's brokers "would praise the business prospects of the house stock companies, even though many of the companies did little or no business and would assure their customers that the price of the house stocks would rise rapidly." Id. Then, "[t]o maintain the appearance of demand, brokers would often either fail to take and execute customer orders to sell house stocks or execute such a sale only if it could be 'crossed' with a purchase of the same stock by another customer." Id.
Having succeeded in artificially inflating the price of house stocks, Ageloff and his cohorts would reap their profits by selling off their shares of those stocks to their own unsuspecting customers. They would then endeavor to maintain the price of the house stocks so that that scheme would remain undetected and a large supply of additional unsuspecting customers would be available for the next round of sales of the inflated stock.
The criminal resolve manifest in the scheme was seemingly implacable: Ageloff's fraud began in 1991 while he was at the brokerage firm Hanover Sterling and continued there until the FBI raided the firm and closed it down in February of 1995. But Hanover's collapse did not deter him; Ageloff simply relocated his criminal operation, repeatedly (to Norfolk Securities, PCM Securities and Capital Planning Associates), until it finally and fully unraveled in mid-1998.
Ageloff was both architect and enforcer. Along with co-defendant Robert Catoggio he orchestrated the scheme, but he was its single most important participant. More than anyone else, it was Ageloff who developed the sham companies whose stocks became the touted "house stocks," who determined the allocation of the IPO house stocks to the brokers, who gave daily on-site pep talks to the brokers (and whose "motivational" tactics were often laced with threats of violence), who was the go-to person at Hanover, and who continued to be the financial point person even after Hanover's collapse.
Ageloff also earned the largest share of the tens of millions of dollars in illegal profits generated by the scheme.*fn2
B. The Initial Restitution Order
Ageloff entered a plea of guilty to a single count of a 34-count superseding indictment that charged him and 55 co-conspirators with engaging in a pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c) and 1963. I imposed a custodial sentence of 96-months and ordered restitution under the Mandatory Victim Restitution Act ("MVRA"), 18 U.S.C. § 3663A. The Restitution Order specifically provides, in pertinent part, that Ageloff "shall pay restitution to the victims of the offense of conviction . . . in the amount of $80 [million]" and that Ageloff "shall be jointly and severally liable" for the full amount with co-defendant Robert Catoggio.
I adopted the amount of $80 million because it was the loss figure used at the time in both Ageloff's plea agreement and the Presentence Report prepared by the Probation Department in November 2000 (PSR). In the former, Ageloff stipulated to a sentence enhancement of 18 levels pursuant to U.S.S.G. § 2F1.1(b)(1)(S) for fraud that caused losses in excess of $80 million, the highest loss bracket under the applicable 1997 Sentencing Guidelines; in the latter, Probation determined that, for guideline purposes, Ageloff was responsible for losses of more than $80 million. Ageloff, of course, was also amply heard on the subject, and the restitution order issued only after plenary consideration of his extensive sentencing submissions, which included the recommendations of a retained loss calculation expert. (As discussed more fully in the Findings section of this Memorandum, Ageloff's pre-sentencing papers advanced-and I already resolved-essentially the same arguments on loss that are asserted in Ageloff's extensive post-remand submissions).
On the specific subject of restitution, the plea agreement stated that restitution was "applicable" and that it would be ordered "in an amount to be determined by the Court." When accepting Ageloff's plea, I also made clear that my intention at sentencing would be to impose restitution "to the extent that specific victims can be identified." The November 2000 PSR explained that "[d]ue to the thousands of victims affected by the defendants' conduct, it would be impractical to request Affidavits of Loss from each victim, but it is noted that the Government is in possession of trading records which identify the victims and their respective losses." As the Catoggio decision notes, at the time of Ageloff's sentencing the following August, the government had not yet provided me with a list of identified victims and actual losses. There was no dispute, however, that there was a basis for the figure of at least $80 million; further, as Catoggio also notes, Ageloff had "acknowledged on the record that he had agreed with the government that the required victim information could be provided at a date beyond the 90 days specified in 18 U.S.C. § 3664(d)(5)." Id., 326 F.3d at 325. Accordingly, I included the following language in the Restitution Order:
By the consent of the parties, the names of the victims to whom restitution is owed and the losses sustained by each individual victim will be set forth in a separate Order of the Court at such time, which may exceed 90 days from the date of this Order, as that information can be ascertained by the Court, on notice to the defendant, based on a proposal that shall be submitted by the United States Attorney.*fn3
In affirming Ageloff's conviction, the Circuit rejected all but one of
Ageloff's objections to the Restitution Order as "at best a
disingenuous effort to avoid a consequence of his criminal behavior."
Catoggio, 326 F.3d at 328. More specifically, the Court rejected
Ageloff's contention that the victims of his crime were
"unidentifiable," pointing to the fact that the government had, by the
time of oral argument on the appeal, submitted to me a lengthy report
of victims' identities. Id. at 327-28. (I address this report in the
Findings section of this Memorandum, infra at 12 et seq.). The Circuit also rejected Ageloff's
argument under 18 U.S.C. § 3663A(c)(3) that the number of victims was
too large for restitution to be practicable and that the issues in
determining restitution were so complex that the need for restitution
was outweighed by the burden on the sentencing process. Id.*fn4
To the contrary, the Circuit recognized that I had
"considered restitution an essential part of [Mr.] Ageloff's
sentence," that I did not "commit plain error in proceeding with
restitution in this admittedly complex case," and that the Restitution
Order "represents a creative approach to a difficult problem." Id. at
The Circuit held, however, that "even where a defendant's complex fraud scheme results in many victims whose identities and losses are difficult to ascertain, [a] district court should identify the victims and their actual losses prior to imposing restitution under the MVRA." Id. at 329 (emphasis added). As the Circuit explained, restitution under the MVRA "can only be imposed to the extent that the victims of a crime are actually identified," and so the Court concluded that "although [the Court] believe[s] the victims of Ageloff's fraud are identifiable," I "erred in not identifying them before ordering restitution." Id. at 328 (emphasis added).
The Catoggio decision also reflects the Circuit's concern that the figure of $80 million may have been inappropriately low. The Court noted that "the MVRA also requires courts to order restitution in the full amount of t he victims' losses," id. at 329 (emphasis added) (citing 18 U.S.C. § 3664(f)(1)(A)), and that, although the figure of $80 million set the appropriate upward enhancement to the length of Ageloff's incarceration, neither the parties nor I indicated that the figure "was an estimate of actual loss." Id. Indeed, the Court was aware that the government's post-sentencing Restitution Report now placed actual losses in the $190 million range while Ageloff was contending that the figure was "significantly less" than $80 million, but that, by his explicit agreement to the sentencing enhancement, "[Mr.] Ageloff admitted to causing losses exceeding $80 million." Id. (emphasis in original). See also United States v. Qurashi, 634 F.3d 699, 703 (2d Cir. 2011) ("We think it significant that the statute mandates that courts 'order restitution to each victim in the full amount of each victim's losses'") (quoting § 3664(f)(1)(A), emphasis added by the Circuit).
Finally, the Circuit noted that "proceedings" to determine the victims and actual losses were then "under way in the district court," and, in remanding "for resentencing on restitution," instructed me to "simply incorporate the findings from those proceedings into a new restitution order." Id. at 330.
Under Catoggio, then, my task here is an exceedingly limited one: to compile, and then incorporate into a supplemental restitution order, a list of the names of actually identified victims and the total loss that each victim suffered.
D. The Florida Conviction
Ageloff's efforts to avoid paying restitution have hardly been confined to this Court. They have also been manifest in the additional criminal activity Ageloff undertook from the very prison cell where he has been serving the sentence I imposed. As revealed through the proceedings commenced by indictment number 5:08-cr-32-Oc-10GRJ handed down by a federal grand jury in the Middle District of Florida, Ageloff enlisted the services of his brother MichaelAgeloff to help him conceal from the government illegal proceeds of the pump and dump schemes that were the subject of his conviction here. In 2008, Ageloff entered a plea of guilty to one count of conspiracy to commit money laundering.
Although he acknowledges, as he must, the fact of his guilty plea, Ageloff insists that his Florida criminality has no bearing on this proceeding. The plain language of the Florida indictment refutes Ageloff's position: after making specific reference to the indictment, guilty plea, sentence and restitution order in this case, see Fla. Ind. At ¶¶ 1-6, the indictment charges that Ageloff conspired with others to engage in transactions "designed in whole or in part to conceal and disguise the nature, location, the source, ownership and control of the proceeds" of the conduct for which he was convicted in this Court, and that "[i]t was part of the conspiracy" that Ageloff and others "agreed to undertake efforts to conceal the money and other assets that [Ageloff] had obtained as a result of [that] securities fraud." Fla. Ind. at ¶¶ 9, 10.
The transcripts of Ageloff's plea and sentencing proceedings in Florida likewise flatly refute Ageloff's claim in this proceeding that the Florida conviction did not reflect his effort to avoid paying restitution: In its proffer of facts during the plea proceeding, the government recited, inter alia, that "from 1991 to 1998 Roy B. Ageloff was involved in a stock or securities manipulation scheme whereby he swindled thousands of investors out of millions of dollars," for which he pled guilty to one count of a 34-count superseding indictment in this Court, and that, while in federal custody on that conviction, he gave others "instructions regarding the . . . transfer [and] concealment . . . of the profits he obtained through securities fraud." Plea Tr. Jan. 8, 2009 at 25, 30. The following ensued:
The Court: Now, Mr. Ageloff, you just heard what the government says happened.
And let me first ask you, generally, is that, indeed, what you did in this case? [Ageloff]: Yes. (Plea Hearing, 5:08-cr-32-0c-10GRJ, January 8, 2009 at 25, 30).
At sentencing, the following exchange occurred:
The Court: Mr. Ageloff, do you then admit that in your conversations with your brother while you were at Coleman between November 2001 and October 2003 that it was your intent not only to manage the investment and disbursement or distribution of funds that you had derived from your securities fraud activities in New York but to conceal those funds from the United States? [Ageloff]: Yes. (Sentencing Hearing, 5:08-cr-32-0c-10GRJ, July 22, 2009 at 27-28).
The general standards governing restitution are not in dispute and do not require lengthy recitation here, except perhaps to note that they have not changed since the mandate was issued in Catoggio. Thus, as Catoggio notes and the parties recognize, the "primary and overarching purpose of the MVRA is to make victims of crime whole, to fully compensate these victims for their losses and to restore these victims to their original state of well-being." United States v. Boccagna, 450 F.3d 107, 115 (2d Cir. 2006) (citation and quotation marks omitted). In addition to compensating victims, restitution is also designed to serve the traditional purpose of forming a part of the defendant's punishment. See United States v. Johnson, 378 F.3d 230, 245 (2d Cir. 2004). The MVRA requires a sentencing court to impose restitution in "the full amount of each victim's losses as determined by the court and without consideration of the economic circumstances of the defendant." United States v. Pescatore, 637 F.3d 128, 138 (2d Cir. 2011) (citing 18 U.S.C. § 3664(f)(1) (A)).
For purposes of restitution, "the term 'victim' means a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant's criminal conduct in the course of the scheme, conspiracy, or pattern." 18 U.S.C.§ 3663(a)(1)(2). "The requirement that the victim be 'directly and proximately harmed' encompasses the traditional 'but for' and proximate cause analyses," In re Rendon Galvis, 564 F.3d 170, 175 (2d Cir. 2009), while the "conspiracy" portion of this provision, according to the Second Circuit, "provide[s] for restitution payable by all convicted co-conspirators ...