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United States of America v. Robert Catoggio

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2012


October 10, 2012

UNITED STATES OF AMERICA, APPELLEE,
v.
ROBERT CATOGGIO, DONALD MESSINGER, BARRY MIELE, ALAN KOOP, MARCELO QUINTERO, MICHAEL TROCCHIO, DOMINICK FRONCILLO, STEPHEN AGNESE, ARTHUR ALONZO, JOHN ASARO, RANDY ASHENFARB, ROCCO BASILE, WILLIAM JOSEPH BATTISTA, MICHAEL A. BENGEN, JOHN BESARANY, NICHOLAS BOSCO, FABIO BORGOGNONE, NEIL BRAUNER, NICHOLAS BRIGANTI, RONALD CATAGGIO, ANTHONY CAVICCHIO, JOHN CLAUDINO, DAMON GERARD COHEN, WILLIAM COSIDENTE, RONALD CROPPER, JR., JOSEPH DIBELLA, DAVID DUNHAM, JONATHAN DURINDA, RUI REIS FIGUEIREDO, ROBERT FIGUEROA, VITO GILI, VALERY GOLDBERG, GREGORY GROELLER, THOMAS GUCCIARDO, JOHN LEMBO, III, RICO LOCASCIO, BRENT CALDERONE LONGO, MARK MANCINO, PAUL MEDAGLIA, CHRISTOPHER L. MIANO, VINCENT MINERVA, CHRISTOPHER MORMANDO, JAIME SCOTT MORRILL, JOEL NAZARENO, VITO PADULO, MICHAEL PERRINE, SCOTT PICCININNI, AKA SCOTT PALMER, AKA SCOOTER, FRANK J. PIZZOLATO, AKA FRANKIE THE FISH, THOMAS PLAMENCO, JOSEPH ROSETTI, KEITH RUFFLER, KIRK RUFFLER, MICHAEL SCARAMELLINO, JOSEPH SCARFONE, JR., RICHARD SCARSELLA, PAUL TAHAN, JEFFREY VAN BLARCOM, VICTOR VERNACI, DEFENDANTS, ROY AGELOFF, DEFENDANT - APPELLANT.

Per curiam.

11-3474-cr

United States v. Roy Ageloff

(Argued: September 14, 2012

Before: POOLER, WESLEY, LOHIER, Circuit Judges.

Appeal from the August 19, 2011 Memorandum and Order of 14 Restitution from the United States District Court for the 15 Eastern District of New York (Dearie, J.) resentencing 16 Defendant-Appellant Roy Ageloff to pay $190 million in 17 restitution to the victims of a massive fraud scheme 18 perpetrated by Ageloff and his co-conspirators. Ageloff 19 challenges this order on four grounds: (1) the district 20 court erred by not holding an evidentiary hearing prior to 21 resentencing; (2) the eight-year delay in resentencing 22 violated Ageloff's constitutional and statutory rights; (3) 23 the district court should have released some or all of the 24 $536,000 of Ageloff's money held by the court from the time 25 of his initial sentencing; and (4) Ageloff was entitled to 26 CJA funding for expert services. Should we remand, Ageloff 27 requests that the case be reassigned and CJA counsel 28 relieved. We affirm and hold that the district court 29 properly exercised its authority under the All Writs Act to 30 restrain Ageloff's funds in anticipation of resentencing.

33 AFFIRMED.

10 Defendant-Appellant Roy Ageloff appeals from the August 11 19, 2011 Memorandum and Order of Restitution by the United 12 States District Court for the Eastern District of New York 13 (Dearie, J.) resentencing Ageloff to pay $190,339,436.65 in 14 restitution to the victims of a massive fraud scheme he and 15 his co-conspirators designed and executed. Ageloff 16 contends, inter alia, that the district court should have 17 released some or all of the $536,000 of Ageloff's money held 18 by the court pending his resentencing. Whether a district 19 court may exercise its authority under the All Writs Act to 20 restrain a convicted defendant's funds in anticipation of 21 sentencing is a question of first impression in this 22 Circuit. We answer it in the affirmative and affirm the 23 district court's restitution order.

Background

26 Ageloff and his partner, Robert Catoggio, were the 27 leaders of a massive "pump-and-dump" securities fraud 3 1 scheme. From 1991 to 1998, Ageloff and Catoggio owned and 2 controlled four brokerage firms through which they defrauded 3 the firms' customers in connection with the purchase and 4 sale of different "House Stocks." Ageloff and Catoggio 5 acquired these securities cheaply and then sold their shares 6 at a substantial profit after creating artificial market 7 demand by offering incentives to brokers to aggressively 8 market the House Stocks. After this scheme unraveled,

9 Ageloff pled guilty to one count of racketeering and 10 stipulated to a sentence enhancement of eighteen levels for 11 fraud that amounted to losses exceeding $80 million.*fn1 12 The district court sentenced Ageloff to 96 months' 13 imprisonment, three years' supervised release and $80 14 million in restitution pursuant to the Mandatory Victims 15 Restitution Act ("MVRA"), 18 U.S.C. § 3663A. At the time of 16 his initial sentencing, Ageloff deposited approximately 17 $536,000 with the clerk of the court for the purpose of 18 paying restitution. Ageloff subsequently appealed the 1 district court's 2001 restitution order to this Court, 2 arguing, among other things, that the district court could 3 not order restitution without first identifying the victims 4 and their losses. See United States v. Catoggio, 326 F.3d 5 323, 324 (2d Cir. 2003). We agreed and remanded to the 6 district court for the limited purpose of resentencing in 7 accordance with the MVRA. Id. at 330; 18 U.S.C. § 8 3664(f)(1)(A).

9 On remand, the government submitted a report prepared 10 by the National Association of Securities Dealers ("NASD 11 Report") that synthesized trade-sheet data to identify and 12 tabulate the estimated $190 million in losses suffered by 13 more than 9,000 victims. Although armed with the NASD 14 Report, eight years elapsed before the district court 15 resentenced Ageloff. The delay is partly traceable to 16 Ageloff's 2008 Florida prosecution for conspiracy to commit 17 money laundering in connection with the conviction at issue 18 here, as well as to a stay issued while Ageloff's petition 19 for a writ of certiorari was pending before the Supreme 20 Court. However, as the district court noted, the eight-year 21 delay on remand is not solely attributable to Ageloff. Over 22 the years, there were several changes of counsel on both 23 sides. And, indeed, the district court recognized that 5 1 responsibility "ultimately lies, as it must, with the 2 Court." See United States v. Ageloff, 809 F. Supp. 2d 89, 3 107 n.17 (E.D.N.Y. 2011).

4 In 2011, after reviewing Ageloff's objections to the 5 NASD Report, the district court incorporated the loss 6 information into its restitution order and sentenced Ageloff 7 to pay just over $190 million. Id. at 97-98, 112. In its 8 order, the court also affirmed its prior rejection of 9 Ageloff's request to access some of his money held by the 10 court. Id. at 106. On appeal, Ageloff argues that the 11 district court improperly refused to release any of his 12 funds and consequently denied him the right to secure 13 counsel of his choice.

15 Discussion*fn2

16 The All Writs Act enables federal courts to "issue all 17 writs necessary or appropriate in aid of their respective 18 jurisdictions and agreeable to the usages and principles of 19 law." 28 U.S.C. § 1651(a). The broad power conferred by 1 the All Writs Act is aimed at achieving "'the rational ends 2 of law.'" United States v. N.Y. Tel. Co., 434 U.S. 159, 172 3 (1977) (quoting Harris v. Nelson, 394 U.S. 286, 299 (1969)).

4 Thus, courts have significant flexibility in exercising 5 their authority under the Act. See id. at 173. 6 Although this Court has never addressed whether the All 7 Writs Act enables a court to restrain a convicted 8 defendant's property in anticipation of ordering 9 restitution, courts in this Circuit and beyond have 10 uniformly answered this question in the affirmative. See 11 United States v. Hatfield, No. 06-CR-0550, 2010 WL 4235815, 12 at *1 (E.D.N.Y. Sept. 27, 2010); United States v. Numisgroup 13 Int'l Corp., 169 F. Supp. 2d 133, 138-39 (E.D.N.Y. 2001); 14 United States v. Ross, No. 92-CR-1001, 1993 WL 427415, at *1 15 (S.D.N.Y. Oct. 15, 1993); see also United States v. 16 Sullivan, No. 5:09-CR-302-FL-1, 2010 WL 5437243, at *5-*7 17 (E.D.N.C. Nov. 17, 2010); United States v. Simmons, No. 07- 18 CR-30, 2008 WL 336824, at *1 (E.D. Wis. Feb. 5, 2008); 19 United States v. Runnells, 335 F. Supp. 2d 724, 725-26 (E.D. 20 Va. 2004); United States v. Abdelhadi, 327 F. Supp. 2d 587, 21 598-601 (E.D. Va. 2004).

1 In reaching this conclusion, courts explain that a 2 sentencing court may use the All Writs Act to prevent the 3 defendant from frustrating collection of the restitution 4 debt. For instance, in Ross, a district court for the 5 Southern District of New York issued an order restraining 6 the convicted defendant's assets pending sentencing pursuant 7 to the All Writs Act. 1993 WL 427415, at *1. The 8 restraining order furthered the court's exercise of its 9 jurisdiction over sentencing by ensuring that the defendant 10 would have some assets available to satisfy the pending 11 restitution order. See id. at *1. Even though the exact 12 amount of restitution to be ordered was unclear, the 13 district court determined that there was "a real question as 14 to whether or not [the defendant] currently has sufficient 15 liquid assets to satisfy any judgment of restitution ordered 16 by the Court," and it therefore "seem[ed] totally 17 appropriate to restrain [the defendant] from dissipating his 18 assets prior" to sentencing. Id. (emphasis added).

19 Relying on Ross, the Eastern District of New York used 20 the All Writs Act to restrain the defendants' 26,600 coins 21 (valued somewhere between $430,000 and $860,000) in 22 anticipation of sentencing. Numisgroup Int'l Corp., 169 F. 23 Supp. 2d at 136-38. The court reasoned that "'[t]here is no 8 1 logic to the position that the Court is powerless to enter a 2 restraining order after a jury has found a defendant guilty 3 of participating in a large-scale fraud simply because 4 sentencing has been delayed.'" Id. at 138 (quoting Ross, 5 1993 WL 427415, at *1). In explaining its order, the court 6 also expressed concern over one defendant's lack of assets 7 available to satisfy the court's future order of 8 restitution. See id. at 138.

9 Similarly, in Sullivan, the Eastern District of North 10 Carolina determined that a restraining order was warranted 11 pursuant to the All Writs Act because the defendant, who had 12 previously pled guilty to eleven counts of manufacturing 13 child pornography and one count of possession of child 14 pornography, was attempting to dispose of his assets prior 15 to sentencing and a probable order of restitution. 2010 WL 16 5437243, at *1, *7. The court explained that it would be 17 "'without any meaningful ability to impose a proper 18 sentence'" if it could not issue an order stopping a 19 convicted defendant awaiting sentencing from disposing of 20 assets in an effort to avoid paying restitution or other 21 fines and court costs. Id. at *6 (quoting United States v. 22 Gates, 777 F. Supp. 1294, 1296 n.7 (E.D. Va. 1991)).

1 The Eighth Circuit recently issued a set of decisions 2 that strongly suggest it takes a similar position regarding 3 a sentencing court's ability to restrain a defendant's funds 4 pursuant to the All Writs Act. See United States v. 5 Yielding, 657 F.3d 688 (8th Cir. 2011) ("Yielding I"); see 6 also United States v. Yielding, 657 F.3d 722 (8th Cir. 2011) 7 ("Yielding II"). In Yielding I, the Eighth Circuit vacated 8 and remanded the district court's approximately $1 million 9 restitution order after finding that the court below erred 10 in presuming that restitution was mandatory. See 657 F.3d 11 at 718-19. In Yielding II, decided on the same day, the 12 court affirmed the district court's issuance of a TRO to 13 prevent the defendant from spending or transferring any of 14 the $160,000 he was likely to receive as a settlement in an 15 unrelated civil case. 657 F.3d at 727-28. The Eighth 16 Circuit confirmed the district court's authority to issue 17 the TRO pursuant to the All Writs Act because the 18 restraining order was appropriate in aid of the court's 19 exercise of jurisdiction to ensure that the defendant's 20 assets were available for paying restitution. See id. at 21 726-28. "We agree that a sentencing court has jurisdiction 22 to enforce its restitution order and may use the All Writs 23 Act, when necessary and appropriate, to prevent the 10 1 restitution debtor from frustrating collection of the 2 restitution debt." Id. at 727. Because the Eighth Circuit 3 vacated the restitution order itself on the same day it 4 affirmed the TRO, the court effectively held that the All 5 Writs Act gave the district court the power to issue a 6 restraining order for the purpose of ensuring that 7 sufficient funds would be available to satisfy any future 8 order of restitution.

9 Aided by the relevant case law, we conclude that the 10 district court properly exercised its authority under the 11 All Writs Act to restrain Ageloff's assets in anticipation 12 of resentencing.*fn3 Ageloff pled guilty to committing a crime 13 for which restitution is mandatory under the MVRA. See 18 14 U.S.C. § 3663A(c)(1)(A)(ii). Given that Ageloff agreed to a 15 sentencing enhancement for fraud causing losses of $80 16 million or more, the eventual restitution order was certain 17 to exceed $536,000. See Catoggio, 326 F.3d at 329. 18 Although we believe that this circumstance alone would be 19 sufficient to justify the district court's exercise of its 1 power under the All Writs Act, other facts highlight the 2 need to ensure compliance with the district court's 3 anticipated order of restitution: specifically, Ageloff's 4 2008 conviction for conspiring to launder millions of 5 dollars in proceeds from this fraud scheme. 6 Moreover, Ageloff's argument that the district court's 7 refusal to release any of his money denied him the right to 8 counsel of his choice in violation of the Sixth Amendment is 9 without merit. In United States v. Monsanto, the Supreme 10 Court held that a pretrial restraining order freezing the 11 defendant's assets did "not 'arbitrarily' interfere with a 12 defendant's 'fair opportunity' to retain counsel." 491 U.S. 13 600, 616 (1989) (quoting Powell v. Alabama, 287 U.S. 45, 69, 14 53 (1932)). This reasoning applies with "even greater 15 force" here because Ageloff had already pled guilty to both 16 the underlying fraud scheme and later to attempting to 17 launder its proceeds from his prison cell. See Numisgroup 18 Int'l Corp., 169 F. Supp. 2d at 139. In any event, Ageloff 19 was ably represented by CJA counsel at the time of 20 resentencing and for purposes of this appeal.

21 Ageloff's remaining arguments on appeal are without 22 merit. For example, contrary to Ageloff's assertions, the 23 district court was not required to hold an evidentiary 12 1 hearing prior to resentencing provided that Ageloff was 2 afforded sufficient opportunity to be heard. See United 3 States v. Slevin, 106 F.3d 1086, 1091 (2d Cir. 1996). He 4 was. Finally, Ageloff cannot make out any constitutional or 5 statutory claim based on the eight-year delay in 6 resentencing because he did not suffer prejudice. Cf. 7 United States v. Ray, 578 F.3d 184, 202 (2d Cir. 2009).

Conclusion

For the foregoing reasons, the order of the district court is hereby AFFIRMED.


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