United States v. Kelliher

UNITED STATES OF AMERICA v. DENIS KELLIHER, Appellant

No. 19-3301

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued: September 21, 2020

March 9, 2021

NOT PRECEDENTIAL

On Appeal from the United States District Court for the Eastern District of Pennsylvania

(D.C. Criminal Action No. 2-17-cr-00485-001)

District Judge: Honorable Michael M. Baylson

Before: AMBRO, PORTER, and ROTH, Circuit Judges

Christy Martin [Argued]

Federal Community Defender Office

for the Eastern District of Pennsylvania

601 Walnut Street

The Curtis Center, Suite 540 West

Philadelphia, PA 19106

Counsel for Appellant

Anita D. Eve

Robert A. Zauzmer [Argued]

Office of United States Attorney

615 Chestnut Street, Suite 1250

Philadelphia, PA 19106

Counsel for Appellee

OPINION^*

PORTER, Circuit Judge.

While Denis Kelliher was on supervised release from a prior fraud conviction, he participated in a fraudulent boat-selling scheme. After he pleaded guilty to wire fraud, the District Court sentenced him to 96 months in prison. Kelliher appealed that sentence, contending that the record lacked sufficient evidence to prove the existence of ten or more victims, so a two-level enhancement was improper. The government conceded that there was insufficient evidence to support the enhancement. We accepted the government's concession, vacated Kelliher's sentence, and remanded for resentencing. Kelliher now contends that the District Court erred when it (1) reopened the record at resentencing, (2) counted ten or more victims, and (3) provided an alternative basis for the 96-month sentence, so that even if the ten-victim enhancement were improper, Kelliher would still receive the same 96-month sentence. Finding no reversible error, we will affirm.

I

While Kelliher was on supervised release from a previous fraud conviction, he began working at Trenton Marine Center. At Trenton Marine, Kelliher brokered the sale of high-end boats and marine equipment. But after Kelliher sold a boat, he sometimes kept the money for himself instead of reimbursing the boat's owner. When the boat owners demanded the money Kelliher owed them, he issued payment through bank accounts that he knew were underfunded or already closed. Kelliher eventually pleaded guilty to one count of wire fraud in violation of 18 U.S.C. §§ 1343 and 2.

At the initial sentencing, the District Court determined that Kelliher was subject to a two-level enhancement under U.S.S.G. § 2B1.1(b)(2)(A)(i) based on its finding that Kelliher's scheme harmed ten or more victims. Because of this enhancement and a three-level reduction for acceptance of responsibility, Kelliher's total offense level was 26, yielding a Sentencing Guidelines range of 78-97 months' imprisonment. The court imposed a 96-month sentence. Kelliher appealed, contending that the court erred when it imposed the two-level enhancement because the government presented insufficient evidence to support a finding of ten or more victims. The government conceded the errors and recommended that we vacate and remand for resentencing. We agreed.

On remand, the government did not again seek the ten-victim enhancement. Instead, the government requested an upward variance based on the sentencing factors in 18 U.S.C. § 3553(a) and newly identified losses. The court allowed the government to present supplemental evidence of victim losses, and Kelliher had the opportunity to respond to and rebut the supplemental evidence. The court readopted its 96-month sentence based on its determination that there were ten victims and that the calculations in the Presentence Investigation Report were still correct. The court also stated that even if the two-level enhancement were inappropriate, the court would still reach the same 96-month sentence by imposing an upward variance based on Kelliher's prior criminal record and the details of his scheme. Kelliher timely appealed and asks that we once again remand for resentencing.¹

II

We will affirm the District Court's judgment. And because it correctly counted ten or more victims, we need not reach Kelliher's third argument about the District Court's alternate grounds for the 96-month sentence.

A

Kelliher first contends that the District Court abused its discretion by reopening the record and allowing the government to present supplemental evidence of victim losses. "An abuse of discretion occurs only where the district court's decision is 'arbitrary, fanciful, or clearly unreasonable'—in short, where 'no reasonable person would adopt the district court's view.'" United States v. Green, 617 F.3d 233, 239 (3d Cir. 2010) (quoting United States v. Starnes, 583 F.3d 196, 214 (3d Cir. 2009)). And "decisions to reopen proceedings are traditionally a discretionary matter for the district court." United States v. Trant, 924 F.3d 83, 90 (3d Cir. 2019) (quoting United States v. Coward, 296 F.3d 176, 180 (3d Cir. 2002)).

When determining whether to reopen a proceeding, a district court must consider whether (1) reopening would prejudice the party opposing it, and (2) the party supporting reopening provided "a reasonable explanation for its failure to initially present the evidence." United States v. Smith, 751 F.3d 107, 114 (3d Cir. 2014). The prejudice prong is the "paramount factor" for the court to consider, and "[t]iming is key to this analysis." Id. If the opposing party has the '"opportunity to respond and attempt to rebut the evidence introduced,' the possibility of prejudice is greatly lessened." Id. (quoting Coward, 296 F.3d at 181). And for the reasonable-explanation prong, we recognize that a district court is in a much better position to weigh the merits of the party's rationale. Coward, 296 F.3d at 182; United States v. Vastola, 915 F.3d F.2d 865, 876 (3d Cir. 1990). The District Court did not abuse its discretion in granting the government's request to reopen the record.

Most importantly, Kelliher was not prejudiced by the evidence presented on remand. Kelliher had the opportunity to respond to and rebut the new testimony through extensive cross-examination.

The District Court also acted reasonably, not arbitrarily or fancifully, in accepting the government's reasoning. First, the government explained that it was introducing supplemental evidence in support of its request for an upward variance, not the ten-victim enhancement. So the government took a more arduous path in seeking the same sentence. Second, the government said that it did not initially include Frank Martins as a victim because it believed that Martins was reimbursed for the funds he gave Kelliher. And third, the government explained that it failed to offer the evidence of additional victims in part because it thought it already had evidence of ten victims without including them.

The dissent does not believe the government gave a reasonable explanation for its failure to initially present the evidence. But here, the District Court has already decided that the government's reasoning was sufficiently persuasive. Our job is merely to ask whether the court's decision was an abuse of discretion—not whether we would do things differently. Abuse of discretion is a high bar: we will not encroach on the court's discretion unless "no reasonable person would adopt the district court's view." Starnes, 583 F.3d at 214. Here, the court's decision to accept the government's explanation satisfies that standard.

As the dissent correctly notes, we said in United States v. Dickler that the government "should ordinarily have to stand or fall on the record it makes the first time around. It should not normally be afforded 'a second bite at the apple.'" 64 F.3d 818, 832 (3d Cir. 1995) (emphasis added). We conceded, however, that "we perceive no constitutional or statutory impediment to the district court's providing the government with an additional opportunity to present evidence on remand if it has tendered a persuasive reason why fairness so requires." Id.

Kelliher contends that we must remand for resentencing because the government's reasons for reopening the sentencing record were insufficiently persuasive, violating the principles of Dickler. But Dickler is procedurally distinct from this case. In Dickler, the district court had not yet ruled on whether the record should be reopened; we remanded the case for resentencing and provided guidance because we anticipated that "the question may arise whether the district court is restricted to resentencing the defendants based on the current record." Id. at 831. But we were careful not to "suggest that the government should or should not be permitted to offer further evidence in this case on remand." Id. at 832. Instead, we emphasized that "[t]he district court is in a far better position than we to assess the situation in the light of the circumstances surrounding the original sentencing hearing." Id.

Here, we are not writing on a blank slate and anticipating arguments that might be raised on remand. The District Court already ruled in favor of reopening; the only question is whether it abused its discretion in doing so. While we may not find the government's reasons particularly compelling,² the District Court—which is in a far better position than we to assess the situation—reasonably found those justifications persuasive. Our conclusion is supported by a combination of factors: the court's wide discretion at sentencing, the government's decision to seek a variance rather than continue to pursue an enhancement, and, most importantly, the lack of prejudice to Kelliher. See Trant, 924 F.3d at 90 (holding that the government's reason for failing to introduce evidence was "hardly compelling"—it "simply forgot"—but the district court did not abuse its discretion when it reopened the record because no prejudice resulted).

B

Kelliher claims the District Court clearly erred in finding ten or more victims because two of the alleged victims—Jeff McCoun and Frank Martins—do not qualify as victims under the Sentencing Guidelines. We are not persuaded....