United States v. Ochoa

58 F.4th 556

UNITED STATES of America, Appellee,

v.Christopher OCHOA, Defendant, Appellant.

No. 22-1327

United States Court of Appeals, First Circuit.

January 26, 2023

Robert C. Andrews, with whom Robert C. Andrews Esquire P.C. was on brief, for appellant.

Brian S. Kleinbord, Assistant United States Attorney, with whom Darcie N. McElwee, United States Attorney, was on brief, for appellee.

Before Kayatta, Selya, and Gelpí, Circuit Judges.

SELYA, Circuit Judge.

Defendant-appellant Christopher Ochoa, formerly a practicing attorney and now a convicted fraudster, challenges the district court's restitution order, which held him jointly and severally liable for all sums illicitly obtained by the charged conspiracy. In the defendant's view, his restitution obligation should have been limited to the portion of the proceeds that went into his own pocket. Concluding, as we do, that the restitution order falls within the encincture of the district court's discretion, we affirm.

I

We briefly rehearse the facts and travel of the case. Because this "appeal follows a guilty plea, ‘we glean the relevant facts from the change-of-plea colloquy, the unchallenged portions of the presentence investigation report (PSI Report), and the record of the disposition hearing.’ " United States v. Dávila-González, 595 F.3d 42, 45 (1st Cir. 2010) (quoting United States v. Vargas, 560 F.3d 45, 47 (1st Cir. 2009) ).

Beginning in March of 2017, the defendant — a lawyer formerly licensed in the state of Florida — and his co-conspirators orchestrated a scheme designed to defraud investors of millions of dollars. To execute the scheme, the conspirators (or intermediaries acting to their behoof) contacted prospective victims and induced them to invest in standby letters of credit.¹ The conspirators pitched the investments as a win-win opportunity.

On the one hand, if the standby letters of credit were issued, the investors would reap huge returns within days or weeks (or so they were promised).² On the other hand, if the standby letters of credit were not issued, the investors would not lose a dime (or so they were promised); each investor would simply receive a full refund of his initial investment.

Over the course of a few months, the conspirators convinced at least five people to invest substantial sums of money in the scheme. The defendant played a significant role in bilking the investors. At the direction of two of his co-conspirators (Russell Hearld and Herbert Caswell), he drafted agreements to memorialize the investments, delineate the handling of the investors' funds, and limn the terms of the transactions. Among other things, the agreements represented that investor funds would be held in escrow in the client trust account of the defendant's law firm unless and until the defendant received confirmation that a standby letter of credit had been issued.

Trusting that the drafted agreements said what they meant and meant what they said, each of the five investors wired funds to the defendant to be held in escrow. The defendant, though, did not retain the investors' money in his trust account. Instead, he quickly withdrew some funds for his personal use and disbursed other funds to his co-conspirators.

A few examples help to illustrate the defendant's role. On April 10, 2017, two investors wired a total of $1,500,000 to the defendant's trust account. That same day, the defendant transferred $50,000 from the trust account to his personal account and $50,000 to his business account. In addition, he wired $750,000 to Hearld and $300,000 to Caswell's company. The next day, the defendant transferred another $10,000 to his personal account and transferred $200,000 to Hearld.

Essentially the same pattern was repeated a few weeks later after a different investor wired $1,250,000 to the trust account. Within hours, the defendant transferred $50,000 to his personal account and $10,000 to his business account. He also wired $900,000 to Hearld and $250,000 to Caswell.

The five victims of the fraudulent scheme invested a total of $3,550,000. Individual investments ranged from $50,000 to $1,500,000. After sending their money to the defendant, the investors were kept in the dark: no investor was informed by any of the conspirators (including the defendant) that any of his funds had been withdrawn from the trust account.

In point of fact, not a red cent of the investors' money was ever used to obtain standby letters of credit. Nor was any of that money ever refunded to any investor.

The conspirators bought time by playing on the investors' fears. For instance, one of the conspirators (Arthur Merson) threatened the investors that they could be precluded from future investment opportunities if they sought the return of their funds.

Patience has its limits and — after some time had passed — one of the victims contacted Florida authorities. That contact started a chain reaction that brought the matter to the attention of the Federal Bureau of Investigation. A probe ensued and, on April 25, 2019, a federal grand jury sitting in the District of Maine handed up an indictment charging the defendant and his three co-conspirators with a single count of conspiracy to commit wire fraud.³ See 18 U.S.C. §§ 1343, 1349. Although the defendant initially maintained his innocence, he later entered into a plea agreement with the government. On July 22, 2021, he pleaded guilty to the single count charged in the indictment. The district court accepted his plea.

The disposition hearing was held on February 11, 2022, and the court sentenced the defendant to a twenty-nine-month term of immurement, to be followed by a three-year term of supervised release. The court also determined that restitution was "mandatory in the amount of $3,473,701," which was the total amount of the loss caused by the fraudulent scheme.⁴ The court deferred, however, in entering a defendant-specific restitution order, see 18 U.S.C. § 3664(d)(5), and directed the parties to furnish further briefing as to whether to apportion restitution or, conversely, to hold the defendant jointly and severally liable for the entire amount of the loss.

In due course, the parties filed their supplemental submissions. The district court reviewed those submissions, and on April 15, 2022, rejected the defendant's entreaty that restitution be limited to $230,000 — the amount that the defendant "personally received from the fraud." United States v. Ochoa, No. 19-00077, 2022 WL 1127858, at *3 (D. Me. Apr. 15, 2022). Instead, the court ruled that the defendant should be held jointly and severally liable (along with his co-conspirators) for the full amount of the victims' loss: $3,473,701. See id. at *1, *5. In reaching this result, the court observed that the defendant:

played a major role in carrying ... out [the scheme], and its success turned on [his] position as an attorney. Mr. Ochoa induced trusting victims to deposit their money in his law office's trust account, drafted related agreements, and, as the [c]ourt raised during the sentencing hearing, disbursed the victims' funds in direct violation of the agreements that he himself drafted. Moreover, each of the victims wired money to Mr. Ochoa's attorney trust account and Mr. Ochoa disbursed the money to his co-conspirators and to himself. ... In other words, all of the losses subject to restitution passed through Mr. Ochoa's trust account and none is attributable to activity in which he was not involved.

Id. at *4. The court found it unpersuasive that the defendant had "retained less of the proceeds" than two of his co-conspirators, noting that such an argument "improperly conflate[d] [the defendant's] gain with the victims' losses." Id. at *5. Finally, the court declined the defendant's invitation to apply the reasoning of Paroline v. United States, 572 U.S. 434, 134 S.Ct. 1710, 188 L.Ed.2d 714 (2014), a child pornography case, to the case at hand. See Ochoa, 2022 WL 1127858, at *3.

This timely appeal followed.

II

This is a rifle-shot appeal: the sole issue on appeal focuses on the district court's decision to hold the defendant jointly and severally liable for the full amount of loss attributable to the fraud scheme. The defendant argues that the court should have limited his restitution obligation to $230,000 — the amount that he personally garnered from the scheme. Relatedly, he argues that holding him liable for the full amount of the sums extracted by the conspiracy would impose a crushing burden and foreclose any prospect of rehabilitation. Because the defendant preserved this claim of error below, our review is for abuse of discretion. See United States v. Carrasquillo-Vilches, 33 F.4th 36, 45 (1st Cir. 2022). Within that framework, we "examin[e] the court's subsidiary factual findings for clear error and its answers to abstract legal questions de novo." United States v. Chiaradio, 684 F.3d 265, 283 (1st Cir. 2012).

The restitution order in this case is grounded upon the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. The MVRA requires a district court to order a defendant convicted of "an offense against property ... including any offense committed by fraud or deceit," 18 U.S.C. § 3663A(c)(1)(A)(ii), "to ‘make restitution to the victim of the offense,’ " United States v. Soto, 799 F.3d 68, 97 (1st Cir. 2015) (quoting 18 U.S.C. § 3663A(a)(1) ). What is more, the MVRA requires the court to "order restitution to each victim 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. Morán-Calderón, 780 F.3d 50, 51 (1st Cir. 2015) (quoting 18 U.S.C. § 3664(f)(1)(A) ). This mandate is easy to apply when a defendant, acting alone, caused all of a victim's losses: in that event, the defendant must be ordered to pay the entire amount of the losses. See United States v. Yalincak, 30 F.4th 115, 121 (2d Cir. 2022).

The situation is more nuanced, however, when — as in this case —...