# Petition for Writ of Certiorari — Rafferty v. United States (No. 08-1400) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0515%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2008 ## Text Supreme Court U.S. \ “(\) 081400 MAY 14 2009 No. 08-OFFICE OF THE CLERK IN THE Supreme Court of the United States TIMOTHY RAFFERTY, Petitioner, Vv. UNITED STATES OF AMERICA, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit PETITION FOR WRIT OF CERTIORARI MARSHA R. TAUBENHAUS Counsel of Record 110 Wall Street 11th Floor New York, NY 10005 (212) 859-3513 Counsel for Petitioner QUESTIONS PRESENTED 1. Whether the principles set forth in Dura Pharmaceuticals Inc. v. Broudo, 544 U.S. 336 (2005) regarding loss calculations in civil cases should ap- ply in criminal cases. =. Under 18 U.S.C. § 3771, victims are entitled to no- tice of court proceedings, to be heard at sentencing, and to be treated with fairness. The question pre- sented are: (A) whether government prosecutors, under the guise of giving victims notice, may inform potential witnesses of their theory of the case and belief in the defendant’s guilt; and (B) »’nether a vic- tim’s desire to appear on the defendan.’s behalf at sentencing must be honored. il TABLE OF CONTENTS QUESTION PRESENTED TABLE OF AUTHORITIES PETITION FOR A WRIT OF CERTIORAI OPINIONS BELOW JURISDICTION RELEVANT CONSTITUTIONAL AND Factual Background Sentencing Ampeai ............. el a a EAA ERR SRO REASONS FOR GRANTING THE WRIT Loss Calculation The CVRA CONCLUSION APPENDIX A, Opinion of the United States Court of Appeals for the Eleventh Circuit APPENDIX B, Order of the United States Court of Appeals for the Eleventh Circuit Denying Order for Rehearing APPENDIX C, United States Code, Title 15, Chapter 2B, § 78) (Manipulative and deceptive devices) APPENDIX D, United States Code, Title 18, § 3771(a) (Crime victims’ rights) APPENDIX E, United States Sentencing Commission Guidelines Manual, § 2B1.1 ill TABLE OF AUTHORITIES Cases JInreAntrobus, F.3d__ , 2009 US. App. LEXIS 8264* at *23 (10 Cir. April 22, 2009) Dura Pharmaceuticals, Inc. v. Broudo, 530 U.S. 466 (2005) Matter of Eldrige, 37 N.Y. 161 Kenna v. U.S. Dist. Court, 435 F.3d 1011 (9th Cir. 2006) O’Connor v. Pierson, 426 F.3d 187 (2d Cir. 2005) United States v. Ebbers, 458 F.3d 110 (2d Cir. 2006) United States v. Guthrie, 557 F.3d 243 (6th Cir. 2009) United States v. Mark Kaiser, 04 Cr. 733 (S.D.N.Y. 2006) 1V United States v. Marcello, 370 F.Supp.2d 745 (N.D. Ill. 2005)(mem.) ................ United States v. Masferrer, 514 F.3d 1158 (11* Cir. 2008) United States v. Mooney, 425 F.3d 1093 (8t» Cir. 2005) United States v. Olis, 429 F.3d 540 (5th Cir. 2005) United States v. Peterson, 538 F.3d 1064 (9th Cir. 2008) United States v. Rutkoske, 506 F.3d 170 (2d Cir. 2007) United States v. Saferstein, slip op., 2008 WL 4925016 *3 (E.D. Pa. Nov. 18, 2008) United States v. Turner, 367 F. Supp. 2d 319 (E.D.N.Y. 2006) Gmem.) .................0....+-. 17 United States v. Tyler, 767 F.2d 1350 (9th Cir. 1985) United States v. Zolp, 479 F.3d 715 (9th Cir. 2007) Vv Statutes 18 U.S.C. §3553(a)(1) 18 U.S.C. §3661 18 U.S.C. §3771 28 U.S.C. § 1254(1) Federal Sentencing Guidelines Provisions U.S.S.G. §2B1.1 Other Authorities 150 CONG. REC. $10,911 (daily ed. Oct. 9, 2004) (statement of Sen. Kyl) 150 Cong. Rec. at S4261 (Apr. 22, 2004) (statement of Sen. Feinstein) 150 Cong. Rec. $4262 (daily ed. Apr. 22, 2004) (statement of Sen. Feinstein) Steven M. Davidoff, A Brave New World for the S.E.C., N.Y. TIMES, May 8, 2009 vl Bennett L. Gershman, Witness Coaching by Prosecutors, 23 CARDOZO L.J. 829 (2002) Ashby Jones, Making Sense of the Mini-Boom in Securities Suits, WALL ST. J., (May 6, 2009) Sarah Lynch, SEC, CFTC Would Get More Enforcement Resources, WALL ST. d., (May 7, 2009) Justice Department Accuses Andersen of ‘Witness Coaching,’ KNIGHT RIDDER/TRIBUNE BUSINESS News (Mar. 29, 2002) Man sentenced to community service for distracted driving death, http://www.abc4.com, Nov. 10, 2008 Monica Mercer, Hamilton County: Forgiveness leads to lighter sentence, CHATANOOGA FREE PRESS (June 3, 2008) Recent Development, The Victims’ Rights Amendment, 42 H.J.L. 525 (2005) Mari A. Schaefer, Victim's forgiveness keeps embezzler out of prison, PHILADELPHIA IN- QUIRER, (May 6, 2009) PETITION FOR A WRIT OF CERTIORARI Petitioner Timothy Rafferty respectfully peti- tions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Elev- enth Circuit. OPINIONS BELOW The opinion of the United States Court of Ap- peals for the Eleventh Circuit (Pet. App. la) is un- published and appears at 296 Fed.Appx. 788 (11t Cir. 2008). The Court of Appeals’ order denying peti- tioner’s petition for rehearing (Pet. App. 22a) is un- published. JURISDICTION The judgment of the Court of Appeals was en- tered on October 16, 2008 (Pet. App. la). The Court of Appeals’ order denying petitioner’s application for rehearing was denied on December 16, 2008. On March 23, 2009, Justice Thomas granted petitioner’s application for an extension of time for filing a peti- tion for a writ of certiorari to May 14, 2009. This Court has jurisdiction pursuant to 28 U.S.C. § 1254(1). 2 RELEVANT CONSTITUTIONAL AND STATUTORY PROVISIONS The Fifth Amendment to the United States Consti- tution provides in relevant part: “No person shall be . deprived of life, liberty or property without due process of law....” The Sixth Amendment to the United States Constitution provides in relevant part: “In all crimi- nal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury.” The relevant sections of the Crime Victims Act, the United States Sentencing Guidelines, and 15 U.S.C. § 78) are reproduced at Pet. App. 23a-25a. STATEMENT OF THE CASE This securities case is unusual in one respect: a majority of the “victim” shareholders, in an un- precedented show of support for petitioner, insisted that they had not been defrauded by him and did not want their losses factored into his sentence. In other aspects, however, the case is representative of the difficult issues that are frequently litigated in secu- rities cases and about which the courts of appeal are hopelessly divided. Factual Background Uncommon Media Group (UMDA) was a startup company involved in “crossover media” with, in the government’s words, an “interesting concept” 3 and some “interesting ideas” about tracking down- loads of music on the internet (T8).! The company “had a business plan, it had some technology, it had opportunities to merge with other companies. What it didn’t have was capital. And that’s where Timothy Rafferty came in” (Gov- ernment’s opening at T9). In March, 2003, petitioner was approached by UMDA’s investment broker and by the company’s largest investor and asked to help raise funds to acquire the necessary technology to implement UMDA’s business plan. Petitioner was excited by the UMDA technol- ogy and agreed to help raise funding for the com- pany.2 He invested his own money to help UMDA acquire a company with proprietary tracking soft- ware.? A deal was consummated with the software company in July 2003 (T122). A few months later, UMDA entered into a contract with the Nielsen | References preceded by “T” are to the trial transcript. 2 Nearly all of the witnesses at trial testified that, throughout the period of the indictment, petitioner was “someone that was interested in this company being built and succeeding” (1178), was “enthused about this project [and] he felt that this was go- ing to be a winner for all the people that had invested in it)” (T476), he was “enthusiastic” and wanted the company to suc: ceed (T74, 872,). 3 On May 22, 2003, he wired $70,000 from his trading account to an account that was established to close the deal with the software company (T2018). He then borrowed $210,000 so UMDA could purchase additional shares of the company (T1160). Petitioner invested a total of $492,000 in UMDA in 2003 (T1186, 1482). UMDA issued a secured convertible prom- issory note to him for $461,000, reflecting monies he had lent the company (T1386, Govt. Ex. 748). He also lent a fellow in- vestor $23,000, and secured the loan with the investor’s UMDA stock (T1979). 4 Company, a leading marketing and media informa- tion company (T122). Petitioner mentioned UMDA as an investment opportunity to an acquaintance, Fred Hornick from Colorado, who in turn told his friends and family, many of whom became UMDA investors (T219, 224- 225). Petitioner told them he was not an officer of UMDA, or an “insider,” but merely an investor (T225, 494, 531, 710). Hornick spoke personally with the patent holder of the technology UMDA was using and watched it in action on his computer (T01). Hornick brought in over 100 investors, raising about $1.4 million for UMDA, most of which was wired directly to UMDA’s bank account, some of which was wired to companies in California and some to third parties, usually at petitioner’s direc- tion (230, 1480). Over the course of several months, petitioner and Gallo gave the investors an extremely rosy outlook for UMDA, and petitioner exaggerated his family’s wealth. However, as one investor testi- fied, petitioner warned them about the risks of in- vesting in UMDA: “he pointed out that this is all very risky, right? We’re launching a new company. There were risks. It was wrought with risks, I be- lieve is what he said” (T2057). Gallo and petitioner did not tell potential investors that the available shares were not free-trading, although at least by December 2003, it was publicly known that the stock would have to be restricted (T472). Petitioner did not tell all the investors that 12 years earlier, he had been convicted of a securities fraud, nor that 11 years earlier, the SEC had enjoined him from com: mitting securities fraud, nor that he had several un 5 related civil judgments (T687, 1285-1286).4 Mark Gottlieb, a lawyer who had worked for petitioner and was brought in to “clean up” UMDA’s problems tes- tified that he did not believe petitioner had any “fi- duciary duty to disclose” his conviction (T1114). Many of Hornick’s investors also purchased a substantial number of shares in two privately held companies, Third Dimension and Data Treasury. Petitioner had large positions in options on those companies. As directed, Hornick wired Third Di- mension and Data Treasury monies to various third party accounts, including petitioner’s accounts. Petitioner did not have any control over the books and records of UMDA and was not an officer or a salaried employee (T109-110). The company’s CEO was Lawrence Gallo, who, petitioner came to learn, had been indicted in 2002 for conspiring to de- fraud UMDA shareholders. He was released on bail, and continued to operate the company. He belittled the indictment, telling petitioner and other investors that it was a mistake. By the fall of 2003, CEO Gallo was making tens of thousands of dollars in cash withdrawals from the UMDA account to support his cocaine habit, pay his criminal defense lawyers, and make a down payment on a house (T984, 1907). Petitioner was also making withdrawals of money that had been wired to third party accounts for UMDA, but, according to Mike Contento (the man who was hired by UMDA in September/October 2003 to bring the UMDA books and records up to SEC compliance) it 4 At least one of the investors who testified for the government at trial stated that petitioner told him about getting “enveloped in a securities violation” (T483). 6 was “understood that [petitioner] had put ... money into the company” and the withdrawals were for monies that “were owed to him” (T1920). Contento testified that, while the money “should have come into the company first, and then [petitioner] should have gotten his money,” that was “just the way the whole accounting at UMDA] went” (T1920). Con- tento was unhappy about the “bizarre” way that UMDA handled its accounting (“Money was just given to people without a ledger, you know, and it was shocking”)(T1886), but he never had any reason to believe that petitioner was diverting funds from UMDA (T1922).5 . After Contento found that Gallo had been di- verting funds from UMDA for personal use, he told petitioner and others who were trying to “clean up the mess” that Gallo had made of the company (T1898, 1907-1908). They brought in Gottlieb, who convinced Gallo to resign in February 2004. Nonetheless, in March 2004, the SEC placed a restraining order on UMDA, effectively terminating its operations (T485, 636, 1117, 1185, 1911, 1989). The SEC injunction was related to Gallo’s 2002 in- dictment, covering events which occurred before pe- titioner became involved with UMDA (Government’s brief in the Court of Appeals at p.6 n.6). One of the UMDA investors testified that in September 2005, he received a telephone call from an FBI agent. He asked the agent whether the restraining order would be removed. “At that time, he told me, which was a great surprise, that the Justice Department had 5 With respect to Contento, the government told the jury: “Mike Contento testified in the grand jury, and it was obvious that he is clueless” (T2181). 7 made arrangements with the Securities and Ex- change Commission to hold on to our corporation and keep it under lock and key for quite an extended period of time” (T1988). In July 2004, petitioner and Gallo were in- dicted and charged with securities fraud. The in- dictment included the allegation that petitioner failed to disclose to investors that he had been con- victed of securities fraud 13 years earlier. Shortly thereafter, Gallo pled guilty to both the 2002 and 2004 charges. After cooperating with the govern- nent, he served a 47-month term of imprisonment. After petitioner was indicted, government prosecutors and FBI agents contacted many of the UMDA investors, and told them that UMDA was merely a “sham company,” a “Ponzi scheme,” a “shell game” (T509, 538, 2060) In January 2006, the government prosecutors wrote a letter to the UMDA investors, purportedly pursuant to the requirements of the CVRA. In it, the government stated: The government alleges that Rafferty solicited more than one hundred small investors to invest funds in ... UMDA .. by making materially false state- ments to those investors. Rafferty failed to disclose that he had been convicted of securities fraud in 1991 and that over the course of the next 10 © A superseding indictment added two substantive wire fraud counts and incorporated allegations that he failed iv disclose to investors a 2003 Georgia default judgment and a New York case that was resolved by a negotiated settlement. 8 years, had continued to defraud inves- tors in a number of different cases. Even as UMDA was ceasing to be a go- ing concern, and as its prospects con- tinued to flag, Rafferty and Gallo con- tinued to represent to investors that the company was a gold mine. ... The evidence in the case will show that the money was diverted from UMDA by these men, and in Rafferty’s case, used to pay for the myriad of civil fraud judgments he has pending against him, as well as payment of expenses such as his mortgage, a BMW, and other personal expenses (Appendix to Petitioner’s brief in the Court of Ap- peals, DE-154).’ In pretrial proceedings, the defense moved to dismiss the indictment, arguing that this letter amounted to witness tampering, depriving him of his right to a fair trial. The prosecution responded that it was required by federal law “to send out this let- ter. So by law it is impossible that the government was vindictive.” The trial court denied the defense motion, concluding that the letter was sent pursuant to 18 U.S.C. §3771, and 18 U.S.C. §3771(d)(1) pro- ’ Attached to one of the letters was a New York Daily News article entitled “Brokers Busted in 2.5M Pad Scam.” The prosecutor explained: ““‘l don’t think attaching a newspaper article that I happened to have on my desk because it was just there. I was trying to give him info, you know, call me this is something that’s ongoing, the trial is starting. ... | wasn’t try ing to taint him in the process, just communicate with him” (2/23/06 Pretrial hearing at p.8). 9 vided that an accused could not obtain relief under that statute (Pretrial hearing, February 23, 2006 at pp2-3). After a three-week trial, petitioner was con- victed as charged. Sentencing At a first sentencing proceeding, the court ar- ticulated the standard it would use for calculating loss: The determination is how much did people invest based upon fraudulent representations that were made to induce them to purchase the stock. Whether or not [the defendants] put it in their own pocket or they actually used the money to try and run the business appropriately, either one of those is irrelevant. The question is how much money was fraudulently received based upon the misrepresen- tations or omissiuns (July 14, 2006 Sentencing Proceeding at pp.43-44). The defense contended that the court would first have to determine whether any alleged loss was “as a result of the misrepresentation charged” (7/14/06 Sentencing at p.53). It noted that despite the government’s outreach to the investors, only ten had responded. The prosecution argued that it was irrelevant that many of the investors did not consider themselves to be victims: “There is no case law supporting that you have to believe you are a victim in order to be a victim for guideline purposes” 10 (7/14/06 Sentencing at p.80). It also stressed that the investors were an “unsophisticated” group of Mormons (7/14/06 Sentencing at p.82). The court adjourned the proceedings to review the bank records and other evidentiary materials (7/14/06 Sentencing at p.98). At a second proceeding in September, defense counsel spoke on behalf of 120 of the 200 investors the government had identified. They wanted the court to consider their letters, stating in effect that they did “not want their losses in terms of monetary value or in terms of their numbers as people to be used to enhance” petitioner's sentence. They had even written to their senators and congressman say- ing: “Help us explain to Judge Marra that we do not want our losses in UMDA to be used against Tim Rafferty at his sentencing” (9/12/06 Sentencing at p.62). When the court complained that the letters were not submitted earlier, defense counsel noted that they had been submitted to the government at around the time of the first sentencing proceeding. The court responded: “What is it you want to tell me; that they think Mr. Rafferty’s a great guy? I heard their testimony that he didn’t do anything wrong, that they had faith in him, that they believed he was acting in their best interest. What else do I need to know? I mean, I’ve heard it already. ... I’m just going to make it part of the record for appellate purposes for whatever it’s worth. ... So there’s no ar- gument that I kept things out of the record” (Sep- tember 12, 2006, Sentencing at pp.59-63). The defense attempted to introduce an ac- countant’s affidavit, which included UMDA’s closing prices and daily trading volume for the time period of the charged conspiracy and the subsequent four 11 months. The data was derived from Bloomberg’s market data service, and indicated that at the be- ginning of the charged conspiracy, UMDA was trad- ing at appropriate three cents per share. At the end of the conspiracy period, it was trading at six to eight cents per share. Defense counsel argued that the investors suf- fered no loss until the company’s activities were terminated by the temporary restraining order: “these losses that the investors incurred in this case were as a result of the government closing down the business” (9/12/06 Sentencing proceeding at p.37). The court, ruling that the accountant’s affida- vit was inadmissible hearsay, summarily dismissed the defense argument and proffer. It concluded that the stock became worthless as a result of the fraud, and calculated the loss as the total amount invested by the investors for the duration of the conspiracy. Recognizing that petitioner “didn’t personally profit” from the charged conspiracy (9/12/06 Sentenc- ing at p.84), the court added 16 levels to his guide- line offense level on the basis of a $1.1 million loss calculation. Petitioner was sentenced to a term of imprisonment of 126 months. Appeal On appeal, petitioner challenged, inter alia, the district court's methodology for determining loss for sentencing purposes. The Eleventh Circuit was apparently unwilling to adopt the reasoning of Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 125 S.Ct. 1627 (U.S. 2005) in the criminal context; it up- held the district court’s decision to count as a loss the entire amount of UMDA investments, without 12 identifying a causal connection between the pur- ported loss and the alleged misrepresentations. The Circuit accepted the district’s conclusion that the stock became worthless by the end of the conspiracy period, despite contrary evidence provided by Bloomberg Market Data Service records.* It also apparently approved the district court’s decision to include in its loss calculation the monies lost by those ‘victims’ who had asked that their losses not be used to enhance petitioner’s sentence. The Eleventh Circuit did not reach petitioner’s contention that the prosecution’s letter to prospec- tive witnesses/victims was improper. REASONS FOR GRANTING THE WRIT Loss Calculation The calculation of loss under the fraud Guide- line, Section 2B1.1(d), drives the length of the sen- tence and bedevils courts in criminal securities fraud cases. Here, for example, petitioner’s offense level was increased by 16 levels based on the district court’s loss calculation, which it arrived at after re- jecting the calculations proposed by the government, the defense and the probation office. The federal courts are deeply divided as to what exactly the gov- ernment has to show in order to prove loss causa- tion; as a result, the length of a securities’ fraud sen- 8 The Circuit could not have arrived at this conclusion without endorsing the district court’s rejection of the Bloomberg quotes on hearsay grounds, despite Circuit precedent specifically hold- ing that Bloomberg market quotes are admissible pursuant to FRE 803(17). United States v. Masferrer, 514 F.3d 1158 (11% Cir. 2008). 13 tence depends largely on the court in which the case was tried. Loss calculation is an important issue, since the need to calculate loss arises in virtually every securities fraud prosecution, and there is an intrinsic difficulty in proving loss in such cases even under the clearest of measures: “The loss to inves- tors who hold during the period of an ongoing fraud is not easily quantifiable because we cannot accu- rately assess what their conduct would have been had they known the truth.” United States v. Ebbers, 458 F.3d 110, 127 (2d Cir. 2006). And, given the size of the enhancement, it is fair to say that accu- rately determining loss is the most important task facing a court in a securities fraud conviction. The lower courts need this Court’s guidance to resolve this confusion and to ameliorate the risk of substan- tially overstating actual loss. 3 In Dura Pharmaceuticals Inc. v. Broudo, 544 U.S. 336, 125 S.Ct. 1627 (2005), this Court resolved a marked conflict amongst the courts as to what ex- actly plaintiffs had to show in order to prove loss causation in a private securities fraud action. Loss causation, as defined in Dura, is the “causal connec- tion between the material misrepresentation and the loss.” 125 S.Ct. at 1631. In other words, in civil fraud cases, a claimant must show that the decline in the market price was due to the fraud, as opposed to other factors In the wake of Dura, however, the courts have been conflicted as to whether or not such a showing is required in criminal cases involving securities fraud.? 9 In fraud cases, a defendant’s Guidelines offense level gener- ally begins with a base offense level of six or seven. Under Sec- 14 The Second, Fifth and Ninth Circuits have all applied the precepts of Dura in the criminal context. The Second Circuit concluded that “considerations relevant to loss causation in a civil fraud case should . apply, at least as strongly, to a sentencing regime in which the amount of loss caused by a fraud is a critical determinant of the length of a defendant's sentence.” United States v. Rutkoske, 506 F.3d 170 (2d Cir. 2007). See also United States v. Zolp, 479 F.3d 715 (9 Cir. 2007); United States v. Olis, 429 F.3d 540 (5t Cir. 2005)(“because a company’s stock is affected before and after the fraud, by numerous extrinsic market influences as well as the soundness of other business decisions by the company, the cal- culation of loss attributable to securities fraud re- quires careful analysis”). The Eighth Circuit has taken the opposite ap- proach and rejected the application of Dura in the criminal] context, adding: “Criminal prosecutions for violations of securities law are different [from civil cases], however, for ‘the victims and their losses are difficult if not impossible to identify’ as the guideline commentary points out.” United States v. Mooney, 425 F.3d 1093 (8th Cir. 2005). With its decision be- low, the Eleventh Circuit has followed the Eighth Circuit’s approach. Unlike the Second, Fifth and Ninth Circuits, which require that losses from causes other than the fraud be excluded from the tion 2B1.1(d), levels are added depending on the amount of monetary loss the victim(s) suffered as a result of the defen- dant’s offense conduct. The fraud Guideline’s commentary states that “loss is the greater of actual loss or intended loss.” Both actual and intended loss are calculated to measure the seriousness of the offense, as well as the defendant’s level of culpability in committing the offense. 15 loss calculation, the Eighth and Eleventh Circuits permit the district court to ignore the variety of other factors (including changed economic circum- stances, changed investor expectations, industry- specific or firm-specific facts, conditions or other events, taken separately or together) that may ac- count for some or all of a stock’s lower price. This split is causing unwarranted sentencing disparities across the country, since the length of sentences meted out in securities fraud cases over recent years is driven by the measure of the financial losses. 1° Similarly, the Circuits run the gamut in how broadly they construe the realm where they will re- quire detailed proof of loss causation. The Eleventh Circuit has apparently concluded that detailed proof is not necessary so long as a stock was “worthless” at the conclusion of the conspiracy. Pet. App. at 16-17a. By contrast, in United States v. Olis, 429 F.3d at 546, the Fifth Circuit held that detailed proof is not necessary if the stock was worthless before, during and at the conclusion of the scheme. In Olis, the 10 As an example, in a fraud prosecution in the Southern Dis- trict of New York, the government originally sought a sentence based on the total market capitalization loss of $6 billien upon disclosure of the fraud. But a defense expert's analysis attrib- uted the vast bulk of the share price decline to issues other than the fraud in which the defendant was involved. The re- sulting seven-year sentence, while significant, was far lower than the life sentence dictated by the advisory guidelines under the government's original loss analysis. United States v. Mark Kaiser, 04 Cr. 733 (S.D.N.Y. 2006). In many cases where the initial loss estimates are much smaller (for instance, in many options backdating schemes), the application of Dura’s loss cau- sation principles may even mean the difference between jail and probation. 16 court noted that where a defendant “promoted worthless stock in worthless companies, measuring the loss as the entire amount raised by the scheme is neither surprising nor complex, and is fully consis- tent with civil loss causation.” Id. That is because where there is no value to the stock before or after the scheme, all money lost through investment in the stock is the result of the fraud. The Ninth Cir- cuit has defined a “worthless stock” very narrowly: a company is not a “sham operation” within the mean- ing of the Olis exception, if it (a) is in fact incorpo- rated and (b) occupies real estate. Where those meager requirements are met, the Ninth Circuit will require the Government to prove loss causation in detail. United States v. Zolp, 479 F.3d at 720. Simi- larly, in United States v. Rutkoske, supra, the Sec- ond Circuit required a detailed loss causation analy- sis despite the defendant’s brokerage firm handling the vast majority of the volume of the subject stock during the manipulation period (between 72 and 90%), which, when coupled with the evidence of bro- ker bribery and other high pressure sales tactics, could easily support a finding that the public market for the stock was wholly engulfed in a manipulation scheme and therefore that all loss was attributable to the fraud. And in United States v. Ebbers and Rutkoske, supra, the Second Circuit repeatedly em- phasized the narrowness of those situations where no loss analysis is required: “cases might arise where share price drops so quickly and so extensively 1m- mediately upon disclosure of a fraud that the differ- ence between pre- and post-disclosure share prices is a reasonable estimate of loss caused by the fraud. Even there, however, a coincidentally precipitous de- if cline in shares of comparable companies would merit consideration.” /d. This case is an excellent vehicle for consider- ing the questions presented, since there can be no doubt that, had this case been tried in the Ninth, Second, or Fifth Circuits, the result would have been dramatically different. Clearly, this was not the case of a “sham” company as defined by the Fifth and Ninth Circuits. Nor would this case have fallen into the small category of cases where the Second Circuit would forgo detailed analysis. Moreover, the result in this case would undoubtedly have been different under the methodology employed by those Circuits, since there was undisputed evidence of other factors - contributing to any loss.!! Most significant was the SEC’s TRO which, as the government conceded be- low, was imposed for reasons predating petitioner’s involvement with the stock. Since nearly all of the witnesses at trial testified that the TRO was the main cause of UMDA’s demise, under Dura, losses attributable to the TRO would have to be excluded from the loss calculation.'2 Additionally, a number '! The district court in this case did not perform a loss calcula tion as described in the above-cited cases, since it did not de- termine precisely which losses could be attributed to the charged fraud as Opposed to other factors. Instead, it merely searched the record to determine the total amount invested in UMDA through petitioner. 12 The Ninth Circuit dealt with a similar issue in a different context. In United States v. Tyler, 767 F.2d 1350 (9th Cir. 1985), the defendant was arrested for cutting down timber from a national forest. The government took possession of the timber that same day, but retained it for evidentiary purposes. By the time the government sold it, the value of the timber had dropped significantly, The district court ordered the defendant to pay restitution for the decreased value of the timber. The 18 \ of investors testified that their decision to invest in UMDA was independent of any of the petitioner’s statements or omissions. Under Dura, their invest- ments would likewise have to be excluded from the measurement of loss. The standard for determining loss takes on particular important during difficult economic times such as these, where the vast majority of public companies have experienced falling stock prices due to macroeconomic conditions. Securities cases are all but certain to proliferate. See generally, Ashby Jones, Making Sense of the Mini-Boom in Securities Suits, WALL ST. J., May 6, 2009; Steven M. Davidoff, A Brave New World for the S.E.C., N.Y. TIMES, May 8, 2009; Sarah Lynch, SEC, CFTC Would Get More Enforcement Resources, WALL S'. J., May 7, 2009. At the same time, untangling the effect of a defen- dant’s conduct from other extraneous factors on a stock price becomes increasingly difficult when sig- nificant declines in company stock prices are com: monplace. In such circumstances, guidance from this Court is critical. Ninth Circuit reversed the restitution order and found that the defendant did not cause the loss. The court observed: "Any re- duction in [the timber's] value stems from the government's decision to hold the timber during a period of declining prices, not from [the defendant’s] criminal acts." Jd. at 1352. See also United States v. Peterson, 538 F.3d 1064 (9th Cir. 2008)(“defendant’s conduct need not be the sole cause of the loss, but any subsequent action that contributes to the loss, such as an intervening cause, must be directly related to the defendant’s conduct. The causal chain may not extend so far, in terms of the facts or the time span, as to become unreason- able”). The CVRA In 2004, Congress passed the Crime Victims’ Rights Act (CVRA), giving victims some rights to participate in the federal criminal justice system. !* Instead of making victims parties or intervenors in criminal prosecutions, the CVRA asks courts and prosecutors to vindicate victims’ interests. This un- usual posture creates substantial conflicts for courts and prosecutors. “CVRA is a relatively new statute that effects dramatic changes to our traditional criminal justice system. The participants in that system-- prosecutors, defendants, victims, and courts alike-- are rightfully struggling with its scope and mean- ing.” In re Antrobus, F.3d , 2009 U.S. App. LEXIS 8264* at *23 (10 Cir. April 22, 2009). Moreover, the legislation itself provides little guidance to courts and prosecutors on how to incor- porate the statute into federal prosecutions. Nor does the sparse legislative history provide any guid- ance.'4 On one hand, its drafters took pains to stress 13 In addition to the CVRA, every state has passed victims’ rights legislation, and a majority of states have amended their constitutions to recognize victims’ rights as well. Recent Devel- opment, The Victims’ Rights Amendment, 42 H.J.L. 525, 526— 27 (2005). 14 Congress enacted the CVRA when sponsors of a crime vic- tims’ constitutional amendment failed to secure sufficient sup port for its passage after years of debate and lobbying efforts by victim advocates. 150 CONG. RFC. at $4261 (Apr. 22, 2004) (state- ment of Sen. Feinstein). Because Congress rushed to pass the statute, the legislative history supporting the CVRA consists of only two floor statements by the statute’s sponsors, Senators Dianne Feinstein and Jon Kyl. Kenna v. U.S. Dist. Court, 435 20 that the rights in the CVRA “do not come at the ex- pense of defendant’s [sic] rights.”15 But they also demanded that courts and prosecutors avoid “whittl{ing] down or marginalizling]” victims’ rights and “treat victims of crime with the respect they de- serve and... afford them due process.”?® This case presents two important issues relat- ing to investor/victims in securities fraud cases: the line between appropriate notice to victims and im- permissible witness coaching; and the inclusion of victims at sentencing. The first issue involves the interaction between the governnent and prospective witnesses/victims in this case, and the propriety of a letter sent to pro- spective witnesses/victims which included the prose- cution’s view of petitioner’s guilt. Given that securt ties fraud cases characteristically involve large vic tim bases, the government often has to resort to mass mailings or publication to fulfill its obligation under 18 U.S.C. § 3771(a)(2) to give victims notice.'’ F.3d 1011, 1015-16 (9th Cir. 2006); United States v. Turner, 367 F. Supp. 2d 319, 323 n.3 (E.D.N.Y. 2005) (mem.). 15 150 CONG. REC. $4262 (daily ed. Apr. 22, 2004) (statement of Sen. Feinstein). 16 150 CONG. REC. $10,911 (daily ed. Oct. 9, 2004) (statement of Sen. Ky). \?7 For example, in United States v. Saferstein, slip op., 2008 WL 4925016 *3 (E.D. Pa. Nov. 18, 2008), where the government had to notify 300,000 people, the court approved publication in the newspaper and an interactive website, Unlike this case, however, the notice was carefully drawn to avoid contamina- tion. It stated the name of the company and defendants’ titles but not their names, omitting tax and perjury charges because there were no victims, and stating that an “indictment is an accusation,” and a “defendant is innocent unless and until proven guilty.” 21 The question of what information those mass mail- ings may include is one of significanee and one which will inevitable recur with some frequency. Here, the court allowed the prosecutor to in- clude a highly opinionated version of the case in its letter to possible victims/witnesses.18 When peti- tioner moved to dismiss the indictment, arguing that the letter constituted “an intentional act to influence prospective witnesses” (Pretrial hearing, February 14, 2006 at p.45), the district court denied the mo- tion on the ground that the letter was authorized under 18 U.S.C. §3771 and that under that statute the defendant is precluded from obtaining relief.!9 With this ruling—a ruling which the Eleventh Cir- cuit, given its affirmance, apparently endorsed—the court interpreted the CVRA as stripping the peti- tioner of his due process right to a fair trial. For, while a defendant could otherwise argue that his right to due process had been violated by egregious 18 One witness testified at a pretrial hearing that the letter was circulated among the investors and was “very upsetting because it presented a completely different representation of what I know the man to be” (Pretrial hearing, February 14, 2006 at p.21). He said that another investor, upon reading the letter, was also very upset, and told him: “I am really angry. ... I just want my money back” (2/14/06 hearing at p.25). Interestingly, the Justice Department has decried pre- cisely the same conduct when it emanated from the defense camp. It accused Arthur Andersen, Enron Corp.’s former audi- tor, of “behavior bordering on ‘witness coaching’ in its media campaign challenging the government’s obstruction of justice charge.: Justice Department Accuses Andersen of ‘Witness Coaching,’ KNIGHT RIDDER/TRIBUNE BUSINESS NEWS, Mar. 29, 2002. 19 Under 18 U.S.C. § 3771(d)(1), a “person accused of the crime may not obtain any form of relief under this chapter.” 22 witness coaching,2° under the CVRA, the court con- cluded, that avenue was no longer available. It is important for this Court to address this is- sue, not only to provide guidance for the proper in- terpretation of the CVRA, but also because this case affords a rare opportunity to address witness coach- ing, “the ‘dark—some have even called it ‘dirty’ —secret of the U.S. adversary system.” Bennett L. Gershman, Witness Coaching by Prosecutors, 23 CARDOZO L.J. 829 (2002). While there is a body of scholarly commentary devoted to witness prepara- tion generally, “there has been very little discussion by courts and commentators on witness ... coaching by prosecutors.” Jd. at 831. The second aspect of the CVRA raised by this case involves the responsibility of the sentencing court to ensure that victims are “reasonably heard” before imposing sentence. 18 U.S.C. § 3771(a)(4). 20 As Judge Francis Finch of the New York Court of Appeals put it, the attorney’s “duty is to extract the facts from the wit- ness, not to pour them into him: to learn what the witness does know, not teach him what he ought to know.” In the Matter of Eldrige, 37 N.Y. 161, 171 (1880). See Geders v. United States, 425 U.S. 80, 90 n.3 (1976) ("An attorney must respect the im- portant ethical distinction between discussing testimony and seeking improperly to influence it."). See also ited States v. Guthrie, 557 F.3d 243 (6t Cir. 2009)(prosecutor may “have conversations with his witness. He may not coach the wit- ness”). The danger that a prosecutor may improperly influence a witness’ testimony is even greater than it is with other attor- neys. Because of the prosecutor's unique status as the attorney for the government, he ordinarily is viewed by the witness as a highly knowledgeable official who can be trusted to use the facts responsibly. 23 The CVRA does not explain how much weight, if any, courts should give victims’ opinions. And the lower courts disagree as to the scope of this provision. Compare, e.g., United States v. Marcello, 370 F.Supp.2d 745, 48 (N.D. Ill. 2005)(mem.) (“[T]he statute requires only that a victim be reasonably heard, and . . . Congress’s use of that term of art does not require that a trial court accept oral state- ments in all situations.”), with Kenna v. U.S. Dist. Court, 435 F.3d 1011, 1016 (9th Cir. 2006) (“The statements of the sponsors of the CVRA and the committee report for the proposed constitutional amendment disclose a clear congressional intent to give crime victims the right to speak at proceedings covered by the CVRA.”). Here, the district court arrived at a sentencing determination without considering letters written on behalf of a majority of the UMDA investors.?! These investors were not insisting on appearing in person, but merely wanted the opportunity to be “reasonably heard” as required by the statute. The propriety of excluding victims who wish to weigh in at sentencing on the defendant’s behalf is an issue of national importance, given the substan- tial impact such testimony can have on a defendant’s sentence. While not the norm, it is far from unusual 21 “Reasonably heard” is a legal term of art meaning to bring one’s position to the attention of the court, in person or in writ- ing, as the court deems reasonable under the circumstances. See Q’Connor v. Pierson, 426 F.3d 187, 198 (2d Cir. 2005); al- though the district judge made the victims’ letters part of the record to preserve them for appellate purposes, he did not read them himself. Thus, the investors did not have a meaningful opportunity to have their position brought to the court’s atten- tion before it determined the appropriate sentence. 24 for a victim’s statement to prompt a lighter sentence. See, e.g., Monica Mercer, Hamilton County: Forgive- ness leads to lighter sentence, CHATTANOOGA FREE PRESS, June 3, 2008 (although sentencing court had intended to impose an 8-12 year sentence, defendant received a suspended sentence after hearing victim’s statement); Man sentenced to community service for distracted driving death, http://www.abc4.com, Nov. 10, 2008 (Gudge placed defendant on probation and ordered him to do 500 hours of community service for vehicular homicide after hearing plea from vic- tim’s mother); Mari A. Schaefer, Victim's forgiveness keeps embezzler out of prison, PHILADELPHIA IN- QUIRER, May 6, 2009)(defendant given probation where sentencing court gives “full weight” to the vic- tim’s request for leniency).22 In short, this issue is of importance, not only to petitioner but to criminal de- fendants generally. Accordingly, it is worthy of con- sideration by this Court. CONCLUSION For the foregoing reasons, the petition for a writ of certiorari should be granted. 22 While a defendant cannot seek re-sentencing on the basis of a violation of the CVRA, he may appeal the failure of the sen- tencing court to hear the victims’ perspective under 18 U.S.C. §3553(a)(1) and 3661. May 13, 2009 295 Respectfully submitted, Marsha R. Taubenhaus Counsel of Record 110 Wall Street, 11 Floor New York, New York 10005 (212) 859-3513 APPENDIX la FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT OCT 16, 2008 THOMAS K. KAHN CLERK [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 06-15090 D. C. Docket No. 04-20478-CR-KAM UNITED STATES OF AMERICA, Plaintiff-Appellee, versus TIMOTHY RAFFERTY, a.k.a. Tim Rafferty, Defendant-Appellant. Appeal from the United States District Court for the Southern District of Florida (October 16, 2008) Before TJOFLAT and BLACK, Circuit Judges, and EVANS, District Judge. ie EVANS, District Judge: Honorable Orinda Evans, United States District Judge for the Northern District of Georgia, sitting by designation. * Timothy Rafferty ("Rafferty") appeals his convictions and sentence on counts of conspiracy to commit se- curities fraud, conspiracy to commit mail fraud and 2a wire fraud, and two substantive counts of wire fraud. Rafferty raises numerous issues on appeal challeng- ing evidentiary rulings, legal rulings, his convictions, and the sentence imposed. After oral argument and a careful review of the briefs and record in this case, we affirm. BACKGROUND Rafferty was charged in a second superseding in- dictment with conspiracy to engage in securities fraud, in violation of 15 U.S.C. §§ 78j(b), 78ff(a) and 18 U.S.C. § 371 (Count 1), conspiracy to commit mail fraud and wire fraud, 18 U.S.C. § 1349 (Count 2), and wire fraud, 18 U.S.C. § 1343 (Counts 3 and 4). He was convicted on April 10, 2006 by a jury on all Counts. He was sentenced on September 12, 2006 to 126 months’ imprisonment, followed by three years of supervised release. The sentence included a requirement of $1,234,880 in restitution and forfei- ture of $1,198,450 in certain property. Post-trial mo- tions for new trial on Counts 1 and 2 and for judg- ment of acquittal on Counts 3 and 4 were denied. Rafferty timely filed a notice of appeal. Taking the facts in the light favorable to the verdict, the evidence at trial’ showed that Rafferty began his association with Uncommon Media Group, Inc. ("UMDA") in 2003 when its CEO Lawrence Gallo ("Gallo") persuaded Rafferty to join his cperations. ' The testimony of over thirty witnesses aiong with hundreds of exhibits, including eleven summary charts (discussed infra), was presented at trial. 3a Rafferty worked at UMDA on a daily basis, shared an office with CEO Gallo and spoke with potential investors, but was neither a corporate officer nor a salaried employee of UMDA. Rafferty held himself out to be both a major investor in and consultant to UMDA. Rafferty established a business relationship with Frederick Hornick, an investor in Colorado. Hornick served as a recruiter of other investors and as Rafferty's messenger to them regarding directions for wire transfer of investment funds. The govern- ment presented evidence that Rafferty and Gallo knowingly misrepresented a number of material facts to these investors related to the business pros- pects of UMDA; taken together, these statements misrepresented the vaiue and liquidity of the UMDA shares. The evidence also showed that Rafferty did not reveal, to either the investors or Gallo, past legal judgments against him: specifically, a 1991 convic- tion for securities fraud, a 1993 injunction against further acts of securities fraud, and numerous civil suit judgments. A large number of individuals who dealt with either Rafferty, Hornick, or both pur- chased shares of UMDA and/or other companies. Such shares were either never delivered to these in- dividuals or, if they were delivered, turned out to be worthless. At trial, the government argued that Rafferty defrauded these investors. Also, the gov- ernment’s trial evidence showed that Rafferty, either directly or via Hornick, caused the investors to wire their money to accounts controlled by Rafferty rather than to UMDA. In July 2004, the government filed a sealed indict- ment charging Timothy Rafferty and Lawrence Gallo 4a with conspiracy to commit securities fraud and con- spiracy to commit mail fraud and wire fraud. The government offered both defendants a plea agree- ment. Gallo pled guilty, but Rafferty did not. The grand jury returned the first superseding indictment against Rafferty alone on June 2, 2005, adding sub- stantive wire fraud counts and extending the time period of the alleged conspiracy. On September 13, 2005, the district court held a hearing to consider Rafferty's motion to dismiss the first superseding in- dictment on grounds of vindictive prosecution. This motion was denied. In response to questioning by the district court on the specificity of the forfeiture section of the first superseding indictment, the gov- ernment brought and ultimately tried Rafferty on a second superseding indictment. At trial, the district court ruled that the 1991 convic- tion, the 1993 injunction and the two 2003 civil judgments, in Georgia and New York, specified in the second superseding indictment were admissible as intrinsic evidence. Regarding the civil judgments not specified in the second superseding indictment, the court ruled that testimony demonstrating that Rafferty secretly diverted UMDA investor funds to pay his debts and attorneys fees arising from these civil cases was inextricably intertwined. Limited evidence that Rafferty’s conduct underlying those civil cases was similar to the facts in the instant case was admitted under Federal Rule of Evidence 404(b), but most of the evidence related to civil judgments not specified in the second superseding indictment was not admitted. 5a In preparation for trial, the government enlisted FBI financial analyst Gail Winter to review documents from various third-party bank accounts controlled by Rafferty, along with other records. Winter prepared eleven summary charts tracking the sources and destinations of money through these various ac- counts. Winter’s charts traced $998,921 in investor funds to these accounts and showed that UMDA did not receive any of this investor money. The eleven summary charts, along with the bank records, were admitted into evidence at trial. Altogether, the vo- luminous account records, Winter's summary charts, and Winter's and others’ trial testimony supported the government's theory that Rafferty funneled in- vestor money through these accounts and used the funds to pay personal expenses, including, inter alia, mortgage and car payments, repayment of civil judgments and associated attorneys’ fees. Over the course of two sentencing hearings, the dis- trict court proceeded to determine the amount of loss by tracing and aggregating the investor funds depos- ited into Rafferty’s various bank accounts. The dis- trict court emphasized that it was only including funds that were clearly invested in UMDA, not other companies, as a result of Rafferty’s solicitation, and it deducted significant amounts of money where the bank records contained mistakes or where it was possible that some money might be double-counted. The district court concluded that the amount of loss attributed to Rafferty, after giving him the benefit of the doubt, was $1,198,450. The district court found the amount of loss to be between $1 million and $2.5 million and added a 16-level enhancement to his of- 6a fense level pursuant to U.S.S.G. § 2B1.1(b)(1). Rafferty’s objection was overruled. Rafferty’s post-trial motions for new trial on Counts 1 and 2 and for acquittal on Counts 3 and 4 and were denied. Rafferty timely filed a notice of appeal. He claims improper admission of evidence, a violation of Brady v. Maryland, 373 U.S. 83 (1995), vindictive prosecution, and improper sentencing.” DISCUSSION 1. Admussion of Evidence. A district court's evidentiary rulings are reviewed for abuse of discretion. United Statesv. Baker, 432 F.3d 1189, 1202 (11th Cir. 2005). We review preserved evidentiary objections for harmful error. United States v. Hands, 184 F.3d 1322, 1329 (11th Cir. 1999), corrected by 194 F.3d 1186 (11th Cir. 1999). A. Summary Charts. Rafferty challenges the admission of all eleven summary charts into evidence, alleges that the summary charts were “falsely created” in violation of his due process rights and claims that the manner in which the summary charts were introduced violated his due process right to effective cross examination. —-- ‘ Throughout his briefs, Rafferty focuses on his assertion that many of the transactions depicted in the summary charts do not involve UMDA directly. His argument confounds the issues in this case; the losses stemming from Rafferty’s actions are not the damages to UMDA per ee, but the injuries inflicted by Rafferty upon the investors he defrauded. 7a He also asserts a Brady violation related to the summary charts. As a preliminary matter, we find that the summary charts produced by FBI analyst Winter were properly admitted under Federal Rule of Evidence 1006 as summaries of the voluminous financial data. The data had also been previously admitted into evidence. See United States v. Norton, 867 F.2d 1354, 1362-63 (11th Cir. 1989) (finding no abuse of discretion where district court admitted a summary chart and related testimony after admis- sion of the checks depicted in the summary chart as relevant to establishing a conspiracy to engage in racketeering activity). As the summary charts were properly introduced at trial, Rafferty’s allegations of deprivation of his due process rights are without merit and we find no abuse of discretion. B. Evidence of Prior Conviction, Injunction and Civil Fraud Judgments. Challenges to evidentiary rulings are reviewed for an abuse of discretion. Baker, 432 F.3d at 1202. Count One of the second superseding indictment ac- cused Rafferty of omitting material facts in commu: nications with investors. Such alleged omitted facts included: (1) Rafferty’s 1991 conviction for securities fraud in a New York federal court; (2) in 1993, an Il- linois federal court permanently enjoined Rafferty from committing further acts of securities fraud; (3) the two civil fraud judgments entered against Rafferty in 2003; and (4) Rafferty’s secret use of funds from investors in UMDA and other companies to pay his legal fees. Prior to trial, the government notified Rafferty of its intent to offer the foregoing evidence, including the facts underlying the civil 8a judgments, as inextricably intertwined with the charged offenses or alternatively as evidence of in- tent, plan or knowledge, pursuant to Federal Rules of Evidence 404(b). Rafferty moved to exclude this evidence on the grounds that he did not have a duty to disclose this information, that the investors did not rely on his representations before investing, and that the facts underlying the civil judgments were inadmissible under Federal Rule of Evidence 404(b). The district court heard argument several times and held that the conviction, the injunction and the civil judg: ments specified in the second superseding indict: ment were admissible as intrinsic evidence with the charged offenses. On appeal, Rafferty renews his objections. The Supreme Court has recognized a fi- duciary duty in the instance of so-called "temporary insiders," specifically: Under certain circumstances, such as where cor: porate information is revealed legitimately to...[a] consultant working for the corporation, these out- siders may become fiduciaries of the sharehold- ers. The basis for recognizing this fiduciary duty is not simply that such persons acquired nonpub- lic corporate information, but rather that they have entered into a special confidential relation- ship in the conduct of the business of the enter- prise and are given access to information solely for corporate purposes. Dirks v. S.E.C., 463 U.S. 646, 655 n.14 (1983). 9a To the extent the district court based its ruling on Rafferty’s status as a “temporary insider” and that he was therefore under a duty to disclose the mate- rially omitted facts, discussed supra, we find no abuse of discretion. Furthermore, this court has held that: evidence of criminal activity other than the charged offense is not extrinsic under Rule 404(b) if it is (1) an uncharged offense which arose out of the same transaction or series of transactions as the charged offense, (2) necessary to complete the story of the crime, or (3) inextricably intertwined with the evidence regarding the charged offense. United States v. Ramsdale, 61 F.3d 825, 829 (11th Cir. 1995). The government argues specifically that the evidence is part of the offense charged and thus intrinsic, as witnessed by the reference to the spe- cific material omissions, discussed supra, in the charges in the indictment. See also United States v. Bianco, 181 Fed. Appx. 846, 853-4, 2006 WL 1374495 at *7 (11th Cir. 2006) (unpublished) (admitting evi- dence showing that the defendant [while on trial for mail fraud, wire fraud and money laundering] was on probation, owed restitution, had been enjoined from soliciting investments, and was not licensed to provide check-cashing services as intrinsic to the of- fense and/or as relevant to his intent). We find no abuse of discretion in the district court's evidentiary ruling. Evidentiary errors that are not specifically objected to at trial are reviewed for plain error. United 10a States v. Jernigan, 341 F.3d 1273, 1280 (11th Cir. 2003) (holding that, “[uJnder this standard, we cor- rect only for errors that are particularly egregious and that seriously affect the fairness, integrity or public reputation of judicial proceedings, and the only when a miscarriage of justice would result”) (ci- tations, internal quotations and alteration omitted). At trial, the government tendered a certified copy of the 1991 conviction against Rafferty, with the In- formation attached. It was admitted. Rafferty nei- ther objected to the attached Information at that time nor when the prosecutor referred to the facts in the Information in closing argument. For the first time in his motion for new trial, Rafferty claimed that he was not provided with a copy of the Informa- tion during discovery and objected to the admission of the Information on the grounds that its admission was highly prejudicial to his right to a fair trial. The record reflects, however, that Rafferty’s counsel ex- pressly stated that he did not object to the intredauc- tion of a certified copy of the 1991 conviction with attached Information at trial. Therefore, we find that he has failed to show plain error in its admis- sion at trial. Il. Lrady Claim. Rafferty's Brady claim centers around summary chart S-5, which focuses on the activity of a Millen- nium Capital Trading bank account controlled by Ralf Riverso. The government argues that unknow- ing UMDA investors deposited money into Riverso’s bank account and that none of these funds actually reached UMDA. Rafferty filed a motion in May 2005, requesting any exculpatory evidence from the lla government. The government’s response did not in- form Rafferty of an interview that took place in early 2005 in which Riverso explained to government in- vestigators that most of the funds that passed through his accounts were held for the benefit of someone besides Rafferty. After the verdict was re- turned, Rafferty filed a motion for new trial. In fur- therance of this motion, Rafferty submitted an affi- davit by Riverso describing his 2005 interview with the government. The district court denied the mo- tion for new trial. “The suppression by the prosecution of evidence fa- vorable to an accused upon request violates due process where the evidence is material either to guilt or to punishment, irrespective of the good faith or bad faith of the prosecution." Brady v. Maryland, 373 U.S. at 87. Evidence is material “if there is a rea- sonable probability that, had the evidence been dis- closed to the defense, the result of the proceeding would have been different.” Grossman Vv. McDonough, 466 F.3d 1325, 1341-42 (11th Cir. 2006) (citation omitted). The information contained in the Riverso affidavit, assuming its veracity, would only call into question the information in one of the gov- ernment's eleven summary charts [chart S-5]. The remaining charts, witnesses, and other evidence be- fore the jury support the government’s contention that investors’ money was fraudulently funneled at Rafferty’s direction to entities not including UMDA. Therefore, the Riverso evidence is not material, i.e., if it had been admitted at trial in Rafferty’s favor, 12 there is not a reasonable probability of a different outcome in this case. 12a Ill. Vindictive Prosecution. The dismissal of an indictment on the ground of prosecutorial misconduct is reviewed for an abuse of discretion. United States v. Barner, 441 F.3d 1310, 1315 (11th Cir. 2006). A district court abuses its dis- cretion if it applies the incorrect legal standard or makes findings of fact that are clearly erroneous. Jd. Rafferty alleges that the government brought the first and second superseding indictments to punish Rafferty for not pleading guilty. Rafferty also al- leges that the Assistant U.S. Attorney threatened to withdraw the plea deal if he filed any more motions and later told Rafferty’s attorney that, "[Rafferty] should have taken his three and one-half year plea while he had the chance." We find that Rafferty has failed both to show any ob- jective evidence of actual vindictiveness on the part of the government or to raise circumstances meriting a rebuttable presumption of vindictiveness. See United States v. Dorsey, 512 F.3d 1321, 1325 (11th Cir. 2008). The government acquired more evidence against Rafferty as a result of the Gallo plea agree- ment; nothing precluded the government from seek- ing the first and second superseding indictments. IV. Motions for Judgment of Acquittal and New Trial. A. Motion for Judgment of Acquittal. Challenges to the sufficiency of the evidence are re- viewed de novo. United States v. Keller, 916 F.2d 628, 632 (11th Cir. 1990). In this context, all rea- sonable inferences and credibility choices are made 13a in favor of the jury verdict. United States v. Young, 39 F.3d 1561, 1565 (11th Cir. 1994). In order to uphold a lower court's denial of judgment of acquittal, it is only necessary to find that a rea- sonable factfinder could conclude that the evidence establishes the defendant's guilt beyond a reason- able doubt. Keller, 916 F.2d at 632. Rafferty argued that the evidence at trial was insufficient to sustain his conviction for wire fraud on Counts 3 and 4. However, a defendant need not be proven to have ac- tually participated in or initiated the wire communi- cations to be guilty of violating the wire fraud stat- ute. United States v. Snyder, 505 F.2d 595 (5th Cir. 1974).3 We find that the evidence and testimony presented at trial, including the summary charts which depict wire transfers of investment money, is sufficient to support the jury’s verdict. B. Motion for New Trial. A denial of a motion for new trial is reviewed for an abuse of discretion. United States v. Fernandez, 136 F.3d 1434, 1438 (11th Cir. 1998). In furtherance of his motion for new trial on Counts 1 and 2, Rafferty argued that, by deliberating for only two hours, the jury clearly failed to follow the district court’s in- structions to consider evidence separately with re- spect to each count. Rafferty cited no law in support of his assertion that the short length of jury delib- erations reflects any bias against him. Furthermore, > This Court adopted as binding precedent all Fifth Circuit decisions prior to October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981)({en banc). l4a the Tenth Circuit has ruled against this very argu- ment. See United States v. Lawrence, 405 F.3d 888, 904-05 n.11 (10th Cir. 2005) (denying motion for mistrial where jury deliberations lasted two hours and finding no evidence of prejudice against defen- dant). Rafferty also alleged the improper admission of the summary charts, the civil and crimina! convictions, including the Information attached to the 1991 con- viction, as well as the violation of Brady, discussed supra. Incorporating our reasoning in sections I and II above, we conclude thai the district court did not abuse its discretion in denying Rafferty’s motion for new trial. V. Sentence. On appeal Rafferty argues that in handing down his 126-month sentence, the district court erred by ap- plying a 16-level enhancement under U.S.S.G. § 2B1.1(b)(1)(D based on its finding that Rafferty was responsible for losses between $1,000,000 and $2,500,000. In addition to his substantive argu- ments about § 2B1.1(b)(1)(D, Rafferty also argues that he was not given an opportunity to address the court on the loss issue and that the court erred by independently calculating the loss. “A district court’s determination regarding the amount of loss for sentencing purposes is reviewed for clear error.” United States v. Medina, 485 F.3d 1291, 1303 (11th Cir. 2007)(citation omitted). Under U.S.S.G. § 2B1.1(b)(1), a defendunt’s base offense level is increased by 16-ler~'s if the offense involved 15a losses in the amount of more than $1,000,000, but less than $2,500,000. U.S.S.G. § 2B1.1(b)()(D. The application notes provide that “loss is the greater of actual or intended loss.” /d., comment (n.3(A)). Ac- tual loss is defined as “the reasonably foreseeable pecuniary harm that resulted from the offense.” /d., comment (n.3(A)(D). “[Tlhe government bears the burden of supporting its loss calculation with reli- able and specific evidence.” United States v. Renick, 273 F.3d 1009, 1025 (11th Cir. 2001)(citation omit- ted). “(T]he Sentencing Guidelines require a district court, at the sentencing stage, to make independent find- ings establishing the factual basis for its Guideline calculations.” United States v. Hamaker, 455 F.3d 1316, 1338 (11th Cir. 2006). “The court need only make a reasonable estimate of the loss. The sentenc- ing judge is in a unique position to assess the evi- dence and estimate the loss based upon that evi- dence. For this reason, the court’s loss determina- tion is entitled to appropriate deference.” U.S.S.G. § 2B1.1(b)(1), comment ‘n.3(C)). “A reasonable esti- mate of the loss amount is appropriate because often the amount of loss caused by fraud is difficult to de- termine accurately.” Medina, 485 F.3d at 1304 (cita- tion omitted). “But while estimates are permissible, courts must not speculate concerning the existence of a fact which would permit a more severe sentence under the guidelines.” /d, (citation and alternation omitted). “Fraudulent schemes...come in various forms, and we must consider the nature of the scheme in deter- mining what method is to be used to calculate the 16a harm caused or intended.” United States v. Orton, 73 F.3d 331, 333 (11th Cir. 1996). “The Sentencing Commission is clearly aware that different types of fraud may call for different methods of calculation.” Id. at 333 n.4. Nonetheless, “[lJoss...focuses gener- ally on the harm suffered by the victim of the crimi- nal conduct rather than on the proceeds of the crime enjoyed by the defendant.” Hamaker, 455 F.3d at 1337. Rafferty argues that the district court erred by adopting a methodology of calculating his applicable guideline range that was not advanced by the gov- ernment or the probation officer and that the court therefore assumed the role properly left to the prose- cution. Specifically, he argues that the district court erred by not calculating the loss as the diminution in the net value of the shares between the time the conspiracy began and the time it ended, March 2003 to February 2004; the approach this Court employed in United States v. Snyder, 291 F.3d 1291, 1295 (11th Cir. 2002). Here, however, the district court found that the UMDA stock was “worthless” at the conclusion of the conspiracy and, therefore, no such subtraction was warranted. This exhaustion of the subject stock’s value did not occur in Snyder, where shares of Biocryst Pharmaceuticals, Inc. were found to have retained some value over the life of the con- spiracy. Furthermore, this Court in Snyder did not mandate a particular loss calculation approach and stated that many methods were acceptable. “All that is re- quired is that the court make a reasonable estimate 17a of the loss, given the available information.” /d., at 1295-96 (citations omitted). Here, the district court calculated the loss by determining the amount of in- vestor funds deposited in to Rafferty’s various bank accounts, taking care to only aggregate funds clearly invested in UMDA, not other companies, as a result of Rafferty’s solicitation. The district court did not subtract the value of the stock at the end of the con- spiracy, as such arithmetic would be pointless. See United States v. Olis, 429 F.3d 540, 546 (5th Cir. 2005) (stating that, “[iln cases where defendants promoted worthless stock in worthless companies, measuring the loss as the entire amount raised by the schemes is neither surprising nor complex, and is fully consistent with civil loss calculation”). Also, the district court’s loss calculation methodology was conservative, excluding some amounts that were transferred during the course of the conspiracy, in order to avoid the risk of mistakes or double- counting amounts. Rafferty also contends that he had no opportunity to challenge the district court’s loss findings, denying Rafferty his Sixth Amendment right to counsel. However, Rafferty addressed the district court on the loss issue in both his sentencing memorandum and in his objections to the pre-sentencing investiga’ tion report. Additionally, the district court heard ex- tensively from Rafferty on the issue at both the first and second sentencing hearings. This argument is meritless. Finally, Rafferty argues that the district court erred by independently calculating the amount of loss. His complaint is that the district court made calculations 18a of its own in between the first and second sentencing hearings. We find nothing wrong with this. Rafferty had the opportunity to address the district court when its calculations were presented. Indeed, the district court is required to exercise independent judgment in Guidelines calculations. See Unrted States v. Foley, 508 F.3d 627, 633 (11th Cir. 2007) (holding that the district court erred by adopting the jury's forfeiture verdict as the amount of loss, thus abdicating its responsibility to make independent findings under the Sentencing Guidelines). We find that Rafferty failed to demonstrate that the district court employed an improper loss-calculation methodology or that its factual findings were clearly erroneous. Furthermore, Rafferty's arguments that he was not given an opportunity to address the dis- trict court on the loss calculation issue and that the court erred by conducting its independent loss calcu- lation are without merit. CONCLUSION The district court’s denial of the motion for new trial and denial of the motion for judgment of acquittal re AFFIRMED. Rafferty’s conviction and sentence are also AFFIRMED. 19a IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT No. 06-15090 UNITED STATES OF AMERICA, Plaintiff-Appellee versus TIMOTHY RAFFERTY a.k.a. Tim Rafferty, Defendant-Appellant. On Appeal from the United States District Court for the Southern District of Florida Before: THOFLAT and BLACK, Circuit Judges, and EVANS’ PER CURIAM: The Petition(s) for Rehearing are DENIED and no Judge in regular active service on the Court having requested that the Court be polled on rehearing en banc (Rule 35, Federal Rules of AppelDate Procedure), the Petition(s) for Rehearing En Banc are DENIED. * Honorable Orinda Evans, United States District Judge for the Northern District of Georgia, sitting by designation. ENTERED FOR THE COURT: UNITED STATES CIRCUIT JUDGE Filed Dec. 15, 2008 ~ Zla TITLE 15 - COMMERCE AND TRADE CHAPTER 2B - SECURITIES EXCHANGES § 78}. Manipulative and deceptive devices It shall be unlawful for any person, directly or indi- rectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange— (a) (1) To effect a short sale, or to use or employ any stop-loss order in connection with the pur: chase or sale, of any security registered on a national securities exchange, in contravention of such rules and regulations as the Commis: sion may prescribe as necessary or appropriate in the public interest or for the protection of investors. (2) Paragraph (1) of this subsection shall not apply to security futures products. (b) To use or employ, in connection with the pur- chase or sale of any security registered on a national securities exchange or any security not so registered, or any securities-based swap agreement (as defined in section 206B of the Gramm-Leach-Bliley Act), any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the _Commission may prescribe as necessary or appropri: ate in the public interest or for the protection of in- vestors. 22a Rules promulgated under subsection (b) of this sec- tion that prohibit fraud, manipulation, or insider trading (but not rules imposing or specifying report- ing or recordkeeping requirements, procedures, or standards as prophylactic measures against fraud, manipulation, or insider trading), and judicial prece- dents decided under subsection (b) of this section and rules promulgated thereunder that prohibit fraud, manipulation, or insider trading, shall apply to security-based swap agreements (as defined in section 206B of the Gramm-Leach-Bliley Act) to the same extent as they apply to securities. Judicial precedents decided under section 77q (a) of this title and sections 78i, 780, 78p, 78t, and 78u-—1 of this ti- tle, and judicial precedents decided under applicable rules promulgated under such sections, shall apply to security-based swap agreements (as defined in section 206B of the Gramm-Leach-Bliley Act) to the same extent as they apply to securities. 23a 18 U.S.C. § 3771. Crime victims’ rights (a) Rights of Crime Victims.— A crime victim has the following rights: (1) The right to be reasonably protected from the accused. (2) The right to reasonable, accurate, and timely notice of any public court proceeding, or any parole proceeding, involving the crime or of any release or escape of the accused. (3) The right not to be excluded from any such public court proceeding, unless the court, after receiving clear and convincing evidence, determines that testimony by the victim would be materially altered if the victim heard other testimony at that proceeding. (4) The right to be reasonably heard at any public proceeding in the district court involving release, plea, sentencing, or any parole proceeding. (5) The reasonable right to confer with the attorney for the Government in the case. (6) The right to full and timely restitution as provided in law. (7) The right to proceedings free from unreasonable delay. (8) The right to be treated with fairness and with respect for the victim’s dignity and privacy. U.S.S.G. § 2B1.1 §2B1.1. Larceny, Embezzlement, and Other Forms of Theft; Offenses Involving Stolen Property; Property Damage or Destruction; Fraud and Deceit; Forgery; Offenses Involving Altered or Counterfeit Instruments Other than Counterfeit Bearer Obligations of the United States (a) Base Offense Level: (1) 7, if (A) the defendant was convicted of an offense referenced to this guideline; and (B) that offense of conviction has a statutory maximum term of imprisonment of 20 years or more; or (2) 6, otherwise. (b) Specific Offense Characteristics (1) If the loss exceeded $5,000, increase the offense level as follows: Loss (Apply the Greatest) Increase in Level $5,000 or less no increase (B) More than $5,000 add 2 (C) More than $10,000 add 4 (D) More than $30,000 add 6 (E) More than $70,000 add 8 (F) More than $120,000 add 10 (G) More than $200,000 add 12 (H) More than $400,000 add 14 (I) More than $1,000,000 add 16 (J) More than $2,500,000 add 18 25a (K) More than $7,000,000 add 20 (L) More than $20,000,000 add 22 (M) More than $50,000,000 add 24 (N) More than $100,000,000 add 26 (O) More than $200,000,000 add 28 (P) More than $400,000,000 add 30. (2) (Apply the greatest) If the offense— (A) @) involved 10 or more victims: or (ii) was committed through mass-marketing, increase by 2 levels; (B) involved 50 or more victims, increase by 4 levels; or (C) involved 250 or more victims, increase by 6 levals. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0515%3A1. Public record. Not legal advice.