                             UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                             No. 09-5096


UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

           v.

DAVID A. HAGEN, a/k/a Antonio Diez, a/k/a David DeFusco,

                Defendant - Appellant.



Appeal from the United States District Court for the Western
District of North Carolina, at Charlotte. W. Earl Britt, Senior
District Judge. (3:08-cr-00093-WEB-2)


Argued:   December 9, 2011                 Decided:   March 12, 2012


Before AGEE, DAVIS, and KEENAN, Circuit Judges.


Affirmed by unpublished opinion. Judge Davis wrote the opinion,
in which Judge Agee and Judge Keenan joined.


ARGUED: Philip Urofsky, SHEARMAN & STERLING, Washington, D.C.,
for Appellant.   Amy Elizabeth Ray, OFFICE OF THE UNITED STATES
ATTORNEY, Asheville, North Carolina, for Appellee.     ON BRIEF:
David A. Brown, Richard Lee Edwards, Assistant United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Asheville, North
Carolina, for Appellee.


Unpublished opinions are not binding precedent in this circuit.
DAVIS, Circuit Judge:

     Following         a   jury    trial       in    May       2009,   Appellant       David   A.

Hagen was convicted of conspiracy to commit securities fraud, in

violation of 18 U.S.C. § 371 (“Count One”); conspiracy to commit

mail fraud and wire fraud, in violation of 18 U.S.C. § 1349

(“Count Two”); and conspiracy to commit money laundering, in

violation of 18 U.S.C. § 1956 (“Count Three”). The convictions

arose     out     of   Hagen’s         role     in    a        so-called      “pump-and-dump”

securities fraud scheme, in which he and his co-conspirators

acquired        control      of    a    company       known       as    GTX    Global,        made

successful efforts to artificially increase its stock price, and

then sold the stock at a higher price, bringing in proceeds of

approximately          $27        million.          The        district       court     imposed

consecutive sentences on each count of conviction summing to a

540-month term of imprisonment.

     On appeal, Hagen contends that his convictions are tainted

by the district court’s erroneous refusal to appoint substitute

counsel     to     represent           him    (and        to    postpone      the     trial    in

connection with the requested appointment of counsel) after his

relationship       with      his    retained         counsel      deteriorated.         He    also

argues    that     the     district          court    committed        various        errors   at

sentencing, including a miscalculation of the total loss that

resulted from his offense behavior and an unreasonable failure

to depart (or vary) from the Guidelines sentencing range. Having

                                                2
carefully    examined    Hagen’s     contentions   in    the       light    of   the

record presented to us, and for the reasons that follow, we

discern     no    reversible   error;      accordingly,       we     affirm      the

judgment.

                                      I.

                                      A.

     At the time of the proceedings in this case, Hagen was an

experienced      financial   fraud   schemer,   and     the   record       suggests

that deep knowledge of his background informed both his retained

attorney’s and the district court’s handling of many of his pro

se filings, requests, objections, and assertions of unfairness.

Specifically, in 1990, Hagen was convicted of mail fraud and

conspiracy to commit mail and wire fraud in the United States

District Court for the Eastern District of Texas arising out of

a fraudulent time-share marketing operation. Also, in early 1990

he was convicted of money laundering and conspiracy to commit

bankruptcy fraud in the United States District Court for the

Eastern District of Virginia. He was sentenced to a total of 100

months in prison on those convictions. 1 Hagen was released from

federal prison in April 1997.

     1
       See United States v. DeFusco, 949 F.2d 114 (4th Cir. 1991)
(affirming conviction in E.D. Va.); United States v. DeFusco,
930 F.2d 413 (5th Cir. 1991) (affirming conviction in E.D.
Tex.); see also United States v. DeFusco, No. 94-6144, 1994 WL
396351 (4th Cir. Aug. 1, 1994) (unpublished order affirming
denial of relief under 28 U.S.C. § 2255).

                                       3
       In   January      2007,     following       an    extensive         investigation,

which included (among other techniques) interceptions of Hagen’s

telephone conversations with a co-defendant who was, unbeknownst

to    Hagen,    cooperating      with    the      government,      the      FBI    filed   a

criminal complaint under seal charging Hagen with conspiracy to

commit      securities      fraud       and       conspiracy     to        commit       money

laundering.       The    government’s          allegations       were       that    Hagen,

together       with   others,    conducted         a    series   of    “pump-and-dump”

securities fraud schemes in which they would buy stock in a

company, make efforts to artificially increase its price, and

then sell the stock at the elevated price. At the time the

complaint was filed, Hagen had been living in the Bahamas since

in or about March 2006.

       In September 2007, he returned to the United States from

the    Bahamas,       apparently    in       connection     with      an     unsuccessful

effort to become a diplomat for the Southern African nation of

Swaziland and thereby avoid prosecution for potential criminal

offenses       and/or   execution       on    civil      judgments     that       had   been

entered against him. 2 Upon his arrival at JFK airport in New


       2
       At trial Hagen described his efforts to become a diplomat
for Swaziland as a way to secure “asset protection”: “if you
become a Consulate General of a Consulate of a diplomatic corps,
they can no longer come in and attach your bank accounts.” J.A.
1463. He also explained that he was “pursuing alternatives,
which would include . . . a camouflaged passport, which
basically gives you a new identity.” J.A. 1466.


                                              4
York, he was arrested and detained. At the time, he had been

represented for some months (in connection with the government’s

investigation)    by    Kieran      Shanahan,    Esq.,     a    North    Carolina

attorney   whom   Hagen      had   retained.    In   due       course,   Shanahan

successfully negotiated a plea agreement with the government on

Hagen’s behalf and Hagen signed the plea agreement on October

22, 2007. The plea agreement called for Hagen’s cooperation with

the   government’s     ongoing     investigation.    Pursuant      to    the   plea

agreement, Hagen and counsel met with government investigators

and   prosecutors      and    Hagen    made     numerous       disclosures     and

admissions demonstrating his knowing involvement in the “pump-

and-dump” conspiracy. 3


      3
       A critical (and rather unusual) feature of the plea
agreement executed by Hagen provided that upon his breach of the
agreement, the government would be permitted to use against
Hagen “any and all information, in whatever form” Hagen had
provided to the government:

           In   any   such   prosecution,   the   prosecuting
      authorities, whether federal, state, or local, shall
      be free to use against him, without limitation, any
      and all information, in whatever form, that he has
      provided pursuant to his plea agreements or otherwise.
      The defendant shall not assert any claim under the
      United States Constitution, any statute, Fed.R.Crim.P.
      11(f), Fed.R.Evid. 410, or any other provision of law,
      to attempt to bar such use of the information. . . .

          The defendant acknowledges that Federal Rule of
     Criminal Procedure 11(f) and Federal Rule of Evidence
     410 are rules which ordinarily limit the admissibility
     of statements made by a defendant in the course of
     plea discussions or plea proceedings if a guilty plea
     is later withdrawn. The defendant knowingly and
(Continued)
                               5
     There      followed     several   postponements         of   the    scheduled

guilty   plea    proceedings,      ostensibly   due     to   defense     counsel’s

scheduling      conflicts.    By   December     2007,    however,       Hagen   had

discharged Shanahan as his counsel upon Hagen’s learning that

Shanahan had worked as an Assistant United States Attorney in

the U.S. Attorney’s Office for the Eastern District of North

Carolina while Sam Currin, Esq., one of Hagen’s co-defendants,

served as the United States Attorney in that district. Shanahan

filed a motion to withdraw, which the district court granted on

December 4, 2007. That same day Steven Meier, Esq., whom Hagen’s

wife had retained, entered his general appearance. Hagen soon

decided not to go forward with his long-anticipated guilty plea.

Accordingly, a federal grand jury returned an indictment against

Hagen and others on April 23, 2008.




     voluntarily waives the rights which arise under these
     Rules. As a result of this waiver, he understands and
     agrees that any statements which are made in the
     course of his guilty plea or in connection with his
     cooperation pursuant to this plea agreement will be
     admissible against him for any purpose in any criminal
     or civil proceeding if his guilty plea is subsequently
     withdrawn.

S.J.A. 29, 31. After a hearing, the district court granted the
government’s motion in limine and admitted at trial Hagen’s
admissions   of  his   knowing participation in   the  charged
conspiracies. Hagen does not challenge on appeal the district
court’s ruling in this regard.


                                       6
                                            B.

       In light of Hagen’s assertion that the combination of his

counsel’s      lack       of     diligence        and   the      district     court’s

acquiescence        in   such     deficient       performance     (by     failing   to

appoint successor counsel) denied Hagen a fair trial, we set

forth in some detail the pre-trial proceedings that took place

below.

       A magistrate judge held an initial appearance on May 8,

2008, at which Attorney Meier asked to be heard on the issue of

his representation of Hagen. Meier explained that although Hagen

had paid a “not insubstantial retainer” to Meier’s firm, it had

been   negotiated        under    the   belief     Hagen   was    likely     to   plead

guilty. According to Meier, because Hagen had declined to plead

guilty and had withdrawn his consent to, and declined to perform

his obligations under, the plea agreement, and because of the

complexity     of     the      case   and   the    large   number       of   documents

involved, the retainer was going to “run short pretty quickly,”

and there was “some question” as to whether Hagen would have any

funds to pay Meier in that event, as Hagen’s funds had been

frozen    as    subject          to   forfeiture.       Thus,     Meier      requested

permission to file an affidavit to demonstrate Hagen’s indigence

and explain the status of the retainer. The government did not

specifically oppose the request, but stated its “concern” that

“once someone has been paid a retainer, it’s difficult to be

                                            7
appointed.” The magistrate judge stated that Meier could file

such an affidavit if he so wished. No such affidavit ever was

filed, however.

       Approximately           four    weeks     later,        on   June    3,   2008,   the

magistrate judge conducted an arraignment, detention and bond

review hearing. S.J.A. 80-111. Meier again brought up the issue

of his representation of Hagen. He explained that he expected to

face “somewhere between 500,000 and upwards of 22 million pages

of discovery,” but had received only “partial payment” of his

retainer. S.J.A. 102. Meier asked for the magistrate judge’s

“guidance      on    that,”       later     clarifying          that     “ultimately”    his

request    was      to    be     appointed       as     Hagen’s        counsel   under   the

Criminal     Justice       Act        (“CJA”),       once     the   retainer     Hagen   had

previously       paid      had    been      exhausted.          S.J.A.     103-04.    Meier

recognized that such an appointment would be unusual, but stated

that   given     the      “extraordinary             amount    of   discovery”     and   the

likely      need         for     investigators,               expert     witnesses,      and

depositions,        his         representation           of      Hagen      presented     an

“extraordinary situation.” S.J.A. 104.

       In response to these expressions of concern by Meier, the

magistrate judge explained that although appointing counsel who

had previously been retained would be a “great departure,” he

appreciated the situation in which Meier found himself. Thus, he



                                                 8
stated, “If you want to make a motion at some point, I’ll be

glad to address it.” S.J.A. 104, 110.

      Meier never filed a motion to be appointed under the CJA as

Hagen’s counsel. Nor did Meier seek funds for investigative and

related services, as presumably he would have been entitled to

seek under 18 U.S.C. § 3006A(e)(1). 4 Indeed, during a telephone

conference with the presiding district judge on June 12, 2008,

no mention was made of the possibility that Meier might move to

be appointed or seek reimbursement for investigative and other

expenses. The parties and the court agreed to set May 4, 2009,

as a firm date for trial. Another nearly ten months went by,

during which Meier filed a number of pretrial motions on Hagen’s

behalf, including motions to suppress evidence, and he responded

to   the   government’s   motions   in   limine,   and   during   which   the

      4
         Section   3006A(e)(1)(e)         provides       as   follows     for
investigative or other services:

             Services other than counsel.--

           (1) Upon request.--Counsel for a person who is
      financially unable to obtain investigative, expert, or
      other services necessary for adequate representation
      may request them in an ex parte application. Upon
      finding, after appropriate inquiry in an ex parte
      proceeding, that the services are necessary and that
      the person is financially unable to obtain them, the
      court, or the United States magistrate judge if the
      services are required in connection with a matter over
      which he has jurisdiction, shall authorize counsel to
      obtain the services.

18 U.S.C. § 3006A(e)(1).


                                     9
grand jury returned a second superseding indictment on February

19, 2009.

       On March 26, 2009, five and a half weeks before trial,

Hagen   filed     a    pro     se    motion       to      discharge    Meier.      He     lodged

numerous complaints regarding Meier’s representation, including

that    Meier    had    not        filed    pre-trial        motions       that    Hagen     had

requested       that    he     file;       that      he    failed     to   “professionally

assess” Hagen’s “culpability” and “bargaining position”; that he

had     not     interviewed          certain           “relevant       participants         and

witnesses”; and that he had not filed a motion to suppress that

Hagen had requested that he file. Hagen explained that he had

prepared a “97-page Trial Guide” describing how he wished Meier

to proceed with “every aspect of the case,” but Meier had not

followed his instructions. J.A. 158. Thus, he requested that the

court permit him to proceed pro se, “[o]r, in the alternative .

. . in recognition of his indigence . . . appoint a suitable

defense counsel.” J.A. 165.

       A few days later, Meier filed a motion to withdraw. In

light    of     Hagen’s       motion       to   discharge       Meier,      Meier        stated,

“various      conflicts       and    irreconcilable           differences         have    arisen

between       counsel        and    Defendant          making       counsel’s       continued

representation of Defendant impossible.” J.A. 170. Neither Meier

nor Hagen requested a continuance, however.



                                                10
        The district court held a hearing on Hagen’s and Meier’s

motions on April 6, 2009, one month before the long-scheduled

trial date. The court addressed Hagen, stating, “obviously [you

and Meier] have some differences of opinion as to how best for

him     to     go      about    representing            you,”     although      “that’s     not

unusual.” J.A. 174. The court noted, however, “I don’t know what

the problems are between you and your lawyer.” Id. The court

explained         to    Hagen    the       perils       of   proceeding        pro    se,   but

acknowledged, “if that’s what you want to do, you are entitled

to    do      it.”     J.A.     176.       Hagen       responded    by       reiterating    his

complaints about Meier’s representation. He then requested leave

to proceed pro se, although he acknowledged that preparing for

trial      from      detention        in    the    local     jail       in    this    document-

intensive            case       would         be         extraordinarily             difficult.

Alternatively, he requested that an attorney be appointed to

replace Meier, noting that he could no longer afford to pay an

attorney.

        For    his      part,    Meier       explained       to     the      court   that   the

retainer Hagen had paid would soon run out, but that he had

assured Hagen that he would “honor [his] commitment to represent

him     regardless,”           even    knowing          Hagen     was     unlikely     to   pay

subsequent costs. J.A. 179. The government, for its part, also

countered         Hagen’s      accusations         against        Meier,      describing    the

extensive work Meier had done on the case -- work of which Hagen

                                                  11
almost certainly was not aware -- including multiple exchanges

with the government about discovery, the law, and the facts.

Moreover, although Hagen had complained that Meier had not filed

a motion for discovery, the government explained there was no

need   for   such   a   defense   motion    because    the   government   had

already “provided open file” discovery in the case. J.A. 187.

       The district court stated, “I don’t want to get into a

swearing match between you [Hagen] and your lawyer and I’m not

going to do that.” J.A. 178. With respect to the witnesses Hagen

believed Meier should have subpoenaed, the court explained to

Hagen, “If you tell [Meier] to subpoena whatever witnesses to

come and testify on your behalf, he’ll do that.” Id. When Hagen

complained again that Meier’s performance had been inadequate,

the court stated, “That’s beyond the point. I’m not going to

continue this trial.” J.A. 181. “We’re going to start a month

from today one way or the other.” Id. “If I were to give you

another year, if I were to continue the case to give you longer

to be prepared, without any legal training you will not be able

to do it.” J.A. 182.

       Hagen then reiterated his request, as an alternative to

proceeding pro se, that the court allow Meier to withdraw and

then    appoint     “somebody     who      will   be    competent    in   my

representation.” J.A. 183. In response, the court stated that

even “assuming” Hagen could prove that he was “now indigent,”

                                     12
       [I]f I were to allow you to discharge Mr. Meier[,] . .
       . appoint another lawyer and continue the case, it
       would take six months for that lawyer to get up to
       snuff and be ready for trial. Now, at the end of that
       six months I’ll be having another motion before me by
       David Hagen wanting another lawyer because that lawyer
       too does not want to do it like you want it done. . .
       . You’ve had two privately retained lawyers now that
       you can’t get along with and you want the court to
       appoint you a third one, and I’m not going to do it.
       I’m going to deny the motion, both motions. You either
       make peace with your lawyer or, Mr. Meier, when we go
       to trial a month from today, if Mr. Hagen insists on
       going pro se, you’ll be standby counsel.

Id. Meier reiterated his concern that Hagen’s complaints about

Meier’s performance had created an “extraordinary conflict of

interest,” but stated that even if Hagen were to proceed pro se,

he would be willing to serve as standby counsel and assist Hagen

with   subpoenas     and   other    “things    of   that   nature.”    J.A.    185.

Finally,   the     government      expressed    its   opposition      to   Hagen’s

request to proceed pro se, because providing discovery to the

defendant while he was incarcerated in the Mecklenburg County

Jail would be “a huge logistical nightmare.” Id.

       After   engaging      in   an   extended     colloquy   with    Hagen    to

confirm that his decision to proceed pro se was knowing and

voluntary,     the   court    granted    the    request.    The   court    denied

Hagen’s request for appointed counsel, largely because it would

be “impractical, impossible, and a travesty to this court’s time

and the efforts that have been put into this case over the last

two-and-a-half years to delay further the trial of this action,”

which the court concluded would have been necessary if it were
                              13
to appoint new counsel. J.A. 199-200. Importantly, the court

also    denied     Meier’s   motion    to    withdraw.     Rather,    Meier    was

instructed to remain as standby counsel, to continue to prepare

for trial, and “in terms of trial preparation” to “act on Mr.

Hagen’s orders.” J.A. 203.

       When Hagen again argued that Meier had been ineffective,

the court stated, “I don’t know how much communication you and

he have, that’s between the two of you,” but did observe that

the government had represented that Meier had done “everything

any defense counsel would be doing up until this point.” J.A.

204. The court entered an order allowing Hagen to proceed pro se

at trial and instructing Meier to “continue preparing for trial

as if he were trying the case” and to “remain in the case as

standby counsel for trial to assist defendant if and when and to

the extent called upon by defendant.” J.A. 171A. Hagen filed a

motion for reconsideration, which the district court denied.

       During a status hearing before a magistrate judge on April

23,    2009,   a   week   and   a   half    before   the   trial     date,   Meier

described the tasks he had undertaken on Hagen’s behalf. He had

offered to Hagen to have his office type any motions he wished

to file, “even to the extent that they reflect negatively upon

me.” J.A. 235. Notably, Meier explained he would be prepared for

trial, and had instructed his staff to accept any call from

Hagen. In addition, the government explained some of what it had

                                       14
undertaken to do in order to address some of Hagen’s concerns.

For    example,       it   had     waived    its      usual      policy       of   prohibiting

defense counsel from leaving discovery materials with defendants

who    are    detained,      and    had     created       binders       of    trial   exhibits

which it sent to Meier to provide to Hagen. Hagen reiterated

some of his complaints about Meier’s representation but noted

that ever since the district judge granted the motion to proceed

pro se, “the cooperation did go way up,” and he was “comfortable

that we are now moving, at least, in a direction that I can at

least communicate with [Meier and his staff].” J.A. 261. “[N]ow

-- he is indeed, he is sending his person over, I spent about 2

hours a day with him the last three days.” Id. With respect to

Hagen’s difficulties preparing for trial without a private cell

or access to the prison library, the magistrate judge instructed

the Marshals Service to communicate to the Mecklenberg County

Jail    that       Hagen   was   going      to    trial     in     a   week     and   would   be

representing himself, and to instruct the jail “to make sure

that he’s getting adequate access to what he needs.” J.A. 277.

       On     May    4,    2009,    the     first     day     of       trial,      Hagen   again

objected to “the unfair and unjust manner in which I’ve been

forced to proceed pro se” and requested a continuance. Id. The

district court explained that Hagen could, at any time before or

during       the    trial,    ask    Meier       to   step       in     to    represent    him,

although he could not “go back and forth.” J.A. 303. Hagen then

                                                 15
explained that he had decided to accept Meier’s representation,

though “under duress.” J.A. 305. He argued the court should not

force him to choose between proceeding with Meier and proceeding

pro se. But given what he saw as an “unconscionable” choice,

Hagen agreed        to    proceed      represented    by    Meier.     J.A.   311.    The

court then heard argument on several motions in limine. Meier

made detailed arguments on each. Trial began the next day.

                                              C.

       Over   the    course       of   the     two-week     trial,    Meier   gave    an

opening statement and vigorously cross-examined the government’s

witnesses,       including        investigating       agents,        cooperating     co-

conspirators,       and    an     expert      on   securities      trading.   He     also

conducted a direct examination of Hagen that took several hours,

made a number of arguments about jury instructions, and gave an

extensive and detailed closing argument. Indeed, after the jury

retired to deliberate, the district court commended counsel for

both   parties      “for    the    very      professional    way     in   which   [they]

carried out [their] duties” and for being “well versed” in the

facts and the law. S.J.A. 434. The court specifically commended

Meier for his grasp of complex questions of stock trading and

his cross-examination of the government’s expert witness.

                                              1.

       Briefly      summarized,        the     evidence     at   trial     showed     the

following. Hagen owned a company known as Gatelinx Corporation

                                              16
that was working to develop software for secure online video

communications. Gatelinx, in turn, owned another company that

marketed satellite television subscriptions for Direct TV and

employed 90 to 100 people in a call center. Gatelinx’s revenue

was almost entirely derived from those marketing operations, as

Hagen      admitted   at     trial.   In    2004,        Gatelinx’s    contract       with

Direct TV was terminated. Gatelinx was left without a revenue

stream, and began to “run out of money”; Hagen “could see the

end coming” for Gatelinx. J.A. 1212, 1389.

      Hagen started looking for other sources of revenue. In late

2004, one of Hagen’s co-conspirators, Howell Woltz, proposed a

reverse      merger    between      Gatelinx       and    a     publicly    held    shell

company called autoleasecheck.com, which was listed through Pink

Sheets, an electronic quotation system that displays quotes from

broker dealers for certain “over-the-counter” securities. This

would allow Gatelinx to sell shares to the public but avoid many

of   the    disclosure       requirements        that    apply    to   initial     public

offerings.     Hagen     and      Woltz    executed       the    reverse     merger    and

renamed the merged company GTX Global Corp. (“GTX Global” or

“GTX”). At that point, Hagen and his co-conspirators controlled

approximately         91.4     percent       of     the       company’s      31,150,000

outstanding      shares      of    stock,    or     approximately          28.5    million

shares, which they held through several offshore companies.



                                            17
        Eventually, Hagen and his co-conspirators agreed on a plan

to    begin   selling       GTX    shares    to     the   public       through    Canadian

brokerage firms and fraudulently “pump” up the stock price and

trading volume by engaging in a fraudulent promotional campaign.

Their goal was to drive the stock price from $4 to over $20 and

then to “dump” the stock, keeping the proceeds. They began the

promotional      campaign         in    October   2005,      primarily     by     creating

websites      that        fraudulently       touted       the    company’s        business

prospects and misstated the company’s financial condition. For

example,      one     press        release     described         GTX     Global        as   a

“[f]inancially stable company with strong balance sheet,” “an

established leader in direct response marketing, with average

annual sales over $12 million, de[ri]ved primarily from sales of

residential satellite television services,” which was “utilizing

these    marketing        capabilities       to     launch      proprietary       patented

video     conferencing        software       technology,”        on     which     it    held

“numerous patents.” J.A. 597-99. The release continued, “By the

end of 2007, sales are expected to hit nearly [$]360 million,

with earnings of [$]64 million.” J.A. 600. In reality, although

the    company      had    begun       developing    software      for    online       video

communications, the company did not own any patents, had not

completed development of any software, had no customers, and,

having lost the Direct TV contract, had no revenue. At times,

the company did not even have funds to pay its electric bill.

                                             18
       The   conspirators         also    issued      press     releases    designed         to

mislead the public into believing that Hagen, who (as previously

mentioned) had twice previously been convicted of federal fraud

felonies, was not involved in the management of the company, and

that   no     one    person      controlled        more    than    5    percent       of   the

company’s      stock.       In    addition,        one    of    GTX’s     lead    software

developers had stolen a copy of the code for the software the

company had been developing. Hagen and the others decided not to

disclose      that    theft      to    investors.        Moreover,      throughout         this

period,      Hagen    and     his      co-conspirators          took    steps    to     avoid

detection of the scheme, including by working to prevent the

price from rising “too fast, because it would attract regulatory

attention.” J.A. 591.

       In    the    months    before      the      promotional     campaign       began     in

October 2005, no shares of the company had been traded. During

the “pump” phase of the scheme, the trading volume skyrocketed,

up to 500,000 shares per day, as did the share price, up to $10

per share in December 2005. Within two months, the conspirators

sold over half of their holdings, or a total of approximately 14

million shares. By August 2006 Hagen and the others had sold

approximately 19 million GTX shares to the public, generating

proceeds      of    between      $32    and   $35    million.      Although       they     re-

invested approximately $2 million in the company, the remaining

proceeds      went    into       the     “pocket[s]”       of     Hagen    and    his       co-

                                              19
conspirators. J.A. 554. Hagen’s percentage share of the proceeds

was       22.4     percent.        Approximately             $27.6     million         of    the

approximately $32 to $35 million they had derived from the sale

of GTX stock were wired from the Canadian brokerage firms to

bank accounts in the Bahamas, Curacao, Panama and Cyprus, among

other places, that were held by Hagen and his co-conspirators.

      The promotional campaign continued until in or about June

2006.      By      mid-August       2006,        the     share        price     dropped      to

approximately $1, and continued to drop after that. One investor

testified that on February 13, 2006, he bought 1,000 shares for

$7.09 per share, shares he sold later, just to get them “off the

paperwork,”         for    0.06     cents     per       share.       J.A.     1099.    Another

investor         testified    that       on   June      9,    2006,     having        read   the

promotional materials, he bought 3,000 shares of GTX stock at

$3.31     per     share.     By    the    time     of    Hagen’s      trial,     the     entire

investment -- all 3,000 shares -- was worth just 75 cents. The

stock price had dropped to just 0.025 cents per share. 5

                                              2.

        After      the    two-week       trial,        and    after     deliberating         for

thirty-three minutes, the jury returned guilty verdicts on all

counts:     conspiracy        to   commit     securities         fraud;       conspiracy      to


      5
       By that time the company had changed its name again, this
time to Vision Technology Corporation. That company filed for
bankruptcy in February 2007.


                                              20
commit mail fraud and wire fraud; and conspiracy to commit money

laundering. After the jury returned the verdicts, the district

court instructed the jury to deliberate on a requested special

forfeiture verdict. The jury was instructed to determine “the

amount of money representing the criminally derived proceeds, if

any, which the defendant himself received directly and/or which

he     received   indirectly,       due    to    the    reasonably       foreseeable

conduct of his co-conspirators.” J.A. 1768. The court defined

this     amount      as   “property       that   the      defendant      and   other

conspirators would not have received, but for their involvement

in the conspiracy.” Id. The jury found this amount to be $27.6

million.

                                          D.

       The court held a sentencing hearing on November 2, 2009.

The primary issue at sentencing was the amount of loss caused by

the fraud. The probation officer who prepared the Pre-Sentence

Report (“PSR”) determined that an upward adjustment for a loss

more    than   $20    million   should     apply,      resulting    in   a   22-level

upward adjustment. The basis for that upward adjustment was the

jury’s finding that the proceeds received as a result of the

conspiracies were $27.6 million. Hagen objected, contending the

correct    loss      amount   for   Guidelines      purposes       was   $15,160.38,

corresponding to just a 4-level upward adjustment. The district

court     overruled       Hagen’s   objection,         and   adopted     the   PSR’s

                                          21
recommendation of a 22-level increase based on loss. The court

also      concluded      that       the    offenses       of   conviction         were    to    be

grouped        for    Sentencing          Guidelines      purposes,     and    applied         the

Guidelines           section       applicable        to   money     laundering      offenses,

which      was   the     Guideline         that      carried   the    sentence       with      the

longest        term     of     imprisonment:           life.   Having       calculated         the

advisory Guidelines ranges, the district court imposed terms of

imprisonment of five years on Count One, twenty years on count

Two, and twenty years on Count Three, each corresponding to the

statutory maximum on each count and to be served consecutively,

for a total of forty-five years in prison.

                                                  E.

          Hagen timely appealed. On appeal, he argues he is entitled

to    a    new   trial       for    two    reasons:       because    the    district      court

should have appointed counsel and permitted Meier to withdraw,

and       in   any    event     because        the     court   should      have     granted      a

continuance to permit Hagen to fully prepare a pro se defense.

Alternatively,           he    seeks       a    re-sentencing,        for     two    reasons:

because        the    district       court     applied      the     Guideline       for   money

laundering convictions rather than the Guideline for mail fraud

convictions, and because the district court erred in calculating

the loss attributable to the stock fraud scheme. As we explain

within, we reject each of these contentions.



                                                  22
                                          II.

       Hagen’s first argument on appeal is that the district court

abused its discretion in denying his motion to discharge his

privately      retained    lawyer,     Meier,     and   to   replace    him    with    a

court-appointed lawyer. He argues he was entitled to appointment

of    counsel    both    by   virtue     of    the   Sixth   Amendment       right    to

adequate representation and the Criminal Justice Act, 18 U.S.C.

§ 3006A. For the following reasons, we hold the district court

did not abuse its discretion in denying Hagen’s motion. 6

                                          A.

       We first consider Hagen’s claim under the Sixth Amendment,

which provides that “[i]n all criminal prosecutions, the accused

shall enjoy the right ... to have the Assistance of Counsel for

his defence.” U.S. Const. amend. VI. In cases where a district

court has denied a request by a defendant to replace one court-

appointed       lawyer     with     another      court-appointed       lawyer,        we

consider       three     factors    to    determine        whether     the    initial

appointment “ceased to constitute Sixth Amendment assistance of

counsel”: “(1) the timeliness of the motion; (2) the adequacy of

the        court’s     subsequent      inquiry;      and     (3)     ‘whether        the


       6
       Although prior to trial Hagen also requested to proceed
pro se, immediately before trial he elected to re-assert his
right to counsel and have his attorney represent him at trial.
Thus, on appeal we are not faced with a denial of a defendant’s
right to proceed pro se, and Hagen does not so contend.


                                          23
attorney/client conflict was so great that it had resulted in

total lack of communication preventing an adequate defense.’”

United    States    v.   Smith,     640       F.3d      580,   588    (4th   Cir.    2011)

(quoting United States v. Gallop, 838 F.2d 105, 108 (4th Cir.

1988)).

    In United States v. Mullen, 32 F.3d 891 (4th Cir. 1994), we

applied those same factors in an appeal, after a jury verdict of

guilty, from       the   denial    of     a    request     to   substitute         retained

counsel   with     appointed      counsel.         In   Mullen,      there   had    been   a

total breakdown in attorney-client communications that made “an

adequate defense unlikely had [the retained lawyer] handled the

trial,” and the defendant’s request had been timely made and

accompanied by a financial affidavit demonstrating eligibility

for court-appointed counsel. Id. at 897. Moreover, the request

to substitute counsel was Mullen’s first, and the request was

denied largely because the government had forgotten to take the

steps necessary to arrange a hearing earlier than the first day

of trial. Id. at 896-98. Under those circumstances, we held the

district court had abused its discretion by not appointing a

lawyer to replace the one Mullen had retained, and remanded the

case for the appointment of a new lawyer and a new trial. Id. at

897-98.

    Here, Hagen argues the three factors weigh in favor of our

finding an abuse of discretion. We disagree. We assume without

                                              24
deciding that Hagen’s request was timely made, although we note

the district court was entitled to consider the complexity of

the case in deciding whether granting the request would have

“obstruct[ed] orderly judicial procedure” and deprived the court

of     “the    exercise           of    [its]      inherent         power     to    control        the

administration of justice.” Id. at 895.

       We     next    examine           the    adequacy        of    the     district       court’s

inquiry into the bases for the motion. Although the district

court’s       questioning              of     Meier     with     respect       to     his     trial

preparations         and     the       level    of      communication        between       him     and

Hagen could          have    been       more     probing,      we     conclude       the    court’s

extensive dialogue with the parties and counsel, considered in

its totality, satisfied the court’s duty to evaluate the reasons

for Hagen’s motion. The court also indicated that it had read

and considered Hagen’s motion, which set forth the factual bases

for his request in great detail. See United States v. Reevey,

364    F.3d    151,     157       (4th      Cir.      2004)    (concluding          the    district

court’s inquiry into the basis for the motion was sufficient

when    the    court        was    informed        of    counsels’         consultations         with

Reevey and was assured that attorneys were ready for trial).

       In     addition,            the        district        court        concluded,        albeit

implicitly,          that    Hagen’s           request     was      at      least    in     part     a

“transparent ploy for delay,” which the Supreme Court has held

is a proper basis for denying a request for change in counsel.

                                                   25
Morris    v.    Slappy,     461   U.S.    1,    13    (1983)       (holding       that    the

district        court      “could       reasonably          have        concluded        that

respondent’s belated requests [for change of counsel] were not

made in good faith but were a transparent ploy for delay”); see

also Gallop, 838 F.2d at 108 (“A request for change in counsel

cannot     be     considered      justifiable         if     it    proceeds        from    a

transparent       plot    to   bring    about    delay.”).         Appointing       counsel

would have required delaying the trial for months, which in the

court’s view would have been “a travesty” not only to “th[e]

court’s time” but also to the “efforts that have been put into

this   case     [by     Hagen’s   counsel]      over       the    last    two-and-a-half

years.”    J.A.       199-200.    The    court       believed,      and     not     without

reason, that, even if the court were to appoint counsel and

postpone    the    trial,      Hagen    was    likely      to    file    another     motion

shortly before the new trial date, complaining about the new

lawyer’s performance and “wanting another lawyer.” J.A. 183.

       Although the district court could have been more explicit

in finding that Hagen’s request was a ploy for delay, the record

and the surrounding circumstances make clear that the district

court so found. Hagen had been granted multiple opportunities to

air his grievances about his representation in open court over

the course of the year before trial. The district court, at

times with the assistance of a magistrate judge, had conducted a

series     of     extensive       pre-trial      hearings          involving        Hagen’s

                                           26
periodic complaints about Meier’s representation. Moreover, the

court would have been justified in taking into account (as it

surely did) the nature of the charges Hagen was facing, Hagen’s

familiarity      with    the        federal        criminal   justice    system,     and

importantly,      the        fact     that     Hagen’s        aborted    guilty     plea

negotiations had resulted in the execution by Hagen of a written

plea    agreement     and     the    court’s        earlier   ruling    admitting    the

numerous oral admissions by Hagen of his knowing and willful

participation in the “pump-and-dump” scheme at the root of the

prosecution. The above circumstance no doubt accounts in large

measure for the fact that the jury deliberated for less than an

hour after a two-week trial. For these reasons, we conclude the

district court’s inquiry into the reasons for Hagen’s request

for appointed counsel was adequate.

       In    assessing       the    third    factor,     we   consider    whether    the

breakdown in communications was “so great” that it precluded the

presentation of an adequate defense. Mullen, 32 F.3d at 895.

Hagen       focuses     on     the     breakdown         in    communications       that

precipitated the motion for Meier’s discharge, arguing there was

little or no communication between him and Meier between July

2008 and February 2009. The record reveals, however, that in

this period, Meier filed two pre-trial motions to suppress and

responded appropriately to the government’s motions in limine.

Moreover, Hagen acknowledged that Meier consulted with him on

                                              27
several occasions. Although Hagen believed other motions should

have    been     filed,       his     disagreement           with      his    attorney’s          trial

strategies       and        tactics      does        not     constitute           a    communication

breakdown      sufficient           to     warrant         the   substitution           of     counsel.

United States v. Johnson, 114 F.3d 435, 443-44 (4th Cir. 1997).

       Indeed,        the    court’s          finding       that    communications              between

Hagen and Meier were not impeding Hagen’s defense was confirmed

by    subsequent       events:        by      the    day     trial     was        to   start,     Hagen

expressed that the “cooperation” between them had gone “way up,”

and he was “comfortable that we are now moving, at least, in a

direction that I can at least communicate with [Meier and his

staff].”       J.A.    261.     As       we    have      explained,          “A       total    lack    of

communication simply does not exist where the attorney and the

client communicate significantly during trial.” United States v.

DeTemple, 162 F.3d 279, 288-89 (4th Cir. 1998). Accordingly, on

this record, we cannot say that the lack of communication was so

serious     as     to        impact        the       adequacy        of      Meier’s          pre-trial

preparation. For these reasons, we hold the district court did

not    abuse    its     discretion            in    denying      the      motion       to     discharge

Meier and to replace him with a court-appointed attorney.

                                                    B.

       Independent of the three-part inquiry, Hagen argues he was

entitled to appointed counsel by virtue of the Criminal Justice

Act    itself,    which        provides            that,    “[i]f      at    any       stage    of    the

                                                    28
proceedings, including an appeal, the United States magistrate

judge or the court finds that the person is financially unable

to pay counsel whom he had retained, it may appoint counsel as

provided in subsection (b) and authorize payment as provided in

subsection (d), as the interests of justice may dictate.” 18

U.S.C. § 3006A(c). Hagen argues that by declining to determine

whether he was “financially unable to pay counsel,” the district

court abused its discretion.

      We disagree, because § 3006A(c) expressly incorporates a

discretionary aspect into the analysis it requires. Even if a

person is financially eligible for such “mid-case appointment,”

United   States   v.   Rivera-Corona,        618   F.3d   976,   981   (9th   Cir.

2010), the Act does not mandate that the district court appoint

counsel. Rather, the district court “may” appoint counsel, and

only “as the interests of justice may dictate.” 18 U.S.C. §

3006A(c). Here, for the same reasons as those discussed above,

the district court was entitled, within its discretion, to find

that appointing counsel to represent Hagen was not dictated by

“the interests of justice.”

      The two cases Hagen cites are unavailing. In Rivera-Corona,

the   district    court   failed   to    advise     the   defendant,    who   had

retained a lawyer and pled guilty, that he had a right to be

represented by counsel at sentencing. 618 F.3d at 977. When the

defendant asked to withdraw his guilty plea and be appointed

                                        29
counsel,     the     district            court     “summarily           reject[ed]”       the

defendant’s request for appointed counsel to replace retained

counsel “simply because of the expense and the stage of the

proceedings.” Id. at 981. The Ninth Circuit held that “requiring

a retained counsel to continue to represent the defendant even

if the defendant cannot pay him and no longer wants him . . . is

no substitute for appointed counsel paid with public funds and

so could not, without more, be in the ‘interests of justice.’”

Id. at 982 (emphasis added).

      The problem for Hagen is that here, there is “more,” most

notably    indicia    that        the    request    was     a    ploy    for    delay,    and

evidence concerning Meier’s performance as counsel. This is not

a case where a judge “summarily decide[d]” that a defendant was

not   eligible      for    appointed        counsel       “merely       because    he     has

previously    retained       an     attorney,”       or   rejected        a    request    for

appointed counsel in part based on the “public expense” such an

appointment would incur. Cf. id. at 978, 982.                             Nor is this a

case, as apparently Rivera-Corona was, where a retained lawyer

attempted to “influence the defendant’s litigation choices by

expressing an intention to seek fees from relatives or friends.”

Id. at     982.    Rather,    Meier       had     apparently      recognized       that    he

likely    would    never     be    paid    beyond     the       initial    retainer,      but

nonetheless       committed         (as     required        by     widely       applicable

professional       norms)     to        represent    Hagen        through      trial,     and

                                             30
proceeded         to     conduct      a     full        and     vigorous         defense.      Those

considerations, among others, render the district court’s denial

of his request a proper exercise of its discretion.

      The other case Hagen relies upon, United States v. Parker,

439   F.3d    81       (2d    Cir.    2006),       is    also     unavailing.          There,       the

Second Circuit considered whether the district court had erred

in determining that the defendant was financially ineligible for

CJA   counsel.          The   court       held    the    district          court      had    made    an

“appropriate             inquiry”          into         the       defendant’s               financial

eligibility,           and    had    not    clearly           erred    in       determining      that

Parker    had          sufficient          income        to     render          him    financially

ineligible. Id. at 93-99. This finding made an analysis of the

“interests         of    justice”         unnecessary,           because         “a    finding       of

financial eligibility is a necessary (although not sufficient)

condition for mid-case appointment under the Act.” Id. at 99

(emphasis         added).      Here,       the     question           is    a    different       one:

whether, even assuming the defendant was financially eligible,

the district court abused its discretion in finding that the

appointment        of    counsel      was    not        dictated       by    the      interests      of

justice. The Parker court acknowledged that in some cases the

answer to that question can be “no.” This is such a case.

      Our holding does not mean, of course, that a defendant’s

financial eligibility is irrelevant to whether a district court

should,      in    the       appropriate         case,    appoint          counsel      even    if   a

                                                  31
defendant had previously retained counsel. To the contrary: if

the    “interests       of     justice”       do     not    weigh       against         mid-case

appointment      of    counsel     in     a   particular         case    at      a    particular

time, then a defendant may request, and a district court may

grant,    appointment        of    counsel          under   18    U.S.C.         §     3006A(c).

Moreover,      the      exercise     of       that     discretion           is       subject   to

constraints. In the appropriate case, such as if there were no

or few considerations weighing against mid-case appointment, or

if a district court were to “summarily decide” that a defendant

was not eligible for appointed counsel “merely because he has

previously retained an attorney,” see Rivera-Corona, 618 F.3d at

978-82, then perhaps (though we need not decide now) a district

court’s failure to consider a defendant’s financial eligibility

could constitute an abuse of discretion. In any event, it could

not be clearer here that the district court did not abuse its

discretion.



                                              III.

       Hagen further assigns error to the district court’s denial

of his motion for a continuance in order to (1) allow appointed

counsel to prepare for trial or (2) allow Hagen to prepare a pro

se    defense.    The    district        court’s      denial      of    a   continuance         is

reviewed for abuse of discretion. United States v. Williams, 445

F.3d    724,     739    (4th      Cir.    2006).       A    trial       court        abuses    its

                                               32
discretion when its denial of a motion for continuance is an

“unreasoning      and    arbitrary       insistence     upon   expeditiousness         in

the face of a justifiable request for delay.” Morris, 461 U.S.

at 11-12 (internal quotation marks omitted). Moreover, even if a

defendant     demonstrates         that     the   district       court    abused      its

discretion in denying a motion for a continuance, the defendant

must show that the ruling “specifically prejudiced” his case in

order to prevail. United States v. Hedgepeth, 418 F.3d 411, 419

(4th Cir. 2005).

       To the extent Hagen argues a continuance was warranted for

appointment of counsel, the district court did not abuse its

discretion for the reasons stated above. To the extent he argues

he   should   have      been     given     time   to   prepare      for   his   pro   se

representation at trial, even assuming without deciding that the

district court abused its discretion, this claim fails. Prior to

jury   selection,        Hagen    agreed     to   allow     Meier    to   handle      the

defense. Because Hagen’s pro se representation at trial never

came to pass, we discern no prejudice resulting from the denial

of the requested continuance for additional preparation time.



                                           IV.

       We   now   turn    to     Hagen’s    claims     of   procedural     sentencing

error. In reviewing the district court’s calculations under the

Guidelines, “we review the district court’s legal conclusions de

                                            33
novo and its factual findings for clear error.” United States v.

Manigan, 592 F.3d 621, 626 (4th Cir. 2010) (internal quotation

marks omitted).

                                             A.

       The Sentencing Guidelines provide that if a defendant is

convicted of multiple counts “involving substantially the same

harm,” U.S.S.G. § 3D1.2, the counts “shall be grouped together,”

with the Guidelines range applicable to the group being the one

for “the most serious of the counts comprising the Group, i.e.,

the highest offense level of the counts in the Group.” Id. §

3D1.3. The district court here adopted the PSR’s recommendation

to   group    the    three    counts       of     which    Hagen      was   convicted      --

conspiracy to commit securities fraud, conspiracy to commit mail

and wire fraud, and conspiracy to commit money laundering. On

appeal,    Hagen     does    not     challenge       the       decision     to    group   the

offenses. Nor does he challenge the district court’s calculation

of the Guidelines range for each offense, nor its conclusion

that   the    highest     offense         level    was    on    the   money       laundering

count,    for     which     the    Guidelines       recommend         a   life     sentence.

Rather,      he     argues        that,     after     calculating           the     advisory

imprisonment range for each offense, the district court erred in

applying     the     money        laundering        offense       level     as     the    one

applicable to the group, because Hagen’s conduct “fell outside

the ‘heartland’ of money laundering.” Appellant’s Br. at 26. He

                                             34
argues     the   district     court    should       have       instead       applied      the

offense level for securities fraud, which, all else equal, would

have generated a Guidelines range of 324 to 405 months.

      Despite the severity of the advisory imprisonment range on

the   money      laundering     count,          Hagen’s        argument      fails.       The

Guidelines are clear that when the advisory term of imprisonment

on one count is higher than the advisory term on other counts in

a “Group” the offense level for the group is the highest offense

level of the counts in the Group. U.S.S.G. § 3D1.3. Prior to

2000, the Guidelines provided that “[i]f, in an atypical case,

the guideline section indicated for the statute of conviction is

inappropriate because of the particular conduct involved, use

the   guideline     section    most     applicable        to     the    nature       of   the

offense conduct charged in the count of which the defendant was

convicted.” See United States Sentencing Commission, Guidelines

Manual, Appendix A at 417, introductory cmt. (1998); see also

United     States    v.   Smith,    186    F.3d     290,        297    (3d    Cir.     1999)

(applying the “atypical case” analysis to grouped counts that

included     a   money     laundering      count).        In    2000,     however,        the

Guidelines       were     amended     to    eliminate           that    analysis.         See

Amendment 591 (“clarify[ing]” that “the sentencing court must

apply the offense guideline referenced in the Statutory Index

for the statute of conviction” unless a defendant has stipulated

a   more   serious      offense).     Indeed,      in   2001      the     Third   Circuit

                                           35
confirmed      that     the    Amendment         rendered   the   “atypical      case”

analysis, and therefore the test in Smith, “no longer good law.”

United States v. Diaz, 245 F.3d 294, 303 (3d Cir. 2001). The

court continued: “[S]entencing courts may not conduct an inquiry

into the heartland of § 2S1.1 and courts have no discretion to

decide that the money laundering guideline is inappropriate or

not the most applicable guideline on the facts of a given case.”

Id. Therefore, the district court correctly chose U.S.S.G. §

2S1.1    as   the     starting      point   for    calculating    Hagen’s      offense

level under the Guidelines.

                                            B.

        Hagen’s next challenge to his sentence is that the district

court erred in calculating the loss attributable to the conduct

for which he was convicted. As stated above, the district court

applied a 22-level upward adjustment to Hagen’s sentence based

on a finding that the loss resulting from the fraud was over $20

million.

     The Guidelines instruct that for a defendant convicted of

fraud, the offense level should be adjusted upward to varying

degrees       depending       on    the     amount    of    “loss.”     U.S.S.G.    §

2B1.1(b)(1).        District       courts   are    instructed     to   apply   either

“actual loss” or “intended loss,” whichever is greater. Id. §

2B1.1, cmt. n.3(C). “Actual loss” is defined as “the reasonably

foreseeable pecuniary harm that resulted from the offense.” Id.

                                            36
§   2B1.1,      cmt.      n.3(A).       “Intended          loss”    is     defined      as     “the

pecuniary harm that was intended to result from the offense.”

Id. Whether          using     actual     or    intended      loss,        a    district      court

“need only make a reasonable estimate of the loss.” Id. § 2B1.1,

cmt.     n.3(C).          In    cases     involving          equity        securities,          the

“reduction” in such securities’ value “that resulted from the

offense”       is    relevant     to     calculating         the    amount       of    loss.    Id.

Moreover,       if    both     actual     loss       and    intended       loss       “reasonably

cannot    be     determined,”          then    courts       “shall       use    the    gain    that

resulted from the offense as an alternative measure of loss.”

Id. § 2B1.1(b)(a), cmt. n.3(B).

       The government argued at sentencing that $27.6 million, the

amount     the       jury      found     constituted         the     “criminally         derived

proceeds,”          was   a    proper    measure       of    loss    for       three    reasons.

First, it argued that GTX Global was “an essentially worthless

company,” and thus the entire amount investors lost from their

investments in the company was caused by the fraud. J.A. 1805.

Second, it argued that even if GTX was not a “worthless company”

and even if other factors contributed to the drop in the value

of its stock, the 22-level increase in the Guidelines applies to

any losses greater than $20 million, and the evidence showed by

a preponderance that at least $20 million in losses were caused

by the defendants’ conduct. Third, it argued that, regardless of

investors’          actual     losses,    the    district          court       could    calculate

                                                37
loss based on “intended loss,” and Hagen and his co-conspirators

intended      to    bilk    investors         of    between     $80   million       and   $142

million.      J.A.        1806.     As    evidence        of     “intended      loss”       the

government         relied       upon     an     October        26,    2005,    handwritten

agreement between Hagen and two of his co-conspirators, Mark

Brecher and Jeremy Jaynes, describing the two “phases” of the

planned fraud, each 30 days long. In Phase I, they intended to

sell 12 million GTX shares at $4 to $8 each, and during Phrase

II they intended to sell another 4.5 million shares at $8 to $12

each.   Thus,       the    government         argued,   they     intended      to    take    in

between $84 million and $150 million.

       Hagen disputed, and continues to dispute, each of those

assertions. First he argues the company was not “worthless” and

in fact had substantial assets, in the form of technology it had

developed,         physical       infrastructure,         and    revenue.      Second,       he

argues, because the company was not “worthless,” the district

court was required to (1) disaggregate the amount investors lost

from    the   residual          value    they      retained      after   the    fraud       was

disclosed, and (2) to further disaggregate the amount investors

lost between how much of their total loss was caused by the

fraud and how much was caused by other factors. Only the amount

investors actually lost, and lost because of the fraud, could

constitute         “the    reasonably         foreseeable        pecuniary      harm      that

resulted      from        the     offense”      under     U.S.S.G.       §    2B1.1,      cmt.

                                               38
n.3(A)(i). Hagen also argues that any reliance on “intended”

loss was speculative and therefore not a “reasonable estimate of

the loss.” Further, he argues, the alternative of using “the

gain that resulted from the offense” would be improper because

the amount of loss is not such that it “reasonably cannot be

determined.”        See    id.    §   2B1.1(b)(a),         cmt.    n.3(B).     We   should

remand, he argues, for the district court to conduct the proper

fact-finding and calculations.

      Having fully reviewed the trial proceedings and sentencing

hearing, we conclude the district court did not err in declining

to   disaggregate         the    amount     investors       lost   from   the    residual

value   of    their       shares.     The    jury    found     that    the     defendants

obtained proceeds of $27.6 million, and there was undisputed

evidence     at   trial     that      once   the     fraudulent       scheme    was      made

public, the value of the shares dropped essentially to zero. The

evidence     thus    clearly       showed     that       investors    lost   the    entire

amount they put into the company, i.e., the proceeds from the

stock sales.

      As   to     the     question     whether       a    material    portion       of    the

investors’ losses was caused by factors other than the fraud, we

also conclude the district court did not clearly err. As stated,

the “actual loss” for Guidelines purposes is limited to the loss

that “resulted from the offense,” U.S.S.G. § 2B1.1(b)(1), cmt.

n.3(A), and therefore only losses caused by the fraud may be

                                             39
attributed to Hagen for Guidelines purposes. The record amply

supported     the        district   court’s       conclusion      that    the        fraud

perpetrated by Hagen and his co-conspirators caused at least $20

million of the $27.6 million loss suffered by investors. Within

a short period of time after the fraud was disclosed, GTX stock

became essentially worthless, less than $0.01 per share. Hagen’s

argument     that        general    market       decline    in    2006        and     2007

contributed to a substantial portion of this decrease in value

is untenable on this record. Thus, the district court did not

clearly     err     in     determining     that     the    loss    caused       by     the

defendants’ fraud was at least $20 million. Having made that

factual finding, the district court did not err in applying the

22-level enhancement called for by U.S.S.G. § 2B1.1(b)(1)(L),

which applies to losses greater than $20 million.

     The    cases        upon   which    Hagen    relies    do    not    support       his

argument for resentencing. In United States v. Olis, 429 F.3d

540, 545 (5th Cir. 2005), although the court vacated a sentence

due to the district court’s failure to exclude from the loss

calculation the effects of “extrinsic factors” on the stock’s

decline in price, it noted that, “[i]n cases where defendants

promoted    worthless       stock   in    worthless       companies,”     a    district

court would properly calculate the amount of loss caused by a

fraudulent scheme as “the entire amount raised by the schemes.”

Id. at 546-48. Here, the district court did not clearly err in

                                          40
determining that GTX was a “worthless compan[y]” at the time the

defendants sold GTX stock to investors, and therefore at least

$20 million of the funds raised by the schemes constitute the

loss caused by the fraud.

       Similarly, in United States v. Rutkoske, 506 F.3d 170 (2d

Cir.    2007),       unlike    here,    there       was   no     suggestion      that    the

defendant      “‘promoted       worthless      stock      in   worthless       companies,’

which    would       [have]     justif[ied]        attributing      the       entire    loss

amount to Rutkosky’s fraud.” Id. at 180 n.4 (quoting Olis, 429

F.3d at 546). Moreover, the court observed that “cases might

arise    where       share    price   drops    so      quickly    and    so    extensively

immediately         upon     disclosure   of       a   fraud     that    the    difference

between pre- and post-disclosure share prices is a reasonable

estimate of loss caused by the fraud.” Id. at 179. This is such

a case, for the reasons explained above. And while the court

observed that even in such cases “a coincidentally precipitous

decline        in     shares     of     comparable        companies        would       merit

consideration,” id., here the evidence supported the district

court’s finding that the amount of loss caused by the fraud was

at     least        $20    million,     the        threshold      for     the    22-level

enhancement. See United States v. Ebbers, 458 F.3d 110, 128 (2d

Cir.    2006)        (affirming       former       WorldCom      CEO’s    sentence      for

securities fraud because, even if some portion of the loss may

have been caused by factors other than the fraud, “no reasonable

                                              41
calculation of loss to investors” would have brought the loss

amount   below     the   $100   million   threshold   for   the   26-level

enhancement that applied).

     For these reasons, the district court’s determination of

the actual loss caused by the fraud and attributable to Hagen

was not clearly erroneous, and therefore supported the district

court’s application of a 22-level upward adjustment of Hagen’s

offense level. 7



                                     V.

     For the reasons set forth in this opinion, the judgment is

                                                                  AFFIRMED.




     7
       Because the actual loss supported the district court’s
application of the 22-level adjustment, we need not address the
government’s   alternative  arguments  that  the  sentence  was
supported by the “intended loss” and/or by the “gain that
resulted from the offense.”


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