     13-214-cr(L)
     United States v. Gent, Lagona

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 24th day of October, two thousand fourteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                RAYMOND J. LOHIER, JR.,
 8                CHRISTOPHER F. DRONEY,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12       GUY W. GANE, JR.,
13                Defendant,
14
15       IAN CAMPBELL GENT,
16       JAMES F. LAGONA,
17                Defendants-Appellants,
18
19                    -v.-                                  13-214-cr, 13-1166-cr,
20                                                          13-1195-cr
21
22       UNITED STATES OF AMERICA,
23                Appellee.
24       - - - - - - - - - - - - - - - - - - - -X
25
26       FOR APPELLANTS:                       Robert A. Culp, Garrison, New
27                                             York, for Appellant Gent.
28

                                                  1
 1                              Daniel M. Perez, Newton, New
 2                              Jersey, for Appellant Lagona.
 3
 4   FOR APPELLEE:              Joseph J. Karaszewski for
 5                              William J. Hochul, Jr., United
 6                              States Attorney, Buffalo, New
 7                              York.
 8
 9        Appeal from judgments of the United States District
10   Court for the Western District of New York (Skretny, J.).
11
12        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
13   AND DECREED that the judgments of the district court be
14   AFFIRMED in part and VACATED and REMANDED in part.
15
16        Defendants-Appellants Ian Campbell Gent (“Gent”) and
17   James F. Lagona (“Lagona”) appeal judgments, following a
18   jury trial in the United States District Court for the
19   Western District of New York (Skretny, J.), convicting them
20   of mail fraud and conspiracy to commit mail fraud. While
21   working at Watermark Financial Services Group, Gent and
22   Lagona were involved in an investment scheme in which they
23   offered clients investment opportunities in debentures that
24   promised 10% annual interest. Although investors were led
25   to believe that the prospective investments were safe,
26   chiefly real estate in Maine, most of the money was used for
27   business and personal expenses, and only a small fraction of
28   the money was ever invested in anything.
29
30        Gent and Lagona challenge their convictions and
31   sentences on the following grounds: (1) insufficient
32   evidence that they had intent to defraud and knowledge of
33   the scheme; (2) unacceptable risk that speculative legal
34   theories led to their convictions; (3) the admission of
35   impermissible hearsay evidence; (4) erroneous jury
36   instructions; and (5) procedural error and substantive
37   unreasonableness of their sentences. We assume the parties’
38   familiarity with the underlying facts, the procedural
39   history, and the issues presented for review.
40
41        1.  “A defendant challenging the sufficiency of the
42   evidence bears a heavy burden, because the reviewing court
43   is required to draw all permissible inferences in favor of
44   the government and resolve all issues of credibility in
45   favor of the jury verdict.” United States v. Kozeny, 667
46   F.3d 122, 139 (2d Cir. 2011). We “must affirm the
47   conviction if any rational trier of fact could have found

                                  2
 1   the essential elements of the crime beyond a reasonable
 2   doubt.” Id. (internal quotation marks omitted).
 3
 4        The trial evidence was sufficient to allow a rational
 5   jury to conclude that Gent and Lagona had intent to defraud
 6   and knowledge of Watermark’s illegal scheme. Specifically,
 7   Lagona actively prepared new debentures even after becoming
 8   aware that payments to investors of previously issued
 9   debentures were due and could not be paid, as promised, with
10   profit; attended at least one sales meeting in which he
11   participated in procuring an investment based on false
12   representations; signed letters assuring investors that
13   their non-existent investments were safe; and did these
14   things at times when he was aware that no investments and no
15   income were being generated.
16
17        When he was hired, Gent knew that the company was
18   “bleeding money” and was paying new investors back with
19   prior investor money. As Gent argues, these conditions do
20   not necessarily bespeak fraud; however, while he was
21   encouraging the sales team to continue selling debentures,
22   he told an employee that he had received permission for the
23   sales from a FINRA representative — which the representative
24   denied at trial. Gent and Lagona were also present at a
25   meeting in which an employee was instructed to take records
26   home in order to conceal them from FINRA or SEC officials;
27   and Gent implicitly acknowledged the potential legal
28   consequences. This evidence is sufficient to allow a
29   reasonable jury to infer that Lagona and Gent intended to
30   defraud investors and had knowledge of the scheme.
31
32        2.  During trial, neither Gent nor Lagona objected on
33   the ground that there was an unacceptable risk of conviction
34   based on speculative or undefined legal theories.
35   Therefore, we review this issue for plain error. See, e.g.,
36   United States v. Brown, 352 F.3d 654, 663 (2d Cir. 2003).
37   “To establish plain error, there must be (1) error, (2) that
38   is plain, and (3) that affects substantial rights.” Id. at
39   664 (internal quotation marks omitted). Once these
40   conditions are met, we can notice the error only if it
41   “seriously affects the fairness, integrity, or public
42   reputation of judicial proceedings.” Id. (internal
43   quotation marks omitted). The events during trial did not
44   amount to plain error that “seriously affect[ed] the
45   fairness” of the trial. Id.
46


                                  3
 1        The defendants argue that the government referenced
 2   Ponzi schemes and unregistered securities to suggest
 3   illegality outside of the indictment. However, Ponzi
 4   schemes were referenced to show that the victims were never
 5   informed that their money would be used to pay other
 6   investors, which supported the theory that Gent and Lagona
 7   intended to engage in a fraudulent scheme. Evidence that
 8   Gent and Lagona believed that the debentures sold by
 9   Watermark should have been registered, but decided to sell
10   them anyway, was also probative of fraudulent intent. In
11   any event, even if undefined legal theories were thus
12   referenced, they did not affect the fairness or integrity of
13   the trial.
14
15        3.  The district court’s evidentiary decisions are
16   reviewed for abuse of discretion and will be reversed only
17   in instances of “manifest error.” United States v. Miller,
18   626 F.3d 682, 687-88 (2d Cir. 2010). Even an evidentiary
19   ruling that is “manifestly erroneous” is not a basis for
20   vacatur if the error was harmless. Id. at 688. The
21   district court’s decision to admit the credit report was not
22   manifestly erroneous. The credit report was not admitted to
23   prove the truth of its contents. It was therefore not
24   hearsay. Rather, it was used for the purpose of showing
25   what had been communicated to Gent, which went to the core
26   of his good faith defense. Even if it was error for the
27   district court to allow the information in the report to be
28   read to the jury, such error was harmless as the credit
29   report was a minimal part of the government’s case and its
30   exclusion likely would not have affected the outcome. See
31   Tesser v. Bd. of Educ. Of City Sch. Dist., 370 F.3d 314, 319
32   (2d Cir. 2004).
33
34        4.  “A jury instruction is erroneous if it misleads
35   the jury as to the correct legal standard or does not
36   adequately inform the jury on the law.” United States v.
37   Males, 459 F.3d 154, 156 (2d Cir. 2006). We review jury
38   instructions in their entirety, rather than in isolation.
39   Id. Considered in their entirety, the instructions were not
40   misleading with respect to the appropriate legal standard.
41   Additionally, the absence of contemporaneous objection from
42   defense counsel further suggests that when the “challenged
43   language” was heard in the “context of the charge as a whole
44   rather than in artificial isolation,” it was not misleading
45   or confusing. United States v. Carr, 880 F.2d 1550, 1555
46   (2d Cir. 1989) (internal quotation marks omitted).
47

                                  4
 1        5.  We review sentences imposed by the district court
 2   for “reasonableness, which is akin to review for abuse of
 3   discretion, under which we consider whether the sentencing
 4   judge exceeded the bounds of allowable discretion, committed
 5   an error of law in the course of exercising discretion, or
 6   made a clearly erroneous finding of fact.” United States v.
 7   Corsey, 723 F.3d 366, 374 (2d Cir. 2013) (internal quotation
 8   marks omitted).
 9
10        Gent argues that the sentence imposed by the district
11   court was procedurally and substantively unreasonable
12   because, in calculating the amount of loss and the number of
13   victims, the court attributed to Gent prior conduct of the
14   conspiracy, contrary to U.S.S.G. § 1B1.3. The district
15   court erred because, for purposes of sentencing, a
16   defendant’s relevant conduct does not, in the ordinary case,
17   include conduct committed before the defendant joined the
18   conspiracy. See U.S.S.G. § 1B1.3 cmt. n.2 (“A defendant’s
19   relevant conduct does not include conduct of members of a
20   conspiracy prior to the defendant’s joining the
21   conspiracy . . . [but] [t]he Commission does not foreclose
22   the possibility that there may be some unusual set of
23   circumstances in which the exclusion of such conduct may not
24   adequately reflect the defendant’s culpability; in such
25   case, an upward departure may be warranted.”). The district
26   court did not consider whether Gent’s conduct amounted to
27   unusual circumstances. Nor did the district court make a
28   finding as to when Gent joined the conspiracy. Accordingly,
29   Gent’s sentence is vacated and remanded for the district
30   court to consider, in the first instance, whether this case
31   presents unusual circumstances, and if not, to make findings
32   of fact as to the date on which Gent joined the conspiracy.
33
34        Lagona argues that, in light of his family
35   circumstances, age, and lack of criminal record, his
36   sentence was procedurally and substantively unreasonable.
37   But the district court did consider Lagona’s circumstances,
38   and sentenced him to a non-Guidelines sentence that was
39   drastically reduced from the Guidelines range. Lagona
40   acknowledges that he waived his right to challenge on appeal
41   his sentence for attempted obstruction in violation of 18
42   U.S.C. § 1503(a). The sentence pursuant to 18 U.S.C. § 3147
43   is a “statutory sentencing enhancement” of his attempted
44   obstruction sentence, U.S.S.G. § 3C1.3, imposed because the
45   conduct was committed while Lagona was on release, 18 U.S.C.
46   § 3147. Accordingly, the appeal waiver covers the two-year


                                  5
 1   sentence, imposed consecutively, and Lagona has no basis for
 2   appealing the consecutive nature of the sentence.
 3
 4        Finally, “[i]n light of our baseline aversion to
 5   resolving ineffectiveness claims on direct review, . . . we
 6   decline to review” any claim of ineffective assistance to
 7   the extent presented on this appeal. United States v.
 8   Morris, 350 F.3d 32, 39 (2d Cir. 2003) (internal quotation
 9   marks omitted).
10
11        For the foregoing reasons, and finding no merit in
12   appellants’ other arguments, we hereby AFFIRM as to
13   defendant Lagona and AFFIRM in part, and VACATE and REMAND
14   as to defendant Gent’s sentence.
15
16                              FOR THE COURT:
17                              CATHERINE O’HAGAN WOLFE, CLERK
18




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