10-4622-cr
USA v. Lyttle

                            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.

    At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Daniel Patrick Moynihan United States Courthouse, at 500 Pearl Street, in the City of New York,
on the 12th day of January, two thousand twelve.

Present:
         ROBERT D. SACK,
         ROBERT A. KATZMANN,
         BARRINGTON D. PARKER,
                           Circuit Judges.
____________________________________________________________

UNITED STATES OF AMERICA,

                           Appellee,

                           - v. -                      No. 10-4622-cr

MELVIN RAY LYTTLE,

                           Defendant-Appellant,

VIOLETTE GAIL ELDRIDGE, PAUL E. KNIGHT,
JOHN L. MONTANA,

                           Defendants.
____________________________________________________________

For Defendant-Appellant:                 PETER J. PULLANO, Rochester, N.Y.

For Appellee:                            BRADLEY E. TYLER, Assistant United States Attorney,
                                         of counsel, for William J. Hochul, Jr., United States
                                         Attorney for the Western District of New York,
                                         Rochester, N.Y.
       Appeal from the United States District Court for the Western District of New York
(Siragusa, J.).

       ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the district court is AFFIRMED.

       Defendant-Appellant Melvin Ray Lyttle appeals from a judgment of conviction entered

on November 8, 2010, by the United States District Court for the Western District of New York

(Siragusa, J.), following a jury trial before the Honorable Sterling Johnson III, District Judge,

Eastern District of New York. On appeal, Lyttle contends (1) that his trial counsel was

ineffective, (2) that the district court erred in denying his competency motion, (3) that the district

court erred in providing the jury with a transcript of his testimony, (4) that the charges in the

indictment were barred by the statute of limitations, (5) that the district court erred in dismissing

his motion to dismiss the money laundering counts, and (6) that the sentence imposed by the

district court was substantively unreasonable. We assume the parties’ familiarity with the facts

and procedural history of this case.

       Turning first to Lyttle’s contention that his trial counsel was ineffective, in order for a

defendant to prevail on a claim of ineffective assistance of counsel, he “must show that counsel’s

representation fell below an objective standard of reasonableness” and “that, but for counsel’s

unprofessional errors, the result of the proceeding would have been different.” Strickland v.

Washington, 466 U.S. 668, 688, 694 (1984). “The usual method of challenging the effectiveness

of defense counsel in a federal criminal trial is by a collateral attack on the conviction under 28

U.S.C. § 2255.” United States v. Aulet, 618 F.2d 182, 185 (2d Cir. 1980). Because “a trial

record [is] not developed precisely for the object of litigating or preserving the [ineffective


                                                  2
assistance] claim and [is] thus often incomplete or inadequate for this purpose,” such a claim

“ordinarily will be litigated in the first instance in the district court, the forum best suited to

developing the facts necessary to determining the adequacy of representation during an entire

trial.” Massaro v. United States, 538 U.S. 500, 505 (2003).

          Lyttle principally argues that his counsel was ineffective for (1) failing adequately to

prepare him to testify and (2) failing to call an expert witness in banking or securities law to

rebut the government’s expert’s testimony that the asset management agreement prepared by

Lyttle was illegal on its face. Because the factual record on these and other issues is not fully

developed, we conclude that Lyttle’s ineffectiveness claim can be better addressed in the district

court on a motion under 28 U.S.C. § 2255 and thus decline to consider the claim on direct

review.

          We next turn to Lyttle’s argument that the district court erred in denying his competency

motion. To be competent to stand trial, a defendant “must have (1) ‘sufficient present ability to

consult with his lawyer with a reasonable degree of rational understanding’ and (2) ‘a rational as

well as factual understanding of the proceedings against him.’” United States v. Nichols, 56 F.3d

403, 410 (2d Cir. 1995) (quoting Dusky v. United States, 362 U.S. 402, 402 (1960) (per curiam)).

We will uphold a district court’s competency determination unless it is clearly erroneous.

United States v. Gold, 790 F.2d 235, 239-40 (2d Cir. 1986). “Where there are two permissible

views of the evidence as to competency, the court’s choice between them cannot be deemed

clearly erroneous.” United States v. Villegas, 899 F.2d 1324, 1341 (2d Cir. 1990).

          In this case, we cannot say that the district court’s finding of competency was clearly

erroneous in light of the report submitted by Judith Campbell, Ph.D. After monitoring Lyttle


                                                    3
from February 10, 2009 through March 27, 2009, Dr. Campbell concluded that Lyttle was

competent to stand trial and was merely malingering. According to the report, at the time of Dr.

Campbell’s evaluation, Lyttle “[wa]s capable of perceiving the facts of his case realistically and

engaging rationally, productively, and meaningfully in discussions of his case” and

“underst[ood] the adversarial nature of legal proceedings[,] . . . the role of the prosecuting

attorney[,] . . . the role of the judge[,] . . . [and] the implications of various pleas.” Gov’t App.

50. Dr. Campbell also noted that during monitored phone calls, Lyttle discussed his case in a

“detailed, rational, goal-directed, and reality-based manner,” and that while he “appeared

extremely distrustful of his attorney,” he “did not evidence paranoia of delusional proportions”

and “never verbalized bizarre ideas, fears, or concerns which could suggest [that he was

suffering] . . . from delusions or other signs of severe mental disorder.” Id. at 46, 48.

        While Thomas Sullivan, Ph.D., opined that Lyttle did suffer from a delusional disorder

that interfered with his ability to trust his defense counsel, the district court was entitled to give

more credence to Dr. Campbell’s report since Dr. Campbell observed Lyttle over a forty-five day

period while Dr. Sullivan only observed Lyttle for seven hours. In addition, as noted by the

district court, Dr. Sullivan reported that while Lyttle “complained vociferously about his

memory functioning . . . his performance on standardized tests of memory was consistently

good,” a finding consistent with Dr. Campbell’s opinion that Lyttle was malingering. Id. at 10.

Moreover, the district court observed that in its many dealings with Lyttle, he “always appeared

to the Court to be intelligent, oriented in time and place, and very aware of the facts and

circumstances related to his case.” United States v. Lyttle, No. 05 Cr. 6116, 2009 WL 2390608,

at *6 (W.D.N.Y. July 31, 2009). The district court was entitled to take into consideration its own


                                                   4
observations of Lyttle during the lengthy pre-trial proceedings. See United States v. Morrison,

153 F.3d 34, 46 (2d Cir. 1998) (“In determining competency, the court may consider . . . its own

observations of the defendant’s conduct.”). Accordingly, the district court’s determination that

Lyttle was competent to stand trial was not clearly erroneous.

       Lyttle next contends that the district court erred in providing the jury with a written

transcript as opposed to an oral readback of his testimony. The decision to provide the jury with

a written transcript in lieu of an oral readback is reviewed for abuse of discretion. United States

v. Escotto, 121 F.3d 81, 84-85 (2d Cir. 1997). “Whether a court permits readbacks or sends

transcripts, appropriate cautions should be given to the jury to minimize the particular risks

associated with either technique[, such as] a jury instruction reminding the jury to consider all

the evidence without unduly emphasizing any portion of it . . . .” Id. at 85.

       Here, since the jury requested Lyttle’s entire testimony—testimony consisting of

approximately eighty-six pages—we cannot conclude that the district court abused its discretion

by providing the jury with a written transcript of Lyttle’s testimony. Id. at 84 (“[T]he possibility

of undue emphasis on transcripts sent in lieu of readbacks is minimal when the jury has asked to

rehear extensive sections of testimony.”). As we observed in Escotto, “written transcripts

provide the jury a more efficient method than readbacks of sorting through lengthy portions of

testimony” and “will often be preferable to enduring a verbatim and usually unanimated

rereading of testimony.” Id. While Lyttle further argues that it was error to provide the jury the

transcript without a cautionary instruction, Lyttle’s trial counsel never objected to the lack of a

cautionary instruction, so this argument is waived. Id. (“[T]o the extent that [the defendant] is

arguing that it was error to provide the transcripts without giving a cautionary instruction, we

reject this argument because it was not raised in the trial court.”).

                                                  5
       The next issue raised by Lyttle is whether the district court erred in failing to dismiss the

indictment as time-barred. We review the district court’s application of a statute of limitations

de novo. See, e.g., Corcoran v. N.Y. Power Auth., 202 F.3d 530, 542 (2d Cir. 1999). Here,

because the indictment was filed on August 18, 2005 and alleges misconduct between the

summer of 1999 to July 5, 2001, Lyttle argues that no act committed prior to August 18, 2000

should have been allowed to be charged in the indictment. See 18 U.S.C. § 3282. While Lyttle

would be correct in the ordinary case, in certain circumstances, the court may suspend the

running of the statute of limitations to permit the government to obtain foreign evidence:

           (a)(1) Upon application of the United States, filed before return of an indictment,
           indicating that evidence of an offense is in a foreign country, the district court before
           which a grand jury is impaneled to investigate the offense shall suspend the running
           of the statute of limitations for the offense if the court finds by a preponderance of the
           evidence that an official request has been made for such evidence and that it
           reasonably appears, or reasonably appeared at the time the request was made, that
           such evidence is, or was, in such foreign country.

           ....

           (b) Except as provided in subsection (c) of this section, a period of suspension under
           this section shall begin on the date on which the official request is made and end on
           the date on which the foreign court or authority takes final action on the request.

           (c) The total of all periods of suspension under this section with respect to an offense:

           (1) shall not exceed three years; and

           (2) shall not extend a period within which a criminal case must be initiated for more
           than six months if all foreign authorities take final action before such period would
           expire without regard to this section.

18 U.S.C. § 3292 (emphasis added).

       Lyttle acknowledges that the government successfully sought an order suspending the

statute of limitations in order to seek records from Hungary, but he argues that the request was

made in bad faith. Specifically, he contends that because he turned over the documents in


                                                   6
question to the SEC in accordance with a subpoena, the government already possessed the

foreign documents, and thus only sought the suspension order to obtain more time to file the

indictment. Even assuming that Lyttle turned over all relevant documents to the SEC, we cannot

fault the government for seeking an extension so that it could request records from Hungary.

Contrary to Lyttle’s assertion, the government was not obligated to trust that the defendant had,

in fact, made a complete production of documents to the SEC. Thus, because the suspension

order was obtained in a procedurally proper fashion and because there is no evidence that the

government’s request was improper, we conclude that the charges against Lyttle were not time-

barred.

          We now turn to Lyttle’s contention that the district court erred in denying his motion to

dismiss the money laundering counts. We review the district court’s denial of a motion to

dismiss de novo. See United States v. Mazza-Alaluf, 621 F.3d 205, 209 (2d Cir. 2010) (“To the

extent [defendant’s] challenge presents an issue of statutory construction . . . our review is de

novo.”). A defendant is subject to criminal liability for money laundering when, “knowing that

the property involved in a financial transaction represents the proceeds of some form of unlawful

activity, [he] conducts or attempts to conduct such a financial transaction which in fact involves

the proceeds of a specified unlawful activity.” 18 U.S.C. § 1956(a)(1) (emphasis added). In

United States v. Santos, 553 U.S. 507 (2008), a case involving allegations relating to a gambling

operation, the Supreme Court addressed whether the term “proceeds” refers to “profits” or

simply “receipts.” Id. at 509. After concluding that the term “proceeds” was ambiguous, a four-

justice plurality applied the rule of lenity and determined that “proceeds” refers to “profits,” not

“receipts.” Id. at 514. Justice Stevens concurred in the judgment, but rejected the plurality’s

application of the rule of lenity to all predicate unlawful activity, reasoning that “proceeds” may


                                                   7
mean “profits” with respect to one predicate crime and “receipts” with respect to another. Id. at

526 & n.3. In United States v. Quinones, we held that “proceeds’ under 18 U.S.C. § 1956 is not

limited to ‘profits’ at least where . . . the predicate offense involves the sale of contraband,” but

declined to “address the proper interpretation of ‘proceeds’ under Santos where the predicate

offense does not involve the sale of contraband.” 635 F.3d 590, 600 & n.5 (2d Cir. 2011).

       Lyttle argues that the co-defendants’ return of investor principal – the basis for the

money laundering counts charged in the indictment – did not constitute a financial transaction

involving the “proceeds” of unlawful activity, both as a matter of law under Santos and also as a

matter of fact. Assuming without deciding that “proceeds” means “profits” when, as here, the

predicate “specified unlawful activities” are mail and wire fraud, Lyttle’s argument is unavailing,

because the district court specifically instructed the jury that “proceeds” means “net profits” and

that “the proceeds of the specified unlawful activity do not include money that is used to pay the

expenses associated with the specified unlawful activity.” Tr. 960. In light of this instruction,

the jury necessarily concluded that the co-defendants were in receipt of “profits,” as opposed to

“gross receipts.” Moreover, this conclusion was perfectly reasonable; unlike the illegal

gambling business in Santos – an ongoing operation that paid people to collect wagers and

distribute winnings to clients – the investment scheme charged here involved no investment

activity whatsoever. We thus conclude that the district court did not err in denying Lyttle’s

motion to dismiss the money laundering counts.

       Lyttle’s final argument on appeal is that the district court’s sentence of fourteen years

was “harsh and excessive” in light of his age and health problems. Appellant Br. 41. We review

a district court’s sentence for “reasonableness.” United States v. Booker, 543 U.S. 220, 260-62

(2005). Reasonableness review is akin to a “deferential abuse-of-discretion standard.” Gall v.

                                                  8
United States, 552 U.S. 38, 52 (2007). In determining whether a sentence is reasonable, we

examine both “the length of the sentence (substantive reasonableness) as well as the procedure

employed in arriving at the sentence (procedural reasonableness).” United States v. Johnson,

567 F.3d 40, 51 (2d Cir. 2009).

       Here, we cannot conclude that the sentence imposed by the district court is procedurally

or substantively unreasonable. As to procedural reasonableness, Lyttle fails to identify a single

procedural error committed by the district court in imposing the sentence.1 The district court

took Lyttle’s age and health into consideration in rendering its sentence, noting that Lyttle was

“almost 60 years old” and that his “health [was] not good,” and decided to downwardly depart

from the Guidelines range after “[c]onsidering all of the sentencing factors [and] considering

[Lyttle’s] age and physical condition.” Gov’t App. 108-09. As to substantive reasonableness,

we only set aside a district court’s substantive determination in “exceptional cases where the trial

court’s decision cannot be located within the range of permissible decisions,” and, here, we

cannot say that the below-Guidelines sentence issued by the district court falls outside “the

boundaries of reasonableness.” United States v. Rigas, 583 F.3d 108, 122 (2d Cir. 2009)

(internal quotation marks omitted).

       We have considered all of Defendant-Appellant’s remaining arguments and find them to

be without merit. For the reasons stated above, the judgement of the district court is

AFFIRMED.
                                                     FOR THE COURT:
                                                     CATHERINE O’HAGAN WOLFE, CLERK




       1
         While noting that the district court applied certain sentencing enhancements over
defense counsel’s objections, Lyttle does not challenge any of these enhancements on appeal.

                                                 9
