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United States v. Feldman

United States Court of Appeals, Eleventh Circuit

July 30, 2019

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
ISAAC FELDMAN, Defendant-Appellant.

          Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:11-cr-20279-RNS-4

          Before WILLIAM PRYOR, NEWSOM, and BRANCH, Circuit Judges.

          WILLIAM PRYOR, CIRCUIT JUDGE.

         This appeal requires us to decide several issues-including an issue of first impression in this Circuit about the Double Jeopardy Clause of the Fifth Amendment-arising from Isaac Feldman's convictions and sentence for conspiracy to commit wire fraud and conspiracy to commit money laundering. Feldman invested in two Miami Beach nightclubs that hired foreign women to pose as tourists, attract patrons, and persuade them to buy drinks without paying attention to the clubs' exorbitant prices. A grand jury returned an indictment against Feldman and alleged co-conspirators alleging that the nightclubs' activities included regular acts of wire fraud. After a jury convicted the defendants of some counts but acquitted them of others, we reversed their convictions. See United States v. Takhalov, 827 F.3d 1307 (11th Cir.), modified on denial of reh'g, 838 F.3d 1168 (11th Cir. 2016). After a retrial, a second jury found Feldman guilty of conspiracy to commit wire fraud and conspiracy to commit money laundering. The district court sentenced him to 100 months of imprisonment. Feldman contends that his retrial on an alternate theory of the money-laundering-conspiracy charge- for which the first jury verdict was silent-violated his double-jeopardy rights, that the evidence is insufficient to support his convictions, that the indictment's wire-fraud-conspiracy charge was constructively amended, that literary allusions by prosecutors deprived him of a fair trial, and that his sentence is procedurally and substantively unreasonable. We disagree on each point, and we affirm his convictions and sentence.

         I. BACKGROUND

         A grand jury indicted Isaac Feldman and several alleged co-conspirators for one count of conspiracy to commit wire fraud, 18 U.S.C. §§ 1343, 1349; one count of conspiracy to commit money laundering, id. § 1956(h), both by means of financial transactions to conceal the nature and source of illegal proceeds, id. § 1956(a)(1)(B)(i), and by the international transmission of funds to promote unlawful activity, id. § 1956(a)(2)(A); and several counts of wire fraud, id. § 1343. The charges stemmed from the defendants' involvement in a ring of Miami Beach nightclubs at which customers were parted from their money. The ringleader of the alleged conspiracy was Russian businessman and con artist Alec Simchuk, who became a cooperating witness for the government. Feldman, a Miami Beach-area resident and Russian-speaking naturalized citizen, invested in two clubs with Simchuk, Stars Lounge and VIP Diamond Club.

         The clubs operated on a business model that Simchuk had developed in Eastern Europe. The basic hustle was for so-called "B-girls," young women from Eastern Europe who worked for the clubs, to pose as partygoing tourists, trawl Miami Beach for eligible patrons-the ideal targets were well-dressed single men using high-value credit cards-and lure them back to the clubs, where they would be led to spend exorbitant sums on drinks for themselves and the B-girls. The indictment charged a panoply of deceptive or underhanded tactics that the B-girls and bartenders used to increase the customers' bills and to keep them unaware of the charges they were incurring: for example, hiding menus, ordering drinks without the customers' knowledge, ignoring customers' inquiries about prices, lying about prices, hiding the amount on a receipt when requesting a customer's signature, forging customers' signatures, encouraging customers to drink themselves into a stupor, and serving the B-girls shot glasses filled with water when the customers thought they were ordering vodka shots.

         Feldman and several alleged co-conspirators pleaded not guilty, and after a joint trial, a jury found Feldman guilty of conspiracy to commit wire fraud. But the jury found Feldman not guilty of the individual counts of wire fraud with which he was charged. The jury also found Feldman guilty of conspiracy to commit money laundering by the international transmission of funds to promote unlawful activity, 18 U.S.C. § 1956(a)(2)(A), but it expressed no finding about conspiracy to commit money laundering by financial transactions to conceal the nature and source of illegal proceeds, id. § 1956(a)(1)(B)(i).

         The verdict form provided the jury three options with regard to the money-laundering-conspiracy count: "Guilty (Concealment of Payments)," "Guilty (Transmitting & Receiving Funds Internationally)," and "Not Guilty," arranged as follows:

         (Image Omitted)

         The district court instructed the jury that it could find Feldman guilty under either or both theories, but it had to agree unanimously about any theory it selected. The jury found Feldman guilty of conspiracy to commit money laundering by international transactions and made no other mark, as the image above reflects.

         The district court sentenced Feldman to 100 months of imprisonment, which exceeded Feldman's advisory guideline range. The district court determined that an upward variance was warranted based in large part on its finding that Feldman had committed perjury when he testified in his defense.

         We reversed Feldman's convictions on the ground that the district court erred when it failed to give a jury instruction requested by the defendants. See Takhalov, 827 F.3d at 1312-24. The requested instruction would have informed the jury that the B-girls' concealment of their employment relationship with the clubs was not sufficient to establish fraud. See id. at 1311. We held that the district court should have given the requested instruction because it correctly stated the law, dealt with an important matter raised at the trial, and was not substantially covered by the other instructions. See id. at 1315-20. And we held that its denial was not harmless beyond a reasonable doubt because the government had argued that the B-girls' dissembling their employment status was in and of itself an act of fraud, and the jury reasonably could have found that the defendants lacked any other fraudulent intent. See id. at 1322-25.

         The government redacted the indictment to charge Feldman individually with the wire-fraud and money-laundering conspiracy counts of which the first jury had found him guilty. Feldman again pleaded not guilty, and he proceeded to an individual trial.

         At the second trial, the gist of the government's case was that Feldman was an involved investor with significant managerial authority over the clubs' activities and finances. Simchuk, the most important government witness, testified about the clubs' business model, the manner in which the B-girls and bartenders fleeced customers out of their money, and Feldman's knowing participation in the scheme. Several B-girls testified about incidents in the clubs and the extent of their interactions with Feldman. And the government presented evidence that Feldman helped manage the clubs' finances through his sister, Alex Burrlader, and his accountant, Kim Marks. Burrlader, who worked as Feldman's bookkeeper, was a signatory of the Stars Lounge bank account and kept records of the clubs' finances in her office at Feldman's realty company, including records of "chargebacks," or payments that credit-card companies rescinded after their customers complained that the nightclubs had billed them for unauthorized charges. Marks testified that he had set up a limited-liability company, Ieva Marketing LLC, in the name of B-girl Ieva Koncilo at either Feldman's or Burrlader's request; Simchuk testified that Feldman had managed the creation of the company and that its purpose was to funnel cash payments to the B-girls without having to pay taxes on their earnings.

         Feldman did not testify in his own defense as he had at the first trial. He presented a short character-based defense by calling two business associates and his rabbi to testify that he was a naïve and trusting person who would not willingly have joined a fraudulent scheme. Apart from their testimony, Feldman's defense strategy was to try to establish on cross-examination of the government's witnesses that Feldman had no knowledge of any fraud that took place in the nightclubs and that Simchuk's testimony to the contrary was unreliable.

         On two occasions, prosecutors made references to the Charles Dickens novel Oliver Twist and, in particular, the character Fagin, a street criminal who inducted the title character into his band of juvenile pickpockets. During jury selection, the government used Fagin and the children as an example when it asked prospective jurors whether they understood that the ringleader of a conspiracy is guilty of a crime even if he does not personally steal from the targets and whether they would be unwilling to credit a co-conspirator's testimony because he was also a criminal. The government returned to the image of Fagin during its rebuttal closing argument:

I will end with the story of where we began with my colleague . . . . He talked about the story of Oliver Twist and how the older man, Fag[i]n, would send out his little orphans onto the street to pick people's pockets. Those guys-Fag[i]n wasn't there on the streets picking their pockets. Oleg Simchuk, Isaac Feldman, weren't there when these credit cards were being processed. But did they know it? Did they benefit from it? Absolutely.

         Because much of the evidence at the second trial concerned the B-girls' efforts to induce customers to drink to excess, the district court's instructions to the jury included the following paragraph to distinguish between fraudulent and innocent conduct:

The law does not excuse a patron from his obligation to pay for beverages or goods just because he became intoxicated voluntarily. Even if the establishment uses attractive women to encourage a patron to purchase and consume increasing amounts of alcoholic beverages, the patron is not a victim of fraud when he becomes intoxicated voluntarily and later regrets the purchases. But if the establishment forces the patron to consume the alcoholic beverage, or adulterates the beverage, or allows or encourages the patron to become intoxicated with the intent to charge his credit card for purchases he either is unaware of or is too intoxicated to consent to, then such conduct may constitute fraud [emphasis added].

         This instruction was written in part by Feldman's attorney and in part by the district court. At the charge conference, Feldman's counsel asked the district court to give the first part of the instruction. The district court agreed to do so but sua sponte proposed adding the emphasized sentence. Feldman's counsel asked the district court to read the sentence again, the district court did so, and Feldman's attorney said, "All right. I have been overruled by my esteemed colleagues at the defense table and that's fine."

         The jury found Feldman guilty of both conspiracy counts, including both money-laundering objects. Using the 2016 edition of the United States Sentencing Guidelines, the district court calculated that Feldman's advisory guideline range was 46 to 57 months of imprisonment based on a total offense level of 23 and a criminal-history category of I. The district court's calculations included an eight-level enhancement based on a loss amount greater than $95, 000 but not greater than $150, 000, see United States Sentencing Guidelines Manual § 2B1.1(b)(1)(E) (Nov. 2016); a two-level enhancement based on a finding that the fraud involved ten or more victims, see id. § 2B1.1(b)(2)(A)(i); a two-level obstruction-of-justice enhancement based on the finding that Feldman committed perjury when he testified at the first trial, see id. § 3C1.1; and a two-level enhancement for "sophisticated" money laundering based on the use of Ieva Marketing as a shell entity, see id. § 2S1.1(b)(3).

         Despite Feldman's lower advisory guideline range, the district court again sentenced Feldman to 100 months of imprisonment. The district court explained its view that "a very significant sentence [was] appropriate in light of the scope of this conspiracy, the significant harm that this crime caused to [the] community and the customers and [the local] tourist industry." It also explained its continued belief that Feldman had committed perjury when he testified at the trial, and it remarked that Feldman "ha[d]n't shown any remorse."

         II. STANDARD OF REVIEW

         Three standards govern our review of this appeal. First, we review de novo an alleged violation of the Double Jeopardy Clause, United States v. Strickland, 261 F.3d 1271, 1273 (11th Cir. 2001); the sufficiency of the evidence, United States v. Calhoon, 97 F.3d 518, 523 (11th Cir. 1996); an alleged constructive amendment of the indictment, United States v. Sanders, 668 F.3d 1298, 1309 n.9 (11th Cir. 2012); and allegations of prosecutorial misconduct, United States v. Noriega, 117 F.3d 1206, 1218 (11th Cir. 1997).

         Second, we review alleged errors to which no objection was made at trial only for plain error. See United States v. Gonzalez, 834 F.3d 1206, 1217 (11th Cir. 2016). "To establish plain error, 'there must be an error that has not been intentionally relinquished or abandoned'; 'the error must be plain-that is to say, clear or obvious'; and 'the error must have affected the defendant's substantial rights, '" which ordinarily requires "'a reasonable probability that, but for the error, the outcome of the proceeding would have been different.'" United States v. Corbett, 921 F.3d 1032, 1037 (11th Cir. 2019) (alteration adopted) (quoting Molina-Martinez v. United States, 136 S.Ct. 1338, 1343 (2016)). "If these conditions are met, we 'should exercise our discretion to correct the forfeited error if the error seriously affects the fairness, integrity or public reputation of judicial proceedings.'" Id. (alterations adopted) (quoting Molina-Martinez, 136 S.Ct. at 1343).

         Third, "[w]e review the reasonableness of a sentence for abuse of discretion using a two-step process." United States v. Cubero, 754 F.3d 888, 892 (11th Cir. 2014) (quoting United States v. Turner, 626 F.3d 566, 573 (11th Cir. 2010)). In the first step, "we look at whether the district court committed any significant procedural error, such as miscalculating the advisory guidelines range, treating the guidelines as mandatory, failing to consider the 18 U.S.C. § 3553(a) factors, selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen sentence." Id. In the second step, "we examine whether the sentence is substantively unreasonable under the totality of the circumstances and in light of the § 3553(a) factors." Id. We review the district court's legal interpretation of the Sentencing Guidelines de novo. Id.

         III. DISCUSSION

         We divide our discussion in five parts. First, we reject Feldman's argument that double jeopardy barred the concealment-based theory of conspiracy to commit money laundering. Second, we explain that the evidence is sufficient to support Feldman's convictions. Third, we explain that the wire-fraud-conspiracy count of the indictment was not constructively amended. Fourth, we reject Feldman's argument that the allusions by prosecutors to the character of Fagin from Oliver Twist deprived him of due process. Fifth, we explain that Feldman's 100-month sentence is procedurally and substantively reasonable.

         A. Double Jeopardy Did Not Bar the Concealment-Based Money-Laundering Theory.

         Feldman contends that he was twice put in jeopardy for conspiracy to commit concealment money laundering because the jury at his first trial did not find that he was guilty under that theory of the money-laundering-conspiracy charge. The Double Jeopardy Clause of the Fifth Amendment guarantees that "[n]o person shall . . . be subject for the same offence to be twice put in jeopardy of life or limb." U.S. Const. amend. V. "[B]y its terms," the protection of the clause "applies only if there has been some event, such as an acquittal, which terminates the original jeopardy." Richardson v. United States, 468 U.S. 317, 325 (1984).

         We have held that when a single count charges two different theories of the offense, a jury's finding that the defendant is not guilty under one theory does not bar retrial under the other theory if the jury fails to reach a verdict about the alternative theory and a mistrial results. See United States v. Rivera, 77 F.3d 1348, 1350-52 (11th Cir. 1996). But Feldman's first jury did not find him not guilty of conspiracy to commit concealment money laundering. Instead, it found him guilty of conspiracy to commit money ...


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