09-2888-cr
USA v. Leonard (Dickau)
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 2nd day of November, two thousand ten.
Present: ROGER J. MINER,
ROBERT A. KATZMANN,
Circuit Judges,
DENISE COTE,
District Judge.*
____________________________________________________________
UNITED STATES OF AMERICA,
Appellee,
-v- No. 09-2888-cr
WILLIAM A. NEWSOM,
Defendant,
PAUL C. DICKAU,
Defendant-Appellant.**
____________________________________________________________
For Defendant-Appellant: NORMAN TRABULUS, New York, N.Y.
*
The Honorable Denise Cote, United States District Judge for the Southern District of
New York, sitting by designation.
**
The Clerk of the Court is directed to amend the official caption as set forth above.
For Appellee: CHARLES P. KELLY, Assistant United States
Attorney (David C. James, Assistant United
States Attorney, on the brief), for Loretta E.
Lynch, United States Attorney for the Eastern
District of New York, Brooklyn, N.Y.
Appeal from the United States District Court for the Eastern District of New York
(Wexler, J.).
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED.
Defendant-appellant Paul C. Dickau (“Dickau”) appeals from a July 1, 2009 restitution
order issued by the United States District Court for the Eastern District of New York (Wexler,
J.). Dickau was convicted, following a jury trial, of two counts of conspiracy to commit
securities and mail fraud and two substantive counts of securities fraud. Each of these four
counts regarded Dickau’s failure to disclose accurately the sales commissions that Dickau’s
company would receive in connection with the sale of interests in companies formed to finance
the production and distribution of motion pictures. The district court sentenced Dickau to 43
months’ imprisonment and ordered him to pay $499,989.64 in restitution, an amount that
equaled the purchase price of the securities sold by Dickau. This Court affirmed Dickau’s
judgment of conviction by opinion dated June 11, 2008, see United States v. Leonard, 529 F.3d
83, 93 (2d Cir. 2008), but vacated and remanded for resentencing, concluding that “the district
court erred in not deducting from the purchase price the actual value of the instruments” because
the securities that the investors received were not necessarily “entirely without value,” id. at 93.
On remand, the district court concluded that the securities were worth 75% of their purchase
price, adjusted to reflect the amount of the sales commissions that Dickau fraudulently
concealed. Based on that calculation, the district court resentenced Dickau to 15 months’
imprisonment and ordered him to pay $106,379 in restitution (representing the full amount of the
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sales commissions that Dickau fraudulently concealed from investors). We assume the parties’
familiarity with the remaining facts and procedural history of this case.
On appeal, Dickau principally argues that the amount of the undisclosed commissions
(i.e., 25% of the instruments’ purchase price) was not a reasonable estimate of the actual loss to
investors caused by the fraud.1 We disagree.
We review a district court’s order of restitution for abuse of discretion. See United States
v. Lucien, 347 F.3d 45, 52 (2d Cir. 2003). “To identify such abuse, we must conclude that a
challenged ruling rests on an error of law, a clearly erroneous finding of fact, or otherwise cannot
be located within the range of permissible decisions.” United States v. Pearson, 570 F.3d 480,
486 (2d Cir. 2009) (per curiam) (quotation marks omitted). Where there are challenges to the
court’s findings of fact, we review for clear error, and insofar as the order rests on interpretations
of law, we review those interpretations de novo. Lucien, 347 F.3d at 53.
Our review of restitution orders is “extremely deferential,” United States v. Giwah, 84
F.3d 109, 114 (2d Cir. 1996), because ordering restitution “requires a delicate balancing of
diverse, sometimes incomparable[,] factors, some of which not only lack certainty but may
indeed be based on mere probabilities, expectations, guesswork, even a ‘hunch,’” United States
v. Atkinson, 788 F.2d 900, 902 (2d Cir. 1986). We have long held that the sentencing court is in
the best position to engage in such balancing and that it therefore “makes little sense for an
appellate court, significantly more removed from the case than the district court, to scrutinize the
decision closely.” United States v. Jaffe, 417 F.3d 259, 263 (2d Cir. 2005) (quotation marks
omitted).
1
Dickau does not appeal the district court’s sentence of 15 months’ imprisonment, which
was based in part on the district court’s loss calculation, because it fell “within the range that
applies given no loss at all.” Def. Br. at 4.
3
Based on the record before us, we are satisfied that the district court acted well within its
discretion in ordering Dickau to pay restitution based on the amount of the undisclosed
commissions. The primary purpose of the Mandatory Victims Restitution Act of 1996
(“MVRA”), which governs the order of restitution in this case, is to make crime victims whole
by fully compensating them for their losses. United States v. Boccagna, 450 F.3d 107, 115 (2d
Cir. 2006). Notably, though, the MVRA is silent “on the question of how the [stolen property] is
to be valued,” and instead contemplates “the exercise of discretion by sentencing courts in
determining the measure of value appropriate to restitution calculation in a given case.” Id. at
114 (emphasis in original); see 18 U.S.C. § 3664(f)(1)(A) (2006) (“[T]he court shall order
restitution to each victim in the full amount of each victim’s losses as determined by the court . .
. .” (emphasis added)). Thus, we have emphasized that “value,” as used in the MVRA, is “a
flexible concept to be calculated by a district court by the measure that best serves Congress’s
statutory purpose” of making crime victims whole. Boccagna, 450 F.3d at 115; see id. at 116
(noting that despite “the general reliability of fair market value as a measure of property value, in
some circumstances other measures of value may more accurately serve the statutory purpose to
ensure a crime victim’s recovery of the full amount of his loss”); see also United States v.
Shugart, 176 F.3d 1373, 1375 (11th Cir. 1999) (“Where actual cash value is difficult to ascertain
— because an item is unique, or because there is not a broad and active market for it —
replacement cost may be a better measure of value.”).
Here, in light of this flexibility, we see no abuse of discretion in the district court’s
decision to choose a valuation method that approximates the investors’ losses by focusing on the
fraud’s effect on the original pricing of the securities. Such an approach accurately (and
reasonably) reflects the nature of the fraud in this case, which centered on hiding exorbitantly
high commission rates so as to induce investors to buy securities at an inflated price. The district
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court’s loss calculation also reflects the fact that the fraud in question related to how the
investors’ money would be spent, rather than the inherent value of a particular asset or liability.
By pegging actual loss to the amount of the undisclosed commissions, the court ensured that
Dickau was held liable for the loss caused by his fraud, i.e., the non-disclosure of the excessive
commissions.
Dickau also argues that the district court improperly created a sentencing disparity
between him and his co-defendants, noting that “[m]any co-defendants were not ordered to pay
any restitution at all, even though loss was no less attributable to them than to Dickau.” Def. Br.
at 21. We disagree. Although 18 U.S.C. § 3553(a) mandates sentencing courts to consider “the
need to avoid unwarranted sentencing disparities among defendants with similar records,” 18
U.S.C. § 3553(a) (2006), we have repeatedly emphasized that that section was “intended to
eliminate national disparity,” not disparity among co-defendants. United States v. Wills, 476
F.3d 103, 109 (2d Cir. 2007); see id. at 110 (noting that section 3553(a) “does not require district
courts to consider sentencing disparity among co-defendants” (quotation marks omitted)). Thus,
regardless of the reasons why the district court did not order restitution from certain of Dickau’s
co-defendants, Dickau cannot use that purported disparity to avoid the consequences of the
MVRA’s mandatory restitution scheme. See United States v. Dupes, 513 F.3d 338, 345 (2d Cir.
2008) (“The MVRA makes full restitution mandatory for certain crimes, including securities
fraud.”).
We have considered Dickau’s remaining arguments and find them to be without merit.
Accordingly, for the foregoing reasons, the judgment of the district court is AFFIRMED.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE
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