United States v. Gent, Lagona

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.
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 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

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 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.
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 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).
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 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

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 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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