14‐1452‐cr(L)
United States v. Tanaka
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 COURTʹS 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
ʺSUMMARY ORDERʺ). 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 Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 23rd day of March, two thousand sixteen.
PRESENT: RALPH K. WINTER,
DENNY CHIN,
SUSAN L. CARNEY,
Circuit Judges.
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
UNITED STATES OF AMERICA,
Appellee,
v. 14‐1452‐cr(L)
14‐1453‐cr(Con)
GARY ALAN TANAKA, ALBERTO WILLIAM VILAR, AKA
Albert Vilar,
Defendants‐Appellants,
‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x
FOR APPELLEE UNITED STATES OF JOSHUA A. NAFTALIS, Rebekah A.
AMERICA: Donaleski, Karl Metzner, Assistant United
States Attorneys, for Preet Bharara, United
States Attorney for the Southern District of
New York, New York, New York.
FOR DEFENDANT‐APPELLANT BARRY D. LEIWANT, Appeals Bureau,
GARY ALAN TANAKA: Federal Defenders of New York, Inc., New
York, New York.
FOR DEFENDANT‐APPELLANT MICHAEL K. BACHRACH, New York, New
ALBERTO WILLIAM VILAR: York.
Appeal from the United States District Court for the Southern District of
New York (Sullivan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgments of the district court are AFFIRMED,
except that the fines imposed are VACATED, and the case is REMANDED.
This case returns to us following a resentencing conducted pursuant to
our remand order in United States v. Vilar, 729 F.3d 62 (2d Cir. 2013). Defendants‐
appellants Gary Alan Tanaka and Alberto William Vilar were convicted, following a
jury trial, of various offenses relating to securities fraud. In 2010, the district court
sentenced Tanaka to 60 monthsʹ imprisonment, Vilar to 108 monthsʹ imprisonment, and
both to a $25,000 fine. On April 24, 2014, the district court resentenced Tanaka to 72
monthsʹ imprisonment, Vilar to 120 monthsʹ imprisonment, and both to a $10 million
fine. The district court also imposed forfeiture and restitution against both defendants
totaling over $47 million, to be paid jointly and severally. Both defendants now appeal
that resentencing. We assume the partiesʹ familiarity with the underlying facts and
‐ 2 ‐
procedural history of the case, much of which is recited in our opinion in Vilar, 728 F.3d
62, as well as the issues on appeal.
We address in turn defendantsʹ claims that (1) the district court was
vindictive in the resentencing and (2) the fines were unreasonable.
1. Judicial Vindictiveness
Tanaka and Vilar first contend that the district court violated their due
process rights when it increased each of their terms of imprisonment by 12 months and
their fines from $25,000 to $10 million.
The Due Process Clause ʺrequires that vindictiveness against a defendant
for having successfully attacked his first conviction must play no part in the sentence he
receives after a new trial.ʺ North Carolina v. Pearce, 395 U.S. 711, 725 (1969). The
Supreme Court has since reiterated that ʺ[t]o punish a person because he has done what
the law plainly allows him to do is a due process violation ʹof the most basic sort.ʹʺ
United States v. Goodwin, 457 U.S. 368, 372 (1982) (quoting Bordenkircher v. Hayes, 434 U.S.
357, 363 (1978)); see Bordenkircher, 434 U.S. at 363 (ʺ[F]or an agent of the State to pursue a
course of action whose objective is to penalize a personʹs reliance on his legal rights is
ʹpatently unconstitutional.ʹʺ (quoting Chaffin v. Stynchcombe, 412 U.S. 17, 33 n.20 (1973))).
If there is a reasonable likelihood that the district court punished the
defendant for successfully appealing or otherwise exercising his legal rights, we
presume that the sentence is vindictive. See United States v. Singletary, 458 F.3d 72, 76
‐ 3 ‐
(2d Cir. 2006). That presumption may be rebutted, however, ʺbased upon objective
information concerning identifiable conductʺ that ʺaffirmativelyʺ appears in the record.
Pearce, 395 U.S. at 726; see Singletary, 458 F.3d at 77.
There is ʺno reasonable likelihood of vindictiveness where the sentencing
court ʹpredicated its increased sentence on events which occurred subsequent to the
original sentencing proceeding.ʹʺ United States v. Weingarten, 713 F.3d 704, 714 (2d Cir.
2013) (quoting United States v. Bryce, 287 F.3d 249, 257 (2d Cir. 2002)). Such events may
include a defendantʹs ʺanti‐social conduct following the initial sentence.ʺ Bryce, 287 F.3d
at 257; accord United States v. Coke, 404 F.2d 836, 842 (2d Cir. 1968) (en banc). If no
reasonable likelihood of vindictiveness exists, ʺthe defendant must affirmatively prove
actual vindictiveness.ʺ Wasman v. United States, 468 U.S. 559, 569 (1984); see, e.g.,
Weingarten, 713 F.3d at 715.
Tanaka and Vilar argue that the district court sentenced them on the basis
of their successful appeal, see Vilar, 729 F.3d 62, and their defense of a related civil
enforcement action brought by the government, over which this district judge also
presided, see SEC v. Amerindo Inv. Advisors Inc., No. 05 Civ. 5231 (S.D.N.Y.). Of course, if
the district court in fact sentenced Tanaka and Vilar on either of those bases, their due
process rights would have been violated. See Goodwin, 457 U.S. at 372.
On this record, however, we find that there was no reasonable likelihood
of vindictiveness. As the district court made clear at resentencing:
‐ 4 ‐
I certainly canʹt hold it against the defendants that they
appealed and I certainly donʹt. They have ‐‐ you have the
right to appeal. You have the right to defend yourselves in
civil cases. You have the right to protect your legal rights.
Of course you do.
Vilar App. 312. It then went on to conclude that Tanaka and Vilar had engaged in ʺanti‐
social conduct following the initial sentence.ʺ Id.
Notably, at the initial sentencing, the district court imposed sentences well
below the Guidelines range of 210 to 262 months, in part because it concluded, based on
defendantsʹ affirmations, that they wanted to help their investors be repaid. Vilar told
the district court, ʺI donʹt know where the government gets the idea that I am not
responsible or remorseful.ʺ Feb. 5, 2010 Sent. Tr. 57. He went on to explain that he
ʺdeeply regret[ted] any inconvenience that our 14,000 clients might have sufferedʺ and
that ʺ[f]ortunately there are only five victims, and [he] would be 95 percent confident
that they will be paid and that they will not have lost anything.ʺ Id. at 60. Likewise,
Tanakaʹs attorney described how, post‐conviction, Tanaka had engaged others to help
find and value assets to repay investors and ʺspearheaded the effort to get the Mayers [a
family of investors] paid.ʺ Id. at 108. Tanaka also apologized ‐‐ ʺI am sorry for what has
happened.ʺ Id. at 144. He attested that his ʺobjective mind is to restore [the] clientsʹ
capital,ʺ that he ʺwould like to get into trying my best to restore client assets,ʺ and that
he would ʺhope [he] get[s] the opportunity in the near term again to restore these client
assets, because [he] do[es] feel deeply responsible.ʺ Id. at 141‐42, 144.
‐ 5 ‐
At resentencing, the district court discussed at length how, in stark
contrast, defendantsʹ post‐sentencing conduct ʺseemed designed at every step to slow
down the distribution process and to punish the investors.ʺ Vilar App. 313. The district
court noted instances where the defendants obstructed or refused to consent to
distributions, opposed the receiver, and refused hardship payouts to certain victims
who were in dire financial straits.1 Further, the district court referenced two letters that
Tanaka and Vilar sent to investors where they claimed that they ʺdid not perpetrate a
ʹfraud,ʹ to leave hapless ʹvictimsʹ in [their] wake.ʺ Id. at 332. The letters also incited
investors to oppose the receiver and requested that, ʺ[i]n any communication with [the
receiver], [they should] ask him directlyʺ why he was not taking certain actions. Id. at
335. In the district courtʹs words, after the initial sentencing, Tanaka and Vilar
ʺreneg[ed] [on] the promisesʺ they had made then to obtain lighter sentences. Id. at 315.
In the meantime, two victims had passed away between the initial sentencing and
resentencing, still awaiting their money.
In light of these changed circumstances and this additional conduct
following the initial sentencing, we do not apply a presumption of vindictiveness
because there is no reasonable likelihood of vindictiveness on the part of the district
court. In the absence of the presumption, and in light of Tanaka and Vilarʹs failure to
1 Though the district court referenced, in passing, an email sent by Tanaka, it is
clear from the record that the district court was not improperly using that email to punish Vilar
for Tanakaʹs conduct, but referencing how that email was indicative of conduct attributable to
both.
‐ 6 ‐
affirmatively prove actual vindictiveness, we reject the claim of vindictive resentencing.
See Weingarten, 713 F.3d at 715.
2. Reasonableness of the Fines
Tanaka and Vilar also challenge the $10 million fine imposed on each of
them. We review all aspects of a sentence, including criminal fines, for reasonableness
under a ʺdeferential abuse‐of‐discretion standard.ʺ United States v. Aldeen, 792 F.3d 247,
251 (2d Cir. 2015) (quoting Gall v. United States, 552 U.S. 38, 41 (2007)). Because Tanaka
and Vilar failed to object to the fine below, we review for plain error. See United States v.
Pfaff, 619 F.3d 172, 174 (2d Cir. 2010).
Guidelines § 5E1.2(a) directs courts to ʺimpose a fine in all cases, except
where the defendant establishes that he is unable to pay and is not likely to become able
to pay any fine.ʺ ʺIf the defendant is indigent, a fine should not be imposed absent
evidence in the record that he will have the earning capacity to pay the fine after release
from prison.ʺ United States v. Rivera, 971 F.2d 876, 895 (2d Cir. 1992). Fines may not be
imposed on the ʺmere suspicion that the defendant has funds,ʺ United States v. Rivera, 22
F.3d 430, 440 (2d Cir. 1994), or ʺwhen the possibility of a future ability to pay is based
merely on chance,ʺ United States v. Wong, 40 F.3d 1347, 1383 (2d Cir. 1994) (quoting
United States v. Seale, 20 F.3d 1279, 1286 (3d Cir. 1994)). It is ʺordinarily an abuse of
discretion to impose a fine that exceeds a defendantʹs ability to payʺ as established by
evidence in the record. United States v. Salameh, 261 F.3d 271, 276 (2d Cir. 2001).
‐ 7 ‐
We conclude that the fines must be vacated. First, the government
concedes that even on plain error review Tanakaʹs fine should be vacated as it exceeds
the statutory maximum. See 18 U.S.C. § 3571(b) (specifying maximum). Second, the
record of the resentencing proceeding demonstrates that the district court imposed a
$10 million fine on each defendant based apparently on the possibility of future assets.
At the time, Tanaka and Vilar were indigent defendants of over 70 years of age who
were represented by court‐appointed attorneys. The district court stated that ʺthe
residual amount in the Amerindo accounts which [Tanaka and Vilar] claim could be
worth millions or tens of millions of dollars and that may, in fact, be true.ʺ Vilar App. 319
(emphases added). The district court also commented that ʺthose accounts have not yet
been fully valued and so there may be a remainder.ʺ Id. (emphasis added).
Though the government did not ask for an increased fine below, at oral
argument it pointed to a January 27, 2016 motion by the receiver suggesting that there is
over $38 million left in the receivership account. See No. 05 Civ. 5231, ECF No. 584, at 3.
Still, much remains unclear. It is not clear whether the district court found on then‐
available evidence in the record that money would in fact remain, whether Tanaka and
Vilar were entitled to any of that money, and whether Tanaka and Vilar could still
afford $10 million fines after satisfying their other criminal and civil repayment
obligations. These obligations included: for Tanaka and Vilar, criminal forfeiture of
$20,578,855.28 and restitution of $26,637,502.69, with joint and several liability; for
‐ 8 ‐
Tanaka individually, civil disgorgement of $13,118,693.96 and a civil penalty of
$10,000,000; and for Vilar individually, civil disgorgement of $18,572,902.02 and a civil
penalty of $10,000,000. See Vilar App. 254‐59; Suppl. App. 15‐20; No. 05 Civ. 5231, ECF
Nos. 433, 434 (also imposing some joint and several liability for the individual
disgorgement obligations). The record is not at all clear that the defendants are or are
likely to become able to pay the $10 million criminal fines. Accordingly, in the interest
of fairness, we vacate the criminal fines as to both Tanaka and Vilar and direct the
district court to reconsider those fines in light of the defendantsʹ actual ability to pay
and to take into account all the aforementioned obligations, including civil obligations.
We have reviewed defendantsʹ remaining arguments and conclude they
are without merit. Accordingly, we AFFIRM the judgments of the district court, except
that we VACATE the fines imposed and REMAND the case for reconsideration of those
fines.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
‐ 9 ‐