United States Court of Appeals
For the First Circuit
No. 16-1437
UNITED STATES OF AMERICA,
Appellee,
v.
AARON E. OLSON,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Landya B. McCafferty, U.S. District Judge]
Before
Torruella, Thompson, and Barron,
Circuit Judges.
Inga L. Parsons, Christian J. Urbano and Law Offices of
Inga L. Parsons on brief for appellant.
Seth R. Aframe, Assistant United States Attorney, and John J.
Farley, Acting United States Attorney, on brief for appellee.
August 14, 2017
TORRUELLA, Circuit Judge. Defendant-Appellant Aaron
Olson ("Olson") committed securities and tax fraud, and he pled
guilty to tax fraud. Olson's plea agreement contained a sentencing
range of forty-two to sixty months of imprisonment, and the
district court sentenced him to sixty months. Olson also agreed
to pay restitution, and the district court ordered him to pay
almost $23 million. Olson now appeals his sentence and his
restitution schedule. We affirm.
I. BACKGROUND
A. Factual Background
In 1999, Olson began trading in commodities, and in 2002,
he was approached by his first client. Although he was not
licensed as a trader, Olson continued adding clients. By 2010, he
had invested several million dollars for family, friends, and their
businesses, and the New Hampshire Bureau of Securities
investigated his unregulated trading. However, Olson remained
unlicensed to trade in New Hampshire, and his business, AEO
Associates ("AEO"), was not registered to trade in the state. As
a result of the New Hampshire Bureau of Securities investigation,
AEO effectively shut down and Olson created KMO Associates ("KMO"),
which he registered in Massachusetts but ran out of his home in
New Hampshire, where he remained unlicensed. KMO was also not
registered in New Hampshire.
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By 2011, many of Olson's investments had failed. Rather
than truthfully report losses to his investors, however, he turned
his investment business into a Ponzi scheme, creating false
earnings statements showing significant returns and attracting new
investments to pay investors. Olson also converted about
$2.6 million of investor funds for his personal use and comingled
clients' funds with his own. In addition to his securities
violations, he attempted to evade or defeat taxes on income he
obtained from operating AEO and KMO.
Olson's clients finally became suspicious and confronted
him. On March 23, 2012, he confessed and self-reported to the
government and the Internal Revenue Service.
B. Procedural History
The government filed a four-count information on April
14, 2014, charging Olson with attempt to evade or defeat tax, in
violation of 26 U.S.C. § 7201. On March 9, 2015, Olson entered
into a plea agreement pursuant to Fed. R. Crim. P. 11(c)(1)(C)
(the "Agreement"), in which he pled guilty to the four tax-fraud
counts. The Agreement allowed Olson to withdraw his plea if the
district court did not accept it, and it contained, inter alia: a
sentencing range of forty-two to sixty months; a condition that
Olson would pay restitution to the victims "in amounts to be
determined at the time of sentencing"; and an appeal waiver that
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became effective if Olson was sentenced "within, or lower than,
the guideline range determined by the Court." At his plea hearing,
the district court informed Olson that "[u]nder some circumstances
[he] . . . may have the right to appeal any sentence," but that
Olson waived some appeal rights, "and those waivers are set forth
in your plea agreement."
Thereafter, sentencing was delayed while Olson attempted
to sell his granite quarry to provide a fund for restitution. The
district court then held Olson's sentencing hearing on
April 1, 2016. It calculated Olson's recommended sentencing range
to be thirty-seven to forty-six months under the U.S. Sentencing
Guidelines (the "Guidelines"), the same range recommended in
Olson's presentence investigative report. Both parties agreed
with the calculation and jointly recommended a sentence of forty-
two months. The district court also heard testimony from two
victims, Olson, and Olson's wife, read letters from victims
submitted on Olson's behalf and victim impact letters provided by
the government, and probed Olson's unsuccessful attempt to sell
his granite quarry.
Ultimately, the district court sentenced Olson to sixty
months of imprisonment, the highest possible sentence under the
Agreement and an upward variance from the recommended guidelines
range. The district court specifically laid out the factors it
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considered, including the scope of the injury as partly evidenced
by the testimony of the two victims, the need to deter other white-
collar criminals, his continuation of the crime over an extended
period, and his decision to defraud even though he was "privileged"
and did not use drugs or alcohol. The district court also found
that although Olson stated his remorse, he had not sold his granite
quarry, contributed any other money for restitution, or made any
other "acts of remorse." Although Olson's decision to self-report
and help the government identify victims and their losses was a
mitigating factor, the district court found that Olson had already
benefited from it, presumably by avoiding charges for securities
violations. Olson did not offer any legal objection to this
ruling.
The district court held a separate hearing on
restitution on October 31, 2016. At the hearing, the parties
agreed that investors lost $22,811,405.26 from 2007 to 2012. Olson
argued, however, that he had invested some of his clients' money
in legitimate, though unsuccessful, investments. Because his
clients had assumed the risk of losing money, those "legitimate"
losses, which he calculated were approximately $5.5 million,
should not be included in restitution amount. The district court
rejected that argument, reasoning that but for Olson's inducements
and misstatements, his clients would not have invested with him at
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all. It therefore ordered restitution of the entire
$22,811,405.26.
II. ANALYSIS
A. We Assume Appellate Jurisdiction over All of Olson's Claims
The Agreement contained an appeal waiver that applied if
Olson was sentenced "within, or lower than, the guideline range,"
which was thirty-seven to forty-six months. Olson was sentenced
to sixty months' imprisonment, so the appeal waiver does not apply.
The government nevertheless contends that this Court
lacks jurisdiction over Olson's appeal because his sentence was
within the forty-two to sixty months recommended in the Agreement's
Sentencing Stipulations and Agreements. "In the case of a plea
agreement [such as Olson's] that includes a specific sentence under
rule 11(e)(1)(C) . . . a defendant may not [make certain arguments
on appeal] unless the sentence imposed is greater than the sentence
set forth in such agreement . . . ." 18 U.S.C. § 3742(c).1 Given
this bar, we may lack jurisdiction over some of Olson's claims of
error, although other claims may constitute "violation[s] of law"
over which we would retain jurisdiction. 18 U.S.C. § 3742(a)(1).
In addition, the Agreement's appeal waiver and the
colloquy at Olson's change-of-plea hearing implied a right to
1 Fed. R. Crim. P. 11 has been subsequently reorganized and the
provision referred to by § 3742(c)(1) is now Rule 11(c)(1)(C).
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appeal from any sentence above the applicable guidelines range,
which Olson's sentence was. If Olson nevertheless cannot appeal,
his plea arguably was not knowingly made and could be withdrawn.
See United States v. Figueroa-Ocasio, 805 F.3d 360, 370-71 (1st
Cir. 2015) (vacating a guilty plea that was not "knowing and
voluntary"); United States v. Castro-Gómez, 233 F.3d 684, 687-88
(1st Cir. 2000) (allowing withdrawal of plea because "[a] failure
to inform a defendant of a mandatory minimum sentence at his plea
hearing 'implicates a core concern of Rule 11'") (quoting United
States v. McDonald, 121 F.3d 7, 11 (1st Cir. 1997)).
Rather than decide which of Olson's claims, if any, we
can review and the effect of his appeal waiver, however, we can
"'forsake the jurisdictional riddle' when the merits will be
resolved in favor of the party challenging the court's
jurisdiction." United States v. Woods, 210 F.3d 70, 74 (1st Cir.
2000) (quoting United States v. Stoller, 78 F.3d 710, 714 (1st
Cir. 1996)). Although this rule is inapplicable to Article III
subject matter jurisdiction, Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83 (1998), it remains in place when, as in
this case, only statutory jurisdiction is concerned. Woods, 210
F.3d at 74 n.2. Because we can easily dispose of Olson's appeal
on the merits, we bypass the complex jurisdictional issue.
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B. Olson's Sentence Was Not Unreasonable
For preserved challenges, "generally, both [procedural
and substantive] aspects of this review are for abuse of
discretion." United States v. Cortés-Medina, 819 F.3d 566, 568-
69 (1st Cir. 2016). "When assessing the procedural reasonableness
of a sentence, however . . . we afford de novo consideration to
the sentencing court's interpretation and application of the
sentencing guidelines . . . ." Id. at 569. Challenges that were
not preserved in the lower court are reviewed for plain error.
Id. Here, Olson did not offer any legal objection below, so we
review his arguments under the plain-error standard.
First, the sentence was not procedurally unreasonable.
We are not persuaded by Olson's argument that the district court
applied an "upward departure" rather than a variance. Although
the district court used the term "upward departure," its analysis
shows that it imposed a variance. It never mentioned a single
departure provision from the Guidelines, but it specifically cited
the 18 U.S.C. § 3553(a) factors and carefully grounded its analysis
in those factors. Right before its oral ruling on Olson's
sentence, it again referenced § 3553(a) factors and applied its
findings to those factors to justify its above-Guidelines
sentence. We therefore conclude that the district court in fact
imposed a variance rather than a departure. See United States v.
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Santini-Santiago, 846 F.3d 487, 491 (1st Cir. 2017) (holding that
basing a sentence on § 3553(a)'s factors "is the hallmark of a
variance, even when the sentencing court references [a departure
provision]"); United States v. Nelson, 793 F.3d 202, 206-207 (1st
Cir. 2015) (finding an above-Guidelines sentence to be an upward
variance where the district court specifically referenced
§ 3553(a) factors, notwithstanding the district court's use of the
term "depart"). In imposing the variance, the district court did
not have to give prior notice. United States v. Aponte-Vellón,
754 F.3d 89, 94 (1st Cir. 2014) ("Rule 32(h) . . . placed the
district court under no obligation to provide advance notice of
the variance.").
Nor did the district court rely on improper factors in
reaching its decision. It did remark on Olson's privileged
background, his lack of alcohol or drug use, and his failure to
sell his granite quarry and provide funds for restitution, but
those remarks were to prove Olson's conscious decision to defraud
and his failure to show concrete remorse. They properly relate to
"the nature and circumstances of the offense and the history and
characteristics of the defendant." 18 U.S.C. § 3553(a)(1).
Second, Olson's sentence was not substantively
unreasonable. "In reviewing the reasonableness of a sentence
outside the Guidelines range, appellate courts may . . . take the
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degree of variance into account and consider the extent of a
deviation from the Guidelines." Nelson, 793 F.3d at 207 (quoting
Gall v. United States, 552 U.S. 38, 47 (2007)). "The linchpin of
a reasonable sentence is a plausible sentencing rationale and a
defensible result." Id. (quoting United States v. Martin, 520
F.3d 87, 96 (1st Cir. 2008)). The district court's sentence passes
that test. In making an upward variance, the district court took
into account multiple aggravating factors, such as the financial
harm caused by Olson's elaborate scheme, his continuation of the
crime over an extended period, his conscious decision to defraud,
and the need to deter other white-collar criminals. It also
considered his lack of concrete actions showing remorse, and as a
mitigating factor, his cooperation with the government. Together,
the district court's careful deliberation demonstrates a plausible
rationale and reaches a defensible result.
C. The District Court Correctly Rejected Olson's Legitimate
Investment Losses Argument
The parties agreed on the total amount lost by investors,
so the only contested issue is whether that total should have been
discounted because investors would have incurred some "legitimate"
investment losses unrelated to Olson's fraud. In other words,
Olson argues that his illegal scheme was not the but-for cause of
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all of the investors' losses.2 The district court rejected that
argument, as do we.
Olson is right that there must be a causal link between
the illegal activity and the resultant losses. 18 U.S.C.
§ 3663A(a)(2). We have previously held that two "bedrock
principles" of restitution orders require the that the government
"show not only that a particular loss would not have occurred but
for the conduct underlying the offense of conviction, but also
that the causal connection between the conduct and the loss is not
too attenuated (either factually or temporally)." United States
v. Cutter, 313 F.3d 1, 7 (1st Cir. 2002) (citing United States v.
Vaknin, 112 F.3d 579 (1st Cir. 1997)). However, Olson's argument,
which focuses on the "but-for" prong of the analysis, fails. As
the district court found, investors would not have trusted him
with their money if he had disclosed that he was running an
2 Restitution typically contemplates a causal link between the
offenses of conviction and losses suffered by the victims of those
offenses. Here, Olson's plea was for tax evasion, making the IRS
the victim. However, pursuant to the parties' plea agreement, the
district court ordered Olson to pay restitution to the victims of
his Ponzi scheme. See 18 U.S.C §§ 3663A(a)(3) (allowing the court
to order restitution to "persons other than the victim of the
offense"), 3663(c)(2) (allowing the court to order restitution for
offenses falling under the Mandatory Victim Restitution Act for
which the defendant has not been convicted pursuant to the plea
agreement, but that nonetheless "gave rise" to that agreement).
Accordingly, the district court's causal link analysis focused on
the nexus between Olson's fraudulent Ponzi scheme conduct and his
investors' losses.
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unlicensed business and incurring substantial losses, or if he had
confessed that he comingled investors' funds, used new investments
to pay prior investors, and misappropriated funds for his own use.
Thus, Olson's misrepresentations were the but-for cause of all
investor losses, and we agree with the district court that his
legitimate investment losses argument is meritless.
III. CONCLUSION
For the reasons stated, we affirm Olson's sentence and
restitution schedule.
Affirmed.
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