16‐2834‐cr
United States v. Danilovich
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 26th day of April, two thousand eighteen.
PRESENT: RICHARD C. WESLEY,
DENNY CHIN,
Circuit Judges,
DENISE COTE,
Judge.*
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UNITED STATES OF AMERICA,
Appellee,
v. 16‐2834‐cr
MICHAEL DANILOVICH, also known as Sealed
Defendant 2, also known as Mike Daniels, also
Known as Fat Mike, also known as Mike D,**
Defendant‐Appellant.
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* Denise Cote, of the United States District Court for the Southern District of New York,
sitting by designation.
** The Clerk of Court is respectfully directed to amend the official caption to conform to
the above.
FOR APPELLEE: DANIEL NOBLE, Assistant United
States Attorney (Joshua A. Naftalis, Karl
Metzner, Assistant United States
Attorneys, on the brief), for Geoffrey S.
Berman, United States Attorney for the
Southern District of New York, New
York, New York.
FOR DEFENDANT‐APPELLANT: ERIC M. CREIZMAN, Creizman PLLC,
New York, New York.
Appeal from the United States District Court for the Southern District of
New York (Batts, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the amended judgment of the district court is
AFFIRMED.
Defendant‐appellant Michael Danilovich appeals from an amended
judgment of conviction, entered August 1, 2016, after a jury trial. Danilovich was
convicted of crimes related to his involvement in a racketeering enterprise that engaged
in, among other things, investment fraud, healthcare insurance fraud, money
laundering, and illegal gambling. He was sentenced principally to 300 monthsʹ
imprisonment, and ordered to forfeit $24,479,065 and pay restitution of $22,442,040,
jointly and severally with a co‐defendant. We assume the partiesʹ familiarity with the
underlying facts, procedural history, and issues on appeal.
Danilovich raises a host of issues on appeal concerning: (1) the fraud
counts related to a scam that collected health insurance payments for car accident
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victims under New Yorkʹs No‐Fault Comprehensive Motor Vehicle Insurance
Reparation Act, N.Y. Ins. Law § 5101 et seq. (ʺNo‐Fault Fraud Countsʺ); (2) the fraud
counts related to Danilovichʹs participation in three investment schemes (the ʺSecurities
Fraud Countsʺ); (3) the district courtʹs refusal to declare a mistrial; and (4) the
substantive reasonableness of his sentence.
1. No‐Fault Fraud Counts
Danilovich argues that the district court erred because it did not instruct
the jury (1) on the meaning of ʺownershipʺ in the context of New Yorkʹs No‐Fault law,
and (2) that the use of ʺrunnersʺ and the payment of kickbacks are not inherently illegal.
First, we agree with the Government that Danilovich affirmatively waived any objection
to the jury instruction on ʺownershipʺ because his counsel below requested the
instructions that the court gave to the jury, over the Governmentʹs objection. See United
States v. Polouizzi, 564 F.3d 142, 153 (2d Cir. 2009). Second, Danilovich did not object to
the instruction on ʺrunnersʺ and kickbacks; his challenge is therefore subject to plain‐
error review. See Fed. R. Crim. P. 30(d).
We are not persuaded that the district court plainly erred in the
instructions it gave. The court read the charges in the indictment and the statutory
language, properly stated the elements of the charged offense, and instructed the jury as
to the findings required for conviction on the No‐Fault Fraud Counts. In any event, we
are not persuaded that the district court was bound by the jury instructions that the
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court used in Danilovichʹs first trial. See Musacchio v. United States, 136 S. Ct. 706, 716
(2016) (law‐of‐the‐case doctrine is a discretionary court practice).
2. Securities Fraud Counts
Danilovich argues that the convictions for the Baron & Caplan investment
scheme should be reversed because: (1) the convictions were based primarily on the
ʺuncorroborated, inherently incredible, and internally inconsistentʺ statements of a
cooperating witness, Igor Katsman; (2) the Government failed to disclose impeachment
evidence for Katsman; and (3) the district court erroneously admitted the lay opinion
testimony of another cooperating witness, William Shternfeld. Def.‐Appellantʹs Br. 45.
Danilovich further argues that the cumulative effect of these errors, along with the
improper admission of evidence from Danilovichʹs cellphone, prosecutorial misconduct
at trial, and prejudicial conduct by the district judge, warrants reversal and a new trial
on all securities fraud counts. We disagree.
First, the evidence was sufficient to convict Danilovich of the conspiracy
related to the Baron & Caplan investment scheme. See United States v. Coplan, 703 F.3d
46, 62 (2d Cir. 2012) (a conviction must be upheld if ʺany rational trier of fact could have
found the essential elements of the crime beyond a reasonable doubtʺ (citation
omitted)). Katsmanʹs testimony directly implicated Danilovich in the scheme. See
United States v. Truman, 688 F.3d 129, 139 (2d Cir. 2012) (explaining that ʺeven the
testimony of a single accomplice witness is sufficient to sustain a conviction, provided it
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is not incredible on its face or does not def[y] physical realitiesʺ (alteration in original)
(citation and internal quotation marks omitted)).
Moreover, Katsmanʹs testimony was corroborated. We ʺmust view the
evidence in the light most favorable to the government, crediting every inference that
could have been drawn in the governmentʹs favor, and deferring to the juryʹs
assessment of witness credibility and its assessment of the weight of the evidence.ʺ
Coplan, 703 F.3d at 62 (citation omitted). We are not persuaded that the jury failed to
properly assess and weigh the evidence presented.
Second, we are not persuaded that the district court erred in admitting
Shternfeldʹs testimony as to the meaning of certain language used in a recorded
telephone call between Danilovich and an unindicted co‐conspirator. Shternfeld was
personally involved in two investment frauds run by the Zemlyansky/Danilovich
organization. His testimony was ʺrationally based on his own perception because it
derived from his direct participation in the [securities fraud] activities of the charged
enterprise.ʺ United States v. Yannotti, 541 F.3d 112, 125 (2d Cir. 2008). This direct
participation in the activities of the charged enterprise was sufficient to afford
Shternfeld ʺparticular perceptions of its methods of operation [such that he could] offer
helpful lay opinion testimony under Rule 701 even as to co‐conspiratorsʹ actions that he
did not witness directly.ʺ Id. at 126 n.8.
Third, we are not persuaded that the Government failed to disclose
material impeachment evidence because it did not disclose prior to trial that agents had
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visited Katsman once in jail to discuss Katsmanʹs proffer or that the Government had
two phone calls with Katsman to encourage and then discuss his cooperation
agreement. There is no basis in the record to suggest that this information had or could
have had any additional impeachment value in light of the fact that the Government
had produced all of its interview reports and notes for Katsman, as well as the proffer
and cooperation agreements. See United States v. Persico, 645 F.3d 85, 111 (2d Cir. 2011)
(ʺ[W]here the undisclosed evidence merely furnishes an additional basis on which to
challenge a witness whose credibility has already been shown to be questionable . . . the
undisclosed evidence may properly be viewed as cumulative, and hence not material.ʺ).
We therefore agree with the district court that there was no Giglio violation here. See
United States v. Payne, 63 F.3d 1200, 1209 (2d Cir. 1995) (ʺ[U]ndisclosed evidence will be
deemed material only if it ʹcould reasonably be taken to put the whole case in such a
different light as to undermine confidence in the verdict.ʹʺ (quoting Kyles v. Whitley, 514
U.S. 419, 435 (1995)).
Danilovich makes a number of other arguments ‐‐ which he contends
warrant a new trial on the Securities Fraud Counts ‐‐ relating to: (1) the improper
admission of cell phone evidence he contends was seized in violation of his Fourth
Amendment Rights, (2) prosecutorial misconduct at trial, and (3) prejudicial conduct by
the district court. The arguments fail. First, Danilovich admits that the cell phone was
admitted by stipulation. He did not file a motion to suppress it before trial and waived
any objection to it. See Fed. R. Crim. P. 12(b)(3)(C); United States v. Ulloa, 882 F.2d 41, 43
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(2d Cir. 1989) (holding that ʺa motion to suppress evidence must be made before trial
and that failure to make such a motion constitutes waiverʺ).
Second, Danilovichʹs assertions of prosecutorial misconduct at trial ‐‐ that
the Government allegedly ʺsmil[ed] and chuckl[ed] and look[ed] at the jury and
nodd[ed]ʺ on one occasion, App. 1114‐15, criticized defense counselʹs ʺpoor
questioningʺ as creating ʺconfusion on cross‐examination,ʺ App. 1350‐51, and vouched
for an FBI agent ‐‐ do not, taken as a whole, demonstrate misconduct of the kind ʺso
severe and significant as to result in the denial of [Danilovichʹs] right to a fair trial.ʺ
Coplan, 703 F.3d at 86 (citation and internal quotation marks omitted).
Third, we are not persuaded that Danilovich was prejudiced by the
district courtʹs sua sponte sidebars and admonitions during witness questioning and
argument. The district court similarly admonished the Government and sua sponte
called for sidebars during the prosecutorsʹ direct examinations. In any event, the
district court cured any such prejudice by instructing the jury to disregard these
statements by the court, explaining that ʺduring the course of the trial, [the court] had to
admonish attorneys . . . . But you should draw no inference from that.ʺ App. 1469‐70;
see, e.g., United States v. Mickens, 926 F.2d 1323, 1327‐28 & n.1 (2d Cir. 1991) (ʺ[A]ny
possible prejudice . . . [as a result of the courtʹs remarks during trial] was cured by the
courtʹs cautionary instruction.ʺ).
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3. Mistrial Claim
Danilovich next argues that the district court improperly denied his
request for a mistrial and substitution of counsel based upon the alleged ineffective
assistance of Danilovichʹs trial counsel. In two separate letters submitted during trial,
Danilovich asserted that he had not received responses to ʺnumerous email[s], text
messages and phone callsʺ about a witness, had ʺcompletely lost confidence in [his
attorneys],ʺ and faced ʺmajor barriers in communicationsʺ with his counsel concerning
trial strategy, a witness list, and the hiring of a company to create a ʺdemonstrativeʺ for
his defense summation. Supp. App. 11, 17, 50‐51. In response to the first letter, his
counsel represented that they would ʺcontinue to work zealously to defend
[Danilovich] in this matter.ʺ Supp. App. 7.
The district court did not abuse its discretion in denying the motion for a
mistrial and substitution of counsel. See Renico v. Lett, 559 U.S. 766, 774 (2010) (ʺThe
decision to declare a mistrial is left to the sound discretion of the judge.ʺ (internal
quotation marks omitted)). The district court reasonably concluded that Danilovichʹs
arguments as to his counselʹs deficient performance and disagreement on trial strategy
were unavailing, particularly ʺhaving observed Defense Counselʹs performance during
trial,ʺ and having considered Danilovichʹs complaints set forth in his letters. Supp.
App. 9; see United States v. Hsu, 669 F.3d 112, 123 (2d Cir. 2012) (the mere expression of
dissatisfaction with counselʹs trial performance is not a ʺsubstantial complaintʺ). In any
event, it was well within the district courtʹs discretion to deny the motion for mistrial,
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particularly given that Danilovich moved for a substitution of counsel halfway through
trial. See United States v. Carreto, 583 F.3d 152, 158 (2d Cir. 2009) (in determining
whether the district court abused its discretion, we consider, among other things, ʺthe
timeliness of defendantʹs request for new counselʺ).
4. Substantive Reasonableness
Finally, Danilovich argues that his sentence was substantively
unreasonable. We disagree. The district court thoroughly considered the relevant
section 3553(a) factors, and determined that a ʺsubstantialʺ sentence was warranted in
light of Danilovichʹs prior convictions, his continued criminal activity ʺ[w]hile out on
bail,ʺ and his role ʺas a leader and organizer of these conspiracies.ʺ App. 1657‐58. The
district court also specifically noted its application of an aggravating factor because
Danilovichʹs frauds were perpetrated against ʺunsuspecting and vulnerable peopleʺ and
Danilovich had ʺrobbed or bullied [the victims] out of their retirement and life savings.ʺ
App. 1657.
Nor are we persuaded that Danilovichʹs sentence was otherwise
substantively unreasonable because his co‐conspirator Mikhail Zemlyansky received
only a 15‐year sentence. See United States v. Wills, 476 F.3d 103, 110 (2d Cir. 2007),
abrogated on other grounds by Kimbrough v. United States, 552 U.S. 85 (2007) (Section
3553(a) ʺdoes not require district courts to consider sentencing disparity among co‐
defendants,ʺ although disparities may be considered) (emphasis added) (citation
omitted)). Danilovich and Zemlyansky were not similarly situated. Danilovich had a
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higher criminal history category based upon his prior securities fraud and money
laundering convictions, had continued his criminal activities following his arrest, and
was convicted of more counts than Zemlyansky.
* * *
We address a collateral matter related to Danilovichʹs attorneyʹs conduct
in this appeal. The district court below found that the attorney had a direct conflict
because he had previously represented Katsman in another criminal proceeding that
was substantially related to this case and because Katsman had not waived his right to
conflict‐free counsel. In seeking permission in this Court to represent Danilovich in this
appeal, however, Danilovichʹs counsel represented that he would not attack Katsmanʹs
character or credibility on appeal. See Decl. of Eric M. Creizman, Dkt No. 28 ¶¶ 24‐25
(ʺIndeed, there is no reason to challenge Mr. Katsmanʹs credibility or attack his
character on appealʺ). But, as described above, he did just that, squarely contradicting
his prior representation. This conduct is most troubling.
We have considered Danilovichʹs remaining arguments and find them to
be without merit. For the reasons set forth above, we AFFIRM the district courtʹs
judgment.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk of Court
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