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August 29, 2013

Second Circuit upholds huge securities fraud restitution award (without any real Sixth Amendment discussion)

A unanimous Second Circuit panel opinion this morning in US v. Gushlak, No. 12-1919 (2d Cir. Aug. 30, 2013) (available here) upholds a restitution award of over $17 million based on seemingly debatable fact-finding by a federal district judge.  Here is how the lengthy opinion starts and ends:

Defendant-appellant Myron Gushlak challenges, on various grounds, the May 15, 2012, restitution order entered against him in the United States District Court for the Eastern District of New York (Nicholas G. Garaufis, Judge). The order, which was entered pursuant to the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3663A, awarded a total of $17,492,817.45 to victims for losses stemming from Gushlak's role in the manipulation of the price of a publicly traded security. We affirm....

We return to where we began, the inexpertness of most judges in most technical matters, including the forces afoot in the securities markets and their impact on the prices for any particular security at any particular time. We must therefore rely on the testimony of professionals with appropriate expertise. The district court took great pains in addressing the restitution issues over an extended period of time, requiring repeated efforts by the government to obtain a proper valuation for losses under the particular circumstances, and in light of the peculiar challenges, presented by the case before it. It relied on a qualified expert as a guide. We can identify no clear error of fact or mistake of law that the court committed in reaching, with such care, its result.

Based on a quick scan of the opinion, I see no obvious basis to fault or even question the panel's formal analysis of restitution here in Gushlak. But, as the title of this post suggests, I am quite surprised that the defendant apparently here did not argue that the Supreme Court's June 2012 opinion in Southern Union now requires reconsideration of the circuits' prior rulings that the Sixth Amendment jury trial right is not implicated by judicial fact-finding in support of statutory-based restitution punishment.

Though I am not aware of any major rulings reconsidering this Aprrendi-land issue after Southern Union, I am sure that the decision in Southern Union included significant language that provides a strong basis for such reconsideration. And, with over $17 million dollar at stake and with judicial fact-finding apparently so challenging and contestable in a case like Gushlak, I think a Sixth Amendment argument could have had at least some extra traction in a case like this.

August 29, 2013 at 11:22 AM | Permalink

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Comments

Dunno if this qualifies as "major," but the Fourth Circuit has held that _Southern Union_ doesn't apply to restitution or forfeitures. US v. Day, 700 F.3d 713 (4th Cir. 2012).

Posted by: JDB | Aug 29, 2013 1:09:33 PM

I am a federal public defender in the EDVa, and I have an en banc petition pending in the 4th Circuit, raising the Apprendi/Southern Union/restitution issue. The case is United States v. Shmuckler, No. 12-4518. (The Ninth Circuit recently denied an en banc petition raising this issue in a called called Green.)

Posted by: Caroline | Aug 29, 2013 1:45:22 PM

I think JDB will be proved correct---in most cases to be decided.

Posted by: folly | Aug 30, 2013 10:30:31 AM

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