United States v. Rivernider

Citation: Not availableDocket: 13-4865 (L)

Court: Court of Appeals for the Second Circuit; July 7, 2016; Federal Appellate Court

Original Court Document: View Document

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Defendants Robert Rivernider and Robert Ponte appeal their convictions from the U.S. District Court for the District of Connecticut, where they pleaded guilty to multiple counts of wire fraud and conspiracy to commit wire fraud, with Ponte also pleading guilty to tax evasion. The offenses stem from their involvement in a Ponzi scheme and a fraudulent real estate scheme, where they misled victims into purchasing properties with inflated mortgage appraisals, pocketing undisclosed fees. Rivernider challenges the denial of his pro se motion to withdraw his guilty plea, claiming it lacked a factual basis and was coerced, and he argues that the court should have appointed substitute counsel for this motion. He also contests his 144-month sentence. Ponte, while not challenging his conviction, argues that his 90-month sentence was procedurally and substantively unreasonable due to improper enhancements in his sentencing. Both defendants dispute a restitution order totaling $22,140,765.99. The court affirmed the lower court's decisions, finding no error in the denial of Rivernider's motion or the failure to appoint new counsel, citing a sufficient factual basis for his plea and a lack of demonstrated attorney conflict.

The court affirms the defendants' convictions and restitution order, dismissing their challenges. Rivernider and Ponte orchestrated two interconnected fraudulent schemes. The first, initiated by Rivernider in 2005, was the “No More Bills” (NMB) program, where they solicited funds from clients with promises of a 10% monthly return to pay off debts. They created deceptive investment plans using misleading graphs and tables. Although some investment activity occurred, the scheme primarily operated as a Ponzi scheme, relying on new clients' funds to pay returns to earlier investors. Rivernider managed the administrative functions and bank accounts, while Ponte attracted investors and crafted investment plans. Both defendants falsely claimed to investors that returns were generated from legitimate investments such as offshore currency trading and a hedge fund in Hong Kong.

Problems with the NMB program became apparent by fall 2007, and despite this, they continued to solicit new clients while concealing the issues from existing investors. Communication between them revealed an awareness that promised returns were being paid from principal rather than profit. As payments to clients became irregular, they fabricated excuses about external pressures affecting the program's operations, ultimately ceasing all payments in early 2008. The second scheme involved a real estate venture through Rivernider's company, Cut Above Ventures, where they misled victims, including NMB investors, into purchasing investment properties in Florida and Tennessee via an incentive program.

Under the incentive program, Cut Above Ventures was responsible for providing the down payment, covering mortgage payments for two years, and handling other related costs for property purchases. To profit, the company would negotiate a sale price with sellers, obtain inflated appraisals, and secure mortgage loans for buyers based on these inflated values. This allowed Cut Above Ventures to collect a 'marketing fee' from the difference between the inflated mortgage and the actual sale price without disclosing this fee to the buyers. Mortgage applications did not reveal the incentive program or the true sale prices, and some applications contained misrepresentations, such as inflated borrower income.

Rivernider primarily managed the financial operations, while Ponte focused on recruiting buyers. Tosha Wade, a Florida real estate agent, and Shellie Kemp, a Wells Fargo mortgage consultant, were also involved. Wade testified that common methods of mortgage fraud included concealing incentive deals from lenders, misrepresenting property classifications, pushing for multiple property purchases to mask liabilities, fabricating income, hiding money sources at closing, and pricing contracts to cover undisclosed fees. Wade noted that Rivernider reacted negatively to her transparency about the incentive plan with lenders. Kemp processed fraudulent loan applications and was temporarily suspended during an investigation but resumed business after the marketing fee was removed from the documents.

Rivernider purchased 104 properties through the program. On February 7, 2013, Rivernider entered a guilty plea to eighteen counts in the indictment, admitting to the fraudulent nature of the schemes during a hearing. He expressed satisfaction with his legal counsel and acknowledged that participants in the NMB program mistakenly believed payouts originated from investment returns rather than contributions from other investors. The court accepted his plea. Shortly after, Ponte also sought to plead guilty to eighteen of the twenty counts against him, admitting to soliciting funds and making material false representations, which the court accepted.

Rivernider sought to withdraw his guilty plea prior to sentencing, arguing for a downward departure from sentencing guidelines based on diminished capacity due to reduced executive functioning. After an evidentiary hearing, the district court expressed skepticism about Rivernider's claims, emphasizing the high level of executive functioning required to execute the fraud he committed. Subsequently, Rivernider's attorney, James Bergenn, moved to withdraw as counsel, citing Rivernider's discharge, but the court denied this motion for lack of cause. Bergenn then sought permission for Rivernider to file a pro se motion to withdraw his plea, claiming Rivernider believed he lacked the necessary mens rea for the crimes charged. 

In his pro se motion, Rivernider alleged inaccuracies in the indictment, misleading testimony from an FBI agent, false testimony from a trial witness, and asserted that he had acted in good faith. Additionally, he claimed he was improperly influenced to plead guilty based on inaccurate legal advice from Bergenn, whom he accused of being ineffective. Rivernider highlighted that he felt coerced into a guilty plea after being told that another defendant would also plead guilty, and he described his experience during the plea process as akin to "diesel therapy," though he acknowledged Bergenn did not physically restrain him. 

When Rivernider presented his motion in court, he did not mention Bergenn's conduct. The district court ultimately denied Rivernider's motion, stating that his allegations against Bergenn were conclusory and contradicted by Rivernider's own statements made during the plea hearing. After the denial, Rivernider agreed to continue with Bergenn as his counsel for sentencing.

After denying Rivernider’s motion to withdraw his guilty plea, the district court held a sentencing hearing, concluding he was ineligible for a departure or variance based on diminished capacity, substantial assistance, or acceptance of responsibility. The court established Rivernider's Guidelines range as 324 to 405 months and sentenced him to 144 months of imprisonment, with restitution set at $500 per month, although no restitution order was entered at that time. 

Ponte was sentenced approximately one month later. His Presentence Report included enhancements for loss amount, number of victims, use of sophisticated means, and abuse of a position of trust, all of which Ponte contested, along with requests for acceptance-of-responsibility and minor-role reductions. The district court dismissed Ponte’s objections and calculated his Guidelines range as 210 to 262 months, ultimately sentencing him to 90 months for fraud counts and 60 months for tax evasion, to be served concurrently, with restitution set at $300 per month but also without entering an order initially.

The government proposed a restitution order three weeks post-Ponte's sentencing, calculating losses for the NMB program based on total investments made by victims in the last ten months, adjusted for payments made and unidentified pattern payments. For the real estate scheme, only lender losses were considered, with calculations based on unpaid principal reduced by property sales or fair market values. Rivernider objected to the methodology, accuracy, and inclusion of lenders as victims, while Ponte did not object. On November 25, 2014, the district court largely accepted the government’s methodology, excluding twelve "reinvestor" victims who had previously profited from the NMB program, ultimately ordering restitution in the amount of $22,140,765.99.

On appeal, Rivernider argues that the district court erred in denying his motion to withdraw his plea and in not appointing new counsel. He contends that he should have been allowed to withdraw his plea due to a lack of admission to conduct constituting an offense and claims his plea was not entered knowingly and voluntarily. Additionally, he argues that the court's failure to appoint new counsel to aid in his motion to withdraw was an error.

The district court's denial of Rivernider's motion to withdraw his guilty plea is reviewed for abuse of discretion, with factual findings assessed for clear error. Under Fed. R. Crim. P. 11(d)(2)(B), a defendant may withdraw a plea before sentencing only by demonstrating a "fair and just reason." The defendant bears the burden to present valid grounds for withdrawal, which may include claims of legal innocence, the time elapsed since the plea, potential government prejudice, and questions regarding the voluntariness of the plea.

Rivernider contends that his guilty plea lacked an adequate factual basis, arguing that his statements during the plea colloquy did not establish the necessary mens rea for wire fraud. According to Fed. R. Crim. P. 11(f), the court must ensure that the defendant's admissions substantiate an offense under the applicable statute. A wire fraud conviction requires proof of "fraudulent intent," which necessitates showing that the defendant contemplated actual harm to victims. 

The record indicates sufficient evidence supporting the conclusion that Rivernider intended to withhold material information. This includes testimony from victims unaware of the fraud, statements from a co-conspirator, and Rivernider's own detailed admissions regarding his involvement in misleading clients about their investments and misrepresenting financial information in loan applications. These admissions demonstrate Rivernider's fraudulent intent, refuting his claim of a lack of mens rea. 

Rivernider's assertion that his plea was not made knowingly and voluntarily is also challenged, as the collective evidence reinforces that he intentionally withheld significant information from investors and lenders, satisfying the legal requirements for wire fraud.

Sworn testimony given during a plea colloquy is presumed accurate, and a district court does not abuse its discretion in discrediting later contradictory claims about the plea's validity unless substantial reasons exist. In Rivernider's case, prior to accepting his plea, the court conducted a thorough colloquy, assessing his mental state and understanding. Rivernider's responses indicated he was not under pressure or misunderstanding the proceedings; he confirmed clarity of mind, capability to make decisions, and the absence of coercion or promises influencing his plea. His claims of incompetence to plead guilty lacked evidentiary support. 

On appeal, Rivernider alleged coercion by his counsel, Bergenn, asserting that he was improperly told he had a "serious brain deficiency" and that Bergenn refused to pursue a trial following an expert's report. These claims were described as conclusory and insufficient to challenge the presumption of accuracy of his plea colloquy testimony. The record did not establish coercion or conflict of interest, but Rivernider has the option to raise ineffective assistance claims in a habeas petition under 28 U.S.C. § 2255, as appellate courts typically avoid addressing such claims on direct review due to the lack of developed records.

Additionally, Rivernider contended that the district court erred by not appointing new counsel to support his motion to withdraw the plea. Previous case law suggests that Sixth Amendment claims arise when a represented defendant files a pro se motion concerning representation issues related to the plea withdrawal.

The excerpt outlines two approaches to evaluating claims regarding a defendant's representation during a plea withdrawal. The first approach assesses the effectiveness of counsel's representation based on standards from Strickland v. Washington, notably when a conflict of interest is alleged, referencing Cuyler v. Sullivan. The second approach focuses on claims of total denial of representation, relying on precedents like Coleman v. Alabama and United States v. Cronic. The discussion indicates a preference for the first approach, as it aligns with the facts of the case and the principle that defendants are entitled to counsel when deciding to withdraw a guilty plea. 

Rivernider was represented by attorney Bergenn, who discussed the plea withdrawal with him and determined that there were no valid grounds for the motion. The text addresses two potential arguments for appointing new counsel: the claim that a defendant has an absolute right to make a motion to withdraw a plea and should receive new counsel if current counsel declines, or that Bergenn's decision constituted ineffective assistance due to overlooked grounds or a conflict of interest. 

The argument asserting Rivernider was deprived of counsel hinges on the district court allowing him to file a pro se motion. However, it clarifies that a counseled defendant cannot demand that their lawyer pursue specific motions or appoint new counsel simply due to strategic disagreements. While a defendant has the ultimate say on whether to plead guilty, the decision to withdraw a plea differs, as it requires valid legal grounds, which Bergenn deemed absent. The excerpt emphasizes that a defendant's right to choose to go to trial does not extend to requiring counsel to advocate for motions lacking legal merit.

Once a defendant enters and has a plea accepted, they must apply to the court for any modifications, with the court having discretion to deny the application unless sufficient legal grounds are established. Counsel's expertise is essential in determining the existence of such grounds. If counsel chooses not to make a motion to withdraw the plea, the defendant does not possess the right to make the motion independently or demand new counsel. While a defendant can choose to represent themselves or be represented by counsel, hybrid representation—where a defendant alternates between pro se and represented status—is not permitted. The court holds discretion to allow a represented defendant to make pro se submissions, but the defendant cannot insist on this right.

A defendant wishing to withdraw a guilty plea must demonstrate that their counsel's decision not to file a motion falls outside professional competence, which could indicate ineffective assistance of counsel. In this case, the court has already dismissed Rivernider's claim to withdraw his plea on its merits, leaving only a potential conflict of interest involving his lawyer as a basis for arguing ineffective assistance. To establish this claim, a defendant must show that their attorney's performance was unreasonably deficient and that this deficiency impacted the trial outcome, following the Strickland standard. If based on an alleged conflict of interest, the defendant is presumed to be prejudiced if they can prove that the conflict adversely affected their lawyer's performance. The defendant only needs to suggest a plausible alternative strategy that could have been pursued. Furthermore, if the court is aware of any potential conflict of interest, it has a duty to investigate and either disqualify the attorney or obtain a waiver from the client if a conflict is confirmed.

Allegations of counsel coercing a defendant into a guilty plea may indicate an actual conflict of interest, warranting the appointment of substitute counsel to facilitate a motion to withdraw the plea, unless the defendant has waived the right to conflict-free counsel. However, the right to substitute counsel is not automatic and requires a demonstration of an actual conflict, rather than mere accusations of coercion. In the case at hand, the district court did not abuse its discretion in denying the appointment of substitute counsel for Rivernider. Bergenn, Rivernider's counsel, initially sought to withdraw without justification, and subsequently suggested Rivernider file a pro se motion to withdraw his plea, despite believing there was no valid basis for such a motion. Rivernider's pro se motion referenced coercion minimally, focusing instead on his claims regarding mens rea and alleged fraudulent evidence presented to the grand jury. The district court denied the motion to withdraw the guilty plea, finding Rivernider's claims against Bergenn to be conclusory and inconsistent with his prior sworn testimony. The court correctly found no error in failing to appoint substitute counsel, as prior motions did not suggest attorney misconduct, and allowed Rivernider to file his motion pro se, providing him the opportunity to present any legitimate grounds for withdrawal.

The district court did not err in refusing to appoint substitute counsel for Rivernider following his pro se motion and subsequent statements in support. A defendant is not required to prove coercion to obtain substitute counsel for withdrawing a guilty plea; however, conclusory allegations of coercion, especially when lacking specific factual details, do not establish an actual conflict of interest. Rivernider's vague references to Bergenn’s conduct were deemed insufficient for the court to warrant an evidentiary hearing or new counsel, as the court found the coercion claims implausible based on the existing record. Consequently, Rivernider's challenges to his convictions due to inadequate legal representation were rejected, though he retains the right to pursue a 2255 motion based on ineffective assistance claims.

Regarding sentencing, both Rivernider and Ponte contested their sentences. Rivernider's challenge focused solely on substantive unreasonableness, while Ponte claimed both procedural and substantive unreasonableness due to alleged improper enhancements and lack of appropriate reductions. The substantive reasonableness of a sentence is reviewed for abuse of discretion, considering all circumstances and the extent of variance from the Guidelines. Rivernider received a 144-month sentence, significantly below the Guidelines range of 324 to 405 months, which was found to be within permissible limits. The district court justified the sentence by noting that the over $20 million loss amount did not accurately reflect the seriousness of Rivernider's actions, as he was not a predatory fraudster and had been defrauded himself. The court also acknowledged that Rivernider had engaged in substantial investment activities, contributing to its sentencing decision.

A two-level adjustment was applied for the use of sophisticated means, along with a two-level increase due to over $1,000,000 obtained from financial institutions, and a four-level role adjustment for the defendant Rivernider. His criminal history category was I. At the time of sentencing, the U.S. Sentencing Guidelines (U.S.S.G.) allowed for a four-level increase when a crime involved between 50 and 250 victims. This provision was amended in 2015 to increase the level based on "substantial financial harm" to five or more victims instead. The amendment is not retroactive and does not apply on direct review, as established in case law. Consequently, sentencing challenges are evaluated under the Guidelines in effect at the time of sentencing.

Rivernider’s arguments for a substantively unreasonable sentence were rejected by the district court, which found that despite being a first-time offender and having strong family ties, a significant sentence was warranted due to the severity of his actions and the impact on his clients. The district court exercised discretion in imposing a below-Guidelines sentence.

In relation to Ponte, the total offense level was calculated at thirty-seven, factoring in various enhancements including base offense level, loss amount, number of victims, use of sophisticated means, and abuse of position of trust. Ponte contested these enhancements and claimed the district court erred by not applying reductions for minor role or acceptance of responsibility. Additionally, he argued that his sentence was substantively unreasonable. For procedural reasonableness, it was emphasized that loss for fraud is defined as the greater of actual or intended loss, and the court is not obligated to achieve absolute precision in loss calculations.

A court can determine loss amounts using a preponderance of the evidence standard, requiring only a reasonable estimate of the loss. Following the amendment to U.S.S.G. 2B1.1(b)(2)(B) post-Ponte’s sentencing, the amendment does not apply on direct review. In evaluating the trial court's calculation method, the court of appeals must ensure it is legally acceptable. Ponte contested the district court's finding that the government proved, by a preponderance of the evidence, that loan applications for 104 properties through Cut Above Ventures contained material misrepresentations. The district court held a hearing where the government presented testimony from Rivernider’s co-conspirator, Tosha Wade, who revealed undisclosed incentive programs to lenders, and an email indicating non-disclosure. Additionally, FBI Special Agent Stephen West testified about the consolidation of documents related to the properties and the absence of disclosures to lenders.

However, on cross-examination, West admitted he could not specify misrepresentations for individual loans and lacked access to internal lender communications that might indicate awareness of the incentive program. He also had not reviewed the loan documentation for all properties but believed that, upon review, he would find each transaction compromised. After the hearing, the government provided further details regarding two transactions, outlining specific misrepresentations. The district court found the evidence sufficient to establish that all 104 properties were associated with fraud by a preponderance of the evidence, despite the lack of individual misrepresentation identification.

Ponte also raised challenges regarding the district court's enhancements for abuse of trust, use of sophisticated means, and the number of victims, alongside objections to the denials of acceptance-of-responsibility and minor role reductions.

Ponte characterizes himself as a minor participant in a fraud scheme, claiming he lacked knowledge of its complexities. He argues against enhancements related to the use of sophisticated means, the number of victims, and the abuse of a position of trust, asserting they should not apply to him personally. The district court found Ponte to be “more a partner than a pawn” in the offenses, rejecting his self-serving narrative. Ponte admitted to soliciting funds for the NMB program through misrepresentations and participating in a real estate conspiracy that deceived lenders while misleading borrowers. Evidence, including communications with Rivernider, indicated Ponte acted as a partner rather than a mere salesperson, undermining his claims of ignorance.

Ponte contests the abuse-of-trust enhancement, citing a lack of managerial discretion over clients' funds. However, U.S.S.G. § 3B1.3 allows for enhancement when a defendant abuses a position of trust that significantly aids the offense. The court determined that Ponte functioned as an investment advisor, persuading victims to secure loans for investments and recruiting them based on established relationships. The court found that Ponte exercised significant discretion and, from the victims' perspective, held a position of trust.

Ponte also disputes the denial of an acceptance-of-responsibility reduction, which the court denied based on his late guilty plea and inconsistencies in his statements. The district court’s refusal to grant this reduction was supported by sufficient factual grounds, given Ponte's contradictory behavior during the trial.

Ponte contends that his sentence is substantively unreasonable under 18 U.S.C. § 3553(a) due to its being higher than necessary for the statute's intended goals. His position relies on a draft American Bar Association (ABA) report proposing lower sentencing guidelines for economic crimes, which would have recommended a range under 90 months. However, the district court's reference to this draft did not obligate it to apply its guidelines, as it is not bound by proposals that have not been enacted, nor by the existing Sentencing Commission Guidelines. Therefore, the imposed sentence falls within acceptable judicial discretion.

Both defendants contest the restitution order of $22,140,765.99, which is typically reviewed for abuse of discretion, with legal challenges examined de novo. Under the Mandatory Victim Restitution Act (MVRA), restitution is mandated for victims directly harmed by the offense. The definition of "victim" limits restitution to those with a close connection to the defendant's actions, and restitution must reflect "actual" losses, though precise calculations are not necessary. Ponte and Rivernider argue that the restitution improperly included interest and did not accurately represent the lenders' actual losses. Since these arguments were not presented to the district court, they are reviewed only for plain error. Ponte specifically claims that the district court incorrectly included interest in the restitution for the real estate scheme, as the mortgage payments primarily covered interest rather than principal.

Loss is defined as the unpaid principal minus the collateral's value, excluding interest, as established in United States v. Turk. Rivernider's challenge to the restitution calculation methodology for the NMB program, based on incomplete financial records, was dismissed, as the calculation was deemed a reasonable approximation of losses, considering only victims expected to have lost money and crediting outgoing payments linked to the fraud. The argument that lender-victims should not receive restitution due to their alleged participation in the fraud was rejected due to a lack of evidence indicating their knowledge of the scheme.

Furthermore, the court addressed Ponte's claims regarding the restitution calculation for real estate scheme losses. It determined that using unpaid principal rather than the actual purchase price of mortgage loans by downstream purchasers could lead to an unwarranted benefit for those purchasers. However, since the defendants did not raise this argument earlier, it was reviewed for plain error, which was not found to be clear or obvious given the complexity of the mortgage market during the relevant period. Consequently, no reversible error was identified in the district court’s restitution order. The judgments of the district court were affirmed.