By: James W. Kraus
The U.S. Court of Appeals for the Second Circuit recently affirmed an order of restitution by the U.S. District Court for the Eastern District of New York, denying a request by the defendant (Roy Ageloff) to release some of the funds that had been held by the Court pending his resentencing. U.S. v. Catoggio, No. 11-3474, slip op. (2nd Cir., October 10, 2012).
Ageloff and his partner, Robert Catoggio, engaged in a significant “pump-and-dump” securities fraud scheme from 1991 to 1998. Eventually, Mr. Ageloff entered a plea of guilty to one count of racketeering and stipulated to a sentence enhancement of 18 levels for a fraud that amounted to losses exceeding $80 million. His original sentence, which included $80 million in restitution under the Mandatory Victim’s Restitution Act (“MVRA”), 18 U.S.C. 3663(A), was reversed and remanded based on a finding that the order of restitution had been issued without first identifying the victims and their losses. See, U.S. v. Catoggio, 326 F.3d 323, 324 (2nd Cir. 2003).
On remand, the government submitted a report prepared by the National Association of Securities Dealers (“NASD”) that documented an estimated $190 million in losses suffered by more than 9,000 victims. Prior to the resentencing, Ageloff had requested access to portions of the $536,000 that he had deposited with the court prior to his initial sentencing so that he could secure counsel of his choice. The district court denied this request.
Mr. Ageloff was not resentenced until 2011 due to a variety of factors, including a separate prosecution of Mr. Ageloff in Florida. Ultimately, after reviewing Ageloff’s objections to the NASD report, the district court issued a new restitution order on resentencing, ordering Ageloff to pay just over $190 million. On resentencing, the district court affirmed its rejection of Ageloff’s request for access to any of those previously deposited funds.
In affirming the district court’s restraint of Mr. Ageloff’s funds pending resentencing, the Second Circuit found authority for restraint of funds with the All Writs Act, 28 U.S.C. §1651(a), even though the district court had not cited the Act specifically as authority for its restraint of Mr. Ageloff’s funds. The Court, while acknowledging that the Second Circuit had not previously addressed whether the All Writs Act enables a court to restrain a convicted defendant’s property in anticipation of ordering restitution, found that courts in the Second Circuit and beyond have uniformly found such authority.
The court concluded that the district court properly exercised its authority under the All Writs Act to restrain Ageloff’s assets in anticipation of resentencing. It noted that he had previously entered a plea of guilty to committing a crime for which restitution is mandatory under the MVRA, and that Mr. Ageloff agreed to a sentencing enhancement for fraud for causing losses of $80 million or more. Based on these factors, it was reasonable to conclude that the eventual restitution order was certain to exceed $536,000.
The Court also found no merit in Ageloff’s argument that the refusal to release any of his money denied him the right to counsel of his choice in violation of the 6th Amendment. It supported its conclusion in that regard by citing U.S. v. Monsanto, 491 U.S. 600, 616 (1989), where the U.S. Supreme Court established that a pre-trial restraining order freezing the defendant’s assets did “not ‘arbitrarily’ interfere with the defendant’s ‘fair opportunity’ to retain counsel.”
James W. Kraus, of Pietragallo Gordon Alfano Bosick & Raspanti, LLP, has been selected as the recipient of the DRI’s Albert H. Parnell Outstanding Program Chair Award which will be presented during the DRI Annual Meeting on October 17 in Chicago, Illinois. This award honors a program chair who created a dynamic educational program enhancing… Read more »Read More
James W. Kraus has been appointed to serve as the Chair of the Directors and Officers Coverage Subcommittee of the Defense Research Institute’s (DRI) Government Enforcement and Corporate Compliance Committee (GECC). DRI is the largest international membership organization of attorneys defending the interests of business and individuals in civil litigation. The GECC provides opportunities for education… Read more »Read More
Nationally-recognized qui tam attorney, Marc S. Raspanti, will be speaking at the Federal Bar Association’s 2020 Qui Tam Conference in Washington, DC on Thursday, February 27, 2020. This two-day conference will feature experienced FCA litigators from a variety of perspectives who will dive into advanced topics and discuss emerging trends and key developments pertaining to… Read more »Read More
Pietragallo Gordon Alfano Bosick & Raspanti, LLP Partner Michael A. Morse will be presenting at the Pennsylvania Bar Institute’s (“PBI”) Health Law Institute on March 11-12, 2020. Mr. Morse’s session topic is, “Preparing for the Fight of Your Life: Anatomy of a Health Care Fraud Prosecution.” The PBI notes that the Health Law Institute is,… Read more »Read More