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United States v. Reda

United States Court of Appeals, First Circuit

May 29, 2015

UNITED STATES OF AMERICA, Appellee,
v.
ALBERT REDA, Defendant-Appellant

As Amended June 3, 2015.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Denise J. Casper, U.S. District Judge.

William J. Kopeny for appellant.

Mark T. Quinlivan, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for appellee.

Before Howard, Circuit Judge, Souter,[*] Associate Justice, and Lipez, Circuit Judge.

OPINION

Page 626

SOUTER, Associate Justice.

Albert Reda was caught in an FBI sting targeting the market for penny stocks and was convicted of wire and mail fraud. See 18 U.S.C. § § 1343, 1341. His appeal raises two claims of trial error (evidentiary rulings with respect to a key witness and purportedly improper vouching by the government) and two of sentencing error (application of an enhancement for violating securities laws and the loss calculation). We affirm as to both trial error claims and the sentencing enhancement. As to the loss calculation, the government has confessed error, and we remand for resentencing.

I.

Details of this FBI sting, titled " Operation Penny Pincher," were set out in United States v. Prange, 771 F.3d 17, 21-25 (1st Cir. 2014). We will assume familiarity with that case, and describe here only those details necessary for resolving this one.

In Operation Penny Pincher, the FBI created a fictitious hedge fund and designated an undercover agent as its pretended, corrupt manager. Well-connected people (some of whom were FBI cooperators) typically arranged meetings between the manager and executives of penny stock companies. These latter individuals were identified in advance as likely to be interested in proposals by the manager to invest the fund's money in the executives' penny stocks at premium prices in return

Page 627

for 50% kickbacks concealed through phony consulting agreements solely for the manager's benefit.

Reda was one such executive, being chairman of the board of 1st Global Financial Corporation, which was in the business of purchasing distressed real estate. Arrangements were made for him to meet with the agent on June 29, 2011.

The day before that, a cooperating witness, E.H., called Reda to discuss the meeting, and during their recorded conversation, Reda asked for " more detail" on the deal that would be discussed the next day. E.H. explained that the hedge fund buys shares for an above-market price, half of which would be reclaimed by a " consulting bill" from one of several " different nominee companies" so the " accountants don't . . . have any suspicions." E.H. specifically explained that this " money goes back to this gentleman at the fund" and " he doesn't share it with . . . his partners," to which Reda responded, " Right. I understand."

The subsequent conversation among the agent, E.H., and Reda at the June 29th meeting was also recorded. The agent told Reda that, although he normally engaged in a four to six week due diligence enquiry before investing in a company, " this isn't going to be one of those deals." He continued with ...


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