United States Court of Appeals For the First Circuit

No. 23-1159

UNITED STATES OF AMERICA,

Appellee,

v.

RANDALL CRATER,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Denise J. Casper, U.S. District Judge]

Before

Gelpí, Howard, and Rikelman, Circuit Judges.

Scott P. Lopez, with whom Lawson & Weitzen, LLP was on brief, for appellant.

David M. Lieberman, Attorney, Criminal Division, Appellate Section, with whom Joshua S. Levy, Acting United States Attorney, Donald C. Lockhart, Appellate Chief, Christopher J. Markham, Assistant United States Attorney, District of Massachusetts, Nicole M. Argentieri, Acting Assistant Attorney General, and Lisa H. Miller, Deputy Assistant Attorney General, were on brief, for appellee. February 23, 2024 RIKELMAN, Circuit Judge. After an eight-day trial, a

jury convicted Randall Crater of wire fraud, unlawful monetary

transactions, and operating an unlicensed money transmitting

business based on his involvement in a cryptocurrency scheme. On

appeal, Crater challenges two of the district court's trial

rulings. First, Crater argues that the district court violated

his Sixth Amendment right to compulsory process by refusing to

enforce subpoenas against three federal agency witnesses on the

ground that Crater had failed to comply with the agencies' Touhy

regulations. Second, Crater contends that the district court

abdicated its gatekeeping duty by admitting testimony from the

government's cryptocurrency expert without conducting a Daubert

hearing. Because Crater's arguments cannot be squared with

controlling precedent or the record in this case, we affirm.

I. BACKGROUND

A. Relevant Facts

We begin with the facts, recounted in the "light most

favorable to the verdict." United States v. Guerrero-Narváez,

(1st Cir. 2022).

In the early 2010s, interest in cryptocurrency was

rapidly growing. The first well-known cryptocurrency, Bitcoin,

rose in value from less than one dollar in 2010 to nearly $100 per

coin in 2013. That same year, Randall Crater took advantage of

the market by launching My Big Coin (MBC), a new virtual currency

- 3 - and company. Crater credited himself as MBC's "Creator/Developer"

on LinkedIn, and his colleague John Roche served as the company's

chief executive officer.

MBC implicitly touted its similarities to Bitcoin on its

website and social media pages. Like Bitcoin, MBC was purportedly

a "virtual currency" that could be mined, bought, sold, traded,

saved, donated, or "sen[t] to friends and family around the world."

But MBC also claimed several unique features. First, MBC's virtual

currency ostensibly was "backed 100 percent by gold." Second, MBC

claimed to have a partnership with Mastercard, which would allow

coin-holders to "buy stuff all over the world" using a Mastercard

linked to their MBC account.

Crater also emphasized these unique features on his own

social media and in communications with potential customers. On

LinkedIn, he boasted that MBC was "the only cryptocurrency to be

backed by gold" and that "[w]e are partners with Mastercard, which

gives us a closed loop system so your [sic] able to brake [sic]

down into any currency that's needed!" In an email to one

customer, he wrote that "we have 300 million in gold backing us."

To another, he wrote that a bank in Spain held "100 million dollars

in my name in gold." Crater also told potential customers about

MBC's "elite deal" with Mastercard. In one instance, he claimed

via text message to have "[b]een with [the] Mastercard guys all

[morning]."

- 4 - These representations successfully enticed customers to

purchase MBC. For example, one customer, John Lynch, invested

more than $5.6 million in MBC based on his understanding that the

currency "mimicked Bitcoin in many ways" but "had the additional

advantage of being backed by gold."

Once customers purchased MBC, they were stuck with it.

Although MBC purportedly could be sold on an exchange hosted on

MBC's website, of the four MBC investors who testified for the

government at trial, none were ever able to sell their coins on

this exchange. Lynch, who needed liquidity to pay his taxes, tried

to work with Crater to sell some of his investment outside of the

exchange. Crater told Lynch that he had found a buyer and

repeatedly assured Lynch that money was coming -- he claimed to be

"[c]ounting cash," "waiting on the armored car service," and wiring

funds from Europe -- but no sale ever materialized.

Nor could customers spend their coins via Mastercard, as

Crater had promised. In lieu of a Mastercard linked to their MBC

account, MBC customers received a plastic card embossed with the

words "preferred customer," which provided no conduit to spend

their coins. And Mastercard had no record of any proposal or deal

with MBC.

Crater's representations about MBC's gold backing were

also false. Crater had communicated with an individual about a

"product" stored in barrels in a bonded warehouse in Texas -- but

- 5 - that product was high-grade mining waste, not gold bullion. And

the documentation Crater had from the warehouse at the time he

represented to investors that the coin was backed by $300 million

in gold said no such thing.

Customers purchased MBC by wiring money into one of three

bank accounts: an account registered to Crater's other company,

Greyshore Technology, or accounts registered to Crater's family

members. Collectively, between 2014 and 2016, $7.8 million flowed

into these three accounts, over $6.3 million of which could be

traced to MBC purchases.

B. Legal Proceedings

The government charged Crater with four counts of wire

fraud under

, three counts of unlawful monetary

transactions under

, and one count of operating an

unlicensed money transmitting business under

(a),

(b)(1)(B).

Before trial, the government advised Crater that it

planned to call an expert, Pamela Clegg, a "Certified Anti-Money

Laundering Specialist," to testify about virtual currencies

generally and MBC specifically. Clegg worked as the Director of

Financial Investigations and Education for CipherTrace, a

blockchain analytics firm. In that role, she was responsible for

"conduct[ing] cryptocurrency financial investigations and

educat[ing] others to understand and investigate financial crimes,

- 6 - money laundering and other criminal activity within the

cryptocurrency ecosystem." Among the parties Clegg had educated

on cryptocurrency were Interpol, Europol, and the United States

Departments of Treasury, Homeland Security, and Justice.

At the government's behest, CipherTrace had conducted a

"blockchain analysis" of MBC. As Clegg's expert report explained,

cryptocurrencies like Bitcoin use "cryptography to validate and

secure transactions that are digitally recorded on a distributed

ledger" known as a "blockchain." By analyzing these public

blockchains, which are "available to the public and reviewable on

several platforms," an investigator can gather information about

a cryptocurrency, such as transaction history and trading

frequency. CipherTrace's investigation had revealed that MBC was

not associated with a public blockchain and, therefore, lacked a

crucial indicator of operating as a cryptocurrency, until June

2017 -- long after Crater had marketed MBC as a virtual currency

comparable to Bitcoin.

Before trial, Crater moved to exclude Clegg's testimony

on several grounds. He argued that Clegg was not qualified to

render an expert opinion regarding cryptocurrency because her

undergraduate and graduate degrees were not in computer science

and that CipherTrace's investigation was based on unreliable

methods. He also contended that Clegg's proposed testimony was

irrelevant or, to the extent it was relevant, that the danger of

- 7 - unfair prejudice substantially outweighed its probative value.

Crater requested that the court hold a Daubert hearing to explore

these issues.

After the government filed an opposing brief, the

district court heard oral argument at the final pretrial conference

on Crater's motion to exclude Clegg. Crater emphasized that

Clegg's testimony risked confusing the jury because her opinion

was "limited to public blockchains" and thus did not sufficiently

allow for the possibility that MBC was associated with a private

blockchain during the relevant time. The district court rejected

this as a reason to exclude Clegg's testimony in its entirety but

noted that the public versus private blockchain issue would provide

Crater with "fertile ground" for cross-examination. The court

also explained that, based on its review of the papers, which

included Clegg's curriculum vitae, Clegg's qualifications were

sufficient to render expert testimony on the relevant issues.

The case proceeded to trial, at which Crater attempted

to call employees of three federal agencies -- the United States

Postal Service (USPS), Commodity Futures Trading Commission

(CFTC), and Federal Bureau of Investigation (FBI) -- as defense

witnesses. The government maintained that the agents were not

obligated to comply with Crater's subpoenas because Crater had not

followed the agencies' Touhy regulations.

- 8 - These regulations, promulgated under the federal

housekeeping statute,

, "govern the conditions and

procedures by which [agency] employees may testify about

work-related issues at trial." United States v. Soriano-Jarquin,

(4th Cir. 2007). They are known as "Touhy"

regulations after the Supreme Court's decision in United States ex

rel. Touhy v. Ragen,

(1951), which held that the

housekeeping statute conferred upon agency heads the ability to

"validly withdraw from . . . subordinates the power to release

department papers" in civil proceedings.

.

As a threshold step, before the employees would or could

testify, the regulations required Crater to submit to their

respective agencies a summary of the testimony he sought.

(c) (DOJ, including FBI);

(a)

(CFTC);

(c)(2)(iii) (USPS).1 Crater made no

attempt to comply. Instead, he argued to the district court that

the agencies' regulations could not apply in criminal proceedings

because their application would impermissibly burden a defendant's

Sixth Amendment right to compulsory process.

1 By their plain text, the USPS regulations do not apply to any proceeding in which the United States is a party.

(a)(3)(i). For reasons we will explain, however, we do not rely upon the Touhy regulations in affirming the district court's decision and thus do not need to address this issue.

- 9 - Over the course of the trial, the district court returned

to the Touhy issue several times. Although the court heard oral

argument on whether the regulations applied in criminal

proceedings, it also invited Crater to explain why he wanted the

agents to testify, indicating that the Touhy issue would be "moot"

if the testimony Crater sought was irrelevant. Crater clarified

that the purpose of subpoenaing the USPS and FBI agents was to

question them about "how [they] conducted [the] interviews" in

their investigation of Crater because, "in reading through the

reports of this investigation, [he] was struck by the approach

[the agents] took to questioning witnesses and essentially

corrupting their recollection of what was going on." As for the

CFTC agent, Crater explained that he wanted to question him about

Roche's refusal to comply with a CFTC subpoena, which Crater

thought could help him make out a "third-party culprit argument."

The government responded that this evidence was irrelevant because

Crater had not laid a foundation for it by questioning any of the

testifying witnesses about their interactions with the agents.

After Crater's proffer, the district court ruled on two

separate grounds that it would not compel the agents to testify.

First, it concluded that declining to compel the agents' testimony

would not deprive Crater of a defense because the testimony he

sought was not relevant or material. At most, the court reasoned,

the evidence could be used for impeachment, but given that the

- 10 - witnesses Crater sought to impeach were not called to testify by

the government, the evidence was entirely irrelevant. Second,

based on out-of-circuit case law applying Touhy regulations in

criminal cases, the court concluded that the agencies' regulations

were operable and thus cited Crater's non-compliance as a "separate

basis" for its ruling.

At the conclusion of the eight-day trial, at which Clegg

testified and the CFTC, FBI, and USPS agents did not, the jury

returned a guilty verdict against Crater on all counts. The

district court sentenced him to 100 months' imprisonment.

II. DISCUSSION

The issues on appeal are narrow. Crater challenges only

the district court's application of the Touhy regulations in a

criminal proceeding and its decision to admit Clegg's testimony

without holding a Daubert hearing. Either error, he contends,

requires us to vacate the final judgment and order a new trial.

We review each argument de novo and conclude that neither merits

reversal. See United States v. Adams,

(1st Cir.

2014) (explaining that questions of law are subject to de novo

review); Smith v. Jenkins,

(1st Cir. 2013) ("The

question of whether the district court actually performed its

gatekeeping function in the first place [under Daubert] is subject

to de novo review.").

- 11 - A. The Touhy Issue

Crater argues that the district court erred by treating

the agencies' Touhy regulations as valid procedural requirements

in the criminal context. He maintains that enforcing these

regulations in a criminal proceeding violates a criminal

defendant's rights under the Sixth Amendment's Compulsory Process

Clause, which provides that, "[i]n all criminal prosecutions, the

accused shall enjoy the right . . . to have compulsory process for

obtaining witnesses in his favor." U.S. Const. amend. VI. Such

restrictions on a defendant's right to call witnesses, he contends,

are incompatible with the text and history of this clause.2

Crater premises this argument on the claim that the

Supreme Court's decision in New York State Rifle & Pistol Ass'n v.

Bruen,

(2022), controls our analysis. In Bruen, the

Court announced the standard that courts must use to evaluate the

constitutionality of regulations that burden an individual's

Second Amendment right to bear arms: If the regulation at issue

burdens conduct that falls within the plain text of the Second

Amendment, then it is unconstitutional unless the government can

2 Crater also argues that application of the agencies' Touhy regulations violates a defendant's Sixth Amendment rights by "compel[ling] the defendant to sacrifice his work-product privilege." The parties dispute whether Crater forfeited this argument by failing to raise it in the first instance to the district court. Because our decision to affirm does not rest on the validity of the Touhy regulations, we do not need to address this argument.

- 12 - prove that its regulation is "consistent with the nation's

historical tradition of firearm regulation."

. Crater

argues that we must apply this same analytical framework to the

regulations at issue here. And under this framework, he argues,

the Touhy regulations are unconstitutional as applied to criminal

proceedings.

The protections of the Compulsory Process Clause are

certainly critical to an individual's constitutional right to

mount a meaningful defense at trial against criminal charges

brought by the government. But Crater's argument here suffers

from a fundamental flaw: The Bruen decision articulated a "standard

for applying the Second Amendment,"

but it did not purport to

supplant existing case law on any other constitutional right. And

the Supreme Court has separately interpreted the Sixth Amendment's

Compulsory Process Clause. That case law, which provides an

entirely different test for evaluating whether a restriction

violates a defendant's right to compulsory process, necessarily

controls our constitutional analysis here, regardless of whether

it is consistent with the Court's mode of analysis in Bruen. See

Rodriguez de Quijas v. Shearson/Am. Exp., Inc.,

(1989) ("If a precedent of this Court has direct application in a

case, yet appears to rest on reasons rejected in some other line

of decisions, the Court of Appeals should follow the case which

directly controls, leaving to this Court the prerogative of

- 13 - overruling its own decisions."); United States v. Ivery,

(1st Cir. 2005) ("It is not our place to anticipate the

Supreme Court's reconsideration of its prior rulings . . . .").

We briefly summarize the relevant Sixth Amendment case

law. The Supreme Court's decision in Washington v. Texas,

(1967), "shaped the broad contours of the right to

compulsory process." United States v. Hoffman,

(1st Cir. 1987). There, the Court explained that the Sixth

Amendment's Compulsory Process Clause protects, "in plain terms[,]

the right to present a defense." Washington,

. It

then found that a rule that arbitrarily deprived the defendant of

"relevant and material" testimony, which would have been "vital"

to the defense's theory, violated this constitutional right.

.

The Court "narrowed" the "lens of [the compulsory

process] inquiry" in United States v. Valenzuela-Bernal,

(1982). Hoffman,

. Based on Washington, the

Valenzuela-Bernal Court explained that "more than the mere absence

of testimony is necessary to establish a violation of the

[compulsory process] right." Valenzuela-Bernal, 548 U.S. at 867.

Instead, to establish a violation, a defendant "must at least make

some plausible showing of how [the excluded] testimony would have

been both material and favorable to his defense." Id.

- 14 - After the Supreme Court articulated these principles, we

incorporated them into the law of our circuit. Based on Washington

and Valenzuela-Bernal, we explained, "[t]here can be no violation

of the defense's right to present evidence . . . unless some

contested act or omission (1) can be attributed to the sovereign

and (2) causes the loss or erosion of testimony which is both (3)

material to the case and (4) favorable to the accused." United

States v. McLellan,

(1st Cir. 2020) (second

alteration in original) (quoting Hoffman,

).

Crater did not argue in his briefs that the district

court's ruling violated his Sixth Amendment right to compulsory

process under this standard. And when we offered him the

opportunity to reframe his position at oral argument, he declined.

Crater has therefore abandoned any argument that his inability to

compel the agents to appear at trial resulted in the loss of

material and favorable testimony. Instead, he contends that he

need not make such a showing because, after Bruen, Valenzuela-

Bernal is no longer "good law." As we explained above, however,

Bruen concerned only the Second Amendment, and we do not interpret

it to alter the Supreme Court's Sixth Amendment jurisprudence given

that the "Court does not normally overturn, or so dramatically

limit, earlier authority sub silentio." Shalala v. Ill. Council

on Long Term Care, Inc.,

(2000).

- 15 - Crater also contends that Valenzuela-Bernal does not

control because it is factually distinguishable. In Valenzuela-

Bernal, the government deported two non-citizens before a criminal

defendant charged with transporting them could interview them.

. In reaching the conclusion that the deportation

did not violate the defendant's compulsory process right, the Court

explained that such prompt deportation of non-citizens both

"satisf[ied] immigration policy" and was justified by several

practical considerations unique to the immigration context, such

as the "financial and physical burdens" that detaining non-

citizens impose on the government.

. Thus, Crater

argues, the Court's decision in Valenzuela-Bernal does not apply

here because "the government's dual role of enforcing both criminal

law and immigration law" informed its reasoning.

Crater is correct that the immigration context crucially

informed the Court's decision in Valenzuela-Bernal. The Court

announced the "material and favorable" standard for deported

witnesses but noted that it "express[ed] no opinion on the showing

which a criminal defendant must make in order to obtain compulsory

process for securing the attendance at his criminal trial of

witnesses within the United States."

at 873 & n.9 (emphasis

added). Nonetheless, our prior cases, by which we are bound, have

not confined the "material and favorable" standard to the

immigration context. See, e.g., Hoffman,

. We

- 16 - have explained that "[t]he showing of materiality and

favorableness that an accused must make in one setting may not be

the same as in another," but we have never held that a defendant

can entirely decline to make this showing and still succeed on

their Sixth Amendment claim. United States v. Bailey,

(1st Cir. 1987).

As Crater acknowledged at oral argument, our rejection

of his Bruen argument is fatal to his compulsory process claim.

In declining to enforce the trial subpoenas, the district court

relied not only upon Crater's non-compliance with the agencies'

Touhy regulations but also on Crater's proffer. Because it was

"not clear from the proffer that the [agents'] testimony would be

relevant, material, and vital to the defense," the court held that

declining to enforce the subpoenas would not violate Crater's

compulsory process right. By abandoning any argument under the

material and favorable standard, Crater fails to oppose this

conclusion.

We end our analysis here. Crater bases his

constitutional challenge to the Touhy regulations on inapplicable

precedent. The district court separately declined to enforce the

subpoenas because the agents' testimony was irrelevant, and Crater

has not argued that this decision violated his right to compulsory

process by depriving him of material and favorable testimony.

Thus, without expressing any opinion on the constitutionality of

- 17 - enforcing Touhy regulations against criminal defendants, we

conclude that the district court's decision not to compel the

agents' testimony did not violate Crater's right to compulsory

process. Cf. United States v. Vázquez-Rosario,

(1st Cir. 2023) (declining to rule on the sufficiency of a

defendant's Touhy request and instead affirming the district

court's decision to quash trial subpoenas against federal officers

on relevance grounds).

B. The Daubert Issue

Crater also challenges the district court's decision to

admit Clegg's expert testimony without holding a Daubert hearing,

which is "an evidentiary hearing . . . used by district courts to

resolve factual issues related to admissibility" of expert

testimony. Santos-Arrieta v. Hosp. Del Maestro,

, 5

n.11 (1st Cir. 2021). See generally Daubert v. Merrell Dow

Pharms., Inc.,

(1993). Crater argues that a hearing

was necessary to evaluate Clegg's qualifications, her

investigatory methods, and whether the risk of unfair prejudice or

confusing the jury substantially outweighed the probative value of

her proposed testimony.

Our case law does not support Crater's argument. As we

have previously explained, "Daubert establishes that before

admitting expert testimony, the trial court must fulfill its

'gatekeeping role' by making an independent determination that the

- 18 - expert's proffered . . . knowledge is both reliable and relevant."

United States v. Phillipos,

(1st Cir. 2017)

(quoting Daubert,

). But "[t]here is no particular

procedure that the trial court is required to follow in executing

[this] gatekeeping function," Smith,

(quoting United

States v. Diaz,

(1st Cir. 2002)), and we have

specifically rejected the argument that a district court must

necessarily hold an evidentiary hearing, see Phillipos,

.

Crater does not grapple with this precedent or explain

why the district court's procedure was nonetheless insufficient,

such that it "entirely abdicated its gatekeep[ing] role." Lestage

v. Coloplast Corp.,

(1st Cir. 2020). Nor could

he, given that the record demonstrates that the district court

took its gatekeeping role seriously. The court heard oral argument

on Crater's motion outside of the presence of the jury, during

which it noted that it had reviewed Crater's motion, the

government's opposition, Clegg's report, and the defense's expert

summary. These documents cataloged Clegg's extensive professional

experience in blockchain investigations: In addition to her work

as the Director of Financial Investigations and Education for

CipherTrace, she had created multiple training courses, conducted

trainings for Interpol, Europol, and the United States Departments

of Treasury, Homeland Security, and Justice, authored articles,

- 19 - and lectured at conferences and universities on blockchain

technology and cryptocurrency investigations. Thus, the court was

unpersuaded by Crater's argument that Clegg's educational

background alone rendered her unfit to opine as an expert. Given

that Federal Rule of Evidence 702 -- which governs the

admissibility of expert testimony -- allows an expert witness to

be qualified by "knowledge, skill, experience, training, or

education," we conclude that the district court did not abandon

its gatekeeping function by declining to hold a Daubert hearing to

further explore Clegg's qualifications. Fed. R. Evid. 702

(emphasis added).

Crater also suggests that Clegg's report "did not

demonstrate that her conclusions were based on sufficient facts or

data, or that her proposed testimony was the product of reliable

principles and methods." But he has not identified which of

Clegg's facts, data, methods, or principles he objects to, and

given that Crater's own expert agreed that CipherTrace's

blockchain analysis could "reveal a number of details of [a] system

and its contents," we reject the argument that the district court

should have held an evidentiary hearing because of Crater's vague

methodological objections.

Finally, we disagree with Crater that the district court

abdicated its gatekeeping function by resolving his relevancy and

Federal Rule of Evidence 403 objections to Clegg's testimony

- 20 - without holding a Daubert hearing. In fact, Crater does not

explain what more a Daubert hearing could have accomplished with

regard to these inquiries. He argued to the district court that

allowing Clegg to opine that MBC was associated with a public

blockchain after 2017 would lead to the "unduly prejudicial"

inference that it was not associated with any blockchain, and

therefore was not a cryptocurrency, prior to 2017. The record

shows that the district court carefully considered this claim. At

oral argument, it both asked for clarification and offered him the

opportunity to respond to the government's opposing points. At

the end of this colloquy, the court explained that Crater did not

provide a compelling reason to exclude the testimony based on

relevance or unfair prejudice but offered to return to the issue

if Crater had more to add. Under these circumstances, we conclude

that the district court faithfully executed its gatekeeping

function under Daubert.3

3To the extent Crater challenges the district court's decision to actually admit the testimony under Federal Rules of Evidence 401 and 403, we see no abuse of discretion in the district court's ruling. See Smith,

("If we are satisfied that the court did not altogether abdicate its role under Daubert, we review for abuse of discretion its decision to admit or exclude expert testimony."). Clegg's testimony was undoubtedly relevant, given that Crater had advertised MBC as a cryptocurrency with functionality analogous to Bitcoin. Moreover, Crater does not explain why the inferences a juror might draw from Clegg's testimony were "unfairly" prejudicial. United States v. Ross,

(1st Cir. 2016) ("In balancing the scales of Rule 403, it is important to note that only 'unfair' prejudice is to be

- 21 - III. CONCLUSION

For all these reasons, we affirm the judgment.

avoided, as 'by design, all evidence is meant to be prejudicial.'" (citation omitted)).

- 22 -