16‐2834‐cr United States v. Danilovich

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 26th day of April, two thousand eighteen.

PRESENT: RICHARD C. WESLEY, DENNY CHIN, Circuit Judges, DENISE COTE, Judge.* ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

UNITED STATES OF AMERICA, Appellee,

v. 16‐2834‐cr

MICHAEL DANILOVICH, also known as Sealed Defendant 2, also known as Mike Daniels, also Known as Fat Mike, also known as Mike D,** Defendant‐Appellant.

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* Denise Cote, of the United States District Court for the Southern District of New York, sitting by designation. ** The Clerk of Court is respectfully directed to amend the official caption to conform to the above. FOR APPELLEE: DANIEL NOBLE, Assistant United States Attorney (Joshua A. Naftalis, Karl Metzner, Assistant United States Attorneys, on the brief), for Geoffrey S. Berman, United States Attorney for the Southern District of New York, New York, New York.

FOR DEFENDANT‐APPELLANT: ERIC M. CREIZMAN, Creizman PLLC, New York, New York.

Appeal from the United States District Court for the Southern District of

New York (Batts, J.).

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the amended judgment of the district court is

AFFIRMED.

Defendant‐appellant Michael Danilovich appeals from an amended

judgment of conviction, entered August 1, 2016, after a jury trial. Danilovich was

convicted of crimes related to his involvement in a racketeering enterprise that engaged

in, among other things, investment fraud, healthcare insurance fraud, money

laundering, and illegal gambling. He was sentenced principally to 300 monthsʹ

imprisonment, and ordered to forfeit $24,479,065 and pay restitution of $22,442,040,

jointly and severally with a co‐defendant. We assume the partiesʹ familiarity with the

underlying facts, procedural history, and issues on appeal.

Danilovich raises a host of issues on appeal concerning: (1) the fraud

counts related to a scam that collected health insurance payments for car accident ‐ 2 ‐

victims under New Yorkʹs No‐Fault Comprehensive Motor Vehicle Insurance

Reparation Act,

et seq. (ʺNo‐Fault Fraud Countsʺ); (2) the fraud

counts related to Danilovichʹs participation in three investment schemes (the ʺSecurities

Fraud Countsʺ); (3) the district courtʹs refusal to declare a mistrial; and (4) the

substantive reasonableness of his sentence.

1. No‐Fault Fraud Counts

Danilovich argues that the district court erred because it did not instruct

the jury (1) on the meaning of ʺownershipʺ in the context of New Yorkʹs No‐Fault law,

and (2) that the use of ʺrunnersʺ and the payment of kickbacks are not inherently illegal.

First, we agree with the Government that Danilovich affirmatively waived any objection

to the jury instruction on ʺownershipʺ because his counsel below requested the

instructions that the court gave to the jury, over the Governmentʹs objection. See United

States v. Polouizzi,

(2d Cir. 2009). Second, Danilovich did not object to

the instruction on ʺrunnersʺ and kickbacks; his challenge is therefore subject to plain‐

error review. See Fed. R. Crim. P. 30(d).

We are not persuaded that the district court plainly erred in the

instructions it gave. The court read the charges in the indictment and the statutory

language, properly stated the elements of the charged offense, and instructed the jury as

to the findings required for conviction on the No‐Fault Fraud Counts. In any event, we

are not persuaded that the district court was bound by the jury instructions that the

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court used in Danilovichʹs first trial. See Musacchio v. United States,

, 716

(2016) (law‐of‐the‐case doctrine is a discretionary court practice).

2. Securities Fraud Counts

Danilovich argues that the convictions for the Baron & Caplan investment

scheme should be reversed because: (1) the convictions were based primarily on the

ʺuncorroborated, inherently incredible, and internally inconsistentʺ statements of a

cooperating witness, Igor Katsman; (2) the Government failed to disclose impeachment

evidence for Katsman; and (3) the district court erroneously admitted the lay opinion

testimony of another cooperating witness, William Shternfeld. Def.‐Appellantʹs Br. 45.

Danilovich further argues that the cumulative effect of these errors, along with the

improper admission of evidence from Danilovichʹs cellphone, prosecutorial misconduct

at trial, and prejudicial conduct by the district judge, warrants reversal and a new trial

on all securities fraud counts. We disagree.

First, the evidence was sufficient to convict Danilovich of the conspiracy

related to the Baron & Caplan investment scheme. See United States v. Coplan,

(2d Cir. 2012) (a conviction must be upheld if ʺany rational trier of fact could have

found the essential elements of the crime beyond a reasonable doubtʺ (citation

omitted)). Katsmanʹs testimony directly implicated Danilovich in the scheme. See

United States v. Truman,

(2d Cir. 2012) (explaining that ʺeven the

testimony of a single accomplice witness is sufficient to sustain a conviction, provided it

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is not incredible on its face or does not def[y] physical realitiesʺ (alteration in original)

(citation and internal quotation marks omitted)).

Moreover, Katsmanʹs testimony was corroborated. We ʺmust view the

evidence in the light most favorable to the government, crediting every inference that

could have been drawn in the governmentʹs favor, and deferring to the juryʹs

assessment of witness credibility and its assessment of the weight of the evidence.ʺ

Coplan,

(citation omitted). We are not persuaded that the jury failed to

properly assess and weigh the evidence presented.

Second, we are not persuaded that the district court erred in admitting

Shternfeldʹs testimony as to the meaning of certain language used in a recorded

telephone call between Danilovich and an unindicted co‐conspirator. Shternfeld was

personally involved in two investment frauds run by the Zemlyansky/Danilovich

organization. His testimony was ʺrationally based on his own perception because it

derived from his direct participation in the [securities fraud] activities of the charged

enterprise.ʺ United States v. Yannotti,

(2d Cir. 2008). This direct

participation in the activities of the charged enterprise was sufficient to afford

Shternfeld ʺparticular perceptions of its methods of operation [such that he could] offer

helpful lay opinion testimony under Rule 701 even as to co‐conspiratorsʹ actions that he

did not witness directly.ʺ

at 126 n.8.

Third, we are not persuaded that the Government failed to disclose

material impeachment evidence because it did not disclose prior to trial that agents had

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visited Katsman once in jail to discuss Katsmanʹs proffer or that the Government had

two phone calls with Katsman to encourage and then discuss his cooperation

agreement. There is no basis in the record to suggest that this information had or could

have had any additional impeachment value in light of the fact that the Government

had produced all of its interview reports and notes for Katsman, as well as the proffer

and cooperation agreements. See United States v. Persico,

(2d Cir. 2011)

(ʺ[W]here the undisclosed evidence merely furnishes an additional basis on which to

challenge a witness whose credibility has already been shown to be questionable . . . the

undisclosed evidence may properly be viewed as cumulative, and hence not material.ʺ).

We therefore agree with the district court that there was no Giglio violation here. See

United States v. Payne,

(2d Cir. 1995) (ʺ[U]ndisclosed evidence will be

deemed material only if it ʹcould reasonably be taken to put the whole case in such a

different light as to undermine confidence in the verdict.ʹʺ (quoting Kyles v. Whitley,

(1995)).

Danilovich makes a number of other arguments ‐‐ which he contends

warrant a new trial on the Securities Fraud Counts ‐‐ relating to: (1) the improper

admission of cell phone evidence he contends was seized in violation of his Fourth

Amendment Rights, (2) prosecutorial misconduct at trial, and (3) prejudicial conduct by

the district court. The arguments fail. First, Danilovich admits that the cell phone was

admitted by stipulation. He did not file a motion to suppress it before trial and waived

any objection to it. See Fed. R. Crim. P. 12(b)(3)(C); United States v. Ulloa,

, 43

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(2d Cir. 1989) (holding that ʺa motion to suppress evidence must be made before trial

and that failure to make such a motion constitutes waiverʺ).

Second, Danilovichʹs assertions of prosecutorial misconduct at trial ‐‐ that

the Government allegedly ʺsmil[ed] and chuckl[ed] and look[ed] at the jury and

nodd[ed]ʺ on one occasion, App. 1114‐15, criticized defense counselʹs ʺpoor

questioningʺ as creating ʺconfusion on cross‐examination,ʺ App. 1350‐51, and vouched

for an FBI agent ‐‐ do not, taken as a whole, demonstrate misconduct of the kind ʺso

severe and significant as to result in the denial of [Danilovichʹs] right to a fair trial.ʺ

Coplan,

(citation and internal quotation marks omitted).

Third, we are not persuaded that Danilovich was prejudiced by the

district courtʹs sua sponte sidebars and admonitions during witness questioning and

argument. The district court similarly admonished the Government and sua sponte

called for sidebars during the prosecutorsʹ direct examinations. In any event, the

district court cured any such prejudice by instructing the jury to disregard these

statements by the court, explaining that ʺduring the course of the trial, [the court] had to

admonish attorneys . . . . But you should draw no inference from that.ʺ App. 1469‐70;

see, e.g., United States v. Mickens,

, 1327‐28 & n.1 (2d Cir. 1991) (ʺ[A]ny

possible prejudice . . . [as a result of the courtʹs remarks during trial] was cured by the

courtʹs cautionary instruction.ʺ).

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3. Mistrial Claim

Danilovich next argues that the district court improperly denied his

request for a mistrial and substitution of counsel based upon the alleged ineffective

assistance of Danilovichʹs trial counsel. In two separate letters submitted during trial,

Danilovich asserted that he had not received responses to ʺnumerous email[s], text

messages and phone callsʺ about a witness, had ʺcompletely lost confidence in [his

attorneys],ʺ and faced ʺmajor barriers in communicationsʺ with his counsel concerning

trial strategy, a witness list, and the hiring of a company to create a ʺdemonstrativeʺ for

his defense summation. Supp. App. 11, 17, 50‐51. In response to the first letter, his

counsel represented that they would ʺcontinue to work zealously to defend

[Danilovich] in this matter.ʺ Supp. App. 7.

The district court did not abuse its discretion in denying the motion for a

mistrial and substitution of counsel. See Renico v. Lett,

(2010) (ʺThe

decision to declare a mistrial is left to the sound discretion of the judge.ʺ (internal

quotation marks omitted)). The district court reasonably concluded that Danilovichʹs

arguments as to his counselʹs deficient performance and disagreement on trial strategy

were unavailing, particularly ʺhaving observed Defense Counselʹs performance during

trial,ʺ and having considered Danilovichʹs complaints set forth in his letters. Supp.

App. 9; see United States v. Hsu,

(2d Cir. 2012) (the mere expression of

dissatisfaction with counselʹs trial performance is not a ʺsubstantial complaintʺ). In any

event, it was well within the district courtʹs discretion to deny the motion for mistrial,

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particularly given that Danilovich moved for a substitution of counsel halfway through

trial. See United States v. Carreto,

(2d Cir. 2009) (in determining

whether the district court abused its discretion, we consider, among other things, ʺthe

timeliness of defendantʹs request for new counselʺ).

4. Substantive Reasonableness

Finally, Danilovich argues that his sentence was substantively

unreasonable. We disagree. The district court thoroughly considered the relevant

section 3553(a) factors, and determined that a ʺsubstantialʺ sentence was warranted in

light of Danilovichʹs prior convictions, his continued criminal activity ʺ[w]hile out on

bail,ʺ and his role ʺas a leader and organizer of these conspiracies.ʺ App. 1657‐58. The

district court also specifically noted its application of an aggravating factor because

Danilovichʹs frauds were perpetrated against ʺunsuspecting and vulnerable peopleʺ and

Danilovich had ʺrobbed or bullied [the victims] out of their retirement and life savings.ʺ

App. 1657.

Nor are we persuaded that Danilovichʹs sentence was otherwise

substantively unreasonable because his co‐conspirator Mikhail Zemlyansky received

only a 15‐year sentence. See United States v. Wills,

(2d Cir. 2007),

abrogated on other grounds by Kimbrough v. United States,

(2007) (Section

3553(a) ʺdoes not require district courts to consider sentencing disparity among co‐

defendants,ʺ although disparities may be considered) (emphasis added) (citation

omitted)). Danilovich and Zemlyansky were not similarly situated. Danilovich had a

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higher criminal history category based upon his prior securities fraud and money

laundering convictions, had continued his criminal activities following his arrest, and

was convicted of more counts than Zemlyansky.

* * *

We address a collateral matter related to Danilovichʹs attorneyʹs conduct

in this appeal. The district court below found that the attorney had a direct conflict

because he had previously represented Katsman in another criminal proceeding that

was substantially related to this case and because Katsman had not waived his right to

conflict‐free counsel. In seeking permission in this Court to represent Danilovich in this

appeal, however, Danilovichʹs counsel represented that he would not attack Katsmanʹs

character or credibility on appeal. See Decl. of Eric M. Creizman, Dkt No. 28 ¶¶ 24‐25

(ʺIndeed, there is no reason to challenge Mr. Katsmanʹs credibility or attack his

character on appealʺ). But, as described above, he did just that, squarely contradicting

his prior representation. This conduct is most troubling.

We have considered Danilovichʹs remaining arguments and find them to

be without merit. For the reasons set forth above, we AFFIRM the district courtʹs

judgment.

FOR THE COURT: Catherine OʹHagan Wolfe, Clerk of Court

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