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trialmotionburden of proofcorporationjury trialsentencing guidelinesrestitution
trialmotiongrand juryrestitution

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Watts v. United States, Not Reported in Fed. Rptr., 2023 WL 2910634

Facts

Michael Watts was involved in a scheme to manipulate the stock price of Hydrocarb Energy Corporation (HECC) through fraudulent practices, including the use of a Boiler Room to sell shares at inflated prices. He was convicted following a jury trial and sentenced to one year and a day in prison, along with significant restitution and forfeiture. Watts argued that the government had constructively amended his indictment and that the district court had miscalculated the financial penalties.

The indictment specifically alleges Watts's and his co-conspirators’ use of sham documents to effectuate their schemes. … The evidence at trial showed that Watts fully understood the Boiler Room's sales pitches were false and fraudulent.

Issue

Did the government constructively amend the indictment during summation, and did the district court err in denying Watts's motion for a new trial and in calculating forfeiture and restitution amounts?

Watts argues that: (1) the government constructively amended his indictment, and the district court abused its discretion in denying Watts's motion for a new trial; and (2) the district court erroneously calculated the amounts of forfeiture and restitution owed.

Rule

A constructive amendment occurs when the evidence presented at trial broadens the possible bases for conviction beyond what was charged in the indictment. The district court's decisions regarding new trial motions and sentencing calculations are reviewed for abuse of discretion.

A district court's Rule 33 determination is reviewed for abuse of discretion.

Analysis

The court found that the indictment was not constructively amended as the evidence presented was consistent with the charges. The district court's denial of the new trial motion was upheld as the jury had sufficient evidence to convict Watts. Regarding the forfeiture and restitution calculations, the court determined that the district court did not err in including the trades of co-conspirators and that the government met its burden of proof.

Here, we discern no indication in the record, much less a “substantial likelihood,” that Watts “may have been convicted of an offense other than the one charged by the grand jury.” … The district court properly included the trades of HECC shares by co-conspirators, as well as the value of private placements in which Watts personally sold inflated HECC shares, resulting in foreseeable losses, in these calculations.

Conclusion

The court affirmed Watts's convictions but remanded for resentencing, finding the original sentence substantively unreasonable due to its significant deviation from the Sentencing Guidelines without adequate justification.

Accordingly, we AFFIRM Watts's convictions in part and REMAND with instructions that Watts be resentenced consistent with this summary order.

Who won?

The government prevailed in the conviction of Watts, as the court upheld the jury's findings and the district court's rulings on the indictment and trial motions.

We agree. A district court's sentence is substantively unreasonable where “[t]he length of a sentence is outside the range of permissible decisions [and] affirming it would damage the administration of justice because the sentence imposed was shockingly high, shockingly low, or otherwise unsupportable as a matter of law.”

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