NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS MAR 24 2021

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, No. 16-10363

Plaintiff-Appellee, D.C. No. 2:13-cr-00439-KJD-VCF-1 v.

ANTHONY B. BRANDEL, MEMORANDUM*

Defendant-Appellant.

UNITED STATES OF AMERICA, No. 19-10177

Plaintiff-Appellee, D.C. No. v. 2:13-cr-00439-KJD-VCF-3

JAMES WARRAS,

Defendant-Appellant.

Appeal from the United States District Court for the District of Nevada Kent J. Dawson, District Judge, Presiding

Argued and Submitted March 8, 2021 Las Vegas, Nevada

Before: CLIFTON, NGUYEN, and BENNETT, Circuit Judges.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. In this consolidated appeal, Anthony B. Brandel (“Brandel”) and James

Warras (“Warras”) challenge their convictions for conspiracy, 18 U.S.C. § 371,

wire fraud, 18 U.S.C. § 1343, and securities fraud, 15 U.S.C. § 78j(b). We have

jurisdiction under 28 U.S.C. § 1291, and we affirm.

1. Brandel argues that the jury instruction on securities fraud was fatally

flawed because it failed to mention the disjunctive three factor test in Hocking v.

Dubois, 885 F.2d 1449, 1460-61 (9th Cir. 1989) (adopting the test from

Williamson v. Tucker, 645 F.2d 404 (5th Cir. 1981)). Brandel concedes that plain

error review applies because he failed to raise this issue below. See United States

v. Armstrong, 909 F.2d 1238, 1244 (9th Cir. 1990) (applying plain error review

where the defendant fails to object before district court).

Here, the district court correctly provided the three-prong definition of an

“investment contract,” the relevant security type, from SEC v. W.J. Howey Co.

(Howey), 328 U.S. 293, 298-99 (1946). Hocking’s disjunctive three-factor test is

an elaboration of the third Howey prong and was not plainly required. The

Hocking factors are needed when, “[o]n the face of a partnership agreement,” the

investor maintains control, but the reality is different. Koch v. Hankins, 928 F.2d

1471, 1477 (9th Cir. 1991) (quoting Williamson, 645 F.2d at 424). The joint

venture agreements in this case were not facially partnership agreements, despite

their label. In fact, the agreements included a “No Partnership Relationship”

2 clause.

Even assuming the district court erred in failing to explain the Hocking

factors, the absence of that instruction did not affect Brandel’s substantial rights.

United States v. Marcus, 560 U.S. 258, 262 (2010). The joint venture agreements

would clearly satisfy the first disjunctive Hocking factor: that the agreement

“leaves so little power in the hands of the partner or venturer that the arrangement

in fact distributes power as would a limited partnership.” Hocking, 885 F.2d at

1460 (quoting Williamson, 645 F.2d at 424). Again, under the terms of the joint

venture agreements here, the victims were not partners. Nor does Brandel dispute

that in fact Malom Group AG (“Malom”) had the unilateral authority to decline,

and always did decline, the victims’ investment proposals.

2. The evidence was sufficient for a rational juror to find the existence of

an investment contract supporting Brandel and Warras’s securities fraud

convictions. See United States v. Nevils, 598 F.3d 1158, 1163-64 (9th Cir. 2010)

(en banc) (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)). Both the joint

venture agreements and the funding commitments satisfy the three Howey prongs

for the existence of an investment contract.

As to the joint venture agreements, each victim “invest[ed] . . . money” with

the expectation of financial gain. Howey, 328 U.S. at 298-99. To the extent the

joint venture agreement terms were confusing or contradictory as to whether the

3 funds were a “fee” or an investment, the standard of review compels resolution of

these conflicts in the prosecution’s favor. Nevils, 598 F.3d at 1163-64; McDaniel

v. Brown, 558 U.S. 120, 133 (2010). The evidence was also sufficient for the

jurors to find that the victims who invested in the joint venture agreements

expected to profit from the efforts of others. Howey, 328 U.S. at 298-99. A

rational juror could conclude beyond a reasonable doubt that the victims were

dependent on Brandel, Warras, or a “third party,” id. at 299, for the investment

ideas and that the victims’ ability to present investment ideas was not tantamount

to exercising the full powers of a general partner or joint venturer.

The evidence was also sufficient for a juror to conclude the funding

commitments were investment contracts. Gianopoulos expected to be reimbursed

for his $1.2 million “underwriting fee,” plus either $600,000 if the loan succeeded

or $50,000 if it failed. Thus, the jury could have concluded he expected to profit,

Warfield v. Alaniz, 569 F.3d 1015, 1024 (9th Cir. 2009), even if he also had other

motivations to secure the loan. We need not analyze Glazebrook’s funding

commitment because he signed a joint venture agreement that contemplated

sharing profits.

3. The evidence was also sufficient to establish that Brandel and Warras

possessed the requisite specific intent to defraud. See United States v. Kaplan, 836

F.3d 1199, 1212 (9th Cir. 2016) (conspiracy); United States v. Miller, 953 F.3d

4 1095, 1101 (9th Cir. 2020) (wire fraud); United States v. Tarallo, 380 F.3d 1174,

1181 (9th Cir. 2004) (securities fraud). Brandel and Warras argue that they had a

good-faith belief in the legitimacy of their activities, but a rational jury could have

concluded otherwise. Again, reasonable inferences must be drawn in the

government’s favor. McDaniel, 558 U.S. at 133. For instance, a rational jury

could reasonably infer intent to defraud one victim from Appellants’ activities in

nearly identical setups with other victims. See United States v. Sullivan, 522 F.3d

967, 974 (9th Cir. 2008).

The evidence was also sufficient for the jury to conclude Warras was part of

the conspiracy from the beginning. He received funds in his account as early as

January 2010, the same day a victim’s funds were released from escrow, and in

March 2010, he sent a suspicious email voicing his concern about “someone

fronting for some investigative agency.” And, although Warras did not meet with

victims before they transferred funds, conspirators pursuing the “same criminal

objective” need not agree “to commit or facilitate each and every part of the

substantive offense.” Salinas v. United States, 522 U.S. 52, 63 (1997). In several

emails, Warras and the codefendants discuss proof of funds letters that proved to

be fraudulent. The jury could also have concluded beyond a reasonable doubt that

Warras thought the “Brazilian bonds” were valueless. For instance, in a July 2011

email, Warras instructed an attorney about the need to come up with a “story”

5 about the Brazilian bonds and explained the joint venture agreement was a “file

stuffer” with “meaningless” percentages. The jury was free to disregard Warras’s

explanations and could have reasonably concluded beyond a reasonable doubt that

he possessed the requisite intent.

4. The government did not violate Warras’s Fifth Amendment Due

Process and Sixth Amendment rights to a fair trial by improperly shifting the

burden of proof on the value of the Brazilian bonds. We review this question de

novo, United States v. Coutchavlis, 260 F.3d 1149, 1156 (9th Cir. 2001), and

conclude any constitutional mistake was harmless, Washington v. Recuenco, 548

U.S. 212, 218-19 (2006). The jury could infer from Warras’s suspicious behavior

that he thought the bonds were of questionable value. Warras ignores that his

suspicious conduct is itself highly suggestive of the bonds’ worthlessness, as was

his apparent doctoring of a receipt to make the bonds appear legitimate, and his

failure to explain persuasively why Malom’s bonds would be an exception to his

general impression that 95 or 99% of old Brazilian bonds were fraudulent. The

government thus satisfied its initial burden to provide evidence permitting the jury

to conclude beyond a reasonable doubt that the bonds were worthless.

5. The district court also properly denied Warras an instruction that the

jury had to unanimously find the overt act element of conspiracy and unanimously

find that Warras did not have a good faith belief his actions were lawful. While the

6 jury must agree the overt act element is satisfied, it does not have to agree on the

factual basis for that element. United States v. Gonzalez, 786 F.3d 714, 718-19

(9th Cir. 2015). The district court properly instructed the jury that it had to agree

on the crime underlying the conspiracy—either wire or securities fraud. As noted

above, the district court also correctly instructed the jury that good faith is a

complete defense, and the government bears the burden of proving the lack of

good faith.

6. The district court’s forfeiture order did not violate Brandel or

Warras’s Eighth Amendment rights under the Excessive Fines Clause. We review

whether a fine is unconstitutionally excessive de novo. United States v.

Bajakajian, 524 U.S. 321, 336 n.10 (1998). We assume, along with the parties,

that the Eighth Amendment applies to the orders in this matter and that the in

personam forfeiture orders here are punitive. See United States v. Beecroft, 825

F.3d 991, 999-1000, 999 n.8 (9th Cir. 2016). The district court imposed forfeiture

amounts well below the U.S. Sentencing Guidelines recommended penalties, and

the sums were not “grossly disproportional to the gravity of [the] defendant’s

offense,” United States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1121 (9th

Cir. 2004) (citing Bajakajian, 524 U.S. at 334), given the severity of the offenses

and the extent of harm to victims. Id. at 1121-22. Although the district court did

not consider the extent of Brandel and Warras’s roles in the overall scheme relative

7 to others, no “rigid” set of factors is required, and the district court properly

analyzed the three other considerations often used to measure proportionality.

United States v. Mackby, 339 F.3d 1013, 1016 (9th Cir. 2003).

AFFIRMED.

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