U.S. v. MARTINOVICH, No. 13-4828

Decided: January 7, 2016

In a case stemming from the defrauding of investors, the Fourth Circuit held that the district court erred by interfering with the trial, but that the error did not lead to an unfair trial.  The Fourth Circuit also held that the district court incorrectly treated the United States Sentencing Guidelines (USSG) as mandatory.  On that basis, the Fourth Circuit affirmed the defendant’s conviction, vacated his sentence, and remanded the case, ordering that it be assigned to a new judge.

Jeffrey Martinovich was a licensed broker who owned an investment services company.  From about late 2006 to early 2009, Martinovich inflated the values of stock, resulting in increased fees to him.  After investigating Martinovich’s company, in May, 2010, the Financial Industry Regulatory Authority forced the company to close, and Martinovich gave up his broker’s license.  In February, 2011, Martinovich filed for bankruptcy.  During the bankruptcy proceedings, he failed to disclose income and losses from gambling.

In October, 2012, Martinovich was charged with lying in a bankruptcy proceeding, conspiracy to commit mail and wire fraud, and multiple counts of mail and wire fraud.  During his trial, the court often interrupted and challenged counsel, but Martinovich never objected.  The trial jury found Martinovich guilty on one conspiracy count, four counts of wire fraud, five counts of mail fraud, and seven counts of money laundering, not guilty on three more counts, and was unable to reach a verdict on an additional five counts.  Over the disagreement of both Martinovich and the government, the district court repeatedly indicated at sentencing that the USSG were mandatory.  The district court found that Martinovich’s USSG guideline was 135-168 months imprisonment, and sentenced him to 140 months imprisonment.  Martinovich appealed, arguing that the court’s interruptions deprived him of a fair trial, and that the district court erred by treating the USSG as mandatory.

The Fourth Circuit first found, under the plain error standard, that the court’s interference was error, but that the error did not deprive Martinovich of a fair trial.  The Fourth Circuit noted the repeated times the court interrupted counsel, interfered with counsel’s presentation of evidence, and challenged counsel’s tactics, finding that “the district court’s repeated comments were imprudent and poorly conveyed.”  The Fourth Circuit found that while the court’s behavior was error, the error did not lead to an unfair trial.  The Court based this holding on the fact that district courts are generally entitled to manage trials, the court warned jurors that its opinions and comments should not influence how they thought about or decided the case, Martinovich did not object to the court’s behavior at the time, and the evidence against Martinovich was overwhelming.

The Fourth Circuit then found that the district court erred by treating the USSG as mandatory.  Under case law, the Court noted, treating the USSG as mandatory makes the sentence imposed procedurally unreasonable, and subject to being vacated.  Here, the district court repeatedly said that the USSG left it no discretion, or that what discretion it did have was disfavored.  The Court then held that the error in treating the USSG as mandatory was not harmless, because if the district court had treated the USSG as advisory, it might have imposed a shorter sentence on Martinovich.  On this basis, the Fourth Circuit affirmed Martinovich’s convictions, vacated his sentence, and remanded the case.  In addition, the Fourth Circuit ordered that the resentencing be done by a different judge to preserve the appearance of fairness.

Judge Wynn wrote a separate concurring opinion in which he noted that judges “must avoid even the appearance of improper interference and excessive interruptions of court proceedings.”  He noted that, “[a]t some point, repeated injudicious conduct must be recognized by this Court as a compelling basis for finding plain error.”

Full Opinion

Katherine H. Flynn

 

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