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United States v. Bartko, No. 12-4298

Decided: August 23, 2013

The Fourth Circuit affirmed the sentence and conviction of Gregory Bartko in connection with his role in a fraudulent investment scheme. The court found that district court did not err in failing to award Bartko a new trial. Additionally the court held that the district court’s jury instructions were not an abuse of discretion and that the district court properly imposed sentencing enhancements.

Defendant Gregory Bartko was a securities attorney, investment banker, and a registered broker/dealer. Bartko led and organized a fraudulent financial scheme that involved securing money from investors to provide funding for private equity funds. Bartko and his accomplices led investors to believe that the money would be used for investments and loans while the money was actually used to pay salaries and expenses. Ultimately, Bartko personally received $2,684,928.86 from forty different investors. After a thirteen-day trial, the jury convicted him on all counts. Bartko made four motions for a new trial, which were all denied. He also objected to jury instructions, consideration of a sealed document, and several of the Sentencing Guideline enhancements. The district court overruled Bartko’s objections and sentenced him to 272 months imprisonment. Bartko appealed.

On appeal, Bartko first contends that the district court erred by not granting him a new trial, citing four separate grounds on which the trial court erred. The Fourth Circuit disagreed. The court dismissed the first ground for new trial, finding that Bartko had waived the argument by failing to include it in his brief. Second, Bartko argued that he was entitled to a new trial based on a government witness’s false testimony that he had not received any promises or inducements for his testimony and the government’s failure to correct such testimony. The court agreed that the witness should have disclosed certain promises that the government made regarding how the prosecution would use the witness’s testimony. However, the court denied the motion for a new trial on this ground, finding that it would have had little to no impact on the final judgment. The court cited the district court’s statement that it had “never seen a witness more thoroughly impeached.” Bartko’s final two arguments stemmed from the government’s failure to disclose agreements with witnesses. The court again agreed that the government should have produced this information, but held that Bartko was not prejudiced by the nondisclosure, citing the district court’s conclusion that the defense’s impeachment of the witness was “devastatingly thorough and thoroughly devastating” and that the additional information was merely cumulative. Nevertheless, the court issued a stern warning to the attorney general’s office in the Eastern District of North Carolina based on its failure to provide information. Second, Bartko argued that the court improperly considered a sealed document. After an in camera review, the Fourth Circuit held that the document was harmless to Bartko, providing no basis for a new trial. Third, Bartko appealed based on the district court’s jury instruction regarding accomplice/informant testimony and multiple conspiracies. Bartko’s requested instruction for accomplice/informant testimony included a provision that charged the jury to view testimony of the accomplice/informants with “great care and scrutiny.” On appeal, the Fourth Circuit held that the district court’s instruction was not an abuse of discretion, finding that the jury instruction given “substantially covered” the requested instruction. Bartko also argued that the district court did not have sufficient evidence to warrant a multiple conspiracy instruction. The Fourth Circuit disagreed, finding that there were sufficient similarities between the defendant’s investment schemes to justify the district court’s instruction, including similar methods of investor recruitment, the same actors, the same goals, and the same methods of handling money.

Finally, Bartko contended that the district court improperly imposed Sentencing Guideline enhancements based on the amount loss, the number of victims, and his status as a registered broker/dealer at the time of the offense. First, Bartko argued that the amount of loss enhancement was improper because the court failed to offset the amount of loss by the amount he returned to the victims. The court dismissed this argument on the grounds that he did not return the money until the government detected the crime. Second, Bartko argued that the district court improperly concluded that there were more than fifty victims of his crime. The court disagreed, finding that there were 171 investors in the fraudulent scheme, and while they could not all be pinned to Bartko’s actions, their money was sufficiently comingled to assign a pro-rata loss to each investor. Finally, Bartko challenged the broker/dealer enhancement on the grounds that his status as a broker/dealer was not used to commit the crime. The court acknowledged that his broker/dealer status was not used in the crime, but dismissed his argument. The court found that the Sentencing Guidelines required the enhancement where a broker or dealer’s criminal offense involves a securities law violation, regardless of whether a connection existed between the broker/dealer designation and the securities violation. Therefore, the Fourth Circuit affirmed the conviction and sentence.

Full Opinion

– Wesley B. Lambert