GREENBERG, Circuit Judge.
This matter comes on before this Court on an appeal from a judgment of conviction and sentence entered against appellant Matthew Kluger on June 4, 2012, in which Kluger challenges only his sentence. The government initiated this criminal case on April 5, 2011, when it filed a complaint against Kluger and Garrett Bauer in the District Court.
On December 14, 2011, Kluger entered a guilty plea to a four-count information charging him with (1) conspiracy to commit securities fraud; (2) securities fraud; (3) conspiracy to commit money laundering; and (4) obstruction of justice, in violation of 18 U.S.C. § 371, 15 U.S.C. §§ 78j(b) and 78ff(a), and 17 C.F.R. § 240.10b-5; 18 U.S.C. § 1956(h), 18 U.S.C. § 1512(c)(2), and 18 U.S.C. § 2. Kluger pled guilty pursuant to a plea agreement which did not include a stipulation as to his guidelines sentencing range. On June 4, 2012, the District Court sentenced Kluger to a 60-month custodial term on Count I and 144-month custodial terms on each of Counts II, III, and IV, all four terms to be served concurrently, for a total custodial term of 144 months (12 years), a term thought to be the longest insider-trading sentence ever imposed. The sentence included a $400 special assessment,
Following a separate hearing on the same day, the District Court sentenced Bauer to a 60-month custodial term on Count I and 108-month custodial terms on each of Counts II, III, and IV, all four terms to be served concurrently, for a total custodial term of 108 months (9 years). Bauer's sentence also included a $400 special assessment, a three-year term of supervised release, and occupational restrictions.
On April 11, 2011, Robinson, the third conspirator who was the "middleman," in the insider-trading scheme because Kluger passed inside information to him and he, in turn, relayed the information to Bauer who executed the trades, pled guilty to a three-count information for securities fraud. The District Court on June 5, 2011, sentenced Robinson to concurrent 27-month custodial terms on all three counts for a total custodial term of 27 months to be followed by a three-year term of supervised release. The Court also included a $300 special assessment in Robinson's sentence. Robinson's sentence was far below his guidelines range of 70 to 87 months but the Court based it in part on a motion that the government filed pursuant to U.S.S.G. § 5K1.1 seeking a downwards departure from his guidelines sentencing range because Robinson was cooperating with the government in its investigation and prosecution of the conspiracy involved in this case. Robinson has not appealed from the sentence.
On June 13, 2012, Kluger filed a timely appeal, raising the following arguments. First, he challenges the District Court's calculation of his sentencing guidelines range. Second, he contends that the Court procedurally erred in imposing the sentence on him by (1) improperly denying him an evidentiary hearing prior to his sentencing; (2) failing to resolve his objections to the presentence investigation report; and (3) not ordering discovery of materials that the government turned over to the probation department for use in preparing the presentence report. Finally, he contends that the District Court imposed a procedurally and substantively unreasonable sentence.
The insider-trading scheme began in the summer of 1994 and, as we have indicated, involved three individuals: Kluger, Bauer, and Robinson. When the parties to the conspiracy initiated their scheme, Kluger had finished his second year of law school at New York University and was working as a summer associate at the New York law firm of Cravath, Swaine & Moore. Kluger knew Robinson from their prior employment at a New York real estate company and Bauer knew Robinson from their prior employment at a venture capital firm in New York.
Beginning as a summer associate and then continuing as a full-time associate after law school, Kluger passed along material, nonpublic information concerning mergers and acquisitions to Robinson who then gave that information to Bauer, who as a professional stock trader used it to execute trades on behalf of the three conspirators.
The first phase of the scheme continued through 2002 and involved inside information related to approximately 20 corporate transactions resulting in profits of $13,026,904. During that period, Kluger moved from one law firm to the next. Thus, following his employment at Cravath, Swaine & Moore, Kluger obtained a position with Skadden, Arps, Slate, Meagher & Flom which employed him for approximately three years in its New York and Palo Alto offices. Thereafter Fried, Frank, Harris, Shriver & Jacobson employed Kluger for approximately one year in its New York office. In the late 1990s, the Securities and Exchange Commission began investigating some of the conspirators' trades. By 2002, the scheme went on hiatus while Kluger worked for Sills, Cummis, Epstein & Gross and then served as an in-house counsel for a corporation, two places of employment at which Bauer did not gain information useful for inside trading. The second phase of the scheme started when Kluger joined the Washington, D.C. office of Wilson, Sonsini, Goodrich & Rosati as a senior associate in December 2005 and this phase continued throughout his tenure at that firm for more than five years. Although in some cases the insider trading led to losses, overall the insider-trading scheme made substantial profits.
Following the execution of the warrant, Robinson called Bauer and Kluger separately to inform them of the search and ongoing investigation. In the following weeks, unbeknownst to Bauer and Kluger, Robinson began cooperating with the government and recording his separate phone conversations with them. The incriminating conversations not only implicated the parties based on their past conduct but also revealed their plans to obstruct justice by destroying key evidence, such as cell phones and computers, and by agreeing not to cooperate with the government. A bizarre example of their attempts to obstruct justice was Bauer's proposal that Robinson burn $175,000 in cash obtained in the latest ATM withdrawals to eliminate Bauer's fingerprints, or, alternatively, to run the cash through a washing machine, a suggestion that gives a new and literal meaning to the term "money laundering."
During this cover-up phase of the conspiracy, Kluger emphasized that he was not going to cooperate with the government because he knew he never would get a good deal due to his role as the source of the inside information. On April 6, 2011, federal agents arrested Bauer and Kluger. Five days later, federal agents arrested Robinson, who pled guilty that same day.
The District Court exercised jurisdiction pursuant to 18 U.S.C. § 3231. We have appellate jurisdiction pursuant to 18 U.S.C. § 3742(a)(1) and 28 U.S.C. § 1291.
On appeal, "[w]e review the District Court's interpretation of the Sentencing Guidelines de novo, and scrutinize any findings of fact for clear error." United States v. Aquino, 555 F.3d 124, 127 (3d Cir.2009) (internal citations omitted). But "[w]e review the District Court's application of the Guidelines to facts for abuse of discretion." United States v. Tupone, 442 F.3d 145, 149 (3d Cir.2006) (citation omitted); see also Aquino, 555 F.3d at 127 n. 5 ("[T]he appropriate standard when reviewing a district court's application of law to fact is due deference.") (citation and internal quotation marks omitted).
We interpret and apply the guidelines as written. See United States v. Wong, 3 F.3d 667, 670 (3d Cir.1993) (citation omitted). Therefore, "[a]s with statutory language, the plain and unambiguous language of the Sentencing Guidelines affords the best recourse
U.S.S.G. § 2B1.4 cmt. n.2.
U.S.S.G. § 2B1.4 cmt. background (emphasis added).
The government relies on the commentary's plain language to support its argument that in a guidelines calculation Bauer's gains even when not shared with Kluger are attributable to Kluger. In this regard it is significant that Kluger does not dispute either his role as the source of the information on which Bauer traded or the amount of Bauer's gains based on that information. Rather, he counters that there is no support in the § 2B1.4 commentary for a conclusion that the "gain" calculation is exempted from the application of the reasonable foreseeability test under § 1B1.3(a)(1)(B) and that the District Court should have applied § 1B1.3(a)(1)(B) to lessen the gains of the conspiracy attributable to Kluger.
U.S.S.G. § 1B1.3 states:
U.S.S.G. § 1B1.3 (emphasis added). According to Kluger, the § 2B1.4 commentary dealing with insider trading merely provides an overview of the importance of gain in the context of insider trading; it
In United States v. Cespedes we explained that "[b]y including the phrase `unless otherwise specified,' the relevant conduct provision admits of exceptions to application of § 1B1.3(a)(1)(B)'s reasonable foreseeability test in certain instances." 663 F.3d 685, 689 (3d Cir.2011). Cespedes, a case involving a prosecution following a three-man armed bank robbery, dealt with the application of an enhancement in U.S.S.G. § 3C1.2 for "recklessly creating a substantial risk of death or serious bodily injury to another person in the course of fleeing from a law enforcement officer." 663 F.3d at 686-87. Cespedes and Grant, two of the three conspirators, who were armed entered a bank while the third conspirator, Whitehurst, waited outside in a getaway car. Cespedes flashed his weapon, and he and Grant removed the cash stolen in the robbery before exiting the bank and jumping into the car. After Whitehurst drove from the bank the police attempted to make a traffic stop of the getaway car and a high-speed chase through residential neighborhoods ensued. At some point, Cespedes and Grant jumped out of the car and fled on foot. Whitehurst, however, continued on driving recklessly, nearly striking pedestrians before eventually hitting a parked minivan and then colliding with a police vehicle. See id. at 687.
The applicable commentary to the sentencing enhancement explained that "the defendant is accountable for the defendant's own conduct and for conduct that the defendant aided or abetted, counseled, commanded, induced, procured, or willfully caused." Id. at 689 (citing U.S.S.G. § 3C1.2 cmt. n.5). In overturning the district court's application of the enhancement, we explained that by "specifically describing" when the enhancement was applicable the guidelines based the enhancement on "something other than reasonable foreseeability," and therefore created an exception to the application of § 1B1.3(a)(1)(B)'s reasonable foreseeability test. Accordingly, the application of a reasonable foreseeability test impermissibly expanded the scope of the criminal acts attributable to Cespedes in direct contravention of the commentary to the enhancement guideline.
Kluger's case differs from Cespedes' because the application of the reasonable foreseeability test arguably impermissibly would constrict rather than expand Kluger's responsibility in possible contravention of the commentary to the insider-trading guideline. But the key is not the distinction between expansion and constriction of responsibility but rather the application of the relevant commentary. The plain language of the commentary's background to § 2B1.4 unequivocally attributes all of Bauer's gains to Kluger because Bauer was a "person[] acting in concert with the defendant," as well as one "to whom the defendant provided inside information." U.S.S.G. § 2B1.4 cmt. background. Therefore, the insider-trading
The accompanying guideline to § 2B1.4, § 2B1.1 ("Larceny, Embezzlement, and Other Forms of Theft") supports our result. Section 2B1.1 includes a glossary of definitions one of which, "Actual Loss," "means the reasonably foreseeable pecuniary harm that resulted from the offense" and "Reasonably Foreseeable Pecuniary Harm," which "means pecuniary harm that the defendant knew or, under the circumstances, reasonably should have known, was a potential result of the offense." U.S.S.G. § 2B1.1 cmt. n.3. The presence of this foreseeability language in § 2B1.1 demonstrates that the Sentencing Commission could have inserted an explicit foreseeability requirement in § 2B1.4 if it had wanted to do so.
In reaching our result, we are aware of certain widely publicized recent cases from other courts dealing with insider-trading convictions that the parties on this appeal discuss in their briefs. In United States v. Gupta the district court strictly relied on § 2B1.4 and its commentary for calculating gain in an insider-trading case even though the court believed that the guideline "`is not a model of clarity.'" 904 F.Supp.2d 349, 352 (S.D.N.Y.2012) (citing United States v. Rajaratnam, No. 09 Cr. 1184, 2012 WL 362031, at * 14 (S.D.N.Y. Jan. 31, 2012), aff'd, No. 11-4416-cr, 2013 WL 3155848, 719 F.3d 139 (2d Cir. June 24, 2013)).
In Rajaratnam, the district court also relied on the commentary to U.S.S.G. § 2B1.4 to calculate gain without addressing the foreseeability issue addressed in § 1B1.3. See Rajaratnam, 2012 WL 362031.
Finally with respect to guidelines calculations, we note that we do not share the policy concerns that Kluger advances that a "sentence [of] an individual for unforeseeable conduct by a co-conspirator [] accomplish[es] no recognized penological aim." Appellant's br. at 30. By punishing the conspirator who is the source of the information for all gains made by his co-conspirators, we are reinforcing the deterrence message sent to would-be tippers by many courts. Moreover, we are sending a clear warning to individuals, such as Kluger, who, in an attempt to limit their responsibility and the extent of their potential sentencing exposure allege that they had agreements with their co-conspirators to cap the illicit gains. Would-be tippers will know that they cannot be certain that they will restrict their responsibility by coming to limiting agreements with their co-conspirators prior to commission of their offenses and will come to realize the inherent risk in leaking inside information. We also point out that both what we recognize was a long sentence that the Court imposed on Kluger and this opinion are likely to come to the attention of would-be insider traders who may be better educated and informed than persons engaging in other criminal activity, particularly inasmuch as insider-trading cases seem to be well publicized even in the general media.
When reviewing a district court's interpretation of the sentencing guidelines we exercise plenary review, but when reviewing a district court's application of the guidelines to the facts, we utilize an abuse of discretion deferential standard of review. See Aquino, 555 F.3d at 127 n. 5. Kluger argues that the District Court denied him a presentence evidentiary hearing at which he could have addressed the foreseeability issue with respect to the scope of the agreement among the conspirators through direct testimony and cross-examination.
Under U.S.S.G. § 6A1.3(a) (emphasis added):
U.S.S.G. § 6A1.3(b) provides that, "[t]he court shall resolve disputed sentencing factors at a sentencing hearing in accordance with Rule 32(i), Fed.R.Crim.P." Rule 32(i) (emphasis added) provides that at sentencing, the court:
(2) The court may permit the parties to introduce evidence on the objections....
(3) At sentencing, the court:
The District Court held an extensive sentencing hearing for Kluger in which the parties addressed the Court. The sentencing guidelines and Federal Rules of Criminal Procedure do not require that a district court conduct an evidentiary hearing in addition to a sentencing hearing at which the parties can be heard. Thus, "[a]n evidentiary hearing need not be afforded on demand because there is no `right' to a hearing." United States v. Cantero, 995 F.2d 1407, 1413 (7th Cir.1993) (citations omitted); see also United States v. Real-Hernandez, 90 F.3d 356, 362 (9th Cir.1996) ("There is no general right to an evidentiary hearing at sentencing, and a district court has discretion to determine whether to hold such a hearing.") (internal citations omitted). In Cantero the Court of Appeals for the Seventh Circuit held that the district court did not abuse its discretion in denying the defendant in a drug conspiracy case an evidentiary hearing to contest the sentencing enhancement for his supervisory role in the conspiracy, even though the defendant argued that the determination of his role in the conspiracy raised a question of fact and that he needed to cross-examine his co-conspirators so that the court could determine how to characterize his role. In this regard, the defendant was given a copy of the presentence report in advance of sentencing and the government and he submitted written memoranda on the issue. See Cantero, 995 F.2d at 1413. The district court, after considering the materials submitted on the issue, held that the defendant was not a leader or organizer of the criminal activity but rather was a manager or supervisor of the activity.
In United States v. Collado, a case involving two brothers serving as heroin suppliers in a broader drug conspiracy, we remanded the case for resentencing because
In United States v. Rennert, building on Collado, we clarified that "[a]lthough we required individualized inquiry [in Collado], we did not impose an immutable requirement that the district court hold extensive hearings to make explicit, particularized findings as to the exact date on which each defendant committed to the conspiracy or the precise contours of each conspirator's agreement." 374 F.3d 206, 214 (3d Cir.2004), vacated in part on other grounds, Miller v. United States, 544 U.S. 958, 125 S.Ct. 1744, 161 L.Ed.2d 598 (2005). Consequently, we agree with the Court of Appeals for the Seventh Circuit "that § 6A1.3 of the Guidelines requires the district court to provide a procedure — but not necessarily an evidentiary hearing — in which the parties may argue contested sentencing issues." Cantero, 995 F.2d at 1413 (citation omitted); see also Fed.R.Crim.P. 32(i)(2) ("The court may permit the parties to introduce evidence on the objections.") (emphasis added). Here, the extensive sentencing hearing before the District Court gave Kluger a sufficient opportunity to present his case.
In holding Kluger responsible for the profits from the insider trading under the plain language of § 2B1.4 in which foreseeability as Kluger raises the issue in this case is not an issue, we agree with the District Court that there was no need for an evidentiary hearing. Kluger does not dispute the total amount gained by Bauer on which the District Court made its calculations and he does not deny that his tips to Bauer via Robinson made the gains possible. No matter what the terms of the agreement among the conspirators, those terms would not have altered the fact that Kluger provided the information that reached Bauer via Robinson and made it possible for Bauer to make substantial gains by trading on that information. Furthermore, even if the foreseeability to Kluger of the extent of Bauer's trades had been an issue in Kluger's sentencing, as he claims it should have been, as the District Court explained, Kluger could not have "made one of his regular trips north to pick up his cash proceeds, [and then] return[ed] back resting comfortably in the idea that nobody else had a dollar more than he did of gain." App. at 63.
In a May 25, 2012 letter to the District Court, Kluger complained that the presentence report did not adequately address his objections. As noted above, Kluger objected to the characterization of the scheme, which he alleged was based on an underlying agreement regarding the division and targeted range of profits, thereby altering the calculation of the gains attributable to him and explaining the absence of a loss stipulation in the plea agreement. Kluger also objected to the presentence report's description of him as the initiator of the scheme, a characterization that he
PSR ¶ 34. Kluger, however, proposed the following paragraph:
PSR ¶ 57.
The Probation Department, however, is not required to resolve all objections. Following Fed.R.Crim.P. 32(g), the probation officer "submit[ted] to the court and to the parties the presentence report and an addendum containing any unresolved objections, the grounds for those objections, and the probation officer's comments on them." Fed.R.Crim.P. 32(g).
In considering the presentence report the District Court complied with the applicable federal rules of criminal procedure. Fed.R.Crim.P. 32(i)(3)(B) provides that the sentencing court "must — for any disputed portion of the presentence report or other controverted matter — rule on the dispute or determine that a ruling is unnecessary either because the matter will not affect sentencing, or because the court will not consider the matter in sentencing...." The District Court made its disposition with respect to the dispute concerning the existence of a limiting agreement among the conspirators by refusing to grant a hearing on the grounds that Kluger could not prove anything at the hearing that would impact on the Court's determination of his sentence. The Court reached its conclusion as to how to proceed by relying on the plain language of § 2B1.4 and by taking into account its concern over the potential for unreliable testimony regarding the agreement. At the sentencing hearing, the Court explained that it was "fully satisfied that the background note to the insider trading ... guideline[] fully covers Mr. Bauer's activities and Mr. Kluger's
Clearly, in Kluger's proposed changes to the presentence report quoted above he attempts to describe his role in the scheme in more benign terms than the report described his role. Thus, Kluger suggests that the presentence report should have recited that "Robinson became aware," of Kluger's access to inside information whereas the report states that Kluger directly contacted Robinson and informed him that he had access to inside information. The presentence report also states that Kluger asked Robinson to locate an individual capable of executing the trades on their behalf whereas Kluger claims that Robinson told him about Bauer and approached Bauer on his own.
Kluger concedes that he did not object to the presentence report at sentencing but attributes his failure to object to his expectation that the Court would resolve factual disputes at the evidentiary hearing that he contemplated that the Court would hold before imposing sentence. Kluger argues that even though the District Court did not directly address his alleged initiating role in the scheme, the Court could not have failed to consider it. Kluger, however, is in no position to make assumptions as to what the District Court did or did not take into consideration in rendering its sentence. Ultimately, Kluger was the source of the information that Bauer used to make his trades; the identification of the originator of the underlying scheme was of minimal significance in view of the circumstance that Kluger was a full participant in the conspiracy, and therefore an inquiry into the originator of the scheme did not merit an individualized sentencing hearing.
Kluger claims that there are materials, including recorded conversations and emails, that would prove that there was an agreement among the three conspirators regarding the limits of the insider-trading scheme.
We review the procedural and substantive reasonableness of the sentence for abuse of discretion. See United States v. Friedman, 658 F.3d 342, 360 (3d Cir.2011) (citation omitted). "At both [the procedural and substantive] stages of our review, the party challenging the sentence has the burden of demonstrating unreasonableness." United States v. Tomko, 562 F.3d 558, 567 (3d Cir.2009) (en banc) (citation omitted).
In the wake of United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, we have instructed district courts to adhere to a three-step sentencing process. See Gunter, 462 F.3d at 247. First, the district "[c]ourts must continue to calculate a defendant's Guidelines sentence precisely as they would have before Booker." United States v. Brown, 578 F.3d 221, 225 (3d Cir.2009) (footnote, internal quotation marks, and citations omitted). Second, "they must formally rule on the motions of both parties and state on the record whether they are granting a departure and how that departure affects the Guidelines calculation, and take into account our Circuit's pre-Booker case law, which continues to have advisory force." Id. (internal quotation marks and citations omitted). Third, the district courts "are to exercise their discretion by considering the relevant § 3553(a) factors ... in setting the sentence they impose regardless whether it varies from the sentence calculated under the Guidelines." Id. (internal quotation marks and citations omitted). In order to satisfy step three, "[t]he record must disclose meaningful consideration of the relevant statutory factors and the exercise of independent judgment, based on a weighing of the relevant factors, in arriving at a final sentence." United States v. Grier, 475 F.3d 556, 571-72 (3d Cir.2007) (citation omitted). In accordance with Gunter, the
We focus our review on Kluger's challenge to the District Court's application of step three of the sentencing process. Under 18 U.S.C. § 3553(a), the district court should impose a sentence that is "sufficient, but not greater than necessary" to comply with the purposes discussed in the second criterion below. In particular, the court should consider:
The sentencing court "meaningful[ly] consider[s]" the factors by "acknowledg[ing] and respond[ing] to any properly presented sentencing argument which has colorable legal merit and a factual basis." United States v. Begin, 696 F.3d 405, 411 (3d Cir.2012) (internal quotation marks and citations omitted). Yet the court does not need to "discuss and make findings as to each of the § 3553(a) factors if the record makes clear the court took the factors into account in sentencing." United States v. Jackson, 467 F.3d 834, 841 (3d Cir.2006) (internal quotation marks and citations omitted). After considering the factors, the District Court imposed a custodial sentence within the guidelines sentencing range of 144 months on Kluger, which, as we have indicated, was the longest insider-trading sentence in history. But as we noted in Cooper, "`reasonableness is a range, not a point.'" United States v. Cooper, 437 F.3d 324, 332 n. 11 (3d Cir.2006) (citation omitted), abrogated on other grounds by Kimbrough v. United States, 552 U.S. 85, 128 S.Ct. 558, 169 L.Ed.2d 481 (2007).
Kluger argues that the District Court focused on "the seriousness of the offense" (§ 3553(a)(2)(A)) and on "afford[ing] adequate deterrence" (§ 3553(a)(2)(B)) to the exclusion of other factors, such as the "nature and circumstances of the offense and the history and characteristics of the defendant" (§ 3553(a)(1)). According to Kluger, "the judge essentially did no more than mechanically recite the statutory words, rather than applying them to the defendant at hand." Appellant's br. at 41-42 (internal citation omitted). The Court,
Kluger focuses his appeal on what he perceives was the vast disparity between his sentence and that of his co-conspirator Bauer as well as the sentences of other defendants convicted of insider trading throughout the country, particularly in the Southern District of New York, quite naturally the venue for numerous insider-trader prosecutions. Under § 3553(a)(6), a sentencing judge considers "the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct." Courts apply § 3553(a)(6) to compare sentences between co-defendants or among defendants in separate cases, as long as the "defendants are similarly situated." King, 604 F.3d at 145 (citations omitted). Section 3553(a) "does not require district courts to consider sentencing disparity among co-defendants," but "it also does not prohibit them from doing so." United States v. Parker, 462 F.3d 273, 277 (3d Cir.2006). Bauer, Kluger's co-conspirator, netted gains many times larger than those that Kluger obtained from the conspiracy but the Court nevertheless sentenced Bauer to a nine-year custodial term at the bottom of his guidelines range. The Court, on the other hand, sentenced Kluger to a 144-month custodial sentence, a term in the middle of his guidelines range.
Though there is an obvious disparity between Kluger's and Bauer's sentences there was a good reason for the District Court to have imposed a longer sentence on Kluger than on Bauer. In this regard, we cannot overlook the circumstance that Kluger served as the source of the information that permitted the scheme to function. Furthermore, Kluger was an attorney who took an oath to uphold the law. Moreover, it is really quite remarkable that Kluger could not even wait to graduate from law school before using his employment at a law firm to initiate his illegal activities and it is equally remarkable that during most of his legal career he was involved in criminal activity, so that in an actual though perhaps not in a legal technical sense as the term is used in the sentencing guidelines, he truly was a career criminal. Furthermore, the presentence report makes clear that Kluger had a legitimate income well into six figures from his employment at various law firms, an income that should have made it seem less urgent to him to enhance by criminal activity. On the other hand, it is significant that Bauer had engaged in extensive community service work pre- and post-arrest that helped justify the within-guidelines sentence at the lower end of his range. In any event, Bauer and Kluger both received within-guidelines sentences, and such sentences generally do not lead
The District Court informed the parties at sentencing that it had examined a number of other insider-trading cases and recognized "that right now sentencing judges have expressed some dismay over the guidelines sentences applicable to some defendants."
Moving beyond Jiau, the District Court explained that many of the other below-guidelines sentences stemmed from agreements between the government and the defendant. For example, the Court discussed the case of Joseph "Chip" Skowron, who faced a guidelines range of 87-108 months but struck an agreement with the government pursuant to which the government recommended that the court impose a 60-month custodial sentence on him. The Court also discussed what it characterized as "the very notorious case" of Raj Rajaratnam that we addressed above in our discussion of Kluger's sentencing range. Rajaratnam, 2012 WL 362031. On May 11, 2011, a jury in the Southern District of New York convicted Rajaratnam on 14 counts of conspiracy and securities fraud, in a scheme that netted in excess of $60 million. Though Rajaratnam faced an applicable guidelines range of 235-293 months, the court sentenced him to a custodial term of 132 months in spite of the government's portrayal of him as the modern face of insider trading. The District Court here differentiated between
Unfortunately for Kluger, the District Court found that his actions constituted "a more thuggish, more direct example of taking other people's stuff. And at [the] same time for all its acridity, a highly successful scheme because of the money laundering. Because of the simplicity, because of the limited number of people involved in it. Because of the discipline." App. at 90. The Court added: "I don't know any of the other defendants who are accused of individual trades.... Not a pattern of how one runs a hedge fund but individual trades. I haven't seen any of them with this number of trades. And this consistency of engaging in insider information." Id. at 97. Moreover, the Court differentiated between Kluger and other lawyers who have been convicted of insider trading: "[T]he lawyers who have otherwise been prosecuted did not perform[] the kind of [wholesale] purloining of information on a regular and steady basis...." Id.
In the end, "[t]he touchstone of `reasonableness' is whether the record as a whole reflects rational and meaningful consideration of the factors enumerated in 18 U.S.C. § 3553(a)." Grier, 475 F.3d at 571 (footnote and citations omitted). We find that the record more than meets that requirement, especially because we "`give due deference to the district court's determination that the § 3553(a) factors, on a whole,' justify the sentence."
Once we are satisfied, as we are here, that a district court did not commit procedural error, we review the sentence for substantive reasonableness. See United States v. Negroni, 638 F.3d 434, 443 (3d Cir.2011). As noted above, the District Court imposed a within the guidelines custodial sentence of 144 months, and therefore we take into account our recognition that "[a] sentence that falls within the recommended Guidelines range, while not presumptively reasonable, is less likely to be unreasonable than a sentence outside
Kluger's focus on the procedural aspects of the sentence offers little in the way of substantive argument regarding what he believes was the District Court's "draconian sentence." Appellant's br. at 46. He provides an overview of mitigating factors that echoes the arguments under § 3553(a)(1) that we already have discussed regarding his history and characteristics. Kluger reiterates his argument that the sentence is particularly unreasonable as compared to that imposed on Bauer, who reaped millions more in profits and yet received a custodial sentence of 108 months at the bottom of his guidelines range which was shorter than that imposed on Kluger. Yet Kluger's argument does not give adequate attention to the circumstance that he received a two-level sentencing enhancement for abusing his position of trust as an attorney and did not perform a commensurate level of community service pre- and post-arrest as did Bauer, thereby qualifying Kluger for a higher guideline range and justifying his mid-range sentence.
After reiterating the § 3553(a) factors, Kluger summarily concludes that his sentence fails the test of substantive reasonableness and then quotes from Judge Fisher's dissent in Tomko to support his position that: "[I]f substantive reasonableness review is to mean anything, courts of appeals must attempt to give content to this component of our review until the Supreme Court provides further guidance." Tomko, 562 F.3d at 591 (Fisher, J., dissenting). But the concern that Judge Fisher expressed in his Tomko dissent is certainly not a concern here. We do not doubt that Kluger received a fairly severe sentence as compared to Bauer and to other defendants in insider-trading cases who were convicted in the Southern District of New York. Yet we do not exercise plenary review when examining the substantive reasonableness of a sentence, and the District Court set forth adequate reasons "to satisfy [us] that [it] considered the parties' arguments and [had] a reasoned basis for exercising [its] own legal decisionmaking authority." Merced, 603 F.3d at 215-16 (citing Rita v. United States, 551 U.S. 338, 356, 127 S.Ct. 2456, 2468, 168 L.Ed.2d 203 (2007)). Furthermore, "`[t]he fact that [we] might reasonably have concluded that a different sentence was appropriate is insufficient to justify reversal of the district court.'" Tomko, 562 F.3d at 560 (citation omitted).
For the foregoing reasons, we will affirm the judgment of conviction and sentence entered June 4, 2012.
