Eleventh Circuit Court of Appeals - Published Opinions

Wednesday, January 23, 2008

Masferrer: Bank CEO fraud conviction affirmed

In U.S. v. Masferrer, No. 06-14223 (Jan. 22, 2008), the Court affirmed the conviction and sentence of a bank CEO convicted of bank and securities fraud. The fraud arose out of Masferrer’s attempt to conceal bad bank investments in Russian assets.
The Court rejected the challenge to the technical violation of the recusal rules when the case was directly reassigned to another judge. The Court noted the failure to show any potential bias.
The Court also rejected the argument that evidence of the subsequent (higher) value of the assets – subsequent to the fraud – should have been admitted in Masferrer’s defense. The Court noted that the relevant time period was Masferrer’s belief and intent at the time of the fraud, not afterward.
Turning to sentencing, the Court rejected Masferrer’s challenge to the use of 2001 Guidelines, pointing out that these Guidelines predated the completion of the conspiracy and therefore presented no Ex Post Facto issue. The Court also rejected Masferrer’s challenge to the calculation of a loss between $20 and $40 million. The Court rejected the argument that $ 22 million should not have been included as a loss to the bank, because they represented Russian assets that were worthless before the fraud occurred, and the bank would have suffered that unrealized loss, and, in fact, did not do so as a result of his fraudulent conduct. "Masferrer may not have caused the Russian assets to decline in value, but his criminal activity did cause them to be sold when they were in fact worthless, and consequently, caused the $22 million to be realized by the bank."