Monday, August 15, 2016

Circuit Addresses Definition of "Investment Advisor" for First Time


In United States v. Miller, No. 15-2577, the Court affirmed Miller’s securities fraud and tax evasion sentence for selling fake promissory notes to investors and squandering their money ($41 million worth).  In its first opinion addressing the definition of “investment advisor” under the Investment Advisers Act of 1940, 15 U.S.C. § 80b-2(a)(11), the Court held that the district court properly applied the investment advisor enhancement, U.S.S.G. § 2B1.1(b)(19)(A)(iii), because Miller was an investment advisor.  In addition, the Court found that the government had not breached the plea agreement and that the sentence was substantively reasonable.

The Court held that, considering the broad definition of “investment advisor” in the statute, the fact that no exception in the statute applied to Miller, and that the Sentencing Guidelines adopt the definition from the statute, Miller’s activities qualified him for the enhancement.  The statute defines “investment advisor” as any person who, for compensation, engages in the business of advising others on investments.  Miller conceded that he gave personal advice to some victims.  The advice given by others to the remaining victims constituted relevant conduct.  Miller was in the business of advising, because he held himself out as an advisor, and was registered as such.  And, he received compensation including the principal provided by investors, which he converted to his own use.

The Court’s review of the other issues was less substantive.  The breach of plea was reviewed on plain error, because the objection wasn’t clear.  The Court found no breach, because the government, at worst, wavered in response to pressure from the district court.  The Court found the 120-month sentence reasonable, given that the district court accounted for Miller’s poor health, and because of the “predatory and pernicious” nature of the crime.

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