United States v. Goodrich (2nd Cir. September 2021)

The Federal Docket

September 27, 2021

Restitution – A defendant can not be held liable for restitution where he or she has no involvement in planning or executing the part of the scheme where the victims are deprived of their property, and where that part of the scheme is not foreseeable to the defendant.

Darren Goodrich pleaded guilty to conspiracy to commit securities fraud under 18 U.S.C. § 371 for executing fraudulent trades that artificially inflated the share price of a sham company. At sentencing, the district court found Goodrich liable under the MVRA for over $2.3 million in restitution.

On appeal, Goodrich challenged part of the restitution order, arguing that the government did not show that the entire loss was directly and proximately caused by his offense of conviction.

Reviewing the order for an abuse of discretion, the Second Circuit reversed and remanded the case. The largest part of the restitution order was to compensate victims who had purchased shares of the sham company outside of the public market in a private placement. Goodrich’s co-defendants arranged for this private placement, and there was no evidence in the record that Goodrich himself was involved in its planning or execution or that he knew or foresaw it was occurring. The Government thus failed to meet its burden to show by a preponderance of the evidence that the harm to those victims was foreseeable to Goodrich.

Appeal from the Eastern District of New York
Opinion by Carney, joined by Calabresi and Pooler

Click here to read the opinion

Tom Church - Tom is a trial and appellate lawyer focusing on criminal defense and civil trials. Tom is the author of "The Federal Docket" and is a contributor to Mercer Law Review's Annual Survey in the areas of federal sentencing guidelines and criminal law. Tom graduated with honors from the University of Georgia Law School where he served as a research assistant to the faculty in the areas of constitutional law and civil rights litigation. Read Tom's reviews on AVVO. Follow Tom on Linkedin.

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