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United States v. Sample

United States Court of Appeals, Tenth Circuit

August 27, 2018

UNITED STATES OF AMERICA, Plaintiff - Appellant,
MATTHEW DALE SAMPLE, Defendant-Appellee.

          Appeal from the United States District Court for the District of New Mexico (D.C. No. 1:15-CR-04265-JCH-1)

          Fred J. Federici, United States Attorney's Office, Albuquerque, New Mexico (James D. Tierney, United States Attorney's Office, Albuquerque, New Mexico, with him on the briefs), for Plaintiff-Appellant.

          Ray Twohig, Albuquerque, New Mexico for Defendant-Appellee.

          Before LUCERO, HARTZ, and HOLMES, Circuit Judges.


         The United States government appeals the sentence of Matthew Sample, following his guilty plea to one count of frauds and swindles under 18 U.S.C. § 1341 and two counts of wire fraud under 18 U.S.C. § 1343. In sentencing Sample to a five-year term of probation on the rationale that such a sentence would allow him to repay his victims, the district court essentially sentenced Sample based on his income. We conclude that this sentence was unreasonable. Exercising jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(b), we reverse and remand for resentencing.


         Sample began working as a licensed investment advisor and registered broker in 1995. He worked for several large brokerage firms and was recognized as a top advisor. In 2006, Sample began operating the Vega Opportunity Fund (the "Vega Fund"). One year later, in 2007, he closed the fund after it had lost sixty-five percent of its value. Sample had been diverting funds invested in the Vega Fund for his own personal expenses, and had been providing investors with false account statements and quarterly updates on their purported investments.

         After closing the Vega Fund, Sample moved from Chicago, Illinois, to Albuquerque, New Mexico. In October of 2009, he began a hedge fund called the Lobo Volatility Fund, LLC (the "Lobo Fund"). He reverted to form. In a scheme similar to that perpetrated on investors in the Vega Fund, Sample provided false monthly statements showing appreciation in value, engaged in misleading email correspondence about market strategies, and provided false tax reports to Lobo Fund investors. All the while, Sample diverted a total of $1, 086, 453.62 from investors for his personal use.

         In December of 2015, Sample was charged with one count of defrauding and swindling in violation of 18 U.S.C. § 1341 and two counts of wire fraud, in violation of 18 U.S.C. § 1343. He pled guilty to all charges.

         On sentencing, the government requested a sentence at the low end of Sample's Guidelines range, which was 78 to 97 months' imprisonment. It argued that the impact upon Sample's victims had been profound: some lost their entire life savings, others were unable to retire as planned, and many expressed profound emotional distress as a result of Sample's betrayal. Sample's conduct was cast by the government as selfish, callous, and dishonest. The government referenced his attempts to convince investors to testify for him before the Securities and Exchange Commission and in his criminal case as evidence of his selfishness.

         The government noted Sample's previous unadjudicated conduct in Illinois, regarding the Vega Fund, now imported to New Mexico, and argued that Sample's betrayal of his fiduciary obligations and the trust placed in him as a financial professional demanded a significant sentence. It reasoned that Sample's sentence should reflect the seriousness of white collar crime and deter other financial professionals from similar conduct. Although the government acknowledged that less prison time would aid in victim restitution, restitution was unlikely to occur because Sample had filed a petition in bankruptcy. Even were he able to enhance the opportunity for restitution, the government urged Sample should serve the same prison time for his crimes as another defendant with a lower earning capacity would suffer.

         To the contrary, Sample argued that he should receive consideration for probation based on his unblemished record in the securities industry before 2008, his charity and volunteer work during that time, and his previous financial support of his family and friends. Sample construed his crimes as an aberration resulting from stress. That stress arose from, in part, the 2008 financial crisis, the collapse of his financial practice, his divorce, acceptance of his gay identity, and his move to New Mexico. He began using alcohol, cocaine, and ecstasy, which he claimed contributed to his reckless behavior. Essentially, Sample rationalized that he swindled his clients in order to provide for his family and entertain his friends. He sought acknowledgement that at the time of sentencing, he was gainfully employed, engaged, and was free of drugs and alcohol. Continued employment with a six-figure annual income, Sample told the court, would allow him to make significant restitution payments to his former investors.

         At Sample's sentencing, the district court acknowledged that Sample's crimes were "quite shameful" and indicated that it was ignoring Sample's statements as the usual "right things" most defendants mouthed at sentencing. The court chose instead to focus on the impact that the crimes had upon the victims. Every defrauded investor "wants their money back," said the court. "A prison term would end the current job that you have, with no guarantee that you would have this job or one like it when you got out of jail," the court ...

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