United States v. James Quay

• Court: Court of Appeals for the Third Circuit
• Decided: January 7, 2021
• Docket: 20-1447
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ________________

No. 20-1447 ________________

UNITED STATES OF AMERICA

v.

JAMES QUAY, a/k/a Stephen Jameson, Appellant

________________

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Criminal No. 2-17-cr-00371-003) District Judge: Honorable Joel H. Slomsky ________________

Submitted Pursuant to Third Circuit L.A.R. 34.1 on November 12, 2020

Before: HARDIMAN, SCIRICA, and RENDELL, Circuit Judges.

(Filed: January 7, 2021)

OPINION * ________________

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. SCIRICA, Circuit Judge

Appellant James Quay appeals his above-Guidelines sentence. He contends the

sentence is procedurally and substantively unreasonable. We disagree and will affirm.

I.

Quay, a former attorney and investment advisor, pleaded guilty to two counts of

securities fraud in 2019. Over the two decades prior to this conviction, he participated in

several schemes selling fraudulent investment products. Due to some of this fraudulent

activity, the Securities and Exchange Commission obtained civil judgments and

injunctions against him. During this time, Quay was also convicted of criminal contempt

of court and tax fraud, each resulting in a term of imprisonment. Further, Quay was

disbarred and then continued to hold himself out as an attorney, using an alias to conceal

that he was disbarred.

The securities fraud leading to Quay’s conviction in this case began in 2010, when

Quay and a partner co-founded Aptus Planning LLC, a company that provided estate-

planning services and sold investment products. Through Aptus, Quay began promoting

an investment firm, Paul-Ellis Investment Associates, which had falsely inflated its

returns. Quay and his partner recruited thirteen clients to invest a total of $1,295,000 with

Paul-Ellis Investment Associates. At Quay’s request, Paul-Ellis Investment Associates

wired $385,900 of the $1,295,000 into a bank account controlled by Quay. Quay gave the

$385,900—together with an additional $100,000 he solicited from another client—to

someone with no institutional investing experience or licenses, whom Quay hired to

2 invest the money. Ultimately, all but $9,000 was lost. After losing his clients’ money,

Quay told them the investment strategy was “performing as expected” and that he

anticipated “continued growth.”

Based on this conduct, the Government charged Quay with two counts of

securities fraud. While out on bond he sent text messages to Government witnesses,

making false statements and requesting that the witnesses testify favorably to him. The

Government then charged him with three counts of witness tampering. He later entered

into a plea agreement to plead guilty to the securities fraud counts in exchange for the

Government moving to dismiss the witness tampering charges. While out on bond

awaiting sentencing, but after the guilty plea was entered, Quay cut his electronic

monitoring device and absconded from supervision for twenty days before he was found

and taken back into custody.

At sentencing, Quay’s total offense level was 28. Based on his convictions for tax

fraud and criminal contempt—but not considering his history of selling fraudulent

investment products—Quay’s criminal history category was II. Accordingly, the

applicable Guidelines range was 87 to 108 months’ imprisonment.

Quay argued a sentence at the bottom of the Guidelines range was appropriate

because his age made recidivism unlikely, his history of fraud was irrelevant, and his

ability to pay restitution would increase with less imprisonment. The court considered

these arguments and weighed the sentencing factors outlined in 18 U.S.C. § 3553(a), but

3 ultimately sentenced Quay to 125 months’ imprisonment. 1 This 17-month upward

variance was based on Quay’s history of fraudulent conduct, flight from supervision, and

comments showing lack of remorse. This appeal followed.

II. 2

Quay contends his sentence is procedurally unreasonable because the court did not

meaningfully consider several sentencing factors. Additionally, Quay contends the

sentence is substantively unreasonable because the upward variance is not supported by

the record. We conclude the sentence is procedurally and substantively reasonable

because the court considered the § 3553(a) factors and based the upward variance on

rational conclusions supported by the record.

A.

We begin with Quay’s challenge to the sentence’s procedural reasonableness. At

the outset, Quay did not object to any procedural error after the sentence was imposed.

Accordingly, we review for plain error and will reverse only if the error “is ‘clear’ or

‘obvious,’ ‘affects substantial rights,’ and ‘affects the fairness, integrity or public

reputation of judicial proceedings.’” United States v. Flores-Mejia, 759 F.3d 253, 259 (3d

1 The court also ordered Quay to pay over one million dollars in restitution, jointly and severally with two co-defendants. 2 The trial court had jurisdiction under 18 U.S.C. § 3231. We have jurisdiction under 18 U.S.C. § 3742 and 28 U.S.C. § 1291. We review a sentence for procedural and substantive reasonableness under the abuse of discretion standard. United States v. Tomko, 562 F.3d 558, 567 (3d Cir. 2009) (en banc). “Factual findings relevant to the Sentencing Guidelines are reviewed for clear error, and the District Court’s Guidelines interpretation is reviewed de novo.” United States v. Seibert, 971 F.3d 396, 399 (3d Cir. 2020) (citation omitted).

4 Cir. 2014) (quoting United States v. Dragon, 471 F.3d 501, 505 (3d Cir. 2006)).

A sentence is procedurally unreasonable when the court does not meaningfully

consider a sentencing factor. Tomko, 562 F.3d at 567–68. But “[a] sentencing court does

not have 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.” Id. at 568 (internal

quotation marks and citation omitted). It is clear the court took a factor into account when

the record shows the court heard the appellant’s argument about that factor and rejected

the argument. Id. (quoting Rita v. United States, 551 U.S. 338, 358 (2007)).

Quay contends the sentence is procedurally unreasonable because the court did not

meaningfully consider four § 3553(a) factors: (1) the history and characteristics of the

defendant, (2) the need for deterrence and to protect the public, (3) the need to pay

restitution, and (4) the need to avoid unwarranted sentencing disparities.

As to the first three factors, the record shows that the court meaningfully

considered these factors by listening to Quay’s arguments and expressly rejecting them.

First, the court heard Quay’s argument about his history and characteristics—that he

would be unlikely to recidivate due to his age—and expressly rejected it because his prior

conduct indicated he was likely to recidivate. 3 Second, the court heard Quay’s argument

about deterrence and protecting the public—that the court should not consider his prior

3 To the extent Quay contends the court erred in finding he is likely to recidivate, this finding was not clearly erroneous considering Quay has sold fraudulent investment products for many years and was not deterred by a prior criminal sanction. See United States v. Jayyousi, 657 F.3d 1085, 1117 (11th Cir. 2011) (“Although recidivism ordinarily decreases with age, we have rejected this reasoning as a basis for a sentencing departure for certain [types of defendants].”).

5 conduct as relevant to this factor—and expressly rejected it because his prior conduct was

relevant to his likelihood to recidivate. Third, the court heard Quay’s argument about

restitution—that a shorter sentence would increase the likelihood that he will be able to

pay restitution—and expressly rejected it because restitution would likely not be paid

regardless of the length of the sentence. 4

As to the fourth factor, the need to avoid unwarranted sentencing disparities, the

court did not discuss the sentences of similarly situated defendants because Quay did not

present any comparable sentences. The defendant bears the burden of presenting the court

with comparable cases featuring similarly situated defendants. United States v. Charles,

467 F.3d 828, 833 (3d Cir. 2006). But instead of presenting comparable cases, Quay

argued, in general terms, that a sentence within the Guidelines range would avoid

unwarranted sentencing disparities. The court rejected this argument.

Accordingly, we find no plain error in the court’s consideration of the § 3553(a)

sentencing factors.

B.

Next, we turn to Quay’s challenge to his sentence’s substantive reasonableness. A

sentence is substantively reasonable if it “was premised upon appropriate and judicious

consideration of the relevant factors.” United States v. Lessner, 498 F.3d 185, 204 (3d

Cir. 2007) (internal quotation marks and citation omitted). And a sentence is only

4 To the extent Quay contends the court erred in finding he is unlikely to pay restitution, this finding was not clearly erroneous considering Quay’s financial condition and the amount of restitution ordered in this case.

6 substantively unreasonable if “no reasonable sentencing court would have imposed the

same sentence on that particular defendant for the reasons the district court provided.”

Tomko, 562 F.3d at 568.

Quay contends the sentence is substantively unreasonable because it was based on

his criminal history and his prior fraudulent conduct. But the court may consider both.

“[A] district court [is] entitled to consider [a defendant’s] criminal history in its decision

to vary above the recommended Guidelines range.” United States v. Tristan-Madrigal,

601 F.3d 629, 636 (6th Cir. 2010); accord Tomko, 562 F.3d at 571 (affirming a variance

based, in part, on the defendant’s criminal history). And a court is allowed “to consider

prior criminal conduct not resulting in a conviction” if the prior conduct is established by

a preponderance of the evidence, such as “where reliable evidence of that conduct is

proffered or . . . the [Presentence Investigation Report] adequately details the underlying

facts without objection from the defendant.” United States v. Berry, 553 F.3d 273, 281,

284 (3d Cir. 2009). Here, the civil penalties obtained by the Securities and Exchange

Commission constitute reliable evidence of Quay’s prior fraudulent conduct, and the

Presentence Investigation Report details the prior conduct without Quay’s objection.

Thus, it was proper for the court to consider Quay’s criminal history and prior conduct.

Quay also contends the sentence was not supported by the record because the

court improperly weighed his age and the need to pay restitution, factors that weigh

against an upward variance. But a “decision to accord less weight to mitigation factors

than that urged by [the defendant] does not render the sentence unreasonable.” United

States v. Young, 634 F.3d 233, 243 (3d Cir. 2011) (citing United States v. Bungar, 478

7 F.3d 540, 546 (3d Cir. 2007)). Here, the court imposed the 125-month sentence because

Quay’s history of fraudulent conduct, flight from supervision, and lack of remorse

indicated he posed a danger to the community and that an above-Guidelines sentence was

needed to adequately deter him. We conclude a reasonable court could have sentenced

Quay to 125 months’ imprisonment for these same reasons.

Accordingly, the above-Guidelines sentence was substantively reasonable.

III.

For the reasons stated above, we will affirm the above-Guidelines sentence.