19-619 (L) United States v. John Galanis
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 9th day of February, two thousand twenty-one. PRESENT: JOHN M. WALKER, JR., REENA RAGGI, WILLIAM J. NARDINI, Circuit Judges. _____________________________________ UNITED STATES OF AMERICA, Appellee, v. Nos. 19-619, 20-395 JOHN GALANIS, also known as Yanni,
Defendant-Appellant, DEVON ARCHER, JASON GALANIS, GARY HIRST, HUGH DUNKERLEY, MICHELLE MORTON, BEVAN COONEY,
Defendants. _____________________________________
FOR APPELLEE: REBECCA MERMELSTEIN for Audrey Strauss, United States Attorney for the Southern District of New York (Negar Tekeei, Thomas McKay, on the brief), New York, NY
FOR DEFENDANT-APPELLANT: DAVID TOUGER, Peluso & Touger, LLP, New York, NY
1 On appeal from a final judgment of the United States District Court for the Southern
District of New York (Ronnie Abrams, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED in part, VACATED in part,
and REMANDED for entry of judgment as modified by this order.
Defendant-Appellant John Galanis, who was found guilty, following a jury trial, of
substantive and conspiratorial securities fraud, see 15 U.S.C. §§ 78j(b), 78ff; 18 U.S.C. § 371; 17
C.F.R. § 240.10b-5, appeals from the judgment of conviction entered on March 8, 2019. We
assume the reader’s familiarity with the record.
I. Admission of Galanis’s Past Conviction for Financial Fraud in a Scheme Involving His Son and Denial of Surrebuttal
Galanis claims that the district court committed prejudicial error when, following the
defense summation, it allowed the Government to reopen its case to introduce evidence that
Galanis, his son Jason, and another co-defendant had been previously convicted of securities
fraud (the “Gerova conviction”). We review a district court’s decision to allow the Government
to reopen its case for abuse of discretion. See United States v. Bennett, 709 F.2d 803, 806 (2d
Cir. 1983). To determine whether a district court properly admitted evidence of a defendant’s
past criminal conduct under Fed. R. Evid. 404(b), we consider “whether (1) it was offered for a
proper purpose; (2) it was relevant to a material issue in dispute; (3) its probative value is
substantially outweighed by its prejudicial effect; and (4) the trial court gave an appropriate
limiting instruction to the jury if so requested by the defendant.” United States v. LaFlam, 369
F.3d 153, 156 (2d Cir. 2004).
The Gerova conviction was offered for a proper purpose material to the charged offense,
2 that is, to rebut Galanis’s claim of ignorance and lack of intent. See United States v. Bautista,
252 F.3d 141, 147 (2d Cir. 2001). Moreover, the conviction was highly probative in that regard
and accompanied by a robust limiting instruction. While the district court initially excluded
evidence of the Gerova conviction on Rule 403 prejudice grounds, it put defense counsel on
notice that he would open the door to this evidence by arguing either that Galanis had no reason
to suspect Jason Galanis of fraudulent activity or that Galanis was deceived by Jason Galanis
into furthering the conspiracy. After defense counsel made both of these points in summation,
the district court acted within its discretion in reopening the case to permit the Government to
introduce evidence of the Gerova conviction, particularly in light of the fact that it was
“accompanied by a careful and thorough instruction limiting the evidence to relevant Rule 404
grounds,” namely, Galanis’s knowledge and intent. United States v. Mercado, 573 F.3d 138, 141
(2d Cir. 2009).
Nor did the district court abuse its discretion in not allowing Galanis to present Jason
Galanis or others as surrebuttal defense witnesses. A defense surrebuttal is justified only when
“(1) the government’s rebuttal testimony raises a new issue, which broadens the scope of the
government’s case, and (2) the defense’s proffered surrebuttal testimony is not tangential, but
capable of discrediting the essence of the government’s rebuttal testimony.” United States v.
Murray, 736 F.3d 652, 657 (2d Cir. 2013). Introduction of the Gerova conviction did not broaden
the Government’s case; it merely rebutted Galanis’s argument that his son so duped everyone as
to admit an inference that Galanis unwittingly furthered the bond scheme. Assuming arguendo
that Jason Galanis would have testified in surrebuttal that his father was unaware of his plans to
defraud the Wakpamni and bond investors, such testimony would not have discredited the fact of
3 the men’s common Gerova conviction—a probative threshold which the district court correctly
identified as required to warrant surrebuttal. See id.
II. Denied Cross-Examination on the Wakpamni’s Other Lending Practices
Galanis faults the district court for precluding him from questioning a Wakpamni witness
about issuing unsecured, short term, high interest loans—that is, “payday loans.” We will
overturn evidentiary rulings only if they are “arbitrary and irrational.” See Mercado, 573 F.3d at
141. Here, it was neither arbitrary nor irrational to exclude questions about specific instances of
conduct that did not go to the witness’s character for truthfulness. See Fed. R. Evid. 608(b)(1).
The excluded questions would have served no purpose but to cast the victims of the charged
crime in an unfavorable light based on irrelevant matters. The denial of such cross-examination
was within the “wide latitude” afforded a district court “to impose reasonable limits” on cross-
examination likely to prejudice the jury. Delaware v. Van Arsdall, 475 U.S. 673, 679 (1986).
III. The Procedural and Substantive Reasonableness of Galanis’s Sentence
Galanis contends that his sentence is procedurally and substantively unreasonable because
it fails to account for his minor role in the offense, his advanced age, and his serious health
conditions.
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19-619 (L) United States v. John Galanis
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 9th day of February, two thousand twenty-one. PRESENT: JOHN M. WALKER, JR., REENA RAGGI, WILLIAM J. NARDINI, Circuit Judges. _____________________________________ UNITED STATES OF AMERICA, Appellee, v. Nos. 19-619, 20-395 JOHN GALANIS, also known as Yanni,
Defendant-Appellant, DEVON ARCHER, JASON GALANIS, GARY HIRST, HUGH DUNKERLEY, MICHELLE MORTON, BEVAN COONEY,
Defendants. _____________________________________
FOR APPELLEE: REBECCA MERMELSTEIN for Audrey Strauss, United States Attorney for the Southern District of New York (Negar Tekeei, Thomas McKay, on the brief), New York, NY
FOR DEFENDANT-APPELLANT: DAVID TOUGER, Peluso & Touger, LLP, New York, NY
1 On appeal from a final judgment of the United States District Court for the Southern
District of New York (Ronnie Abrams, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED that the judgment of the district court is AFFIRMED in part, VACATED in part,
and REMANDED for entry of judgment as modified by this order.
Defendant-Appellant John Galanis, who was found guilty, following a jury trial, of
substantive and conspiratorial securities fraud, see 15 U.S.C. §§ 78j(b), 78ff; 18 U.S.C. § 371; 17
C.F.R. § 240.10b-5, appeals from the judgment of conviction entered on March 8, 2019. We
assume the reader’s familiarity with the record.
I. Admission of Galanis’s Past Conviction for Financial Fraud in a Scheme Involving His Son and Denial of Surrebuttal
Galanis claims that the district court committed prejudicial error when, following the
defense summation, it allowed the Government to reopen its case to introduce evidence that
Galanis, his son Jason, and another co-defendant had been previously convicted of securities
fraud (the “Gerova conviction”). We review a district court’s decision to allow the Government
to reopen its case for abuse of discretion. See United States v. Bennett, 709 F.2d 803, 806 (2d
Cir. 1983). To determine whether a district court properly admitted evidence of a defendant’s
past criminal conduct under Fed. R. Evid. 404(b), we consider “whether (1) it was offered for a
proper purpose; (2) it was relevant to a material issue in dispute; (3) its probative value is
substantially outweighed by its prejudicial effect; and (4) the trial court gave an appropriate
limiting instruction to the jury if so requested by the defendant.” United States v. LaFlam, 369
F.3d 153, 156 (2d Cir. 2004).
The Gerova conviction was offered for a proper purpose material to the charged offense,
2 that is, to rebut Galanis’s claim of ignorance and lack of intent. See United States v. Bautista,
252 F.3d 141, 147 (2d Cir. 2001). Moreover, the conviction was highly probative in that regard
and accompanied by a robust limiting instruction. While the district court initially excluded
evidence of the Gerova conviction on Rule 403 prejudice grounds, it put defense counsel on
notice that he would open the door to this evidence by arguing either that Galanis had no reason
to suspect Jason Galanis of fraudulent activity or that Galanis was deceived by Jason Galanis
into furthering the conspiracy. After defense counsel made both of these points in summation,
the district court acted within its discretion in reopening the case to permit the Government to
introduce evidence of the Gerova conviction, particularly in light of the fact that it was
“accompanied by a careful and thorough instruction limiting the evidence to relevant Rule 404
grounds,” namely, Galanis’s knowledge and intent. United States v. Mercado, 573 F.3d 138, 141
(2d Cir. 2009).
Nor did the district court abuse its discretion in not allowing Galanis to present Jason
Galanis or others as surrebuttal defense witnesses. A defense surrebuttal is justified only when
“(1) the government’s rebuttal testimony raises a new issue, which broadens the scope of the
government’s case, and (2) the defense’s proffered surrebuttal testimony is not tangential, but
capable of discrediting the essence of the government’s rebuttal testimony.” United States v.
Murray, 736 F.3d 652, 657 (2d Cir. 2013). Introduction of the Gerova conviction did not broaden
the Government’s case; it merely rebutted Galanis’s argument that his son so duped everyone as
to admit an inference that Galanis unwittingly furthered the bond scheme. Assuming arguendo
that Jason Galanis would have testified in surrebuttal that his father was unaware of his plans to
defraud the Wakpamni and bond investors, such testimony would not have discredited the fact of
3 the men’s common Gerova conviction—a probative threshold which the district court correctly
identified as required to warrant surrebuttal. See id.
II. Denied Cross-Examination on the Wakpamni’s Other Lending Practices
Galanis faults the district court for precluding him from questioning a Wakpamni witness
about issuing unsecured, short term, high interest loans—that is, “payday loans.” We will
overturn evidentiary rulings only if they are “arbitrary and irrational.” See Mercado, 573 F.3d at
141. Here, it was neither arbitrary nor irrational to exclude questions about specific instances of
conduct that did not go to the witness’s character for truthfulness. See Fed. R. Evid. 608(b)(1).
The excluded questions would have served no purpose but to cast the victims of the charged
crime in an unfavorable light based on irrelevant matters. The denial of such cross-examination
was within the “wide latitude” afforded a district court “to impose reasonable limits” on cross-
examination likely to prejudice the jury. Delaware v. Van Arsdall, 475 U.S. 673, 679 (1986).
III. The Procedural and Substantive Reasonableness of Galanis’s Sentence
Galanis contends that his sentence is procedurally and substantively unreasonable because
it fails to account for his minor role in the offense, his advanced age, and his serious health
conditions. “District judges are given considerable discretion in fashioning the proper sentence for
criminal defendants.” United States v. Brooks, 889 F.3d 95, 100 (2d Cir. 2018). “A sentence is
substantively unreasonable only if it cannot be located within the range of permissible decisions.”
United States v. Betts, 886 F.3d 198, 201 (2d Cir. 2018) (internal quotation marks omitted). “A
sentence is procedurally unreasonable if the district court fails to calculate (or improperly
calculates) the Sentencing Guidelines range, treats the Sentencing Guidelines as mandatory, fails
to consider the § 3553(a) factors, selects a sentence based on clearly erroneous facts, or fails
4 adequately to explain the chosen sentence.” United States v. Smith, 949 F.3d 60, 66 (2d Cir. 2020)
(internal quotation marks omitted).
Here, the sentence was procedurally and substantively reasonable. The record shows that
the district court duly considered Galanis’s Guidelines range of 135 to 168 months of
imprisonment, the sentencing factors in 18 U.S.C. § 3553(a), and the need to avoid unwarranted
sentencing disparities. It also shows that the district court acknowledged Galanis’s health issues,
but it noted that most of those conditions were already present when Galanis committed his offense
and observed that the Bureau of Prisons is generally capable of handling inmates with such
conditions. The district court weighed Galanis’s age and health against his “extraordinary” history
of “defrauding people and entities for well over 40 years” and, in particular, the devastating
economic harm Galanis caused to the Wakpamni and the pension fund clients, whose money
Galanis spent on “jewelry, cars, hotels, and disbursements to family members.” Sentencing Tr. at
36–37. It is not our role to reweigh the factors the district court considered in imposing its sentence.
See United States v. Albarran, 943 F.3d 106, 116 (2d Cir. 2019).
IV. The Denial of Galanis’s Pro Se Recusal Motion
Finally, Galanis appeals the district court’s denial of his eleventh-hour pro se motion for
recusal in order to allow another judge to consider his motion to vacate the jury’s guilty verdict.
We review the denial of a recusal motion for abuse of discretion, see Apple v. Jewish Hosp. &
Med. Ctr., 829 F.2d 326, 333 (2d Cir. 1987), which we do not identify here. The district court
properly denied the motion. Not only was the recusal motion untimely, coming over nine months
after the entry of judgment, see id. at 332–33 (discussing 28 U.S.C. §§ 144, 455), but also, both
the motion to recuse and the motion to vacate were completely meritless, see id. at 334.
5 V. Modification of Galanis’s Restitution
Apart from Galanis’s claims, the Government took the position at oral argument that
Galanis’s restitution obligation to the Wakpamni should be reduced to include only the actual
$150,0000 loss, spent on unfinished construction projects in reliance on the conspirators’ false
promises, and to exclude $357,740 in expectation damages for anticipated costs to complete
those projects, see United States v. Boccagna, 450 F.3d 107, 119 (2d Cir. 2006). The Wakpamni
have received notice of the Government’s proposal and do not object. We agree, and therefore
direct the district court to reduce its restitution award by $357,740 from $43,785,176 to
$43,427,436.
* * *
We have considered Galanis’s remaining arguments and we find them to be without merit.
We therefore AFFIRM the judgment of the district court in all respects, except that we VACATE
that part awarding restitution, and REMAND with direction to enter a modified restitution order
consistent with this order.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk