Argued: December 5, 2018
from the United States District Court for the Southern
District of New York Nos. 15-cr-769-1, 15-cr-769-2,
15-cr-769-3 ― Alison J. Nathan, Judge.
from the November 1, 2017 and November 16, 2017 judgments of
the United States District Court for the Southern District of
New York (Alison J. Nathan, Judge), convicting the
Defendants-Appellants, after a jury trial, of multiple counts
arising out of their roles in the operation of an illegal
Bitcoin exchange and a scheme to use a federal credit union
for illegal purposes. They argue, among other things, that
the district court made various evidentiary errors, including
improperly limiting the examination of a witness called to
impeach a key government witness. Defendant Lebedev further
argues that insufficient evidence was presented at trial to
sustain his convictions, while defendant Gross argues that
the evidence presented at trial so differed from the
allegations of the superseding indictment that the government
impermissibly constructively amended the indictment.
Defendant Gross also challenges his 60-month prison sentence
and order of restitution, arguing that the court misapplied
certain sentencing enhancements in calculating the Guidelines
range, and abused its discretion in determining restitution.
Tillman J. Breckenridge, Pierce Bainbridge Beck Price &
Hecht LLP, Washington, DC, (Eric M. Creizman, Melissa
Madrigal, Creizman PLLC, New York, NY on the brief) for
Kristen M. Santillo, Gelber & Santillo PLLC, New York,
NY, for Defendant-Appellant Gross.
S. Noble, Assistant United States Attorney, (Won S. Shin, Eun
Young Choi, Sarah K. Eddy, Assistant United States Attorneys,
on the brief) for Geoffrey S. Berman, United States Attorney
for the Southern District of New York, New York, NY.
Before: Cabranes, Pooler, and Droney, Circuit Judges.
DRONEY, CIRCUIT JUDGE
a consolidated appeal of two defendants convicted in a joint
jury trial of offenses arising out of their roles in an
illegal Bitcoin exchange and a scheme to use a federal credit
union for illegal purposes. Yuri Lebedev was convicted of
wire fraud in violation of 18 U.S.C. § 1343, bank fraud
in violation of 18 U.S.C. § 1344, conspiracy to commit
wire and bank fraud in violation of 18 U.S.C. § 1349,
and making corrupt payments with the intent to influence an
officer of a financial institution in violation of 18 U.S.C.
§ 215(a)(1). Trevon Gross was convicted of receiving
corrupt payments as an officer of a financial institution in
violation of 18 U.S.C. § 215(a)(2). Both Lebedev and
Gross were also convicted of conspiracy in violation of 18
U.S.C. § 371.
and Gross appeal their judgments of conviction, raising
various constitutional and evidentiary challenges. Gross also
appeals the district court's application of several
provisions of the Sentencing Guidelines in imposing his
sentence and his order of restitution.
evidence presented by the government at trial concerned the
activities of an internet-based Bitcoin exchange service
located in Florida, known as "Coin.mx."
Coin.mx's customers used the exchange to purchase
Bitcoins, a digital currency, with traditional currency.
Although the purpose of Coin.mx was to allow the purchase and
sale of Bitcoins, Coin.mx concealed that fact from the banks
and credit card companies processing its
transactions. Coin.mx opened bank accounts in the name
of "the Collectables Club," which falsely purported
to be a private members' association dedicated to
collecting and exchanging memorabilia. Coin.mx also processed
credit card transactions listing the Collectables Club as the
merchant. Neither Coin.mx nor the Collectables Club
registered with federal regulators as a money-transmitting
entity or obtained state licensure for that purpose.
employed Lebedev to manage information technology operations.
One of Lebedev's responsibilities was to set up various
Internet Protocol ("IP") addresses to make it
appear to banks and payment processors that Coin.mx's
transactions were legitimate Collectables Club transactions.
Coin.mx sought control of a credit union to process its
transactions. In April 2014, Coin.mx representatives
contacted Gross to discuss the possibility of taking control
of the Helping Other People Excel Federal Credit Union
("HOPE FCU" or the "credit union"). Gross
was then the chairman of HOPE FCU, as well as the head pastor
of the nearby Hope Cathedral in Jackson, New Jersey.
ensued between HOPE FCU, represented by Gross, and
Coin.mx's front company, the Collectables Club,
represented primarily by Anthony Murgio. Gross promised that
HOPE FCU would appoint to its board of directors six members
selected by the Collectables Club, giving the Collectables
Club a majority of the board seats. In return, Gross required
that three donations be made to Hope Cathedral: two for $15,
000 each and a third for $120, 000. Evidence at trial
demonstrated that Gross frequently used those
"donations" for personal expenses.
Coin.mx's other front companies, Currency Enthusiasts,
made the first two $15, 000 donations to Hope Cathedral. HOPE
FCU's executive board nominated the six Collectables Club
board members, and Gross promised that the board members they
were replacing would resign at the annual meeting. Lebedev
was one of the six new members nominated. At the annual
meeting in June 2014, the nominees were elected, although the
former board members remained on the board for a few
additional months to help HOPE FCU avoid scrutiny from its
regulator, the National Credit Union Administration
third donation was made by a company known as
"Kapcharge." Kapcharge was a third-party payment
processing company that processed electronic payments for its
clients through its own accounts at financial
institutions. Murgio was affiliated with Kapcharge.
Murgio approached Gross in June 2014 about allowing Kapcharge
to process third-party transactions, known as automated
clearing house transactions ("ACH transactions"),
through an account at HOPE FCU. Kapcharge, which was a
Canadian company, became a member of HOPE FCU, even though
HOPE FCU's membership was limited to persons and
organizations within the local community. HOPE FCU was
substantially undercapitalized to process the high volume of
transactions Kapcharge used it to process. Shortly after
becoming a member, Kapcharge wired $120, 000 to Hope
addition to the "donations" used by Gross for
personal expenses, Kapcharge and its co-conspirators paid
Gross $12, 000 in so-called "consulting fees."
Gross had a falling out with Murgio, Lebedev, and the other
Coin.mx representatives, which resulted in Gross expelling
them from the credit union and terminating their
relationship.  Thereafter, Gross refused to communicate
or transact with the Coin.mx agents, directed them to stop
wiring funds into the credit union, locked them out of
computer access to their accounts, and informed them that
they were not members of the credit union and thus lacked
standing to call a board meeting. However, Gross continued to
allow Kapcharge to process transactions through its account
after Coin.mx was no longer involved in the credit union. In
2015, Kapcharge wired an additional $80, 000 into credit
union accounts that Gross controlled.
FCU eventually came under regulatory scrutiny from the NCUA.
During the NCUA's examination of the credit union, Gross
failed to disclose a number of transactions, including the
"donations" that Currency Enthusiasts and Kapcharge
paid to Hope Cathedral, that HOPE FCU had opened a branch in
Florida, and that Kapcharge was paying the salary of the
credit union's new CEO and the legal fees of Gross and
the credit union. Gross further misrepresented that Kapcharge
had an office in New Jersey that qualified it for membership
in the credit union, and failed to disclose Coin.mx
agents' email accounts after the NCUA requested all of
the credit union's email accounts. NCUA placed HOPE FCU
into a conservatorship in October 2015.
superseding indictment was filed on December 22, 2016, in the
United States District Court for the Southern District of New
York. Following a four- week jury trial, Murgio, Lebedev, and
Gross were convicted of all counts on March 17, 2017.
Following the denial of post-trial motions, Lebedev was
sentenced to 16 months' imprisonment, supervised release,
and forfeiture. Gross was sentenced to 60 months'
imprisonment and three years' supervised release. Lebedev
and Gross were ordered to pay $126, 771.82 in restitution
jointly and severally with their convicted codefendants.
and Gross appealed their judgments of conviction. Gross, but
not Lebedev, also challenges his sentence on appeal.
consider Lebedev's and Gross's claims on appeal in
Lebedev's Claims on Appeal
Sufficiency of the Evidence
challenges the sufficiency of the evidence underlying his
convictions for wire fraud under 18 U.S.C. § 1343, bank
fraud under 18 U.S.C. § 1344, and conspiracy to commit
wire and bank fraud under 18 U.S.C. § 1349.
review de novo a challenge to the sufficiency of the
evidence underlying a criminal conviction. United States
v. Corbett, 750 F.3d 245, 250 (2d Cir. 2014). We
"view the evidence in the light most favorable to the
government, crediting every inference that could have been
drawn in the government's favor, and deferring to the
jury's assessment of witness credibility and its
assessment of the weight of the evidence." United
States v. Coplan, 703 F.3d 46, 62 (2d Cir. 2012)
(internal quotation marks omitted). "[W]e will uphold
the judgments of conviction if 'any rational
trier of fact could have found the essential elements of the
crime beyond a reasonable doubt.'" Id.
(quoting Jackson v. Virginia, 443 U.S. 307, 319
argues that there was insufficient evidence that he committed
wire fraud because his role in Coin.mx's scheme-deceiving
financial institutions concerning the nature of Coin.mx's
business-did not harm or risk harming those financial
elements of wire fraud are "(1) a scheme to defraud, (2)
money or property as the object of the scheme, and (3) use of
the . . . wires to further the scheme." United
States v. Binday, 804 F.3d 558, 569 (2d Cir. 2015)
(internal quotation marks omitted). "Since a defining
feature of most property is the right to control the asset in
question, we have recognized that the property interests
protected by the . . . wire fraud statute include the
interest of a victim in controlling his or her own
assets." Id. at 570 (alteration omitted)
(quoting United States v. Carlo, 507 F.3d 799, 802
(2d Cir. 2007)). For this reason, a wire fraud charge under a
right-to-control theory can be predicated on a showing that
the defendant, through the "withholding or inaccurate
reporting of information that could impact on economic
decisions," deprived "some person or entity . . .
of potentially valuable economic information."
United States v. Finazzo, 850 F.3d 94, 108 (2d Cir.
2017) (internal quotation marks omitted).
trial, the government presented testimony from witnesses to
establish the significance of Coin.mx's
misrepresentations about the nature of its business,
including Erika Heinrich, who worked in the fraud
investigations group at Chase Bank USA ("Chase").
Heinrich testified that Chase decides whether to process
pending credit card transactions based in part on information
it receives about the merchant. Chase evaluates regulatory
risk, including potential fines for doing business that is
illegal, as well as economic risk posed by fraudulent
transactions, and considers transactions with money services
or money-transmitting businesses to carry a higher risk of
evidence at trial demonstrated that Coin.mx was a money
service business that was both unlawful and carried a higher
risk of fraudulent transactions. The evidence also showed
that Lebedev's role in Coin.mx's scheme was to
disguise Coin.mx's Bitcoin transactions through front
entities such as the Collectables Club, so the institutions
processing those transactions would be more likely to process
and approve them. On this basis, a reasonable jury could
conclude that Lebedev ...