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United States v. Reyes-Rivera

United States Court of Appeals, First Circuit

January 29, 2016

DILEAN REYES-RIVERA, Defendant, Appellant

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[Copyrighted Material Omitted]

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Michael R. Hasse, for appellant.

Nelson Pérez-Sosa, Assistant United States Attorney, Chief, Appellate Division, with whom Rosa Emilia Rodríguez-Vélez, United States Attorney, was on brief, for appellee.

Before Lynch, Stahl, and Barron, Circuit Judges.


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LYNCH, Circuit Judge.

Dilean Reyes-Rivera was the mastermind of a Ponzi scheme, operated largely in Puerto Rico, which defrauded over 230 vulnerable people out of approximately $22 million. In 2012, he pled guilty to bank fraud and to conspiracy to commit wire fraud, and in 2013 he was sentenced to concurrent terms of 60 months of imprisonment on the wire fraud conspiracy count and 242 months on the bank fraud count. He appeals, bringing a number of challenges to his 242-month sentence, basically saying the sentence is too high because his was only a " run-of-the-mill" Ponzi scheme. Finding no error, we affirm.


Because this sentencing appeal follows a guilty plea, we draw the relevant facts from the plea agreement, the change-of-plea colloquy, the presentence investigation report (" PSR" ), and the transcript of the sentencing hearing. United States v. King, 741 F.3d 305, 306 (1st Cir. 2014).

Reyes-Rivera was the president of Global Reach Trading (" GRT" ), a for-profit corporation registered in Florida and Puerto

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Rico that operated as a front for an extensive Ponzi scheme. As president, Reyes-Rivera had access to and signatory authority on all GRT bank accounts and business transactions. Reyes-Rivera's younger brother, Jeffrey Reyes-Rivera (" Jeffrey" ), a licensed attorney in Puerto Rico, was one of the incorporators of GRT as well as its accountant, and was a co-defendant.

Between 2001 and 2007, the Reyes-Rivera brothers, along with promoters and sales agents who worked for GRT, solicited money from unsuspecting individuals, mostly from Puerto Rico, by promising to invest the money in low-risk, short-term, high-yield investment programs. Investors were guaranteed a particular rate of return, ranging between five percent and twenty percent. Neither Reyes-Rivera, Jeffrey, nor GRT was registered or licensed to offer or sell investments to the general public by either the U.S. Securities and Exchange Commission or the Office of the Commissioner of Financial Institutions of Puerto Rico.

The money they secured from misled investors was not actually invested but instead funded a Ponzi scheme, in which they used the money they received from later investors to pay " returns" to earlier investors. The Reyes-Riveras took about $4.6 million from the proceeds of the scheme to purchase or lease for their own benefit luxury vehicles, houses, furniture, jewelry, and trips.

During the course of the scheme, the Reyes-Riveras also operated other entities, incorporated in Puerto Rico, Antigua and Barbuda, and Florida, in order to conduct businesses similar to GRT. In 2005, Reyes-Rivera, on behalf of one of these entities, WR4 Equity Corporation, secured a mortgage loan with First Bank, a federally insured financial institution, for approximately $1.7 million with the use of fraudulent documents, including personal financial statements and a GRT financial statement.

To conceal the scheme, the Reyes-Riveras placed the funds invested in GRT in eighteen different bank accounts, held in their personal names and in the names of their various entities, and with at least three different banks in multiple countries. They also did not refer to the investors' signed investment contracts as involving " securities." Instead, they used various misleading euphemisms like " Private Programs of Commercial Paper" and " Special Private Placement Programs." In addition, they imposed a strict code of confidentiality and non-disclosure on their investors.

Dilean Reyes-Rivera was the mastermind of the operation. He admitted after his arrest that he influenced Jeffrey to assist him in perpetrating the fraud and that Jeffrey followed his instructions. He also stated that he was the one who made all of the business decisions, that Jeffrey always consulted him before making a contract or bringing in a new investor, and that he never actually explained the business to Jeffrey.[1]

When all was said and done, Reyes-Rivera had defrauded more than 230 investors out of over $22 million. Many of these victims were retirees or pensioners. The PSR includes summaries of victim impact statements submitted by roughly fifty of Reyes-Rivera's victims. The victims described how much they invested and how many lost their life savings. Many now suffer physical and emotional problems, such as anxiety, high blood pressure,

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insomnia, depression, and panic attacks. One victim described becoming incapacitated and being hospitalized in a psychiatric facility and placed on ...

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