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Date: 11-27-2021
Case Style:
United States of America v. James Quay a/k/a Stephen Jameson
Case Number: 20-1447
Judge: Anthony Joseph Scirica
Court: UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
On appeal from The United States District Court
for the Eastern District of Pennsylvania
Plaintiff's Attorney: United States Attorney’s Office
Defendant's Attorney:
Description:
New York, NY - Criminal defense lawyer represented defendant with
two counts of securities fraud charges.
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 estateplanning 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
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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
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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).
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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].”).
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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.
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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
8
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.
Outcome: For the reasons stated above, we will affirm the above-Guidelines sentence.
Plaintiff's Experts:
Defendant's Experts:
Comments: