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United States v. Laurienti

United States Court of Appeals, Ninth Circuit

September 30, 2013

UNITED STATES of America, Plaintiff-Appellee,
v.
Bryan LAURIENTI, Defendant-Appellant.

Argued and Submitted Feb. 11, 2013.

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Lisa Shinar (argued) and Sean K. Kennedy, Federal Public Defender, Los Angeles, CA, for Defendant-Appellant.

Ellen R. Meltzer, (argued) Special Counsel, Fraud Section, Criminal Division; Lanny A. Breuer, Assistant Attorney General; John D. Buretta, Acting Deputy Assistant Attorney General; André Birotte, Jr., United States Attorney; and Keri Curtis Axel, Assistant United States Attorney, Central District of California, United States Department of Justice, Washington, D.C., for Plaintiff-Appellee.

Appeal from the United States District Court for the Central District of California, Terry J. Hatter, Senior District Judge, Presiding. D.C. No. 2:03-cr-00620-TJH-3.

Before: MARSHA S. BERZON and PAUL J. WATFORD, Circuit Judges, and JAMES G. CARR, Senior District Judge.[*]

OPINION

CARR, Senior District Judge:

Defendant-appellant, Bryan Laurienti, appeals the district court's order sentencing him to thirty-six months' imprisonment and three years' supervised release. A jury convicted Laurienti of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and two counts of securities fraud by use of manipulative and deceptive devices in violation of 15 U.S.C. §§ 78j(b), 78ff, and 17 C.F.R. § 240.10b-5 (Rule 10b-5). For the following reasons, we affirm.

I. Factual Background

Laurienti worked as a stock broker at Hampton Porter, an investment firm in San Diego. The firm began selling extremely cheap and thinly-traded securities.[1] The firm obtained the securities and aggressively stimulated a market for them by promoting them to clients and later dissuading clients from reselling. The firm, and several individuals,[2] bought the securities in their own names at the lower price and later resold their shares at the higher, artificial price they had generated.

The firm did not allow its brokers, including Laurienti, to sell a client's securities while the firm continued promoting them unless the brokers could find another buyer to offset the sale. If the broker failed to follow this policy, and allowed the net number of shares owned by firm clients to decrease, the broker would lose the substantial bonus commission he would have received for selling the securities. In addition to participating in this activity, defendant made unauthorized purchases of client securities and executed cross-trades

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between clients without notifying them that they were selling to each other. The plan the firm and brokers employed is known as a securities fraud " pump and dump" scheme.

After the stock market declined substantially in 2000, the prices of the inflated securities fell, and clients lost money on their investments. Following the market's overall decline, Hampton Porter went out of business. After an investigation, the government ...


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