Date: 08-02-2018

Case Style:

Case Number: 17-948

Judge: Per Curiam

Court: United States Court of Appeals for the Second Circuit on appeal from the Southern District of New York (New York County)

Plaintiff's Attorney: Stanley J. Okula and Karl Metzner

Defendant's Attorney: Greg Farre, Roman Martinez and Graham Phillips

Description: Defendant‐Appellant Morris Zukerman appeals from a judgment of
conviction entered on March 21, 2017, in the United States District Court for the
Southern District of New York (Torres, J.). After pleading guilty to tax evasion
and to corruptly endeavoring to obstruct and impede the due administration of
the internal revenue laws, Zukerman was sentenced to pay restitution of $37
million, serve a 70‐month term of imprisonment, and pay a $10 million fine. On
3
appeal, this case calls on us to determine whether the fine imposed was
procedurally and substantively unreasonable. It was not. In particular, the
district court did not err in calculating the fine range recommended by the
Sentencing Guidelines; Zukerman was given adequate opportunity to inform the
district court of his financial condition and ability to pay a fine; and the
imposition of a $10 million fine was within the district court’s discretion.
Accordingly, the judgment of the district court is AFFIRMED.
***
Morris Zukerman is the founder of M.E. Zukerman & Co., an investment
management firm also known as “MEZCO.” In 2007, a MEZCO subsidiary sold
certain assets for $110 million, at which time Zukerman enacted a scheme to
avoid paying taxes on the proceeds of that sale, as well as on approximately $12
million of operating income MEZCO received as a result of its earlier ownership
of those assets. Zukerman falsified several documents in order to effectuate this
scheme, which allowed MEZCO to evade over $30 million in taxes. When aspects
of these transactions were audited by the Internal Revenue Service in 2008,
Zukerman lied to the tax professionals working for him and fabricated
documents relating to the transactions, causing several false statements to be
4
made to the IRS. See In re Grand Jury Subpoena Dated March 2, 2015, 628 F. App’x
13, 14‐15 (2d Cir. 2015) (rejecting claims of attorney‐client privilege relating to
those false statements).
Separate and apart from those activities, Zukerman engaged in several
other schemes to avoid paying taxes and to throw the IRS off of his trail. He
avoided paying over $4.5 million in state taxes related to paintings used to
decorate his and his families’ living quarters, which were purchased, in part,
with his ill‐gotten gains from the MEZCO tax evasion. In addition, he provided
false information in connection with his personal tax returns, as well as those of
his family members and his household employees, causing each of them to file
false tax returns over the course of several years. When the personal taxes of both
Zukerman and his daughter were audited, Zukerman once again provided false
documentation and representations to the IRS. Finally, Zukerman also failed to
file several years’ worth of tax returns for the Zukerman Family Trust despite the
trust’s receipt of significant taxable income.
On June 27, 2016, Zukerman pleaded guilty to tax evasion, in violation of
26 U.S.C. § 7201, and to corruptly endeavoring to obstruct and impede the due
administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a). In
5
addition to requiring that he pay restitution in the amount of $37 million,
Zukerman’s plea agreement stipulated to a Sentencing Guidelines range of
between 70 to 87 months’ imprisonment and a fine of between $25,000 to
$250,000. On March 21, 2017, the district court principally sentenced Zukerman
to a 70‐month term of imprisonment, ordered $37 million to be paid in
restitution, and imposed a fine of $10 million. Judgment was entered that same
day, from which Zukerman appealed.
Following oral argument, we subsequently entered a summary order
pursuant to United States v. Jacobson, 15 F.3d 19 (2d Cir. 1994), remanding this
matter to the district court for the limited purpose of elaborating on the rationale
for the fine imposed. United States v. Zukerman, 710 F. App’x 499 (2d Cir. 2018).
The district court provided such elaboration via a Supplemental Memorandum
dated May 4, 2018 (“Supp. Mem.”), after which the instant appeal was reinstated.
We now address Zukerman’s arguments.
On appeal, Zukerman contends that the fine component of his sentence
was procedurally and substantively unreasonable. Because Zukerman did not
raise any procedural objections below, his procedural arguments are “deemed
forfeited on appeal unless they meet our standard for plain error.” United States
6
v. Villafuerte, 502 F.3d 204, 207 (2d Cir. 2007). That standard requires Zukerman to
“establish (1) error (2) that is plain and (3) affects substantial rights,” only after
which will we “consider whether to exercise our discretion to correct it, which is
appropriate only if the error seriously affected the ‘fairness, integrity, or public
reputation of the judicial proceedings.’” Id. at 209 (quoting United States v. Doe,
297 F.3d 76, 82 (2d Cir. 2002)).
Zukerman’s first procedural argument is that the district court overlooked
U.S.S.G. § 5E1.2(h) in calculating the Guidelines’ recommended sentencing
range, which had the effect of doubling the recommended fine. That provision
states that an earlier version of the Guidelines should be applied “[f]or offenses
committed prior to November 1, 2015.” Count One of Zukerman’s indictment
alleges that his corrupt endeavors to obstruct and impede the due administration
of the internal revenue laws occurred “[f]rom in or about 2007 through in or
about 2015,” however, and Zukerman averred during his plea allocution that the
conduct underlying Count One took place “from 2007 through 2015.” Jt. App. 60,
99. One cannot reasonably interpret “through 2015” to mean only prior to
November 1, 2015. Moreover, Zukerman’s plea agreement expressly recognized
the applicability of the Guidelines range of which he now complains. That the
7
district court did not apply the pre‐November 1, 2015 Guidelines to Zukerman
was not an error, much less a plain error.
Nor is there any merit to Zukerman’s contention that inadequate
consideration was given to his ability to pay a $10 million fine. As soon as the
district court set a date for sentencing, it foreshadowed that a major fine was
possible, requesting information concerning “how fines have been calculated” in
“cases where you have this degree of violation of law.” Jt. App. 107. Zukerman
subsequently submitted an affidavit regarding his financial condition as of
August 2, 2016, at which time his net‐worth was in the eight‐figure range.
Zukerman now contends that the affidavit was outdated by time he was
sentenced in March 2017, but he declined to provide updated information in any
of several submissions he made to the district court after receiving a revised Pre‐
Sentence Report on November 9, 2016, which incorporated information
regarding his financial condition from his August 2016 affidavit. His failure to do
so continued even after the government expressly asserted that he could “pay a
substantial fine and should be ordered to do so—through a substantial variance
from the $25,000 to $250,000 Guidelines range” in February 2017. Id. at 322. At his
sentencing hearing, Zukerman objected neither specifically that he could not
8
afford to pay the fine imposed, nor more broadly that his financial condition had
materially changed since the submission of his affidavit. He was afforded ample
opportunity to attempt to show any limitations on his ability to pay a fine, yet he
failed to do so. See United States v. Elfgeeh, 515 F.3d 100, 136 (2d Cir. 2008)
(defendant must be given “at least a minimal opportunity to show that he lacks
the ability to pay the fine”). Accordingly, it was not plain error for the district
court to rely on the information that Zukerman himself had provided.1
We next address the substantive reasonableness of Zukerman’s fine, which
we review “under a ‘deferential abuse‐of‐discretion standard,’” United States v.
Thavaraja, 740 F.3d 253, 258 (2d Cir. 2014) (quoting Gall v. United States, 552 U.S.
38, 41 (2007)). We “identify[] as substantively unreasonable only those sentences
that are so shockingly high, shockingly low, or otherwise unsupportable as a
matter of law that allowing them to stand would damage the administration of
justice,” recognizing that although we “have a role to play in patrolling the
boundaries of reasonableness, we do so modestly, not substituting our own
judgment for that of the district courts.” United States v. Broxmeyer, 699 F.3d 265,
1 Zukerman’s third procedural argument—that the district court’s explanation of his
sentence was inadequate—is moot in light of our Jacobson remand.
9
289 (2d Cir. 2012) (internal quotation marks, citation and alteration omitted).
Under that lenient standard, Zukerman’s fine is not unreasonable.
First, the district court “put significant weight on the nature and
circumstances of [Zukerman’s] crimes” pursuant to 18 U.S.C. § 3553(a)(1),
explaining that “[t]ax crimes represent an especially damaging category of
criminal offenses,” which “strike[] at the foundation of a functioning
government.” Supp. Mem. at 5; cf. New York ex rel. Cohn v. Graves, 300 U.S. 308,
313 (1937) (“Enjoyment of the privileges of residence in the state and the
attendant right to invoke the protection of its laws are inseparable from
responsibility for sharing the costs of government.”); Compania Gen. de Tabacos de
Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 100 (1927) (Holmes, J.,
dissenting) (“Taxes are what we pay for civilized society . . . .”). Accordingly, the
district court expressed deserved opprobrium for Zukerman’s “calculated
scheme to defraud the government of tens of millions of dollars for the sole
purpose of increasing his personal wealth,” executed through efforts that
“spanned fifteen years and involved submitting more than 50 falsified tax forms
for at least ten different individuals.” Supp. Mem. at 6.
10
Zukerman counters that these factors do not support an upward variance
from the recommended fine range because they were already addressed as part
of his offense level under the Sentencing Guidelines. But the district court was
not bound to conclude that the offense level adequately accounted for the
complexity and scope of Zukerman’s actions. To the contrary, “the historic role
of sentencing judges,” which “continue[s] to be exercised,” is to consider “the
judge’s own sense of what is a fair and just sentence under all the
circumstances.” United States v. Jones, 460 F.3d 191, 195 (2d Cir. 2006). Moreover,
“a district court’s decision to vary from the Guidelines ‘may attract the greatest
respect when the sentencing judge finds a particular case outside the heartland to
which the Commission intends individual Guidelines to apply.’” United States v.
Cavera, 550 F.3d 180, 192 (2d Cir. 2008) (en banc) (quoting Kimbrough v. United
States, 552 U.S. 85, 109 (2007)). In particular, the Guidelines related to tax offenses
“drastically vary as to the recommended sentence based simply on the amount of
money involved,” such that “a district court may find that even after giving
weight to the large or small financial impact, there is a wide variety of culpability
amongst defendants and, as a result, impose different sentences.” Id. Thus
sentences varying from the Guidelines in tax matters, “if adequately explained,
11
should be reviewed especially deferentially.” Id. We therefore accede to the
finding that an above‐Guidelines fine was necessary “to reflect the complexity,
scope, and extreme nature of [Zukerman’s] criminal activity.” Supp. Mem. at 7;
cf. Scott A. Schumacher, Sentencing in Tax Cases After Booker: Striking the Right
Balance Between Uniformity and Discretion, 59 VILL. L. REV. 563, 594 (2014) (noting
that the Guidelines “provide only a two‐point increase for a sophisticated means
adjustment,” which “can be cancelled out by an acceptance of responsibility
adjustment, making the defendant’s culpability and the manner in which the tax
loss was generated virtually irrelevant”).
Second, and again pursuant to 18 U.S.C. § 3553(a)(1), the district court
concluded that Zukerman’s “history and characteristics also pointed toward a
substantial above‐Guidelines fine.” Supp. Mem. at 7. This was based upon his
“history of uncharged criminal conduct” and his “repeated refusal to fess up,”
despite having “had ample opportunities to come clean,” as weighed against his
“role in the lives of his friends and family, as well as his philanthropy.” Id. at 8.
Zukerman does not challenge the district court’s weighing of these factors, nor
could he. See Broxmeyer, 699 F.3d at 289 (“The particular weight to be afforded
aggravating and mitigating factors ‘is a matter firmly committed to the discretion
12
of the sentencing judge’ . . . .” (quoting United States v. Fernandez, 443 F.3d 19, 32
(2d Cir. 2006)).
Third, the district court “put the most weight” on the need for deterrence,
pursuant to 18 U.S.C. § 3553(a)(2)(B)‐(C). Supp. Mem. at 9. As regards general
deterrence, Zukerman asserts that his Guidelines‐minimum term of
imprisonment “is enough to make an example of him to others,” Def. Br. 44, but
the sentencing judge was by no means bound by such an argument. Instead, the
district court determined that general deterrence “has a particularly important
role” here “due to the significant resources required to monitor and prosecute tax
crimes,” which cost the government hundreds of billions of dollars annually.
Supp. Mem. at 9. Moreover, the district court explained that enforcement of tax
laws has “a ‘significant and positive deterrent effect’ on would‐be tax violators”
because, as compared to most criminals, “tax criminals are more likely to account
for the size of a fine and the likelihood that it will be imposed” and are therefore
more likely to eschew criminal conduct if it will be unprofitable. Id. at 10
(quoting Joshua D. Blank, In Defense of Individual Tax Privacy, 61 EMORY L.J. 265,
321 (2011), and citing Stephanos Bibas, White‐Collar Plea Bargaining and Sentencing
After Booker, 47 WM. & MARY L. REV. 721, 749 (2005)). That rationale is eminently
13
reasonable. Cf. Cavera, 550 F.3d at 196 (“Where the profits to be made from
violating a law are higher, the penalty needs to be correspondingly higher to
achieve the same amount of deterrence.”); United States v. Heffernan, 43 F.3d 1144,
1149 (7th Cir. 1994) (“Considerations of (general) deterrence argue for punishing
more heavily those offenses that either are lucrative or are difficult to detect and
punish, since both attributes go to increase the expected benefits of a crime and
hence the punishment required to deter it.”).
Zukerman also summarily argues that it is “obvious” his fine is not
necessary for purposes of specific deterrence in light of his prison term and the
“pain and humiliation his prosecution has caused.” Def. Br. 43‐44. Although
there can be little doubt Zukerman has suffered, we “must give due deference to
the district court’s decision” that specific deterrence justified an upward variance
in light of Zukerman’s long‐running tax evasion scheme, Gall, 552 U.S. at 51. “It
was clear” to the district court “that simply being caught did not deter”
Zukerman, as his “criminal activities had only grown in size and scope” since
they first began at the turn of the century. Supp. Mem. at 11. Given that an earlier
“$233,000 slap‐on‐the‐wrist . . . proved useless in dissuading [Zukerman] from
evading his taxes” thereafter, the district court was entitled conclude that a
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Guidelines‐range fine of up to $250,000 would be similarly inadequate, such that
“[a] significant penalty was required.” Id. at 11‐12. In light of Zukerman’s
enormous resources, the district court properly determined that a more onerous
fine was needed in order to deter future illegal conduct. See infra at 17‐19.2
Fourth, the district court recognized that there was some risk of an
unwarranted sentencing disparity, but it “assigned less weight than it might
typically have” to this factor because it found “few, if any, defendants” who
were similarly situated. Id. at 12. Although Zukerman’s fine is certainly an outlier
as compared to the fines typically imposed in tax cases, his arguments based on
aggregated sentencing data and vague summaries of other cases are
unconvincing. The relevant question is not simply whether there are disparities,
but whether there are “unwarranted sentence disparities” as between Zukerman
and others “with similar records who have been found guilty of similar
2 The district court noted that a longer incarceral term was not necessary in order to
specifically deter Zukerman at his sentencing hearing, but it referenced the totality of
his experience with the criminal justice system—including the fine imposed upon
him—as necessary to achieving that end. See Special App. 38 (“I do not think that there
is a need for a term of imprisonment at the higher end of the guidelines range in order
to achieve the goal of specific deterrence. I have confidence that this experience
throughout this case has gotten that message across loud and clear.”).
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conduct,” 18 U.S.C. § 3553(a)(6). “The point merits little discussion” because
Zukerman “failed to provide sufficient information to compel the district court to
find that these [other defendants] were so similarly situated to himself that any
disparity in sentence would be unwarranted.” Broxmeyer, 699 F.3d at 296‐97; see
also United States v. Irving, 554 F.3d 64, 76 (2d Cir. 2009) (“The district court was
not required to consult . . . statistics. Averages of sentences that provide no
details underlying the sentences are unreliable to determine unwarranted
disparity because they do not reflect the enhancements or adjustments for the
aggravating or mitigating factors that distinguish individual cases.” (internal
quotation marks and alteration omitted)).3
3 The only tax offender Zukerman discusses with specificity is Robert Pfaff, who was
sentenced to 97 months’ imprisonment and fined $3 million. As explained by the
district court, however, there are myriad distinctions between Zukerman and Pfaff:
(1) Pfaff designed and implemented fraudulent tax shelters on behalf of others but was
not a direct beneficiary of the tax loss he caused, whereas here the tax loss directly
benefitted Zukerman and his family; (2) Pfaff was convicted alongside two codefendants,
whereas Zukerman was the sole director of the scheme at issue; (3) Pfaff
had no history of uncharged criminal conduct, whereas Zukerman had been dodging
taxes for year prior to the conduct for which he was ultimately indicted; and (4) Pfaff
had lost his entire net worth by time of his sentencing, whereas Zukerman still enjoyed
a $35 million net worth. But even assuming arguendo that Pfaff and Zukerman were
similarly situated, the disparity in their sentences points in both directions: Pfaff’s fine
may have been smaller, but he was also sentenced to an additional 27 months’
imprisonment as compared to Zukerman. As a result, we cannot say whose sentence
was more lenient. Cf. United States v. Rinaldi, 461 F.3d 922, 931 (7th Cir. 2006) (affirming
16
Fifth, the district court “looked to 18 U.S.C. § 3571(d), which permits a
court to set a fine that is ‘twice the gross loss.’” Supp. Mem. at 14. In light of the
estimated $45 million tax loss caused by Zukerman, that would allow for a fine
far larger than that which was actually imposed. The district court also
considered that Zukerman’s agreed‐upon restitution was $7.5 million lower than
the estimated tax loss and that several million dollars’ worth of interest would
have accrued in the years between the beginning of Zukerman’s charged
criminal conduct and his restitution payment. Taking these disparities into
account, the district court concluded that a $10 million fine was “sufficient, but
no greater than necessary,” to comply with the statutorily enumerated factors to
be considered in imposing a sentence. Id. at 15 (quoting 18 U.S.C. § 3553(a)). We
infer from the district court’s choice of language—i.e., that it “looked to” this
factor rather than “putting significant weight” on it—that this was a relatively
minor aspect of the district court’s analysis. Cf. Novella v. Westchester Cnty., 661
F.3d 128, 142 (2d Cir. 2011) (“the presumption of consistent usage and
sentence where sentencing judge “chose not to increase [defendant’s] term of
imprisonment, but opted instead to increase the fine; punishing the perpetrator with a
correlate of his own crime”).
17
meaningful variation, and the textual cannon of expressio unius est exclusio
alterius” suggest that “the presence of [a phrase] applicable to one [factor] makes
clear that the [phrase’s] omission” elsewhere “was deliberate”).
Although Zukerman now asserts that the district court erred in
considering the gap between his restitution and the estimated tax loss, as well as
the absence of interest in calculating the tax loss, he cites no authority for the
proposition that the district court could not take these factors into account.
Indeed, these seem pertinent considerations in ensuring that Zukerman would
not ultimately profit from his tax evasion. See 18 U.S.C. § 3572(a)(5) (“In
determining whether to impose a fine, and the amount, . . . the court shall
consider . . . the need to deprive the defendant of illegally obtained gains from
the offense . . . .”). Regardless, we need not definitively rule on the propriety of
these considerations because they were referenced in Zukerman’s Pre‐Sentence
Report, the district court’s adoption of which was unopposed by Zukerman.
Sixth, the district court “accorded significant weight to [Zukerman’s]
income and financial resources, as well as the limited burden of a $10 million
fine.” Supp. Mem. at 15. Zukerman contends that he is being unfairly punished
because of his wealth, but 18 U.S.C. § 3572(a) mandates that “[i]n determining
18
whether to impose a fine,” a sentencing judge “shall consider . . . the defendant’s
income, earning capacity, and financial resources,” as well as “the burden that
the fine will impose upon the defendant.” That is in accord with the Sentencing
Guidelines’ instruction that sentencing judges “shall consider,” among other
factors, “the defendant’s ability to pay the fine” and “the burden that the fine
places on the defendant and his dependents.” U.S.S.G. § 5E1.2(d)(2)‐(3).
It stands to reason that a defendant’s wealth is relevant in determining
whether a particular fine will deter illegal conduct. Zukerman implies that
sentencing judges should consider only whether a defendant is unable to pay a
given fine, but nothing in the text or history of the Guidelines, let alone common
sense, suggests that this is meant to be a one‐way ratchet. A fine can only be an
effective deterrent if it is painful to pay, and whether a given dollar amount hurts
to cough up depends upon the wealth of the person paying it. Indeed, as noted
above, a previous “$233,000 slap‐on‐the‐wrist” did not deter Zukerman, with his
extraordinary resources, from subsequently evading his taxes once again. Supp.
Mem. at 11. We therefore join our sister Circuits in holding that a defendant’s
wealth and earning capacity are pertinent considerations in assessing an
appropriate fine. See United States v. Teel, 691 F.3d 578, 591 (5th Cir. 2012) (“[T]he
19
court properly utilized its discretion to vary from the Guidelines by taking into
account [the defendant’s] financial resources when determining the
appropriately punitive fine in the first instance.”); United States v. Koestner, 628
F.3d 978, 980 (10th Cir. 2010) (“[T]he amount of the fine was reasonably related
. . . to Koestner’s ability to pay a fine . . . .”) United States v. Blackwell, 459 F.3d 739,
771 (6th Cir. 2006) (“[T]he district court committed no error . . . in considering
Defendant’s ability to pay.”); see also United States v. Adams, 243 F. App’x 249, 250
(9th Cir. 2007) (“Socioeconomic status is different than financial resources. The
former has no place in sentencing, but the latter is required by statute.” (internal
citations omitted)).4
4 We see no inconsistency between our holding and United States v. Mancilla‐Mendez, 191
F. App’x 273, 274 (5th Cir. 2006), or United States v. Graham, 946 F.2d 19, 22 (4th Cir.
1991), on which Zukerman relies. “Those cases deal with challenges to upward
departures, not variances.” Teel, 691 F.3d at 591. The former “‘is a term of art under the
Guidelines and refers only to non‐Guidelines sentences imposed under the framework
set out in the Guidelines,’” whereas the latter “refers to a non‐Guidelines sentence
outside the Guidelines framework.” Pepper v. United States, 562 U.S. 476, 498 n.12 (2011)
(quoting Irizarry v. United States, 553 U.S. 708, 714 (2008)). “The pertinent question in a
departure case is whether ‘there exists an aggravating or mitigating circumstance of a
kind . . . not adequately taken into consideration by the Sentencing Commission in
formulating the guidelines that should result in a sentence different from that
described.’” Teel, 691 F.3d at 591 (quoting 18 U.S.C. § 3553(b)). In contrast, we address
“variances from Guidelines ranges that a district court may find justified under the
sentencing factors set forth in 18 U.S.C. § 3553(a).” Irizarry, 553 U.S. at 715. The district
court properly recognized that distinction, as it “d[id] not find any grounds warranting
20
Lastly, the district court “put substantial weight” on the payment of
restitution by “corporate entities,” as a result of which “only the fine would be
paid from [Zukerman’s] own pocket.” Supp. Mem. at 15. Zukerman responds
that restitution was properly paid by MEZCO because it was MEZCO’s tax
evasion that caused most of the tax losses at issue and, in any event, payments
made by MEZCO are tantamount to payments made by him. The latter point
appears to be somewhat disingenuous, as elsewhere Zukerman takes the
position that he no longer has any interest in MEZCO for purposes of asserting
that the district court overestimated his net worth. Zukerman cannot have it both
ways: if he no longer owns MEZCO and believes that its value is not attributable
to him, it follows that he should not be credited with MEZCO’s restitution
payments.5
a departure under the guidelines,” but nevertheless found “a variance pursuant to 18
United States Code § 3553(a) . . . appropriate” in this case. Special App. 6, 38.
5 Zukerman informed the district court that he transferred his interest in MEZCO to his
wife as a result of the publicity surrounding his prosecution. He subsequently argued
that “Mrs. Zukerman’s assets are not relevant to assessing her husband’s ability to pay,”
Def. Br. 18‐19 n.3, and that assets “belong[ing] exclusively to Zukerman’s wife” could
not “be fairly considered in assessing Zukerman’s ability to pay,” Def. Reply Br. 16.
21
Regardless of MEZCO’s current ownership, however, a more fundamental
principle remains: “Restitution is an effective rehabilitative penalty because it
forces the defendant to confront, in concrete terms, the harm his actions have
caused.” Kelly v. Robinson, 479 U.S. 36, 49 n.10 (1986); see also Paroline v. United
States, 134 S. Ct. 1710, 1726 (2014) (“The primary goal of restitution is remedial or
compensatory, but it also serves punitive purposes.” (internal citation omitted)).
The district court was charged with ensuring that Zukerman’s fine should be
“punitive” when “taken together with other sanctions imposed.” U.S.S.G.
§ 5E1.2(d). To the extent that the corporate payment of restitution reduced the
degree to which restitution personally punished Zukerman, which seems likely
given that it appears he owned only a 50% interest in MEZCO even prior to
transferring those interests to his wife, it was well within the district court’s
discretion to counteract that effect by increasing the fine it imposed on him. In
doing so, it “further[ed] the traditional sentencing goals of rehabilitation and
deterrence, by forcing [Zukerman] to directly witness the effect[] of [his] crimes.”
In re Silverman, 616 F.3d 1001, 1009 (9th Cir. 2010); cf. Kokesh v. S.E.C., 137 S. Ct.
1635, 1643 (2017) (“[A] pecuniary sanction operates as a penalty only if it is
22
sought ‘for the purpose of punishment, and to deter others from offending in like
manner’ . . . .” (quoting Huntington v. Attrill, 146 U.S. 657, 668 (1892))).
Focusing on each facet of the district court’s reasoning individually, rather
than their totality, is to miss the forest for the trees. The district court concluded
that Zukerman, a very wealthy man who has repeatedly and brazenly committed
sophisticated tax fraud—a rarely caught and more rarely punished offense that
undercuts the functioning of state and federal governments—ought to pay a fine
hefty enough to take any financial benefit out of his crimes and to give pause to
others who might be tempted to commit similar crimes. The district court further
concluded that the Guidelines range did not encompass a fine necessary to
accomplish those ends. Instead, the district court calculated the size of the fine
based, in part, on an estimate of the tax loss Zukerman caused less the amount of
restitution he had agreed to pay. Zukerman’s fine thus “resulted from the
reasoned exercise of discretion.” Cavera, 550 F.3d at 193. Under the “circumspect
form of review” we apply when the substance of a sentence is challenged, id., we
need not find a district court’s reasoning compelling in order to affirm, so long as
“the sentence was reasonable,” Gall, 552 U.S. at 56. Because we find that it was,
we see no reason to overturn Zukerman’s sentence in any respect.

Outcome: For the foregoing reasons, we AFFIRM the judgment of the district court
and DENY Zukerman’s motion to stay his sentence pending this appeal as moot.
We have considered all of the defendant’s arguments and find in them no basis
for vacatur.

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