Free Sentencing Statement - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB-MEH

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Judge Robert E. Blackburn

Criminal Action No. 04-cr-00103-REB-6 UNITED STATES OF AMERICA, Plaintiff, v. 6. Michael Smith, Defendant.

____________________________________________________________________ DEFENDANT MICHAEL SMITH'S SENTENCING STATEMENT _____________________________________________________________________ Defendant Michael Smith, through his court appointed attorney Richard N. Stuckey, respectfully submits the following sentencing statement as allowed by this Court's General Order 2002-3-B. That order is titled "Order Concerning Procedures for Guideline Sentencing under the Sentencing Reform Act of 1984" and allows a defendant to submit a sentencing statement "setting forth factors to be considered at sentencing." Therefore, in addition to comment on the now advisory Sentencing Guidelines, the defense for Defendant Smith will also address factors under 18 U.S.C. § 3553(a) which should be considered. -1-

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MAIN ARGUMENT AND OBJECTION TO GOVERNMENT SENTENCING STATEMENT The government has taken the position in its Sentencing Statement (Doc. 1291) that the amount of loss and number of victims attributable to Defendant Smith for the advisory sentencing guideline calculation purposes begins on the date of the earliest count of conviction (September 18, 2002, Count 23) and includes all funds taken in by the investment schemes in the case from that date to the end of the schemes, even if Smith had no involvement in those investments, and despite the fact that jury verdicts on ten counts alleging offenses after the September 18th date found Smith not guilty.1 The government states at paragraph 38 of its Sentencing Statement that its rationale for this approach is relevant conduct under Guideline 1B1.3, and that even though Defendant Smith was acquitted by the jury of conspiracy and the fraudulent scheme counts, he was still involved in "jointly undertaken criminal activity." That approach totally ignores the fact that Defendant Smith was acquitted by the jury of conspiracy and the mail and wire fraud schemes as described in the indictment, and therefore absolved of joint criminal activity. Indeed, the government recognizes in its discussion of the three counts (Counts 23, 26 and 27) of which Defendant Smith was convicted, that those verdicts clearly rested on the jury finding that Smith failed to disclose to the victims alleged in those three counts that Co-Defendant Charles Lewis had a prior conviction and/or that

1. Those ten are mail fraud counts 6, 7, 8 and 9; wire fraud counts 16 and 17; securities fraud counts 24, 25, 28 and 29, as well as the not guilty verdict on the conspiracy count (Count 1, charging a conspiracy from April of 1999 through October of 2004). -2-

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Nebraska had issued a Cease and Desist Order against Schmidt's entities.2 Those three counts are based on the language that "It was a further part of the scheme . . . " followed by the allegations that Defendant Smith failed to reveal the Lewis conviction and the Nebraska order. This was certainly the basis for the jury finding against Defendant Smith on those three counts, and nothing in those guilty verdicts show that the jury found Smith liable for any joint criminal activity, nor do those three verdicts somehow "demonstrate . . . that each of the defendants had joined the conspiracy and/or scheme charged in the indictment," nor that all acts by others after the starting date were reasonably foreseeable, as the government claims. Government Sentencing Statement, paragraph 38, pps. 20-21. The not guilty verdicts on the ten counts alleging crimes after the September 18th date clearly negate any such argument. The government is trying to convict Defendant Smith of crimes of which he was acquitted. The evidence and the verdict are clear here; the jury vindicated Defendant Smith of all other charged activity, and the amount of loss must be limited to the amounts involved in the three counts of conviction ($78,000). This argument will be discussed below in addressing the factors under 18 U.S.C. § 3553(a) which should be considered at sentencing, but the government argument here on loss and number of victims is

2. Defendant Smith truthfully acknowledged that he must have known about the Lewis conviction at some point (he thought in December) and the Nebraska Cease and Desist Order in the summer of 2002, when contacted by the witness Wommack about the order. These admissions during testimony are the basis for the three count verdict against Smith. And as admissions to the conduct of conviction, it is submitted that Smith might be eligible for a twolevel downward reduction for acceptance of responsibility under Guideline 3E1.1(a), Application Note 1(a). The government merely states categorically that no defendants are eligible for any acceptance of responsibility under Guideline 3E1.1 (paragraph 45, p. 32, Government Sentencing Statement.) -3-

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totally overreaching, inconsistent and illogical, in view of the jury's overall verdict. FACTORS TO BE CONSIDERED UNDER 18 U.S.C. § 3553(a) The "Sentencing Statute", 18 U.S.C. § 3553(a), begins with the well-known instruction for the Court to "impose a sentence sufficient, but not greater than necessary, to comply with the purposes set forth in paragraph (2) of this subsection." (Emphasis added.) The purposes of paragraph (2), are also well-known to the Court and Probation Office, and generally address seriousness of the offense, respect for the law, just punishment, deterrence, and protection of the public. The "Sentencing Statute" also requires consideration of "the nature and circumstances of the offense and the history and characteristics of the defendant." These will of course be addressed in detail in the Pre-Sentence Investigation Report of the Probation Office, but Defendant Smith argues that the three counts of conviction mitigate his role in the overall case and show that the180 month sentence proposed by the government is far greater than necessary under all the "Sentencing Statute" considerations. Defendant Smith also argues that the eleven character witnesses who testified in his behalf at trial, giving their strong opinions regarding his honesty and truthfulness, are a strong factor to be given consideration at his sentencing. They described Defendant Smith, who has no prior criminal record, as a single man in his forties, a "work-alcoholic", a businessman with a fine reputation, and a religious and caring man. All these matters, along with the background facts to be shown in the Pre-Sentence Investigation Report, should mitigate heavily for a substantially lesser sentence than that proposed by the government. -4-

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GUIDELINE FACTORS FOR CONSIDERATION UNDER 18 U.S.C. § 3553(A)3 As argued above, the loss to be assigned Defendant Smith for the offense of conviction, and the number of victims, should be limited to the three counts on which a guilty verdict was returned. The relevant conduct guideline on which the government argument relies, 1B1.3, defines relevant conduct as that which "occurred during the offense of conviction." And all definitions in the Commentary relating to Guideline 2B1.1 as to loss (Application Note 2) refer to loss which was a "result of the offense." And as argued above, these three guilty verdicts clearly show that the jury found Defendant Smith guilty of Counts 23, 26 and 27 only because he failed to tell the investors in those counts about either the Lewis prior conviction or the Nebraska order. Nothing suggests that those verdicts showed that the jury found he "engaged in a conspiracy or fraud scheme" as the government claims. He was acquitted of those charges. The government argues that Defendant Smith should be considered for an enhancement under the guidelines as a leader or manager because he, they argue, supervised the activities of persons in Spokane. This follows the government argument that Co-Defendant Schmidt was the primary leader in his schemes, and "exercised significant decision-making authority over other participants including . . . Michael Smith." Government Sentencing Statement, paragraph 42, page 25. Therefore, Smith did not lead or manage anyone. The evidence at trial did show that Smith did what Schmidt said (believing in all that Schmidt said) and followed and passed on those

3. The government relies on the 2002 version of the Guidelines. On information and belief, Co-Defendant Schmidt plans on submitting a Sentencing Statement arguing that the 1999 version should be used. Should Schmidt's argument prevail, Defendant Smith would accept and adopt that argument and result. -5-

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instructions of Schmidt to others, but not that Smith "led" anyone in Spokane. To the contrary, it was clear from the evidence that the Spokane people acted individually, and that Smith did not lead or manage them. The government claims that an obstruction of justice enhancement is appropriate against Defendant Smith because they claim that he committed perjury in ten different instances. None of these examples, described in the Government Sentencing Statement at pages 29-32, rises to the level of perjury, are material as required, nor can they be said not to be the result of faulty memory, confusion or mistake. In fact, some of the conclusions by the government are plain wrong regarding what was stated at trial by the witnesses they claim Smith contradicted. For example, in subparagraph ix at page 32 of the Government Sentencing Statement, the prosecution alleges that Smith lied when he testified that he never told the witness Tammy Goulet to delete information from their office computers on the day of the execution of search warrants in other places. Goulet did not even state that Smith said to delete any information; she stated that he said to download it all onto discs in case the original computers or hard drives were seized in a search. This allegation of perjury is a disingenuous effort to obtain the enhancement. The same applies to the allegation in example x on the same page, stating that Smith denied that he falsely told the witness Hoener that he had been to London and seen the trading. Hoener testified that he heard Smith say that, but Hoener also testified that he heard Smith say he had been convicted and served time previously. The government and defense stipulated that Smith had never been convicted or served time; so obviously Smith never told Hoener that he had. Not only did this stipulation -6-

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destroy Hoener's recollection of what he thought he heard, but the defense called two witnesses, in addition to Defendant Smith, who testified that they were present and that Smith never made the statement about London or trades. This allegation by the government of a claimed act of perjury is again a totally disingenuous attempt to add an enhancement which should not be. And all the other examples the government cites are merely instances of subjective disagreement between Defendant Smith's testimony and the prosecution's attempt to establish contradictions, which clearly do not rise to the level of perjury. The government argues that Defendant Smith should receive an enhancement because of "sophisticated means" under Guideline 2B1.1(b)(8)(C). That provision contemplates the use of complex or intricate acts to execute or conceal a scheme. The factors described in the Government's Sentencing Statement at paragraph 41-d, page 24, as to Michael Smith's acts, to wit, that he "disguised his receipt and control of investor money" is contradicted by the testimony at trial of the investors and of Defendant Smith. Nothing was disguised, and no receipt or control of investor money was ever effected by Smith. He received investor checks, sent them to Denver to Norman Schmidt, received back monthly statements for investors, received monies for disbursement to investors where called for by them, and got paid for his sales work as agreed. No sophistication as contemplated by the guideline was involved, and this enhancement should not be applicable. Again, as to the counts of conviction, all that he did, or did not do, was not tell Mr. DellaPenna (Count 23) and the Hendricksons (Counts 26 and 27) that Nebraska had issued a cease and desist order.

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CONCLUSION At the end of the Government Sentencing Statement, it is suggested that the sentences recommended by the government for all defendants, including Michael Smith, are supported by the Guidelines, are presumptively reasonable, and are not "substantively unreasonable," citing Rita v. United States, 551 U.S.___, ___S.Ct.___, 2007 WL 1772146 (decided June 21, 2007); United States v. Hildreth, 485 F.3rd 1120 (10th Cir. 2007) and United States v. Kristl, 437 F.3d 1050, 1054 (10th Cir. 2005). It is the contention of the defense for Michael Smith that the maximum statutory sentence of 180 months offered by the government for him is outrageously unreasonable under all the facts and circumstances of the case and in terms of the required consideration of all the factors of the "Sentencing Statute," 18 U.S.C. § 3553(a). Whatever conclusions are reached in due consideration by the Probation Office in the Pre-Sentence Investigation will be addressed at the appropriate time as necessary, and if necessary. Defendant Smith respectfully submits at this time the above statements as to his pending sentencing and in response to the Government Sentencing Statement, and respectfully submits that the government's proposed sentence of 180 months would be grossly unreasonable and unfair. Dated: July 6, 2007. Respectfully submitted,

s/ Richard N. Stuckey Richard N. Stuckey Richard N. Stuckey, Attorney at Law, PC 2150 West 29th Ave. Suite 500 Denver, CO 80211-3890 303-455-4545 FAX: 303-458-6338 E-mail [email protected] -8-

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Attorney for Defendant Michael Smith

CERTIFICATE OF SERVICE I hereby certify that on July 6, 2007, I electronically filed the foregoing Defendant Michael Smith's Sentencing Statement with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses, and I further certify that I have mailed by U.S. Mail the same to the United States Probation Office, District of Colorado, 1929 Stout Street, Suite C-120, Denver, Colorado 802940101: Matthew T. Kirsch, AUSA Wyatt Angelo, AUSA Peter Bornstein, Esq. [email protected]

[email protected] [email protected]

Thomas Hammond, Esq. [email protected] Thomas Goodreid, Esq. [email protected] Ron Gainor, Esq. gains_2000@hotmailcom

Declan J. O'Donnell, Esq. [email protected]

s/ Richard N. Stuckey Richard N. Stuckey Richard N. Stuckey, Attorney at Law, PC 2150 West 29th Ave. Suite 500 Denver, CO 80211-3890 303-455-4545 FAX: 303-458-6338 E-mail [email protected] Attorney for Defendant Michael Smith

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