Free Other Notice - District Court of Arizona - Arizona

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PAUL K. CHARLTON United States Attorney District of Arizona RACHEL C. HERNANDEZ Arizona State Bar No. 016543 GARY M. RESTAINO Assistant U.S. Attorney Two Renaissance Square 40 N. Central Avenue, Suite 1200 Phoenix, Arizona 85004-4408 Arizona State Bar No. 017450 Telephone (602) 514-7500 [email protected] [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America Plaintiff, v. Harvey L. Sloniker, Jr., Tye Sloniker, Kindy Jonagan, Robert Shinn, Richard Nail, and John Desiderio, Defendants. The United States, through counsel undersigned, pursuant to Fed. R. Crim. P. GOVERNMENT'S NOTICE OF INTENT TO INTRODUCE EXPERT TESTIMONY CR04-0820-PHX-FJM

17 16(a)(1)(G), Rule 702 of the Federal Rules of Evidence and this Court's scheduling order, 18 notices defendants that it intends to introduce at trial expert testimony on the following topics. 19 The government also designates proposed experts. The government reserves the right to 20 supplement the information contained in the disclosure at a later time and/or to change the 21 designated expert within a disclosed category. 22 1. 23 Defendants and their employees solicited telemarketing victims for bank account 24 information in order to pay for the putative "major credit card". Defendants, through the 25 companies referenced in the indictment, sent the bank account information electronically to 26 ACH Commerce, who then debited the fee for the putative "major credit card" from each 27 victim's account, and wired it to company accounts. The government intends to introduce expert 28 Testimony as to the Automated Clearing House for electronic funds transfer

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1 testimony as to the Automated Clearing House network, a network which enabled the electronic 2 funds transfers from victim accounts to company accounts, via a third party processor such as 3 ACH Commerce. 4 Specifically, the government intends to present testimony to explain how the ACH system

5 works and to describe the authorizations that a company must receive from consumers. The 6 testimony will further include information as to the specific requirements a company must follow 7 when obtaining authorization by telephone (and the rationale for these additional requirements) 8 and a description of "chargebacks" ­ that is, debits subsequently challenged by customers and 9 taken back from the company by the ACH processor ­ and the risks associated with chargeback 10 percentages. The government anticipates that expert testimony will be presented as to the risk 11 factors associated with defendants' companies, specifically the use of telephonic authorizations 12 and the high percentage of chargebacks. 13 The intended expert on the ACH process is Charles E. Floyd, Jr. The bases for his

14 testimony and opinions are his work in the electronic payments industry as a regulator and 15 trainer and his designation as an Accredited ACH Professional. A c.v. will be provided 16 separately. 17 The government reserves the right to designate an additional expert from a major credit

18 card company as to the risk factors associated with chargebacks. 19 20 2. Financial analysis of the companies

The government will present a financial analysis of the companies listed in the indictment

21 through a financial analyst. The analysis is expected to include summary evidence to support 22 certain allegations in the indictment, including but not limited to the wire fraud allegations in 23 Counts 30-38, the money laundering allegations in Counts 39-49 and the loss amounts and 24 number of victims in paragraph 54. 25 The intended expert is Wendy Spaulding of Nossen & Associates. Her opinions and other

26 testimony are based on a review of bank and other financial records of the companies. She 27 compiled a series of spreadsheets itemizing the deposits and withdrawals, including checks and 28
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1 wires, from each company account. The spreadsheets were produced to defense counsel as CD 2 219 (in Microsoft Access file format) with the initial discovery in this case. A c.v. for Ms. 3 Spaulding will be produced separately. 4 5 3. Telemarketing

The government reserves the right to present expert testimony as to the modus operandi

6 of a telemarketing enterprise. The testimony is expected to include, inter alia, the setup of a 7 boiler room, the development of client lists, the recruitment of telephone sales representatives, 8 the use of scripts and the role of closers, verifiers, customer service representatives and 9 fulfillment companies, as generally set forth in paragraph 8 of the Indictment. 10 Special Agent Nora Kollas of the Federal Bureau of Investigation or Special Agent Julie

11 Halferty, the co-case agent, would be expected to provide this expert testimony, and a c.v. will 12 be provided at a later date. 13 14 4. Tax withholding charges

The indictment charges defendant Harvey Sloniker with failing to pay over withheld

15 employee taxes to the Internal Revenue Service, and the government anticipates testimony 16 generally describing the withholding requirements of employers and the information provided 17 to employers to place them on notice of their obligations. The government also anticipates 18 specific testimony describing the tax obligations of two of the companies controlled by 19 defendant Sloniker, the notice of those obligations provided to him and the failure to remit 20 withheld taxes. 21 The anticipated testifying agents include one of the following: Don Powers, a Revenue

22 Agent with the Internal Revenue Service; Special Agent Tracy Daun of the Internal Revenue 23 Service, the co-case agent in this case; or an Employee Tax Specialist to be designated from the 24 Internal Revenue Service. The bases for the opinions and other testimony are a review of the 25 tax records at issue in Counts 70-73 and the knowledge and experience gained through 26 employment with the IRS. A c.v. for the testifying expert will be produced at a later date. 27 28
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5.

Handwriting Exemplar

The Court has ordered defendant Desiderio to provide a handwriting exemplar with

3 respect to the false documentation allegations inherent in Counts 51-69, specifically the 4 provision of fraudulent versions of corporate and individual tax returns and/or W-2 forms. Upon 5 provision of the exemplar, the government will arrange for examination by a forensic document 6 specialist. The government anticipates that John Gorjazyk of the Phoenix Police Department 7 will compare the exemplar to the returns itemized in the indictment and proffer an opinion as to 8 the similarity of the handwriting on the itemized returns and the exemplar. Further information, 9 including reports, if any, and a c.v. will be produced following completion of the examination. 10 11 12 13 14 15 16 17 Respectfully submitted this 1st day of August, 2005. PAUL K. CHARLTON United States Attorney District of Arizona /s/ Gary M. Restaino RACHEL C. HERNANDEZ GARY M. RESTAINO Assistant U.S. Attorney CERTIFICATE OF SERVICE

I hereby certify that on this date, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic 18 Filing to the following CM/ECF registrants: Bruce Blumberg, Jeanette Alvarado, Ivan Mathew, Tom Hoidal, Greg Parzych and Michael Bresnehan. 19 20 21 22 23 24 25 26 27 28
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