Free Objection to Presentence Investigation Report - District Court of Arizona - Arizona

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MATHEW & MATHEW, P.C. IVAN K. MATHEW (SBN: 011610) SUSAN T. MATHEW (SBN: 012916) 1850 N. Central Avenue, Suite 1910 Phoenix, Arizona 85004 Tel: (602) 254-8088 / Fax: (602) 254-2204 e-mail: [email protected] Attorneys for Defendant, RICHARD NAIL

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA UNITED STATES OF AMERICA, Plaintiff, vs. HARVEY L. SLONIKER, JR., TYE SLONIKER, KINDY JONAGAN, ROBERT SHINN, RICHARD NAIL, and JOHN DESIDERIO, Defendants.
CASE NO. 04-CR-820-PHX-FJM

OBJECTIONS TO PRESENTENCE REPORT

(Assigned to the Hon. Frederick J. Martone)

Defendant, Richard Nail, by and through his counsel, Ivan K. Mathew, hereby objects to the draft presentence report in this case. MEMORANDUM On March 10, 2006, Richard Nail pled guilty to one Count of bank fraud. (Count 69). Richard Nail objects to the cascading of the plea of guilty to one Count of bank fraud to include every Count of the Indictment. (Counts 1-73). The bridge from a home equity loan application to the telemarketing fraud is a bridge to nowhere. Harvey Sloniker made an application for a loan in the name of Richard Nail. The loan application to Irwin Home Equity was prepared for Mr. Nail's signature stating that he made $92,000. He overstated his income by $40,000. The loan was in the amount of $30,800. The loan was funded. Mr. Sloniker assured Mr. Nail that he would make payments on the loan. Mr. Sloniker did not.
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The loan went into default. Richard Nail felt an obligation to repay the loan although the misrepresentations were made to him by Harvey Sloniker. When the loan went into default, Richard Nail borrowed money from his relatives to repay the loan. Richard Nail has paid back every penny. Richard Nail did not cause the bank to lose any money at all. of $30,800 was fully secured as it was a home equity loan. The Bridge to Nowhere. Secreted in the vast amount of pages is a sentence that tries to serve as the basis for the connection between a home equity loan and telemarketing fraud. On page 8, paragraph 18, there is a sentence as follows: "The investigations concluded Nail's purchase of a home, through acts of loan fraud, provided the required conditions to have these companies incorporated under his name. Case agents believed Sloniker, Jr. intended to use these entities as back up companies in the event he was shut down by the authorities." This is a quantum leap. Richard Nail allegedly opened an account for Alliance Com Technologies has nothing to do with this case. Alliance Com Technologies was incorporated after the search warrant was executed. There is absolutely no evidence whatsoever between Alliance Com Technologies and home equity loan. In the case of Alliance Com Technologies no financing was obtained. Merely because someone went to a bank and opened a bank account does not show any connection to a loan used to purchase a home. See, U.S. v. Mellen, 393 F.3d (D.C. Cir. 2004). Nor is there any explanation of a connection in the presentence report.1 On page 12 of the Presentence Report, it states "Subsequent to carrying out this act, at least one of Sloniker Jr.'s companies, Alliance Com Technologies, was incorporated under Nail's name. In this matter, the loan fraud became part of the same common scheme as it contributed in furthering the telemarketing wire and mail fraud acts."
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The loan

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The Court may also recall that on or about February 3, 2006 the plea in this matter was not entered into. It was not entered into because the government was seeking restitution on the basis of the entire Indictment. Subsequently, a plea was entered into on March 10, 2006. The plea that was entered into omits the objectionable language to the Defendant and which derailed the first change of plea. The investigation concluded that Mr. Nail's purchase of a home, through assets of loan fraud, provided the required conditions to have these companies incorporated under his name. Case agents believed Mr. Sloniker intended to use these entities as back-up companies in the event he was shut down by authorities. There is no illegal action by Alliance Com Technologies.
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This is wrong. The fact that one opens a bank account at a bank for business is not the same as obtaining a loan by inflating one's income. In addition, the account was not even opened at Irwin Home Equity but at Wells Fargo Bank. Background of Richard Nail. During the periods of 1997 through 1998, Richard Nail went through a difficult divorce. During this period, he came to rely upon Harvey Sloniker as a trusted friend in his hours of need. At Mr. Sloniker's request, Richard Nail moved to Phoenix, Arizona.

Richard Nail questioned Harvey Sloniker about the legitimacy of the businesses. Harvey Sloniker told Mr. Nail that his lawyers advised him that everything he was doing was legal. In addition, Harvey Sloniker introduced Richard Nail to Glenn Erickson, a lawyer hired by Harvey Sloniker. Glenn Erickson repeatedly gave assurances that all the things that were being done by Harvey Sloniker were legal. Furthermore, the vendors that provided

materials to Harvey Sloniker also provided statements that to Mr. Nail that everything was legitimate and lawful. In 2001, the Florida Court of Appeals agreed. See, Millennium Communications and Fulfillment, Inc., U.S. Attorney General, 800 So.2d 255 (Fla. 3d DCA 2001). Defendant Objects to the Inclusion of Defense Conduct Relating to Co-Defendants in This Case Which Has Nothing Whatsoever to do With the Charge in This Case. No Loss. As the loan application was fully collateralized, i.e., home equity loan, there was no loss. The Telemarketing Accounts are Not Related Conduct. Relevant conduct under §1(B)1.3(a)(1) includes only acts that occurred during the commission of the offense. §1(B)1.3(a)(2) is broader and includes any conduct that is part of the same scheme or plan as the offense of conviction. The broader categories is used "solely with respect to offenses which require grouping under §3(D)1.2(d) unless otherwise specified." U.S.S.G §1(B)1.3(a)(2). §3(D)1.2(d) does not list §2(F)1.1(18 U.S.C. §1014 ­ bank fraud) grouping of all offenses. In addition, §3(D)1.2(d) provides that the grouping is
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based upon for the same harm. In this particular case, the harm is not the same. The potential harm under §1014 is to the banking system and the preservation of the banking system which is federally insured. The harm in telemarketing fraud is totally different. It is to individual victims who may lose money as a result of false statements in connection with consumer products. The means of committing the offenses are different. One is through verbal solicitation and assurances. The other is through a loan application and supporting documents. Furthermore, the narrower relevant conduct presumptively applies to the

sentencing. Unless otherwise specified, relevant conduct is limited to all acts and omissions committed by the Defendant that occurred during the commission of the offense of conviction. U.S.S.G. §1(D)1.3(a)(1). In this particular case, there is no proof of any connection as there is no information of when the bank account was opened at Alliance Com Technologies. (It was done after July 29, 2002. The date of incorporation of Alliance Com Technologies.) It does not identify what bank was opened by Alliance Com

Technologies. It was Wells Fargo, not Irwin Home Equity. Alliance Com Technologies was formed after the search warrants were executed. There is no connection between Alliance Com Technologies and telemarketing fraud, bank fraud or tax fraud. After the search warrant was executed on July 10, 2002, Mr. Nail questioned doing business with Mr. Sloniker. Mr. Sloniker advised him that his attorneys had stated everything was fine as he previously did. A new company, Alliance Com Technologies, was formed for a legitimate business ­ not to do the same business as before. In any event, the incorporation of Alliance Com Technologies cannot be said to be part of the conspiracy as the telemarketing conspiracy as it was formed after the execution of the search warrant. §1(B)1.3(b)

specifically states that it must be a common scheme, endeavor or enterprise. §1(B)1.3(b)(2) provides that it must be the same course of conduct, common scheme or plan as the offense of conviction. For two offenses to constitute part of a common scheme or plan, they must be "substantially connected" to each other. Id. There is no common victim. No common purpose. The same course of conduct means that they must be sufficiently connected or related to each other as to warrant the conclusion that they are part of a single episode,
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spree, or ongoing series of offenses. It is appropriate to consider whether the offenses are sufficiently connected or related to each other to be considered as part of the same course of conduct to conclude the degree of similarity of the offenses, the regularity, (repetitions) of the offenses, and the time interval between the offenses. When one of the above factors is absent, a stronger presence of at least one of the other factors is required. See Commentary Notes paragraph 9(a) and 9(b). The loan was taken out in February, 2001. Alliance Com Technologies was incorporated on July 29, 2002. See, U.S. v. Mellen, 393 F.3d (D.C. Cir. 2004) (holding that in conviction for conspiracy to defraud the United States, Defendants' possession of stolen property at his home could not be grouped as related to the offense of conviction.) See also, U.S. v. Rizzo, 349 F.3d 94 (2nd Cir. 349 F.3d 94 2003). (Court of Appeals held that a Defendant convicted of federal bank fraud could not have his sentence enhanced for identity theft which is not part of the charge of conviction.) See also, U.S. v. Lisk, 939 F. Supp. 332 (D.NJ 1996). (The alleged theft was not relevant conduct to be considered in connection with mail fraud charge.) See also, U.S. v. Phillips, W.D. Va. 1997, 955 F. Supp. 622 Affirmed 129 F.3d 119 (W.D. Va. 1997). (The Court held that

Defendants' conviction for distributing cocaine did not qualify as relevant conduct to subsequent conviction for marijuana conspiracy.) Mr. Nail's Role Was That of a Minor Participant. Pursuant to §3(B)1.2, Mr. Nail's participation was minor. Mr. Sloniker and Mr. Desiderio prepared the documents. Mr. Nail signed the documents. The idea for this was Mr. Sloniker. The entire preparation was Mr. Sloniker's idea with the assistance of Mr. Desiderio. Mr. Nail received no monies. Indeed, Mr. Nail had to repay the loan of which he got no proceeds. Paragraph 9. Mr. Nail did not know telemarketing statements were false. His job was to prevent people from making misrepresentations. He saw catalogs being prepared for shipment in warehouses.

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Paragraph 11. Mr. Nail did not commit mail fraud. He should not be lumped in as "Defendants". Paragraph 12. Mr. Nail did not commit money laundering. He did not control any bank accounts in connection with telemarketing operations. Paragraph 13. There is a quantum leap of logic from incorporating a company and trying to connect such a fact to a false statement and obtaining a home equity loan for $30,000. Home

ownership is not a prerequisite to forming a corporation or opening a bank account. No credit was obtained in the name of Alliance Com Technologies or Focus Center Group.2 Paragraph 23. Richard Nail objects to any connection to Western Security Bank and the loan of $140,000. Richard Nail objects to any connection to Union Bank. Paragraph 24. The Irwin Home Equity loan pertaining to Mr. Nail amounts to $30,000. amounts were collateralized. Paragraph 35. Mr. Nail did not send any letter to any bank on Morgan Stanley Dean Witter letterhead. See acknowledgement of Probation Department noting there is not sufficient evidence to link Mr. Nail with letters to Western Security Bank. Mr. Nail has no knowledge of any transactions with Western Security Bank. Paragraph 39. Mr. Nail voiced his concerns to Mr. Sloniker but was informed that his lawyers approved of the transactions. Paragraph 43. Mr. Nail disputes profits of $5,897,494. This is gross revenue. The basis of the calculations uses a loss figure of $5,897,494 is erroneous. There is no loss of profits of this Focus Center Group is not the basis in the Presentence Report to connect the loan fraud to telemarketing. (Presentence Report, p. 12).
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All

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amount in this matter. Richard Nail repaid all the money borrowed in his name which was used by Harvey Sloniker for his benefit. The loan was collateralized. The irony of this is

that Richard Nail is also a victim of Harvey Sloniker. The guidelines are no longer binding on this Court. Second of all, pursuant to an agreement with the government and the Defendant, it was agreed that probation is available to the Defendant in this case. (See Plea Agreement, p. 5). Indeed, the government would make such a recommendation. The legal authority for such a recommendation, in light of the plea to a class B felony and the statutory prohibition on probation for a class B felony, is United States v. Lahey, 186 F.3d 272 (2nd Cir. 1999) and United States v. Elliot, 971 F.2d 620 (10th Cir. 1992). The harm is different. The Presentence Report writer recognizes the false loan applications, which overstated his income, were completed to influence the bank's decision. (p. 12). Alliance Com Technologies was incorporated by Richard Nail after the search warrants were executed. The opening of the account was not done in connection with telemarketing fraud and mail fraud. Paragraphs 41-52. Richard Nail disputes paragraphs 41-52. Mr. Nail did not participate in

telemarketing fraud. This was why the entry of the Plea Agreement had to be rescheduled. Paragraph 84. Defendant objects to paragraph 84 which provides that probation is not authorized. The Plea Agreement entered into specifically states that probation is authorized with the authorities being cited. (See Plea Agreement, page 5, United States v. Lahey, 186 F.3d 272 (2nd Cir. 1999) and United States v. Elliot, 971 F.2d 620 (10th Cir. 1992)). Paragraph 85. Defendant submits that probation is authorized and can no longer be prohibited by the guidelines as the guidelines no longer have the force of mandatory law. (Booker & Fanfan.) Paragraph 94. The loan application had nothing to do with the telemarketing.
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Verification of Cancer. Mr. Nail previously forwarded over 100 pages to the presentence writer confirming Hodgkin's Lymphoma and the ongoing treatment. (See attached Exhibit "1"). Undersigned counsel will again forward the documents to him. Defendant Richard Nail is also requesting a departure pursuant to 5(H)1.4 due to his medical condition and that he is receiving ongoing treatment for Hodgkin's Lymphoma which allows Mr. Nail to receive treatment and it will be more cost effective for him not to be incarcerated. OFFENSE LEVEL COMPUTATION Base Offense Level (§2B1.1(a)) Minor Participation (§3B1.2) Adjusted Offense Level Acceptance of Responsibility Total Offense Level 6 2 4 2 2

RESPECTFULLY SUBMITTED this 5th day of October, 2006. MATHEW & MATHEW, P.C By: _____s/Ivan K. Mathew___________ Ivan K. Mathew Attorneys for RICHARD NAIL

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CERTIFICATE OF SERVICE

United States of America v. Sloniker, et al. 04-CR-820-PHX-FJM I hereby certify that on October 5, 2006, 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 Filing to the following CM/ECF registrants:

Rachel C. Hernandez Gary M. Restaino Assistant U.S. Attorney e-mails: [email protected];
[email protected] Attorneys for Plaintiff United States of America

Gregory T. Parzych Maricopa Legal Defenders Office e-mail: [email protected] Attorneys for Defendant Tye Sloniker

Thomas M. Hoidal Hoidal & Hannah, P.C. e-mail: [email protected] Attorneys for Defendant John Desiderio Jeanette E. Alvarado Asst. Federal Public Defender e-mail: [email protected] Attorneys for Defendant Robert Shinn

Michael J. Bresnahan e-mail: [email protected] Attorneys for Defendant Kindy Jonagan Bruce Blumberg Blumberg & Associates [email protected] Attorneys for Harvey Sloniker

s/Karen Gawel

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