Free Reply to Response - District Court of Arizona - Arizona

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BLUMBERG & ASSOCIATES

Bruce E. Blumberg
BLUMBERG & ASSOCIATES
_____________________

45 West Jefferson, Suite 210 Phoenix, Arizona 85003
Office: (602) 277-6180 Fax: (602) 271- 4119

Attorney for Defendant Arizona State Bar Number 010779

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America, Plaintiff, vs. Harvey Sloniker, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No: 04-CR-820-PHX-FJM DEFENDANT'S REPLY TO GOVERNMENT'S RESPONSE TO DEFENDANT'S MOTION TO DISMISS FOR DOUBLE JEOPARDY

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Defendant Harvey Sloniker, by and through counsel, respectfully submits to this Honorable Court the attached Memorandum in Reply to the Government's Response to Defendant's Motion to Dismiss for Double Jeopardy. The government's response evades the issue that the Stipulated Judgment and Order entered into by the Federal Trade Commission and Mr. Sloniker imposed penalties that were conditioned on the commission of a crime, and hence, punitive in nature. As a result, the present indictment results in a violation of the Double Jeopardy Clause of the Fifth Amendment to the United States Constitution.

RESPECTFULLY SUBMITTED, this 3rd day of October, 2005.

BLUMBERG & ASSOCIATES

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By:

s/ Bruce E. Blumberg Bruce E. Blumberg, Esq. 45 West Jefferson, Suite 210 Phoenix, Arizona 85003 Office: (602) 277-6180 Facsimile: (602) 271-4119 Attorney for Harvey Sloniker

Memorandum I. Background Defendant Harvey Sloniker owned and operated several telemarketing businesses that-- along with individual defendants--became the target of a Federal Trade Commission ("FTC") civil action that alleged, inter alia, violations of the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101 et seq. On February 3, 2003, Mr. Harvey Sloniker and his codefendants entered into a stipulated judgment with the FTC that required the defendants to pay $20 million dollars, of which Mr. Sloniker contends that he forfeited approximately $2 million dollars in property and cash (although the government disputes the actual amount of the penalty suffered by Mr. Sloniker). Nevertheless, Mr. Sloniker was indicted in this case on August 5, 2004. Since the government is now seeking to try Mr. Sloniker for the same offenses as the prior civil action, Mr. Sloniker contends that the instant prosecution is barred by the Double Jeopardy Clause of the Fifth Amendment to the United States Constitution. Additionally, the prior civil settlement now blocks the Court from ordering further restitution in the instant case. The government's response asserts that the penalties were civil in nature; however, the penalties imposed were the functional equivalent of a criminal penalty, not civil. Since the government is now seeking to punish Mr. Sloniker for the same conduct, the present indictment violates the Double Jeopardy Clause and therefore, the current prosecution should be dismissed.

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II.

Argument A. The Civil Sanctions imposed in the FTC injunction constitute punishment for the purposes of double jeopardy and therefore violate the Double Jeopardy Clause. The Double Jeopardy Clause of the Fifth Amendment to the United States Constitution

prohibits a defendant from being put in jeopardy for the same offense twice. It also protects the defendant from multiple punishments for the same offense, Whalen v. United States, 445 U.S. 684, 100 S.Ct. 1432, 63 L.Ed.2d 715 (1980), as well as encompass the corollary doctrine of collateral estoppel. See Ashe v. Swenson, 397 U.S. 436, 444-45, 90 S.Ct. 1189, 1194-95, 25 L.Ed.2d 469 (1970). Whether or not a specific punishment is civil or criminal for purposes of double jeopardy is a matter of statutory construction; "the court must first ask if the legislature, in establishing the penalizing mechanism, indicated either expressly or impliedly any preference for one label or the other. Hudson v. U.S., 522 U.S. 93, 99, 118 S.Ct. 488, 493, 139 L.Ed.2d 450 (1997). For even in some cases where the legislature "has indicated an intention to establish a civil penalty, [the Supreme Court of the United States has] inquired further whether the statutory scheme was so punitive either in purpose or effect," U.S. v. Ward, 448 U.S., 242, 248-49, 100 S.Ct., 2636, 2641, 65 L.Ed.2d 742 (1980), as to "transform what was clearly intended as a civil remedy into a criminal penalty," Rex Trailer Co. v. United States, 350 U.S. 148, 154, 76 S.Ct. 219, 222, 100 L.Ed. 149 (1956). The government has correctly cited the seven Hudson factors useful for determining if a particular penalty is civil or criminal, however, under some scenarios, civil penalties may constitute punishment for the purposes of double jeopardy nevertheless, and the test to figure out if the double jeopardy clause is applicable is to question whether the particular challenged penalty is punitive in purpose. U.S. v. Brown, 917 F.Supp 780, 784 (M.D.Ala., 1996). Also, labels such as "criminal" and "civil" are not authoritative in determining if a particular civil penalty constitutes punishment for purposes of double jeopardy. Garcia v. U.S., 915 F.Supp 168, 176 (N.D.Cal., 1996). A "civil" penalty can appropriately classified as "punitive," and thus of a criminal nature, if the size of the penalty cannot be said to be of a remedial nature "and can only be explained as also serving either

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retributive or deterrent purposes." U.S. v. Halper, 490 U.S. 435, 448, 109 S.Ct. 1892, 1902, 104 L.Ed.2d 487 (1989), abrogated by Hudson, 522 U.S. 93, 118 S.Ct. 488. As stated in Mr. Sloniker's original motion to dismiss, Mr. Sloniker was criminally punished when his property was forfeited. A second attempt to punish Mr. Sloniker is therefore unjustified under the Double Jeopardy Clause. The government disputes Mr. Sloniker's suggestion that the amount taken from him was approximately $537,000, yet for the purposes of double jeopardy, the exact dollar amount is irrelevant as long as the defendant can prove that the penalty constituted a criminal punishment and the size of the penalty served a retributive purpose. Mr. Sloniker does not dispute the legislature's intent to enact a civil penalty in this case. That the FTC was able to seize Mr. Sloniker's assets via a Stipulated Order based on 15 U.S.C. §§ 53(b) and 57(b), 15 U.S.C. §§ 6101 et. seq. and 15 U.S.C. § 6822(a) signifies "that Congress intended to provide for a civil sanction." Hudson, 522 U.S. at 103, 118 S.Ct. at 488. The criminal nature of the sanctions, however, stems from the punitive characteristics of the penalties Mr. Sloniker suffered under the Order. The FTC filed its complaint and motion for a temporary restraining order against Mr. Sloniker on July 8, 2002. On that same date, agents from the FBI, the Postal Inspection Service and the Criminal Investigation Division of the IRS executed search warrants at Mr. Sloniker's home and places of business. Therefore, at the same time the FTC was gearing up to extract penalties from Mr. Sloniker for his alleged activities under the Telemarketing and Consumer Fraud and Abuse Prevention Act, there was a criminal investigation arising out of the same conduct. Like the defendant in Department of Revenue of Montana v. Kurth Ranch, 511 U.S. 767, 114 S.Ct. 1937 (1994), Mr. Sloniker was subject to arrest for the same conduct giving rise to the penalties he endured under the Order. Therefore, for all practical purposes, the Order's penalties were "conditioned on the commission of a crime." U.S. v. Ursery, 518 U.S. 267, 282, 116 S.Ct. 2135, 135 L.Ed.2d 549 (1996). Although Mr. Sloniker may dispute that there was telemarketing fraud, the Supreme Court of the United States has held that this is "significant of penal and prohibitory intent." Kurth Ranch, 511 U.S. at 781, 114 S.Ct. at 1937. Also, the size of the penalty requested and demanded under Order has a completely deterrent purpose component to it,

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because it "promote[s] the traditional aims of punishment, retribution and deterrence." Hudson, 522 U.S. at 99, 118 S.Ct. at 488. As the tax imposed against the defendant in Kurth Ranch was held to be the equivalent of punishment under a criminal prosecution, so should the penalties suffered by Mr. Sloniker under the Order he entered into with the FTC. These penalties, by nature, were in themselves a judgment of Mr. Sloniker's activities that preceded the present criminal indictment for the same conduct the government believes to be unlawful. A conviction in this case for the same conduct would therefore violate the Double Jeopardy Clause, and this Court should hence put and end to Mr. Sloniker's second placement in jeopardy. III. Conclusion Since Mr. Sloniker has been punished once for engaging in deceptive and unfair acts or practices through his telemarketing businesses, he should not be tried again in this case for the same acts. Under principles of collateral estoppel embodied in the Double Jeopardy Clause of the United States Constitution, this indictment should therefore be dismissed. RESPECTFULLY SUBMITTED, this 3rd day of October, 2005.

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BLUMBERG & ASSOCIATES

By:

s/ Bruce E. Blumberg Bruce E. Blumberg, Esq. 45 West Jefferson, Suite 210 Phoenix, Arizona 85003 Office: (602) 277-6180 Facsimile: (602) 271-4119 Attorney for Harvey Sloniker

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 Filing to the following CM/ECF registrants: Michael Bresnehan, Rachel Hernandez, Gary Restaino, Jeanette Alvardo, Thomas Hoidal, Ivan Mathew, Gregory Parzych and the Honorable Frederick Martone.

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