Free Sentencing Memorandum - District Court of Arizona - Arizona

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PAUL K. CHARLTON United States Attorney District of Arizona John R. Lopez IV Assistant U.S. Attorney Arizona State Bar No. 019182 Two Renaissance Square 40 North Central, Suite 1200 Phoenix, Arizona 85004-4408 Telephone: (602) 514-7500 [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

United States of America, Plaintiff, v. Andrew Taylor, Defendant.

CR-04-0809-PHX-NVW UNITED STATES' SUPPLEMENTAL SENTENCING MEMORANDUM

The United States of America, through undersigned counsel, hereby files its Supplemental Sentencing Memorandum. For the reasons set forth in the attached Memorandum of Points and Authorities, the government respectfully requests that this Court adopt the sentencing calculation set forth in the Presentence Investigation Report and impose a sentence at least at the high-end of the Guideline range. Respectfully submitted this 21st day of November, 2005. PAUL K. CHARLTON United States Attorney District of Arizona /S/ JOHN R. LOPEZ IV Assistant U.S. Attorney

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. MEMORANDUM OF POINTS AND AUTHORITIES DEFENDANT HAS THE BURDEN OF PROVING THE CONSTITUTIONAL INFIRMITY OF A PRIOR CONVICTION USED TO ASSESS CRIMINAL HISTORY POINTS. The government has obtained Defendant's original conviction document (PSR ¶ 34), filed February 13, 1981, and entitled "Order Deferring Imposition of Sentence and Granting Probation." This conviction document, which provides that Defendant was present at his plea hearing with his attorney, is signed by Defendant and his attorney. As such, Defendant's argument that his conviction is constitutionally infirm because he allegedly was deprived of his right to counsel and did not otherwise voluntarily, knowingly, and intelligently waive his right to counsel is foreclosed. Sentences resulting from convictions that are shown to be constitutionally invalid may not be counted when assessing a defendant's criminal history score. U.S.S.G. § 4A1.2, Application Note 6 (2001). However, "in the `context of considering a constitutional challenge to a prior conviction in the criminal history calculation . . . the ultimate burden of proof in demonstrating the constitutional infirmity of the . . . conviction lies with the defendant.'" U.S. v. Allen, 153 F.3d 1037, 1041 (9 th Cir. 1998) (citing U.S. v. Newman, 912 F.2d 1119 (9 th Cir. 1990)); see also United States v. Dominguez, 316 F.3d 1054, 1056-57 (9 th Cir. 2003). "A defendant must prove the invalidity of a prior conviction by a preponderance of the evidence." Id. In order to prevail, "the defendant must present evidence sufficient to overcome the presumption that there was a valid waiver of counsel." Id. (citing U.S. v. Malloy, 3 F.3d 1337, 1339-40 (9 th Cir. 1993), for the proposition that there exists "`a presumption of regularity' of prior convictions offered for purposes of sentencing enhancement, thereby preventing a defendant from proving the constitutional invalidity of a prior conviction merely by pointing to a missing or silent transcript."). "To overcome the presumption and `bar the use of [a prior] conviction for sentence enhancement,' the defendant must make `[a]n affirmative showing that the prior conviction is invalid . . . ." Id. (Citation omitted.) Moreover, self-serving statements are insufficient to 2

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establish that a conviction was constitutionally infirm. Id. (citing Cuppett v. Duckworth, 8 F.3d 1132, 1139 (7 th Cir. 1993)). A conviction in which a defendant knowingly and intelligently waives assistance of counsel is not constitutionally infirm, and may be included in the criminal history calculation. Id. To the extent that Defendant elects to contest the constitutional validity of his conviction (PSR ¶ 34) for purposes of assessing criminal history points, Defendant retains the burden. In light of the conviction document which demonstrates that Defendant was present with counsel at his plea hearing, the government submits that Defendant faces an insurmountable hurdle. II. INTEREST THAT HAD ACCRUED AT THE TIME OF THE OFFENSE MAY BE INCLUDED IN THE RESTITUTION AMOUNT. The Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3663, which is intended to

11 make victims of crime whole, "`authorizes restitution for a victim's `actual losses'" and 12 "`[f]oregone interest is one aspect of the victim's actual loss.'" United States v. Gordon, 393 F.3d 13 14 15 16 17 In this case, victims of Defendant's bankruptcy fraud, namely Catholic Credit Union, are 18 entitled to be made whole and thus, are entitled to restitution which includes contractual interest 19 and finance charges. 20 21 22 "[I]nterest should be included [in the sentencing guideline loss calculations] if . . . the victim 23 had a reasonable expectation of receiving interest from the transaction." United States v. Soares, 24 985 F.Supp. 1227, 1228 (C.D. Cal. 1997) (citing United States v. Henderson, 19 F.3d 917, 928-29 25 26 the calculation of actual loss amounts for sentencing purposes); see also United States v. 27 28 3 (5th Cir. 1994), and enumerating other circuits that have approved including accrued interest in III. CONTRACTUAL INTEREST THAT HAD ACCRUED AT THE TIME OF THE OFFENSE MAY BE INCLUDED IN THE LOSS AMOUNT FOR PURPOSES OF CALCULATING DEFENDANT'S OFFENSE LEVEL. 1044, 1058-59 (9 th Cir. 2004) (citing United States v. Smith, 944 F.2d 618, 626 (9 th Cir. 1991)); see also United States v. Morgan, 376 F.3d 1002, 1014 (9 th Cir. 2004) (citing United States v. Hoyle, 33 F.3d 415 (4 th Cir. 1994), for the proposition that restitution may include contractual interest and finance charges); United States v. Catherine, 55 F.3d 1462, 1464-65 (9 th Cir. 1995).

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Davoudi, 172 F.3d 1130, 1136 n.3 (9 th Cir. 1999) ("[U]npaid interest in fraudulent loan cases is considered an actual loss to the victims. District Courts may choose to include unpaid interest still due on the loan in the calculation of the victim's actual loss."). In this case, contractual interest accrued pursuant to the Catholic Credit Union contract at the time of the commission of Defendant's bankruptcy fraud should be included in the loss amount for purposes of Defendant's sentencing. As a result of Defendant's bankruptcy fraud, Catholic Credit Union was deprived of this reasonable and expected contractual interest. This amount should be included in the loss amount because Catholic Credit Union had a reasonable expectation of receiving interest from the vehicle loan. IV. IRS AND ADR LIEN AMOUNTS SHOULD NOT BE DEDUCTED FROM DEFENDANT'S LOSS AMOUNT. "[L]oss is the greater of the actual or intended loss." U.S.S.G. § 2B1.1 App. N. 3(A).

12 "Intended loss includes the `pecuniary harm that was intended to result from the offense,' whether 13 or not that pecuniary harm `would have been impossible or unlikely to occur.'" U.S.S.G. § 2B1.1 14 App. N. 3(A)(ii). As such, "it is irrelevant to the intended loss calculation that a [party] is 15 unlikely to suffer the total intended loss when a defendant pledges collateral to secure a loan." 16 17 in determining that the gross amount of defendant's debt should not be reduced, for purposes of 18 calculating loss for sentencing purposes, by the amount the lender recovered by repossessing an 19 automobile because defendant did not intend to return the collateral when she fraudulently 20 obtained an automobile loan). 21 In addition, "courts do not subtract from the intended loss repayments made by a defendant 22 to his victim after the detection of the offense, as such payments, given their timing, likely do not 23 indicate anything about the defendant's culpability." United States v. Staples, 410 F.3d 484, 491 24 25 because it bears on the defendant's culpability: the existence of collateral could indicate that the 26 defendant intended to cause a smaller loss than would have occurred absent the collateral."). 27 28 4 (8 th Cir. 2005) ("[C]ollateral is more like pre-detection repayment than post-detection repayment United States v. McCormac, 309 F.3d 623, 628 (9 th Cir. 2002) (District Court did not clearly err

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Consistent with this approach, courts have declined to reduce the loss amount for sentencing calculation purposes where the government has been forced to reacquire property through the legal process. See, e.g., United States v. Johnson, 941 F.2d 1102, 1114 (10 th Cir. 1991) ("The fact that the government was able to reacquire the properties does not diminish Defendant's culpability and responsibility for the fraudulent scheme he masterminded. The district court permissibly decided to base Defendant's sentence on the value of all the property taken . . . ."); United States v. Scott, 74 F.3d 107, 112 (6 th Cir. 1996) ("Subsequently making voluntary restitution is simply not the equivalent of posting collateral."); United States v. Mummert, 34 F.3d 201, 204 (3 rd Cir. 1994) ("A defendant in a fraud case should not be able to reduce the amount of loss for sentencing purposes by offering to make restitution after being caught."). In this case, any purported collateral in Defendant's real estate holdings should not be deducted from the loss amount used to calculate his sentence because the proper measure of loss is his intended loss, which generally is not subject to a reduction for collateral under Guideline Section 2B1.1 Application Note 3(E)(ii). See McCormac, 309 F.3d at 628. In any event, even if the IRS and ADR were able to collect on their tax liens, their lien interests in Defendant's property do not represent pledged collateral, but rather, judicially-created interests that the victims were forced to obtain without Defendant's cooperation or acquiescence. See Johnson, 941 F.2d at 1114. Moreover, Defendant's present offer of his home as collateral to satisfy the IRS and ADR tax liens represents, at best, a subsequent offer at restitution rather than the equivalent of posting collateral prior to discovery of the offense. See Scott, 74 F.3d at 112. Accordingly, the IRS and ADR tax lien amounts should be included in the loss amount for purposes of calculating Defendant's sentence. V. DEFENDANT IS RESPONSIBLE FOR THE CATHOLIC CREDIT UNION DEBT. Defendant included the Catholic Credit Union ("CCU") debt on his bankruptcy schedules and reported the return of the vehicle on his amended schedules. Although Defendant now asserts that this debt is his wife's sole and separate debt, financial harm to the CCU was a direct and

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foreseeable result of defendant's bankruptcy fraud. Accordingly, Defendant is responsible for the CCU debt for both restitution and sentencing purposes.

VI. CRIMINAL JUSTICE ACT PANEL GUIDELINES. The government hereby attaches to this memorandum a copy of General Order 04-12 ­ the United States District Court for the District of Arizona Criminal Justice Act Plan ("the CJA Plan"). (See Exhibit 1.) The CJA Plan provides, in pertinent part, that: The determination of eligibility for representation under the CJA is a judicial function to be performed by a judge after making appropriate inquiries concerning the person's financial condition. Such inquiries can be held in camera, ex parte,or under seal, at the discretion of the judge. CJA Plan, Section IV B (2).

11 For the Court's consideration of Defendant's financial condition from June 2004 through 12 July 2005, the government submits copies of Defendant's "Monthly Business Operating 13 Statements," which indicate that Defendant's business included inventories on hand of 14 approximately $800,000 at the end of each month during this period. (See Exhibit 2.) 15 VII. 16 For the reasons set forth above, the government respectfully requests that the Court impose 17 a sentence at least at the high-end of the applicable Guideline range. 18 Respectfully submitted this 21st day of November, 2005. 19 20 21 22 23 24 25 26 27 28 6 PAUL K. CHARLTON United States Attorney District of Arizona /S/ JOHN R. LOPEZ IV Assistant U.S. Attorney CONCLUSION

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/ S/ JOHN R. LOPEZ IV CERTIFICATE OF SERVICE

I hereby certify that on November 21, 2005, 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: Cameron Morgan 4295 North 75 th Street Scottsdale, AZ 85251

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EXHIBIT 1

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EXHIBIT 2

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