Free Reply to Response - District Court of Arizona - Arizona

1 2 3 4 5

Cameron A. Morgan, Esq. th

4295 North 75 Street Scottsdale, Arizona 85251 480-990-9507 Telephone 480-990-9509 Facsimile e-mail: [email protected] Arizona State Bar No. 006709
Attorney for Defendant

IN THE UNITED STATES DISTRICT COURT
6

FOR THE DISTRICT OF ARIZONA
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

UNITED STATES OF AMERICA, Plaintiff, vs. ANDREW TAYLOR, Defendant.

) NO: CR04-0809-PHX-NVW ) ) ) DEFENDANT'S REPLY RE: ) SENTENCING MEMORANDUM ) ) ) ) )

Defendant Taylor, by and through counsel undersigned, hereby replies to the Government's Response and that of the probation officer in this case received respectively on November 3, 2005 and November 10, 2005. The issues involved herein concern the total offense points attributable to the Defendant and his criminal history. Defendant has objected to the restitution and specific offense points under 2B1.1 for actual loss to the tenancy of the Lal rental house, the Catholic Credit Union and the secured liens of the Government and the State of Arizona for past due taxes. The Defendant has also objected to the assessment of criminal history points for an alleged felony conviction that fails to show the appointment of counsel, a valid waiver, a guilty plea proceeding and a plea agreement. Defendant has also objected to the imposition of a criminal point for a misdemeanor for flying without a license.

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 1 of 9

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

The Government and probation have responded that the Court should follow the original pre-sentence report recommendations with respect to the guidelines. Their contentions are without merit and the guideline range for this offense is an offense level 10 and a criminal history 2. The assertions of the Government and the probation officer are discussed below. I. BHARAT LAL. The Defendant has asserted that the maximum amount that this court can take into consideration for both actual loss and restitution amounts is the amount of the judgment that was stipulated to by the parties, $8500.00. The Government requests that the Court double count the amount owed to Mr. Lal and impose additional restitution for which there is no basis. The facts in this matter are that the Defendant, his wife and the Lals entered into a residential lease with option to purchase on August 11, 1997. In May of 1998 the Defendant failed to pay rent and the Lals filed a forcible detainer in Maricopa County Superior Court case #CV98-09553. Defendant filed a Chapter 13, entered into an agreement with the Lals to pay the back rent and was allowed to remain in the premises. The judgment that the Lals received for the one month of unpaid rent was void because it was issued in a violation of the bankruptcy stay; however, under the agreement of the parties the Defendant made up all back rent. Defendant allowed the Chapter 13 to be dismissed and remained in the Lal rental property. On May 25, 1999 Mr. Lal had his attorney, David Delozier, send a notice of default for nonpayment of rent alleging that the Taylors owed $7,768.50 representing past due rents, late fees, attorney's fees, costs and interest at the rate of 8%. The parties subsequently settled this matter with the Taylors agreeing to paying $8500.00 as full settlement of all of the Lal's claims. Noticeably absent from the second forcible detainer was any allegation that rent was owed from the prior forcible detainer action. Neither Mr. Lal nor the probation department has provided any documentation for any attorney's fees. Since the prior demand letter and judgment included attorney's fees, it is

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 2 of 9

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

reasonable to assume that the $8500.00 judgment includes all attorney's fees that Mr. Lal incurred in this matter. II. I.R.S. TAXES. Defendant has alleged that the specific offense characteristics under 2B1.1(b) related to actual losses as set for in the probation report is wrong. Both the IRS and State tax liens must be eliminated from the calculation because application note 3(E)(ii) states that the loss shall be reduced by the fair market value of any collateral at the time of sentencing. The tax liens are fully secured by the Defendant's residence. In fact, neither the Government nor probation has bothered to respond to this argument at all. Defendant asserts that the Government's failure to respond to the affect of the collateral on the specific offense characteristic is a waiver and the Court should not include it for the determination of the total offense level. III. CATHOLIC CREDIT UNION. Neither the Government nor probation denies that the Catholic Credit Union debt was the sole and separate property of the Defendant's wife incurred prior to their marriage. Their argument is that somehow this morphed into a debt of the Defendant simply by virtue of it being listed in their joint Chapter 13 Petition. At the outset it is important to determine whether this loss was a reasonably foreseeable pecuniary harm that resulted from the offense. The Catholic Credit Union is listed in both of the 2000 Chapter 13 petitions filed by the Taylors. In July of 2000 the credit union applied for and received an Order for Relief from the automatic stay, obtained the vehicle and sold it for $6000.00. It was able to do exactly what it was entitled to do in the bankruptcy action and neither the bankruptcies nor the misrepresentations for which the defendant was convicted had any effect on the credit unions assertion of its rights as a secured lien holder other than it had to file a motion. If there were any deficiency the Catholic Credit Union was entitled to assert

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 3 of 9

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

that as an unsecured claim in the bankruptcy action. It did not do so. Based on the foregoing, Defendant submits that any loss by the Catholic Credit Union had nothing to do with any criminal conduct in this case. There is another reason that the Court should refuse to accept the amount alleged as an actual loss by the Catholic Credit Union; that is that the numbers alleged simply make no sense. The original amount financed by the Catholic Credit Union was $17,836.00. The loan called for Mrs. Taylor to pay interest in the amount of $4593.00 for a total amount of $22,430.00. Payments were in the amount of $373.00 per month beginning September 17, 1995 for 60 months. Assuming that Mrs. Taylor made payments through January of 2000, the date of the first 2000 bankruptcy, she would have made 51 payments. A total of 51 payments is $19,023.00. In addition the Catholic Credit Union received $6000.00 for the sale of the car. Under 2B1.1 application note 3(D)(i) actual loss shall not include interest, finance charges, late fees, penalties or other similar costs. Defendant asserts that the Catholic Credit Union received more than the principal financed in this case and is not entitled to any further restitution nor may this amount be included in the 2b1.1. actual loss calculation. Defendant further submits that the Government has failed to provide any evidence that would substantiate any restitution for the Catholic Credit Union in this case. IV: CRIMINAL HISTORY. Defendant has alleged that the 1980 alleged conviction cannot be counted in the criminal history in this case because the record does not establish that the Defendant was represented by counsel, there is no plea agreement and there is no waiver of counsel at the time any alleged plea may have been taken. Relying on U.S. v. Allen, 153 F.3d 1037 (9th Cir.) and U.S. v. Dominguez, 316 F.3d 1054 (9th Cir. 2003) the Government and probation allege there is a presumption that there was a valid waiver of counsel. These cases are distinguishable on their facts.

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 4 of 9

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

In U.S. v. Allen, supra., Defendant argued that an uncounseled prior conviction with a waiver could not be used to increase his criminal history. The court held that, while the defendant had raised the issue, the Government proved that there was a valid waiver of counsel in the prior proceeding. In U.S. v. Dominguez, supra., the Defendant also challenged the use of his prior conviction by challenging the validity of his waiver of counsel. The court held that the burden of proof is on the Defendant to show by a preponderance of evidence that his waiver of counsel was invalid. The distinguishing feature in these cases is that the challenged conduct was the waiver of counsel affirmatively shown on the record. These 9th Circuit cases rely on Park v. Riley, 506 U.S. 20 (1992) where the Supreme Court found that the Defendant carried the burden of proof in showing a violation of the Boyken requirements for a plea. The situation in this case is far different than those cases asserted by the Government. Both before and after the Park decision, the Court reaffirmed the holding of Burgett v. Texas, 389 U.S. 109 (1967) where it found that the failure to appoint counsel precluded the use of a prior conviction for any purpose. In Custis v. U.S., 511 U.S. 485 (1994) the court found that failure to appoint counsel is a unique constitutional defect rising to the level of a jurisdictional defect. Custis was subsequently cited and ratified in Lackawana County District Attorney v. Kaus, 532 U.S. 394 (2001). It is clear that the Supreme Court still embraces Gidgeon v. Wainright and the requirement that a Defendant must either have counsel or the record must show a valid waiver in order to avoid jurisdictional defects in a prior conviction. Certainly where there is a waiver of counsel at the finding of guilt stage the burden is on the Defendant to show that the waiver was invalid; however, where there is no waiver of counsel, no guilty plea proceeding, no plea agreement and no showing of appointment of counsel there is no presumption of regularity in the prior proceedings. The fact that the defendant may have waived counsel at a later probation violation hearing is of no consequence where there is no showing that he had or waived counsel prior to being found guilty of the underlying offense. Defendant asserts

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 5 of 9

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

that the failure of the record to show appointment of counsel or a valid record waiver at the time a guilty plea proceeding makes the prior conviction constitutionally infirm. V. MISDEMEANOR CONVICTION. Defendant has alleged that the misdemeanor conviction for flying without a license is similar to driving without a license and thus is precluded from the criminal history pursuant to §4A1.2(C)(1)(a). The Government argues without analysis that these offenses are not similar and that the Court should consider the facts alleged in the PSR as originally charged instead of the elements of the offense for which he was convicted. A conviction under a statute is similar to one of those listed in §4A1.2(C) is not counted as part of the criminal history. According to U.S. v. Lopez-Pastrana, 244 F.3d 1025 (9th Cir. 2001), this circuit has adopted two tests for determining similarity of offenses. Under U.S. v. Martinez (Clyde), 905 F.2d 251 (9th Cir. 1990) the issue involves the seriousness of the offense to determine whether it offers a basis for predicting future significant criminal activity. Under U.S. v. Martinez (Carlos), 69 F.3d 999 (9th Cir. 1995) the issue is to determine whether the activity underlying prior offense is similar to the activities underlying the listed offense. There is no case or guideline that looks at the underlying allegations of the police report to determine the similarity, and with good reason; this would require the court to make fact determinations not supported by the actual record and second guess the decisions of the parties regarding plea bargaining, the facts that might be proven and the conduct for which the defendant was actually responsible. In this case the defendant specifically denies that version of the events set forth in the PCR, as he did in the prior proceeding. Under either of the two Martinez approaches flying without a license is similar to driving without a license. Both are misdemeanors under Washington law, they have essentially the same elements and neither charge is an accurate predictor of future criminal conduct. The flying without a license charge cannot be counted under §4A1.2(C)1.

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 6 of 9

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

VI.

SERIOUS FINANCIAL FRAUD. At page 10 of its response the Government alleges that the Defendant engaged in

a "systematic pattern of criminal conduct involving various forms of financial fraud." It alleges that the court should take into account 8 criminal convictions including 4 felonies and 14 other contacts with law enforcement. The Government even alleges that the Court should take in account any civil lawsuits that the Defendant has been involved in. Contrary to the Government's vociferous response, the PSR only indicates two prior felony convictions that can be considered in the Defendant's criminal conduct for guideline purposes and one of those was obtained in violation of Defendant's constitutional rights to counsel. According to the PSR the Defendant's sole allegeable felony conviction occurred when he was 25 years old. He is now 51. The Government alleges no sentencing guidelines that the Court should consider taking into account its rhetoric. However, under U.S. v. Hahn, 960 F.2d 903 (1992), in order for the Government to meet its burden to show that prior activity was relevant conduct under the sentencing guidelines, it must show similarity, regularity and temporal proximity sufficiently to meet the relevant conduct guideline of §1B1.3. In this case none of the conduct alleged by the Government has temporal proximity, similarity or regularity as defined by Hahn. VII. DEFENDANT'S FINANCIAL STATUS. The PSR gives an incorrect picture of Defendant's assets and liabilities. First of all, the PSR lists a business inventory of $849,000.00. That inventory represents what the Defendant believed might be the fair market value of the surplus aircraft parts that he had available. He recently filed a statement of inventory adjustment that significantly knocked down what he believed was the value of some of the parts. Specifically, the Defendant wrote off a significant portion of the value of 300 oxygen regulators because the U.S. Government started selling the same product for $30 to $100. See Statement of Inventory

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 7 of 9

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

Adjustment attached hereto. His latest monthly business operating statements filed with the bankruptcy court show a total inventory as of October 14, 2005 of approximately $10,000.00. See attached business operating statement filed with the U.S. Bankruptcy Court. In addition, with respect to the monthly expenses, the PSR does not take into account the business expenses set forth in the monthly business operating statement. In that sense it is inaccurate. VIII. CONCLUSION. The Defendant stands before the Court convicted of failing to report prior bankruptcies in his Chapter 13 Petitions in full and failure to disclose his interest in an Automotive Dealership and an airplane he acquired after being in bankruptcy. Defendant admits that these are significant violations of federal law specifically with respect to the reporting requirements that are necessary for the proper functioning of the bankruptcy court. However, with the exception of Mr. Lal, his significant creditors, the IRS and his mortgage holder are fully secured and will obtain full payment of their interest in due course. The outcome with respect to these creditors most likely would have been the same if he had fully reported. With respect to the Catholic Credit Union, it appears that it has received full repayment of the principal that it loaned to the Defendant's wife prior to their marriage. Defendant requests that the Court take into account all of the factors in this case and place him on probation with restitution to Mr. Lal in the amount of $8500.00. RESPECTFULLY SUBMITTED this 14th day of November, 2005.

/S/ Cameron A. Morgan Cameron A. Morgan Attorney for Defendant

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 8 of 9

1 2 3 4 5 6 7 8 9 10 11 12

FILED ELECTRONICALLY this 14th day of November, 2005, with a copy automatically electronically mailed to: John Lopez Assistant United States Attorney COPY electronically mailed this 14th day of November, 2005, to: Honorable Neil V. Wake U.S. District Court [email protected] and faxed to: Elizabeth Gonshak-Peters U.S. Probation Officer 602-322-7409 BY: /s/ Dawn-Marie Kenney

13 14 15 16 17 18 19 20 21 22 23 24 25

Case 2:04-cr-00809-NVW

Document 102

Filed 11/14/2005

Page 9 of 9