Free Sentencing Memorandum - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10

DANIEL G. KNAUSS United States Attorney District of Arizona HOW ARD D. SUKENIC Assistant U.S. Attorney Arizona State Bar No. 011990 United States Attorney's Office Two Renaissance Square 40 North Central Avenue, 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. Margaret Molter, RESPONSE TO DEFENDANT'S SUPPLEMENTARY OBJECTIONS AND GOVERNMENT'S SENTENCING RECOMMENDATION CR 04-0539-06-PHX-MHM

11 12 Defendant. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

GOVERNMENT'S RESPONSE TO DEFENDANT'S OBJECTIONS TO THE DRAFT PRESENTENCE REPORT: The government has reviewed the defendant's objections and responds as follows: The Offense Conduct: ¶ 11 The government has asserted throughout this prosecution that defendants Tullo and Monteleone each owned 37.5 % of ABF apiece. The government has no evidence of ownership on the part of defendant Nova or Mr. Kockerback. ¶ 13 The defendant is absolutely incorrect. Defendant Tullo dictated the creation of the accounts and others, such as defendant Wolfe and defendant Molter, assisted in the actual creation. For example, as an illustration of defendant Molter's knowledge, she signed as the account holder on the U.F. Distribution Inc. account at Bank of America (See Exhibit A attached hereto and incorporated for reference). ¶ 15 The government is uncertain how to respond as defendant's objection is inconsistent with the contents of this paragraph in the Draft PSR. In response to the objection however,

Case 2:04-cr-00539-MHM

Document 251

Filed 10/25/2007

Page 1 of 5

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

Personnel Management Solutions of Arizona was funded by ABF money and defendant Molter was an active participant in the ABF conspiracy. Therefore, even if the objection is correct, this is nothing but form over substance. Culpability Assessment ¶ 35 The government, in settling this complex matter, has agreed that the victim-investor representatives of the successor corporation, NHC, defined the loss, for advisory Guideline sentencing computations, when they settled for cash and stock in Y.P. Net. That amount is approximately $7.2 million. The government however, disagrees with the defendant as to the amount of investor funds that were obtained during the ABF portion of the conspiracy. The government supports the figure of approximately $19.2 million as stated in the Draft PSR. To assist this Court, the government provides a a summary of the funds traced (attached hereto and incorporated for reference as Exhibit B). The first page traces $36,175,491 from the ABF accounts and disbursements from those accounts. Some disbursements, such as "Investor Distributions," are "Ponzi" payments. Also, as a good illustration of how funds were distributed to promote the ongoing illegal enterprise and re-pay earlier factors who had a relationship with HVAC, the government directs the Court to the items referencing "HVAC" payments. ¶ 37 The government, in settling this complex matter, has agreed that the victim-investor representatives of the successor corporation, NHC, defined the loss, for advisory Guideline sentencing computations, when they settled for cash and stock in Y.P. Net. That amount is approximately $7.2 million. The government agrees with the Presentence writer that the defendant should be held accountable for the financial gain that defendant received. This amount is $168,219.57 (See Exhibit C attached hereto and incorporated for reference). However, the government mistakenly wrote $166,219.57 in the plea agreement and therefore is bound by this figure. The source of the funds traced to this defendant were obtained through the fraudulent scheme. The defendant has not demonstrated that she obtained these funds

legitimately. To the extent that defendant can demonstrate that she received funds for legitimate work and also, compensation for medical bills, the government has always been open to 2

Case 2:04-cr-00539-MHM

Document 251

Filed 10/25/2007

Page 2 of 5

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

considering this alleged evidence. The defendant has yet to provide specific documentation to prove these claims. ¶ 45 The government leaves the application of this enhancement to the discretion of the Court. Ms. Molter is arguably the least culpable of all of the defendants. However, she still actively and knowingly engaged in fraudulent conduct that was essential to the execution of the conspiracy, albeit at the direction of co-defendant Tullo. The government has read the sections of the Guidelines cited by the defendant but asserts that defendant is comparing apples to oranges. More than minimal planning and sophisticated means are separate and distinct enhancements. ¶ 47 The government agrees with defendant's assertion that she should be eligible for a greater reduction than that afforded by the definition of minor participant under U.S.S.G. § 3B1.2(b). The government disagrees with defendant's attempt to characterize the criminal activity as "the scheme created by Mr. Monteleone," but that is form over substance as to this particular objection and the government has addressed the topic in this and other related pleadings. As far as actual activity in the conspiracy, defendant Molter can be considered the least culpable. The government submits that defendant should be considered a minimal participant under U.S.S.G. § 3B1.2(a) and, as a result, have her Offense Level reduced by four levels. ¶ 49 and ¶ 51 If the Court does not apply the enhancement for sophisticated means and agrees that the defendant should be considered a minimal participant, the Total Offense Level would be 9. The government, in considering all of the defendants and their actions compared with those of defendant Molter, would be comfortable with this figure. GOVERNMENT'S SENTENCING RECOMMENDATION: This defendant, albeit a willing participant in the criminal conspiracy, is the least culpable of the six defendants charged. Although this defendant did not enter into a plea with the benefit of a cooperation agreement, defendant's position in the conspiracy puts her at a level below defendants Wolfe and Guttentag. Both of those defendants have previously been sentenced by 3

Case 2:04-cr-00539-MHM

Document 251

Filed 10/25/2007

Page 3 of 5

1 2 3 4 5 6 7 8 9 10 11

this Court to, among other things, a term of probation. It is important for this defendant to be held accountable for her actions and that her sentence be consistent with those equally situated. In this case, the government is requesting that this Court sentence defendant Molter to a term of supervised probation. This can be achieved by not applying certain sentencing enhancements and making an adjustment for Role in the Offense. This may also be achieved by this Court by allowing a variance afforded under 18 U.S.C. § 3553(a).

Respectfully submitted this 25th th day of October, 2007. DANIEL G. KNAUSS United States Attorney District of Arizona S/ Howard D. Sukenic

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 Howard D. Sukenic Assistant U.S. Attorney

Case 2:04-cr-00539-MHM

Document 251

Filed 10/25/2007

Page 4 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 S/ Howard D. Sukenic 16 HOWARD D. SUKENIC 17 18 19 20 21 22 23 24 25 26 27 28

CERTIFICATE OF SERVICE I hereby certify that on October 25, 2007, 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: David R. Appleton 8711 E. Pinnacle Peak Rd., #109 Scottsdale, Az. 85255 Michael D. Kimerer Kimerer & Derrick, P.C. 221 E. Indianola Ave. Phoenix, Az. 85012 David C. Derrickson 3636 N. Central Ave., Suite 1050 Phoenix, Az. 85012 Mark W. Nebgen Senior U.S. Probation Officer Sandra Day O'Connor Courthouse 401 W. Washington, Suite 260 Phoenix, AZ 85003 Jess A. Lorona Ducar, Lorona & Parks 3003 N. Central Ave., Ste 1800 Phoenix, Az. 85012 Michel B. Bernays 3839 N 3 rd St., Ste 400 Phoenix, Az. 85012

5

Case 2:04-cr-00539-MHM

Document 251

Filed 10/25/2007

Page 5 of 5