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

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MICHAEL B. BERNAYS State Bar No. #007057 3839 N. 3rd Street, Suite 400 Phoenix, Arizona 85012 Phone: 602-254-5544 Fax: 602-254-9263 E-mail: [email protected] Attorney for Defendant Molter UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA UNITED STATES OF AMERICA, Plaintiff, vs. MARGARET MOLTER, Defendant. ) ) ) ) ) ) ) ) ) ) No. CR 04-00539-PHX-MHM

OBJECTION TO PRE-SENTENCE REPORT

The Defendant, Margaret Molter, through counsel Michael B. Bernays, hereby objects to the draft pre-sentence investigation report dated May 7, 2007, and moves the Court to sustain these objections, all for the reasons set for in the accompanying memorandum of points and authorities. RESPECTFULLY SUBMITTED this 9th day of July, 2006.

/s Michael B. Bernays

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I.

MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Margaret Molter has entered into a plea agreement with the government to resolve this outstanding case. In it, she agreed to plead guilty to one count of conspiracy in violation of 18 USC § 371. As part of that plea agreement, the government agreed that it will recommend probation, that the loss attributable to Ms. Molter will not exceed $166,219.57 and that she should receive a reduction for her role in the offense as either a minimal or minor participant. The parties also agreed that, while restitution may be determined to be owing, it shall be limited to that amount which has already been paid to the victims of these offenses. Thus, no restitution is actually to be ordered. On May 7, 2007, the Adult Probation Office completed a draft pre-sentence report concerning Ms. Molter. Ms. Molter has, this date, filed a joinder in certain objections raised by co-defendant, Angelo Tullo, to the General Offense Conduct descriptions set forth in their respective pre-sentence reports. Additionally, Ms. Molter raises the following objections to her pre-sentence report. II. OBJECTIONS Ms. Molter objects to the statement in ¶ 11 that Tullo and Monteleone alone created and owned American Business Funding. In fact, co-defendant James Nova and one Conrad Kockerbeck were additional owners of American Business Funding. Ms. Molter objects to that portion of ¶ 13 which described the creation of nonexisting customers for HVAC as having been done by Tullo, Nova, Wolf and Molter. All of the fictitious accounts were created by co-defendant, Monteleone, though he may have utilized others within the business to (perhaps unwittingly) further his efforts at creating fictitious accounts. Ms. Molter objects to ¶ 15 of the pre-sentence report to the extent that it suggests that Ms. Molter was employed by American Business Funding (ABF). Ms. Molter was never employed by ABF, she was employed by a company know as Personnel Management Solutions of Arizona and worked for Angelo Tullo, Gene Monteleone, James

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Nova and Rick Wolfe in that capacity. Ms. Molter objections to ¶ 35 on the same basis as her previously joined objections with Mr. Tullo, to ¶ 10 in that the representation that investors lost 17.6 million dollars is exaggerated. Ms. Molter believes the figure was approximately 7 million dollars of which all money was paid back with restitution and there where no victims. Ms. Molter objects to ¶ 37 to the extent that the $168,219.00 attributed to her exceeds that amount stipulated to in ¶ 2-B of the plea agreement, and more importantly and more substantively, on the grounds that that figure includes her salary from Personnel Management Services of Arizona for work she was legitimately performing having nothing to do with fraudulent activities. Moreover, to the extent that that figure includes monies paid to Ms. Molter as compensation for an auto accident for which she should have been covered by disability insurance but (due to her superiors not making the disability insurance payments) was not, this figure is inflated as those payments did not involve the charged fraud at all. Ms. Molter also objets to ¶ 45 which attributes an additional two level for the offense involving sophisticated means under Unites States Sentencing Guidelines (USSG) § 2F1.1(b)(5)(C). The objection is based on the commentary in the 1998 guidelines to § 2F1.1(b)(5)(C) which states, in application note 15, that "the enhancement for sophisticated means under subsection (b)(5)(C) requires conduct that is significantly more complex or intricate that the conduct that may form the basis for an enhancement for more than minimal planning under subsection (b)(2)(A)". The "more than minimal planning" enhancement is defined in USSG §1B1.1, application note 1(f). In that section, in the final paragraph, when discussing embezzlements, the application note states that "on the other hand, creating purchase orders to, and invoices from, a dummy corporation for merchandise never delivered will constitute more than minimal planning, as would several instances of taking money each accompanied by false entries." This definition of what "more than minimal planning" entails is precisely what took place in the instant offense; what makes it seem more egregious is the amount of money involved, not the

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sophistication of the scheme. Thus, under application note 15 of § 2F1.1, we do not have conduct significantly more complex or intricate than that which forms the basis for the "more than minimal planning" enhancement, and therefore defendant Molter objects to the additional offense characteristic under § 2F1.1(b)(5)(C). Ms. Molter objects to ¶ 47 for assigning only a minor participant downward adjustment to her actions. Ms. Molter was never an officer or director of ABF, and her role in incorporating HVAC took place long before any fraud was committed. It is clear from the factual posture of this case that Ms. Molter was an absolute minimal participant, opening one bank account and notarizing several documents, with no understanding of the overall extent of the scheme created by Mr. Monteleone. To describe her merely as having a minor role does not do justice to the facts of this case, nor does it acknowledge that Ms. Molter was out of state for a portion of the charged scheme and was off work, both hospitalized and at home, following a serious automobile accident during another major time frame during this scheme. There has never been any allegation that Ms. Molter created the scheme or made any direct or personal profit from it above and beyond being paid by the company that was fraudulently obtaining the resources used to pay her. Counsel would urge the Court to find that her actions are "plainly among the least culpable of those involved in the conduct" of this group. See USSG § 3B1.2, application note 1. Counsel would urge the Court to find that her role was in fact minimal and not merely minor. Ms. Molter object to ¶49, adjusted offense level, on the grounds that it includes two points from ¶ 45 to which Ms. Molter has objected and fails to include an additional two point downward adjustment in ¶ 47. Ms. Molter therefore urges the Court to find that the appropriate adjusted offense level is 11. Likewise, Ms. Molter objects to ¶ 51, total offense level on the same basis and urges the Court to find that that level should be level 9. Ms. Molter objects to ¶ 88 in its suggestion that there are no circumstances which would warrant a departure from the advisory guidelines, level. Counsel would urge the Court to find that the monetary assessments used to set the offense characteristics in ¶ 43,

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overrepresents Ms. Molter's criminality in that these monies, however counted, did not constitute direct into - her - pockets type proceeds of crime from the fraud but, rather, represented payments of salary and insurance proceeds to which she was otherwise fully entitled; the attachment of the fraudulent label to these proceeds arises from the illegitimacy of some of the projects undertaken by the company for which she worked. In other words, it is not as though Ms. Molter received a check from one of the defrauded companies and deposited it directly into her own account for her own benefit. Instead, ABF received those checks, deposited them to, among others, their operating account and paid Ms. Molter's salary through Personnel Management Service of Arizona with those funds. Counsel would urge the Court to find that this over representation of criminality in the 7 level increase required by § 2F1.1(b)1(H) does warrant a departure from the advisory guidelines. RESPECTFULLY SUBMITTED this 9th day of July, 2006.

/s Michael B. Bernays

Copy of the foregoing e-mailed via ECF this 9th day of July, 2006 to: Howard Sukenic Assistant United States Attorney Two Renaissance Square 40 North Central, Ste. 1200 Phoenix, AZ 85003 David C. Derickson 3636 North Central, Ste. 1150 Phoenix, AZ 85012 Attorney for Defendant John R. Wolfe Michael D. Kimerer 221 East Indianola Phoenix, AZ 85012 Attorney for Defendant Angelo Tullo Dave Appleton

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8711 East Pinnacle Peak Rd., #109 Scottsdale, AZ 85255-3517 Attorney for Defendant Gene Monteleonee Jess A. Lorona 40 North Central, Ste. 2800 Phoenix, AZ 85004 Attorney for Defendant James Nova /s Michael B. Bernays

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