Free Notice of Correction - District Court of Arizona - Arizona

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

UNITED STATES OF AMERICA, 5 6 7 8 9 Defendant. 10 11 12 13 14 15 APPEARANCES: 16 For the Plaintiff: 17 18 19 For the Defendant: 20 21 Court Reporter: 22 23 24 25 vs. JOHN RICHARD WOLFE, Plaintiff,

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NO. CR 04-539 PHX-MHM Phoenix, Arizona June 14, 2007 2:24 p.m.

REPORTER'S TRANSCRIPT OF PROCEEDINGS (Sentencing) BEFORE THE HONORABLE MARY H. MURGUIA

Howard D. Sukenic, Esq. Assistant U.S. Attorney Two Renaissance Square 40 N. Central Avenue, Suite 1200 Phoenix, Arizona 85004-4408 David G. Derickson, Esq. 3636 N. Central Avenue, Suite 1050 Phoenix, Arizona 85012-1955 Merilyn A. Sanchez, CRR Sandra Day O'Connor U.S. Courthouse 401 W. Washington Street SPC-37 Phoenix, Arizona 85003-2118 (602) 322-7250

Proceedings taken by stenographic court reporter Transcript prepared by computer-aided transcription

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P R O C E E D I N G S

THE COURTROOM DEPUTY:

Criminal case 04-539,

United States of America versus John Richard Wolfe, on for sentencing. MR. SUKENIC: Good afternoon, Your Honor, Howard
02:24:55

Sukenic on behalf of the United States. MR. DERICKSON: Good afternoon, Your Honor, David We are ready to
02:25:03

Derickson appearing on behalf of Mr. Wolfe. proceed. THE COURT: Please come forward.

Sir, you're John R. Wolfe? You're John R. Wolfe? THE DEFENDANT: THE COURT: your sentencing? THE DEFENDANT: THE COURT: Yes, Your Honor. Yes, Your Honor.
02:25:25

And do you understand we are here for

If you recall, it was on February the

7th of 2005 that you pled to Count 1 of the Indictment charging you with conspiracy, in violation of Title 18 of the United States Code, Section 371. guilty to that count on that date? THE DEFENDANT: THE COURT: Yes, Your Honor. Do you recall pleading
02:25:44

Let me ask you today if you have any
02:26:15

questions regarding your agreement with the United States.

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THE DEFENDANT: THE COURT:

No, Your Honor.

Let me ask you if you have any

questions regarding the change of plea proceedings that took place before Judge Anderson back in February of 2005. THE DEFENDANT: THE COURT: No, Your Honor.
02:26:41

Since the date of your plea, a It details the

Presentence Report has been prepared. offense conduct that took place.

It also details your Have you had a
02:27:00

personal, social, and criminal history. chance to read and review this report? THE DEFENDANT: THE COURT:

Yes, Your Honor.

And have you had sufficient

opportunity to review it and discuss it with your lawyer? THE DEFENDANT: THE COURT: Yes, Your Honor.
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And has Mr. Derickson been able to

answer all of your questions regarding the Presentence Report and your pending sentencing here today? THE DEFENDANT: THE COURT: Yes, Your Honor.

I know you must be very nervous being If you need any time or to take a
02:27:38

here for your sentencing. break, you let me know. THE DEFENDANT: THE COURT:

Yes, Your Honor. I, too, have read your

Okay.

Presentence Report and I've reviewed everything in the Court's file pertaining to you in anticipation of your
02:27:52

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sentencing here today.

I did not see any -- or -- well, the

Government -- I was going to say, I didn't see any objections to the Presentence Report from the defendant. And it appears the Government requested that certain factual points be included or clarified. been done. So let me ask, are there any objections to the Presentence Report from the defendant? MR. DERICKSON: Honor. THE COURT: MR. SUKENIC: Mr. -None other than what we lodged and There are none from us, Your
02:28:33

And it looks like that has

02:28:17

have been changed, Your Honor. THE COURT: Okay. I find that all of the factual
02:28:39

statements in the Presentence Report are supported by a preponderance of the reasonably reliable evidence, therefore, I adopt them and make them my findings of fact. Mr. Wolfe, based on my review of the plea agreement, it appears that the thrust of the plea agreement is that you were to plead guilty, and you have, to the conspiracy count and then the Government would move for a downward departure based on your substantial assistance. It also looks like the Government would be dismissing a more serious count of the money-related accounts related to the money laundering. Is that your

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understanding? THE DEFENDANT: THE COURT: Yes, Your Honor.

The guidelines are no longer

mandatory, the United States Sentencing Guidelines are no longer mandatory. I'm sure your lawyer has probably However, they are advisory. And
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discussed this with you.

the Court must and should consider them along with all of the other factors set forth in the Federal Sentencing Statute. A guideline calculation took place in your case and is set forth in the Presentence Report. I think you've
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had a chance to review it when you reviewed the Presentence Report. But let's just review it again here in open court.

Specifically, the offense level computation takes place on page 9 and goes on to page 10, and you'll see results in a total offense level of six. THE DEFENDANT: THE COURT: that? THE DEFENDANT: THE COURT: No, Your Honor.
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Is that your understanding? Yes, Your Honor.

Do you have any questions regarding

Next we review your criminal history And if I can note

as part of the guideline calculation.

here that the criminal history category is a category I, that's reflected on page 10 as well. understanding? Is that your
02:30:51

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THE DEFENDANT: THE COURT:

Yes, Your Honor.

Do you have any questions regarding

THE DEFENDANT: THE COURT:

No, Your Honor. With an offense level of
02:30:56

All right.

six and a criminal history category of I, the recommended guideline range of imprisonment is zero to six months. you understand that? THE DEFENDANT: THE COURT: Yes, Your Honor. At this time -- you are
02:31:13

Do

All right.

probation eligible with this guideline range. At this time, let me call upon your lawyer to see if there's anything that he would like to say on your behalf before I proceed with sentencing. Mr. Derickson, and would you like Mr. Sukenic to go first before you comment? MR. DERICKSON: THE COURT: Perhaps Mr. Sukenic can go first. Mr. Sukenic, if you could,
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Okay.

since there's a motion for downward departure, typically, I leave the Government to go at the end, but since there's a motion here for downward departure, I think it makes sense for you to go at this time. MR. SUKENIC: THE COURT: Yes, Your Honor. If you have any concluding
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statements, you can make any additional statements after I

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call on the defendant. So if you want to step aside, Mr. Sukenic can come forward. MR. SUKENIC: Judge, we filed a fairly
02:32:13

substantial sentencing memorandum and downward departure request. Just to -- you can tell Mr. Wolfe is pretty shook

up and I think he's been shook up since the day that he's been indicted. But he knew this Indictment was coming. In

fact, Mr. Wolfe, out of all of the defendants in this case, is the one that I admire the most for stepping forward and taking responsibility for his actions. Presentence Report was well written. I think the I think the
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recommendations in the Presentence Report were correct for probation. There really wasn't any reason for the Government to move for a downward departure given where Mr. Wolfe is situated, the Court can sentence him to probation. are asking this Court to sentence him to probation. Restitution is not an issue in this case. THE COURT: I would like for you to highlight
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But we

here in open court why you -- what the level of his cooperation was and if you could go over the factors. MR. SUKENIC: Oh, sure. And, Judge, I could

refer to my sentencing memorandum, which I filed in the early part of this month. He was the -- first of all, when
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New Horizon Capital, which was the successor to ABF, which was the factoring company brought suit against Mr. -- among others, Mr. Tullo, Mr. Monteleone and Mr. Nova, Mr. Wolfe testified during depositions and I believe at trial. brought forth truthful testimony, which was actually damaging to him because he was operating with the day-to-day issues of the criminal enterprise. His testimony, I believe, was essential in New Horizon Capital securing a verdict from the bankruptcy court in that case. That led to ultimately a financial settlement between New Horizon Capital and primarily Mr. Tullo, the YP Net stock and the money we've talked about before. Mr. Wolfe agreed to a judgment. executed. But also
02:34:01

He
02:33:43

The judgment has never been
02:34:18

And I don't believe it's New Horizon Capital's But he took

intent to ever execute on the judgment. responsibility.

He also took responsibility because he was the first defendant in a six-defendant criminal case who came forward to the Government on July 19th, 2004, was extensively debriefed in my office. Given the complexity of this case, Your Honor, and the fact that everybody was pointing fingers at each other, it was essential to have people such as Mr. Wolfe guide the Government through the documents and to allow us
02:34:47 02:34:30

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to assess the culpability of each defendant. I believe that Mr. Wolfe, other than that, I have enumerated several things in my sentencing memorandum which is filed with this Court. And if the Court has any
02:35:07

questions, I'll leave it with that. THE COURT: Thank you.

All right, Mr. Derickson, is there anything you would like to say on behalf of your client? MR. DERICKSON: Yes, there is, Your Honor. He brought with him
02:35:22

Mr. Wolfe came to me in the year 2000.

an affidavit that he had signed at the request of an attorney representing a victim or victim group in which he admitted that he had been involved in this scheme that led to the loss of money. And the question at that particular And as I looked at the case,
02:35:49

point in time was how much.

and looked at who all was involved in the case at that particular point in time and recognized that Mr. Wolfe had been very courageous in signing the affidavit that he had at that particular point in time without counsel. As we proceeded, it was obvious that that affidavit was going to be a factor in the future of what was going to happen to the case. created by a police contact. admissible. THE COURT: Can you speak into the microphone.
02:36:36 02:36:16

It wasn't a statement that was So it was going to be

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MR. DERICKSON:

Yes.

He and I discussed the --

he and I discussed the aspect of what he had done at that particular point in time. We then were in contact with the And
02:36:52

lawyers who were representing various victims.

Mr. Wolfe made the decision that he should cooperate with them and provide information. I made the effort, as far back as the year 2000, to get in touch with several federal authorities, which we did. And we discussed the matter as far back as that point.

We also discussed it with the United States Attorney, I think, in the year 2001. But in any event, there wasn't any

02:37:20

agreement that was forthcoming that would prevent or preclude Mr. Wolfe's facing federal charges. Despite that, Mr. Wolfe felt that it was -- it was something that he needed to do, which was to go ahead and testify on behalf of the victims as to the extent of the problems that Mr. Tullo and Mr. Monteleone had created over the course of a period of time. He continued to want to cooperate because he felt it was his obligation. He felt it was his moral obligation.
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And I explained to him that he had some very serious legal consequences to exercising his moral obligation. felt that he should go ahead regardless of that. I felt strong enough -- strongly enough about Mr. Wolfe that I continued representing him throughout the
02:38:28

And he

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years and I felt that even though he really could not pay my services, I was concerned about what might happen to him if he got -- if he was not properly represented somewhere along the line, because it was a very dangerous situation he found himself in. Mr. Wolfe continued cooperating. And as
02:38:52

Mr. Sukenic has pointed out, he provided a pretty good map of what had happened and how it had happened and explained in terms that we understood how it had been done. This was a complex process. And it was going to
02:39:18

be extremely complex, I felt, from a plaintiff's standpoint, a civil plaintiff's standpoint or a government plaintiff's standpoint to present the case. He -- he has always continued working with the Government on this matter. And he has continued his life.
02:39:41

He works for Home Depot, has worked for Home Depot for a number of years. He is going to change jobs now hopefully,

but he's basically, as the Government says, a decent individual who allowed himself to be manipulated. It happened at a time when he was going through some tremendous personal crisis. His wife had died. He
02:40:03

took the proceeds from the life insurance policy, invested it in this case, in these -- in these particular enterprises and, of course, lost all that. I think that the past seven years have been a
02:40:24

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real difficult period for him. difficult.

And they will continue to be

But at this particular juncture, as Mr. Sukenic He has done

has pointed out, he has been fully cooperative.

what you would expect a person in his position to do and a lot more. I think Mr. Sukenic's request for downward departure is well written. I would not have been able to And I ask the
02:40:48

write as persuasive a statement as he has.

Court to go along with his request and the probation report in this particular case. well written. I think the probation report was
02:41:16

I know that the matter was well investigated. Thank you.

THE COURT:

Mr. Wolfe, you have a right to speak before sentence is imposed. If you wish to make any statement to
02:41:33

the Court, now is the time to do so. THE DEFENDANT: THE COURT: I have no statement, Your Honor. And, Mr. Sukenic, do you

All right.

have anything else to add at this time? MR. SUKENIC: THE COURT: Nothing additional, Your Honor. Mr. Wolfe, let me review with you
02:41:50

here in open court the factors that I referred to previously as the federal sentencing factors and what the Court must consider in determining what a fair and just sentence should be in this case under your circumstances. I am to look at
02:42:14

the nature and circumstances of the offense and your history

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and your characteristics and impose a sentence that reflects the seriousness of the offense, promotes respect for the law, provides just punishment, affords adequate deterrence, and protects the public from further crimes and provides you with the necessary care and training. As a judge of this Court, I see a lot of crimes, some of them violent crime offenses where people are physically injured, which are very heinous and disturbing. And I see white collar offenses. offenses of this magnitude. I rarely see white collar
02:43:21 02:42:36

This coordinated with the

intent clearly to deceive investors and where there's so much lost by the investors, 19 million dollars based on this scheme is obviously a very serious offense. This was a

long-term, sophisticated fraud scheme which bilked the investigators of a remarkable -- investors of a remarkable amount of money. And it appears that this was done by the
02:44:12

conspirators involved, of which you are one, to benefit from it. So even though it's not a violent crime, there was a lot of harm here done to the investors and to the community. In looking at your history and your characteristics, I note that your role in this offense is not that of some of the others which were more culpable, had more responsibility, were more senior and were more
02:45:07 02:44:42

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supervisory.

In fact, yours was a lower-level role.

You

were a salaried employee. the car that you drive.

Your benefits were the salary and This was noted in the Presentence

Report, the car that you drove while you worked for this organization, this company. But your participation
02:45:28

consciously contributed to the fraud. It appears that your cooperation was very important to the Government and it's impressive that you were the first to come forward and that you played a critical role in navigating what had occurred for the investigators and the prosecutors and the Government. appears that your cooperation was extensive in nature. It It
02:46:00

was useful as has been identified by Mr. Sukenic here today and also in the pleading that he submitted to the Court. Your extensive debriefing that occurred on 2004 -- in July of 2004 was of extreme importance. This is
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a complicated case and one that involved several, several documents, boxes of documents. And your willingness to come

forward as you did and to come forward as completely as you did was of significant help to the United States. It appears that you were truthful and reliable and the Government was able to corroborate by other witnesses and the evidence what you had told them. And
02:47:05

because you were the office manager and accountant for HVAC, and had handled the account receivables and payables and
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prepared monthly statements for the businesses, you were able to discuss with the investigators how they were fabricated in order to bolster the company's financial picture and what the roles were in your perspective of some of the other individuals involved. You were helpful in
02:48:05

describing where the money -- how the money was coming and going, and how the funds were being sent that were involved here. And you did this -- any time someone does this, they do this at a risk of some form of retribution by the other codefendants. And so it's appropriate to take that And it appears again, since you
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into account at this time.

were the first to come forward, that your cooperation and the information you provided was very timely and exposed yourself to a wide level of criminal prosecution. So as disconcerting and disturbing as the facts are here and the level of loss involved, and your participation, it appears that you have suffered a great deal already before sentence is imposed and that you have recognized that this was a significant mistake to continue to be involved in this scheme after you knew it was wrong. You've clearly benefited from the plea agreement and that you were not charged with the more -- or not -- you did not plead guilty to the more serious offenses. And it
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looks like you lost a significant amount of funds yourself,

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$150,000, hoping or thinking that the business was going to be legitimate at some point in time. So in factoring in all of those items, I find that pursuant to the Sentencing Reform Act of 1984, it is the judgment of this Court that you, John R. Wolfe, be hereby placed on probation for two years. You shall pay a
02:50:43

special assessment of $100 which shall be due immediately. I find that you do not have the ability to pay a fine and I order the fine waived. While on probation, you shall comply with the standard conditions of supervision adopted by this Court in General Order 05-36. Of particular importance is you shall
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not commit another federal, state, or local crime during the term of supervision. is suspended. The mandatory drug testing provision
02:51:21

And you shall comply with the following You shall submit your

additional conditions, Mr. Wolfe:

person, property, including but not limited to computer, electronic devices and storage media, residence, office, or vehicle to a search conducted by a probation officer at a reasonable time and in a reasonable manner. You shall
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provide the probation officer access to any requested financial information. You are prohibited from making major

purchases, incurring new financial obligations or entering into any financial contracts without the prior approval of the probation officer.
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You shall notify all future employers related to sales, obtaining investors, accounting and office management of your conviction. Let me advise you, sir, that ordinarily a right to appeal a sentence exists even if you plead guilty, but you waived your right to appeal in the plea agreement and such a waiver is enforceable. If you believe the waiver is
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unenforceable or inapplicable, then you can present that issue to the appellate court by taking an appeal. Any
02:52:28

appeal must be taken within the ten-day time period allowed by Rule 4(b) of the rules of appellate procedure. If you cannot afford to pay for an appeal, you may ask to appeal at public expense by applying for leave to proceed in forma pauperis. If you request it, the Clerk of

the Court will file a Notice of Appeal on your behalf. You were looking at lesser time than the others because of your role. However, what was critical here for

02:52:43

you, Mr. Wolfe, was your extensive and full and immediate cooperation. sentence. I find that this is an appropriate and just
02:53:16

I want to believe and hope that you have learned And I believe that the

a significant and difficult lesson.

lessons that you have learned here will deter you and so this sentence is appropriate to deter you from any future criminal conduct and protects the public from any further crimes.
02:53:43

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Are there any counts that need to be dismissed? MR. SUKENIC: Yes, Your Honor. The rest of the

counts alleged against this particular defendant in the Indictment shall be dismissed upon order of the Court and the allegation of forfeiture. THE COURT: are hereby dismissed. Is there anything else, Mr. Derickson? MR. DERICKSON: Nothing else, Your Honor. I am
02:54:06 02:53:55

Those items -- the rest of the counts

going to advise him that he is to go to the probation department this afternoon. THE COURT: From here to the probation

Thank you.

We will be in recess.

(The court stood in recess.) * * *

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C E R T I F I C A T E

I, MERILYN A. SANCHEZ, do hereby certify that I am duly appointed and qualified to act as Official Court Reporter for the United States District Court for the District of Arizona. I FURTHER CERTIFY that the foregoing pages constitute a full, true, and accurate transcript of all of that portion of the proceedings contained herein, had in the above-entitled cause on the date specified therein, and that said transcript was prepared under my direction and control.

DATED at Phoenix, Arizona, this 11th day of June,

S/Merilyn A. Sanchez MERILYN A. SANCHEZ, CRR

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