Free Motion for Departure - District Court of Arizona - Arizona

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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, CR 04-0539-PHX-MHM Plaintiff, v. Allan Guttentag (04), GOVERNMENT'S MOTION FOR DOWNWARD DEPARTURE AND OR VARIANCE, OBJECTIONS TO PRESENTENCE REPORT, RESPONSE TO DEFENDANT'S OBJECTIONS TO PRESENTENCE REPORT, AND SENTENCING RECOMMENDATION

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

The United States of America, by and through undersigned counsel, respectfully moves, pursuant to 18 U.S.C. § 3553(a) and (e), 28 U.S.C. § 994(n), and U.S.S.G. § 5K1.1 for this Court to depart downward from the minimum sentence dictated by the Sentencing Guidelines
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statute for the offense to which the above defendant has entered a guilty plea. In support of its motion, the government states as follows:

As the Sentencing Guidelines are advisory, this Court has complete discretion to impose a sentence within the statutory limits. The Government is requesting that this Court exercise its discretion to sentence the defendant in a manner commensurate with his cooperation in the prosecution.

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LAW: Section 5K1.1 of the Sentencing Guidelines allows the court to depart downward in the defendant's sentence for his substantial assistance to the government. The appropriate reduction shall be decided by the court after consideration of certain factors. Those factors include, but are not limited to: (1) the court's evaluation of the significance and usefulness of the defendant's assistance, taking into consideration the government's evaluation of the assistance rendered: (2) the truthfulness, completeness, and reliability of any information or testimony provided by the defendant; (3) the nature and extent of the defendant's assistance; (4) any injury suffered, or any danger or risk of injury to the defendant or his family resulting from his assistance; and (5) the timeliness of the assistance.

12 ARGUMENT: 13 1. SIGNIFICANCE AND USEFULNESS OF THE ASSISTANCE. 14 The defendant's assistance was significant and useful. This defendant was able to provide 15 a substantial illustration of all of the facets of the conspiracy and the fraudulent activity that 16 resulted. This was an extremely complicated case and one that involved voluminous documents. 17 Mr. Guttentag participated in a series of debriefings. His assistance was essential by, among 18 other things, verifying the creation of fraudulent entities used to perpetrate the fraud, analyzing 19 complicated documents to establish their foundation for their admission and certifying the roles 20 of each defendant in order to assess levels of culpability. 21 2. 22 The government believes the defendant's information was truthful and reliable. The 23 defendant's testimony in the preceding civil action and the information that he provided to the 24 government was corroborated by other witnesses or through evidence gathered during the 25 investigation. 26 27 28 TRUTHFULNESS, COMPLETENESS AND RELIABILITY OF INFORMATION.

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NATURE AND EXTENT OF DEFENDANT'S ASSISTANCE. As set forth above, defendant provided substantial information and testimony detailing the

inner workings of the conspiracy and the other criminal acts. Defendant's information, and his willingness to participate as a witness for the government was enough, in the government's view, to constitute substantial assistance worthy of consideration from this Court. Among other things, Mr. Guttentag specifically delineated his role in the conspiracy and the specifics of the fraudulent scheme in a notarized memorandum he made available in January, 2000, to attorneys representing the investors, more than four years before he was indicted. In it he advised, among other things, that he had been directed to incorporate certain corporations (which were subsequently used to defraud investors as their names resembled large well known corporations), as well as open bank accounts and mail boxes for them. He described how he was instructed to create invoice layouts which were then used for the creation of fraudulent invoices to enhance the financial appearance of ABF and how due diligence files were fraudulently created. He was also able to review documents and identify those which contained forged signatures as well as those which were fraudulently created. B) He met with the government and was debriefed at least one time before he was indicted. C) He met with the government twice after indictment where he candidly answered questions, identified documents, and clarified various details of the acts carried out in furtherance of the scheme. D) He was voluntarily deposed in May 2002, in the civil matter arising from the fraud and candidly answered questions specifically detailing the scope and breadth of the scheme well before the 2004 indictment and with no protection from criminal prosecution. Appearing without counsel at the deposition, Mr. Guttentag was preliminarily asked about his willingness to answer to questions: Q: Do you presently have any kind of plead arrangement (sic) with the United States Attorney's Office: A: No.

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Q: Do you currently have a settlement agreement with my firm or my client, New Horizon Capital [the successor entity to ABF after Tullo was forced out]. A: I do not. Q: Without a deal from the U.S. Attorney's office you are still willing to testify today - A: Yes. Q: - - is that right? Do you consider yourself to be taking some risk by doing so? A: Yes. Q: Why are you willing to testify today without some kind of arrangement with the U.S. Attorney's office? A: It falls under the trite statement of the right thing to do. Q: What do you mean by that? A: There were actions and events that occurred in period of 1997 to 1999 that I was not proud of, didn't agree with, went essentially counter to my basic makeup. And while I certainly hope I'm not falling on my sword, so to speak, by discussing those actions, I can only hope that doing the right thing within a moral context leads to a decent outcome for me. Deposition, May 25, 2002, In Re American Business Funding Corporation, pp. 14-15. E) He voluntarily testified at the civil trial in September, 2002, for approximately one and one-half days. He met with counsel for the investors in the evenings, after court, to clarify their questions. F) He spent countless hours explaining, detailing, and walking the attorneys and their investigators through the accounting nuances. For example, he described how the journal entries regarding these transactions were accomplished. 4. INJURY, DANGER OR RISK OF INJURY SUFFERED BY THE DEFENDANT OR HIS FAMILY AS A RESULT OF THE ASSISTANCE. When a defendant cooperates against any target, there is always a possibility of threats of violence and/or injury to the defendant. Although the government could not assess any physical

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danger, Mr. Guttentag expressed fear of Mr. Tullo to the government. The Court may take this factor into account in reaching an appropriate sentence. 5. TIMELINESS OF ASSISTANCE. As previously illustrated, the defendant cooperated, well before he was indicted, in the civil action initiated by the investors in ABF who now control the successor corporation NHC. The defendant admitted his culpability and exposed himself fully to a criminal prosecution. In the matter at hand, the defendant allowed sufficient time to be debriefed and his assistance was fully utilized. His agreement to cooperate therefore was timely. VARIANCE (18 U.S.C. §3553 (a) FACTORS): The defendant does not have a criminal history of any sort and is not likely to re-offend. From the government's perspective, after reviewing all of the material and extensively debriefing defendant Guttentag, defendant Guttentag was used as a pawn by defendant Tullo. Although Mr. Guttentag is an educated man and certainly knew right from wrong, he is not a strong person and his will seems easily overborne. It is true that this defendant participated in a complicated financial conspiracy and that his participation was vital in carrying out the criminal acts however, he must be viewed as an individual who did what he was told and did not profit other than what was paid to him in salary. The offense to which he plead is serious but his cooperation was extraordinary. As previously stated, Mr. Guttentag fully cooperated with the victims in their civil suit and also cooperated with the government. Because of his cooperation this prosecution was very

successful. His cooperation must be taken into account when this Court decides what is a just punishment.

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GOVERNMENT'S RESPONSE TO DEFENDANT'S OBJECTIONS TO THE DRAFT PRESENTENCE REPORT: The government has reviewed the defendant's objections and does not oppose their

3 position. 4 GOVERNMENT'S OBJECTIONS TO THE DRAFT PRESENTENCE REPORT: 5 The government does not have substantive objections. However, the government wishes 6 to clarify certain factual points as follows: 7 1. ¶6 should be corrected to reflect that defendant Guttentag was charged with participation 8 in the Money Laundering Conspiracy and not the substantive Money Laundering counts. 9 2. ¶9 should be corrected to reflect that defendants Tullo and Nova created the fraudulent 10 accounts receivables in the "HVAC" portion of the conspiracy and as to the "ABF" portion of 11 the conspiracy, only defendants Tullo and Monteleone solicited investors. 12 3. ¶10 should be corrected to reflect that defendant Nova served as president of HVAC and 13 that solicitation of investors was done by both defendants Tullo and Monteleone. 14 4. ¶13 should be amended to state that "ABF was created in part to facilitate a payoff to the 15 factor before the fraud was discovered. 16 5. ¶29 should be amended to reflect that both Monteleone and Tullo solicited funds from 17 investors. 18 6. ¶31 should be amended to state that Guttentag created investor reports. 19 GOVERNMENT'S RECOMMENDATION: 20 The defendant has admitted responsibility for his participation in the criminal conspiracy. 21 His assistance was essential in both the civil litigation and the subsequent criminal prosecution. 22 If the Court accepts the plea agreement reached by the parties and follows the calculations in the 23 pre-sentence report, the defendant's total offense level would be at 12. The government submits 24 that defendant has shown an appropriate acceptance of responsibility (U.S.S.G. § 3E1.1(a)) and 25 should be credited with a reduction of two offense levels. 26 enhancement for "more than minimal planning" must also be discounted for the reasons stated 27 28 6 Furthermore, the two level

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above. The defendant did not direct any part of the scheme but took orders and did what he was directed to do. Therefore, the defendant's total offense level should be at 10. The defendant's Criminal History category of I reflects that this defendant has been, up to the time of this matter, a law abiding citizen. This Court, based on defendant's criminal history and assistance in the instant case, may appropriately sentence the defendant to a term of probation. To accomplish this objective, the government is seeking, pursuant to the plea agreement, a downward departure or variance for defendant's substantial assistance to the government. The government requests that this Court consider an additional two level departure or variance in Offense Level. This would leave defendant at Offense Level 8 and Criminal History Category I with a range of 0-6 months. Respectfully submitted this 27 th day of March, 2007.

DANIEL G. KNAUSS United States Attorney District of Arizona s/ Howard D. Sukenic Howard D. Sukenic Assistant U.S. Attorney
CERTIFICATE OF SERVICE I hereby certify that on March 30, 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: Martin Lieberman Martin Lieberman PC 3839 N 3rd St , Ste 400 Phoenix, AZ 85012 Justine L. Kozak Senior U.S. Probation Officer Sandra Day O'Connor Courthouse 401 W . W ashington, Suite 260 Phoenix, AZ 85003 s/ Howard D. Sukenic Howard D. Sukenic

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