Free Sentencing Statement - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB

Document 1470

Filed 02/25/2008

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-cr-00103-REB UNITED STATES OF AMERICA, Plaintiff, v. 1. NORMAN SCHMIDT, Defendants.

DEFENDANT'S SENTENCING STATEMENT RE: LOSS CALCULATION

Defendant, Norman Schmidt, by his court-appointed counsel of record, Peter R. Bornstein and Thomas J. Hammond, hereby submits his position concerning the loss calculation for purposes of computing a guideline sentence under the U. S. Sentencing Guidelines. 1. Post United States v. Rita, 551 U.S. ____ (2007), the district court is first

required to compute a guideline sentence under the now advisory guideline system of the United States Sentencing Commission. In this case, that process requires a calculation of loss pursuant to §2B1.1. 2. To that end, the district court held an evidentiary hearing at which testimony

was taken from Special Agent Marcy, and Government Exhibits 1 through 9 were proffered by the government. Defendant Schmidt introduced a stipulation concerning the value of the Redstone Castle sale, and he proffered a computation of the totals on Exhibit 6.

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3.

The government has the burden of proving actual and intended loss by a

preponderance of the evidence. United States v. Schild, 269 F.3d 1198, 1200 (10th Cir. 2001). If they fail to meet their burden, no loss enhancement above the base level can be assessed. 4. The evidence at the hearing established three possible loss calculation

starting points: $55,841,066.19, $43,086,918.52, or $36,774,230.82. The government puts up the highest number which it calls "investor deposits" based on an analysis of bank records and bank deposits. And while some of the named depositors were interviewed by government law enforcement agents, not all were. More importantly, Agent Marcy could not testify which deposits were backed up by personal interviews and which were not, except for those for which he had some personal knowledge. 5. The money that went into the ten bank accounts (Government Exhibit 1, page

2) is not an accurate measure of loss to victims unless the court has before it evidence that each deposit is linked to a particular investor who made an investment based on the scheme to defraud alleged and proved at trial. If there is no investor statement before the court, or the investor put money into some other scheme, or money was not investment money, or any number of other scenarios, then that deposit cannot be counted as a loss. 6. The record before this court bears important similarities to the record before

the trial court in United States v. Galloway, 06-1487 (10th Cir. 12/7/2008). In that case, there was conflicting data submitted by the government and the court could not reasonably quantify the precise amount of loss. The court then tried to use Mr. Galloway's total gain as an alternative measure of loss. The Court of Appeals reversed the sentencing

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computation and directed the trial court make a finding addressing the various amounts of the loss proposed and to make a reasonable estimate of loss. 7. The government hired a contractor, Marika Tolz, to contact victims of the

fraud and obtain loss numbers from them. This work is represented by Government Exhibit 6 and might establish actual loss. Schmidt's counsel objected to this evidence at the hearing on grounds that its accuracy could not be tested or confirmed, and he does not waive that objection by this submission. 8. The $43 million number represents the loss claimed by victims of the fraud

who were contacted for that purpose, and the $36 million dollar number is the amount Ms. Tolz could document or confirm. 9. Thus, Mr. Schmidt submits that the starting number for calculation of loss From this number $12,823,746.62 must be

purposes should be $36,774,230.82.

subtracted pursuant to USSG §2B1.1, Application Notes 3D and F, which applies to Ponzi schemes and credits against loss amounts returned to investors before the offense was detected. Thus, the resulting starting number becomes $23,950,484.15, because the government evidence does not establish by a preponderance of the evidence what amount of the deposits, what part of the $55 million, represents actual or intended loss to people who were defrauded by the scheme to defraud pled and proved at trial. 10. Mr. Schmidt, without waiving his evidentiary objections, submits that lower

number as the loss or intended loss from the Ponzi scheme.

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Respectfully submitted this 25th day of February, 2008. THE LAW OFFICES OF PETER R. BORNSTEIN

s/ Peter R. Bornstein Peter R. Bornstein The Law Offices of Peter R. Bornstein 1600 Broadway, Suite 2300 Denver, CO 80202 Telephone: 303-861-2500 Facsimile: 303-861-0420 E-mail: [email protected] Attorney for Defendant Norman Schmidt THOMAS J. HAMMOND , P.C. s/ Thomas J. Hammond Thomas J. Hammond Thomas J. Hammond, P.C. 1544 Race Street Denver, CO 80206 Telephone: 303-321-7902 Facsimile: 303-329-5871 E-mail: [email protected] Attorney for Defendant Norman Schmidt

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on this 25th day of February, 2008, I electronically filed the foregoing Defendant's Sentencing Statement Re: Loss Calculation with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: Matthew T. Kirsch, Esq. Wyatt B. Angelo, Esq. Assistant U.S. Attorneys [email protected] [email protected] [email protected], [email protected] [email protected] Ronald Gainor, Esq. [email protected] Thomas E. Goodreid, Esq. [email protected] Thomas J. Hammond, Esq. [email protected] Declan J. O'Donnell, Esq. [email protected] Mitchell Baker, Esq. [email protected] Richard K. Kornfeld [email protected] Richard N. Stuckey [email protected]

s/ Heather M. Bolton Heather M. Bolton, Paralegal

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