Free Sentencing Memorandum - District Court of Arizona - Arizona

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Joe Keilp, P . C .
1440 East Washington #100 Phoenix, Arizona 85034 (602) 252-0100 Fax (602) 252-0199 [email protected] Joe Keilp 3356

Attorney for Defendant Grace Marie Miller IN THE UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America, No. CR04­0811­PHX­EHC Plaintiff, vs. Gene Lee Miller and Grace Marie Miller, Defendants Defendant Grace Marie Miller's Memorandum on Sentencing

Defendant Grace Marie Miller submits herewith letters of character reference and respectfully requests that the Court consider the following matters with respect to sentencing. Prior to establishing Southwest International Trading (SWIT) with her husband in about 1995, Grace Miller had been employed as a numismatic coin salesperson by Swiss America Trading Corporation. She had no experience in running a business, and no experience dealing with the "back office" part of the coin business: purchasing coins from wholesalers, dealing with inventory, handling client funds, accounting and so forth. Her training and experience had been strictly sales. SWIT was started by Grace Miller and her husband Gene with the idea that it could be competitive but still profitable by selling coins with less of a markup than other dealers were taking. Indeed, while the market was rising, it could. The business operated with Grace focusing on sales while Gene Miller ran the back office. It should be pointed out that Gene Miller had no experience running a coin business either. There was no comprehensive set of books. The business was essentially run out of the company checkbook. Cash that was not needed to purchase coins to fill an order or to pay overhead was regarded as profit but not accounted for as such, resulting in the comingling of personal and company funds. Personal and

Case 2:04-cr-00811-EHC

Document 59

Filed 12/29/2005

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family expenses were routinely paid out of the company account. This caused no significant problems while the coin market was good, which it was through 1999. Nor was there any planning or consideration given to contingencies or possible market fluctuations. Reflecting a naive belief that the market would continue to rise, the Millers offered their coins for a time with a one-year money back guarantee. This was a promise to repurchase a customer's coins for the price originally paid for them for any reason within a year after purchase. This guarantee was a ticking bomb. While the market prospered there were few takers. Prior to the turn of the millennium, many doomsayers were predicting that the Y2K computer date problem would cause the collapse of the international banking system if not the collapse of society itself. Millions of people believed this was a real possibility. Grace Miller was one of them. Rare coin and precious metals dealers around the country used this as a sales tool and the market continued to rise. The bubble burst and the market suddenly collapsed when January 1, 2000 came and nothing happened. Suddenly SWIT found itself with no new sales, no reserves and no cash flow. Had the Millers let the business fail at that point, there would be no criminal case. Instead, they tried to keep it afloat. As noted in the presentence report (¶ 27), "[Grace] felt obligated to be there for her existing clients, noting she had promised them she would be there for them if they ever needed to liquidate their coins." There then followed a series of catastrophically bad decisions on the part of both Millers which ultimately led to this prosecution. The first, as reflected in the respective factual bases for their plea agreements, was Gene Miller's idea for raising money to keep the business going until the market rebounded. This plan involved borrowing coins from clients for six months while paying the clients 10 to 13.4% interest1, selling the coins at the prevailing market price for cash to run the business, and earning enough money in the interim to purchase equivalent coins2 at the end of the period to return to the client. Grace acquiesced in this plan, desperately believing it would work. Each of the Millers spoke with different customers of
The Millers did not realize that since the notes were for six months and the interest was computed in advance, they were actually committing to pay 20 to 26.8% interest. Moreover, the interest was computed on the original purchase price of the coins, which was substantially higher than their actual value at the time of the transaction. Thus the plan was hopelessly naive.
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These coins are graded for quality according to industry standards, and, within any particular grade, are fungible.

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SWIT at different times. Grace has admitted that she failed to tell the ones she dealt with of the serious financial difficulty SWIT was experiencing. She told them only that the coins would be used to help run the company and she did not specifically disclose that they would immediately be sold and the proceeds used to pay business and personal expenses as well as interest on their notes.3 The victims were entitled to know these things. Gene Miller has acknowledged in his plea agreement making the affirmative misrepresentations alleged in the indictment to the victims. The market did not rebound, and SWIT now had the crushing burden of the ill­conceived promissory notes to deal with. The Millers began selling assets. The residential properties would return little more than enough to repay the relatives and friends who loaned them money to keep the properties out of foreclosure. Gene Miller cast about for other ways to raise money to pay back the victims and another disastrous decision was made. Having no prior experience in the stock market, he began day­trading. He made thousands of trades and at the end of it all, had lost whatever cash remained, and most of the proceeds from the sale of their church, which could have been used to repay a portion of the debt to the victims. Nothing in the foregoing discussion lessens Grace Miller's responsibility for the crime she has committed. Hopefully it does demonstrate that the offense conduct was born of good intentions gone completely awry. It may also serve to show that in this case, as in most multiple­defendant fraud cases, the roles of the defendants differed in kind and quality, as reflected in the differences in the factual bases for their respective pleas. The presentence report acknowledges that "the instant offense appears to represent an isolated incident", and that "[n]ormally, the defendant would not be considered a candidate to reoffend...", but the officer goes on to state "... however, because she resumed employment in the gold and silver business and because of her personal financial issues involving not filing taxes, she may be tempted to `cross the line'.... (p. 15) The letter from Grace's employer, attached as Exhibit A, should dispel any such notion. In her present position, Grace is a sales person only. She does not handle money, does not

A salesperson of SW IT told at least one victim that the coins would be kept in a vault. W hen confronted the salesperson claimed that she had heard that from Grace. Grace denies telling anyone the coins would be kept in a vault. The clients she dealt with did not ask, and she did not volunteer, what disposition would be made of them.

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handle product (coins), and her work is closely monitored, including sales calls. There is no opportunity to "cross the line". There is, however, a very real opportunity to repay the victims in this case over time. Her employer reports that, absent the distractions of her present legal troubles, Grace has the demonstrated ability to earn more than $10,000 per month with his company. Her employer has also expressed a willingness to ensure that restitution payments are paid through deductions from her compensation in whatever amount the court determines. (Exhibit A). The defendant respectfully requests that the Court consider the facts described above, the letter of her employer (Exhibit A) and the letters of members of her church, her co­workers and the youth group she supervises (Exhibit B), and the best interests of the victims in the case and impose a sentence of 5 years probation, with whatever conditions the court deems appropriate, including a period of home detention (18 U.S.C. § 3563(b)(19)) or community confinement (18 U.S.C. § 3563(b)(11)), if deemed appropriate, so that the defendant may continue to work to pay restitution to the victims.

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CERTIFICATE OF SERVICE

I hereby certify that on DECEMBER 29 , 2005 , 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:

Richard Mesh, Assistant United States Attorney Greg Clark, Attorney for Defendant Gene Miller

________________s/_Joe Keilp___________

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