Free Objection to Presentence Investigation Report - 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 Objections to Presentence Report

Defendant Grace Marie Miller interposes her objections to the Presentence Report.

"...the Millers devised a plan..." Without attempting to minimize the seriousness of Grace Miller's participation in the offense conduct, defendant points out that this paragraph fails to distinguish the roles of the two defendants as set forth in their respective plea agreements in the section "Facts of the Offense". The scheme to borrow coins of clients of their company was devised by Gene Miller. Grace Miller participated in the scheme by failing to disclose certain material facts to clients in connection with the coin borrowing transactions. All of the clients who loaned coins to Southwest received some of the interest payments promised. See the table in paragraph 9 of the report. Some wanted, and received, all of their interest payments "up front". This table represents the value of the coins borrowed by the Millers only in column two. The report fails to point out that "Declared Value of Coins" in the table represents what the coins cost the various victims at the time they were purchased in legitimate, arm's­length transactions months or years prior to the inception of the scheme. The relevance of this column of the table

Case 2:04-cr-00811-EHC

Document 57

Filed 12/12/2005

Page 1 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ¶ 15. ¶ 13. ¶ 12. ¶ 9.

to sentencing issues is unclear, since the victims were not promised return of their purchase price: they were promised return of their coins, or ones of identical grade, which would have, at the time the promissory notes came due, whatever value the market held for them. Since the market had not rebounded substantially, if at all, during the 6 month term of the notes, the victims were, in effect, promised they would get back the fair market value of their coins, plus the interest called for by the notes -- nothing more. This table indicates that the victims were paid all but $15,576.36 of the return (interest) they were promised on the promissory notes. The last line of the table takes this amount and purports to add it to the "Declared Value" from the previous paragraph to arrive at a figure in excess of one million dollars.1 This computation, even if arithmetically accurate, would have no bearing on the issues before the court for the reasons set forth in the previous paragraph. It is highly misleading and inflammatory, and the reporting Officer uses it to justify a suggested sentence enhancement. As set forth in the preceding paragraph, the return promised the victims was approximately the fair market value of the coins at the time the Millers received them, plus the interest promised in the notes, for a total of approximately $588,884.18 ($496,142 + 92,742.18). The victims received $77,165.82 of the amount promised them. ¶ 10-11 The transactions reflected in these paragraphs are not part of the scheme alleged in the

indictment. Ms. Houle and Ms. Hairston simply wanted to sell their coins back to Southwest for the amount they paid. Southwest failed before it could make full payment. Presumably, the reporting Officer intended to say that the net proceeds from the sale of the church was $175,690. The Millers had no personal bank account. All expenses, business and personal, were paid through the business account. In his desperate and foolish efforts to make enough money to keep the business afloat and pay the victims, Gene Miller did indeed use moneys from the business account in his day trading activities. This paragraph confounds the Malateks' original coin purchase, which was not fraudulent in any

1

This is an arithmetic error, a vestige of an earlier version of the report. $813,000 + 15,576.13 = $828,576.36.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ¶ 65. ¶ 71. ¶ 80. ¶ 36. ¶ 38. ¶ 63. ¶ 34. ¶ 24. ¶ 16.

respect, with the later borrowing of the coins, which was. It was, and is, common for coin and precious metals dealers to recommend that investors put 20% of their investments into such hard assets. Counsel personally spoke with Regina Goerss on May 19, 2005. Her husband had passed away within a few weeks prior to that conversation, long before the entry of plea in this case. It is unclear where the quote attributed to Mr. Goerss comes from. ¶20-1. The defense has not been provided with any victim impact statements in this case. ¶ 22. The defense has not been provided with the letter of Cathleen Howell apparently attached to the Court's copy of the presentence report. As pointed out with respect to paragraphs 10 and 11, above, Houle and Hairston were not victims of any "coin buy back scheme", nor does the government contend that there was any such scheme. When the defendants sold coins in arm's­length transactions they sometimes offered to buy them back within a year at full sale price. When the market tanked they were unable to keep this promise. The defendant adopts the argument set forth in the government's Objections to Presentence Report. The Millers were not ministers to the victims in this case and had nothing other than a business relationship with them. The abuse of trust enhancement does not apply for the reasons set forth in the government's objections. The Adjusted Offense Level is 17. The Total Offense Level is 14. The defendants have engaged a certified public accountant to prepare their tax returns and expect to be able to file prior to sentencing. The returns will be provided when received. The guideline range for a Total Offense Level of 14 is 15 to 21 months. The fine range is $4,000--$40,000. Whatever value the victims may have wished their coins had, they were acutely aware that the bottom had fallen out of the market. Indeed, the only incentive for lending their coins to the Millers rather than selling them was that one day they might again have the value they had at the time of purchase, and, in the meantime, they could collect interest on them. As discussed above 3 Case 2:04-cr-00811-EHC Document 57 Filed 12/12/2005 Page 3 of 5

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with respect to paragraphs 8 and 9, in connection with the coin borrowing transactions with the Millers the victims expected to receive back their coins, or coins of equal quality, whatever the market value was for them when their notes matured. Moreover, while, as the government points out in its objection to this paragraph, there may be a civil cause of action for not honoring the one-year buy back guarantee, that is not a part of the fraud in this case but a result of the vagaries of the market. Indeed, some of the coins involved in the fraud in this case were past the buy back period in any event. Not one victim in this scheme expected to get back anything other than the coins plus whatever interest was called for by the notes. The value of the coins would be established by the market, and the market alone, at the time the notes matured.

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CERTIFICATE OF SERVICE

I hereby certify that on DECEMBER 12 , 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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