Free Motion for Departure - District Court of Arizona - Arizona

Cameron A. Morgan, Esq.

4295 North 75th Street Scottsdale, Arizona 85251 480-990-9507 Telephone 480-990-9509 Facsimile e-mail: [email protected] Arizona State Bar No. 006709
Attorney for Defendant

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

) ) Plaintiff, ) ) vs. ) ) ANDREW TAYLOR, ) ) Defendant. ) __________________________________________)

UNITED STATES OF AMERICA,

NO: CR04-0809-PHX-NVW

DEFENDANT'S SENTENCING MEMORANDUM

Defendant, Andrew Taylor, by and through his attorney undersigned, hereby submits the following objections to the Presentence report. A. At Paragraph 4, under the heading "The Offense Conduct" it is stated that

Bharat Lal had entered into a lease agreement with the Taylor's and eventually filed a forcible retainer action against them in the Maricopa County Superior Court resulting in a judgment in the amount of $2,222.85. That judgment was a nullity because it was entered after the automatic stay was in effect in the Taylor's Chapter 13, Case Number 98-06941. Judgment was therefore invalid. The Taylor's eventually entered into a settlement agreement with Lal wherein they paid the back rent and were allowed to stay in the house. B. Paragraph 6 references the Chapter 13 petition filed by the Taylor's on

May 25, 1999, Case Number 99-06077. This petition was filed in response to the Lal's second

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forcible detainer action based on the same lease. The parties entered into a settlement agreement and stipulated judgment in the amount of $8,500.00. This amount represents the entire loss this court should consider with respect to Lal. C. With respect to Paragraph 10, the Presentence report references disputes

between Mr. Taylor and Automotive Innovation Solutions. Those matters are in dispute and are currently subject to litigation in Maricopa County Superior Court, Case Number CV2002000087. D. With respect to Paragraph 12, the actual loss of $59,905.83, the Defendant

has the following objections: 1) The Catholic Credit Union Debt in the amount of $10,790.47 was the sole and separate liability of his wife incurred prior to their marriage. Mr. Taylor had no liability with respect to this debt at all; 2) The debt to the Lals is $8,500.00, not $11,400.00. The only liability to the Lals is set forth in the settlement agreement and judgment previously mentioned; 3) The IRS debt of $36,768.36 is disputed. This amount does not take in to account money that the IRS owes the Defendant as refunds for prior tax years and does not take into account that the debt is fully secured by liens upon the Defendant's residence. Furthermore, the Defendant has entered into a 100% repayment plan in his Chapter 13 case that includes all amounts due to the IRS. In the event he cannot meet his plan obligations the case will be converted to a Chapter 7, his house sold and the equity of the house would be used to pay off the IRS. As is set forth in the financial statements the equity of the house more than covers the obligation to the IRS; 4) With respect to the Arizona Department of Revenue, Defendant submits that it is in the same position as the IRS. Based on the foregoing, Defendant submits that the only amount that qualifies as an actual loss in this case is the $8,500.00 owed to Lal.

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E.

With respect to Paragraph 15, Defendant submits that the amount to Lal is

$8,500.00 as is set forth in the settlement agreement and judgment previously mentioned. Defendant asserts that the attorneys' fees of $12,200.00 are not generally recoverable as restitution, U.S. v. Sacedo-Lopez, 907 F.2d 97 (9th Cir. 1990), and the amount had nothing to do with Mr. Taylor. In addition, Defendant notes that Mr. Lal has significant personal problems related to his family that are the real source of his attorney's fees, mental anguish and medical problems. Defendant is informed and believes that Mr. Lal did not lose his job because he was, in fact, self employed. F. Defendant disputes the allegations in Paragraphs 16 and 17 related to

Arizona Department of Revenue and the Catholic Credit Union as is set forth above. Defendant also disputes the restitution amount of $75,873.83 set forth in Paragraph 18. G. Defendant agrees with the base offense level of 6 pursuant to §2B1.1 of

the guidelines. However, with respect to the specific offense characteristics pursuant to §2B1.1(b)(1)(D) Defendant disagrees. Defendant submits that the total loss for purposes of this section is $8,500.00 which increases the base offense level by 2. The argument on this issue is set forth below. Defendant submits that the offense level computation is 10. H. With respect to the Defendant's criminal history he objects to the

conviction set forth in Paragraph 34 of the PCR. Records obtained from probation for that case include an information dated June 24, 1980, an amended information dated July 8, 1980 and a judgment and sentence entered August 10, 1983. The judgment of sentence indicates that the Defendant had previously been placed on probation and apparently was violated. The judgment and sentence document indicates that the Defendant waived counsel and was sentenced to 5 years in prison, consecutive to other cases in Snohomish County. However, there is no plea

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agreement or guilty plea proceeding form that indicates that Defendant plead guilty and was placed on probation or was represented by counsel. In addition, there are no factual findings to support the court's holding upon imposition of a prison sentence that there was a knowing, voluntary and intelligent waiver of right to counsel. The waiver of the constitutional right to counsel cannot be implied from a silent record. Carnley v. Cochran, 369 US 506 (1962). I. The PCR also assigns one point for a misdemeanor conviction occurring

on December 20, 1994 for engaging in aeronautics without appropriate rating and a pilot's license. According to the PCR the Defendant was sentenced to 7 days in jail and a fine. However, under §4A1.2(C)(1) the sentences for a misdemeanor where the sentences did not carry a term of probation for at least one year or imprisonment for at least 30 days are not counted. In this case flying an airplane without a license is similar to driving without a license or with a revoked or suspended license, one of the offenses set forth in §4A1.2(C)(1). See Washington Revised Code §47.68.230 attached hereto and incorporated by reference herein. J. Defendant also disputes the allegations in Paragraph 44 concerning a

violation of a no contact order. Defendant has no knowledge of this matter. K. Defendant also disputes the allegations set forth in Paragraph 45 of the

PCR. Defendant asserts that, as the evidence at trial showed, he invested a significant sum of money in AIS and that he lost his entire investment due to the misappropriations and malfeasances of Thomas Robinson. He also requests that the court note that the allegations of Thomas Robinson were found by the Maricopa County Attorney's Office to be meritless and his testimony unreliable. The charges were dismissed after tape recorded interviews with Thomas Robinson were conducted.

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L. has been dismissed. M.

With respect to Paragraph 47 of the PCR Defendant asserts that that case

With respect to Paragraph 53, Defendant asserts that he has no knowledge

of this alleged assault and has never been arrested for assault. N. With respect to Paragraph 57, Defendant disputes all of the factual

allegations therein, except for the fact that he did sell an airplane for Josephine Olson. Defendant asserts that a dispute arose between Josephine Olson and her sister Karen Olson over the proceeds. As is noted in the PCR, the Olsons filed a lawsuit against the Defendant but their case was dismissed. LEGAL ARGUMENT: 1. Total Offense Level.

In this case the PCR identifies the base level at a 6 pursuant to §2B1.1(a)(2). The probation officer then adds on 6 points for losses in excess of $30,000.00 pursuant to §2B1.1(b)(1). Defendant submits that the total amount of the loss in this case should be $8,500.00 which would add only two points to the offense level. The commentary to the guidelines states that loss under 2B1.1 means the actual loss or the intended loss. See U.S. v. Lindholm, 34 F.3d 1078, (9th Cir. 1994). In Lindholm the court recognized that, in a bankruptcy fraud case, the actual loss should be based on the rent and mortgage payments due on the properties owned by the victim. The court also recognized that the loss amount may be determined by settling agreement of the parties. See U.S. v. Gallegos, 975 F.2d 710 (10th Cir. 1992). In restitution cases, which also deal with the actual loss determination, the courts have held that attorney's fees are not properly recoverable because they are too remote from the

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criminal conduct to service a basis for restitution. U.S. v. Barany, 884 F.2d 1255 (9th Cir. 1989). Defendant submits for purposes of §2B1.1 attorney's fees are not an actual loss. Applying these cases to Mr. Lal's claims it is clear that the court can properly award restitution for the $8,500.00 that represents the settlement of all claims between the Taylor's and Mr. Lal. The amount of his attorney's fees, which are disputed, should not be assessed as an actual loss under §2B1.1. In addition, the court should keep in mind that there is only one judgment in this case, and that is for the $8,500.00. With respect to the government's claims, Defendant submits that the comments under §2B1.1 state that "Loss shall be reduced by the following: In a case involving collateral pledged or otherwise provided by the defendant, the amount that the victim has recovered at the time of sentencing from disposition of the collateral, or if the collateral has not been disposed of by that time, the fair market value of the collateral at the time of sentencing." In this case the PCR reports that the IRS filed a proof of claim for taxes and the total amount is $61,249.00. After penalties and interest were subtracted, the actual taxes due were calculated at $36,768.36. Defendant submits the proof of claim in case number 00-00672-P-SSC, the Chapter 13 Petition filed by the Defendant in 2000. At that time the government was claiming $72,378.00 in taxes all of which were either secured or priority claims. The secured claims of $42,378.00 includes penalties and interests far exceeding the estimate of actual taxes owed of $36,000.00 in the PCR. In addition, the PCR states that the equity in the Defendant's home was approximately $120,000.00 a year ago. It is common knowledge that the value of real estate in the Scottsdale market has gone up considerably since that time and the value of the home may have gone up as much as 25% which would add another $100,000.00 in equity for the purpose of the IRS

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security. Since the actual taxes owed to the IRS without penalties and interest is fully secured it should not be included in the calculation for purposes of §2B1.1. Attached hereto is the original note from the Catholic Credit Union to Sandy Voelker the maiden name of Defendant's wife. As the court can see the Defendant was not obligated on this note and, in fact, was not married to his wife at the time that she took out the note. Since the Defendant did not owe any money to the Catholic Federal Credit Union this amount should not be used to calculate a loss under 2B1.1. Finally, there is the matter of the $900 claim for Arizona State taxes. Like federal taxes, the Arizona State taxes are a priority claim that must be satisfied from the assets in the bankruptcy in the event the Defendant does not fully repay the state as is his obligation under his current plan. Under these circumstances the state would be able to lien any proceeds from the sale of his house and therefore is fully secured. This amount should not be considered in determining the actual loss under 2B1.1. In summary, the only actual loss that can be shown is the judgment of Mr. Lal which expired by virtue of his failure to renew it. That judgment was in the amount of $8,500.00 and may be considered by the court under 2B1.1. If the court chooses to consider this amount then the total number of points added to the offense level is 2. Based on the information in the PCR, the Defendant submits that the total offense level that should be considered by this court is 10. 2. Criminal History.

There are two issues with respect to criminal history that the court should consider. First the conviction set forth in Paragraph 34 of the PCR for a bad check was an uncounseled prior conviction. The record provided by probation shows that the Defendant

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waived the presence of an attorney at the time his probation was revoked but does not show a prior plea agreement or representation by counsel. In addition, due to the age of the case, there does not appear to be any record available that would give a factual substantiation to an knowing, voluntary and intelligent waiver of counsel at the probation revocation proceeding. The court should not consider this conviction in determining the criminal history category. See Island County case No. 2964 attached hereto. In Paragraph 40 of the PCR the probation officer attributes 1 point for a misdemeanor conviction for flying an airplane without a license. The Defendant was sentenced to 7 days and paid a fine and restitution. Defendant submits that this charge is similar to driving without a license or with a suspended license under §4A1.2(C). Since the sentence was less than 30 days and probation was not involved Defendant submits that this misdemeanor should not be counted in his criminal history. See U.S. v. Hagganou, 423 F.3d 638 (7th Cir. 2005)(Possession of Police scanner similar to resisting arrest). Based on the foregoing Defendant submits that his criminal history points equal 3, putting him in criminal history category 2. 3. Restitution.

Defendant submits the same arguments set forth above, to establish the actual loss apply to the terms of restitution that should be considered by the court in this case. Based on those arguments, Defendant respectfully requests the court to reduce the restitution amount herein to $8,500.00. MITIGATING FACTORS: 1. Court can take into account the motives of these cases.

In the 1999 case the Defendant attempted to stop the forcible detainer filed by Mr. Lal who evicted the Defendant and his family from his leased house. After a short period of time

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he vacated the house and entered into a settlement agreement with Mr. Lal. While it certainly could be argued that he could have paid Mr. Lal the $8,500.00 that he agreed to pay, his financial circumstances were such at the time that he could not afford to do so and get into another house. With respect to the two 2000 Chapter 13 cases, these cases were also filed with the intent of preventing a forcible detainer action. The Defendant eventually settled with this landlord and paid them in full. With respect to the failure to inform the court of the sale of the aircraft, Defendant believed it was not necessary to do so and the legal opinions of the expert at trial support his position in some respects. The attorney for the government stated that the supplemental information on the sale and financial condition of the Defendant would not be particularly important until such time as the trustee was considering any Chapter 13 repayment plan offered by the Taylors. The 2003 petition that was in place for a short period of time was filed in response to threatening letters from the Defendant's mortgage holder. When that issue came up again in 2004 the Defendant again filed a Chapter 13 with notice to the government. In terms of mitigation, Defendant submits that it's important for the court to consider his actions since that filing. His hired competent legal counsel, filed all necessary documents, appeared for all hearings, and made all payments necessary in his case. He has submitted a repayment plan that calls for a 100% repayment of all creditors. Unbeknownst to him his lawyer filed a motion to disallow the claim of Mr. Lal because the judgment had expired but that obligation may be considered as restitution by this court. He has entered into a settlement agreement which his mortgage holder and made all payments required under that agreement.

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His largest obligation, other then his mortgage, is his debt to the IRS. However, the Defendant is not charged with tax evasion and it certainly could be argued that the multiple Chapter 13 filings have helped the IRS keep track of the Defendant and assert its claims. The testimony at trial was that, as of 2003, the IRS had essentially wrote off collection in this matter. The filing of a subsequent Chapter 13 Petition in 2003 and in 2004 allowed the IRS to reassert its claim, file the necessary liens on the Defendant's home to secure its claims and it will eventually receive 100% repayment. CONCLUSION: Based on the forgoing the Defendant respectfully requests that the court consider the guideline offense level of a 10 with a criminal history category 2, consider the Defendant's good faith attempts to fully repay all of his creditors, his lack of any criminal convictions since 1983 as well as any other relevant sentencing considerations, and place the Defendant on probation. DATED this 28th day of October, 2005. /s/ Cameron A. Morgan Cameron A. Morgan Attorney for Defendant

COPY of the foregoing electronically mailed this 28th day of October, 2005, to: Honorable N. V. Wake U.S. District Court [email protected] John Lopez Assistant United States Attorney [email protected] AND MAILED this 28th day of October, 10 Filed 10/28/2005

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2005, to: Shelley Gonshak-Peters U.S. Probation Office 401 W. Washington St., SPC 7, Ste. 160 Phoenix, AZ 85003-2119

BY: /s/ Dawn-Marie Kenney

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