Free Response - District Court of Arizona - Arizona

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

PAUL K. CHARLTON United States Attorney District of Arizona ALBERT L. KLEINER Assistant United States Attorney 405 W est Congress Street, Suite 4800 Tucson, Arizona 85701 Telephone: (520) 620-7300 [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America CR-04-718-PHX-DKD Plaintiff, v. BRADLEY SCHROEDER, Defendant. COMES NOW the Plaintiff, United States of America, by and through Paul K. Charlton, United States Attorney for the District of Arizona, and Albert L. Kleiner, Assistant United States Attorney, and hereby files its Response to Defendant's Supplemental Sentencing Memorandum. The United States incorporates by reference all prior pleadings filed by the United States in this matter, specifically including its Objections to the Presentence Report and its Appeal Memorandum and Motion for Remand filed in case number CR04-1242-PHX-NVW. ARGUMENT I. THIS COURT SHOULD RESENTENCE THE DEFENDANT BECAUSE IT WOULD HAVE SENTENCED DIFFERENTLY HAD IT KNOWN THE SENTENCING GUIDELINES WERE ADVISORY The Defendant should be resentenced because the United States Supreme Court's Blakely decision clearly constrained this Court's ability to fashion a reasonable sentence. In determining whether to resentence a defendant, the Ninth Circuit, as noted in Defendant's Supplemental Sentencing Memorandum ("SSM") (at 4), has developed a limited remand PLAINTIFF'S RESPONSE TO DEFENDANT'S SUPPLEMENTAL SENTENCING MEMORANDUM

Case 2:04-cr-00718-DKD

Document 28

Filed 01/27/2006

Page 1 of 8

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

procedure which asks the sentencing court to determine whether the original sentence would have been different had the court known the Guidelines were advisory. This Court should answer that question in the affirmative. In making its determination, the sentencing Court should also examine whether the prior sentence was reasonable. However, contrary to Defendant's position, "reasonableness" is not the first issue this Court needs to address. In support of his position, Defendant Schroeder improperly1 cites an unpublished decision, United States v. Edwards, 2005 WL 3487659 (9th Cir. Dec. 20, 2005), which upon close reading, indicates the Ninth Circuit panel merely felt they should not make a determination of "reasonableness" without the district court first having examined the issue. The panel was certainly not creating procedure for the sentencing court upon remand. In reviewing the prior sentencing transcript, it is clear this Court felt constrained by the state of the law in light of Blakely and would have sentenced the Defendant differently. The most significant indication that the Court would have sentenced differently is the Court's statement to the defendant prior to imposing sentence: [Y]ou are in a very fortunate position with respect to what your possible sentence can be. [B]ecause of the fortuity of [Blakely] coming down when it did, and the posture that your case was in, the Government is essentially boxed out of prevailing in its argument on sentencing, because of the status of the law, which means that the higher end of sentencing that the probation office believes is warranted in this case, and indeed one that I am persuaded to believe is also warranted, is unavailable to me. TR at 11, ll.13-22. (Emphasis added.) Given this clear statement from the Court,

Defendant's claim that "it is logical to assume [] his sentence would not have been significantly different under advisory Sentencing Guidelines" (SSM at 5) is without merit. See also SSM at 5, n.1 //

1

See 9th Cir. R. 36-3. -2-

Case 2:04-cr-00718-DKD

Document 28

Filed 01/27/2006

Page 2 of 8

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

Further review of the sentencing transcript clearly indicates this Court felt "constrained" from imposing a higher sentence. Indeed, the Court opened the sentencing hearing by stating, "[M]y view is that in light of Blakely and the Ninth Circuit progeny, that I cannot go into the range that is advanced by the government and that I am limited to the sentencing range that would be possible based upon matters charged in the Indictment and admitted to by the defendant in court." TR at 2, ll. 11-16. Based on that limitation, the Court felt any evidentiary hearing to determine tax loss was unnecessary because its only purpose would have been "to increase the sentence, which [it] could not do under Blakely." TR at 2, ll. 20-22. In fact, defendant argued the Court was "locked in" to the "zero to six sentencing range." TR at 4, ll.22-23. Similarly, in reviewing the parties' Objections to the Presentence Report, the Court stated that most of the matters did not require a ruling as they were issues "that swirl around Blakely. And because of that the matters that are asserted are simply not matters that the Court can consider." TR at 6, ll. 9-11. For instance, the Court overruled the Government's objection "in light of Blakely" regarding Defendant's sophisticated concealment of the offense. TR at 7, ll. 19-22. Under Blakely, the Court believed that issues of gross income and tax loss were "not relevant to sentencing." Id. Clearly, under Blakely's progeny, these are issues required to be determined prior to pronouncing sentence. United States v. Booker, 125 S.Ct. 738, 764-65 (2005) (18 U.S.C. § 3553(a) requires judges to take account of the Guidelines together with other sentencing goals); United States v. Ameline, 409 F.3d 1073, 1085-86 (9th Cir. 2005) (en banc) (base offense level starting point even in a discretionary Guidelines system); United States v. Cantrell, 2006WL73483 *7 (9th Cir. January 13, 2006) (18 U.S.C. § 3742(f) requires reviewing court remand where sentencing court incorrectly applied guidelines.) //

-3Case 2:04-cr-00718-DKD Document 28 Filed 01/27/2006 Page 3 of 8

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

Similarly, the Court felt it could not order restitution because of Blakely. TR at 15, ll. 2-14. However, under the now-advisory sentencing guidelines, restitution may be ordered as a condition of supervised release. See U.S.S.G. § 5E1.1(a)(2); 18 U.S.C. §§ 3556, 3663. Further, it is clear this Court believed the sentence it could render was not reasonable. As the Court stated, [T]he penalty phase here is largely precluded. In fact what I am left with is a very modest sentence[.] And in fact in my view a sentence that is so modest that it is probably not in the best interests of anyone . . . . [I] want you to understand and clearly take away from this courtroom today the fact that this is largely because of the fortuity of a Supreme Court decision that had ramifications that tumbled down into your case, and have made it so that you are getting a very good result . . . . it's an incredibly lucky break. TR at 12, ll. 9-14, and 13, ll. 4-11. (Emphasis added.) The prior sentence was also not reasonable because it was not an adequate deterrent which, under the advisory guidelines, is a "primary consideration" in tax cases. U.S.S.G. § 2T1.1 (2000), Introductory Comment. The Court made clear it felt the sentence available was not an adequate deterrent: So if it were simply the law of the land that those who had failed to pay the tax would simply have to pay it back when they were caught, that wouldn't be a very successful deterrent. TR at 12, ll. 2-5. Since the Court clearly was constrained by the unsettled nature of sentencing procedure and the Court could not issue a reasonable sentence, this Court should now resentence the Defendant in accordance with the law. II. THE COURT IS REQUIRED TO MAKE FINDINGS RELEVANT TO SENTENCING UNDER THE ADVISORY SENTENCING GUIDELINES IN ORDER TO FORMULATE A REASONABLE SENTENCE Whereas this Court believed it could not consider various sentencing issues at the original sentencing, the law clearly requires the Court to make factual determinations under the advisory guidelines so that it can fashion a reasonable sentence. As noted, supra, a sentencing court is required to make determinations under the advisory sentencing guidelines -4Case 2:04-cr-00718-DKD Document 28 Filed 01/27/2006 Page 4 of 8

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

when formulating the sentence.

The Court makes these determinations under the

preponderance of the evidence standard.2 Contrary to Defendant's apparent fear, the United States is not seeking a sentence above the statutory one-year maximum (for each count), and is not seeking a departure from the Court that would invoke the "beyond a reasonable doubt" standard. Thus, Defendant's entire argument (at SSM 8-11) is moot. The Court must make its factual determinations so that an advisory guideline range can be calculated, and, based on that advisory range, fashion a reasonable sentence. Thus, this Court should determine the harm to the government caused by Defendant Schroeder. Previously, the Court believed it could not consider this issue. TR at 6, ll. 6-16. As found in the Presentence Investigation Report (¶¶ 4, 6, 9, 16) and urged in the United States' prior pleadings, conservatively, the Defendant caused a tax loss of $130,289. This tax loss corresponds with a Base Offense Level of 15. Similarly, the Court should determine whether the offense involved sophisticated concealment pursuant to U.S.S.G. § 2T1.1(b)(2). Previously, the Court agreed with the Presentence Investigation Report (¶17) that Defendant Schroeder's offense had involved sophisticated concealment, but over-ruled the United States' position in light of Blakely. TR at 7, ll. 6-11. This Court should affirm its prior determination and find Defendant

Schroeder's offense involved sophisticated concealment. The Court must also determine whether the Defendant has demonstrated acceptance of responsibility pursuant to U.S.S.G. § 3E1.1(a). Previously, the Presentence Investigation

In United States v. Ameline, the Ninth Circuit explained that the district court must continue to apply the burdens of proof set forth in United States v. Howard, 894 F.2d 1085, 1089-90 (9th Cir.1990). Ameline, 409 F.3d 1073, 1085-86 (9th Cir. 2005) (en banc). In Howard, the Ninth Circuit had stated that "the party bearing the burden of proof will be required to meet a preponderance of the evidence standard." 894 F.2d at 1090 (internal quotations omitted). Thus, the en banc Ameline court held that a preponderance of the evidence is the proper standard of proof for guidelines factors. -5Case 2:04-cr-00718-DKD Document 28 Filed 01/27/2006 Page 5 of 8

2

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

Report (¶22) recommended and this Court found the Defendant had demonstrated an acceptance of responsibility. TR at 7, ll. 12-16. However, in addition to the arguments previously urged by the United States, Defendant's present conduct further indicates his lack of acceptance for his responsibility. Defendant Schroeder continues to deny and contest the tax loss he caused. This is analogous to the defendant who fails to admit all relevant conduct. Although a defendant is not required to admit relevant conduct, "a defendant who falsely denies, or frivolously contests, relevant conduct that the court determines to be true has acted in a manner inconsistent with acceptance of responsibility." U.S.S.G. § 3E1.1, Application Note 1(a). Defendant

Schroeder has not admitted his gross or taxable income for 1997 or 1998, has not admitted the harm he caused the government, and, in fact, is contesting the tax loss, causing an appeal and essentially turning his sentencing into an evidentiary hearing likely to include witness testimony. Further, despite this Court's order, Defendant Schroeder has failed to file federal income tax returns for the years of conviction.3 The Guidelines list "voluntary payment of restitution prior to adjudication of guilt" as an example of acceptance of responsibility. U.S.S.G. § 3E1.1, Application Note 1(c). Although not technically "restitution," by analogy the Court should consider that Defendant Schroeder did not make any tax payments to the Internal Revenue Service for the years of conviction during the time he knew he was under investigation, prior to the Information being filed, after adjudication of guilt, or even after this Court ordered him to file tax returns and pay all outstanding taxes. Even if he does not

The United States is at a loss as to why defense counsel would advise the Defendant (see SSM at 7) to ignore the Court's order, and indeed, ignore the Defendant's obligations under the tax laws of the United States. See United States v. Sullivan, 274 U.S. 259, 263-64 (1927) ("extreme if not an extravagant" application of the Fifth Amendment to allow non-filing of tax return on claim that information called for was incriminating.) -6Case 2:04-cr-00718-DKD Document 28 Filed 01/27/2006 Page 6 of 8

3

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

file his federal income tax returns, an extension to file (which he filed for tax year 1998 but never filed for tax year 1997) does "not operate to extend the time for the payment of the tax or any installment thereof[.]" 26 C.F.R. § 1-6081-1(a). Thus, Defendant Schroeder continues to ignore his obligations under the tax laws and this Court's order which demonstrates his lack of acceptance of responsibility. Thus, this Court should not grant any adjustment for acceptance of responsibility. In addition, this Court should make restitution a condition of supervised release or probation. As noted, supra, restitution may be ordered as a condition of supervised release or probation. See U.S.S.G. § 5E1.1(a)(2); 18 U.S.C. §§ 3556, 3663. Once the Court determines tax loss, the Court should order Defendant Schroeder to pay the loss amount plus interest (as calculated to the date of sentencing) and order Defendant Schroeder to sign a Form 870 allowing the Internal Revenue Service to assess the tax and interest without filing a notice of assessment.4 CONCLUSION As this Court felt constrained by Blakely from fashioning a reasonable sentence, this Court should resentence Defendant Schroeder for the full extent of his criminal conduct. The Court should find that Defendant Schroeder caused a tax loss to the United States of

Several decisions have recognized that not only may a court order the payment of restitution, it may also take steps to ensure its payment. See e.g., United States v. Soderling, 946 F.2d 898 (9th Cir. 1991) (district court did not abuse its discretion in issuing a temporary injunction restraining the defendants from liquidating their assets and in appointing a receiver to manage their assets in order to preserve those assets to satisfy a restitution order); see also e.g., United States v. Gallant, 306 F.3d 1181, 1189 (1st Cir. 2002) (order requiring, as a special condition of supervised release, that defendant sell such of his assets as necessary to permit restitution merely effectuated the court's power to order restitution and was well within the district court's discretion over conditions of supervised release); United States v. Gunn, 16 F.3d 1226 (7th Cir. 1994) (court did not abuse its discretion in ordering the defendant to sell his tools and apply the proceeds to the payment of restitution within six months as the court may order any condition it considers to be appropriate). -7Case 2:04-cr-00718-DKD Document 28 Filed 01/27/2006 Page 7 of 8

4

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

$130,289, that the Defendant's crime involved sophisticated concealment, that the Defendant has not accepted responsibility for his actions, and order the Defendant to pay restitution including interest as part of any supervised release or probationary sentence after signing the Form 870. Respectfully submitted this 27 th day of January, 2006. PAUL K. CHARLTON United States Attorney District of Arizona s/ Albert L. Kleiner Albert L. Kleiner Assistant U.S. Attorney Copy of the foregoing served electronically or by other means this 27 th day of January, 2006 to: Michael D. Kimerer, Esq. Attorney for Defendant

-8Case 2:04-cr-00718-DKD Document 28 Filed 01/27/2006 Page 8 of 8