Free Motion for Departure - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10

DANIEL G. KNAUSS United States Attorney District of Arizona HOW ARD D. SUKENIC Assistant U.S. Attorney Arizona State Bar No. 011990 United States Attorney's Office Two Renaissance Square 40 North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4408 Telephone: (602) 514-7500 [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA United States of America, CR 04-0539-PHX-MHM Plaintiff, v. John R. Wolfe a.k.a. Rick Wolfe (05), GOVERNMENT'S MOTION FOR DOWNWARD DEPARTURE AND OR VARIANCE, OBJECTIONS TO PRESENTENCE REPORT, AND SENTENCING RECOMMENDATION

11 12 Defendant. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DOWNWARD DEPARTURE:

The United States of America, by and through undersigned counsel, respectfully moves, pursuant to 18 U.S.C. § 3553(a) and (e), 28 U.S.C. § 994(n), and U.S.S.G. § 5K1.1 for this Court to depart downward from the minimum sentence dictated by the Sentencing Guidelines
1/

and

statute for the offense to which the above defendant has entered a guilty plea. In support of its motion, the government states as follows:

As the Sentencing Guidelines are advisory, this Court has complete discretion to impose a sentence within the statutory limits. The Government is requesting that this Court exercise its discretion to sentence the defendant in a manner commensurate with his cooperation in the prosecution.

1/

Case 2:04-cr-00539-MHM

Document 185

Filed 06/05/2007

Page 1 of 6

1 2 3 4 5 6 7 8 9 10 11

LAW: Section 5K1.1 of the Sentencing Guidelines allows the court to depart downward in the defendant's sentence for his substantial assistance to the government. The appropriate reduction shall be decided by the court after consideration of certain factors. Those factors include, but are not limited to: (1) the court's evaluation of the significance and usefulness of the defendant's assistance, taking into consideration the government's evaluation of the assistance rendered: (2) the truthfulness, completeness, and reliability of any information or testimony provided by the defendant; (3) the nature and extent of the defendant's assistance; (4) any injury suffered, or any danger or risk of injury to the defendant or his family resulting from his assistance; and (5) the timeliness of the assistance.

12 ARGUMENT: 13 1. SIGNIFICANCE AND USEFULNESS OF THE ASSISTANCE. 14 The defendant's assistance was significant and useful. This defendant was able to provide 15 a substantial illustration of all of the facets of the conspiracy that he was involved in and the 16 fraudulent activity that resulted. This was an extremely complicated case and one that involved 17 voluminous documents. Mr. Wolfe participated in an extensive debriefing on July 19, 2004. His 18 assistance was essential by, among other things, verifying the creation of fraudulent entities used 19 to perpetrate the fraud, analyzing complicated documents to establish their foundation for their 20 admission, and certifying the roles of each defendant in order to assess levels of culpability. 21 2. 22 The government believes the defendant's information was truthful and reliable. The 23 defendant's testimony in the preceding civil action and the information that he provided to the 24 government was corroborated by other witnesses or through evidence gathered during the 25 investigation. 26 27 28 TRUTHFULNESS, COMPLETENESS AND RELIABILITY OF INFORMATION.

Case 2:04-cr-00539-MHM

Document 185

Filed 06/05/2007

Page 2 of 6

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

3.

NATURE AND EXTENT OF DEFENDANT'S ASSISTANCE. As set forth above, defendant provided substantial information and testimony detailing the

inner workings of the conspiracy and the other criminal acts. Defendant's information, and his willingness to participate as a witness for the government was enough, in the government's view, to constitute substantial assistance worthy of consideration from this Court. Among other things, defendant Wolfe provided the following information. Wolfe was the office manager and accountant for HVAC. In that capacity he handled accounts receivables and payables. He also prepared monthly statements for the business. According to Mr. Wolfe, defendant Tullo taught him how to fabricate receivables in order to bolster the company's financial picture and it was defendant Tullo's idea to engage factors. Mr. Wolfe also explained how newer dollars that came in from the newest factor were used to pay previous factors who had loaned HVAC money. He also provided crucial evidence that revealed ABF funds were being sent to factors at defendant Tullo's direction. 4. INJURY, DANGER OR RISK OF INJURY SUFFERED BY THE DEFENDANT OR HIS FAMILY AS A RESULT OF THE ASSISTANCE. When a defendant cooperates against any target, there is always a possibility of threats of violence and/or injury to the defendant. Although the government could not assess any physical danger, Mr. Wolfe expressed fear of Mr. Tullo to the government. The Court may take this factor into account in reaching an appropriate sentence. 5. TIMELINESS OF ASSISTANCE. The defendant cooperated, well before he was indicted, in the civil action initiated by the investors in ABF who now control the successor corporation NHC. The defendant admitted his culpability and exposed himself fully to a criminal prosecution. In the matter at hand, the defendant allowed sufficient time to be debriefed, in fact he was the first defendant who cooperated, and his assistance was fully utilized. His agreement to cooperate therefore was timely.

Case 2:04-cr-00539-MHM

Document 185

Filed 06/05/2007

Page 3 of 6

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

VARIANCE (18 U.S.C. §3553 (a) FACTORS): The defendant does not have a criminal history of any sort and is not likely to re-offend. From the government's perspective, after reviewing all of the material and extensively debriefing defendant Wolfe, defendant Wolfe is a decent individual who allowed himself to be manipulated. His role in the offense, although minor in comparison to the defendants who led and profited, was essential and he was aware of his wrongdoing. As such, it is true that this defendant participated in a complicated financial conspiracy and that his participation was vital in carrying out the criminal acts however, he must be viewed as an individual who did what he was told and did not profit other than what was paid to him in salary 2/ . The offense to which he plead is serious but his cooperation was extraordinary. As previously stated, Mr. Wolfe fully cooperated with the victims in their civil suit and also cooperated with the government. Because of his cooperation this prosecution was very

successful. His cooperation must be taken into account when this Court decides what is a just punishment. GOVERNMENT'S OBJECTIONS TO THE DRAFT PRESENTENCE REPORT: The government does not have substantive objections. However, the government wishes to clarify certain factual points as follows: 1. ¶6 should be corrected to reflect that defendant Wolfe was charged with participation in the Money Laundering Conspiracy and not the substantive Money Laundering counts. 2. ¶9 should be corrected to reflect that defendants Tullo and Nova created the fraudulent accounts receivables in the "HVAC" portion of the conspiracy and as to the "ABF" portion of the conspiracy, only defendants Tullo and Monteleone solicited investors 3/ .

In this particular matter, defendant Wolfe really did not profit at all as he was seduced into investing $150,000 of his own money into the venture. That money, the proceeds of his first wife's life insurance policy, was lost to him. Mr. Wolfe can not be looked on as sympathetically as the victim investors but this was a substantial financial loss and perhaps a just punishment in and of itself.
3/

2/

Aside from an isolated solicitation by defendant Nova.

Case 2:04-cr-00539-MHM

Document 185

Filed 06/05/2007

Page 4 of 6

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

3. ¶10 should be corrected to reflect that defendant Nova served as president of HVAC and that solicitation of investors was done by both defendants Tullo and Monteleone. 4. ¶13 should be amended to state that "ABF was created in part to facilitate a payoff to the factor before the fraud was discovered." 5. ¶29 should be amended to reflect that both Monteleone and Tullo solicited funds from investors. 6. ¶31 should be amended to state that Guttentag created investor reports. GOVERNMENT'S RECOMMENDATION: The defendant has admitted responsibility for his participation in the criminal conspiracy. His assistance was essential in both the civil litigation and the subsequent criminal prosecution. If the Court accepts the plea agreement reached by the parties and follows the calculations in the pre-sentence report, the defendant's total offense level would be at 10. The government submits that defendant has shown an appropriate acceptance of responsibility (U.S.S.G. § 3E1.1(a)) and should be credited with a reduction of two offense levels. The defendant is also correctly categorized as having a minor role in the offense as he did not direct any part of the scheme but took orders and did what he was directed to do. Therefore, the defendant's total offense level, with the reduction for minor role, should be at 6. The defendant's Criminal History category of I reflects that this defendant has been, up to the time of this matter, a law abiding citizen. This Court, based on defendant's criminal history and assistance in the instant case, may appropriately sentence the defendant to a term of probation. The Guidelines allow for a sentence of probation without the government's request for a downward departure or variance for defendant's substantial assistance to the government. Pursuant to the plea agreement however, the

government requests that this Court consider an additional two level departure or variance in Offense Level. This would leave defendant at Offense Level 4 and Criminal History Category I with a range of 0-6 months. This defendant, in the government's opinion, does not need to be incarcerated.

5

Case 2:04-cr-00539-MHM

Document 185

Filed 06/05/2007

Page 5 of 6

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

Respectfully submitted this 5 th day of June, 2007.

DANIEL G. KNAUSS United States Attorney District of Arizona s/Howard D. Sukenic Howard D. Sukenic Assistant U.S. Attorney

CERTIFICATE OF SERVICE I hereby certify that on 5 th day of June, 2007, 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:

David R. Appleton 8711 E. Pinnacle Peak Rd., #109 Scottsdale, Az. 85255

Michel B. Bernays 111 W. Monroe, Suite 165 Phoenix, Az. 85003

Michael D. Kimerer Kimerer & Derrick, P.C. 221 E. Indianola Ave. Phoenix, Az. 85012 David C. Derrickson 3636 N. Central Ave., Suite 1150 Phoenix, Az. 85012

Marty Lieberman 111 W. Monroe, Suite 165 Phoenix, Az. 85003

Jess A. Lorona Ducar, Lorona & Parks 40 N. Central Ave., Suite 2800 Phoenix, Az. 85004

Justine Kozak Senior U.S. Probation Officer U.S. Probation Office Sandra Day O'Connor U.S. Courthouse, Suite 260 401 West Washington Street, SPC 8 Phoenix, Arizona 85003

Case 2:04-cr-00539-MHM

Document 185 6 Filed 06/05/2007

Page 6 of 6