Free Sentencing Memorandum - District Court of Arizona - Arizona

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G EORGE F. K LINK
45 West Jefferson Luhrs Tower - Suite #810 Phoenix, AZ 85003-2317 (602) 253-3889 State Bar #004057 Attorney for Defendant IN THE UNITED STATES DISTRICT COURT

6 DISTRICT OF ARIZONA 7 __________________________________________ 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 By: /s/ George F. Klink George F. Klink Attorney for Defendant ) ) ) Plaintiff, ) ) v. ) ) Suzanne Lisa Prather, ) ) Defendant. ) __________________________________________) United States of America, No. CR04-00276-002-PHX-SMM SENTENCING MEMORANDUM

Defendant, through counsel, submits the attached Memorandum for the Court's consideration in determining the advisory guideline calculations and any departures therefrom. Respectfully submitted this 18th day of November, 2005.

Case 2:04-cr-00276-SMM

Document 220

Filed 11/18/2005

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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 By:/s/ Susan L. West Susan L. West

CERTIFICATE OF SERVICE I hereby certify that on November 18, 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: Hon. Stephen M. McNamee United States District Court 401 West Washington Street Phoenix, AZ 85003 [email protected] Mr. Richard Mesh Assistant United States Attorney Two Renaissance Square 40 North Central Avenue, Suite 1200 Phoenix, AZ 85004 Copy of the foregoing faxed/mailed this 18th day of November, 2005 to: Susan Otero Senior United States Probation Officer 401 West Washington Street, SPC 7, Suite 160 Phoenix, AZ 85003-2119

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Case 2:04-cr-00276-SMM

Document 220

Filed 11/18/2005

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1 2 Memorandum 3 The Court is well aware of the facts in this case, having heard a lengthy trial. However, 4 counsel would point out a few matters relevant to Mrs. Prather which may not have been emphasized 5 to this Court during that trial: 6 1. Mrs. Prather did not join the conspiracy until well after it began. It would be neither fair 7 nor reasonable to attribute to her all acts of the co-defendants who were participating before she 8 became a member of same. Hence, the government quite reasonably capped the loss amount. 9 2. The loans which are the subject of the fraud were rewritten federally guaranteed loans 10 which replaced other federally guaranteed loans which were already in default. 11 3. The rewritten loans added certain amounts to principal to cover the costs associated with 12 them. Therefore, the only loss that the government could have suffered as a result of the fraud was 13 the additional principal which was added to cover the cost of rewriting the loans that were already in 14 default. 15 4. Generally, about one-half was added to the original defaulted loan when the new loan was 16 made. For example, if a defaulted loan in the amount of $10,000.00 was re-funded and a new loan 17 was written, the new balance on that loan would be $15,000.00 18 I. The Defendant Concurs with the Government that the Loss Amount Should be Based Upon 19 Defendant's Conduct Alone 20 It is this Defendant's position that the intended loss is not nearly what the probation office 21 attributes to her. Nor is it even close to the amount set forth in the plea agreement as a cap for loss 22 amount of $555,583.81, which are the loans written by Mrs. Prather. This is principally due to 23 rewriting loans that were already in default which were backed by the federal government. Mrs. 24 Prather and the co-defendants merely rolled that principal into another federally guaranteed loan 25 adding about one-half to them for administrative costs. Consequently, the amount of the fraud in 26 terms of intended loss should be only the one-half which was added to the principal of the 27 nonperforming loans when they were rewritten. 28 -3Case 2:04-cr-00276-SMM Document 220 Filed 11/18/2005 Page 3 of 6

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Therefore, if the Court accepts this proposition, the intended loss would be as follows: 1. 2. Approximate principal amount of loans in default status which were rewritten by this Defendant: Approximate amount added to above principal when loans were rewritten by the Defendant Total principal amount after adding approximately onehalf for administrative costs $368,389.20 $184,194.61 $552,583.81

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Moreover, the Defendant concurs in the government's view that the probation office's 7 assessments of loss is neither fair, reasonable, nor realistic. A fair, reasonable, and realistic 8 assessment of loss led the parties in this litigation to the conclusion that there should be a cap on the 9 loss amount as set forth in the Plea Agreement at page 3, paragraph d (1), line 11. 10 Indeed, the proposed loss amount suggested by Defendant is consistent with Ninth Circuit 11 law. In this circuit, a "reasonable, realistic, economic approach" to the loss calculation is appropriate 12 in complicated cases because it approximates intended loss. U.S. v. West Coast Aluminum Heat 13 14 approximately one-half added for administrative costs to the already defaulted (and previously 15 federally backed) student loans that were rewritten by Defendant. Hence, the loss amount should be 16 $184,194.61. 17 II. Restitution Amounts 18 The Defendant's position is that the restitution, just as in determination of loss, should be 19 based upon the loans written by the Defendant. As the Court will note in the Plea Agreement and 20 Presentence Report, that amount is also capped. Again, for the reasons cited with respect to 21 determination of loss amounts, the Defendant submits that the restitution amounts should be 22 similarly determined; that is, the administrative costs that were added to the original principal loan 23 that was in default. Of course, restitution must be reduced by the amount of payments which 24 continue to be made by the borrowers. 25 III. More than Minimum Planning 26 Counsel submits that the Defendant entered this conspiracy after it was well underway. She 27 had nothing to do with any planning. In fact, it appears from a review of the facts in this case that 28 -4Case 2:04-cr-00276-SMM Document 220 Filed 11/18/2005 Page 4 of 6 Treating Co., 265 F.3d 986 (9th Cir. 2001). Counsel submits that the true "intended" loss was the

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this conspiracy evolved and happened without any planning. In light of the proof beyond a reasonable doubt standard, the assertion of a more than minimal planning enhancement is especially suspect. IV. Defendant's Health While counsel is going to be brief in addressing this issue, the Court should pay particular attention to Defendant's very serious medical condition. (Paragraphs 42 and 43 of the Presentence Report.) While the presentence writer felt the need to note that the medical condition of the Defendant is "unverified", counsel knows that the Defendant has been hospitalized twice for a total of six weeks during the course of this litigation. Her medical condition is very delicate. These particular health conditions of the Defendant justify a downward departure since it is present here to an unusual degree and thus takes this case as applied to this Defendant out of the "heartland" of cases covered by the guidelines. U.S.S.G. 5K2.0; Koon v. United States, 518 U.S. 81 (1996). V. Cooperation The Court is well aware of this Defendant's cooperation. Counsel undersigned sees no need to address it at any length here. Suffice it to say that the Defendant believes a departure is warranted on this basis. Conclusion If the Court accepts the recommendations made herein, the advisory guidelines would be as follows: Base Offense Level Specific Offense Characteristic Loss Amount (more than 120,000 but less than 200,000) Adjusted Level 6 +7 13 -2 11 -6 -2 3 -5Case 2:04-cr-00276-SMM Document 220 Filed 11/18/2005 Page 5 of 6

23 Acceptance of Responsibility 24 Total Offense Level 25 Government's 5K1.1 Departure 26 "Heartland" 5K2.0 Departure 27 Level 28

1 2 3 4 5 6 Dated: 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6Case 2:04-cr-00276-SMM Document 220 Filed 11/18/2005 Page 6 of 6 11/18/05 /s/ George F. Klink George F. Klink Attorney for Defendant Given the circumstances of this case, a probation sentence is appropriate.