Free Objection to Presentence Investigation Report - District Court of Arizona - Arizona

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PAUL K. CHARLTON United States Attorney District of Arizona Richard I. Mesh Assistant U.S. Attorney Arizona State Bar No. 02716 Two Renaissance Squares 40 N. 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-04-0276-01-PHX-SMM Plaintiff, v. Robert C. Hazlett, Defendants. The United States of America through its undersigned attorneys, hereby submits the following objections to the Presentence Investigation Report (PSR) concerning Robert C. Hazlett dated April 28, 2006. 1. PSR, paragraph 13 Based on current records supplied by victim SunTrust Bank, of the 537 student loans obtained through fraudulent means, the bank was reimbursed by the victim Educational Credit Management Corporation (ECMC) for the losses sustained incident to the default of 229 loans that had an original face value of $1,503,648.62. Additionally, ECMC declined to accept SunTrust Bank's claims for an additional 55 loans that had been obtained by fraud, where the original face value was $364,796.29. Forty nine of these loans are currently in a default status. The United States Department of Education has assumed responsibility for 8 loans which originally were subrogated by ECMC. Therefore, there is a grand total of 111 loans currently in a default status. The PSR reflected that 240 loans are currently in a default status but that was based upon an earlier reporting. In the interim, a substantial number of defaulted loans held by ECMC have been resolved by the original student borrowers, either through further GOVERNMENT'S OBJECTIONS TO PRESENTENCE REPORT

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consolidations of those loans with new independent lenders or through the loans being paid in full by the obligated borrowers. (See Attachment 1, ECMC loan list and Attachment 2, SunTrust defaulted loan list) 2. PSR, paragraph 16 The report correctly states that Greg Evans and James Stevens testified that they never received a memo dated July 13, 1999, which allegedly indicated Hazlett's disdain with them upon the discovery of fraudulent histories being used for loan consolidations. The PSR fails to reflect that Hazlett produced a similar letter on the same subject and addressed to Tom Friedlander. (Trial Exhibit # 77) The letters were produced by defendant Hazlett pursuant to a grand jury subpoena for his business records. Friedlander, likewise denied receiving such a letter. The defendant, to the contrary, testified at trial that he had a personal discussion with each of the men concerning the letters and their contents. No other person was ever presented to validate the existence of these letters. The evidence established that Hazlett signed two fraudulent loans verifications dated on the same date as the letters. All this leads to the conclusion, based upon the available credible evidence, that Hazlett made up the letters to assist in his defense. 3. PSR, paragraph 17 This paragraph reflects the original computation as to each of the defendants' participation in the conspiracy as to the number of fraudulent loans they individually prepared. Fifty six-additional fraudulent loans were prepared by other collectors working at Valley Acceptance Corporation. The collectors who prepared these 56 loans were not prosecuted for various reasons. Irrespective of which loan collector actually prepared the fraudulent

documentation, Hazlett was the recipient of the lion's share of the commission income from these loan consolidations. 4. PSR, paragraph 19

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PSR, paragraphs 19 should be amended to reflect that ECMC has refused to pay guarantee claims to Suntrust Bank on 55 loans for a total loss of $351,910.27. (See Attachment 2) However. Six of those loans after default were restored to a repayment status. 5. PSR, paragraph 20 The records supplied by ECMC reflect that eight loans have been consolidated to the United States Department of Education. Therefore, these loans are no longer carried on the ECMC books. However, the losses on those files have been assigned to the Department of Education and represent an additional $44,879 of restitution owed to that federal agency. 6. PSR, paragraph 21 This paragraph is incorrect in its assertion that the defendant did not impede or obstruct justice. The United States Sentencing Guidelines, Section 3C1.1, Obstructing or Impeding the Administration of Justice, imposes a two-level increase, If (A) the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the Administration of Justice during the course of the investigation, prosecution, or sentencing of the instant offense of conviction, and (B) the obstructive conduct related to (i) the defendant's offense of conviction and any relevant conduct; or (ii) a closely related offense. The application notes to that section provides:

17 18 19 The three letters refer to PSR paragraph 16, each dated July 13, 1999, were produced via 20 a grand jury subpoena to Valley Acceptance Corporation. The defendant testified at trial to 21 having prepared the documents himself and having personally discussed with each man the 22 contents of the letters. Each of the three men, Tom Friedlander, Greg Evans and James Stevens, 23 denied under oath ever having seen the letters or having a meeting with the defendant concerning 24 the subject matter of the letters. 25 Producing those false letters pursuant to a grand jury subpoena during the investigative 26 stage of this case was, by definition, obstructing on the part of the defendant. Testifying falsely 27 as to the existence of the letters was, by definition, obstructing on the part of the defendant. The 28 C) producing or attempting to produce a false, altered, or counterfeit document or record during an official investigation or judicial proceeding is of the type of conduct to which this adjustment applies.

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government bears the burden of proving by a preponderance of the evidence that the defendant obstructed the administration of justice. U.S. v. Brennan, 326 F.2d 176 (3rd Cir. 2003). 7. PSR, paragraph 22 The defendant elected not to discuss the instant offense with the probation officer. There has been no adjustment for acceptance of responsibility in the calculation of the offense level. (PSR, paragraph 31). However, the defendant waived his right to remain silent and testified during his trial in a fashion that clearly demonstrated he does not accept any responsibility for his criminal conduct. As the Court noted in its findings of fact dated February 9, 2006 at page 24, "the testimony and exhibits admitted at trial do not support defendant's version of the facts. Rather, the testimony and exhibits conclusively demonstrate that defendant knowingly joined the scheme to defraud SunTrust Bank and the Department of Education with the specific intent of defrauding both the bank and the department, and that he committed overacts in furtherance of that scheme." 8. PSR, paragraph 32 The total offense level is calculated as 23 without the inclusion of the two additional levels that should be included for obstructing justice. Therefore, the total offense level should be 25. As an adjusted offense level of 25, the sentencing range would be 57-71 months. However, this range is impacted by the stipulation of the parties limiting the loss to $500,000. 9. PSR, paragraph 34 The parties stipulated prior to the submission of this case to the court that the loss would be not more than $500,000.00. This stipulation was based upon the alternative calculation of the unjust enrichment obtained by the conspiracy from commissions earned on the fraudulent loans which subsequently went into default. This alternative calculation took into account that student loans, guaranteed by the government, are not dischargeable in bankruptcy and can be collected though an offset of tax refunds due the borrowers until the debt is satisfied. It also took into account the fact that 50 percent of the fraudulent loans continued as performing loans, without loss, once they had been consolidated by the SunTrust Bank. As such, the total offense level was set at 19 by the Probation Department. That level should be adjusted by two additional

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points for obstructing. Therefore, the guideline range for imprisonment would be 37-46 months. The guideline fine range would be $7,500.00 to $75,000.00. The government respectfully requests that the draft presentence investigation report be amended to reflect these objections and corrections. Respectfully submitted this11 th day of May, 2006. PAUL K. CHARLTON United States Attorney Districts of Arizona S/Richard I. Mesh Richard I. Mesh Assistant U.S. Attorney
I hereby certify that on May11th , 2006, 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 registrant(s): Honorable Stephen M. McNamee United States District Judge Booker T. Evans, Jr. Attorney at Law Greenberg Traurig, LLP 2375 E. Camelback Rd., Suite 700 Phoenix, AZ 85012 Attorney for Defendant Hazlett Shawn T. Shear Senior U.S. Probation Officer 401 W . W ashington Street, Suite 160 Phoenix, AZ 85003 S/Richard I. Mesh

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