Free Response - 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. 002716 Two R enaissance Square 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-04-0162-02-PHX-SRB Plaintiff, v. Thomas Edward Smith, Defendant. The United States of America, by and through its undesigned attorneys, hereby submits this response to the presentence report prepared in this matter. The government's sentencing recommendation and the reasons therefore are also included in this filing. This response is supported by the following memorandum of points of authorities. Respectfully submitted this 15 th day of September, 2005. PAUL K. CHARLTON United States Attorney District of Arizona S/ Richard I. Mesh RICHARD I. MESH Assistant U.S. Attorney GOVERNMENT'S RESPONSE TO PRESENTENCE REPORT AND SENTENCING RECOMMENDATION

Case 2:04-cr-00162-SRB

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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 1. Introduction

MEMO RANDUM OF POINTS AND AUTHORITIES

The presentence report accurately presents the facts that lead to this prosecution against this defendant. The government has no objections as to the offense level computations reflected in paragraphs 44 through 53 of the presentence report. However, as will be detailed in this memorandum, there exists reasons why the court should depart from the sentencing guidelines in this case and impose a probation sentence.

2. The Pre-Sentence Report Recommendation The presentence report contains a recommendation that the defendant Thomas Edward Smith, should be placed on probation for five years. The presentence report recommendation notes that this is outside the guideline advisory range. That recommendation is based in part "due to the recognition his father (the principal defendant in this case) is the true leader of the criminal conspiracy" and that he could benefit from a program of mental health counseling. The government does not object to the presentence report recommendation. The reasons stated for the presentence report recommendation for probation are in addition to those listed below that led to the plea agreement stipulation for a probation sentence.

3. The Plea Agreement Stipulation In the course of the investigation that lead to the indictment against the defendant, it became obvious that the defendant's father, Joseph Patrick Smith, Jr. (JPS), was the moving force as to the criminal enterprise known as Smith Aerospace Manufacturing Ltd. (SAML ). Joy Slattery, a former SAML employee, advised "nothing could happen (at SAML) without JPS's say." Slattery's statement, 12/10/2003, pg. 37. Another former employee, James Fahy stated "when I started or any member of staff started in Smith Aerospace, you are quite bluntly told at the beginning and on numerous occasions that nothing could be quoted, nothing could be done, 2

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without Joe's (Joseph Patrick Smith, Jr.) okay on it." Fahy's statement 12/11/2003, pg. 28. A third former employee, Cindy Macaulay stated, "JPS (Joseph Patrick Smith, Jr.) had to approve all sales orders before they could be processed. JPS made it blatantly clear that he was the boss and things were to be done his way. I was directed by JPS to report when people did not follow company policy and JPS would deal with the matter." Macaulay's statement, 10/6/2000, pg 2. The government was also aware that Joseph Patrick Smith, Jr. had been previously convicted in the District of Arizona in 1992 of an offense involving the fraudulent sale of aircraft parts for which he received a 15-month prison sentence. After his release from prison, Joseph Patrick Smith, Jr. moved his aircraft parts sales operations to Ireland. The evidence available to the government revealed that both of Joseph Patrick Smith, Jr.'s sons went to work for him in Ireland but "both of the sons were quite afraid of (JPS), they would not confront him on anything." Fahy's statement 10/5/2000 at 12:20 p.m., pg. 9. Fahy provided the following observations concerning the interactions between JPS and his son, the defendant: "Tom was put in as a figurehead (for his father) in the company... He's not the brightest guy in the world... He just did whatever this father wanted him to do... Tom literally couldn't go down and make coffee without his father's permission." Fahy statement, 12/11/03, pg. 63. Other government witnesses provided similar comments. As often is the case in business fraud prosecutions, the workers are the persons whose names and signatures appear on incriminating documents. The principal defendants insulate themselves from proof of their wrongdoing by having their workers be the parties who have third party contact with victims. The workers' testimony is often crucial in establishing a sufficient case for conviction against the true organizers and directors of the criminal activity. Fahy was the salesperson who communicated most of misrepresentations concerning the aircraft parts at the direction of JPS. Joy Slattery was a worker involved in the packing for shipment of misrepresented parts. Each of the JPS's sons were also workers in the enterprise.

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In the course of the settlement negotiations between the government and defendant Thomas Edward Smith, the government was prepared to recommend a downward departure for the defendant pursuant to U.S.S.G., Section 5K1.1 provided that he cooperate with the government and testify against his co-conspirators including his father. Experience teaches that it is usual that family loyalty emerges as an impediment to the government obtaining voluntary cooperation when the prosecution is among family members. The government has instituted an extradition proceeding against Joseph Patrick Smith, Jr. who continues to reside outside the United States and is a citizen of Ireland. The Department of Justice, Office of International Affairs, which coordinates extradition requests with the U.S. State Department, has indicated that the expected length of time for extradition for a citizen from Ireland can run in excess of three years. The prosecution of this case will require the appearance of several former employees of SAML who reside in Ireland, as well as several Irish law enforcement officers who executed a search warrant at SAML facilities in Shannon, Ireland. Several other Irish law enforcement officers who took statements from each of the defendants will also be necessary witnesses in the government's case in chief. The government sought to reduce the burden arising from two separate trial appearances as to these Irish witnesses since the trial of this defendant would proceed without his father and codefendant being a party. As part of the settlement negotiations, the defendant was made aware though his attorney that if he pled guilty pursuant to a plea agreement that precluded his right to appeal, as does the current plea agreement, he could thereafter be called as an involuntary witness to testify concerning his own involvement and that of other co-conspirators in this case. See United States v. Moore, 682 F.2d 853, 856 (9 th Cir. 1982). The defendant was further made aware that if he was called as an involuntary witness he would be subject to the same perjury laws for a false statement as any other witness. Title 18 U.S.C., Section 1621. The defendant was further made aware that his refusal to testify when called as an involuntary witness could lead to his being held in contempt by the court and being

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subject to additional incarceration for such contempt on his part. United States v. Doe, 125 F. 3d 1249, 1254 (9 th Cir. 1997). In return for a guilty plea which included the waiver of his appellate rights, the government agreed to a plea agreement which contained a sentencing stipulation to probation. This stipulation was the same as would have been recommended by the government under a section 5K1.1 cooperation agreement. The conditions of probation under the plea agreement are in the court's discretion. The defendant signed the plea agreement with knowledge of the above. The government gained a strategic benefit through the defendant's plea even aside from having him available as an involuntary witness against his father. The further benefit is that the defendant's potential testimony will blunt any attempt on the part of his father from laying the blame for the sale of fraudulent aircraft parts on his sons. Testimonial and documentary evidence shows the defendant was the person who handled the distribution of knowingly misrepresented aircraft parts. The government submits this was all done under the direction of his father and codefendant. The government submits that because the defendant through his plea has made himself available as a witness, albeit an involuntary one, in the potential trial against his father, this is a sufficient reason for the government to urge the court to sentence the defendant below the guideline range. The government's action reflects a balancing of the expected benefits to be derived by the government from the likely testimony of the defendant against his father while still fulfilling the government's obligation to seek a sufficient sanction against the defendant, to wit: a felony conviction, for his own criminal involvement in this situation. It is further submitted by the government that the circumstances present in this case fall within U.S.S.G. §5K2.0, the policy statement which establishes the basis for a departure from the guidelines. It is within the court's discretion to impose a probation sentence since the United States Supreme Court in United States v. Booker, 125 S.Ct. 738, (decided Jan. 12, 2005) severed from the 1984 Federal Sentencing Act the provision that mandated the court's adherence to the guidelines. 5

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4. Conclusion Based on all the foregoing, the government respectfully requests this court to accept the plea agreement entered into between the parties and impose a probation sentence against the defendant, subject to such terms as the court deems appropriate. The defendant should be required to pay restitution in the amount of $24,722 as indicated in the presentence report.

Respectfully submitted this 15 th day of September, 2005.

PAUL K. CHARLTON United States Attorney District of Arizona S/Richard I. Mesh RICHARD I. MESH Assistant U.S. Attorney
I hereby certify that on September 15 th, 2005, I electronically transmitted the attached document to the Clerk's Office using the CM /ECF System for filing and tra nsmittal of a Notice of Electronic Filing to the following CM/ECF registrant(s): Honorable Susan R. Bolton U.S. District Judge 401 W . Washington Street Phoenix, Arizona 85003 James C. Braden Attorney At Law 1440 W . Washington, Phoenix, AZ 85034 Attorney for d efendant T hom as E. S mith [email protected] Jon P. Evanko U.S. Probation Officer 401 W . Washington Street Phoenix, Arizona 85003

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