Free Response to Motion - District Court of Arizona - Arizona

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PAUL K. CHARLTON United States Attorney District of Arizona John R. Lopez IV Assistant U.S. Attorney Arizona State Bar No. 019182 Two Renaissance Square 40 North Central, Suite 1200 Phoenix, Arizona 85004-4408 Telephone: (602) 514-7500 [email protected]

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

United States of America, Plaintiff, v. Jeanette Wilcher, Defendant.

CR-03-1098-PHX-EHC UNITED STATES' RESPONSE TO MOTION FOR RELEASE PENDING APPEAL AND FOR STAY OF SENTENCE OF IMPRISONMENT

The United States of America, through undersigned counsel, hereby files its Response to Motion for Release Pending Appeal and for Stay of Sentence of Imprisonment. For the reasons set forth in the attached Memorandum of Points and Authorities, the government respectfully requests that the Court deny Defendant's Motion.

Respectfully submitted this 3rd day of November, 2006.

PAUL K. CHARLTON United States Attorney District of Arizona S/ John R. Lopez IV JOHN R. LOPEZ IV Assistant U.S. Attorney

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MEMORANDUM OF POINTS AND AUTHORITIES I. BACKGROUND On October 22, 2003, Defendant Jeanette Wilcher ("Defendant") was indicted on 8 counts of wire fraud, promotional money laundering and transactional money laundering for defrauding an elderly victim of approximately $3.3 million through a fictitious high-yield investment trading program and transferring the victim's money through various bank accounts and purchasing a house with the funds. 1/ On April 17, 2006, after nearly three years of delay attributable primarily to Defendant's appointment or retention of seven attorneys of record, a jury convicted Defendant on seven counts of wire fraud, promotional money laundering and transactional money laundering. Defendant's sentencing is set for November 13, 2006. The Presentence Investigation Report ("PSR") recommends a sentence of 97 months imprisonment. (PSR at 17.) On November 1, 2006, Defendant filed the instant Motion for Release Pending Appeal and for Stay of Sentence of Imprisonment. II. LEGAL ARGUMENT A. Standard for Release Pending Appeal

"[A] judicial officer shall order a person who has been found guilty of an offense and sentenced to a term of imprisonment, and who has filed an appeal or a petition for a writ of certiorari, be detained, unless the judicial officer finds (A) by clear and convincing evidence that the person is not likely to flee or pose a danger to the safety of any other person or the community" . . . and (B) that the appeal is not for the purpose of delay and raises a substantial question of law or fact likely to result in (i) reversal, (ii) an order for a new trial, (iii) a sentence that does not include a term of imprisonment, or (iv) a reduced sentence to a term of

On October 4, 2004, the Court severed Count 8 of the indictment, a mail fraud count, which involved a scheme to obtain shares of stock from a company under false pretenses, artificially inflate the stock price, then sell the shares at the inflated price for a profit. 2

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imprisonment less than the total of the time already served plus the expected duration of the appeal process." 18 U.S.C. § 3143(b)(1) (Emphasis added.) Defendant should not be released because she fails to demonstrate by clear and convincing evidence that she does not pose an economic danger to the safety of the community and she fails to raise a substantial question of law or fact likely to result in her requested relief. B. Defendant Has Failed To Demonstrate By Clear And Convincing Evidence That She Does Not Pose a Danger To The Safety Of The Community.

It is well-settled that danger to the community that will justify denial of a request for bail 8 pending appeal may encompass pecuniary or economic harm. See, e.g., United States v. 9 10 This Court's finding that Defendant poses an economic danger to the community is supported 11 by Defendant's conviction in the instant case, as well as her lengthy history of financial 12 misconduct, including her pending indictment on Count 8 of the indictment. In the present case, 13 Defendant was convicted for defrauding an elderly victim of $3.3 million and diverting the 14 victim's funds to support an extravagant lifestyle. In addition, Defendant was indicted in Count 8 15 for engaging in a sophisticated scheme to obtain shares of stock from a company under false 16 pretenses, artificially inflate the stock price, then sell the artificially inflated shares at a profit. 17 (PSR ¶ 40.) Defendant sold her artificially inflated shares at a profit in excess of $1,000,000. 18 (PSR ¶ 40.) Defendant's conviction and her pending indictment demonstrate that Defendant is 19 willing and capable of perpetrating sophisticated financial crimes. 20 The economic danger Defendant presents to the community is also illustrated by her 21 significant history of civil litigation involving financial misconduct. Defendant has been named 22 as a defendant in at least 10 separate civil proceedings in Maricopa County, Arizona, and has 23 been ordered to pay over $23,000,000 in judgements for various fraudulent financial dealings. 24 (PSR ¶¶ 56, 60-75.) Many of these civil actions have involved financial fraud, including 25 investment scams (PSR ¶ 61), fraudulent possession of a home (PSR ¶ 63), failure to pay rent on 26 a commercial property (PSR ¶ 68), and a Securities and Exchange Commission action concerning 27 28 3 Reynolds, 956 F.2d 192, 192-93 (9 th Cir. 1992).

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the scheme alleged in Count 8 of the indictment (PSR ¶ 74.) In addition, despite claims that she is worth in excess of $2 billion (PSR ¶ 59), Defendant has failed to file tax returns (PSR ¶ 75.) Defendant has failed to demonstrate by clear and convincing evidence that she does not pose an economic danger to the community. See, Reynolds, 956 F.2d at 192-93. The government respectfully submits that Defendant's history of financial fraud simply does not permit such a showing. Consequently, Defendant is not entitled to release pending appeal, even if she were to raise substantial questions of law or fact likely to result in a reversal of her conviction or a reduction in her sentence. Accordingly, the government respectfully requests that this Court deny Defendant's Release Motion on this ground alone. C. Defendant Does Not Raise Any Question of Law or Fact, Much Less a "Substantial One," Likely to Result in Relief From Her Conviction or Sentence. A "substantial question" of law or fact within the context of 18 U.S.C. § 3143 is one that is

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"fairly debatable." United States v. Handy, 761 F.2d 1279, 1283 (9 th Cir. 1985) (citing D'Aquino v. United States, 180 F.2d 271, 272 (11 th Cir. 1950)). "In short, a `substantial question' is one of more substance than would be necessary to a finding that it was not frivolous." Handy, 761 F.2d

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at 1283 (citing United States v. Giancola, 754 F.2d 898, 901 (11 th Cir. 1985)). In this case, Defendant states that she intends to appeal her conviction on the following

17 grounds: (1) the Court's refusal to give a special verdict requiring the jury to specify what false 18 promise or statement was made; (2) insufficiency of the evidence of specific intent; (3) the 19 Court's denial of Defendant's request to allow her to re-depose the victim, and (4) the Court's 20 denial of the motion for mistrial based upon the victim's deposition testimony relating to civil 21 litigation. The government submits that Defendant has failed to raise a "substantial question" of 22 law or fact within the context of 18 U.S.C. § 3143 because these grounds are not "fairly 23 debatable." 24 First, the Court's refusal to give a special verdict form requiring the jury to specify what false 25 promise or statement was made does not present a "substantial question" for appeal because it 26 was not required or necessary. 27 28 4 Defendant was alleged to have orchestrated a fraudulent

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investment scheme, using unwitting intermediaries, who solicited an investment on behalf of Defendant. The victim, Ms. Gillaspie, provided her funds to the intermediaries pursuant to a contract they obtained from Defendant. Ms. Gillaspie's money to Defendant. The intermediaries then immediately forwarded

Defendant disbursed Ms. Gillaspie's funds to the

intermediaries as commissions, made Ponzi-type payments to Ms. Gillaspie through the intermediaries, and retained the bulk of Ms. Gillaspie's funds for her own use. The evidence demonstrated that Defendant never invested Ms. Gillaspie's funds as promised. The basis for the jury's verdict is self-evident. Second, Defendant's claim that there was insufficient evidence of her specific intent to commit wire fraud and money laundering is belied by the record. The government demonstrated that Defendant never invested Ms. Gillaspie's money and that Defendant, alone, controlled the funds. The evidence also proved that Defendant used Ms. Gillaspie's investment to support her lifestyle, including purchasing an expensive home in Scottsdale, Arizona. Defendant's specific intent to commit the charged offenses is supported by overwhelming evidence of her failure to invest Ms. Gillaspie's money, her elaborate scheme to conceal her conversion of the funds, and her movement of the money through various accounts and her purchase of the Scottsdale home. Third, Defendant's claim that she was legally entitled to re-depose Ms. Gillaspie, an elderly woman in dramatically ill-health, including suffering from virtual blindness and deafness, fails to raise a substantial issue of law or fact. Ms. Gillaspie was subject to thorough cross-

examination by one of Defendant's previous attorneys. As the Court has noted, Defendant's claim that her previous attorney's cross-examination of Ms. Gillaspie was constitutionally defective is belied by the record. This issue does not present a "substantial issue" of law or fact for appeal. Finally, Defendant argues that the Court erroneously denied her motion for a mistrial due to Ms. Gillaspie's reference in her deposition to civil ligation arising out of this case. As this Court is aware, Ms. Gillaspie's reference to civil litigation was elicited by Defendant's attorney during cross-examination. Moreover, Ms. Gillaspie never stated that she sued the Defendant. To the 5

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contrary, Defendant's attorney's line of questioning concerned whether Ms. Gillaspie had sued the intermediaries who solicited her investment. In fact, Ms. Gillaspie testified that one of the intermediaries, not Defendant, had attempted to settle her civil case. Contrary to Defendant's claim of prejudice, Ms. Gillaspie even testified that she never met the Defendant. This ground also fails to raise a "substantial issue" for appeal. III. CONCLUSION

The government respectfully requests that the Court deny Defendant's Motion for Release Pending Appeal because (1) she fails to demonstrate by clear and convincing evidence that she does not pose an economic danger to the safety of the community, and (2) she fails to raise a substantial question of law or fact likely to result in her requested relief. Respectfully submitted this 3 rd day of November, 2006.

PAUL K. CHARLTON United States Attorney District of Arizona /S/ John R. Lopez IV JOHN R. LOPEZ IV Assistant U.S. Attorney

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CERTIFICATE OF SERVICE I hereby certify that on November 3, 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 registrants: Deborah Euler-Ajayi Assistant Federal Public Defender

/S/ John R. Lopez IV

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