PHILLIP A. TALBERT Acting United States Attorney BRIAN A. FOGERTY Case Document 16 Filed 12/08/16 Page 1 of 18 FILED DEC 182016 . - . CLERK, us. DISTRICT Assmtant Umted States Attorney EASTERN 0U 501 I saw, Suite 10-100 a, Sacramento, CA 95814 DEPUTY ct?at Telephone: (916) 554-2700 Facsimile: (916) 554?2900 Attorneys for Plaintiff United States of America IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA UNITED STATES OF AMERICA, CASE NO. TLN Plaintiff, PLEA AGREEMENT v. KEVIN LEE CO, Defendant. I. INTRODUCTION A. Scope of Agreement. The information in this case charges the defendant with yiolations of 18 U.S.C. 1343 - Wire Fraud (8 counts); and 18 U.S.C. 1956(a)(1)(B)(i) Money Laundering (3 counts). This document contains the complete plea agreement between the United States Attorney?s Of?ce for the Eastern District of California (the ?government?) and the defendant regarding this ca 36. This plea agreement is limited to the United States Attomey?s Of?ce for the Eastern District of California and cannot bind any other federal, state, or local prosecuting, administrative, or regulatory authorities. B. Court Not a Party. The Court is not a party to this plea agreement. Sentencing is a matter solely within the discretion of the Court, and the Court may take into consideration any and a1 PLEA AGREEMENT 1 16/ 1 facts and circumstances ?1111 Case Document 16 Filed 12/08/16 Page 2 of 18 concerning the criminal activities of defendant, including activities which may not have been charged in the information. The Court is under no obligation to accept any recommendations made by the government, and the Court may in its discretion impose any sentence it deems apprOpriate up to and including the statutory maximum stated in this plea agreement. If the Court should impose any sentence up to the maximum established by the statute, the defendant cannot, for that reason alone, withdraw his guilty plea, and he will remain bound to ful?ll all of the obligations under this plea agreement. The defendant understands that neither the prosecutor, defense counsel, nor the Court can make a binding prediction or promise regarding the sentence he will receive. II. OBLIGATIONS A. Guilty Plea. The defendant will plead guilty to Count One, Wire Fraud in violation of 18 U.S.C. 1343, and Count Nine, Money Laundering in violation of l8 U.S.C. The defendant agrees that he is in fact guilty of these charges and that the facts set forth in the Factual Basis for Plea attached hereto as Exhibit A are accurate. The defendant agrees that this plea agreement will be ?led with the Court and become a part of the record of the case. The defendant understands and agrees that he will not be allowed to withdraw his pleas should the Court not follow the govemment?s sentencing recommendations. The defendant agrees that the statements made by him in signing this Agreement, including the factual admissions set forth in the factual basis, shall be admissible and useable against the defendant by the United States in any subsequent criminal or civil proceedings, even if the defendant fails to enter a guilty plea pursuant to this Agreement. The defendant waives any rights under Fed. R. Crim. P. and Fed. R. Evid. 410, to the extent that these rules are inconsistent with this paragraph or with this Agreement generally. 1. Waiver of Indictment: The defendant acknowledges that under the United States Constitution he is entitled to be indicted by a grand jury on the charges to which he is pleading guilty and that pursuant to Fed.R.Crim.P. 7(b) he agrees to waive any and all rights he has to being prosecuted by way of indictment to the charges PLEA AGREEMENT 2 A DJ IQ Case Document 16 Filed 12/08/16 Page 3 of 18 set forth in the information. The defendant agrees that at a time set by the Court, hewiI-l sign a written waiver of prosecution by Indictment and ConSent to proceed by Information rather than by Indictment. B. Restitution. The Mandatory Victim Restitution 'Act requires the Court to order restitution to the victims of certain offenses. The defendant agrees the conduct to which he is pl ending guilty requires mandatory restitution pursuant to 1.8 U.S.C. and agrees to pay restitution to the victim, Hell of California, for the total loss to Holt of California as a result of the scheme in- the amount of $4,542,236.08. Restitution payments shall be by Cashier?s or certi?ed check made payable to the Clerk of the Court. C. 313; The defendant reserves the right to argue to Probation and at sentencing that he is unable to pay a ?ne, and that no ?ne should be imposed. The defendant understands that it ishis burden to af?rmatively prove that he is unable to pay a fine, and agrees to provide a ?nancial statement under penalty of perjury tothe Probation Of?cer and the govemment in advance of the issuance of the draft Pro-sentence Investigation Report, along with supporting decurnentation. The government retains the right to oppose the waiVer of a ?ne. If the Court imposes a ?ne, the defendant agrees to pay such ?ne if and as ordered by the Court, up to the statutory maximum ?ne for the defendant?s offen'ses. Any ?ne. payments: shall be by cashier?s or certi?ed check made payable to the Clerk of the Court. I). Special Assessment. The defendant agrees to pay a special. assessment of $200 at the time of sentencing by delivering a check or money order payable to the United States District Cotu't to the. United States Probation Of?ce immediately before the sentencing hearing. The defendant. understands that this plea agreement is voidable at the option of the government if he fails to pay the assessment prior to that hearing. If the defendant is unable to pay?the special assessment at the time of sentencing, he agrees to earn the money to pay the assessment, if necessary by participating in the Inmate Financial Responsibility Program. E. Violation. of Plea Agreement by Defcn dam/Withdrawal of Pleas. If the defendant violates this plea agreement in any way, withdraws his plea, or tries to withdraw his plea, this plea agreement is voidable at the option of the government. If the government elects to 134/3th AGREEMENT xoeo-qoxwmasua Case Document 16 Filed 12/08/16 Page 4 of 18 void?the agreement based on the defendant?s violation, the. government will no longer be bound by its representations to the defendant conceming the limits on criminal prosecution and sentencing as set forth herein. A defendant violates the plea agreement by committing any crime or providing or- procuring any statement or testimony which is knowingly false, misleading, or materially incomplete in any litigation or sentencingprOCess in this-case, or engages in any constituting obstruction, of justice. Thergovemment also shall have the right (1) to prosecute the defendant on any of the counts to Which he pleaded guilty; (2) to reinstate any counts that may be dismissed pursuant'to this plea agreement; and (3) to ?le any new charges that would otherwise be barred by this plea agreement. The defendant shall thereafter be subject to prosecution for any federal criminal violation of which the govemment has. knowledge. The decision to pursue any or all of these options is solely in the discretion of the United States Attorney?s Office. By signing this plea agreement, the defendant agrees to waive any objections, motions, and defenses that therdefendant might have to the government?s decision. Any prosecutions that are not time-barred by the applicable statute of limitations as of the date of this plea agreement may be commenced in accordance with this paragraph, notwithstanding the. expirationof the statute of limitations between the signing of this plea agreement and the commencement of any such prosecutions. The defendant agrees not to raise any objections based on the passage of time with respect to such counts including, but not limited to, any statutes of limitationor any objections based on the Speedy i Trial Act or the Speedy Trial Clause of the Sixth Amendment to. any counts that were not time-barred as of the date of this plea agreement. The determination of whetherthe defendant has violated the plea agreement will be under a probable cause standard. In addition, (1) all statements made by the defendant to the government or other designated law enforcement agents, or any testimony given by the defendant before a grand jury or other tribunal, whether before or after this plea agreement, shall be admissible in evidence in any criminal, civil, or administrative, proceedings hereafter brought against the defendant; and (2) the defendant shail assert no claim under, the United States. Constitution, any Statute, Rule 11(t) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of Evidence, or any other federal rule, that statements made by the defendant before or after this plea agreement, or any leads derived therefrom, should be suppressed. PLEA 4 Case Document 16 Filed 12/08/16 Page 5 of 18 By signing this plea agreement, the defendant waives any and all rights in the foregoing respects. F. Forfeiture. The defendant agrees to forfeit to the United States voluntarily and immediately aIlfof his right title and interest to any and all assets subject to forfeiture pursuant to 18 U.S.C. 28 U.S.C. 2461(c), and 18 U.S.C. Those?assets include, but are not limited to, the following: .1. Approximately $3,000 in hitcoin; 2. A money judgment in the amount. of $4,894,55 .6 l. The defendant agrees that the listed assets constitutes property involved in, Or proceeds of, violations of 1343 and 18 U.S.C. The defendant agrees to fully assist the government in the forfeiture of the listed assets and to take whatever steps are necessary to pass clear title to the United States, including liquidating any digital assets. The defendant shall not sell, transfer, convey, or otherwise dispose of any of'his assets, including hut'not limited to, the above?listed assets. The defendant also voluntarily stipulates and agrees that as part of his sentence the Court may, pursuant to Fed. R. Crim. P. order a forfeiture money judgment in an amount up to' $4,894,551.61, less any forfeited funds. The. defendant agrees not to ?le a claim toany of the listed property in any civil proceeding, administrative or judicial, which may be initiated. The defendant agrees to waive his right to notice of any forfeiture proceeding involving this preperty, and agrees to not file a claim or assist others in ?ling a claim in that forfeiture proceeding. The defendant knowingly and voluntarily waiv'ES his right to a jury trial on the forfeimre of assets. The defendant knowingly and voluntarily waives alleonstitutional, legal and equitable defenses to the forfeiture of these assets in any proceeding. The defendant agrees to waive any jeopardy defense, and agrees to waive any claim or defense under the Eighth Amendment to the United States Constitution, including any claim of execssive ?ne, to the fdrfeihrre of the assets by the United States, the State of California er its subdivisions. The defendant waives oral pronouncement of forfeiture at the time of sentencing, and any defenses or defects that may pertain to the forfeiture. PLEA AGREEMENT 5 era/tilt Case Document 16 Filed 12/08/16 Page 6 of 18 G. i Asset Disclosure. The defendant agrees to make a full and complete disclosure of his assets and ?nancial condition, and will complete the United States Attorney?s Of?ce?s ?Authorization to Release Information? and ?Financial Af?davit? within ?ve (5) weeks from the entry of the defendant?s change ofplea, including supporting documentation. The defendant also agrees to have the Court enter an order to that effect. The defendant understands that if he fails to complete truthfully and provide the described documentation to the United States Attorney?s of?ce within the allotted time,-he wi ll be considered in violation of the agreement, and the government shall be entitled to the remedies set forth in section above. H. Agreement to Cooperate. The defendant. agrees to cooperate. fully with the government and any other federal, state, or local law enforcement agency, as directed by the govemment. As used in this plea agreement, ?cooperation? requires the defendant: (1) to respond truthfully and Completely to all questions, whether in interviews, in correspondence, telephone conversations, before a grand jury, or at any trial or other cOtlt?t proceeding; (2) to attend allmeetings, grand jury sessions, trials, and other proceedings at which the defendant?s presence is requested by thegovenmient or compelled by subpoena or court order; (3) to produce voluntarily any and all documents, records, or other tangible evidence requested by the government; (4) not to participate in any criminal activity while cooperating with the government; and (5) to disclose to the government the existence and status of all money, prOperty, or assets, of any kind, derived from or acquired as a result of, or used to facilitate the commission of, the defendant?s illegal activities or the illegal activities of any conspirators. THE GOVERNMENTS OBLIGATIONS A. Dismissal's/Other Charges. The government agrees to move, at the time of sentencing, to dismiss without prejudice the remaining counts in'thc pending information. The government also agrees not to reinstate anydismissed count except if this agreement is voided as set forth herein, or as provided in. paragraphs (Violation of Plea Agreement by Defendant/Withdrawal of Plea(s)), I'l'l.B.3 (Reduction of Sentence for Cooperation), VLB (Estimated Guideline Calculation), and VILB (Waiver of Appeal and Collateral uhlr PLEA AGREEMENT Case Document 16? Filed 12/08/16 Page 7 of 18 Attack) herein. B. Recommendations. _1 . Incarceration Range. The will recommend that the defendant be sentenced to the low end oE-the applicable guideline range as determined by the Court. 2. Acceptance of Responsibility. The govenrment will recommend a two-level reduction (if the offense level is less than 16) or" a three-level reduction (if the offense level reaches 16) in the computation of his offense level if the defendant clearly demonstrates acceptance of responsibility for his conduct as de?ned in U.S.S.G, 3131.1. This-inclirdes the defendant meeting with and assisting the probation of?cer-in the preparation of the pre-sentence report, being truthful and candid with the probation not otherwise engaging in conduct that constitutes obstruction of justice within the meaning of U.S.S.G 3C1.1, either in the preparation of the pro-sentence report or during the sentencing proceeding. 3. Reduction of Sentence for Cooperation. The government agrees to recommend at the time of sentencing that the defendant?s sentence of imprisonment be reduced by up to 50% of 'the applicable guideline sentence'if he provides substantial assistance to the government, pursuant to U.SA.S.G. 5K1 .1. The defendant understands that he must comply with paragraphs [Hi and not violate this plea agreement asset forth in paragraph llrE herein. The defendant understands that it iswitltin the sole and exclusive discretion of the government to determine whether the defendant has provided substantial. assistance. The defendant understands that the may recommend a reduction in his sentence of less than 50% or-no reductiOn at all; depending upon the level of assiStance the government determines that the defendant has provided. The defendant further understands that a motion pursuant to U.S.S.G. 5K1.l is only a recommendation and is not binding on the Court, that this plea agreement confers no right upon the defendant to require that the government make a 5K1.1 motion, and that this plea agreement confers no remedy? upon the defendant in the event that the government declines to make a 5K1.1 motion In particular, the defendant agrees not to try to ?le a motion to withdraw his guilty pleas based on the fact PLEA AGREEMENT A 7 Case Document 16 Filed 12/08/16 Page 8 of 18 that the government decides not to recommend a sentence reduction or recommends a sentence reduction less than the defendant thinks is appropriate. If the government detennines that the defendant has-provided furthercooperation within one year following sentencing, the government may move for a further reduction of his sentence pursuant to Rule 35 of the Federal Rules of Criminal. Procedure. C. Use of Information for Sentencing. The government is free to provide full and accurate information to the Court and Probation, including answering any inquiries made by the Court andlor ProbatiOn and rebutting any inaccurate statementsor arguments by the defendant, his attorney, Probation, or the Court. The defendant also understands and agrees that nothing in this Plea Agreement bars the government from defending on- appeal or collateral review- any sentence that the Court may impose. IV.. ELEMENTS OF THE. OFFENSE At a trial, the government Would have to prove beyond a reasonable doubt the following elements ol?the offenses to which the defendant'i-s pleading guilty: Count One Wire Fraud (18 U.-S.C. 1343) First, the-defendant knowingly devised a scheme or plan to defraud, or scheme or plan for obtaining money or property by means of false or fraudulent pretenses, representatidns, or promises; Second, the statements made or facts omitted as part of the scheme were material; that is, they had a natural tendency to in?uence, or were capable of in?uencing, a person to part with money .or property; Third, the defendant acted with the intent to defraud, that is, the intent to deceive, or Cheat; and Fouith, the defendant used, or caused to be used, a wire communication to carry out or attempt to carry out an essential part of the scheme. Count Nine Money Laundering (18 U.S.C. First, the defendant conducted a ?nancial transaction involving property that represented the proceeds ofwire fraud, in violation of 18 U.S.C. 1343; PLEA AGREEMENT I?n r?r?It?ty?IHb?oy?nl?Ip?A mummeri?o l9 omqmmeum Case Document 16 Filed 12/08/16 Page 9 of 18 Second, the defendant knew that the property representedthe proceeds of some form. of unlawful activity; and Third, the defendant knew that the transaction was designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds. The defendant fully understands the nature and elements of the crimes charged in the informatiOn to which he is pleading guilty, together with the possible defenses thereto, and has discussed them with his attorney. V. MAXIM UM SENTENCE Maximum Penalty. The maximum sentence that the Court can impose for Wire Fraud, in? violation of 18 U.S.C. 1343, is 20 years of incarccration, a ?ne of $250,000, a 5?year period of supervised release and a special assessment of$ 100. The maximum sentence that the Court can impose for Money Laundering, in violation of? 18 U.S.C. is 20 years of incarceration, a ?ne of $500,000'or twice the value of the property involved in the transaction, a 5-year period of supervised release and a special assessment o.f$100. By signing this plea?agreernent, the defendant also agrees that the Court can order the payment-of restitutiorn for the full loss caused by the defendant?s wrongful conduct. The defendant agrees that the. restitution Order is not restricted to thearnounts alleged in the speci?c counts to which he is pleading guilty. The defendant further agrees, as noted above, that he will not attempt to discharge in any present or future bankruptcy procaeding any restitution imposed by the Court. B. Violations of Supervised Release. The defendant understands that if he violates a condition of supervised release at any time during the term of supervised release, the Court may revoke the term of Supervised release and require the defendant to serve up to 3 additional years of imprisonment VI. SENTENCING DETERMINATION A. Statutory Authority. The defendant understands that the Court must consult the Federal Sentencing Guidelines and must take them into account when determining a ?nal sentence. The defendant understands that the Court ?will determine a non-binding and advisory guideline sentencing range for this case pursuant to the @th PLEA AGREEMENT \l GUI-5.935) Case Document 16 Filed 12/08/16 Page 10 of 18 Sentencing Guidelines and must take them into account when determining a ?nal sentence. The defendant further understands that the Court will consider whether there is a basis for departure from the guideline sentencing range (either above or below the guideline sentencing range) because there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the Guidelines. The defendant further understands that the Court, after consultation and consideration of the Sentencing- Guidelines, must impose a sentence that is reasonable in light of the factors set forth in 18 U.S.C. 3553(a). B. Estimated Guideline Calculation. The government and the defendant agree that the following is their present best estimate of the sentencing guidelines variables. These estimates shall not be binding on the Court, the Probation Off-lee, or the parties: l/ PLEA AGREEMENT $9 3 . r?d Case Document _16 Filed 12/08/16 Page 11 of 18 1. Base Offense Level: The government and the defendant estimate that the base offense level is 7 under U.S.S.G. 2B1.l 2. Speci?c Offense Characteristic Adjustments: a. Defendant?s offense level should be increased by 18 levels because the o??enscinvolved a less ofmore than $3.5 million, pursuant to U.S.S.G. b. Defendant?s offense level should be increased by 2 levels because the offense involved the use of sophisticated means, pursuant to U.S.S.G. 0.. Defendant?s offense level should be increased by 2 levels because he Was an organizer of the criminal activity, pursuant U.S.S.G. 3131.1. d, Defendant?s offense level should be increased by 2 levels because be abused a position of'trust, pursuant to U.S.S.G. 3131.3.- e. Defendant?s Offense- level should be increased by 2 levels because he has pleaded guilty to 18 U.S.C. 1956, pursuant to U.S.S.G. 3. Acceptance of Responsibility: See paragraph above 4. Criminal History: The parties agree that the defendant?s criminal history will be determined by the Court. 5. Departures or Other Enhancements or Reductions: The parties agree that they will not seek or argue ill-support of any other speci?c offense characteristics, Chapter Three adjustments (other-man the decrease for ?Acceptance of cross-references, except that the government may move for a departure or an adjustment based on the defendant?s occiperation or post?plea obstruction of justice Both parties agree not to move for, or argue in support of, any departure from the Sentencing The defendantis free. to request a variance from the Sentencing Guidelines, pursuant to United?States v. Booker, 543 US. 220 (2005), and recommend whatever sentence he believes is appropriate Under 18 U.S.C. 3553(a). The goven?unent will recommend that the defendant be sentenced to the low end of the applicable guideline range for his offenses as determined by the Court. VII. WAIVERS, A. Waiver of Constitutional Rights. The defendant understands that by pleading guilty he is waiving the tbllowirug constitutional rights: to plead not guilty and to persist in that plea ifalready made; to be tried by a jury; to as wee?r PLEA AGREEMENT 1 ?1.Case Document 16 Filed 12/08/16 Page 12 of 18 be assisted at trial by an? attorney, who would be appointed if necessary; to subpoena witnesses to testify on his behalf; to confront and. cross~examine witnesses against him; and not to be compelled to incriminate himself. B. Waiver of Appeal and Collateral Attack. The defendant understands that the law gives the defendant a right to appeal his guilty plea, conviction, and. sentence. The defendant agrees as part of his pleas, however, to give up the right to appeal the guilty plea, conviction, and the sentence imposed in this case as long as the sentence does not exceed the statutory maximum for the offenses to which he is pleading guilty. The defendant speci?cally gives up the right to appeal any order of restitution the Courtmay impose. Notwithstanding the defendant?s waiver of-appeal, the defendant will retain the right to appeal if one of the following circumstances occurs: (1) the sentence imposed by the District Court exceeds the statutory maximum; and/or (2) the government appeals the sentence in the case. The defendant understands that thesIe circumstances occur infrequently and that in almost all cases this Agreement constitutes a complete waiver of all appellate rights. In addition, regardless of the sentence the defendant receives, the-defendant also gives up any right to bring a collateral attack, including a motion. under 28 [15.0 2255 or 2241, challenging any aspect of the guilty plea, conviction, or sentence, except for-non-waivable claims. Notwithstanding the government?s agreements in (para graph 111A above, if the defendant ever attempts to vacate his pleas, dismiss the underlying charges, or modify or set aside his sentence on. any of the counts to which he is pleading guilty, the govermnent shall have the rights set forth in Section 11.5 herein. C. Waiver of Attornevs? Fees and Costs. The defendant agrees to waive all rights under the ?Hyde Amendment,? Section 617, PL. 105- 1 19 (Nov. 26, 1997], to recover attomeys? fees or other litigation expenses in connection with the investigation and prosecution of all charges in the matter and of any related allegations (including without limitation any charges to be dismissed pursuant to this plea agreement and any charges previously dismissed). PLEA AGREEMENT ?2.7 2.8 Case Document 16 Filed 12/08/16 Page 13 of 18 D. Impactl'of. Plea on Defendant recognizes that pleading guilty may have consequences with respect to his immigration status if he is not a citizen of the United States. Under federal law, a broad range of crimes are removable offenses, including offenses to which the defendant is pleading guilty. The defendant and his counsel have discussed the fact that the charge to which the defendant is pleading guilty is an _'agg?ravated felony, or a crime that is likely to be determined to be an aggraVated felony under 8- [18.6. 1101(a)(43), and that while there may be arguments that defendant can raise in immigration proceedings to avoid or delay removal, it is virtually certain that defendant will be removed. Removal and other immigration consequences are the subject of a separate proceeding, however,-and defendant understands that no one, including his attorney or the district court, can predict to a certainty the effect of his conviction on his immigration status. Defendant-nevertheless af?rms that?he wants to plead guilty regardless of any immigration consequences that his plea may entail, even if the consequence is his automatic removal from the United States ENTIRE PLEA AGLILEMENT Other than this plea agreement, no agreement, understanding, promise, or condition between the government and the defendant exists, nor will such agreement, understanding, promise, or condition exist unless it is committed to writing and signed by the defendant, counSel for the defendant, and counsel for the United States. IX. APPROVALS .AND SIGNATURES A. Defense Germsel. I have read this plea agreement and have discussed it fully with my client. The plea agreement accurately and completely sets forth the entirety of the agreement. I concur in my client?s decision to plead guilty as set forth in this plea agreement. Dated: mi? Oi? a? #4 i? DONALD H. HELLER Attorney for Defendant PLEA AGREEMENT Dan/?5 2?8 Case Document 16 Filed 12/08/16 Page 14 of 18 B. Defendant: I?have read this plea agreement and carefully reviewed every part of it with my attorney. I understand it, and I voluntarily agree to it; Further, I have consulted with my attorney and fully understand my rights with respect to the provisions of the Sentencing Guidelines that may apply to my case. No other promises or inducements have been made to me, other than those contained in this plea agreement. In addition, no one has threatened or forced me in any way to enter into this plea agreement. Finally, I am satis?ed with the representation of my attorney in this case Dated; I I- l? - KEVIN LEE CO Defendant C. Attorney for United States: I accept and agree to this plea agreement on behali'ofthe govennuent. Dated: I PHILLIP A. TALBERT y? Acting United States Attomey BRIAN A. Assistant United States Attorney PLEA AGREEMENT ?4 sooeumm-hme Case Document 16 Filed 12/08/16 Page 15 of 18 EXHIBIT Factual Basis for Pleas From in or around May 2008, through in or around March 2015, KEVIN LEE CO engaged in a scheme to defraud his then-employer Holt of California (?Holt?) by conducting hundreds of unauthorized credit card transactions on Holt?s credit account. As a result of conduct, Holt suffered a loss of $4,894,55 1 .61. CO was employed by Holt from in or around 2006, through on or about April 17, 2015. From in or around 2009, until his termination from the company on April 17, 2015, CO served as Holt?s controller. As controller, CO .was responsible for managing Holt?s accounting department. Holt had a commercial credit account with Bank of the West, which was a ?nancial institution that was insured by the Federal Deposit Insurance Corporation. Holt used this credit account to pay its Operating expenses. The account served as an alternative to a traditional accounts payable system, allowing Holt to route its Operating expenses through a single Bank of the West credit account. The account was called a Purchasing Card (?P-Card?) account. From in or around 2009, until on or about April 17, 2015, CO was responsible for managing Holt?s P-Card account. CO reviewed P-Card statements and invoices. CO approved the issuance of P-Cards for Holt employees. CO was also a P-Card cardholder. During the course of the scheme, CO took steps to hide his and co-schemer?s unauthorized charges on Holt?s P-Card account. As a manager in Holt?s accounting department, CO had access to Holt?s accounting records. CO used that access to manipulate and falsify Holt?s records regarding the P- Card account. CO concealed fraudulent transactions referenced in Bank of the West account records, listing the charges as debits on the rolling balance under the Bank of West vendor account. In addition, on more than one occasion, Bank of the West personnel noticed suspicious charges on Holt?s P-Card account?charges that were part of scheme?and contacted CO to inquire about the charges. CO - falsely assured Bank of the West personnel that the charges were authorized by Holt. There were at least three iterations of scheme to defraud Holt: PLEA AGREEMENT A-l 00 Ch 01 A Case Document 16 Filed 12/08/16 Page 16 of 18 I. Unauthorized Use of the Holt P?Card for Personal Expenses As to Count One, CO engaged in the following conduct in violation of 18 U.S.C. 1343 Wire Fraud: On or about May 2, 2012, CO conducted a P-Card transaction using the Holt P-Card assigned to him to purchase $7,200 in goods and services from Precision Lawn Garden. The P-Card transaction was initiated in Sacramento County, California, and processed electronically in Colorado by Bank of the West?s third-party credit card processor, First Data. When CO conducted this P-Card transaction, he knew that the transaction was not authorized by Holt and that it was not for a Holt business-related purpose. From in or around May 2008, through in or around March 2015, CO conducted many more unauthorized P-Card transactions. For example, he used the Holt P-Card assigned to him and others to pay for: 0 Luxury cars; 0 Approximately $1 million in purchases for the online video game Game of War; 0 Plastic surgery expenses; 0 Membership dues at Whitney Oaks Golf Club in Rocklin, California; 0 Home furniture; A 0 Season ticket seat licenses for the San Francisco 49ers; and 0 Season tickets for the Sacramento Kings. CO made these and other purchases knowing that the transactions were not authorized by Holt. H. Unauthorized Use of the Holt P?Card for Payments to SortUsACar From in or around June 2010, through in or around August 2014, CO and Individual A conducted unauthorized P-Card transactions with SortUsACar. SortUsACar was a luxury auto dealer, broker and consignment business located in Sacramento, California. Individual A owned SortUsACar. CO and Individual A devised a scheme that involved conducting high dollar value P-Card transactions with the Holt P-Card assigned to CO. CO and Individual A also conducted high dollar value P-Card transactions using P-Cards assigned to two former Holt employees. SortUsACar was the payee for these transactions. Using the proceeds of these P-Card transactions, CO and Individual A PLEA AGREEMENT A-2 45-11.) Case Document 16 Filed 12/08/16 Page 17 of 18 purchased cars for CO and automotive repair equipment for Individual A?s SortUsACar. CO and Individual A knew that the P-Card transactions that they conducted with SortUsACar were not authorized by Holt, and that the transactions were not for any Holt business-related purpose. As a result of and Individual A?s conduct, C0 and Individual A defrauded Holt of approximately $500,000. and Individual B?s Unauthorized Use of the Holt P?Card Account From in or around May 2008, through December 2013, CO and Individual participated in a scheme to conduct unauthorized P-Card transactions for Individual B?s bene?t. CO obtained a Holt Card for Individual to use for personal expenses. Individual was not a Holt employee and Individual was not authorized by Holt to conduct P-Card transactions. Individual used the Holt P- Card to conduct unauthorized transactions, which were charged to Holt?s Bank of the West account. CO used his knowledge and authority as Holt?s controller to hide Individual B?s fraudulent P?Card transactions. As a result of and Individual B?s conduct, CO and Individual defrauded Holt of approximately $49,000. IV. and Individual A?s Money Laundering Scheme As to Count Nine, CO engaged in the following conduct in violation of 18 U.S.C. 1956(a)(1)(B)(i) Money Laundering: From in or around November 2013, through in or around December and Individual A conducted ?nancial transactions knowing that the transactions were designed in whole or in part to conceal or disguise the nature, location, source, ownership, or control of the proceeds Of and Individual A?s scheme to defraud Holt, On the dates set forth below, CO and Individual A conducted unauthorized P-Card transactions, transferring funds from Bank of the West to SortUsACar?s Wells Fargo, N.A. account. Date of Holt P-Card Transaction Amount of Holt P?Card Transaction November 14, 2013 $9,870 November 14, 2013 $9,600 December 18, 2013 $9,450 December 18, 2013 $7,850 PLEA AGREEMENT OOQQUI Case Document 16 Filed 12/08/16 Page 18 of 18 CO and Individual A were aware that the foregoing P-Card transactions were not authorized by Holt and that the transactions were not conducted for any Holt business-related purpose. The Holt P- Card transactions were initiated in the Eastern District of California, and processed electronically in Colorado. CO and Individual A devised a plan to conduct the following ?nancial transactions in order to provide CO with a portion of the proceeds of the foregoing fraudulent P-Card transactions while disguising or concealing the fact that the funds were fraud proceeds from unauthorized Holt P-Card transactions. CO and Individual A accomplished their plan by transferring the personal checks listed below from Individual A to CO on the dates listed below. Date Financial Transaction November 16, 2013 Transfer of check number 1342, which was payable to CO in the amount of $4,200, and drawn on SortUsACar?s Wells Fargo Bank account number 20 Transfer of check number 1343, which was payable to CO in the amount of $4,800, and drawn on SortUsACar?s Wells Fargo Bank account number Transfer of check number 1359, which was payable to CO in the amount of $4,500, and drawn on SortUsACar?s Wells Fargo Bank account number 20 November 16, 2013 December 19, 2013 Wells Fargo Bank, NA. is a ?nancial institution that was insured by the Federal Deposit InsuranCe Corporation. I have read and carefully reviewed the Factual Basis for Pleas with my attorney. I agree that as it concerns my conduct it is true and correct. I also agree that if this matter proceeded to trial, the United States could establish each of the facts contained within the Factual Basis for Pleas beyond a reasonable doubt, and that those facts satisfy the elements of the offense to which I am pleading guilty. Dated: M7 KEVIN LEE CO I g, I 6 Defendant A-4 PLEA AGREEMENT