Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1350 Page 1 of 52 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION 1 2 3 _______________________________________ 4 UNITED STATES OF AMERICA, 5 6 7 8 9 Plaintiff, vs. DOCKET NO. 1:10-cr-384 ANTHONY DONALD RINKUS, Defendant. ________________________________________/ 10 11 TRANSCRIPT OF SENTENCING HEARING 12 BEFORE THE HONORABLE ROBERT J. JONKER 13 UNITED STATES DISTRICT JUDGE 14 GRAND RAPIDS, MICHIGAN 15 July 15, 2011 16 17 18 19 20 Court Reporter: Glenda Trexler Official Court Reporter United States District Court 685 Federal Building 110 Michigan Street, N.W. Grand Rapids, Michigan 49503 21 Proceedings reported by stenotype, transcript produced by 22 computer-aided transcription. 23 24 25 1 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1351 Page 2 of 52 1 A P P E A R A N C E S: 2 FOR THE GOVERNMENT: 3 4 5 6 7 8 9 10 11 MR. MATTHEW G. BORGULA UNITED STATES ATTORNEY'S OFFICE 330 Ionia Avenue, N.W. P.O. Box 208 Grand Rapids, Michigan 49501-0208 Phone: (616) 456-2404 Email: Matthew.borgula@usdoj.gov FOR THE DEFENDANT: MR. DAVID A. DODGE DODGE & DODGE, PC 200 North Division Avenue Grand Rapids, Michigan 49503 (616) 459-3850 Email: Dodgepc@dodgepc.com 12 * * * * * 13 Grand Rapids, Michigan 14 July 15, 2011 15 10:08 a.m. 16 17 P R O C E E D I N G S (Judge and counsel present - Defendant not present) 18 THE COURT: 19 Rinkus, 1:10-cr-384. 20 I understand that because Mr. Rinkus was returned to state 21 custody, there was a mixup in having him delivered here today, 22 so he's not here. 23 than two or three hours from now if we send the marshals out to 24 get him right now. 25 We're here on the United States against We had set this time for sentencing, but And he's not going to be here any earlier I want to do two things. One, just put that on the 2 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1352 Page 3 of 52 1 record. 2 people came for the hearing in addition to the lawyers who had 3 to be here. 4 want to proceed. 5 I know everybody was here for sentencing. So I wanted to get counsels' reaction to how you I could do this this afternoon at 2:00. 6 opening. 7 think he's in Ionia, and have him back here. 8 if that works for the lawyers, first of all. 9 I know some I have an And we can get the marshals to pick up Mr. Rinkus, I But I need to see And then second, I had one question I just wanted to 10 tee up anyway. 11 hearing, but now I can ask it now and give the lawyers a chance 12 to think about it and address it. 13 14 15 16 I would have asked it at the sentencing But on the scheduling, first of all, where do you want to go today? Let me just start with Mr. Borgula. MR. BORGULA: 2:00 is fine, Your Honor, or any other time thereafter. 17 THE COURT: Okay. Mr. Dodge? 18 MR. DODGE: 2:00. Or later would be a little bit 19 better for me, Your Honor, but 2:00 can work. 20 three, if that's all the same with the Court. But if possible, 21 THE COURT: I already have a 3:00 scheduled. 22 MR. DODGE: Well, 2:00, then. 23 THE COURT: I could do it at four. 24 MR. DODGE: Either two or four, whichever is best for 25 the Court and the government, Your Honor. 3 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1353 Page 4 of 52 1 MR. BORGULA: 4 I do prefer 2:00, Your Honor, if it's 2 possible with Mr. Dodge, because I wasn't planning on being 3 here at 4:00. But I'll do it at four if -- 4 THE COURT: Can you make it at two? 5 MR. DODGE: Absolutely, Your Honor. I'll just call 6 and move the appointment up from 1:30 to noon, hopefully, or 7 even 11:30. 8 THE COURT: 9 Ms. Ludge, the marshals can have him here by then, 10 Let's try for two. right? 11 THE CLERK: Yes. 12 THE COURT: It would be a shame to have things 13 scheduled for two and then find out that he's late. 14 sometimes it's not easy to get them out of a state facility. 15 Right. 16 17 18 Because I mean, I don't know. THE CLERK: They said he would be here in about an THE COURT: All right. hour. Let's plan on two, then. The 19 question I wanted to ask. 20 request for the forfeiture order. And, of course, restitution 21 is part of the discussion as well. And, you know, I want to 22 understand how the forfeiture and restitution work together as 23 a practical matter, particularly with respect to the victims. 24 And I know I looked up what happened in the Madoff case, and 25 I've looked at the department's remission and restoration I know I have the government's Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1354 Page 5 of 52 1 regulations. 2 money is forfeited to the government, whatever amount it is, is 3 there a provision, then, is there anticipation, expectation, 4 that the money will be offered to the victims in some way 5 first? 6 So functionally, I guess, I'm wondering if the Or is it just general Treasury money? MR. BORGULA: Technically it is general money that 7 would go to the Asset Forfeiture Fund, but I am anticipating 8 the Court would issue a restitution order as well. 9 gets paid first. Restitution So to the extent this Court issues a 10 restitution order, that would be paid first. 11 of Justice policy. 12 that. 13 will be paid down to the restitution as ordered by this Court 14 first. 15 That doesn't happen very often, honestly. 16 That's Department I think there's actually a statutory law on But any monies that come in to the Clerk of the Court After that they would go to pay the money judgment. Now, to the extent that there is a money judgment, 17 the government would act as a lien creditor, and the reason 18 that we asked for the money judgment is, for example, should 19 Mr. Rinkus come into some money, a large chunk of money three, 20 four years from now, it would give the government the ability 21 to try to take those assets as substitute assets. 22 are not ill-gotten gains, we would be able to take them from 23 Mr. Rinkus as a lien creditor. 24 out, I anticipate, and this is our practice, we would use those 25 funds to restore them to the court through the restoration Even if they That, as the Court has pointed 5 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1355 Page 6 of 52 1 process, which means we would ask for permission from the 2 Department of Justice to essentially give them to the Clerk of 3 the Court. 4 the Court's order for restitution equally among the named 5 victims. The Court would then distribute them pursuant to So that would be the plan. 6 THE COURT: 7 MR. BORGULA: 8 THE COURT: 9 10 All right. Thanks. Thank you, Your Honor. Mr. Dodge, did you have any thoughts or comments on that now? MR. DODGE: Not on that issue, Your Honor. It sounds 11 like a very orderly way to have any money that might come into 12 the hands of the government in effect distributed to the 13 complainants for restitution purposes. 14 15 THE COURT: Okay. Thanks. Well, we'll see you all at two, then. 16 MR. BORGULA: 17 MR. DODGE: Thank you. 18 THE CLERK: All rise, please. Thank you, Your Honor. Court is in recess. 19 (Recess taken at 10:13 a.m.) 20 (Back on the record at 2:05 p.m. with the judge, counsel, 21 22 and the defendant present in the courtroom) THE COURT: All right. We're here for the second 23 time today on the case of the United States against 24 Anthony Rinkus, 1:10-cr-384, and this time we do have 25 Mr. Rinkus here, so I think we're ready to go. 6 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1356 Page 7 of 52 1 Let's go through our appearances, please. 2 MR. BORGULA: Good afternoon, Your Honor, 3 Matt Borgula on behalf of the government. 4 Barb Birdsong from IRS CID, and also from IRS Craig Kuklewski. With me today is 5 THE COURT: Okay. 6 MR. DODGE: Good afternoon, Your Honor, may it please 7 the Court, David Dodge appearing with Anthony Rinkus. 8 9 Thank you. THE COURT: All right. Thank you. I have received the normal materials that I always receive from Probation in 10 the case. I also have the government's motion for departure 11 under 5K. I have the sentencing memorandum from Mr. Dodge on 12 behalf of his client along with a series of letters. 13 either in that document or in a separate motion Mr. Dodge also 14 sought departure or variance on a variety of grounds in a 15 separate document, and the government responded to that. 16 think that's -- oh, and then I have the government's motion for 17 entry of a money judgment on forfeiture. 18 19 And So I Anything else I should have from the government, Mr. Borgula? 20 MR. BORGULA: 21 THE COURT: Or from the defense, Mr. Dodge? 22 MR. DODGE: No, sir. 23 THE COURT: Okay. Not from the government, Your Honor. Let's start with the 24 Plea Agreement. 25 counts and lead to one count of conviction. It did call for dismissal of a variety of I think under 7 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1357 Page 8 of 52 1 6B1.2 of the guidelines and related authority, it is a fair 2 resolution of the case. 3 reflects the seriousness of the offense and still leaves the 4 Court with sufficient discretion in sentencing, and so I'm 5 accepting the Plea Agreement and would invite Mr. Borgula to 6 move for dismissal of the other affected counts. 7 8 9 MR. BORGULA: I think it accurately and properly Yes, Your Honor, the government moves to dismiss the remaining counts against Mr. Rinkus. THE COURT: All right. So I'll grant that. And move 10 to the guidelines then on the count of conviction and any 11 relevant conduct. 12 As I understand the report, we have a level of 13 offense 23 before acceptance. 14 of 7, the 14-point enhancement for the amount of loss, two 15 points for sophisticated means. I would grant the two points 16 of acceptance in my discretion. I think based on the report 17 Mr. Rinkus has earned that, and I would invite Mr. Borgula to 18 move for the third. 19 MR. BORGULA: 20 THE COURT: That's based on the base level The government so moves, Your Honor. Okay. I'll grant that motion too. So 21 that leaves us at a level of offense 20, a criminal history 22 category of III, with a guideline range of 41 to 51 months at 23 that level. 24 25 As to the guidelines themselves, the government, any objections? 8 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1358 Page 9 of 52 1 MR. BORGULA: 2 THE COURT: 3 9 No objections, Your Honor. All right. Mr. Dodge, for the defense any objections? 4 MR. DODGE: No objection, Your Honor. 5 THE COURT: Okay. All right. Then let me hear from 6 the parties on sentencing issues, including the issues that 7 have been framed by motion. 8 the defense. 9 And, Mr. Dodge, I'll start with Go ahead. MR. DODGE: Thank you very much, Your Honor. 10 Your Honor, obviously the sequence is up to the Court. 11 it be all right to have Mr. Rinkus make his statement first? 12 Because he has content, Your Honor, that I think will -- might 13 weigh in my comments more thoroughly with the Court. 14 THE COURT: 15 you wish to do that. 16 Would I'm content to let Mr. Rinkus start if Mr. Rinkus, you have the privilege of speaking. It's 17 certainly not an obligation, but it is a right, and I would be 18 happy to listen to you right now. 19 THE DEFENDANT: Thank you, Your Honor. I apologize 20 I'm going to be reading this just because I'm a little 21 nerve-racked here. 22 First I want to say thank you, Your Honor, for 23 allowing me to go back to state custody in waiting for this 24 sentencing. 25 my daughters as well as my wife. It means everything to me. My weekly visits with Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1359 Page 10 of 52 1 10 It has also been amazing to me to have the long 2 visits with my father every week. 3 about my offense and what happened and how it will change the 4 future. 5 We've had many conversations Over the past year of incarceration I cannot begin to 6 explain the pain felt by losing my wife, two daughters, and 7 close friends, let alone a home. 8 9 Your Honor, I've made bad decisions and trusted people who took complete advantage of me and my family. 10 can't take that back. 11 how I will change and not repeat my bad decisions again. 12 I I can only look to the future and know In the past year being ripped away from my family and 13 living with people and in a place that is about as close to 14 hell as possible, I reflect every day on how I will never put 15 myself in that position ever again. 16 from my daughters as well as my beautiful wife. 17 I will never be taken away Today the U.S. Attorney would like the Court to 18 believe that I'm a career criminal. 19 made bad decisions. 20 that after this horrible experience I will never make these 21 decisions again. 22 father more and focuses on my family, as well as a chance to 23 repay the victims and restore my name. 24 25 Your Honor, I'm not. I understand that. I've I assure the Court I look forward to a future that involves my I had no intentions to hurt people. and my oversight affect my judgment. I let my greed As a businessman, but Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1360 Page 11 of 52 1 more importantly as a father, husband, and son. 2 truly sorry. 3 11 For that I am I ask my family and God to forgive me, and I ask the 4 Court to rehabilitate me with the ones that will actually 5 rehabilitate me. 6 however, I don't want to punish the innocent people around me 7 anymore. 8 I accept my responsibility for my actions, Please find it in your heart, Your Honor, to see that 9 a long incarceration will not benefit anyone, including me. 10 beg the Court to judge me in a manner that has my family and 11 myself's best interests at heart. 12 rehabilitation and correcting the flaws that I have. 13 Court to not stick me away with the kind of people I've been 14 forced to live with over the last past year. 15 Court that the effects of a prolonged stay will have 16 catastrophic results in the way of rehabilitating me. 17 begging the Court that it takes another chance with me, 18 especially after this reality of the past year. 19 20 I am interested in I ask the I assure the I am Thank you very much for this time and the chance to make the statement, and may God bless your decision. 21 THE COURT: 22 You may be seated, Mr. Rinkus, and we'll hear from 23 24 25 I All right. Thank you. Mr. Dodge. MR. DODGE: Thank you very much, Your Honor. Your Honor, if I could incorporate by reference the pleadings Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1361 Page 12 of 52 1 that the Court mentioned, that way if I don't mention a 2 specific topic or point, if the Court can just take that as an 3 adoption of what was in the pleading without the necessity of 4 having to supplement those pleadings that have already been 5 filed in a timely manner with the Court and a copy to the 6 government. 7 THE COURT: Sure. 8 MR. DODGE: Your Honor, if that's acceptable to the 9 Court, if I could focus on some points that hopefully might 10 make a difference in the Court's mind in arriving at its 11 judgment under 18 U.S.C. ยง 3553(a) to impose a sentence that's 12 sufficient but not more than necessary. 13 more than necessary to punish Mr. Rinkus for the wrongdoing 14 that he accepts responsibility for. 15 Sufficient but not And if I could as the first specific topic address 16 information that could very well be the concluding statements 17 to the Court. 18 more properly contextualize the other things that I'll be 19 saying, hope to say this afternoon. 20 12 But I think to say this first, Your Honor, may And that is in the sentencing materials the Court has 21 a letter from my client's wife, Heather Rinkus, and from his 22 father, Donald Rinkus, both of whom are with us in the second 23 row of the courtroom. 24 sufficient in this case and what is not more than necessary is 25 greatly affected by this support. And I think that in terms of what is His family support. Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1362 Page 13 of 52 1 As indicated by Heather Rinkus, they have been 2 married now 11 years. 3 They have two daughters, an eight-year-old and four-year-old. 4 And they have a very long-term relationship, being together 5 initially as boyfriend and girlfriend and then engaged for a 6 total of 14 years, including their 11 years of marriage. 7 13 June 3rd, 2000, was their marriage date. And in that letter, Your Honor, is something that I 8 think is important here in terms of what is the prognosis of 9 Mr. Rinkus going forward, is the statement by his wife that 10 both of their parents have been married for more than 30 years. 11 That my client's mother had a stroke several years ago, is in a 12 nursing home in the same neighborhood where Mr. Rinkus Sr. 13 resides so he can walk to and visit her every day. 14 that that family background is an important consideration for 15 the Court in terms of what is sufficient but not more than 16 necessary, including the continued support of Mr. Rinkus Sr., 17 Donald Rinkus. 18 I think What is not in the letter, Your Honor, is that the 19 father is a fourth-generation Hope College grad and goes back 20 to -- his lineage goes back to the first class of graduates 21 from the college. 22 heartfelt way that his hope when this is -- whenever these 23 consequences have been served is that -- to help his son be a 24 fifth-generation Hope grad. 25 Anthony will complete his punishment, whatever the Court in its And the father has expressed to me in a That that's his hope. That Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1363 Page 14 of 52 1 wisdom determines is sufficient but not more than necessary 2 after his state confinement, and to go back to -- to go to 3 school at Hope College and to be the fifth-generation graduate 4 within their family. 5 I think that information is significant, Your Honor. 6 It's not designed to tug at the emotions of the Court. 7 more in terms of what is sufficient in this case? 8 more than necessary? 9 support system with this long-term relationship and marriage 10 with his wife, given his young age at 33 years of age to have 11 that 14-year relationship. 12 other letters indicates how close and supportive he is and 13 loving as a father. 14 financial, moral, as well as otherwise, that's going to anchor 15 him in in helping him going forward. 16 14 It's What is not I believe that this is an exceptional His two daughters that from the And his family support system. Not One of the reasons I asked him to -- if the Court 17 would allow him to make a statement prior to my statements is 18 that having spent considerable time with this young man over 19 the past 10 months, I think part of what he's learned from this 20 period of confinement is the importance of his family 21 background. 22 statement, the Court allowing him to go to a place where he 23 could visit in person with contact visits and more than a 24 45-minute-or-so video visit has allowed him to spend the time 25 with his dad that I think is important going forward, that with The influence of his dad. As he indicated in his Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1364 Page 15 of 52 15 1 that guidance, with that influence that the sentence that we're 2 asking the Court, or as close to it, is sufficient but not more 3 than necessary. 4 of him staying out of trouble in the future. And that the prognosis is excellent in terms 5 Now, Your Honor, if I could turn to an issue -- and 6 as I just indicated, I could have just as well concluded with 7 what I just said in terms of what perhaps is the most important 8 information I can provide to the Court. 9 thinking on what's going to happen in the future if the Court 10 imposes sentence A rather than sentence Z or Q or R, that if 11 the Court could just also have that as my concluding statement, 12 what I just mentioned at the opening. 13 The Court in his Secondly, Your Honor, there is an overriding issue in 14 this case that really has shaped and driven in my 10 months or 15 11 months of contact with Mr. Rinkus and his family, and that 16 is that the federal investigation was initially referred to our 17 office last August after Mr. Rinkus had already received the 18 30-month to 20-year sentence in state court. 19 contacted our office and asked if we would be responsible to 20 help with the federal investigation. 21 was is there any way that the consequences that he already has, 22 the 30 months, can be his criminal consequence in the case? 23 there any way that the government, whatever the government's 24 investigation indicated as far as his wrongdoing on the federal 25 front, could that already existing in place August 4th, 2010, His state counsel Obviously the first goal Is Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1365 Page 16 of 52 1 sentence of 30 months incarceration be his consequence for his 2 misdeeds in the past? 3 And I had that conversation with Mr. Borgula, who has 4 been pestered by me, quite frankly, Your Honor, ever since 5 August of last year, pushing the government. 6 available to discuss things. 7 to Jackson, busy investigative agents, FBI and IRS, to meet in 8 the facilities at Jackson Prison to try to, as part of the 9 proffering process and trying to get things right in terms of And he was always The agents were available to go 10 the history and what had happened and being completely 11 truthful, that trying to have as the outcome the state 12 sentence. 13 16 The government obviously in its discretion wouldn't 14 agree with that and wanted to have a separate case. 15 issue was what about an Information, a one-count Information, 16 which I offered back in October/November of last year in lieu 17 of waiting for the Indictment to come down which happened on 18 December 16th or so. 19 have Mr. Rinkus indicted with the other persons in terms of how 20 that would fit into its overall presentation of the case and 21 how a missing component could affect the case against the 22 others, and that's the government's prerogative. 23 The next And the government obviously wanted to And since that time, since Mr. Rinkus was in the 24 Upper Peninsula, in the western part of the Upper Peninsula, it 25 took the time to do the logistics of getting even -- to have Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1366 Page 17 of 52 17 1 the agreed-upon plea agreement once it was entered into on the 2 existing Indictment, it took us several weeks to appear 3 initially on February 4th because of the logistical problems of 4 getting a state-incarcerated person from the western side of 5 the Upper Peninsula to the Newaygo County Jail or to our 6 courthouse here. 7 But once we arrived at the plea agreement, this 8 30-month sentence obviously was an important consideration in 9 terms of going forward from that point. As it is today for the 10 Court. 11 and has driven the attorney handling since August of last year 12 in terms of how I've handled this case and how I've tried to 13 serve Mr. Rinkus and his family, I think it is the most 14 important consideration for the Court today as well. 15 Court, the same preexisting event of August 4th of last year. 16 That is, would the Court or would the Court closely consider 17 and implement what we're asking, and that is that the state 18 sentence be the sentence in the case. 19 then to in part or in whole factor in the confinement from 20 August 4th of last year. 21 indicated that they have no objection to the Court considering 22 perhaps February 4, which is five months, and we're not 23 unmindful of that position by the government. 24 that. 25 since August. It really -- I think, Your Honor, just like it's shaped For the Or secondly, if not, The government in its filing We appreciate But we would ask the Court to factor in the confinement And also, Your Honor, to consider if the Court Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1367 Page 18 of 52 1 determines in its discretion and its wisdom that it is 2 necessary to impose additional imprisonment, federal 3 imprisonment, to have that imprisonment be concurrent with the 4 time that is being served. 5 18 Now, obviously this is going to have to be fashioned 6 as set forth in the application notes since the Bureau of 7 Prisons is not going to give credit under 18 U.S.C. 3585(b) for 8 the state time the Court as set forth in the application note 9 that -- on a consideration of that type by the sentencing court 10 should make it clear in the judgment how, if at all, the Court 11 is weighing in that prior incarceration in arriving at a 12 sentence. 13 And another way, Your Honor, would be a combination of 14 departure and to have concurrent sentencing between the two 15 cases. 16 One way is through departure. To depart downward. Now, thirdly, Your Honor, the third point I would 17 like to address is the 5K1.1 motion in this case, because 18 obviously that varies greatly from one case to the next in 19 terms of what is -- how should the Court weigh that in? 20 First of all, let me start out, we appreciate the 21 government filing the motion. 22 I think it casts the defendant in a more favorable light, 23 certainly, generically with the Court, but also specifically 24 because it does basically leave it up to the Court to determine 25 what is the value, in effect, of the cooperation? It is of great value that -- and Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1368 Page 19 of 52 1 19 And in this case, Your Honor, where the main thrust 2 of the cooperation and how it helps the government in the 3 prosecution of the other codefendants is that these are 4 contemporaneous emails. 5 emails. 6 certainly, but a substantial number of them. 7 government has this right in their memo, Your Honor, that they 8 involve the other codefendants. 9 government used is that it kind of makes the other defendants' 10 claims completely absurd, quote/end of quote, I believe is the 11 reference by the government. 12 be claiming that they had no involvement in any type of 13 wrongdoing involving securities or mail or other type of 14 fraudulent behavior when these contemporaneous emails locked 15 them in in a type of communication, multiple communications 16 with Mr. Rinkus. 17 More than 5,000 contemporaneous Not every one of them would be an exhibit in the case, And the And that the term that the That the other defendants could And we would ask the Court to weigh that as 18 significant, something that's worth more than an impeachable 19 witness as part of the government's case. 20 a codefendant some type of favorable consideration. 21 codefendant, obviously, is always subject to impeachment: 22 do they have to gain? 23 because of whatever nature the conviction they may have, 24 whether it's a fraud case or a drug case. 25 the government doesn't have those shortfalls with Mr. Rinkus as The government gives The What Why they might not be trustworthy But yet in this case Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1369 Page 20 of 52 20 1 a witness because of these emails that were totally voluntarily 2 provided by him. 3 needed to extract. 4 these topics were discussed with the investigators. 5 present during at least three of those sessions. 6 apparent that there might be some external contemporaneous 7 corroboration in effect that would remove the general 8 credibility clouds from Mr. Rinkus. 9 I believe these emails -- if they don't in effect conclude the 10 case for the government, if the other codefendants elect not to 11 enter into plea agreements, they certainly are going to be 12 important corroborative testimony in conjunction with what he 13 would plan to do in terms of continued cooperation as far as 14 actually testifying at trial. 15 It wasn't something that the government It was something that became apparent as And I was It became And that is in effect what So those points, Your Honor, go to the 5K1.1 and the 16 Court in its discretion making the final determination as far 17 as how to fashion a sentence that fittingly weighs in the value 18 of that substantial assistance. 19 Your Honor, there are other points of information. 20 They are in the memorandum. 21 few. 22 remaining state incarceration and a federal sentence that would 23 extend beyond the 30 months that Mr. Rinkus is going to do -- 24 obviously, he's -- right now can't go to the boot camp, the 25 90-day type intensive custody and things like this because of If I could conclude with just a If the Court concludes that something more than the Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1370 Page 21 of 52 1 the federal hold on him. 2 give him something in addition to his state time. 3 going to have perhaps another 19 months or so of incarceration 4 just stemming -- and by that I'm not -- certainly I don't want 5 to mislead the Court that he would automatically be going 6 anyway, because he wouldn't be, Your Honor. 7 circuit court judge who initially turned down the boot camp 8 recommendation would have to revisit that issue once the 9 federal proceedings are concluded, but he was administratively Because of if the Court decides to So he's Obviously, the 10 cleared to go there. 11 back to the state judge and ask that -- back through the 12 channel of the Department of Corrections to ask the judge to 13 reconsider once the federal case is concluded if the federal 14 case is something less than these 30 months. 15 determines not to impose that type of sentence, then already 16 built in is the other 19 months he's going to do without going 17 to any type of intensive custody or boot camp 30-day 18 incarceration in lieu of a more lengthy standard state 19 incarceration. 20 21 And certainly I would take the matter But if the Court And, Your Honor, from all that I don't want to try to 21 have -- leave any room that I'm misleading the Court or the 22 government that he would automatically be eligible because he's 23 not. 24 approval of the state sentencing judge, and the state 25 sentencing judge did not grant that approval. He's administratively eligible, but it requires the But, Your Honor, Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1371 Page 22 of 52 22 1 I think if the federal investigation of the matter were 2 concluded before the 36 months, that certainly could be 3 revisited. 4 ultimately be up to the judge, obviously, and not the counselor 5 or the Department of Corrections. 6 And I would plan to seek that. But it would Your Honor, but if the federal sentence is going to 7 extend beyond this additional 19 months that he in effect will 8 be serving if the Court doesn't go along with our primary 9 request, then I would ask the Court to recommend that 10 consideration on residential drug-abuse programming. 11 One issue here, Your Honor, is that during this time, 12 this troubled time where Mr. Rinkus is trying to get the 13 investors' money back -- whether that's realistic or not, 14 Your Honor, I've discussed this with Mr. Borgula several times, 15 it's the government's conclusion it was totally unrealistic 16 that the money could be gotten back, but yet during all those 17 efforts where he's talking to anyone that might have -- be able 18 to help get the money back to the investors, things like this, 19 if that was unrealistic as the government, I think, has 20 concluded, but he was drinking heavily, I'm told, on a daily 21 basis, as well as before then, in terms of the relationship, 22 some of the relationships during, concurrent with the February 23 through -- February '09 through April '10 time period. 24 that in terms of that alcohol consumption and almost to mask 25 and to override his better judgment and perhaps his conscience I think Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1372 Page 23 of 52 1 in terms of what was going on I think would make the 2 RDAP program an appropriate fit. 3 23 And, Your Honor, RDAP is offered, I'm told now, at 4 least the last check that I did with the Bureau of Prisons, at 5 Milan. 6 custody, which he probably would qualify given the nature of 7 the offense and his lack of violent history. 8 also ask the Court in conjunction with an RDAP recommendation 9 to recommend placement at Milan which would facilitate Nine-month RDAP program availability in the lower-level So that I would 10 visitation, family visiting with his wife and his two daughters 11 and his father. Thank you very much, Your Honor. 12 THE COURT: 13 questions to clarify it for me. 14 MR. DODGE: Yes, sir. 15 THE COURT: In terms of time he's actually spent in Yeah, thank you. Just a couple of 16 federal custody now, when I was looking at the 17 presentence report it looked like it was from February to 18 April. Is that right? 19 MR. DODGE: Your Honor -- 20 THE COURT: He was summoned here in February and then 21 22 returned to state custody in April? MR. DODGE: That, Mr. Rinkus indicates, is correct. 23 I don't have the exact dates, but I know there was a period of 24 time I was visiting in the Newaygo jail instead of the state 25 corrections. Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1373 Page 24 of 52 1 Does that sound right, government? 2 MR. BORGULA: 24 That sounds right, but I don't know if 3 the Court's ultimate question is whether he was going to get 4 federal credit for that. 5 THE COURT: No. My question was just how much time 6 he's actually been in federal custody. 7 credit for that. 8 9 MR. BORGULA: I don't think he'll get I think that's about right. I can figure it out if you would like, Your Honor. 10 THE COURT: Then on a totally different topic. In 11 going through the presentence report and the financial 12 background items, is it true that there haven't been any IRS -- 13 any tax returns basically for Mr. Rinkus on file since 2006? 14 15 THE DEFENDANT: There were tax returns prepared. They just have not been filed since 2006, correct. 16 THE COURT: All right. So the last year anything was 17 filed was for the tax year 2005 or for the tax year 2006? 18 do we know? 19 20 Or I could ask the government that too. MR. BORGULA: We believe it's earlier than '05, Your Honor. 21 THE COURT: Okay. Okay. I thought I had one other 22 question too, but it's not coming to me right now. If it does, 23 I'll ask you as soon as it comes back into my mind. Maybe that 24 was it. 25 Thank you. MR. DODGE: Thank you very much, Your Honor. Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1374 Page 25 of 52 1 THE COURT: 2 MR. BORGULA: 25 Go ahead, Mr. Borgula. Thank you, Your Honor. I would like to 3 address Mr. Dodge's motions, but first I would ask the Court if 4 the Court has any questions about the government's motion for a 5 downward departure. 6 know the Court has read. 7 on that? 8 9 We have filed a written submission which I THE COURT: going to ask you. Do you need to hear anything further Let me -- I just remembered what I was It's about the other government motion. 10 government motion for entry of the money judgment on 11 forfeiture. 12 other, Mr. Dodge? 13 The Do you have a position on that one way or the MR. DODGE: Your Honor, given the givens in the case, 14 I don't believe that we have anything further to say on that. 15 It just is not a topic that there's any meaningful response 16 that would be helpful from Mr. Rinkus's perspective. 17 don't have anything to add on that, Your Honor. 18 THE COURT: Fair enough. Thank you. So I And as far as 19 the K1, I've read your materials, I think I understand the 20 government's thinking on it. 21 my main question was: 22 emails anyway? 23 don't think we would have." 24 that. 25 I think, the only question I had. When I first started reading it Why wouldn't you have access to those And you had the footnote saying, you know, "We I'm still not sure I understand So if you want to address that, that's fine, but that's, Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1375 Page 26 of 52 1 2 26 Anything else you want to address on it would be fine too from either side. 3 MR. BORGULA: I'll address the Court's question on 4 the access to the emails. 5 content of emails from Yahoo, Google, and the various email 6 companies. Things are destroyed rather quickly because it's 7 electronic. They have -- we have to send them preservation 8 letters. 9 subpoenas or search warrants, we still have a hard time getting We do have a difficult time getting And even after we attempt through either grand jury 10 stuff from them. 11 people create email accounts. 12 accounts, and it's hard to tell where they are coming from. 13 So in this case -- another factor we have is They might have six email In this case it was -- Mr. Rinkus's cooperation 14 helped us in that. 15 there's an email on that." 16 time. 17 was a live account. 18 those emails. 19 printing off the emails from I think in this case Yahoo. 20 We were proffering him, and he said, "Well, And we were unaware of that at the And sure enough, he still had his email account. So it Which made it very easy for us to get It was just a matter of a password and then So I think had we known about it, we probably could 21 have got them from Yahoo at that point because it was a live 22 account, but I don't know that we knew the extent of what was 23 in there, nor do we find such incriminating emails in the 24 ordinary case. 25 about the fact that they are referring to their crime as a I mean, usually people are a little smarter Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1376 Page 27 of 52 1 Ponzi in emails back and forth to each other. 2 first time I can remember someone describing the criminal 3 conduct as a Ponzi for us to just view once a case has been 4 indicted. 5 This is the So that was helpful. I think -- I don't think we would have got all those 6 emails without them. 7 got them. 8 motion. 9 It was just so easy to get them once he And Mr. Dodge is right. THE COURT: 10 That's the thrust of All right. MR. BORGULA: I think it will make it -- one thing 11 Mr. Dodge didn't say -- I think it will make it easier for 12 Mr. Rinkus to testify too. 13 will go to trial as it stands right now, and Mr. Rinkus would 14 be called to testify. 15 I anticipate this case probably I think it will be easier for him to explain what was 16 going on when he can refer to specific emails that were sent 17 back and forth as opposed to just relying on his own 18 recollection. 19 well. 20 in that regard. 21 So I think in that sense they are helpful as And I think he does deserve some credit for assisting us THE COURT: Okay. Well, then go on and address the 22 point Mr. Dodge makes which is, you know, one level, come on, 23 we delivered the smoking gun. 24 can be impeached at trial testimony. 25 27 MR. BORGULA: That's better than somebody who That's true, but he can be impeached at Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1377 Page 28 of 52 1 trial, and if he hadn't given us those emails, I don't think 2 that I could stand before the Court and say that he had 3 substantially assisted us. 4 There was at least two or three occasions where we 5 met with him where we left thinking, "Well, this guy is not a 6 very good witness. 7 He's not telling us the truth." And even at his plea, Your Honor, he still seems to 8 minimize his conduct. 9 Mr. Rinkus knew pretty early on what was going on, and that 10 28 I don't think there's any question that isn't what comes out of his mouth when he talks. 11 He has no problem talking about Mr. Wiederhold or 12 Mr. Nieuwenhuis or any of the other defendants, but when it 13 comes to himself, I think he's minimized to us in the past, and 14 he's going to be cross-examined vigorously by defense 15 attorneys, and I think he'll be impeached quite often. 16 hard for him to recall the number of lies that he's made during 17 the course of the scheme and after the scheme. 18 particularly good witness. 19 helpful. It's So he's not a With the emails I think that's That's why we moved for one level. 20 THE COURT: 21 MR. BORGULA: All right. We defer to the Court. If the Court 22 wants to give him additional levels, certainly that's within 23 the Court's discretion. 24 THE COURT: 25 MR. BORGULA: All right. Thank you. With regard to the issue of whether or Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1378 Page 29 of 52 29 1 not to grant sentences that would run concurrent versus 2 consecutive and also whether or not a variance is appropriate, 3 they kind of dovetail into the same underlying argument which 4 is his criminal history is overstated. 5 believe, is based on the fact that one of the reasons that 6 Mr. Rinkus's probation was violated is because the FBI sent a 7 memo or a letter to the circuit court in this case, the 8 probation office, outlining what it believed to be Mr. Rinkus's 9 involvement in the scheme to defraud. 10 of the reasons he got violated. 11 only reason. 12 That argument, I So certainly that's one I don't think that was the If you read the transcript that was attached to the 13 defendant's motion for a downward departure or variance, it 14 appears that the Court did not believe that Mr. Rinkus was 15 complying with any of the terms of his probation. 16 charges he pled to in violation of probation was that he wasn't 17 paying back his restitution. 18 to get some time. 19 didn't serve any time in jail or prison. 20 gave him a pretty stiff sentence of 30 months for a reason, and 21 that was it felt that he had blown his opportunity on probation 22 and deserved some time in jail. 23 concurrent sentence for that regard, because I think first the 24 circuit court intended for him to spend some time in jail for 25 violating his probation. The ultimate So I think the Court intended him He did get probation the first time. He And I think the Court So we don't support a Probation from a prior fraud scheme, Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1379 Page 30 of 52 1 30 not this fraud scheme. 2 In addition, Your Honor, we never know what the state 3 is going to do once he's in state custody and they learn the 4 fact that this Court might give him a sentence. 5 back into state custody, which he will today because he's still 6 serving it out. 7 do so. 8 they will see that there's a federal sentence, and presumably 9 to save costs they will just parole him and then turn him over They can parole him tomorrow if they wish to In fact, I'm sure this Court is aware that on occasion 10 to federal custody. 11 Who knows? 12 Michigan bureau of prisons. 13 He can be put That could happen here. It might not. But we don't have control over the State of So for those reasons I think they should be separate. 14 I think that this Court should consider what it deems an 15 appropriate sentence in this case and let the state deem what 16 is appropriate in its case and just let them run concurrent. 17 For the same reason I don't think a variance is 18 appropriate, Your Honor. 19 receiving double counting because of the fact that he was on 20 probation for a prior fraud offense. 21 and that's in addition to the three points he gets for the fact 22 that he ends up getting 30 months in prison. Mr. Dodge is suggesting that he's He gets two extra points, 23 The rule is written that way for a reason. 24 person that is on probation and commits a crime, his criminal 25 history goes up because he's a higher risk of recidivism. The If Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1380 Page 31 of 52 1 he hadn't done the prior crime and wasn't on probation, he 2 wouldn't get the two points. 3 doesn't mean that he's less of a criminal. 4 of a criminal. 5 If he had gotten it originally and then been placed on parole, 6 he would be in the same position. 7 get two levels off his criminal history because he was on 8 probation, and one of the reasons that his probation was 9 violated is because he committed this crime. 10 31 The fact that he's getting them He got 30 months before. It makes him more That's three points. So I don't see why he should As far as allocution, Your Honor, the defendant 11 did -- in his allocution he said that he felt that he made some 12 mistakes, which he acknowledged. 13 taken advantage of in some fashion. 14 position that Mr. Rinkus is not a victim in any sense in this 15 case. 16 mentioned the actual victims in this case, and those are the 17 investors that gave their money to Mr. Rinkus and 18 Mr. Wiederhold and lost all their money, minus whatever 19 interest payments they got during the course of the Ponzi 20 scheme. 21 But he also again says he was And it's the government's And it's telling that -- I don't know that anybody We think that the Court should consider certain 22 aggravating factors. 23 felony for fraud and he was on probation when he started a 24 hedge fund and committed additional fraud, he is a high risk of 25 recidivism. First, because he does have a prior Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1381 Page 32 of 52 1 32 Mr. Rinkus during his adult life has not shown the 2 Court that he can be a law-abiding citizen. 3 very few time where he's not involved in some either criminal 4 activity or shady business deal. 5 THE COURT: 6 MR. BORGULA: There has been Excuse me. And I ask the Court to consider his 7 relative culpability in this case as to the seriousness of the 8 offense. 9 at the end when it came crashing down. 10 Mr. Rinkus was there at the start, and he was there If you compare him to another defendant, Mr. Angioi, 11 you'll see that Mr. Angioi was there at the beginning and had a 12 substantial role in drafting a prospectus, but once he realized 13 that everything was a complete fraud, a complete sham, and no 14 money was actually being invested, he quit, and he got out in 15 whatever manner he got out. 16 continued to create new entities and tried to lie his way out 17 of the hole that they were in. While Mr. Rinkus stayed on and 18 In this case, Your Honor, the victims were 19 businessmen and they trusted Mr. Rinkus, and that's how he was 20 able to pull this off. 21 individuals. 22 their house to invest. 23 businesses. 24 gaining people's trust. 25 fashion some sentence that's going to protect the public. They were fairly sophisticated These weren't mom and pops who had mortgaged They were individuals that had So Mr. Rinkus must have been fairly good with And in that sense the Court should If Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1382 Page 33 of 52 33 1 in fact when he gets out he's able to create another criminal 2 enterprise, he's apparently pretty good. 3 one. 4 dictates that he should serve some term of incarceration, and a 5 guideline sentence appears to be appropriate. 6 also provide just punishment for this crime, Your Honor. He got caught both times. This is his second But I think public interest And it would 7 If there are no questions, I'll sit down. 8 THE COURT: 9 10 All right. I don't think I have any. Thank you. MR. BORGULA: You know, Your Honor, I did want to 11 mention too that the money judgment, the defendant did consent 12 to that in his Plea Agreement -- 13 THE COURT: 14 MR. BORGULA: 15 All right. -- in the amount asked by the government. 16 THE COURT: 17 Right. Okay. Thank you. And we, when Mr. Rinkus wasn't here, but just 18 for his benefit, I did ask a question at the originally 19 scheduled time for the hearing on the sentencing about how 20 forfeiture and restitution relate. 21 accurately -- and this was consistent with my research too -- 22 if both forfeiture in the form of this money judgment and 23 restitution are entered in the ordinary course, subject at 24 least to Department of Justice regulations, the restitution 25 would get paid first even if it's out of forfeitable assets. And if I'm recalling Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1383 Page 34 of 52 1 Is that a fair summary, Mr. Borgula? 2 MR. BORGULA: 34 If it's out of forfeitable assets, it 3 would actually be -- yes, it would be paid first. 4 would turn them over to the Court to pay the restitution. 5 the restitution is paid off, then the government can proceed or 6 not proceed to collect on the money judgment. 7 THE COURT: 8 Go ahead. 9 10 All right. Because we Once Thank you. Mr. Dodge, is there anything else that you would like to respond to at this point? MR. DODGE: Your Honor, just for point of 11 information, it is true that back in the seventies there was 12 uncertainty in the State of Michigan with respect to a sentence 13 and how much a defendant might be -- almost like in the federal 14 system where there's a one-third eligibility for parole, 15 presumptive eligibility before the -- November 1 of 1987. 16 the change of law in Michigan was in 1978 where Mr. Rinkus is 17 going to do this 36 -- this 30 months. 18 intensive custody as an alternative, he's going to do the 19 30 months. 20 release and things like this. 21 But Unless he goes to an So that we don't have that mystery or one-third and And, Your Honor, he's not going to get into the 22 three-month intensive custody program. 23 approval of -- the administrative approval to go to the judge 24 to ask the judge whether the judge will -- has any objection to 25 it if he has any additional time imposed on the federal front. He won't even get the Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1384 Page 35 of 52 1 So whether it's a concurrent sentence that extends beyond the 2 19 months he's got left, whether it's a consecutive federal 3 sentence of one month, he is not going to be eligible the same 4 way as if he had an immigration hold on him or a hold on 5 another state sentence or any other type of hold, because he 6 can't go into the boot camp pipeline. 7 35 So that point is true that there used to be a lot of 8 uncertainty in terms of when the state might release someone on 9 a prison sentence, but under the present truth in sentencing 10 and no more special and regular good time in the State of 11 Michigan, he's going to serve the 30 months if this Court 12 imposes a sentence beyond 19 months -- I'm sorry -- more than 13 20 months that's concurrent or if this Court imposes any type 14 of consecutive sentence. 15 THE COURT: All right. 16 MR. DODGE: Thank you very much. 17 THE COURT: Anything else from either of the parties? 18 Mr. Borgula? 19 MR. BORGULA: 20 THE COURT: 21 Thank you. No, Your Honor. Thank you. Anything else from the defense, Mr. Dodge? 22 MR. DODGE: Nothing further, Your Honor. 23 THE COURT: All right. Okay. Well, I appreciate the 24 presentations of the parties, both the written materials that 25 came in advance so that I could reflect on them a bit and think Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1385 Page 36 of 52 1 2 about them and also the arguments today. I've had a chance to reflect on it all, and, of 3 course, my task now, my obligation under Section 3553 of 4 Title 18 is to fashion a sentence that's sufficient but not 5 greater than necessary to comply with the purposes of 6 sentencing, as Mr. Dodge has indicated. 7 certainly include deterrence and the need to promote 8 rehabilitation for Mr. Rinkus, it includes the need to promote 9 deterrence for the public at large, and also to reflect the And those purposes 10 seriousness of the wrongdoing here. 11 to be considered and balanced in some way. 12 start with the sentencing guidelines as a benchmark, a 13 beginning point at least, and then work from there. 14 36 All of those things need And as always we Here the guidelines as calculated without objection 15 are 41 to 51 months. 16 address is the government's departure motion under 5K based on 17 the substantial assistance from Mr. Rinkus in the form of the 18 email trove. 19 is substantial assistance to lead the government to a trove of 20 documents that the government may not have otherwise had access 21 to or known about for one reason or another. 22 then when the documents by themselves, simply reading them, 23 provide significant support for the government's case and 24 create significant difficulty for the other people who are the 25 subject of this Indictment. And the first thing that I want to And I am going to grant that motion. I think it And particularly I think that is cooperation, Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1386 Page 37 of 52 1 2 37 certainly, and substantial assistance. How much to credit is, of course, in the first 3 instance something that I look to the government for to tell me 4 what they think it's worth. 5 it's my job to evaluate it finally, but I'm admonished in the 6 guidelines to take into significant consideration what the 7 government thinks it's worth. 8 know, one point is an appropriate adjustment. 9 reasonable argument that it ought to be a bit more. It's not ultimately their job, And in this case I think, you You can make a Mr. Dodge 10 has tried to make that argument. 11 that cooperation and substantial assistance for an individual 12 do come as a package. 13 corroborating information but also the either actual or 14 prospective testimony that somebody is able to provide. 15 think for reasons that are summarized in the 16 presentence report, and at least highlighted to some extent 17 here by Mr. Borgula, there's going to be significant difficulty 18 as a practical matter on credibility issues for Mr. Rinkus. 19 Those emails will help, but it's still going to be a tarnished 20 testimony in a way that other cooperating witnesses are not, 21 and I think one level is an appropriate starting point when it 22 comes to assessing the value of that cooperation and 23 substantial assistance, and I'm satisfied with the explanation. 24 25 But the fact of the matter is It includes the documents and And I In guideline terms, after a one-point adjustment the guideline range would be 37 to 46 months instead of where we Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1387 Page 38 of 52 1 started. 2 reasons to depart or vary? 3 38 And the question then is, you know, are there other The defense is focused, I think, primarily on three 4 things. Two most heavily in the briefing and then a third one 5 today. Let me start with the things that were in the briefing. 6 The idea that the criminal history is overstated in a 7 substantial way such that I ought to depart downward from 8 criminal history III to a lower criminal history is one that 9 I'm not prepared to accept. I do think the scoring was 10 appropriate at five levels. And although Mr. Dodge is right, 11 all those five points arise out of one criminal episode, 12 namely, the state conviction on the car ring, car fraud ring, 13 car theft ring, that the truth is in my view when you have the 14 sequence of events that happened there, namely, the initial 15 conviction followed by probation violations that led to 16 revocation of that probation, and then you have on top of that 17 the instant offense, the one that we're talking about here 18 today committed at the same time as the probation was ongoing, 19 to me that's a huge red flag and perhaps the focal point of 20 problems that I would have and would be wondering does there 21 need to be even an upward kind of variance or departure if 22 somebody while they are under sentence for a similar kind of 23 fraud or dishonest activity begins a new one? 24 like exactly the kind of activity that the Court needs to be 25 alert to and attentive to. That just seems Certainly not a ground for downward Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1388 Page 39 of 52 1 39 departure or variance in my view. 2 The second reason that Mr. Dodge articulates and 3 argues is that for both variance in a number of ways, either a 4 lower sentence here or even an entirely concurrent sentence 5 with the state, and I think there's several factors, but the 6 one again highlighted principally in the briefing was that the 7 state revocation and then resulting sentence from 8 Judge Johnston itself took into account the federal wrongdoing. 9 And although certainly it was referenced both in the probation 10 officer's report and in the discussion of the violations and 11 appropriate sanction, I don't think a fair reading of the state 12 record indicates that Judge Johnston imposed the sentence he 13 chose because of the federal investigation. 14 he went out of his way to note that exactly how Mr. Rinkus was 15 involved in that was unknown. 16 the state matter vehemently protested the idea that Mr. Rinkus 17 was in any sense a target of that investigation. 18 In fact, I think And, of course, his attorney in His initial reaction at page 11 of the state 19 transcript was, "There's no truth to the investigation at this 20 point. 21 FBI would do something about it. 22 probation violation based on any further criminal activities." 23 That's the lawyer's statement in the state case. 24 25 If there was, if there was anything there, I'm sure the There's no allegation of a When Judge Johnston got around to discussing his decision at page 15, he says, "It's a little unclear what the Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1389 Page 40 of 52 1 nature of the investigation, namely, the federal investigation 2 is, other than it involves securities commodities fraud and 3 that Mr. Rinkus is being interviewed in connection with it." 4 And "interviewed" in the context of the whole discussion is 5 significant because the parties noted that being interviewed 6 was not the same thing as being a target or subject. 7 40 When Judge Johnston articulates the affirmative 8 reasons for what he's doing, starting especially on page 23, 9 then federal investigation isn't mentioned at all. He's 10 talking and focusing on the fact that the original sentence was 11 significantly below state guidelines. 12 way that in a sense traded custodial time for a reasonable 13 prospect of repayment or restitution. 14 that after the number of years that had been in his words used 15 up, that that probation order and restitution was going to 16 evaporate in five years, and if the process of restitution 17 hadn't proceeded as anticipated, they are running out of time, 18 and in his words that made him think more about the punitive 19 aspects of the sanction that were pushed to the background in 20 the early going. 21 It was fashioned in a And he was concerned And finally, although this is already alluded to in 22 the state lawyer's comment that I quoted, when you look at the 23 actual probation violations that the state officer brought, 24 none of them involve the federal investigation. 25 lawyer said, there's no claim that he violated a term of state As the state Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1390 Page 41 of 52 1 probation by engaging in new criminal conduct. 2 that he was living in Florida without authorization, a 3 violation of term 2. 4 residence, a violation of term 3. 5 make regular payments toward restitution, a violation of 6 term 5, which was the actual violation to which there was an 7 admission and the resulting sentence. 8 41 Instead it's That he had been untruthful about his And that he had failed to So I think the interplay, the fact that the federal 9 investigation was known and that Mr. Rinkus was at least being 10 interviewed is about all you can say from what was going on in 11 the state. 12 Judge Johnston's decision. 13 I've been able to review. I don't think it amounted to a basis for At least not on the record that 14 But more generally, I think the state fraud 15 conviction involving the car theft ring and the conviction here 16 are fundamentally distinct and entirely different episodes of 17 wrongdoing. 18 fraudulent conduct. 19 in a situation like this where the policy statement of the 20 guidelines says, you know, I can do consecutive, concurrent, or 21 some combination, but then when the guidelines go on to say 22 under these circumstances which we have here it recommends 23 consecutive. 24 are entirely distinct episodes of criminal wrongdoing, 25 consecutive sentences is the only appropriate response in my There's no overlap other than that both involve And that's enough, in my view, to suggest When I further conclude in my own mind that they Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1391 Page 42 of 52 1 42 view, and I intend to do that. 2 In terms of the wrongdoing here -- and this really 3 gets to the third point, I think, that Mr. Dodge highlights 4 today which is a combination of the idea that rehabilitation is 5 important, which it is, and that the best chance of 6 rehabilitation is to get Mr. Rinkus back in his family setting 7 with his supporting spouse, father, and other natural family 8 attachments and allow him to start working toward restitution, 9 to make strides perhaps consistent with his family history that 10 would allow him to complete a formal education, you know, all 11 of those things, and that the sooner he gets to that the 12 better. 13 And we all want Mr. Rinkus to successfully 14 rehabilitate, to turn his life around and to begin engaging in 15 constructive activities. 16 for all of us. 17 and for society generally. 18 sentencing. 19 rehabilitated in that setting, though I must say the experience 20 in the state court process gives me pause. 21 Judge Johnston's original view when he opted for a lengthy 22 probation instead of custody, and we all know that result led 23 to disappointment and in fact this criminal episode. 24 25 That much is a given. That's better For Mr. Rinkus, for his family and loved ones, But it's not the only factor in It may be true that he would be more quickly I think that was But even if it were true, I think I need to focus here on the significance of the criminal wrongdoing that brings Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1392 Page 43 of 52 1 Mr. Rinkus to this Court. 2 through the presentence report, it was exceedingly calculated 3 wrongful activity. 4 Friday night with too much alcohol and a couple of friends and 5 then going off in a half-cocked scheme that took advantage of 6 some people. 7 that took thought to say "We're going to create a financial 8 fraud that takes advantage of the current economic downturn so 9 we can pitch the idea that there are a lot of companies out 10 there that are in need of short-term financing," which there 11 are. 12 first prospectus, it was fraud. 13 sense where people like Mr. Rinkus completely misrepresented 14 their qualifications, both educationally and in terms of 15 experience, but also completely misrepresented what they were 16 going to do when they got the funds. 17 wasn't simply a one-month in and out. 18 alluded to this. 19 to two years. 43 I mean, in my view when I read This wasn't simply sitting there on a This was a very calculated fraud. It was one But that said, from the very beginning, from the very 20 It was fraud in the most basic It was sustained. It I think Mr. Borgula The role for Mr. Rinkus was pretty much close Not quite, but close. Third, and I already mentioned this, it began while 21 he's on probation from a state sentence for a car theft ring or 22 fraud. 23 be knowing that you just contracted a state felony, that you're 24 on probation for it, and then to step into a whole new fraud. 25 And finally, the other factors that aren't I can't imagine a worse combination of situations, to Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1393 Page 44 of 52 1 specifically tied to the nature of the wrongdoing here bother 2 me in terms of Mr. Rinkus's credibility and general ability to 3 function constructively, productively, and lawfully in the 4 American economy. 5 You know, we have no tax returns from at least 2006 6 on, despite his self-report that during those periods of time 7 he was earning a significant salary. 8 lied about it, or he took the money and never paid the taxes. 9 So, you know, we either have a string of unverified employment Either he wasn't and he 10 or we have a string of employment with money that never made 11 its way to Treasury. 12 accounts for the largest part of his time as an adult working 13 in -- working in this state or in other states in this case. 14 44 Either one is a bad outcome, and yet that So the combination of factors to me is very 15 troubling. 16 Mr. Rinkus, as well as his family, with the custodial sentence 17 here that I intend to be within the guideline range more or 18 less -- I'll get to that last point in a minute -- is to say 19 you know, "You really hit the wall. 20 is a cost, a significant price in loss of freedom, in 21 separation from friends and loved ones to pay because of a 22 significant pattern of wrongdoing. 23 significant pattern of ongoing wrongdoing that hurt people and 24 that repeated in a sense a pattern that's been a part of your 25 life for too long. And part of what I think needs to happen for This can't go on. There Not a simple mistake but a And when you come out, yes, you're going to Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1394 Page 45 of 52 45 1 be starting from scratch, you're going to have tough times 2 between now and the end, but hopefully during that time when 3 you come out you can have reinforced, through whatever 4 programming is available and through your own heart and mind, 5 the need to make positive, constructive, and lawful steps for 6 the rest of the time that you will hopefully have to live 7 productively in the community with your family. 8 The guideline range after a K1 adjustment is 37 to 9 46 months, and I'm finding from my own records here that 10 two months of the state time were served here in marshal 11 custody. 12 may or may not give him credit. 13 government won't give him credit for that through the Bureau of 14 Prisons. 15 be consecutive and there shouldn't be any credit for any of it. 16 For lots of the reasons I just indicated. 17 think a two-month adjustment is not unreasonable under all the 18 circumstances. 19 intended sentence of the Court is 35 months, which is at the 20 low end of the guidelines after the K1 departure, plus a couple 21 months off for those February to April months here in federal 22 custody. 23 respects. 24 25 And I don't know what the state will do for that. It I do know the federal Part of me thinks, you know, it really ought to all But that said, I The government doesn't oppose it. So the final But otherwise concurrent to the state in all And for the reasons I indicated. The Court will certainly recommend drug assessment and treatment up to and including the 500-hour program if the Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1395 Page 46 of 52 1 Bureau believes he qualifies for that, and that he be allowed 2 to serve that time as close to his family as possible in 3 West Michigan. 4 Mr. Borgula, did you have something on that? 5 MR. BORGULA: 6 Your Honor, did you mean to say concurrent or consecutive? 7 8 THE COURT: I meant to say consecutive. Did I say the other? 9 MR. BORGULA: 10 THE COURT: I thought you said concurrent. I'm sorry. No, I meant to say 11 consecutive. 12 respects. 13 I mean it to be 35 months consecutive to the state, that is 14 after the state sentence is served. 15 Consecutive to the state sentence in all I apologize for that. And thank you for clarifying. With respect to supervised release, the Court intends 16 a three-year term which would follow custody, during which the 17 mandatory provisions would apply including cooperation in the 18 collection of DNA, drug testing, a ban on the possession of 19 firearms, destructive devices, and dangerous weapons. 20 standard terms including no consumption of alcohol given the 21 history of difficulty with that. 22 difficulty. 23 46 The Or at least potential And then special conditions: (1) that Mr. Rinkus 24 participate in a program of testing and treatment for substance 25 abuse as directed by the probation officer until released, Case ECF N0. 258 filed 10/29/13 PagelD.1396 Page 47 Of 52 4'7 paying a portion of the costs as he's determined able; (2) that he provide the probation officer with access to requested financial information; (3) that he not apply for or enter into any loan or other credit transaction without approval of the probation officer,- next, that he maintain legitimate full-time employment as approved by the probation officer. And I mean that to focus on getting him into a position where there's verifiahle employment, not self-employment, that has led to some of the problems that we-ve seen here. And then seven -- or not seven -- whatever is next in order, that Mr. Rinkus may not work in any occupation involving fiduciary duties, financial management or planning, investments or solicitation of funds without the advance approval in writing of the probation officer. In terms of a fine, the Court does not intend to impose a separate fine here. I don't think there-s really ability to pay based on this record. At least that's verifiahle. But more than that, given the forfeiture and restitution, which we'll talk about in a minute, I think a fine would be excessive and unnecessary. I do intend restitution. which is outlined in the PSR, and I think for purposes of the record I do need to identify the people and amounts here now. The total restitution is $827,300. Payable to $100,000,- John Burbine, 200,400.- Case ECF N0. 258 filed 10/29/13 PagelD.1397 Page 48 Df 52 48 Stephanie Bartley, 20,000, -- 151,400: 50,000: Chris Anzalone, 10,000. I do intend that to he joint and several with any other defendant, if any, who is ultimately found responsible for the same wrongdoing. Because this is a custodial sentence, I will use the normal payment terms I would in a custody situation: Minimum quarterly installments of 525 based on Inmate Financial Responsibility program participation or minimum monthlies of 520 based on UNICOR earnings during the period of custody beginning 60 days after the date of judgment, with any balance due during supervision in minimum installments of $250 beginning 60 days after release from imprisonment. As usual any windfalls from a financial perspective that Mr. Rinkus may receive would have to be credited to the outstanding obligations under this judgment. In terms of the forfeiture, I do intend to grant the government's motion for entry of the money judgment, and so I will reference that in the criminal judgment but also enter the separate order that Mr. Borgula has tendered. And then I am left with a special assessment which is $100. so that's the intended sentence of the Court. Legal object ions Mr. Borgula? MR. EORGULA: None, Your Honor. Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1398 Page 49 of 52 1 THE COURT: And, Mr. Dodge, legal objections? 2 MR. DODGE: No, Your Honor. 3 THE COURT: Okay. 4 MR. DODGE: In the sense of no guideline objections 5 or anything that would be the subject of an appeal. 6 frankly, I think the Court's judgments were within its 7 discretion. 8 9 THE COURT: All right. Quite And what I mean to invite is any objections that you'd want to preserve so that if you have 10 one at this point, whether it's to guidelines or otherwise, 11 that I hear it now, that would give me a chance to address it, 12 and then it would be preserved for appeal. 13 MR. DODGE: I understand, Your Honor. And my 14 listening to what the Court just ruled, I think it was within 15 the parameters of what the Court can decide within its 16 discretion, including the 35-month sentence instead of 17 37 months or those types of issues. 18 THE COURT: Okay. 19 MR. DODGE: So I don't have -- but that certainly 20 doesn't mean that it should be taken that I agree with it. 21 THE COURT: I understand that. 22 MR. DODGE: Obviously I made the best case that I 23 24 25 could for Mr. Rinkus. THE COURT: Yeah, you did, and you made a strong one here that was passionately presented and in writing, and I 49 Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1399 Page 50 of 52 50 1 don't mean to suggest in any way that I've convinced you that 2 it's the correct outcome. 3 objections, if there are any that we haven't already addressed. 4 MR. DODGE: I simply mean to invite legal Your Honor, the Court noted the 5 transcript from the hearing in terms of what Judge Johnston 6 said. 7 and append that so the Court and the government, we all knew 8 exactly what was said at that time instead of just generically 9 going with an argument. I felt compelled to add that I did actually obtain that 10 THE COURT: Right. 11 MR. DODGE: So that's why it was added to the motion I appreciate that. 12 for downward departure, so that the Court could see exactly 13 what was considered and said by the state judge. 14 THE COURT: All right. All right. Well, then I'm 15 going to go ahead and impose sentence as I announced my 16 intention to do so. 17 sentence to run consecutive, as in after, the state sentence; 18 supervised release of three years; the restitution as 19 specified; no fine; the forfeiture in the form of the money 20 judgment; and the special assessment of $100. 21 Summarizing: A 35-month custodial Once that's entered and of record, Mr. Rinkus, you 22 have 14 days to file your Notice of Appeal. 23 be on file within 14 days. 24 of appeal left, that's the triggering period, and you need to 25 talk to your lawyer about how your Plea Agreement addresses That notice has to To the extent you have any rights Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1400 Page 51 of 52 1 rights of appeal. 2 take that, and it has to be on file in 14 days. 3 51 But to the extent you have any left, you can I know you're working right now with retained 4 counsel. 5 want to bring. 6 counsel, you can't do it anymore, and you still want to take an 7 appeal and have a right to do it, you can file the forms that 8 are required, and if you demonstrate the financial eligibility, 9 you'll get a lawyer appointed for you to represent you in that 10 That can continue all the way through any appeals you But if you lose the financial ability to retain appeal. 11 Do you have any questions about that right now? 12 THE DEFENDANT: 13 THE COURT: 14 MR. BORGULA: 15 THE COURT: Mr. Dodge, anything else today? 16 MR. DODGE: No, Your Honor. 17 THE COURT: All right. 18 THE CLERK: All rise, please. 19 20 21 22 23 24 25 No, Your Honor. Okay. Anything else today, Mr. Borgula? No, Your Honor. Thank you. Thank you. (Proceeding concluded at 3:13 p.m.) * * * Thank you. * * Court is in recess. Case 1:10-cr-00384-RJJ ECF No. 258 filed 10/29/13 PageID.1401 Page 52 of 52 I certify that the foregoing is a correct transcript 1 2 from the record of proceedings in the above-entitled matter. 3 4 Date: October 29, 2013 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 /s/ Glenda Trexler __________________________________ Glenda Trexler, CSR-1436, RPR, CRR 52