Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 1 of 62 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - -X UNITED STATES OF AMERICA : : - v. : : CHRISTOPHER ST. LAWRENCE, : : Defendant. : - - - - - - - - - - - - - - - -X 16 Cr. 259 (CS) GOVERNMENT=S SENTENCING MEMORANDUM JOON H. KIM Acting United States Attorney for the Southern District of New York Attorney for the United States of America James McMahon Stephen J. Ritchin Daniel Loss Assistant United States Attorneys - Of Counsel - Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 2 of 62 TABLE OF CONTENTS I. Introduction...................................... 1 II. The Offense Conduct............................... 4 III. Application of the Relevant Section 3553(a) Factors........................... 4 A. The Sentencing Guidelines.................... 4 1. Base Offense Level...................... 4 2. Amount of Loss.......................... 5 a. Applicable Law..................... 5 b. Calculation of Loss................ 7 i. Application Note 3(F)(ix)..... 8 ii. Relevant Conduct and Acquitted Conduct............. 11 a) Applicable Law........... 12 b) The $3.6 Million Receivable............... 13 The Ambulance Fund Transfers................ 19 The Defendant's Loss Arguments..... 25 3. Ten or More Victims/Mass Marketing...... 28 4. Sophisticated Means..................... 31 5. Role Adjustment......................... 36 6. Abuse of Position of Public Trust....... 39 7. No Acceptance of Responsibility......... 42 8. Final Offense Level..................... 42 c) c. Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 3 of 62 B. The Nature and Circumstances Of the Offense............................... 42 History and Characteristics Of the Defendant............................. 49 Need for the Sentence Imposed to Promote Respect for the Law and To Afford Adequate Deterrence................ 51 Need for the Sentence to Provide Just Punishment...................... 57 Restitution and Fine......................... 57 CONCLUSION.................................................. 59 C. D. E. F. ii Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 4 of 62 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - -X UNITED STATES OF AMERICA : : - v. : : CHRISTOPHER ST. LAWRENCE, : : Defendant. : - - - - - - - - - - - - - - - -X 16 Cr. 259 (CS) GOVERNMENT=S SENTENCING MEMORANDUM The Government respectfully submits this memorandum in connection with the sentencing of defendant Christopher St. Lawrence, now scheduled for Monday, November 27, 2017 at 10:00 AM. I. Introduction The defendant's conduct in this case consisted of a wide range of fraudulent conduct over a period of several years. By repeatedly scheming and lying to mislead investors about the Town's and the RLDC's finances, the defendant both defrauded the Town's and RLDC's investors and undermined the credibility of the $3.7 trillion municipal bond market that provides financing for schools, hospitals and other public facilities at a low cost. He also undermined the credibility in that market of the Town he claimed to serve. Ramapo now has no credit rating and its 126,000 residents will feel the impact of the defendant's crimes for years in the form of higher taxes and credit costs, as the Town and its taxpayers try to untangle the financial mess Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 5 of 62 and fill the multi-million dollar hole in the General Fund that the defendant left behind. Despite that impact and despite the jury's verdict, the defendant still insists that he really did nothing wrong. To hear him tell it, his crimes were actually good for Ramapo: The only benefactors were the Town residents who have roads, bridges and other vital infrastructure that has been built, repaired or maintained through the issuance of public improvement bonds while not increasing taxes. The residents have a beautiful baseball stadium for minor league baseball and other events. Defendant's Sentencing Memorandum at 20. And, with the hope that nobody looks at the evidence otherwise or remembers that the stadium was built with bond proceeds obtained by fraud, he wants us to believe that the "beautiful baseball stadium" "has been an economic success." Defendant's Sentencing Memorandum at 2; but see e.g., exs. 127-30 (RLDC financial statements for 2011 through 2014 showing losses absent revenue from condominium sales); tr. at 584-86 (defendant caused owner of baseball team to create documents suggesting that the RLDC received more money from the team than it actually did). At the very least, according to the defendant, no real harm was done. After all, he argues, "[a]ll of the bonds have been paid or are being paid. All the bond proceeds were used for their intended purposes. All the contractors have been paid." Defendant's Sentencing Memorandum at 1. 2 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 6 of 62 This case has never been about those things, or, as the defendant has at times claimed, his political enemies, or allegations that the defendant favored one group over others. It has always been about how the defendant schemed and lied about the Town's and RLDC's finances to sell bonds over a period of several years and the harm effected by that conduct. But, instead of expressing remorse for his crimes now that the jury has spoken, the defendant has continued to dodge and minimize his conduct in a continuing effort to divert attention from what he has done. Even less compelling is the defendant's claim that he has been punished enough because he "has already been removed from office and lost his only source of income." Sentencing Memorandum at 13. a public trust. Defendant's Service in an elected position is Having demonstrated that he does not merit that trust, the defendant is not entitled to sympathy because he lost his position. The arrogance that fuels the defendant's refusal to understand that or to accept responsibility for his criminal conduct, even at this late stage, goes a long way to explaining how he now stands before the Court as a convicted felon awaiting sentencing. The impact of the defendant's crimes on the Town and its bondholders; his lack of remorse or regret for what he has done; the broad scope and duration of the defendant's fraud; 3 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 7 of 62 the defendant's contempt for the law; the need for general deterrence; and the defendant's repeated efforts to damage the reputations and political careers of those who dared question his criminal conduct are all aggravating factors that together call for a substantial sentence in this case. II. The Offense Conduct The offense conduct in this case was described in the Government's Memorandum of Law in Opposition to Defendant St. Lawrence's Rule 29 and Rule 33 Motions (docket no. 167), which was filed on August 22, 2017. That description is incorporated herein and the Government will deliver a hard copy of that memorandum along with the hard copy of this submission. III. Application of the Relevant Section 3553(a) Factors A. The Sentencing Guidelines The defendant's final offense level should be 33. At category I, that offense level calls for a sentencing range of 135 to 168 months and a fine range of $35,000 to $350,000. 1. Base Offense Level The base offense level is 7, as both the 1934 Act (15 U.S.C. §§ 78j(b) and 78ff) and the wire fraud statute (18 U.S.C. § 1343) are referenced to U.S.S.G. § 2B1.1, U.S.S.G., Appendix A, and both statutes have a statutory maximum term of imprisonment of 20 years. U.S.S.G. § 2B1.1(a)(1). 4 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 8 of 62 2. Amount of Loss The loss from the defendant's offense is $2,923,000. Accordingly, the offense level should be increased by 16 levels. U.S.S.G. § 2B1.1(b)(1)(I). a. Applicable Law Under Section 2B1.1 of the Guidelines, a defendant's offense level is based in part on the amount of loss involved in the offense. U.S.S.G. § 2B1.1(b)(1)(A)-(P). Loss is defined by the Guidelines as “the greater of actual loss or intended loss.” U.S.S.G. § 2B1.1, Application Note 3(A). The term “actual loss” is defined, in turn, as “the reasonably foreseeable pecuniary harm that resulted from the offense.” Id. The “offense” includes the defendant's relevant conduct and also all acts and omissions of a defendant and his coconspirators (if reasonably foreseeable to him) “that were part of the same course of conduct or common scheme or plan as the offense of conviction.” U.S.S.G. § 1B1.3(a)(2). "[R]easonably foreseeable pecuniary harm” is itself defined as “pecuniary harm” -- that is “harm that is monetary or that otherwise is readily measurable in money” -- that the “defendant knew or under the circumstances, reasonably should have known, was a potential result of the offense.” U.S.S.G. § 2B1.1, Application Note 3(A)(iii), (iv). In calculating loss amount under the Guidelines, a sentencing court need only make a “reasonable estimate” given 5 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 9 of 62 the available information. U.S.S.G. § 2B1.1, Application Note 3(C); United States v. Rutkoske, 506 F.3d 170, 178 (2d Cir. 2007). The “Guidelines do not require that the sentencing court calculate the amount of loss with certainty or precision.” United States v. Bryant, 128 F.3d 74, 75-76 (2d Cir. 1997). Contrary to the defendant's assertions (supported only by citations to Ninth Circuit precedent), the Second Circuit has held that the calculation of loss need only be determined by a preponderance of the evidence. See United States v. Gonzalez, 407 F.3d 118, 125 (2d Cir. 2005)(district court's authority “to resolve disputed facts by a preponderance of the evidence when arriving at a Guidelines sentence” “endures post-Booker”). Given that the Guidelines are now advisory, "there is even less reason for judicial imposition of enhanced standards of proof to the determination of Guidelines ranges that are, in the end, only advisory. United States v. Jones, 531 F.3d 162, 176 (2d Cir. 2008). 1 Due process does not require an enhanced standard of proof for the loss enhancement here. In McMillan v. Pennsylvania, 477 U.S. 79, 88 (1986), the Supreme Court held that the imposition of a mandatory minimum sentence did not violate due process in part because it was not the "tail which wag[ged] the dog of the substantive offense." Id. at 88. In United States v. Watts, 519 U.S. 148 (1997), the Supreme Court reiterated McMillan's holding “that application of the preponderance standard at sentencing generally satisfies due process,” but recognized the “divergence of opinion among the Circuits as to whether, in extreme circumstances, relevant conduct that would dramatically increase a sentence must be based on clear and convincing 1 6 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 10 of 62 b. Calculation of Loss The Indictment charged that "investors in all Town and RLDC bonds outstanding during the relevant time period [of November 2009 to April 2016] have, to date, suffered millions of dollars in losses" as a result of the fraud. Indictment, ¶ 5. As the Indictment charged, and as the evidence at trial showed, those losses are derived from the reduced yield the investors received from the Town and RLDC on the bonds because the defendant's fraud made the bonds look less risky than they actually were. Indictment, ¶ 4; see, e.g., tr. at 64-65 (correlation between risk and interest rate); 77-81 (rating reflects issuer's financial condition, which impacts interest rate); 99-100, 113 (General Fund balance impacts interest rate); 1090-11 (process by which initial interest rates are set in negotiated bond issues); 2091 (correlation between rating and evidence.” Watts, 519 U.S. at 156. Courts, however, have rejected arguments for enhanced burdens of proof in cases with more extreme facts than those presented here. See e.g., United States v. Fenner, 147 F.3d 360, 366 (4th Cir. 1988) (rejecting argument that increases from 42 years to 55 years' imprisonment and from 115 months' to 210 months' imprisonment were “so profound that it is sufficient to implicate due process concerns or to give the impression of having been tailored to permit the application of [a] cross-reference to be a tail which wags the dog of the substantive offense”); United States v. Galloway, 976 F.2d 414, 425–26 (8th Cir. 1992)(potential increase from 21–27 months to 63–78 months did not raise due process concerns). 7 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 11 of 62 yield); 2092 (correlation between risk, as reflected by General Fund balance, and yield). i. Application Note 3(F)(ix) The Government calculated the $2,923,000 loss in accordance with U.S.S.G. § 2B1.1, Application Note 3(F)(ix), which states: In a case involving the fraudulent inflation or deflation in the value of a publicly traded security . . . , the court in determining loss may use any method that is appropriate and practicable under the circumstances. One such method the court may consider is a method under which the actual loss attributable to the change in value of the security . . . is the amount determined by – (I) the difference between the average price of the security . . . during the period that the fraud occurred and the average price of the security . . . during the 90-day period after the fraud was disclosed to the market, and (II) multiplying the difference in average price by the number of shares outstanding. In determining whether the amount so determined is a reasonable estimate of the actual loss attributable to the change in the value of the security . . . , the court may consider . . . the extent to which the amount so determined includes significant changes in value not resulting from the offense (e.g., changes caused by external market forces . . . .) The Government calculated the loss by focusing on the difference in yields in Town and RLDC bonds before and after the fraud was disclosed because prices of bonds are usually expressed in terms of yield and because the price and yield of any particular bond are directly proportional to each other. 8 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 12 of 62 The fraud here was disclosed incrementally, with the disclosure period beginning with the execution of a search warrant at Ramapo's Town Hall by the FBI on May 15, 2013, and ending when the Indictment was unsealed and the complaint in the SEC's parallel case was filed on April 14, 2016. Because the market for municipal bonds is less active than that for other publicly traded securities, such as common stocks, the Government analyzed trades during an approximately 180 day period before and after the disclosure period, rather than 90 days. The Government chose the following bonds issued by the Town as representative because they had sufficient trading activity and different maturities: CUSIP ISSUE DATE MATURITY 751396T85 11/28/12 11/01/24 751396U26 11/28/12 11/01/26 751396U83 11/28/12 11/01/32 PRE-DISCLOSURE TRADES POST-DISCLOSURE TRADES 11/28/1205/14/13 11/28/1205/14/13 11/28/1205/14/13 04/14/2016 – 10/14/2016 04/14/2016 – 10/14/2016 04/14/2016 – 10/14/2016 In order to control for the impact on pricing of other factors in the marketplace, such as changes in interest rates generally, the Government compared yields on the above bonds in both the pre-disclosure period and the post-disclosure period to the Municipal Market Advisors (“MMA”) AAA General Obligation yield, which is a standard industry benchmark for municipal 9 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 13 of 62 bonds. The chart below illustrates the yields of the representative Ramapo bonds in the pre-disclosure and postdisclosure periods, as compared to the MMA benchmark: CUSIP 751396T85 751396U26 751396U83 Average AVERAGE TRADING SPREAD OVER MMA: PRE-DISCLOSURE PERIOD (IN BASIS POINTS) 35.236 54.10 58.175 49.169 AVERAGE TRADING SPREAD OVER MMA: POST-DISCLOSURE PERIOD (IN BASIS POINTS) 78.17 85.18 75.65 79.665 NET CHANGE FROM PRE- TO POSTDISCLOSURE PERIOD (IN BASIS PTS.) 42.94 31.08 17.475 30.496 The Government's analysis showed that disclosure of the fraud resulted in an average 30.5 basis point increase in the yield of the representative Ramapo bonds. The Government multiplied the 30.5 basis point figure by the Town's and RLDC's total average outstanding bond debt during the period of the fraud of $163,852,000, resulting in an annual loss figure of $499,749. The Government then multiplied that annual loss figure by the average maturity of the Town's and RLDC's outstanding debt during the period of the fraud of 6.08 years, resulting in a loss figure of $3,038,000. The Government then calculated the present value of that loss figure to arrive at the final loss figure of $2,923,000. See United States v. Broderson, 67 F.3d 452, 457 (2d Cir. 1995)(loss consisting of anticipated stream of income should be adjusted to present value); see United States v. Peel, 595 F.3d 763, 771-73 (7th 10 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 14 of 62 Cir. 2010)(sentencing court should consider discounting loss consisting of stream of future payments to present value). ii. Relevant Conduct and Acquitted Conduct The fraud that was disclosed in the Indictment and the SEC's complaint on April 14, 2016 included the fabricated $3.6 million receivable that appeared in the RLDC's April 2011 Official Statement and the fraudulent transfers from the Ambulance Fund to the General Fund. The jury acquitted on the two substantive counts relating specifically to the April 2011 Official Statement. Its decision apparently related to the $3.6 million receivable, as that receivable appeared only in the April 2011 Official Statement and the jury returned its verdicts after it sent out a note asking for evidence of the origin of the $3.6 million receivable but before it received an answer. The jury did not hear evidence relating to the Ambulance Fund transfers. Regardless, the Court may consider the defendant's conduct with respect to the $3.6 million receivable and the Ambulance Fund transfers as relevant conduct. 2 The defendant' claim that he "doesn't have most of the data that [the Government] relied upon" in calculating the loss is untrue. Defendant's Sentencing Memorandum at 12, n.2. The defendant has all of that data. Specifically, with respect to the annual average debt of $162.852 million, the Government told defense counsel in an October 24 letter that: 2 Mr. Wilcox calculated the annual average outstanding bond debt issued or guaranteed by the Town of Ramapo from 2011 through 2015 based on the outstanding 11 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 15 of 62 a) Applicable Law The Court of Appeals has repeatedly recognized that conduct that is not specifically charged or proven at trial, including conduct underlying acquitted counts, is properly included in a defendant's offense level calculation as relevant conduct if proven at sentencing by a preponderance of the evidence. United States v. Gigante, 94 F.3d 53, 55 (2d Cir. 1996); United States v. Rodriguez-Gonzalez, 899 F.2d 177, 181-82 (2d Cir. 1990); see Watts v. United States, 519 U.S. 148, 156 (1997)("an acquittal in a criminal case does not preclude the Government from relitigating an issue when it is presented in a subsequent action governed by a lower standard of proof"); U.S.S.G. § 1B1.3, Background ("Conduct that is not formally charged or is not an element of the offense of conviction may enter into the determination of the applicable guideline indebtedness figures contained in the Official Statements for bonds issued April 18, 2011, June 3, 2011, October 4, 2011, December 8, 2011, May 30, 2014, September 27, 2012, December 3, 2012, April 25, 2013, May 28, 2013, May 27, 2014, May 26, 2015 and September 30, 2015. Mr. Wilcox used the maturity schedules of the outstanding bond debt listed in these Official Statements to calculate an average maturity of 6.08 years. The Official Statements are available on the Internet and the defense also received them in discovery 18 months ago. Many of them were admitted at trial. The Government provided other information requested by the defense in that letter, and in other correspondence, as well. 12 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 16 of 62 sentencing range."). Acts that are: 1) "committed, aided, abetted, counseled, commanded, induced, procured, or willfully caused by the defendant;" 2) during the commission of the offense of conviction, in preparation for it, or in the course of avoiding responsibility for it; 3) "that were part of the same course of conduct or common scheme or plan as [an] offense of conviction;" and 4) that were "of a character for which §3D1.2(d) would require grouping of multiple counts" qualify as relevant conduct and may be considered in calculating the loss. U.S.S.G. § 1B1.3(a)(2). The evidence proves, by at least a preponderance of the evidence, that both the $3.6 million receivable and the Ambulance Fund transfers are relevant conduct. b) The $3.6 Million Receivable The proof at trial showed by at least a preponderance of the evidence that the fake $3.6 million receivable is relevant conduct. This receivable appeared in the RLDC's Official Statement relating to its April 2011 $25 million bond issue, the proceeds of which were to be used to build the stadium. It then disappeared, never to be seen again. at C-12; tr. at 967-76, 2230-31. Ex. 149 It supposedly related to a "transfer of land to the [RLDC] by the Town." Ex. 149 at C-12. It transformed what would have been a negative General Fund balance to a positive balance and ameliorated what otherwise 13 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 17 of 62 would have been a $5 million drop in the General Fund balance in 2010. Id. This receivable originated with the defendant. He told Melissa Reimer to add as an asset in the Town's General Fund a receivable arising from the Town's transfer of the stadium land to the RLDC. He directed Reimer to value the receivable as 45 percent of the Town's cost when it purchased the land, which Reimer calculated to be $3,663,547. 2202. Tr. at The documents confirm Reimer's testimony that the defendant directed her to add this receivable to the General Fund. Ex. 310 (Reimer sending spreadsheet with receivable included in General Fund to defendant). The fact that Reimer sent a spreadsheet containing the receivable to the defendant belies the defendant's attempt at trial to place the blame for the receivable on Reimer alone. The receivable appears on Reimer's spreadsheet as a separate line item. It is the single most important line item on the spreadsheet, as it alone changes the General Fund balance from negative to positive. Ex. 310. We know the defendant received Reimer's spreadsheet because he responded to her email with a request for a meeting later that day. Ex. 309. At that meeting, he directed Reimer to revise the spreadsheet to show just the new, positive General Fund balance and sent it to Moody's. Tr. at 2227, ex. 314. the FBI found a version of Ex. 310 with the defendant's 14 Further, Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 18 of 62 handwriting on it in the defendant's office during its search of Town Hall. Ex. 308; tr. at 2117, 2222. The $3.6 million receivable was fake. The contract for the transfer of the stadium land between the Town and the RLDC, which was signed by the defendant, specified that the Town was transferring the land at no monetary cost to the RLDC. 313. Ex. The deed the Town gave the RLDC for the land, again signed by the defendant, expressly said that there was no monetary cost for the land transfer. Ex. 315. The defendant signed a real estate transfer tax form saying there was no purchase price for the land. Ex. 325. The Town Board, including the defendant, passed a resolution referring to this land transaction as a transfer. Ex. 311-A. The RLDC Board, including the defendant, accepted this "transfer" of the stadium land. Ex. 312. Aaron Troodler, the Executive Director of the RLDC, testified that the Town transferred the stadium land to the RLDC for no money. at 951. Tr. Pat Withers, a Town Board member, said the same thing during his testimony. Tr. at 645. This receivable never appeared on the books or the financial statements of the RLDC or the Town. Ex. 744 (RLDC 2010 General Ledger); tr. at 971 ($3.6 million payable corresponding to Town's $3.6 million receivable not on RLDC's books), 972 (payable not on RLDC's financial statements); Exs. 132-33 (Town financial statements for 2010 and 2011); tr. at 15 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 19 of 62 1945-47 (receivable not on Town's books). The Town Attorney did not know what the receivable represented but did know that the RLDC was not required to pay the Town $3.6 million for the stadium land. Tr. at 1875-76. Nobody ever asked Troodler, who controlled the RLDC's money, tr. at 922, to make a payment on this receivable or when he was going to do so. made any payment for the stadium land. The RLDC never Tr. at 971-75. Reimer said the receivable "just went away" after it appeared once in the RLDC's April 2011 Official Statement. Tr. at 2231-32. The defendant knew the receivable was fake. He was the only person who served on both the Town Board and the RLDC Board of Directors and, therefore, was the only person who voted both to transfer the land and to accept the transfer. He signed the sales agreement, the deed and the tax form, all indicating that the purchase price was zero. He caused Reimer to calculate the receivable amount, to include it in the General Fund, and to send the resulting, positive General Fund balance to Moody's. There was no evidence that the defendant ever asked what happened to the receivable after it "just went away." The defendant also knew that the receivable was included in the Official Statement that went to investors. He received a draft of the page of the Official Statement that included the receivable ten days before the bonds were issued. Ex. 304. He reviewed that page with the Town's financial 16 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 20 of 62 advisor, tr. at 1746, and also discussed this receivable with the underwriter, tr. at 96-97, and with the underwriter's counsel. Tr. at 388-89. He certified the truth of the statements contained in the Official Statement three separate times. Exs. 101, 102, 103. The defendant had more than ample motive to inflate the General Fund balance at the time the RLDC issued its bonds in April 2011. According to the owner of the team that would eventually play in the stadium, the defendant was "very much the champion" of the stadium. Tr. at 581. He had been thinking about it for years before construction started on the stadium in 2010. Tr. at 578. He pressed on with its construction even after the Town's voters overwhelmingly rejected the Town Board's vote to guarantee long term bonds that would have financed the stadium's construction. Tr. at 939. He visited the site almost every day during construction, tr. at 2080, and urged the contractors to continue building through the "worse [sic] winter in 100 years" despite the additional costs that resulted from the bad weather. Tr. at 2067-68. The defendant also began construction before he had any financing in place. Tr. at 645-47, 983. The bills started to mount as construction continued through the difficult winter and the defendant became desperate for funds. One of the primary contractors threatened to walk off the job unless it was 17 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 21 of 62 paid. Tr. at 984-85, 2077. The defendant caused the construction manager to draft a letter falsely describing costs the RLDC had incurred for construction of a separate, Town-owned maintenance building at the stadium site and used the letter to obtain reimbursement from the Town Board. used the money to pay the contractor. 97, 2071-77. The defendant then Ex. 931, 932; tr. at 983- While the bills were mounting, the defendant had to negotiate with two members of the Town Board to get their votes approving the Town's guarantee of the RLDC's bonds. at 647-56. Tr. The defendant, by beginning construction before he had any money in hand, had dug the Town into a very deep hole. The defendant could not have chosen a worse time to dig that hole. As noted above, the Town spent far more than it took in during 2010, leaving the General Fund with a negative fund balance of close to $1 million. Ex. 310-A. A guarantor, like the Town, with a negative fund balance that had dropped by $5 million in one year does not appear creditworthy to potential investors or bond professionals. Tr. at 99-100. But, the defendant was desperate in March 2011 for the $25 million in bond proceeds with which to pay for the stadium and complete its construction by June 2011, so that the RLDC would not have to pay penalties to the baseball team for a delayed opening of the stadium. Tr. at 1000-01. A fake $3.6 million receivable added into the General Fund at the last minute and that changed the 18 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 22 of 62 fund balance from negative to positive was a simple way to get the bonds issued, at an affordable rate of interest, and get the desperately needed $25 million in the door. The fake $3.6 million receivable is relevant conduct. The stream of conduct from the receivable's creation to its ultimate publication to investors in the Official Statement consisted of acts either committed, commanded, induced or willfully caused by the defendant. The defendant did so during, and as part of, his scheme to defraud investors as charged in the Indictment. Finally, conduct relating to the $3.6 million receivable was "of a character for which §3D1.2(d) would require grouping of multiple counts." Had the jury found the defendant guilty on Counts Two and Ten, those counts would have been grouped with the others for sentencing because the offense level for those two counts and the other counts "is determined largely on the basis of the total amount of harm or loss." 3D1.2(d). U.S.S.G. § All the offenses charged in the Indictment, including Counts Two and Ten, are covered by § 2B1.1, which is specifically identified as a section under which multiple counts must be grouped. Id. c) The Ambulance Fund Transfers The Town maintained an Ambulance Fund that was separate and distinct from the General Fund. It was funded in part by taxes assessed on real property within the Town. 19 In Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 23 of 62 each year from 2009 through 2014, the revenue of the Ambulance Fund substantially exceeded its expenses. In each of those years, the defendant caused transfers of excess funds from the Ambulance Fund to the General Fund without consideration and without requiring repayment or the payment of interest. See, e.g., Ex. 611 (defendant approving transfer)(not offered at trial). These transfers were described in the Town's financial statements as the "flow of assets . . .. without the equivalent flow of assets in return" for the purpose of "mov[ing] amounts earmarked in operating funds to other funds for related purposes." Exs. 131 at 50; 132 at 50; 133 at 54; 134 at 58; 135 at 55; 136 at 55. The defendant caused more than $12 million to be transferred from the Ambulance Fund to the General Fund from 2009 through 2014. Id. The defendant's stated intent in causing the transfers was to inflate the General Fund balance. A covert recording of a budget workshop in late 2014 captured the defendant saying: [W]e pay for the EMS, and anything left over we put into the General Fund. . . . That's what we do. And if it's a good year for us, we get, we get good revenue in on it. . . . Yeah, and so, so it's a money maker for the Town. Absolutely, we run, we run it in a way that we actually make money for the General Fund, so it's it 20 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 24 of 62 goes back to the taxpayers in the General Fund. Ex. 610-B (not offered at trial). The defendant's transfers violated New York law. Section 9-a of New York's General Municipal Law provides in relevant part that "[m]oneys temporarily advanced pursuant to this section shall be repaid to the fund from which they were advanced as soon as available but in no event later than the close of the fiscal year in which the advance was made." The evidence described above shows that no such repayment was ever intended. No such repayment was ever made. There is no legal justification for these transfers. Section 9-a sets forth the mechanism by which transfers may be made between funds. With some inapplicable exceptions, no other statute authorizes transfers between funds. It would make no sense for New York's legislature to impose time limits on loans between funds and to require interest payments on temporary transfers between funds while permitting permanent transfers, with no payment of interest, between funds. Such an interpretation would fly in the face of the requirement, applied by New York's highest court to New York statutes, that a court "must interpret a statute so as to avoid an 'unreasonable or absurd' application of the law." People v. Garson, 6 N.Y.3d 604, 614 (2006), quoting People v. Santi, 3 N.Y.3d 234, 244 (2004) and Williams v. Williams, 23 N.Y.2d 592, 599 (1969); 21 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 25 of 62 People v. Kramer, 92 N.Y.2d 529, 539 (1998)(court may consider whether one reading of a statute "might produce absurd and fundamentally unfair results"). The defendant's transfers from the Ambulance Fund to the General Fund were also improper under New York law because they were inconsistent with his statutory duties under the Town Law. Section 125 of New York's Town Law prohibits a town supervisor from "draw[ing] upon one fund or appropriation account to pay a claim chargeable to another." Paying claims "chargeable to another," however, was the very purpose of the transfers to the General Fund because the General Fund's balance would have been negative without the transfers and, in many instances, the General Fund would not have had sufficient cash on hand to pay its expenses as they arose. These transfers never should have happened because they were part of the fraud scheme and because they were improper under New York law. 3 New York law, which controls municipal finances in the state, is relevant both because it As the Court will recall, the Government also contended prior to trial that the transfers were improper under New York law because they were permanent transfers between funds with different tax bases. The Court precluded that argument but said it would permit the Government to argue that the transfers violated Section 9-a because no repayment was made by the end of each fiscal year, as Section 9-a requires. Accordingly, the Government relies here on the Section 9-a argument the Court permitted and the Section 125 argument, all as described above. 3 22 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 26 of 62 provides the applicable law and because the defendant represented to the Town's auditors each year during the audits of the Town's financial statements that he and the Town were "responsible for compliance with the laws . . . applicable to us" and that he had "no knowledge of any fraud or suspected fraud affecting the" Town. Had the defendant acted in a manner consistent with the law and his representations to the Town's auditors, the transfers would not have occurred or would have been repaid and the General Fund balance would be in the red by more than $12 million. Through the Ambulance Fund transfers, the defendant knowingly and willfully created the appearance that the General Fund balance was higher than it was and, therefore, the Town was more creditworthy than it was. The defendant knew that the transfers violated New York law. In November 2011, the New York State Comptroller put the defendant on notice that transfers between funds could only be made on a temporary basis. At that time, the Comptroller's Office sent the defendant a draft of a report that was eventually published as Town of Ramapo: Internal Controls Over Selected Financial Activities, which referred to a 2009 transfer from the Police Fund to the General Fund and stated in relevant part that "General Municipal Law (GML) allows municipalities to temporarily advance monies from one fund to another (with certain restrictions)." Ex. 604 at 19 (not offered at trial). 23 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 27 of 62 The defendant displayed his knowledge of the law when he responded to the Comptroller's allegations: The statements [in the draft report] that the Town did not repay inter-fund transfers timely nor did town officials know when the repayments were to be made are incorrect. Repayments were timely and appropriately made. Ex. 604 at 43. On another occasion, the defendant displayed consciousness of guilt with respect to the Ambulance Fund transfers. In June 2012, the auditors sent the defendant a draft management letter which criticized transfers from the Ambulance Fund as being neither approved by the Board nor incorporated into the Town's budget. The defendant caused this comment to be removed from the final management letter that went to the Town Board. Compare ex. 617 (draft management letter noting lack of budgeting or Board approval for $1.692 million transfer from Ambulance Fund to General Fund in 2011)(not offered at trial) with ex. 618 (comment removed from final management letter)(not offered at trial). The Ambulance Fund transfers are relevant conduct. The evidence shows the defendant committed, counseled or otherwise willfully caused the transfers. The defendant did so during, and as part of, the scheme charged in the Indictment for the same reason he committed acts relating to the Hamlets receivable, the FEMA receivable, the stadium receivable or the Jackson payable -- to inflate the balance of the General Fund to 24 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 28 of 62 make the Town appear more creditworthy than it was. Finally, conduct relating to the transfers was "of a character for which §3D1.2(d) would require grouping of multiple counts" for the same reasons set forth above with respect to the $3.6 million receivable. c. The Defendant's Loss Arguments The defendant's attempts to avoid responsibility for the loss resulting from his crimes ignore the evidence, the law and common sense. loss here. The evidence at trial proved that there was a It showed that the bondholders did not receive the yield to which they were entitled because they were unaware of the Town's and RLDC's real financial condition due to the defendant's fraud. See, e.g., tr. at 64-65 (correlation between risk and interest rate); 77-81 (rating reflects issuer's financial condition, which impacts interest rate); 99-100, 113 (General Fund balance impacts interest rate); 1090-11 (process by which initial interest rates are set in negotiated bond issues); 2091 (correlation between rating and yield); 2092 (correlation between risk, as reflected by General Fund balance, and yield). That higher yield the investors did not receive is the loss. The defendant also ignores Application Note 3(F)(ix) entirely in his sentencing memorandum. His argument that the Court should apply principles applicable to the calculation of 25 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 29 of 62 damages in civil securities cases in calculating the loss fails to recognize that those principles that are relevant to criminal cases are built into Note 3(F)(ix). For example, the defendant argues over several pages that a loss calculation must strip out losses caused by events independent of the fraud. Note 3(F)(ix) specifically states that a sentencing court "may consider . . . the extent to which the amount so determined includes significant changes in value not resulting from the offense (e.g., changes caused by external market forces . . .)." The Government's loss calculation did just that by comparing the bonds' pre-disclosure and post-disclosure yields to a standard industry benchmark for municipal bonds. The defendant also makes the confusing argument that the Government is "'confusing loss causation, . . . with transaction causation.'" The defendant, however, concedes that transaction causation is another name for reliance. Defendant's Sentencing Memo at 9 ("reliance, often referred to as 'transaction causation'"). Reliance is an element of civil, but not criminal, securities cases. United States v. Vilar, 729 F.3d 62, 88-89 (2d Cir. 2013). 4 The Government's "confusion," The Government did, in fact, prove reliance. See, e.g., tr. at 1408 (investor relies "heavily" on Official Statement); 1409-11 (investor relied on General Fund balance); 1412-13 (investor relied on representation regarding RLDC liquidity); 2091-93, 95 (investor relied on General Fund balance); 2093 (investor relied upon representation regarding RLDC liquidity). Thus, had the 4 26 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 30 of 62 according to the defendant, results from a lack of evidence that the defendant "did anything to cause a change in the Town of Ramapo and RLDC bond prices." at 13. Defendant's Sentencing Memorandum The evidence at trial, including the evidence of the relationship between risk and yield cited above, showed he did. One of the defendant's more astonishing arguments about loss is that "there is no evidence that the fraud was ever revealed to the market" and that "[t]he Government has not and cannot point to any evidence that the market ever learned of the fraud." Defendant's Sentencing Memorandum at 12. That argument ignores the May 2013 search of Ramapo's Town Hall and the corresponding press coverage; the Town's post-search Official Statements -- all signed by the defendant -- that described the search and the investigation; the April 2016 return of the Indictment and the corresponding press coverage; and the April 2016 filing of the SEC's parallel civil complaint and its corresponding press coverage. The press coverage of the May 2013 search and the Town's post-search Official Statements revealed the existence of an investigation into the Town's and RLDC's finances that had some connection to the baseball stadium. See e.g., exs. 152-54 (Official Statements from May investors brought a civil case based on evidence from this trial evidence alone, they likely would have won, contrary to the defendant's claim. Defendant's Sentencing Memorandum at 14. 27 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 31 of 62 2013, May 2014 and May 2015, each describing investigation). The Indictment and the SEC complaint described the fraud in much more detail and that detail was covered in the media. The market "learned of the fraud" here the way it usually does: through issuer disclosures and the news media. While loss is not an element of the defendant's crimes, there was a loss here. 5 crimes. It was caused by the defendant's The Government's $2.9 million loss figure was calculated in accordance with the Guidelines, which take into consideration the principles from civil securities cases that the defendant discusses at length in his brief. The Government's loss figure, therefore, does not include loss from market forces. It easily meets the Guidelines' requirement of a reasonable estimate of the loss. 3. Ten or More Victims/Mass Marketing The defendant's offenses involved 10 or more victims and were committed through mass-marketing. Either factor would require a 2 level increase in the offense level. U.S.S.G. § 2B1.1(b)(2)(A). More than 10 entities and individuals bought the The fact that the Town's proposed settlement with the SEC does not call for a monetary penalty does not mean there is no loss here. The waiver of a penalty reflects a concern that the Towns' taxpayers not be burdened more than they already have been. 5 28 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 32 of 62 bonds, as records made available to the defense in discovery show. That alone is enough to warrant the 2 level increase. The defendant's argument that there are no victims because there was supposedly no economic loss ignores the basic principle of the federal fraud laws that investors are entitled to all material information about a security from an issuer. Thus, each bondholder is still a victim -- even if the defendant's claim that there is no loss is correct -- because the defendant denied the bondholders of the right to control their assets by depriving them of the information necessary to make economic decisions. United States v. Levis, 488 Fed.Appx. 481, 486 (2d Cir. 2012)(summary order), citing United States v. Ferguson, 676 F.3d 260, 280 (2d Cir. 2011). The evidence at trial showed that the defendant did exactly that. The two level increase is also warranted because the defendant's offenses were committed through mass-marketing in the $3.7 trillion municipal bond market in two different ways. First, the parties stipulated that the various Official Statements were posted on the EMMA website for public viewing. Ex. 1101. Those Official Statements were designed to provide information about the bonds to potential investors, tr. at 6869, and the EMMA website is designed, in large part, to provide investors information about particular municipal bonds. See emma.msrb.org/AboutEMMA/Overview.aspx ("EMMA houses hundreds of 29 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 33 of 62 thousands of municipal disclosure documents that provide information for investors about municipal securities. These include offering documents, called official statements . . ."). The defendant was aware that the underwriter would market the bonds to the public and post the Official Statements on the EMMA website. See, e.g., ex. 101 at 2-3. Second, Ned Flynn described the process by which Jefferies gave a sales memorandum describing the bonds to its sales force, which used the information in the memorandum to market the bonds to potential investors. Tr. at 237-40. The posting of the Official Statements on the Internet and the marketing efforts of the Jefferies sales force both qualify as "mass-marketing" under the Guidelines, which is defined as follows: "[M]ass-marketing" means a plan, program, promotion, or campaign that is conducted through solicitation by telephone, mail, the Internet, or other means to induce a large number of persons to . . . (iii) invest for financial profit. U.S.S.G. § 2B1.1, Application Note 4(A). Posting information for potential investors to read on the Internet constitutes "solicitation" for purposes of this enhancement. See United States v. Feldman, 647 F.3d 450, 461-62 (2d Cir. 2011) ("Soliciting individuals to purchase organ transplants was the very reason the website existed"). Such solicitation over the Internet reaches the "large number of persons" anticipated by 30 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 34 of 62 the Application Note. Id. at 461-62 ([B]ecause a single public website on the internet can, and is designed to, reach a large number of people, use of such a website to induce people to enter into a fraud can vastly increase the sale of the fraud, making the defendant more culpable"). The defendant's argument that there was no massmarketing because there were no victims who suffered an economic loss fails for the reason discussed above in connection with the 10 or more victims enhancement. Even if the defendant's claim that no bondholder suffered a financial loss were correct (which it is not), they were still victims because the defendant deprived them of the information to which they were entitled. Further, his argument that there was no marketing and "no advertising or solicitation" simply ignores the evidence and the caselaw described above. 4. Sophisticated Means The offense level should be increased by 2 levels because the offense involved sophisticated means and the defendant intentionally engaged in or caused the conduct constituting sophisticated means. U.S.S.G. § 2B1.1(b)(10)(C). Sophisticated means for purposes of this enhancement means "especially complex or especially intricate offense conduct pertaining to the execution or concealment of an offense." U.S.S.G. § 2B1.1, Application Note 10. 31 The Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 35 of 62 defendant's conduct here was "especially complex or especially intricate." It lasted from late 2010 through the time the Grand Jury returned the Indictment in April 2016. than $160 million in Town and RLDC debt. It impacted more It involved eight charged issuances of bonds, as well as other bond issuances that occurred during the time of the fraud. The fraud consisted of several components, most of which were "especially complex" standing on their own. One such "especially complex" component was the $3,080,000 million receivable, which consisted of several parts: the fraudulent switch of the subject of the receivable from the Hamlets to Ramapo Commons; the defendant's repeated false statements, through the Town Attorney, regarding the timing of the payment of the receivable; and, in an effort to cover up the fraud, the defendant's false statement to the auditors that sales of Ramapo Commons condominiums were slowed due to requirements imposed by the State Attorney General. The switch from the Hamlets to Ramapo Commons was particularly complicated. The defendant had to shoehorn the $3,080,000 amount into the amount that the RLDC ultimately had to pay the Town under the Reimbursement Agreement, ex. 230, by fudging the numbers to make it appear that the receivable amount was the product of the percentage of the Ramapo Commons land occupied by the 11 buildings and the amount the Town originally paid for the Ramapo Commons land. 32 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 36 of 62 The $3,080,000 receivable also stands out as "particularly complex" because it took advantage of a structural weakness in municipal accounting standards. As was noted repeatedly at the trial, the General Fund is the primary indicator of a municipality's health. See generally Government's Memorandum of Law in Opposition to Defendant St. Lawrence's Rule 29 and Rule 33 Motions at 2-4 (docket no. 167) (summarizing trial evidence regarding significance of General Fund). Land is not recognized as an asset in the General Fund because it is not a current asset. Instead, it is recognized as an asset on the separate, government-wide balance sheet. 2177-86. Tr. at A receivable relating to the sale of land payable within a year, however, effectively converts land into a current asset that can be recognized in the General Fund. Id. The counter-entry for recognition of such a receivable is the deletion of the land as an asset from the government-wide balance sheet, which has no impact on the General Fund. Id. Thus, recognition of a receivable arising from the sale of a fixed asset, such as land, that is payable within a year will increase the General Fund balance, and thereby improve the apparent financial health of the municipality when, in reality, very little has changed in the municipality's financial picture. Tr. at 2259-60. Another component of the fraud that was "especially 33 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 37 of 62 complex" on its own was the RLDC liquidity scheme. The defendant understood that the appearance that the RLDC could make its bond payments from its own operating revenue was important to Moody's and to investors in both Town and RLDC bonds. Tr. at 504, 512, 516-17, 1810, 2093. Accordingly, the defendant embarked on a multi-part shell game to create that false appearance for each of the four RLDC bond payments from 2012 through 2014. For example, in September 2012, the defendant identified costs relating to drainage work at Ramapo Commons. Tr. at 1027-28; Ex. 701 at 2-3. The defendant then caused Troodler to submit a voucher for reimbursement of that amount. Tr. at 1027-28; Ex. 701 at 1. The defendant then directed Troodler to use that money to make the bond payment. In September 2014, the defendant similarly arranged for the Town's bond counsel to draft a letter by which the RLDC would seek legal fees and then had the Town Attorney cause Troodler to sign the letter. Ex. 702; tr. at 1069-74. The defendant then caused another Board member to move to approve the payment and, when the money was received, directed Troodler to use that money to make the bond payment. When a member of the Town Board later questioned how the RLDC had used the legal fee money, the defendant falsely told the Town Board that the RLDC had used the money to pay down a construction loan, not the bonds. 712-13, 717-25; exs. 927A, 928A. 34 Tr. at Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 38 of 62 The defendant's conduct was accompanied by his numerous false statements regarding the sources of the RLDC's bond payments. In both November 2012 and February 2013, the defendant falsely represented in Town and RLDC Official Statements, respectively, that the RLDC had made the 2012 bond payments out of its operating revenue. In May 2014, and again in May 2015, the defendant falsely represented in Town Official Statements that the RLDC had made payments out of the proceeds of sales of Ramapo Commons condominium units. The defendant caused Troodler to mislead Sarah Armaghan, the Newsday reporter, to prevent her from reporting that the RLDC had refinanced its debt in February 2013 because it could not possibly make the upcoming bond payments. The defendant himself made similar false statements to Ben Eisen, the Debtwire reporter who testified at trial. The FEMA receivable was another "especially complex" component of the fraud. This receivable, as it was included in the May 2013 Official Statement, consisted of 51 different claims to FEMA for expenses arising from Irene and Sandy. The progress of work on each claim was separately tracked, as was the progress of the claim for reimbursement to FEMA. The defendant further complicated this component of the fraud by claiming, ultimately unsuccessfully, that the year end 2012 General Fund balance reported in the May 2013 Official Statement 35 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 39 of 62 was "reviewed with" the Town's Auditors. Ex. 414. The defendant engaged in this conduct in a desperate attempt to ward off default on Town bonds that were maturing. He forwarded the inflated FEMA receivable to the underwriters and other bond professionals less than two weeks after the FBI search of Town Hall. Absent the inflated portion of the receivable, the Town's General Fund balance would have been negative. See Ex. 414 (showing 2012 year end General Fund balance of $1.495 million, including the FEMA receivable); exs. 402-03, 440 (showing receivable inflated by more than $2 million). The defendant was concerned that the Town would not be able to sell the new May 2013 bonds and use the proceeds to pay off maturing bonds as a result of the search. Ex. 896 at 2. The defendant inflated the receivable, and thereby the General Fund balance, so he could sell the new bonds and thereby avoid default on the Town bonds that were maturing in May 2013. The defendant's offenses, particularly when considered as a whole, clearly involved sophisticated means. 5. Role Adjustment The defendant was an organizer and leader of criminal activity that involved five or more participants and was otherwise extensive. The offense level, therefore, should be increased by 4 levels. The defendant was clearly the organizer and leader of 36 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 40 of 62 this fraud. He was the one who directed the switch of the $3,080,000 receivable from the Hamlets to Ramapo Commons. He directed Klein to make the false statements to the auditors about the timing of the payment of the receivable and the receivable's relationship to Ramapo Commons. He told the auditors the false story about how the State Attorney General was delaying sales of condominium units. He was the one who caused the RLDC ultimately to pay the receivable in an unsuccessful effort to avoid prosecution because the FBI was "all over" him. With respect to the RLDC liquidity scheme, the defendant was the one who directed Troodler how and where to get the money each time a payment was due. He caused the necessary documents to be prepared and, where necessary, approved so that the RLDC would get the funds with which to pay the bonds. It was the defendant who falsely certified the accuracy of the false statements in the Official Statements. It was the defendant who told Troodler how to lie to the Newsday reporter while he himself lied to the Debtwire reporter. It was the defendant who lied to the Town Board about how the RLDC spent the legal fee money in the fall of 2014. With respect to the FEMA receivable, it was the defendant who caused the inflated receivable to be inserted into the Official Statement. It was the defendant who lied to Moody's about the 2012 year end General Fund balance in January 2013. 37 It was the defendant who Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 41 of 62 directed Reimer to add the fake $3.6 million receivable into the General Fund. It was the defendant who approved, or caused another to approve, the transfers from the Ambulance Fund to the General Fund. All roads in this fraud led from the defendant. Nothing in the fraud happened without him. It is the defendant's conduct -- not just his titles, as he suggests -that makes him the leader of the fraud. Further, nothing in Section 3B1.1 mandates that the defendant receive money from the fraud before a role enhancement can be applied to him. The defendant's criminal activity was also "extensive." The fraud here lasted for more than five years. It involved more than $160 million in Town and RLDC debt. impacted numerous bond issues by the Town and RLDC. It It included several components, many of which were "extensive" standing alone. It involved fooling and misleading professionals such as the three different underwriters and their respective counsel, disclosure counsel and the financial advisor. It involved numerous false statements by the defendant to those professionals, as well as to investors, Moody's, other Town Board members, Town employees and reporters. It involved the defendant's direction and supervision of others who knowingly participated in the fraud. It involved the defendant's management of the fraud through a nearly three year FBI 38 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 42 of 62 investigation, including the defendant's origination and execution of the FEMA receivable fraud less than two weeks after the FBI's search of Town Hall. Even among complex accounting frauds, the defendant's criminal activity stands out as extensive. Alternatively, the defendant is liable for the four level increase because he organized and led five or more participants in this fraud. The identities of the participants other than the defendant and Troodler, and their respective roles and conduct, have been set forth in a separate communication to the Court, which the Government asks be filed under seal. 6. Abuse of Position of Public Trust The offense level should be increased by 2 levels because the defendant abused a position of public trust in a manner that significantly facilitated the commission and concealment of the offense. U.S.S.G. § 3B1.3. A position of public trust is a position characterized by professional or managerial discretion (i.e., substantial discretionary judgment that is ordinarily given considerable deference). Persons holding such positions ordinarily are subject to significantly less supervision than employees whose responsibilities are primarily non-discretionary in nature. U.S.S.G. § 3B1.3, Application Note 1. The position must "have contributed in some significant way to facilitating the 39 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 43 of 62 commission or concealment of the offense." Id. The defendant occupied three separate positions of public trust: the RLDC. Supervisor, Director of Finance and President of The defendant was given considerable deference and was effectively subject to no supervision in each of these three positions. As Supervisor, he was the Town's chief executive and answered only to an electorate. The defendant had appointed most of the members of Ramapo's part-time Town Board during the period of the fraud, which limited the Board's ability to act as a check on him. 6 He controlled the Board's agenda, tr. at 617- 18, and further controlled the amount and quality of information that went to the Board with respect to finance and bonding matters. See tr. at 656-57. as Director of Finance. The defendant supervised himself Finally, while an organizational chart would show that he answered to the RLDC's Board of Directors as President of the RLDC, he was one of the Directors and he appointed the other two Directors. Tr. at 958. Neither of the other two Directors every challenged or questioned any of the defendant's decisions. Tr. at 959-60. The defendant Withers was appointed to the Town Board by the defendant in January 2010. Tr. at 616. Friedman was similarly appointed in April 2010 and was not re-elected in November 2015 after he questioned the defendant's management of the Town's finances. Yitzchok Ullman was also appointed to the Board by the defendant in October 2008. A fourth Board member was elected in her own right, without being appointed first, and the defendant was the fifth member of the Board. 6 40 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 44 of 62 effectively ran the RLDC himself. See tr. at 959. Each of these three positions did more than just contribute in some significant way to facilitating the commission or concealment of the offense. The defendant was able to commit his offenses because his three positions effectively gave him sole control over the Town's and RLDC's finances. The defendant's position as Supervisor -- from which he derived the power to appoint himself to the other two positions -- also gave the defendant the ability to cause other Town and RLDC employees to participate in the fraud and, just as importantly, to conceal it. See, e.g., tr. at 1308-09 (Troodler committed perjury before the SEC in part "to protect Supervisor St. Lawrence"). The $3,080,000 receivable switched from the Hamlets to Ramapo Commons because the defendant said so. The Town Attorney told the auditors it would be repaid within specified timeframes because the defendant caused that to happen. The FEMA receivable included claims that had not yet even been submitted to FEMA because the defendant said it did. Troodler played the RLDC liquidity shell game and lied to Newsday because the defendant told him to. As far as investors knew, the RLDC made its bond payments from its operating revenue because the defendant said so and caused Troodler to say so. The defendant could not have done any of those things, and commanded the kind 41 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 45 of 62 of misguided loyalty he did from Town employees, absent his positions as Supervisor, Director of Finance and RLDC Chairman and President. 7. No Acceptance of Responsibility The defendant has never accepted responsibility for his offenses. Accordingly, he is not entitled to a reduction in his offense level on that ground. 8. Final Offense Level The final offense level should be calculated as follows: Base Offense Level 7 Loss 16 10 or More Victims/Mass Marketing 2 Sophisticated Means 2 Organizer/Leader with Five or More Participants/Otherwise Extensive 4 Abuse of Position of Public Trust 2 TOTAL: 33 At offense level 33, the range of imprisonment is 135 to 168 months. B. The fine range is $35,000 to $350,000. The Nature and Circumstances of the Offense The nature and circumstances of the defendant's offenses call for a substantial sentence of incarceration. The defendant stands apart from the many corporate 42 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 46 of 62 officials who have been convicted of securities fraud and from the many politicians who have been convicted of offenses they committed as public officials. Both types of cases involve serious breaches of trust and defendants in both types of cases have often received significant sentences that reflect their corrupt breaches of trust. The defendant falls into both categories in that he has both defrauded investors in the Town's and RLDC's bonds and abused the trust that was placed in him by Ramapo's voters, thereby leaving the Town in a precarious financial condition. The sentence in this case should reflect the defendant's serious breaches of trust both to the Town's citizens and to the Town and RLDC bondholders. As the Court knows from having presided over the trial, the defendant's offenses were all part of his unusually complex scheme that involved numerous acts of deception and concealment over a period of several years. actually engaged in several sub-schemes. The defendant The fraud with respect to the $3,080,000 million receivable lasted from 2010 to 2015. The fraud with respect to the RLDC's liquidity and ability to pay its bonds ran from 2012 to 2014. ran from 2010 to 2015. The Jackson payable fraud The defendant inflated the $3,145,503 FEMA receivable to avoid disclosure of an actual negative General Fund balance in May 2013. He fabricated outright the $3,663,547 receivable in order to avoid disclosure of an actual 43 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 47 of 62 negative General Fund balance in April 2011. He transferred funds from the Ambulance Fund to the General Fund in violation of state law in each year from 2009 to 2014. The defendant's acts throughout his execution of all these schemes were hardly aberrational or a singular mistake or bad choice. They were the product of the defendant's willful, intentional and preconceived plan of criminal conduct. To execute that plan, the defendant engaged in numerous separate, criminal acts over a period of years. The defendant, therefore, repeatedly chose to engage in criminal activity over a period of years. That alone makes him more culpable than an embezzler who stole $3 million in one act or even a similarly situated CEO of an issuer that inflates earnings in a few quarters. The sentence in this case should reflect that increased culpability. The sentence should also reflect the impact of the defendant's crimes on the Town, the bondholders and those Town representatives and employees against whom the defendant retaliated when they questioned the Town's finances or provided evidence to the Government. The impact of the defendant's crimes will be felt for decades in the Town he purported to serve as Supervisor for almost 17 years. As a result of his single-minded quest to build, through criminal means, a stadium an overwhelming majority of voters opposed, the defendant has left the Town's 44 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 48 of 62 finances in shambles, for which the Town's taxpayers will continue to pay for years. The Town's General Fund, by any honest calculation, is negative by at least several million dollars and has been so for many years. The Town is not likely to be able to climb out of that hole in the near future. Having already borne the majority of the $58 million cost of the stadium its voters did not want, the Town is now also likely on the hook for the remainder of that cost because it will have to make good on its guarantee of the $25 million in bonds issued by the RLDC to build the stadium. On top of that, the Town is now stuck with a 61 acre white elephant in the form of a stadium that is, if the past is a guide, likely to continue losing money every year. The Town's taxpayers have suffered tax increases in the General Fund alone almost every year since 2012, with some of the annual budgeted increases exceeding 9%. The Town has not issued financial statements since 2014 and it has no credit rating, either of which could make it more difficult to issue new debt or refinance old debt at a reasonable cost. Town and RLDC bondholders have already suffered an aggregate loss of close to $3 million. That loss is to real people, who thought they were making a safe and reliable investment. Given the uncertainty that now surrounds the Town's finances, in addition to the loss they have already suffered by obtaining a lower yield than they should have, the victims here 45 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 49 of 62 could likely find it more difficult than it otherwise would be to recoup their investment if they try to sell their bonds. The bondholders and Town taxpayers are not the only victims here. The defendant retaliated against Town representatives and employees who he believed were providing evidence to the Government or who dared to question the Town's finances. He did so without regard for the damage he was doing to these people's livelihoods and reputations because he placed more value on his own criminal goals. That makes him more culpable than the average fraudulent issuer or corrupt politician and the sentence here should reflect that additional culpability. The defendant's retaliatory acts were not just rough politics. Retaliatory acts arising from a disagreement over policy, a rivalry or support for another candidate can be dismissed as mere politics, especially in New York. The defendant's retaliatory acts were instead designed to further his criminal scheme by silencing those he believed were providing evidence to the Government and to discourage others from doing the same. They were acts of a criminal cover-up. Troodler, for one, received and initially acted on that signal until he later chose to accept responsibility for his conduct. He testified that he lied to the SEC in 2015 because he knew his attorney's law firm "had very close ties 46 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 50 of 62 with folks at the Town, including the supervisor of [sic] the Town Attorney," 7 and he was very concerned that there could be some sort of backlash, impact in a negative way, retribution, whatever you want to call it, associated with my livelihood if I said something that they thought to be hurtful, and I was very concerned about hurting my family at the time. Tr. at 1021-22. Reimer, former Deputy Supervisor Withers and former Town Board member Dan Friedman were all targets of the defendant's retaliation for their efforts to expose the defendant's fraud. Reimer began to express concerns about the Town's finances "very often" to the defendant and "anybody [in Town government] who would listen" in or about 2009. 2129-30. Tr. at About two weeks after the FBI's search of Town Hall, Reimer was placed on administrative leave by the defendant and instructed not to return to work. Tr. at 2131, 2143-44. She was also charged with a variety of disciplinary charges and was eventually found guilty at a hearing of violating the Town's "workplace violence policy" because she cursed in the Town's police headquarters. Tr. at 2131-36. She then faced a second round of charges, including refusing to attend an interview, which refusal was based on the advice of her attorney; refusing Troodler probably said "the supervisor and the Town Attorney." He clearly was referring to the defendant in any event, as the defendant was the supervisor of the Town Attorney at that time. 7 47 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 51 of 62 to accept service of a letter placing her on administrative leave, which she also did on the advice of her attorney; falsely denying that she recorded an interview with a Town attorney, which she admitted doing because she "didn't trust what was happening;" refusing to produce her iPhone, which she had already given to the FBI; and attempting to break into her office by attempting to unlock her door so she could retrieve personal property. Tr. at 2136-42. When the State Comptroller ranked Ramapo as the second most financially stressed town in New York, the defendant issued a press release in which he blamed Reimer for "improperly" submitting "incomplete data" to the Comptroller: The report is based on incomplete, unaudited and misleading information provided by a now suspended Finance Department employee facing disciplinary charges for attempting to falsify town records of her paramour. In an apparent attempt to embarrass the town, she failed to disclose to the comptroller over $3.5 million in anticipated revenue. Her conduct was discovered too late to correct the Comptroller's report. The "$3.5 million in anticipated revenue" included the inflated $3.145 million FEMA receivable that the defendant had fraudulently included in the General Fund in the Town's May 2013 Official Statement only a few weeks before the press release and only two weeks after the FBI's search of Town Hall. 2146-47. Tr. at Reimer remains on administrative leave to this day. The defendant appointed Withers to a two year term as 48 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 52 of 62 Deputy Supervisor, a job that paid an additional $12,000 a year beyond Withers' salary as a Town Board member, in January 2013. He reappointed Withers to a second two year term in 2015. Withers made several covert consensual recordings of the defendant, some of which were admitted into evidence at trial. These tapes were produced in discovery to the defendant in June 2016. In January 2017, the defendant replaced Withers with another Town Board member, who now serves as the Town's Supervisor. When Friedman, then a sitting member of the Ramapo Town Board, questioned the defendant's use of the legal fee money to pay the RLDC's bonds in September 2014, tr. at 713-17, and also publicly denounced St. Lawrence's "criminal activity and . . . corruption" in 2014, Akilo Matsuda, St. Lawrence's 'Corruption' Blasted by Ramapo Official, Journal-News, June 18, 2014, he found himself opposed by St. Lawrence - a member of the same political party - and his allies at the next election in 2015, which he lost. Marc Moss, Friedman Teaches Real-World Politics at RCC, Rockland Times, May 6, 2016. C. History and Characteristics of the Defendant The defendant's history and characteristics make him more culpable than the average fraud or corruption defendant. The defendant's decisions to engage in criminal conduct to hide the Town's deteriorating financial condition, in 49 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 53 of 62 part so that he could build the stadium the voters did not want, shows his contempt for the law. The duration of his criminal conduct shows the breadth of his contempt. The defendant kept increasing the magnitude of his fraud, and thereby his deception of investors, as time passed. The Court had the opportunity to witness the defendant's arrogant contempt for the law and for his victims when it heard the defendant laugh about deceiving Moody's when he told his employees and bond counsel "to do this refinancing of the short term debt as fast as possible, because . . . we're going to have to pull, all be magicians to get to some of those, uh, numbers." Ex. 409. The defendant's disdainful laughter was an unguarded moment of truth which the defendant never expected the public to hear and which he still cannot explain away. Most striking, though was the arrogance he displayed when he fraudulently inflated the FEMA receivable in May 2013, less than ten days after he learned that he, and the Town, were under investigation when the FBI searched Town Hall. 8 Despite the ongoing investigation, the defendant then continued with his fraudulent scheme in May 2014 and May 2015, when he caused false statements regarding the source of the funds with which the RLDC It was obvious from the face of the search warrant that the FBI left behind at Town Hall, see Fed.R.Crim.P. 41(f)(1)(C), that the investigation related to the Town's and RLDC's finances. 8 50 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 54 of 62 made its bond payments to be published in the Town's Official Statements. Instead of accepting any such responsibility or expressing any such remorse, the defendant has retaliated against Reimer, Withers and Friedman because they dared question him or gave the Government evidence so that it could uncover the truth. Such disdain for the law and for others places the defendant apart from other fraudulent issuers of securities or corrupt politicians and indicates that only a substantial sentence will deter him from criminal conduct in the future. D. Need for the Sentence Imposed to Promote Respect For the Law and to Afford Adequate Deterrence The nature and importance of the municipal bond market present a compelling need for the sentence in this case to deter other officials of municipal issuers from engaging in fraudulent conduct in connection with bond offerings. The municipal securities market raises hundreds of billions of dollars each year to build and maintain the nation's infrastructure, such as roads, schools and hospitals. U.S. Securities & Exchange Commission, Report on the Municipal Securities Market, July 31, 2012, at 1 (available at www.sec.gov/news/studies/2012/munireport073112.pdf)(the "Report"). Approximately 44,000 issuers have issued more than one million different bonds representing more than $3.7 trillion 51 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 55 of 62 in principal. Id. at 1, 5. Given their relatively low interest rates, bonds are an attractive financing alternative for state and local governments. The low interest rates result from the exemption of municipal bond interest from federal, and some state, taxation and from the perceived safety of municipal bonds. Id. at 1, 22-26. The image of municipal bonds as being the preferred investment of widows and orphans is not far from the truth. Individual investors hold as much as 75% of outstanding municipal securities. More than half of municipal securities are held directly by individuals, while 25% are held by individuals through mutual funds or other investments. 1, 12. Id. at Individual investors generally buy and hold municipal securities through maturity, although there is still active trading of more than $3 trillion in municipal securities in the secondary market annually. Id. at 1, 12. Despite its size, importance and reliance on individual investors, the regulation of the municipal securities market has been relatively light when compared with the regulation of other securities markets due to Tenth Amendment concerns. Municipal securities are largely exempt from all but the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934 and their corresponding regulations. As a result, municipal issuers are not required to 52 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 56 of 62 register their securities with the SEC or to file periodic financial reports with the SEC. Their obligations to make continuing disclosures of their financial conditions are relatively limited. Id. at 2, 27-29. To date, the SEC has exercised its relatively limited authority to regulate the municipal securities market largely through enforcement actions and its regulation of market participants such as underwriters and broker-dealers. Id. at 28-31. A recent development in the municipal securities market has intensified the need for deterrence of criminal conduct. Prior to the economic crisis of 2008, more than half of all new municipal securities issues benefited from credit enhancements such as bond insurance or bank guarantees. 49-50. Id. at Starting in 2009, no more than 17% of new bonds have been issued with credit enhancements. Id. The safety of these new bonds, including all of the bonds that were the subject of charges in this case, is dependent entirely on the creditworthiness of the issuers. The sentence in this case must send a strong message of deterrence in order to protect the integrity of the municipal securities market. If individual investors lose confidence in the safety of municipal securities, the cost of public financing will rise and place additional burdens on tight municipal 53 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 57 of 62 budgets and, ultimately, taxpayers. 9 This case is an appropriate vehicle through which to send the message that fraud in the municipal securities industry will not be tolerated. As the first criminal prosecution for securities fraud relating to municipal securities, this case is being relatively closely watched, particularly by professionals in the municipal bond industry. See, e.g., "Former Town Official Claims Judicial Errors in Fraud Trial Justify Acquittal or New Trial," Bond Buyer, July 13, 2017; 10 "Commentary: Bond Fraud Trial Shows Need to Scrutinize Municipal Revenue Generation," Bond Buyer, May 17, 2017; "Jury Finds Former Ramapo Town Supervisor Guilty of Criminal Fraud in First-of-a-Kind Verdict," Bond Buyer, May 23, 2017; "Zeroing in on Government Fraud," City Journal, Winter 2017; "Getting Serious About Government Fraud," Investor’s Business Daily, Feb. 22, 2017. It The events of 2002 demonstrated that investors' loss of confidence in the integrity of issuers' financial statements makes raising capital more difficult. A. Berenson, "Week in Review," New York Times, February 10, 2002 ("If investors cannot believe the figures put out by public companies, they will be less willing to risk their money on stocks"); E. Iwata, "Enron's Legacy: Scandal Marked Turning Point," USA Today, January 29, 2006 (accounting scandals at Enron, Worldcom and other issuers "shook investors' confidence and made it harder for companies to raise capital"); J. Castellano, "Restoring Public Confidence," Journal of Accountancy, April 2002 ("The public's confidence has clearly been shaken"). 9 Bond Buyer is a daily trade newspaper that covers the municipal bond market. It reaches more than 75,000 municipal finance professionals. www.bondbuyer.com/about-us. 10 54 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 58 of 62 has been cited as a warning to public officials as far away as Hawaii. "Those Overseeing Oahu Rail Project Face Legal Scrutiny," The Maui News, July 19, 2017 ("Officials here may have the best of intentions, but they better be telling the public the truth - or else"). As a result of the precedent- setting nature of the case, the sentence here will send a message to issuers and municipal financing professionals nationwide. Other factors add to the need for the sentence in this case to promote respect for the law and to deter others similarly situated from engaging in criminal activity. The defendant's conduct here was initially brought to light by a whistleblower and not through any routine audit or inspection. Given the relatively light regulation of the 44,000 municipal issuers nationwide, investors are largely dependent on the integrity of those issuers' financial statements and other disclosures. In that sense, investors and regulators are similarly situated to the Internal Revenue Service in that the IRS is largely dependent on the integrity of taxpayers. Thus, the need for general deterrence that is often a critical factor in tax cases is also a critical factor here. The Sentencing Commission has made clear that sentences in tax cases should advance the goal of general deterrence: 55 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 59 of 62 The criminal tax laws are designed to protect the public interest in preserving the integrity of the nation=s tax system. Criminal tax prosecutions serve to punish the violator and promote respect for the tax laws. Because of the limited number of criminal tax prosecutions relative to the estimated incidence of such violations, deterring others from violating the tax laws is a primary consideration underlying these guidelines. Recognition that the sentence for a criminal tax case will be commensurate with the gravity of the offense should act as a deterrent to would-be violators. U.S.S.G. Part T - Offenses Involving Taxation, Introductory Commentary. General deterrence is similarly important here as in a tax case because a significant sentence here will serve as a deterrent to others who are similarly situated. That the defendant engaged in criminal conduct as a public official adds to the need for the sentence here to deter others similarly situated from engaging in criminal activity. The view, commonly held by New Yorkers, that many of their elected officials are corrupt is not baseless. For example, more than 30 elected officials at the state level have been convicted of crimes in the last dozen years, more than any other state. D. Clark, "Yes, New York Has More Corrupt Officials Than Any Other State," Politifact New York, September 19, 2016, available at www.politifact.com/newyork/statements/2016/sep/19/elaine-phillips/new-york-has-been-mostcorrupt-state-decades. Twelve public officials in Rockland County, including the defendant, have been convicted of criminal charges in the last 24 years. J. Fenster, "15 Rockland County Officials Who 56 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 60 of 62 Faced Legal Troubles," USA Today, May 19, 2017. Given the harm caused by public corruption and the extent of the corruption problem here in New York, the sentence here needs to send a message that violations of public trust will not be met simply with tough talk, but also with a significant sentence in order to deter others. E. Need for the Sentence to Provide Just Punishment For the reasons already set forth above, justice requires a substantial sentence of incarceration in this case. The wide scope of the defendant's fraud, the lengthy duration of his criminal conduct, the defendant's disdain for others impacted by his crimes and the extensive impact of the defendant's offenses on his victims, the Town, and the individuals discussed above, all merit a substantial sentence here. F. Restitution and Fine Full restitution is mandatory under the Mandatory Victim Restitution Act because the defendant was convicted of several Title 18 offenses. 18 U.S.C. §§ 3663A, 3664. Here, the loss amount for Guidelines purposes of $2,923,000 is the appropriate amount for restitution as well. The Government has learned that the Town's and RLDC's outstanding bonds are held by the victim bondholders in street name at 54 different brokerage firms. The Government is obtaining the names of the individual victims, and their corresponding positions in specific Town and 57 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 61 of 62 RLDC bonds, from those brokerage firms and should have that information by November 27. 11 The Government disagrees with the Probation Office's conclusion that the defendant does not appear to be able to pay a fine. PSR ¶ 74. 12 The defendant's reported net worth dropped by more than $750,000 between the time of his arrest in April 2016 and the time he filled out a financial affidavit for Probation in late June 2017. The cost of defending the case seems likely to account for some, but not all, of that drop. 13 Further, the defendant's net worth is likely to rise if he receives proceeds from the estate of his mother, who passed away earlier this year. If it is apparent by November 17 that the brokerage firms will not be able to produce all the necessary information by November 27, the Government will so notify the Court. In that event, "the court shall set a date for the final determination of the victim's losses, not to exceed 90 days after sentencing." 18 U.S.C. § 3664(d)(5). The Government is making every effort to have the necessary information in hand by November 27. 11 The Probation Office also recommends a fine of $35,000. 20. 12 PSR at The Town has been paying the defendant's legal expenses for the SEC's parallel lawsuit and, presumably, the Reimer lawsuit. S. Leiberman, Ramapo to Pay SEC Legal Fees of Targeted Officials, Journal-News, April 25, 2015. 13 58 Case 7:16-cr-00259-CS Document 181 Filed 11/13/17 Page 62 of 62 CONCLUSION For the reasons stated above, the Government respectfully requests that the Court sentence the defendant to a substantial period of incarceration, a fine and an order of restitution. Respectfully submitted, JOON H. KIM Acting United States Attorney /s By: Dated: cc: _________________________________ JAMES MCMAHON STEPHEN J. RITCHIN DANIEL LOSS Assistant United States Attorneys November 13, 2017 White Plains, New York Defense counsel (by ECF) 59