Case 7:16-cr-00259-CS Document 186 Filed 11/22/17 Page 1 of 5
U.S. Department of Justice
United States Attorney
Southern District of New York
United State Courthouse
300 Quarropas Street
White Plains, New York 10601

November 22, 2017
Hon. Cathy Seibel
United States District Judge
300 Quarropas Street
White Plains, NY 10601
Re:

United States v. St. Lawrence
16 Cr. 259 (CS)

Dear Judge Seibel:
We write to respond to the defendant's motions to
preclude the testimony of Jonathan Wilcox and to delay the
sentencing. For the reasons stated below, the Court should deny
the motion to preclude Mr. Wilcox's testimony and the sentencing
should take place, as scheduled, on November 27.
As the Government described in its November 13 sentencing
memo, Mr. Wilcox applied Application Note 3(F)(ix) of Section
2B1.1 of the Sentencing Guidelines to calculate the loss. As
Exhibit 1 shows, he took the average yield on days that Town and
RLDC bonds traded in the pre-disclosure period of November 15,
2012 to May 15, 2013; calculated the difference between those
average yields and the yields on a municipal bond benchmark
index on those same days; did the same for the days that the
same bonds traded in the post disclosure period; and determined
that the average yields of those bonds rose by 23.384 basis
points after the fraud was fully disclosed. Mr. Wilcox then
calculated the loss to be $2.23 million in the manner described
in Exhibit 2.
The defendant goes to great lengths to confuse and
complicate this calculation. First, the $2.23 million loss
figure is not "an unreliable opinion that cannot even be
tested." It is the result of the arithmetic calculations
described above, which follow the methodology described in the
Sentencing Guidelines. The trading data used in the
calculations comes from the Electronic Municipal Market Access
("EMMA") website maintained by the Municipal Securities

 Case 7:16-cr-00259-CS Document 186 Filed 11/22/17 Page 2 of 5

Rulemaking Board. All dealers of municipal securities are
required to report the details of all trades in municipal bonds
to EMMA so that they can be seen by the public, including the
defendant. The data Mr. Wilcox used to calculate the average
outstanding debt of $162 million came from the Town's Official
Statements, each of which was certified as accurate by the
defendant. 1 Thus, Mr. Wilcox's calculations come from readily
available data and their accuracy can be easily confirmed. The
defendant has done nothing more than make conclusory statements
that the calculations were incorrect. Arithmetic from such
readily available data is inherently reliable. Mr. Wilcox's
calculations are accurate and reliable.
Second, Mr. Wilcox did not choose the methodology he used
to make that calculation. He used the methodology set forth in
Application Note 3(F)(ix). The Sentencing Commission has
suggested that the loss for Guidelines purposes be calculated
using that methodology. It, therefore, cannot be inherently
"flawed," and the defense has offered no persuasive reason to
think it is flawed in this case. The Government used a 180 day
period, rather than the 90 day period in the Application Note,
in order to capture more trades. Given that much of the
defendant's argument to date has been that the Government's
calculation relied on too few data points, he can hardly
seriously object to the use of 180, rather than 90, days that
incorporates more data points.
Third, Mr. Wilcox's calculation is based not just on
"sufficient facts or data" but on virtually all the available
data. Mr. Wilcox considered every trade of every Town and RLDC
bond that traded in both the pre-disclosure and post-disclosure
periods for which EMMA reported a yield. It would have been
impossible to calculate the differences between the yields of a
particular bond in the two periods unless that bond traded in

1

The defendant can hardly be "surprised" or be "hearing for the
first time" that the Government has included revenue
anticipation notes in its calculation of the Town's average
outstanding debts. That information was included in the Town's
Official Statements -- the same Official Statements certified by
the defendant during the time of the fraud, that have been
available on the Internet since the various bonds were issued,
that were produced in discovery in this case 18 months ago, and
that were admitted as exhibits at trial.
2

 Case 7:16-cr-00259-CS Document 186 Filed 11/22/17 Page 3 of 5

both periods. There simply are no other "facts or data" that he
could have considered.
Fourth, the defendant continues to claim falsely that the
Government's calculation "failed to consider market developments
and other factors, unrelated to the charged fraud, that may have
affected the spreads of similarly rated bonds." The application
of the MMA benchmark does exactly that. The Government used the
MMA benchmark in response to the Application Note's suggestion
that the Court "consider . . . the extent to which [the loss
amount] includes significant changes in value not resulting from
the offense (e.g., changes caused by external market forces . .
. ."). The application of the MMA benchmark serves to take
account of such other sources of changes in yield.
Fifth, the fact that the Government has revised its loss
calculation downward is not evidence of its unreliability. The
Government has consistently applied the methodology suggested by
the Sentencing Guidelines. The recent change in results is a
function of applying that methodology to a larger set of data.
Similarly, the previous change resulted primarily from the
Government's choice to compare trade yields to the MMA yield on
the day of the trade, rather than the average MMA yield over
each six month period. That change also included more data
points. The fact that the application of that methodology to a
larger set of data yields a similar result, which is in the same
Guidelines loss range as the previous result, is evidence that
the calculation is reliable and that disclosure of the fraud had
the same impact on all Ramapo debt of similar maturities.
It can hardly be a violation of due process or
fundamental fairness for the Government to revise its
calculation to make it more reliable. Most important, however,
is the fact that the calculation now incorporates both parties'
meritful suggestions. The Court can be confident that the
adversary process has produced the proper result.
What would make the calculation unreliable would be to
exclude bonds, as the defendant suggests, that "were priced far
too low, and had far too high yields." The defendant provides
no legal support for his opinion that the bonds he wants to
exclude from the calculation were improperly priced. As the
Court knows from the testimony at trial, the market sets the
prices and yields for bonds, including all the Town and RLDC
bonds. There is no reason to exclude any of the Town's or
3

 Case 7:16-cr-00259-CS Document 186 Filed 11/22/17 Page 4 of 5

RLDC's bonds from the loss calculation. The defendant
misrepresented the creditworthiness of the Town, which had
directly guaranteed the payment of principal and interest on all
those bonds. The loss calculation, therefore, should consider
all the bonds because the holders of all the bonds were
defrauded.
Another way to render the calculation unreliable would be
to exclude bonds issued after the May 2013 search, as the
defendant suggests, because they were issued after the
disclosure of the fraud. A review of media articles regarding
the search however -- which are readily available on the
Internet -- shows that very few details of the fraud were
disclosed as a result of the search. That only makes sense,
given that all the public knew at that time was that the
Government was conducting an investigation. The full extent of
the fraud was not known until after the investigation was
completed and the Indictment was unsealed on April 14, 2016.
Further, the evidence shows that the defendant continued with
his fraud after the search by, for example, inflating the FEMA
receivable in the post-search May 2013 Official Statement; lying
about the sources of the funds used to make the RLDC's bond
payments in the May 2014 and May 2015 Official Statements;
failing to recognize the Leonard Jackson payable in any of those
Official Statements; and continuing to recognize the fraudulent
$3.08 million receivable in whole or in substantial part in each
of those Official Statements.
Excluding inter-dealer or customer trades from the
calculation, as the defendant suggests, would also make the
calculation less reliable because the market price is set by
both types of trades. There is no reason to exclude either type
of trade. The defendant claims that the "vast majority" of the
trades in the pre-disclosure period "for the three CUSIPS used
by Mr. Wilcox" were customer purchases. The defendant, however,
fails to recognize that Mr. Wilcox's calculation incorporates
the full 47 CUSIPS, not just three. There is therefore no
factual basis for the defendant's argument.
As the
do not govern
hearing. Mr.
the direction
were accurate
testimony.

defendant concedes, the
what a sentencing court
Wilcox's testimony will
of the Application Note
and reliable. There is
4

Federal Rules of Evidence
may hear at a sentencing
establish that he followed
and that his calculations
no reason to preclude his

 Case 7:16-cr-00259-CS Document 186 Filed 11/22/17 Page 5 of 5

There is also no reason to reschedule the sentencing.
The only reason the defendant gives for doing so is the fact
that the Government recently recalculated the loss, in his
favor, by accepting his criticism that its calculation used too
few data points and by recalculating the loss to use all
available data points, based on the same methodology it had used
before. Further, the defendant has had access all along to all
the data the Government used in its calculations and could have,
and should have, performed his own loss calculation months ago.
The sentencing has already been delayed once at the defendant's
request and there is no reason to do so again.
The Court should deny both motions and proceed with the
sentencing on November 27.
Respectfully submitted,
JOON H. KIM
Acting United States Attorney
/s
By: ________________________________
James McMahon
Stephen J. Ritchin
Daniel Loss
Assistant United States Attorneys
(914) 993-1936
cc:

Defense counsel (by ECF)

5

 Case 7:16-cr-00259-CS Document 186-1 Filed 11/22/17 Page 1 of 2

Difference in Yields from Pre-Disclosure Period to Post-Disclosure Period
ROW

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

CUSIP

751396T85
751396U26
751396U83
751396L83
751396N57
751396N73
751396Q21
751396T51
751396T77
751396T93
751396U59
751396U67
751396U75
751396U91
751396V33
751396X72
751396Z39
751396Z54
751396C26
751396C34
751396J45
751396J52
751396L67
751396N65
751396P97
751396Q39
751396Q47
751396Q54
751396U34
751396U42
751396W57

MATURITY

11/1/2024
11/1/2026
11/1/2032
9/1/2024
9/1/2021
9/1/2023
9/1/2019
11/1/2021
11/1/2023
11/1/2025
11/1/2029
11/1/2030
11/1/2031
11/1/2033
11/1/2035
3/1/2018
3/1/2030
3/1/2032
8/1/2018
8/1/2019
9/1/2026
9/01/2027
9/1/2022
9/1/2022
9/1/2018
9/1/2020
9/1/2021
9/1/2022
11/1/2027
11/1/2028
3/1/2023

Pre-Disclosure Period 11/15/2012 – 5/15/2013
Average
Yield on
Dates of
Trades

MMA
Benchmark
Used

2.216%
2.650%
2.998%
2.344%
3.199%
3.594%
1.810%
2.035%
2.053%
2.338%
2.904%
2.823%
2.862%
3.022%
3.052%
1.360%
3.548%
3.847%
1.261%
1.759%
2.955%
2.781%
2.442%
3.159%
1.606%
2.131%
2.075%
2.111%
2.890%
2.784%
2.676%

12 yr
14 yr
20 yr
12 yr
9 yr
11 yr
7 yr
9 yr
11 yr
13 yr
17 yr
18 yr
19 yr
21 yr
23 yr
5 yr
17 yr
19 yr
5 yr
6 yr
14 yr
15 yr
10 yr
10 yr
6 yr
8 yr
9 yr
10 yr
15 yr
16 yr
10 yr

Average
Benchmark
Yield on
Dates of
Ramapo
Bond
Trades
1.864%
2.106%
2.416%
2.070%
1.695%
1.986%
1.113%
1.544%
1.781%
1.936%
2.314%
2.310%
2.363%
2.386%
2.450%
0.763%
2.485%
2.636%
0.823%
0.945%
2.375%
2.250%
1.820%
1.820%
1.050%
1.610%
1.675%
1.710%
2.261%
2.183%
1.793%

Post-Disclosure Period 4/14/2016 – 10/14/2016

Basis
Points
Above
MMA
Benchmark

Average
Yield on
Dates of
Trades

MMA
Benchmark
Used

35.236
54.100
58.175
27.383
150.356
160.840
69.736
49.113
27.20
40.206
58.991
51.275
49.957
63.593
60.150
59.788
106.281
121.050
43.863
81.350
57.950
53.125
62.188
133.850
55.550
52.050
40.025
40.050
63.000
60.123
88.313

2.340%
2.6484%
2.7032%
2.1416%
3.842%
3.546%
2.227%
1.837%
2.0592%
2.432%
2.944%
2.729%
2.954%
2.995%
3.056%
0.934%
3.206%
3.307%
2.136%
2.374%
1.260%
1.942%
2.632%
3.278%
1.773%
1.833%
1.831%
2.412%
3.210%
3.147%
2.777%

9 yr
11 yr
17 yr
9 yr
6 yr
8 yr
4 yr
6 yr
8 yr
10 yr
14 yr
15 yr
16 yr
18 yr
20 yr
2 yr
14 yr
16 yr
2 yr
3 yr
11 yr
12 yr
7 yr
7 yr
3 yr
5 yr
6 yr
7 yr
12 yr
13 yr
7 yr

Average
Benchmark
Yield on
Dates of
Ramapo
Bond
Trades
1.556%
1.797%
1.947%
1.517%
1.156%
1.380%
0.913%
1.148%
1.415%
1.650%
1.953%
2.064%
2.254%
2.269%
2.356%
0.520%
2.090%
2.234%
0.615%
0.802%
1.670%
1.762%
1.335%
1.248%
0.745%
0.981%
1.168%
1.331%
1.935%
1.995%
1.360%

Basis
Points
Above
MMA
Benchmark

78.170
85.180
75.650
62.492
268.531
216.575
131.400
68.988
64.429
78.175
99.067
66.457
69.990
72.581
69.975
41.383
111.600
107.363
152.100
157.275
-40.975
17.992
129.650
202.932
102.775
85.156
66.323
108.060
127.500
115.175
141.725

Difference
in Yield
(in basis
points)

42.934
31.080
17.475
35.108
118.175
55.735
61.664
19.875
37.229
37.969
40.076
15.182
20.033
8.988
9.825
-18.404
5.319
-13.688
108.238
75.925
-98.925
-35.133
67.463
69.082
47.225
33.106
26.298
68.010
64.406
55.052
53.413

 Case 7:16-cr-00259-CS Document 186-1 Filed 11/22/17 Page 2 of 2
ROW

32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47

CUSIP

751396Y71
751396Y89
751396B92
751396J60
751396S86
751396J78
751396X23
751396S94
751435AN8
751435AE8
751435AH1
751435AJ7
751435AK4
751435AM0
751435AF5
751435AL2
Average of
Differences
in Yields

MATURITY

3/01/2026
3/1/2027
8/1/2017
9/1/2028
11/1/2016
9/1/2029
3/1/2028
11/1/2017
3/15/2041
3/15/2018
3/15/2021
3/15/2022
3/15/2023
3/15/2033
3/15/2019
3/15/2028

Pre-Disclosure Period 11/15/2012 – 5/15/2013
Average
Yield on
Dates of
Trades

MMA
Benchmark
Used

3.017%
3.296%
1.342%
3.049%
0.870%
3.005%
3.367%
0.996%
3.713%
1.650%
2.409%
2.605%
2.666%
3.540%
1.917%
3.220%

13 yr
14 yr
4 yr
16 yr
4 yr
17 yr
15 yr
5 yr
28 yr
5 yr
8 yr
9 yr
10 yr
20 yr
6 yr
15 yr

Benchmark
Yield on
Dates of
Ramapo
Bond
Trades
2.170%
2.270%
0.650%
2.550%
0.530%
2.545%
2.398%
0.788%
3.043%
0.798%
1.543%
1.676%
1.859%
2.642%
1.059%
2.280%

Post-Disclosure Period 4/14/2016 – 10/14/2016

Basis
Points
Above
MMA
Benchmark

Average
Yield on
Dates of
Trades

MMA
Benchmark
Used

84.698
102.618
69.200
48.000
34.000
45.975
96.950
20.770
66.977
85.225
86.596
92.945
80.691
89.780
85.863
94.000

2.346%
2.576%
2.111%
1.740%
0.651%
2.044%
2.762%
1.565%
3.042%
2.274%
1.982%
1.919%
2.279%
2.707%
1.366%
2.784%

10 yr
11 yr
1 yr
13 yr
1 yr
14 yr
12 yr
2 yr
25 yr
2 yr
5 yr
6 yr
7 yr
17 yr
3 yr
12 yr

Benchmark
Yield on
Dates of
Ramapo
Bond
Trades
1.700%
1.675%
0.440%
1.840%
0.450%
2.069%
1.887%
0.580%
2.444%
0.586%
1.063%
1.110%
1.297%
2.156%
0.765%
1.842%

Basis
Points
Above
MMA
Benchmark
64.565
90.05
167.067
-9.000
20.050
-2.464
87.533
98.500
59.801
168.840
91.850
80.900
98.183
55.128
60.125
94.254

Difference
in Yield
(in basis
points)

-20.133
-12.568
97.867
-57.792
-13.950
-48.439
-9.417
77.730
-7.176
83.615
5.254
-12.045
17.492
-34.653
-25.738
0.254
23.384

 Case 7:16-cr-00259-CS Document 186-2 Filed 11/22/17 Page 1 of 1

Loss Amount
Difference in Annual Yield
from Pre-Disclosure Period
to Post-Disclosure Period

Ramapo’s Average
Outstanding Indebtedness
(2011-2015)

Annual Loss
Amount ($162.986
million x .0023384)

Average Maturity
of Outstanding
Indebtedness
(2011-2015)

Total Loss, Before
Adjustment to Present
Value ($381,127 x
6.08)

Total Loss, After
Adjustment for
Present Value

23.384 basis points

$162.986 million

$381,127

6.08 years

$2.317 million

$2.23 million