not set for oral argument brief for appellant united …€¦ ·  · 2015-03-12not set for oral...

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NOT SET FOR ORAL ARGUMENT BRIEF FOR APPELLANT UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 14-3041 UNITED STATES OF AMERICA, Appellee v. PAUL F. KAUFMAN, Appellant Michael Alan Olshonsky 1757 U. Street, NW Washington, DC 20009-1703 (202) 276-0046 Bar No. 168070 Counsel for Appellant Appointed by the Court Criminal No. 1:14-cr-00010-KBJ-1

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NOT SET FOR ORAL ARGUMENT

BRIEF FOR APPELLANT

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 14-3041

UNITED STATES OF AMERICA,

Appellee

v.

PAUL F. KAUFMAN,

Appellant

Michael Alan Olshonsky

1757 U. Street, NW

Washington, DC 20009-1703

(202) 276-0046

Bar No. 168070

Counsel for Appellant

Appointed by the Court

Criminal No. 1:14-cr-00010-KBJ-1

CERTIFICATE OF PARTIES,

RULINGS, AND RELATED CASES

A. Parties and amici: The parties to this appeal are appellant,

Paul F. Kaufman, and appellee, the United States of America. There are no amici.

B. Rulings under review: Appellant Paul F. Kaufman appeals his

plea and sentencing on one count of Theft Concerning Program Receiving Federal Funds in violation of Title 18, U. S. C. §666(a)(1)A.

C. Related cases: There are no related cases. .

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TABLE OF CONTENTS

Page

Certificate as to Parties, Rulings and related cases……………….. i Table of Contents ……………………………………………….... ii Statement of Jurisdiction………………………………………….. iii Glossary…………………………………………………………… iv Table of Authorities……………………………………………….. v Issue Presented…………………………………………………….. vii Preliminary Statement of the Case………………………………… 1 Statement of Facts…………………………………………………. 2 Summary of Argument…………………………………………….. 6 Argument…………………………………………………………... 7 Conclusion…………………………………………………………. 11 Certificate of Service………………………………………………. 12

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STATEMENT OF JURISDICTION

This Court has jurisdiction to hear this appeal from the judgment and sentence of the United States District Court for the District of Columbia rendered on June 19, 2014 under the provisions of Title 28 U.S.C. §1291 after the appellant filed his Notice of Appeal on July 2, 2014 pursuant to the provisions of Rule 3 of the Federal Rules of Appellate Procedure.

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GLOSSARY

Transcript of Sentencing Hearing on June 19, 2014 before the Honorable Ketanji Brown Jackson, United States District Judge referred herein as “(Sentencing p. _____.]”

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TABLE OF AUTHORITIES

Cases: Page

Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 596, 169 L.Ed.2d 445 (2007)…….. 8 * Kimbrough v. United States, 552 U.S. 85, 128 S.Ct. 558, 169 L.Ed.2d 481 (2007)…………. 7, 8 * Rita v. United States,

551 U.S. 338, 127 S.Ct. 2456, 168 L.Ed.2d 203 (2007)……….. 3 United States v. Bane,

720 F.3d 818 (11th Cir. 2013)………………………………….. 10 United States v. Blalock, 571 F.3d 1282, 1285 (D.C.Cir.2009)…………………………… 8, 9 United States v. Corsey,

723 F.3d 366 (2d. Cir 2013)……………………………………. 11 United States v. Dawkins,

202 F.3d 711 (4th Cir. 2000)……………………………………. 9, 10 United States v. Parsons, 109 F.3d 1002 (4th Cir. 1997)………………………………….. 9 United States v. Salahmand,

651 F.3d 21 (D.C. Cir. 2011)…………………………………… 9 United States v. Whatley,

133 F.3d 601 (8th Cir. 1998)…………………………………….. 10 *Cases chiefly relied upon.

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TABLE OF AUTHORITIES Statutes: Page

18 U.S.C. §666(a)(1)(A)………………………………………… i, I 18 U.S.C. §3552(a)……………….……………………………... 9 18 U.S. C. §3553(a)……………………………………………. 5, 8 28 U.S.C. §1291…………………………..…………………..…. I, ii U.S.S.G. §2B1.1, cmt. (n. 3(F)(v)(III)………..………………… 10 U.S.S.G. § 2B1.1 Application Note 19(C)……………………… 11 U.S.S.G. §3D1.2(d)……………………………………….……. 11 U.S.S.G. §3E(i)…………………………………………………. 3 U.S.S.G. §3F(v)…………………………………………………. 10 Rules: Rule 3, Federal Rules of Appellate Procedure………………….. iii Rule 32, Federal Rules of Criminal Procedure…………………. 9 References: United States Sentencing Commissions Interactive Source Book 6

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ISSUES PRESENTED

Whether the Court erred in refusing to allow credit for work which benefitted

the victim against the loss it claimed in its calculation of the proper sentencing

guideline range and properly considered the factors set forth in Title 18 §3553(a) in

reaching its sentencing decision?

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UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

UNITED STATES OF AMERICA * * Appellant * * v. * Appeal No. 14-3041 * from 1:14-cr-00010-KBJ-1 * * PAUL F. KAUFMAN * * Appellee. *

PRELIMINARY STATEMENT OF THE CASE

The appellant was sentenced by Judge Ketanji Brown Jackson, in the United States District Court for the District of Columbia on June 25, 2014 to Twenty-Four (24) months of Incarceration to be followed by Thirty-Six months of Supervised release; a $100 Special Assessment and Restitution in the amount of $157,516.21 (Docket Entry No. 24) after his entry of a guilty plea to one count of Theft Concerning Program Receiving Federal Funds (Docket Entry Nos. 2-5) a violation of 18 U.S.C. §666(a)(1)(A). Kaufman filed a Notice of Appeal in the United States District Court for the District of Columbia Circuit on July 2, 2014 (Docket Entry No. 27).

STATEMENT OF FACTS

On February 5, 2014, the appellant entered a plea of guilty to one count of Theft Concerning Program Receiving Federal Funds 18 U.S.C. §666(a)(1)(A)

pursuant to a signed plea agreement (Addendix, p. 123-135) in which he admitted to

using two companies he owned, Point Networking Systems (“PNS”) and Capital-

Tec, to bill the Center for Strategic and International Studies (“CSIS”) and receive

a total of $110.925.36 for computer services and obtained at least $46,950.85 from

CSIS by using its corporate credit cards for his personal expenses.

On June 19, 2014, appellant appeared before the Honorable Ketanji Brown

Jackson for purpose of a Sentencing Hearing at which the appellant, through his

counsel, Kira Ann West and the United States, through its representative, Assistant

United States Attorney Ephraim (Fry) Wernick argued their respective positions to

what would be an appropriate sentence in the instant case.

Ms. West opening argument was, that although she agreed with the Court that

“it appears that the presentence report does not contain any information that the

parties dispute and that any objections have been resolved,” “[t]he only issue really

is how loss is determined and whether the losses equal the fraud.” (Sentencing, p. 2,

lns. 24-25 and p. 3 lns. 1-4.).

After satisfying itself, that Kaufman had reviewed his presentence report with his lawyer and was satisfied with Ms. West’ representation, the Sentencing Court adopted the factual statement contained in the report “with the exception of

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the loss calculation,” as its findings (Sentencing, pps. 5-6,) and turned to the first of

appellant’s argued framed by the prosecuting attorney – the issue of loss to be

attributed to him in the calculation.

Appellant’s position was that “we believe that because the outside work he

did was needed, that it was good outside work and because the guidelines in 3E1 in

the application note states that the loss should be – his work should be credited

against that loss.” (Sentencing, p. 10, lns. 9-13).

As the Court understood appellant’s argument on the Guideline calculation

“is that rather than a ten-level increase in loss, it should be an eight-level increase

because the amount attributed to certain services that Mr. Kaufman performed

should be credited because these services were actually performed.” (Sentencing,

p.11, lns. 4-9).

The government’s argued that since “there’s no disagreement about how the

loss was calculated here . . . what we’re talking about is simply limited to any credits

that can be applied” [under Comment 3E(i) of the Sentencing Guidelines] and “[o]ur

position is very simple. He’s already been paid for services rendered.” (Sentencing,

p. 20, lns. 14-20).

The Sentencing Court distinguished the authorities provided by appellant by finding that they “say things about the loss amount is the amount fraudulently

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obtained in excess of the amount to which the defendant was lawfully entitled.

That’s exactly the situation here. “[T]he defendant . . . was getting a salary for the

services that were provided . . . and to the extent that he then created a sham

corporation to bill the organization for those same services, the amount of that billing

is in excess of the amount to which he was entitled. That is, we have a loss here. I

mean, credits against loss is a situation in which there really isn’t a loss to the victim

because there was some benefit that was conferred and the victim would have paid

extra for it anyway.” (Sentencing, p. 22, lns. 8-22).

“Credits against loss is not an applicable concept, and so, the entire amount

of the loss as set forth in the PSR and in the government sentencing memorandum is

accepted and will be counted for the purpose of the guideline calculation. So that

means that there’s a ten-level increase in the base offense level under 2.2B1.1.”

(Sentencing, p. 23, lns. 18-21).

The government argued against any variance by the Sentencing Court by

distinguishing the instant case from those where variances were granted where the

loss was much greater than what was intended as opposed to where the amounts

received and the loss were exactly what appellant intended. (Sentencing, p. 32, lns.

4-12).

Appellant’s counsel asked for a variance for family circumstances because

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of the problems and medical needs of his son, a veteran of the Iraq conflict and

because of the need of his wife to have hip replacement surgery. She also argued

that the loss was relatively slight compared to the financial condition of the victim

and characterized that crime as more of a breach of trust that one of greed which

was deserving of incarceration. (Sentencing, p. 46).

In considering the factors to be weighed under the provisions of Title 18,

§3553(a), the Sentencing Court concluded that because of the continuing nature of

the offense involving “hundreds of discrete acts . . . over a period of years”

(Sentencing, p. 43, lns. 7-10) that the offense was “rather than a conflict of interest

fraud, the conduct here is more like an embezzlement, and that’s a very serious

crime.” (Sentencing, p. 44, lns. 10-13). “[T]his is more like theft and a case in which

Mr. Kaufman used his authority and the trust that the employer placed in him to steal

this money.” (Sentencing, p. 45, lns. 20-21).

The Sentencing Court decided that the nature of the appellant had been

adequately compensated for his lack of any criminal history on its effect on the

Sentencing Guideline range “because the guidelines already account for your lack

of criminal history. (Sentencing, p. 46, lns. 21-22) It also determined that his early

cooperation had been adequately been taken into account by the 2-level reduction in

Guideline level for Acceptance of Responsibility. (Sentencing, p. 47, lns. 13-17).

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Addressing the avoidance of unwarranted sentencing disparities, the Court

cited the United States Sentencing Commissions Interactive Source Book to state

that the average prison term imposed “in this district in 2012 . . . for a fraud of [sic]

theft offense . . . in criminal history category I . . . was 24 months.” (Sentencing, p.

48, lns. 7-10) and concluded that “a guideline sentence within the guideline range is

appropriate and that a penalty of 24 months of imprisonment is sufficient but not

greater that necessary to promote the purpose of sentencing. (Sentencing, p. 49, lns.

3-7).

SUMMARY OF ARGUMENT

Appellant should have been allowed to establish and receive credit for work

performed for CSIS, but billed by his independent companies, PNS and Capital-Tec,

against the loss determined by the Sentencing Court in its calculation of the

Sentencing Guideline range resulting in a 2-level reduction in the applicable

Sentencing Guideline range to establish a 18 to 24 month guideline rather than the

24 to 30 month range the Court used in reaching its sentencing decision.

The Sentencing Court failed to adequately take into account the Appellant’s personal circumstances in light of his family difficulties involving the care of a child who was disabled by service to his country and the immediate medical attention needed by his spouse in connection with hip replacement surgery and his

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early disposition of the matter due to his immediate admissions to law enforcement authorities and continued cooperation with the Office of the United States Attorney

for the District of Columbia.

Basing its decision on statistical data which the Sentencing Court clearly

indicated may not have been an accurate guide in light of its lack of knowledge of

the circumstances of the large number of case similar to the Appellant’s which

resulted in probation was a sufficient basis upon which to avoid unwarranted

sentencing disparities.

ARGUMENT

THE COURT ERRED IN REFUSING TO ALLOW

CREDIT FOR WORK WHICH BENEFITTED THE

VICTIM AGAINST THE LOSS IT CLAIMED IN ITS

CALCULATION OF THE PROPER SENTENCING

GUIDELINE RANGE AND DID NOT PROPERLY

CONSIDER THE FACTORS SET FORTH IN TITLE

18, U.S.C. §3553(a) IN REACHING ITS SENTENCING

DECISION.

The general scheme to be followed by sentencing courts in the United States

District Courts was set by the United States Supreme Court its decision in

Kimbrough v. United States, 552 U.S. 85, 128 S.Ct. 558, 169 L.Ed.2d 481

(2007): “instructing district courts to “impose a sentence sufficient, but not greater

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than necessary” to accomplish the goals of sentencing, including “to reflect the

seriousness of the offense,” “to promote respect for the law,” “to provide just

punishment for the offense,” “to afford adequate deterrence to criminal conduct,”

and “to protect the public from further crimes of the defendant.” 18 U.S.C. §3553(a)

(2000 ed. and Supp. V).”

“[T]he court should consider a number of factors, including “the nature and

circumstances of the offense,” “the history and characteristics of the defendant,” “the

sentencing range established” by the Guidelines, “any pertinent policy statement”

issued by the Sentencing Commission pursuant to its statutory authority, and “the

need to avoid unwarranted sentence disparities among defendants with similar

records who have been found guilty of similar conduct.” Kimbrough, at 101.

In Gall v. United States, 552 U.S. 38, 128 S.Ct. 586, 596, 169 L.Ed.2d 445

(2007), the Court held that appellate review of sentencing decisions is limited to

determining whether they are “reasonable.” Our explanation of “reasonableness”

review in the Booker opinion made it pellucidly clear that the familiar abuse-of-

discretion standard of review now applies to appellate review of sentencing

decisions.

In reviewing a sentencing challenge, this court must first determine whether

the district court calculated the correct Guidelines sentencing range. See United

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States v. Blalock, 571 F.3d 1282, 1285 (D.C. Cir. 2009) (citing Gall, supra. In

making that determination, “[p]urely legal questions are reviewed de novo; factual

findings are to be affirmed unless clearly erroneous; and we are to give due deference

to the district court's application of the guidelines to facts.” United States v.

Salahmand, 651 F.3d 21 (D.C. Cir. 2011).

“The sentencing judge, as a matter of process, will normally begin by

considering the presentence report and its interpretation of the Guidelines. 18

U.S.C. §3552(a); Fed. Rule Crim. Proc. 32. He may hear arguments by prosecution

or defense that the Guidelines sentence should not apply, perhaps because (as the

Guidelines themselves foresee) the case at hand falls outside the “heartland” to

which the Commission intends individual Guidelines to apply, USSG §5K2.0,

perhaps because the Guidelines sentence itself fails properly to reflect §3553(a)

considerations, or perhaps because the case warrants a different sentence

regardless, see Rule 32(f).” Rita v. United States, 551 U.S. 338, 127 S.Ct. 2456,

168 L.Ed.2d 203 (2007).

Calculations involving credits for funds which were found to be due to

defendants involved in fraudulent claims cases were upheld in United States v.

Dawkins, 202 F.3d 711 (4th Cir. 2000) and in United States v. Parsons, 109 F.3d

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1002 (4th Cir. 1997). Citing Parsons, the 4th Circuit Court of Appeals held that the

loss was only the amount fraudulently claimed. See id. at 1006. “As is relevant

here . . . even if automatic forfeiture of the entire voucher amount were required as

a result of the false statement, this does not mean that the amount forfeited by a

defendant constitutes a loss.” at 714.

Other Courts have rejected the credit against loss calculation, entirely. In

United States v. Bane, 720 F.3d 818 (11th Cir. 2013), the 11th Circuit rejected a

defendant’s argument that the value of oxygen supplies he provided in connection

with his defrauding of a government agency be credited against the victim’s loss in

determining the Federal Sentencing Guideline figure.

“Application Note 3(F)(v) provides: ‘[i]n a case involving a scheme in which

goods for which regulatory approval by a government agency was required but not

obtained, or was obtained by fraud, loss shall include the amount paid for the

property, services or goods transferred, rendered, or misrepresented, with no credit

provided for the value of those items or services. U.S.S.G. §2B1.1, cmt. (n.

3(F)(v)(III)) (emphasis added).”

The question of a calculation of loss versus benefit in determining a

Sentencing Guideline range was considered, but not reached in the 8th Circuit case

of United States v. Whatley, 133 F.3d 601 (8th Cir. 1998). “Under the sentencing

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guidelines provision for grouping related counts, the higher offense level applies to

calculate the sentence for both convictions. See U.S.S.G. §3D1.2(d). Thus, even if

we were to find that Mrs. Whatley laundered less money than the district court

concluded, Mrs. Whatley's sentencing range would not be affected, and since her

sentence was at the very bottom of that range, we conclude that the amount of

money that Mrs. Whatley laundered did not affect her sentence in any way.”

Whatley, at 608.

In the 2d Circuit, in United States v. Corsey, 723 F.3d 366 (2d. Cir 2013) the

Court supported examination of the subject of loss calculation without reaching the

issue of credit in citing “Application note 19(C) to U.S.S.G. §2B1.1 indicates that a

downward departure may be warranted where the offense level resulting from a loss

calculation overstates the seriousness of an offense.”

Appellant provided documentation in support of his argument that work he

provided through his two companies, PNS and Capital-Tec which was rejected by

the Sentencing Court as was his argument.

CONCLUSION

Based upon the foregoing authorities and for such reasons as may be proposed

at oral argument on the issues presented herein, your movant prays that the Court

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grant his request to remand his case to the United States District Court for further

proceedings consistent with its ruling and for such other and further relief as the

interest of justice may require.

Respectfully submitted,

_____________________________ MICHAEL ALAN OLSHONSKY 1757 U. Street, NW Washington, DC 20009-1703 (202) 276-0046, Bar No. 168070 Counsel for Appellant Appointed by the Court

CERTIFICATE OF SERVICE

I, hereby CERTIFY that a copy of the foregoing Brief for Appellant

was served on the Office of the United States Attorney for the District of

Columbia and the Office of the Clerk of the United States Court of Appeals

for the District of Columbia Circuit by electronically filing a copy through the

appellate CM/ECF system on this 30th day of September, 2014.

_____________________________ MICHAEL ALAN OLSHONSKY

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