united states of america plaintiff case #: 10-20403...

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA

PLAINTIFF,CASE #: 10-20403

VS.HON. NANCY G. EDMUNDS

KWAME KILPATRICK

DEFENDANT.AUSA Michael BullottaAUSA Mark ChutkowAUSA Jennifer L. BlackwellAUSA Eric DoehU.S. Attorney’s Office211 W. Fort Street, Suite 2001Detroit, MI 48226

Harold Gurewitz (P14468)Margaret Sind Raben (P39243)Counsel for Defendant Kwame KilpatrickGurewitz & Raben, PLC333 W. Fort Street, Suite 1100Detroit, MI 48226

DEFENDANT KILPATRICK’S OBJECTIONS TO

THE PSR’S SCORING OF THE SENTENCING GUIDELINES AND

ARGUMENTS FOR A VARIANCE OR DEPARTURE SENTENCE

I. INTRODUCTION

The revised Presentence Investigation Report (PSR) states Defendant Kwame

Kilpatrick’s Total Offense Level is 44 and his Criminal History is Category IV, and this results

in an advisory guideline range of 368 years, rather than “life.” (PSR, p. 49, ¶159). Defendant

objects to the revised PSR’s enhancement for value of $7-$20 million (+20) because it is not

supported by the evidence or applicable legal principles. Defendant objects to the enhancement

of +4 in Paragraph 103 for “elected public official” as impermissible double counting of the

conduct scored to set Defendant’s elevated Base Offense Level. Defendant objects to the +4

enhancement in Paragraph 105 for “leadership” role in the offense because it is not supported by

the evidence and, as an alternative objection, it is impermissible double counting of the same

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2:10-cr-20403-NGE-MKM Doc # 472 Filed 10/04/13 Pg 1 of 27 Pg ID 15846

aspect of Defendant’s conduct that was used to set his elevated Base Offense Level.

After addressing Defendant’s objections to the scoring of his advisory guideline range

and determining the correct range, this Court should vary Defendant’s sentence from his

guideline range and depart from the Criminal History Category IV for the reasons stated in this

Memorandum and impose a sentence of not more than 180 months imprisonment.

II. DEFENDANT’S OBJECTIONS TO PSR SCORING

Defendant objects to the revised PSR’s scoring of amount of value and to the

enhancements in Paragraphs 103 and 105 which reflect impermissible double counting.

At sentencing, this Court must, for any disputed portion of the PSR or other controverted

matter, rule on the dispute or determine a ruling is unnecessary because the matter will not affect

sentencing or be considered for sentencing. FRCrP 32(3)(B). In United States v. Quail, the Sixth

Circuit affirmed that Rule 32 requires “literal compliance”:

Rule 32 requires that when an issue is actively raised during asentencing hearing, as it was here, the district court mustaffirmatively rule on the controverted matter if the issue affects thedefendant’s sentence or determine that the matter will not affectsentencing. FRCrP 32(i)(3)(B); United States v. White, 492 F3d380, 415 (6 Cir. 2007). The district court “may not merelyth

summarily adopt the factual findings in the presentence report orsimply declare that the facts are supported by a preponderance ofthe evidence.” Id. (citations and internal quotation marks omitted).We have repeatedly held that this Rule requires “literalcompliance.” Id.; United States v. Roberge, 565 F3d 1005, 1011(6 Cir. 2009); United States v. Treadway, 328 F3d 878, 886 (6th th

Cir. 2003); see also United States v. Monus, 128 F3d 376, 396 (6th

Cir. 1997).

United States v. Quail, 513 Fed Appx 559, 562 (6 Cir, 2013).th

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The PSR scored Defendant’s guidelines as follows:

Extended Base Offense Level (¶100) 14 USSG §2B1.1(a)(1)

More than One Bribe or Extortion (¶101) 2 USSG §2C1.1(b)(1)

Value of $7million -<$20 million 20 USSG §2C1.1(b)(2)/§2B1.1(b)(1)(K)(¶102)

Elected Public Official or High- 4 USSG §2C1.1(b)(3)Level Decision Maker (¶103)

Organizer or Leader of Activity 4 USSG §3B1.1(a)(¶105)

Total Offense Level 44

A. DEFENDANT’S OBJECTION TO PSR DETERMINATION OF AMOUNT OF VALUE -USSG §2C1.1(B)(2) (¶91 AND ¶102).

Defendant’s Base Offense Level of 14 is enhanced for the value of the payment or benefit

received in an extortion case if it exceeds $5,000. USSG §2C1.1(b)(2). The level of enhancement

is determined by reference to the table found in USSG §1B1.1(b), the fraud guideline. USSG

§2C1.1(b)(2). The PSR states Defendant’s value received is $9,654,553 which is alleged to be

10% of the alleged profit in this case. This amount enhances the Base Offense level by +20.

(PSR, pp. 39-40, ¶102). Defendant objects to the +20 level enhancement because there was no

evidence that Defendant received this amount of extorted money from Mr. Ferguson, there was

no evidence that Defendant knew how much Mr. Ferguson was seeking or receiving from the

city vendors, there was no evidence presented at trial that this $9+ million amount represents Mr.

Ferguson’s “profits,” the PSR’s determination that 10% should be used to determine the amount

for guideline enhancement is contradicted by the evidence presented at trial, and there is no

evidence that 10% (or any percentage) was reasonably foreseeable to Defendant Kilpatrick.

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The PSR at pp. 37-38 in ¶91 provides two lists of amounts of money relating to certain

contracts: “Profits Generated” and “Amount Used for Guideline Purposes.” The PSR states at

¶91 that “Ferguson’s own records that were seized by the government reveal that he obtained a

profit margin of between 10 and 71 percent.” A percentage of 10% was then used to attribute the

profit identified in ¶91 to Mr. Kilpatrick. The calculations are shown in the chart at p. 38, ¶91.

The amounts listed for “Guidelines Purposes” are primarily 10% of the amount for each contract

referenced.

The Government must prove every scoring it espouses, unless it is conceded by the

defendant. United States v. Vandeberg, 201 F3d 805, 811 (6 Cir, 2008). The statements in theth

PSR are not evidence. United States v. Mann, 701 F3d 274, 310 (8 Cir, 2012). The PSR’sth

scorings should be based on the evidence at trial, not the allegations in the Indictment. United

States v. Correy, 570 F3d 373, 383-84 (1 Cir, 2009). Since Defendant has objected to thest

allegations of loss in the PSR, the Government must present a preponderance of evidence to

prove the amount of value or profit was $9,654,553.00.

Mr. Kilpatrick objects to the use of 10%, or any percentage within the range of 10-71%

as the factor to attribute any portion of what are described as Mr. Ferguson’s “profits”, to Mr.

Kilpatrick. The information said to support this theory, described as “Mr. Ferguson’s own

records,” is not reliable. The information used by this Court to resolve disputes about factors

important to the sentencing determination must have sufficient indicia of reliability to support its

probable accuracy. USSG §6A1.3(a). There has been no disclosure to Kilpatrick of the nature or

content of the “records” on which this alleged profit margin is based and there is no reference to

any trial evidence that supports the accuracy of this percentage.

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Furthermore, the 10% profit percentage used by the Probation Department far exceeds

the testimony in the record as to ranges of profit in the public sector construction industry.

According to the testimony of Special Agent Robert Beeckman, a standard rate of profit in

construction contracts is 5%. (R389, TR 1/14/13, Beeckman, Pg ID 12739-12741). Kathleen

McCann, an executive at Soave Industries/Inland Waters, testified it was her understanding that

Mr. Ferguson was seeking a 3% profit on CS 1368, the “as needed” sewer work contract which

is the basis of Count 3. (R372, TR 12/7/12, McCann, K., Pg ID 10295-10297; R373, TR

12/10/12, Pg ID 10383-10385). Tom Hardiman, a partner in Lakeshore Engineering, testified he

expected Lakeshore’s profits from $15 million of DSWD work would be $750,000 which is a

5% profit. (R352, TR 10/26/12, Hardiman, T., Pg ID 8107). Government witness IRS Special

Agent Carol Paszkiewicz testified she made no attempt to determine Ferguson’s alleged “profits”

on the revenues he received from the contracts at issue here. (R399, TR 1/28/13, Paszkiewicz, Pg

ID 13783). Based on the evidence presented at trial, a profit rate of 10% is completely

unreasonable.

In addition, this extraordinary contract profit of 10% allegedly received by Mr. Ferguson

would have to be foreseeable to Kwame Kilpatrick to be used against him. USSG §1B1.3(a)(2),

Application Note 2 to §1B1.3 states that in cases of “jointly undertaken criminal activity” a

defendant is accountable only for conduct that is “(A) in furtherance of the jointly undertaken

criminal activity; and (B) reasonably foreseeable in connection with that criminal activity.”

(emphasis added). If relevant conduct was not reasonable foreseeable, it “is not relevant conduct

under this provision.” There is no evidence on which to conclude that the excessive profit range

attributable here to Ferguson was known by, or foreseeable, to Mr. Kilpatrick. There is no

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evidence that Mr. Kilpatrick knew how much money Mr. Ferguson received. The profit margins

used in the PSR were not a reasonably foreseeable consequence of the joint criminal activity for

which Kwame Kilpatrick was convicted and are not reasonable given the evidence in this record.

In addition, in quantifying the amount of value received for the bribe offense conviction

under 18 USC §1962(c) in Count 1, the relevant amount begins with profit or net revenue, not

gross revenue. United States v. Sapoznik, 161 F3d 1117 (7 Cir. 1998) It is the Government’sth

burden to establish the correct value of the benefit received. United States v. Lianidis, 599 F3d

273, 278 (3 Cir. 2010). The value must be a net value after it is reduced by direct costs. Unitedrd

States v. Gray, 521 F3d 514, 543 (6 Cir. 2008). For these reasons, the PSR’s calculations ofth

value are incorrect and unreasonable and should not be used to enhance Defendant’s Base

Offense Level by +20.

Defendant submitted specific objections to the Probation Department regarding the

amounts listed and attributed to Mr. Kilpatrick in the first version of the PSR at ¶91. Since the

revised PSR changes the amounts listed in ¶91, Mr. Kilpatrick objects to the specific loss

amounts that appear in the revised ¶91 as set forth below.

1. Count 1 - RICO Conspiracy - Book Cadillac Hotel Demolition $919,815

Mr. Kilpatrick objects to the inclusion of $919,815 for the Book Cadillac demolition in

the guideline computations. The acts related to the Book Cadillac project were alleged as part of

the Count One RICO conspiracy.

The PSR at Paragraphs 25-31 essentially summarizes the allegations concerning this

project that are found at Paragraphs 142-150 of the Fourth Superseding Indictment

(“Indictment”). The allegations of the Indictment are not evidence for purposes of trial or for

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sentencing. There is no substantive count of conviction that concerns the Book Cadillac project.

The jury was not asked to make, and did not make, any specific finding as to any act that was

alleged only as a part of the Count One conspiracy. The jury’s verdict on Count One does not

establish any basis upon which to use conduct or any dollar amount related to the Book Cadillac

project for guideline computations or for purposes of sentencing.

Furthermore, the statements in the PSR do not establish any conduct by Defendant

Kwame Kilpatrick that is extortion. For example, according to Paragraph 25, “Kilpatrick

attempted to ensure that Bobby Ferguson and his companies received payment for the demolition

and reconstruction of the historic Book Cadillac Hotel, located in Detroit Michigan.” The PSR

does not refer to any evidence that Kilpatrick used extortion to assure that Ferguson got paid for

the work that he had performed.

Similarly, although PSR Paragraph 25 states that Kilpatrick put pressure on Alberici

Constructors to give work to Ferguson, no testimony is cited. Odell Jones was the only trial

witness regarding this matter and Mr. Jones’ testimony contradicts this claim. Mr. Jones testified

he had a joint venture with JS Alberici. According to Jones, Ferguson was one of the bidders on

the demolition work and was the low bidder. (R391, TR 1/16/13, Odell Jones, Pg ID 12920-

12940). Mr. Jones’ testimony does not support the notion that Kilpatrick put pressure on

Alberici. The text message quoted at PSR Paragraph 30 is evidence of Kilpatrick communicating

with Ferguson, not evidence of Kilpatrick communicating with a third party for the purpose of

steering work to Ferguson. None of this is evidence that Kilpatrick took any step to ensure that

Ferguson got paid. The PSR’s attempted characterizations of testimony or text messages such as

this does not even suggest extortion. The PSR does not support any claim that Kilpatrick used

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extortion to steer the Book Cadillac work to Ferguson. The amount of $919,815 should not be

included in Defendant’s “value received” for sentencing purposes.

2. Count 1 - Conspiracy - Heilmann Recreation Center $16,118.00

The Heilmann Recreation Center project is discussed at PSR Paragraphs 32 and 33. This

project was not a substantive count of the Indictment but was only alleged as part of the Count 1

conspiracy. There was no finding by the jury to support any assertion that Mr. Kilpatrick should

be held responsible for this conduct. Mr. Kilpatrick objects to the amount of $16,118 being used

for his guideline calculations or for his sentencing.

There is insufficient reliable evidence discussed in the PSR to support inclusion of this

amount for guideline computations or for purposes of sentencing. According to ¶32 of the PSR,

Johnson Akinwusi, the owner of JOA, a construction company, was a friend of Kilpatrick’s

tailor. The tailor suggested Akinwusi pay Kilpatrick’s open account. Akinwusi paid $4,800 on

the account. According to ¶33, after Akinwusi told Kilpatick that he had made the payment, he

received a letter from the City with an invitation to bid on the Heilmann project. Ferguson then

contacted Akinwusi and insisted JOA and Xcel form a joint venture and bid on the project.

Johnson’s bid with Ferguson’s company Xcel came in $82,000 higher than the lowest bid but

received the contract. The profits to Xcel are said to be $161,185. None of this information

supports any claim that Mr. Kilpatrick used extortion to steer this work to Mr. Ferguson. The

amount of $16,118 should not be included in Defendant’s “value received” for sentencing

purposes.

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3. Count 1 - Conspiracy - Downtown Water Main

CM 2012 $ 71,551.00

WS 650 $340,849.00

WS 651 $352,709.00

These three contracts are believed to be part of the RICO conspiracy allegations charged

in Count One of the Indictment because the Indictment, at Count One, Paragraphs 51 through 62

refers to a “Downtown Water Main Contract.” These contracts were not alleged as substantive

counts of the Indictment. There were no specific findings by the jury concerning CM 2012, WS

650 or WS 651. The jury’s verdict on Count 1 does not support inclusion of these amounts for

calculation of Defendant’s guidelines or otherwise for sentencing even by a preponderance of the

evidence.

According to the PSR at Paragraph 34, unidentified “case information,” “reveals that

Ferguson’s companies were not the most qualified, nor the lowest bidder on the contracts.”

There is no trial evidence cited. Mr. Kilpatrick objects to any reliance on “unidentified” source

information because it inherently lacks sufficient indicia of reliability. There is no information in

Paragraph 34 to support any claim that Mr. Kilpatrick performed any act or played any part in

Mr. Ferguson obtaining any of this work. None of these amounts should be attributed to Mr.

Kilpatrick. Unidentified and unattributed information and conclusory allegations that “Kilpatrick

steered” the contracts toward Ferguson are inherently unreliable and an insufficient basis on

which to conclude that these allegations and these amounts can be used for guideline

computation purposes or otherwise for sentencing.

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4. Count 7 - DWS 849/ Outfalls Contract $1,700,000.00

Mr. Kilpatrick objects to the inclusion of the amount of $1,700,000 as an ”Amount for

Guideline Purposes.” There is a lack of evidence on which to attribute this amount to Mr.

Kilpatrick as set out in PSR ¶¶71-77, that refer to this contract. The jury reached no verdict on

this count as to Mr. Kilpatrick. It found Mr. Ferguson guilty but only on the basis of wrongful

“fear of economic harm.” The jury’s verdict is no basis on which to conclude that this amount

should be attributed to Mr. Kilpatrick.

The PSR does not identify any act or communication by Mr. Kilpatrick which establishes

that Mr. Kilpatrick is responsible for this amount and it should not be assessed against Defendant

for purposes of his sentencing.

5. Count 11 - CM 2015 $1,668,661.00

Paragraph 91 includes an amount of $1,668,661, referred to as CM 2015 and identified as

“Westside Water Main. (Xcel/DCI).” Upon information and belief, CM 2015 was the underlying

basis of Count 11, which charged Kwame Kilpatrick and Bobby Ferguson with Interference with

Commerce by Extortion and Aiding and Abetting, and is alleged in Paragraphs 85-91 of the 4th

Superseding Indictment as part of the Means and Methods of the Racketeering Activity. Count

11 was not submitted to the jury nor was there a specific finding by the jury as to Defendant’s

guilt as to these allegations as part of the guilty verdict on Count 1. The allegations in the

Indictment do not specify any conduct by Kwame Kilpatrick. The PSR does not even discuss the

basis for including this amount as part of Defendant’s sentencing. The inclusion of this amount is

unsubstantiated and unreliable and should not be adopted by this Court.

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6. Count 9 - CM 2014

As to CM 2014, Mr. Kilpatrick objects to the amounts of $330,992 and $822,221

attributed to him based on CM 2014. As is otherwise discussed in these objections, the assumed

percentage amount is unsupported and unreliable and should not be used. In addition, Mr.

Kilpatrick objects to the evidentiary reliance on the hearsay testimony of a witness paraphrased

at Paragraph 80 for the same reasons that were place on the record as objections at trial. But for

the objectionable hearsay testimony, there is nothing in the record upon which to draw any

inference of Mr. Kilpatrick’s involvement with CM 2014. This amount is not substantiated and

should not be used to sentence Defendant.

B. DEFENDANT’S OBJECTION TO +4 ENHANCEMENT FOR “ELECTED PUBLIC

OFFICIAL/DECISION MAKER” (¶103) AS IMPERMISSIBLE DOUBLE-COUNTING.

Defendant’s Base Offense Level was +14, enhanced from +12 because Defendant was a

“public official,” i.e, the Mayor of Detroit. The PSR at p. 39, ¶103 enhances this already

enhanced Base Offense Level by +4 because Defendant was an “elected public official.”

§2C1.1(b)(3). Mr. Kilpatrick objects to this +4 enhancement as impermissible “double counting”

of the conduct used to score of his Base Offense Level.

For purposes of scoring Defendant’s Base Offense Level, Note 1 of the Commentary to

§2C1.1 defines a “public official” to include:

(C) An officer or employee or person acting for or on behalf of a state or localgovernment, or any department, agency, or branch of government thereof,in any official function, under or by authority of such department, agency,or branch of government, or a juror in a state or local trial.

* * * (E) An individual who, although not otherwise covered by subdivisions (A)

through (D): (i) is in a position of public trust with official responsibilityfor carrying out a government program or policy; (ii) acts under color oflaw or official right; or (iii) participates so substantially in government

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operations as to possess de facto authority to make governmentaldecisions (e.g., which may include a leader of a state or local politicalparty who acts in the manner described in this subdivisions.

USSG §2C1.1(b)(3), the enhancement made in ¶103, states:

If the offense involved an elected public official or any publicofficial in a high-level decision-making or sensitive position,increase by 4 levels. If the resulting offense level is less than level18, increase to level 18.

Defendant’s Base Offense Level, which is already enhanced because he is a “public

official” as Mayor of Detroit, is being further enhanced in ¶103 specifically because he was the

Mayor of Detroit, an elected public official. This is impermissible “double-counting” and should

not be scored. Impermissible double-counting occurs when “exactly the same aspect” of a

defendant’s conduct is used to determine the BOL and to trigger an enhancement under the

applicable guideline. United States v. Farrow, 198 F3d 179, 193 (6 Cir., 1999). In Farrow, theth

Sixth Circuit found impermissible “double counting” where the district court enhanced the

defendant’s guideline score for his use of his car as a weapon and the same conduct was the basis

of the elevated base offense level initially scored against him. 198 F3d at 195. In the instant case,

since Defendant’s conduct as Mayor of Detroit sets his BOL and is the PSR’s basis for adding a

+4 enhancement because he is the “elected” Mayor of Detroit, the +4 enhancement in ¶103 is

impermissible double-counting and should be stricken.

C. DEFENDANT’S OBJECTIONS TO +4 ENHANCEMENT FOR ROLE IN THE

OFFENSE/LEADERSHIP (¶105) AS UNSUPPORTED BY THE EVIDENCE AND/OR

IMPERMISSIBLE DOUBLE COUNTING.

The PSR at p. 39, ¶105 enhances Defendant’s offense level by +4 for Defendant’s alleged

role as “the organizer or leader (as Mayor) of a criminal activity that involved five or more

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participants and (sic) was otherwise extensive. (emphasis added). USSG §3B1.1(a).1

Mr. Kilpatrick objects to this +4 increase for his alleged leadership. There is insufficient

evidence that Mr. Kilpatrick was a leader in the conduct resulting in his convictions. While Mr.

Ferguson was certainly and successfully creating the impression among city vendors that

Defendant knew of and was directing Ferguson’s effort, there is little direct evidence that

Defendant was doing anything except endorsing Ferguson’s companies for DWSD work. His job

title as Mayor is not evidence of his “leadership.”Application Note 4 to USSG §3B1.1 states:

[In] distinguishing a leadership and organizational role from one ofmere management or supervision, titles such as ... ‘boss’ are notcontrolling. . . Factors the court should consider include theexercise of decision making authority, the nature of participation inthe commission of the offense, the recruitment of accomplices, theclaimed right to a larger share of the fruits of the crime, the degreeof participation in planning or organizing the offense, the natureand scope of the illegal activity, and the degree of control andauthority exercised over others. . . .

There is no evidence which supports the application of any of these factors to Kilpatrick.

The +4 enhancement for leadership should be stricken because it is not supported by the record.

In the alternative, Mr. Kilpatrick objects to the +4 enhancement for his alleged leadership

as another impermissible double counting of the same aspect of his conduct used to score his

BOL. The PSR states that the leadership enhancement in ¶105 applies because Mr. Kilpatrick

“was the organizer or leader (as Mayor) of a criminal activity that involved five or more

participants and was otherwise extensive.” (PSR, p. 39, ¶105)(emphasis added). Defendant’s

enhanced BOL is 14 because Defendant is a “public official.” Paragraph 103 enhanced Mr.

Kilpatrick’s BOL by +4 because Mr. Kilpatrick is an “elected public official . . . in a high-level

The text of §3B1.1 uses the word “or,” not “and.”1

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decision-making or sensitive position.” Defendant has argued in part B, supra, that ¶103 is

impermissible double-counting of the conduct used to set Defendant’s BOL. If the Court rejects

that argument, Defendant alternatively argues that the +4 enhancement for leadership in

Paragraph 105, based on Defendant’s conduct or status as Mayor of Detroit, is a separate

impermissible double-counting of Defendant’s conduct as a public official already scored in his

BOL.

Impermissible double-counting occurs when the same aspect of a defendant’s conduct is

used to determine the BOL and to trigger an enhancement to the applicable sentencing guideline.

United States v. Levy, 250 F3d 1015, 1017 (6 Cir, 2001), citing United States v. Farrow, 198th

F3d 179, 193 (6 Cir, 1999). The Sixth Circuit’s opinion in United States v. Gibson, 409 F3dth

325, 340 (6 Cir, 2005), directly supports Mr. Kilpatrick’s argument that the enhancement forth

leadership in ¶105 is impermissible double counting of Defendant’s BOL. In Gibson, the district

court refused the government’s request to enhance the scoring of the guidelines of two coal mine

superintendents and a foreman as “organizers or leaders” pursuant to USSG §3B1.1(a). The

district court considered the leadership enhancement impermissible double-counting because the

base offense level of the Gibson defendants was already enhanced for their supervisory

positions. The Government appealed. The Sixth Circuit affirmed the district court’s refusal and

its reasoning. 409 F3d at 340. As applicable here, Mr. Kilpatrick’s conduct as a public official

with authority and decision-making authority is the basis for his enhanced BOL and the

additional enhancement in ¶105 under §3B1.1(a) for “leadership” as Mayor is impermissible

double-counting. If the enhancement in ¶103 is scored, the enhancement in ¶105 for leadership

should not be scored.

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III. DEFENDANT’S REQUEST FOR A VARIANCE OR DEPARTURE SENTENCE OF NOT MORE

THAN 180 MONTHS

Booker requires this Court to correctly score an advisory guideline range and then

comply with the entire statutory command of 18 USC §3553(a) by considering the factors listed

in §3553(a)(1)-(7). This allows the Court to individualize a sentence which is “sufficient but not

greater than necessary”. United States v. Booker, 543 US 220 (2005); United States v. Cage, 458

F3d 537, 540 (6 Cir., 2006). By a separate Sentencing Memorandum, Defendant addresses theth

§3553(a) factors as they apply to him.

This Court may, and should, vary its sentence from the advisory guideline range if a

variance sentence meets the requirements of 18 USC §3553(a). Rita v. United States, 551 US

338 (2007). The court may vary its sentence based on its weighing of one or more of the §3553a

factors. United States v. Borden, 365 Fed Appx 617, 619, fn. 2 (6 Cir, 2010). This Court mayth

vary a sentence because it disagrees with the advisory guideline range on general policy grounds,

individualized fact grounds, or because this Court concludes a different sentence is appropriate

regardless of the guideline range. Rita v. United States, 551 US 338, 347-348 (2007). This Court

may depart from the advisory guideline range based on the application of a guideline provision.

Id. The same facts and analysis can support both a variance and a departure, United States v.

Grams, 566 F3d 683, 686-87 (6 Cir, 2009), but a variance is grounded in the district court’sth

broader discretion in considering the §3553(a) factors. Irizarry v. United States, 128 S Ct 2198,

2202-03 (2008).

In Defendant’s case, this Court should vary Defendant’s sentence for the reasons stated

below regarding the unreliability of the fraud loss table applicable to Defendant and depart from

the guideline range because Defendant’s criminal history is overstated. This Court should

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conclude a sentence of not more than180 months imprisonment is a sentence which is “sufficient

but not greater than necessary.”

A. THIS COURT SHOULD VARY DEFENDANT’S SENTENCE FROM HIS GUIDELINE

RANGE BECAUSE THE FRAUD LOSS/GAIN AMOUNTS WHICH DETERMINE

“VALUE OF BENEFIT” ARE NOT BASED ON EMPIRICAL EVIDENCE OR

NATIONAL EXPERIENCE AND FAIL TO PROMOTE ANY PURPOSE OF

SENTENCING.

This Court should vary Defendant’s sentence from the guideline range because the fraud

loss/gain table in USSG §2B1.1, as incorporated into §2C1.1 to determine the “value of benefit”

received by Defendant and which enhance Defendant’s offense level by +20, does not deserve

the usual deference accorded to the guidelines.

In Rita v. United States, 551 US 338 (2007), the Supreme Court stated it was “fair to

assume” that the guidelines “reflect a rough approximation” of sentences that “might achieve

§3553(a)’s objectives” because the original Sentencing Commission used an “empirical

approach” which began “with an empirical examination of 10,000 presentence reports setting

forth what judges had done in the past” and the Commission was empowered to review and

revise the guidelines based on judicial feedback through sentencing decisions, and by

consultation with other interested observers and experts. Id at 348-350. But not all of the

guidelines were developed in this manner. See Gall v. United States, 552 US 38, 46 and n.2

(2007); Kimbrough v. United States, 552 US 85, 96 (2007). Accordingly, the Supreme Court has

also noted when a guideline “do[es] not exemplify the Commission’s exercise of its

characteristic institutional role,” because the Commission “did not take account of ‘empirical

data and national experience,’” a sentencing court is free to conclude that the guideline “yields a

sentence ‘greater than necessary’ to achieve §3553(a)’s purposes, even in a mine-run case.”

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Kimbrough at 109-110. And just as the drug guidelines did not exemplify the Commission’s

“exercise of its characteristic institutional role,” neither does §2B1.1, the fraud guideline.

When Congress enacted the Sentencing Reform Act of 1984, it directed the Sentencing

Commission to promulgate guidelines that “assure the meeting of the purposes of sentencing,”

28 USC §991(b)(1)(A), and to use average sentences imposed and prison time actually served in

the preguidelines period as a “starting point” for those guidelines. 28 USC §994(m). The

Commission was then to review and revise the guidelines after considering sentencing data,

penalogical research, and in consultation with judges and other participants in the criminal

justice system. See 28 USC §991(b)(1)(C), §991(b)(2), §994(o); §995(13), (15), (16). But the

original Commissioners based the original fraud guidelines only on studies of time actually

served for various offenses. See USSG, Ch. 1, Pt A(3) and Justice Stephen Breyer, The Federal

Sentencing Guidelines and the Key Compromises Upon Which They Rest, 17 Hofstra L. Rev. 1, 7

(1988).

From its inception, the fraud guideline, originally USSG §2F1.1 and now §2B1.1, was

not based on past practice or on national experience. Because the Sentencing Commission failed

to rely on empirical data or national experience in promulgating or amending §2F1.1 or §2B1.1,

it failed to fulfill its institutional role. Thus, this Court is free to disagree with the §2B1.1

guidelines as imported into §2C1.1, on reasoned policy grounds. See Spears v. United States,

129 S Ct 840, 843 (2009); Kimbrough, 552 US 101-102; Rita, 551 US at 351, 357; United States

v. Herrera-Zuniga, 571 F3d 568, 585 (6 Cir, 2009); United States v. Corsey, 2013 US Appth

LEXIS 149871 (2 Cir, 2013) (“The loss guideline, like the child pornography guideline . . . wasnd

not developed using an empirical approach based on data about past sentencing practices. As

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such, district judges can and should exercise their discretion when deciding whether or not to

follow the sentencing advice the guideline provides.”).

In addition, the fraud guideline was not based on “deterrence.” When the Commission

adopted the original fraud guidelines in 1987, it required confinement for most fraud cases, and

adopted an initial fraud guideline up to 30-37 months for defendants in Criminal History

Category I. See USSG §2F1.1 (1987). The Commission opined that “the definite prospect of

prison, though the term is short, will act as a significant deterrent to many of these crimes,

particularly when compared with the status quo where probation, not prison, is the norm.”

USSG, Ch. 1, Intro, pt 4(d)(1987); see also U.S. Sentencing Commission, Fifteen Years of

Guidelines Sentencing: An Assessment of How Well the Federal Criminal Justice System is

Achieving the Goals of Sentencing Reform (2004) [hereinafter Fifteen Year Report] (The

Commission sought to ensure that white collar offenders faced “short but definite period[s] of

confinement”).

But the Commission’s “deterrence” rationale was not borne out by empirical evidence.

Empirical research regarding white collar offenders showed no difference between the deterrent

effect of probation and that of imprisonment. See David Weisburd, et. al.; Specific Deterrence in

a Sample of Offenders Convicted of White Collar Crimes, 33 Criminology 587 (1995). Twelve

years later, that conclusion remained unchanged. Avi D. Gabbay, Exploring the Limits of the

Restorative Justice Paradigm: Restorative Justice and White Collar Crime, 8 Cardozo J.

Conflict Resol. 421, 448-449 (2007) “[T]here is no decisive evidence to support the conclusion

that harsh sentences actually have a general and specific deterrent effect on potential white-collar

offenders.”

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Furthermore, the Commission quickly abandoned its original goal of ensuring “short but

definite” sentences. Beginning in 1989, prison sentences for fraud offenders began steadily

increasing because of enhancements to the base offense level based on amounts of loss. Those

increases added 4 levels for amount of loss in 1989 and 5 more levels for increased amounts of

loss in 2001.

B. THE INCREASED ENHANCEMENTS FOR AMOUNT OF LOSS HAVE NO BASIS IN

EMPIRICAL DATA OR NATIONAL EXPERIENCE AND WERE ADDED WITHOUT

ANY DEMONSTRATED NEED TO FURTHER ANY PURPOSE OF SENTENCING.

Another reason to vary Defendant’s sentence is the questionable tie between the values in

§2B1.1 for “amount of loss/gain” and drug guideline scoring, and the questionable use of

“amounts of loss/gain” as a proxy for seriousness of the offense. In 1989, four enhancement

levels were added to §2F1.1 for losses up to $20-50 million. See USSG, App C, Amend 154

(11/1/89). The official reason for this increase was to “increase the offense levels for offenses

with larger losses to provide additional deterrence and better reflect the seriousness of the

conduct.” Id. This rationale was soon denied by former Commission members. According to

Jeffrey S. Parker and Michael K. Block, The Sentencing Commission, P.M. (Post-Mistretta):

Sunshine or Sunset?, 27 Am. Crim. L. Rev. 289, 319 (1989), the Commission “increased

punishment [in the loss table] for larger fraud cases for reasons that were “overtly political and

inexpert,” and ignored its statutory mandates to rely on its own data, measure the effectiveness

or efficiency of guideline sentences, and provide analysis of prison impact. Id at 318-320.

In 2001, the Commission added an additional 5 levels of enhancement for loss amounts

greater than $50 million. See USSG, App C, Amend. 617 (11/1/01). The Commission claimed it

was responding to comments received from the Department of Justice and others that “[the fraud

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guideline] under-punish[es] individuals involved in moderate and high loss amounts, relative to

penalty levels for offenses of similar seriousness sentenced under other guidelines.” Id. The

“offenses of similar seriousness sentence under other guidelines” to which the Commission

referred were drug offenses punished under the drug guidelines.

When the Commission increased the fraud guideline “loss” enhancements by five levels

in 2001 to keep it on a parallel track with the guidelines for drug offenses, this increase was

unsound because, as is now clearly recognized, the drug guidelines themselves were not based

on empirical data or national experience. See Gall, 552 US at 46, n. 2; Kimbrough, 552 US at 96.

The drug guidelines had to be built around the statutory mandatory minimum sentences for drug

offenses, See USSG §2D1.1 comment (backg’d) (1987), and thereby lacked any empirical basis.

These guidelines increased sentences for drug offenses, “far above what had been typical in past

practice, and in many cases above the level required by the literal terms of the mandatory

minimum statutes.” Fifteen Year Report at 49.

Furthermore, although the amount of “loss,” or, as here, the value of the benefit received,

is the primary enhancer of the offense level for Defendant’s extortion offenses, sentencing courts

recognize that loss or value is an imperfect measure of the seriousness of an offense. See United

States v. Gupta, 904 F Supp 2d 349 (SD NY, 10/24/12), 2012 US Dist LEXIS 154226. (“By

making a Guidelines sentence turn on this single factor [loss or gain], the Sentencing

Commission ignored [3553(a)] and . . . effectively guaranteed that many such sentences would

be irrational on their face.”); United States v. Adelson, 441 F Supp 2d 506, 509 (SD NY 2006)

(criticizing “the inordinate emphasis that the Sentencing Guidelines place in fraud cases on the

amount of actual or intended financial loss” without any explanation of “why it is appropriate to

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accord such huge weight to [this factor]”).

The enhancements to the values in the fraud loss table have led to the absurd result that

an offender like Defendant is subject to a guideline range higher than that imposed on armed

drug traffickers, and higher than that applicable to many violent offenders. Consider a defendant

like Defendant with a Base Offense Level of 14, enhanced +20 for loss under $20 million, and

+2 for more than one bribe or extortion (without adding any of the other enhancements scored

for Defendant) and Criminal History Category IV. That results in a Total Offense Level of 36

and a guideline range of 262-327 months. Compare that to a defendant convicted of trafficking

in 3.5-<5 kilograms of cocaine while possessing a firearm with a CHC IV. His guideline range is

168-210 months. §2D1.1 (2012). An offender convicted of assault with intent to commit first

degree murder with a CHC IV has a Total Offense Level of 33 and a guideline range of 188-235

months, §2A2.1 (2012). An armed kidnapper with a CHC IV has a Total Offense Level of 34

and a guideline range of 210-262 months. USSG §2A4.1 (2012). An offender convicted of

sexually exploiting a minor between ages of 12-16 years by producing “kiddie porn” with a CHC

IV has a BOL of 32 and a guideline range of 168-210 months. USSG §2G2.1 (2012.) An

offender convicted of armed carjacking of a car valued at less than $50,000 with a CHC IV has

a Total Offense Level of 25 and a guideline range of 84-105 months. USSG §2B3.1 (2012). The

absurdity of these results becomes absolute if this Court considers Defendant’s guideline range

to be “Life.” There is no descriptive adjective to describe the absurdity of Defendant’s

“guideline range is 368 years.

C. THE SPECIFIC OFFENSE CHARACTERISTICS APPLICABLE TO DEFENDANT IN

THIS CASE IMPOSE CUMULATIVE PUNISHMENTS FOR THE SAME ALLEGED

CHARACTERISTIC.

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This Court should vary Defendant’s sentence from the guideline recommendation

because of the inherent unfairness in the PSR’s scoring of cumulative guideline enhancements

based on the same facts.

Ten (10) of the levels used to calculate Mr. Kilpatrick’s contested guideline scoring come

from the cumulative enhancements in ¶100, ¶103, and ¶105. Paragraph 100 sets an enhanced

base offense level of 14, rather than 12, because Defendant is a “public official.” Paragraph 103

scores an additional +4 because Defendant is an “elected public official/decision-maker.”

Paragraph 105 scores Defendant an additional enhancement of +4 for role in the offense/

leadership because Defendant is “Mayor.”

In Defendant’s case, all three of these scorings are based on his status as a public official,

the Mayor of Detroit, and his alleged conduct while he was Mayor of Detroit. Whether these

scorings are impermissible “double counting” or not, it is clear that Defendant’s score is being

enhanced three times for the same conduct which is inherent in his status as Mayor. This is

patently unfair. See: Alan Ellis, John R. Steer, Mark Allenbaugh, At a “Loss” for Justice:

Federal Sentencing for Economic Offenses, 25 Crim Just 34, 37 (2011) and “[m]ultiple,

overlapping enhancements also have the effect of ‘double counting’ in some cases,” while “the

guidelines fail to take into account important mitigating offense and offender characteristics.”).

The Sentencing Commission recognized this “factor creep” and observed in 2004 that as

“more and more adjustments are added to the sentencing rules, it is increasingly difficult to

ensure that the interactions among them, and their cumulative effect, properly track offense

seriousness.” Fifteen Y ear Report at 137. But even as early as 1999, Justice Breyer warned that:

[t]here is little, if anything, to be gained in terms of punishment’sclassical objectives by trying to use highly detailed offense

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characteristics to distinguish finely among similar offenders. Andthere is much to be lost, both in terms of Guideline workability andeven in terms of fairness (recall the Guidelines’ logarithmicnumerical scales) . . . The precision is false.

See, Justice Stephen Breyer, Federal Sentencing Guidelines Revisited, 11 Fed Sent’g Rep 180,

1999 WL 730985 at *11 (1999).

Since the Commission has recognized, but not corrected, the problem of over assessment

due to multiple overlapping enhancements, courts have recognized that a departure or variance is

warranted to avoid it. See e.g. United States v. Lauersen, 362 F3d 160, 164 (2 Cir., 2004)nd

(vacated in light of Booker but upholding the district court’s departure sentence to mitigate the

effect of “substantially overlapping enhancements” at the high end of the fraud sentencing table

as a factor not adequately considered by the Sentencing Commission); United States v. Parris,

573 F Supp 2d 744, 745 (ED NY 2008) (guidelines in security fraud cases “are patently absurd

on their face” due to the “piling on of points” under §2B1.1); United States v. Adelson, 441 F

Supp 2d 506, 510 (SD NY 2006) (guidelines in fraud cases have “so run amok that they are

patently absurd on their face,” and describing enhancements as “represent[ing], instead, the kind

of ‘piling-on’ of points for which the guidelines have frequently been criticized.”)

Defendant’s guideline range is one characterized by the “piling on” of 10 levels of points

which all reflect his status and conduct as Mayor of Detroit. Defendant’s guideline range is over-

assessed due to these multiple assessments and this Court should determine that a variance

sentence is appropriate.

D. THIS COURT SHOULD DEPART FROM DEFENDANT’S SENTENCE FROM THE

GUIDELINE RANGE BECAUSE DEFENDANT’S CHC IV OVERSTATES THE

SERIOUSNESS OF HIS CRIMINAL HISTORY AND HIS RISK OF RECIDIVISM.

The PSR scores Defendant 5 criminal points (¶133 and ¶134) and adds, as required by

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§4A1.1(d), 2 points because part of “the instant offense occurred while Defendant was on state

probation supervision.” This gives Defendant a total Criminal History Score of 7 which places

Defendant in Category IV (PSR, p. 43, ¶135). The PSR suggests at p. 51, ¶177, that CHC IV

overstates Defendant’s criminal history since the basis for the 2 points which enhanced

Defendant’s Criminal history from III to IV is only his conviction on Count 36, a conviction for

income tax evasion for filing a tax return in April 2009 which did not account for cash received

by Defendant in 2008. The Count 36 conviction is for conduct that occurred after Defendant was

placed on state court probation on October 28, 2008. Defendant concurs in the PSR’s suggestion

that his CHC is overstated but has two reasons. Defendant also concurs in the PSR’s suggestion

that a departure from the guideline range is appropriate for this reason.

Chapter 4 of the Guidelines increases the assigned guideline range based on the scoring

of prior criminal behavior. The Introductory Commentary to Chapter 4 states as the justification

for these increases:

A defendant with a record of prior criminal behavior is moreculpable than a first offender and thus deserving of greaterpunishment. General deterrence of criminal conduct dictates that aclear message be sent to society that repeated criminal behaviorwill aggravate the need for punishment with each recurrence.

USSG §4A1.3, “Departures Based on Inadequacy of Criminal History Category,” states

as the Commission Policy:

(b) DOWNWARD DEPARTURES. –

(1) STANDARD FOR DOWNWARD DEPARTURE.– If reliableinformation indicates that the defendant’s criminal historycategory substantially over-represents the seriousness of thedefendant’s criminal history or the likelihood that the defendantwill commit other crimes, a downward departure may bewarranted.

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* * *(c) WRITTEN SPECIFICATION OF BASIS FOR DEPARTURE.– In

departing from the otherwise applicable criminal history category underthis policy statement, the court shall specify in writing the following:

* * *(2) In the case of a downward departure, the specific reasons why the

applicable criminal history category substantially over-representsthe seriousness of the defendant’s criminal history or thelikelihood that the defendant will commit other crimes.

* * *Background: This policy statement recognizes that the criminal history score isunlikely to take into account all the variations in the seriousness of criminalhistory that may occur. . . This policy statement authorizes the consideration of adeparture from the guidelines in the limited circumstances where reliableinformation indicates that the criminal history category does not adequatelyreflect the seriousness of the defendant’s criminal history or likelihood ofrecidivism, and provides guidance for the consideration of such departures.

Defendant’s criminal history is stated at pp. 41-43, ¶¶133-135 of the PSR. Defendant’s

criminal history is overstated for two reasons. First, the general deterrence rationale of increasing

punishments for repeated criminal behavior anticipates a sequence of an arrest, conviction, and

sentence preceding the next arrest, conviction, and sentence. See 21 USC §841. This sequence

allows a presumption that each conviction and sentence should be a message to the defendant.

But that sequence did not occur in Defendant’s criminal history. Defendant’s criminal history

shows the occurrence of the conduct in Case #1 and the arrest in Case #1 (¶133), the conduct in

Case #2 and the arrest in Case #2 (¶134), Defendant’s guilty pleas in Cases #1 and #2 on the

same day, and Defendant’s sentencings in Cases #1 and #2 on the same day. With this pattern of

events, Defendant did not have the benefit of the deterrence experience from his convictions and

sentences. Although the PSR correctly scored the convictions explained in ¶133 and ¶134, the

scoring of 5 points for these two convictions overstates Defendant’s criminal history because of

the interwoven sequence of the underlying events.

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As to the additional 2 points imposed for the Count 36 conviction, Defendant agrees with

the Probation Department that these additional two points further overstate Defendant’s criminal

history. Count 19 of the initial indictment charged Defendant with Income Tax Evasion for 2008,

the same offense as Count 36 of the 4 Superseding Indictment. This is a Class E felonyth

punishable by no more than 3 years imprisonment. Defendant could have filed an amended tax

return for up to three years after his April 2009 filing for tax year 2008. But once the initial

Indictment was filed on June 23, 2010, Defendant could not amend his tax return. Count 19 and

Count 36 may well have been charged solely to trigger the additional +2 CHC points. This

conviction clearly over-scores Defendant’s criminal history. A sentence which departs from the

guideline range based on Defendant’s overstated criminal history, as expressly authorized by

USSG §4A1, is warranted for Defendant.

IV. CONCLUSION

For the reasons stated in these Objections and Arguments, Defendant asks this Court to

determine that the various amounts attributed to Defendant as “value received” are not supported

by legal principles or sufficient evidence and the assessment of +20 for “value received” is

unwarranted. Defendant asks this Court to determine that the enhancements scored in ¶103 and

¶105 are impermissible double-counting or not supported by sufficient evidence. Defendant asks

this Court to vary Defendant’s sentence from his guideline range because the fraud loss/gain

table in §2B1.1, the principal determinant of Defendant’s guideline range, does not deserve any

deference and because Defendant’s range is reached only by multiple increases based on the

same conduct or status of Defendant. Defendant ask this Court to determine that his criminal

history score overstates the seriousness of Defendant’s prior criminal history and a departure

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sentence is warranted. Defendant asks this Court, after considering all of Defendant’s Objections

and Arguments, to impose a sentence of not more than 180 months.

Respectfully Submitted,

GUREWITZ & RABEN, PLC

By: s/Margaret Sind Raben333 W. Fort Street, 11th floorDetroit, MI 48226(313) 628-4708Email: [email protected]

Date: October 4, 2013 Attorney Bar Number: 39243

CERTIFICATE OF SERVICE

I hereby certify that on October 4, 2013, I electronically filed the foregoing paper with the Clerkof the Court using the ECF system which will send notification of such filing to all parties ofrecord.

s/Margaret Sind Raben (P39243)Gurewitz & Raben, PLC333 W. Fort Street, Suite 1100Detroit, MI 48226(313) 628-4708email: [email protected]

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mailto:[email protected]

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