Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 1 of 12 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

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1 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 1 of 12 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA Case No. 17-CR KMW UNITED STATES OF AMERICA v. MARCELO REYES LOPEZ / UNITED STATES RESPONSE IN OPPOSITION TO DEFENDANT REYES LOPEZ S MOTION FOR DOWNWARD VARIANCE The United States of America respectfully submits that this Court should deny defendant Reyes Lopez s motion for a downward sentencing variance, DE 63, based on the defendant s personal characteristics and the recent sentence of a defendant in a related matter. The defendant s charitable acts in Ecuador, while laudable, do not constitute the kind of mitigating circumstance under Title 18, United States Code, Section 3553(a) such that the court should deviate from the advisory sentencing guidelines range. And while defendants with similar records should not receive unwarranted sentencing disparities, there is a substantial difference in rank, influence and conduct between the defendant and a recently sentenced co-conspirator, who was a lower ranking official at Empresa Publica de Hidrocarburos del Ecuador ( PetroEcuador ), the state-owned and state-controlled oil company 1

2 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 2 of 12 of Ecuador. INTRODUCTION The defendant Reyes Lopez pleaded guilty to one count of violating 18 U.S.C. 1956(h) for conspiring to launder the proceeds of foreign bribery and violations of the Foreign Corrupt Practices Act ( FCPA ). From March 2012 until May 2013, the defendant worked as an in-house attorney and the General Coordinator of Contracts for the Refining Management of PetroEcuador, and thus shared responsibility for reviewing and awarding contracts. Abusing his public position and influence within PetroEcuador, the defendant demanded and obtained approximately $2,100,000 in bribes for his own benefit from contractors seeking to do business with PetroEcuador. In addition to being one of several PetroEcuador officials who engaged in the bribery conspiracy, the defendant also participated in a subsequent conspiracy that lasted until 2016 to launder the proceeds of the corrupt scheme through property purchases financed by offshore shell companies that used foreign bank accounts, including in the United States. Being an attorney, the defendant knew that the receipt of bribes and their proceeds was illegal, and he waited to take ownership of several properties, including in Miami, Florida, until he was no longer employed by PetroEcuador. 2

3 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 3 of 12 LEGAL ANALYSIS The defendant grounds his request for a downward variance in two of the factors enumerated in Section 3553(a), namely (1) the nature and circumstances of the offense and the history and characteristics of the defendant; and (2) the need to avoid unwarranted sentencing disparities. The PreSentence Investigation Report ( PSR ) identifies a guideline sentencing range of incarceration of months. The United States agrees with the defendant that two adjustments included in the PSR should not apply: (1) the three-level increase for his supervisory role in the offense (Section 3B1.1(b)); and (2) the two-level increase for abuse of trust (Section 3B1.3). Accordingly, the United States and the defendant agree that the proper advisory guideline range is months. The nine-month variance sought by the defendant is neither supported by the nature and circumstances of the offense and the defendant s history and characteristics, nor by the variance afforded to Arturo Escobar Dominguez ( Escobar ), a co-conspirator who was recently sentenced by the Hon. Cecilia M. Altonaga in a related case. Moreover, remaining Section 3553(a) factors counsel against a downward variance in this case. 3

4 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 4 of 12 The Nature and Circumstance of the Offense and Defendant s History and Characteristics Do Not Call for Downward Variance First, the nature and circumstance of the offense and the defendant s history and characteristics are not so unusual that they warrant a downward variance. The defendant was a senior official at Ecuador s state oil company who played an important role in reviewing and awarding lucrative multi-million dollar contracts to companies. Rather than using his position to further the interests of the people of Ecuador, the defendant, together with others, monetized his position of public trust for private gain by demanding from contractors the payment of substantial bribes. Knowing the illegality of these actions, the defendant then engaged in the concealment of the proceeds of the bribery scheme, including by using shell companies and bank accounts in the United States to purchase various properties for his own benefit. Moreover, the history and characteristics of the defendant described in his motion for a downward variance are also not nearly so extraordinary as to warrant a variance. The United States does not dispute that the defendant is devoted to his family and his religion, or that he has engaged in charitable acts that helped to address educational needs in Ecuador. While commendable, such charitable contributions are not so unusual for privileged members 4

5 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 5 of 12 of society that they deserve a downward variance in a criminal case involving corruption and money laundering. See, e.g., United States v. Kuhlman, 711 F.3d 1321, 1329 (11 th Cir.)(criticizing leniency based on a defendant s chosen profession and status in the community), cert. denied, 571 U.S. 825 (2013); see also United States v. McClatchey, 316 F.3d 1122, 1135 (10 th Cir. 2003)(in prosecutions of white-collar crimes involving high level corporate executives, it is usual and ordinary to find that defendant was a leader in community charities, civic organizations, and church events; district courts should view such evidence with skepticism when sentencing white collar executives). A Downward Variance Is Not Required to Avoid Unwarranted Sentence Disparities Second, the defendant s argument that a downward variance should issue in light of the Section 3553(a) factor that counsels avoidance of unwarranted sentence disparities among defendants who have been found guilty of similar conduct is similarly unpersuasive. See 18 U.S.C. Section 3553(a)(6). Escobar was a co-conspirator and fellow PetroEcuador employee who also received bribes and laundered them. Judge Altonaga recently sentenced Escobar to 48 months imprisonment, varying downward from a recommended advisory guideline range of months. The amounts the defendant and Escobar obtained in bribes 5

6 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 6 of 12 are indeed close (though the defendant received approximately $200,000 more in bribes), and each used similar methods to conceal the proceeds through money laundering. While these metrics may suggest that their roles in the scheme were comparable, there are at least two substantial differences between the defendant and Escobar. A guideline sentence for this defendant would thus not result in an unwarranted sentence disparity. First, in granting Escobar a downward variance, Judge Altonaga focused on the fact that Escobar voluntarily donated his bribe proceeds to various charities in Ecuador prior to being investigated by authorities in Ecuador or the United States. Such return to charitable causes of the bribe funds he had received clearly distinguishes Escobar from the defendant. Judge Altonaga heard evidence that Escobar ended up giving his bribe proceeds to charitable organizations because he recognized the wrongfulness of his actions. 1 The charitable contributions by the defendant appear to be far smaller, and there is no evidence that the defendant carried out his charitable contributions with a similar 1 In addition, Escobar displayed during his interactions with the government and the court deep remorse for his conduct, which he admitted without hesitation or reservation. Escobar s posture in that respect further distinguishes him from this defendant, who demonstrated far greater difficulty and reluctance acknowledging the scope and contours of his own unlawful activity. 6

7 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 7 of 12 motive. After all, the defendant continued to remain an active participant in the schemes by receiving bribes and laundering them through shell companies subsequent to his charitable acts. And while Escobar has lived a modest life since donating the bribes he received to charity, the defendant here enjoyed a privileged and at times lavish lifestyle in Ecuador and the United States as a result of his unlawful conduct, including the purchase of six real estate properties in the Miami area for more than $3.5 million. Second, the United States disagrees with the defendant s assertion that he and Escobar had similar ranking positions at PetroEcuador. The defendant, who is twenty years older than Escobar, was a senior lawyer and contract manager at PetroEcuador during the time period of the bribe scheme. The defendant played a significant role in connection with the review and award of contracts and was thus seen by contractors and PetroEcuador employees as a high-ranking official. For example, Ramiro Luque, a contractor who paid bribes to Reyes and others and who has pleaded guilty in this matter, told the government that the defendant, unlike Escobar, was among the bosses referred to in a February that another PetroEcuador bribe recipient sent to Luque, and which demanded a bribe payment of 16% for bosses and 5% to middle management. 7

8 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 8 of 12 The Other Section 3553(a) Factors Counsel Against a Downward Variance Third, the United States submits that consideration of the entirety of the Section 3553(a) factors should lead to the conclusion that the court should not grant a downward variance. The defendant focuses his motion on two of the Section 3553(a) factors. Additional 3553(a) factors, including, among others, the need for the sentence to reflect the seriousness of the offense, promote respect for the law, provide just punishment and adequate deterrence, and protect the public, further counsel against a downward variance. See 18 U.S.C. 3553(a)(2). Indeed, the facts of this case fall within the heartland of the sentencing guidelines, thus making the defendant s argument in favor of a variance not compelling. See United States v. Irey, 612 F.3d 1160, 1202 (11 th Cir. 2010)(en banc). Finally, as different authorities have noted, a court should not give a defendant s history and characteristics excessive weight. U.S.S.G. Ch. 5, Pt. H, intro. comment.; Irey, 612 F.3d at 1189 (a district court can err when it considers only proper sentencing factors but balances them unreasonably); United States v. Givens, 443 F.3d 642, 646 (8 th Cir. 2006)(vacating and remanding sentence as substantively unreasonable where the district court gave too much weight to defendant s history and characteristics). 8

9 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 9 of 12 As noted above, the United States considers the laundering of proceeds of bribery, which occurred in violation of Ecuadorian law and the FCPA, to be a serious crime. The conduct by this defendant, a high-ranking attorney, of demanding bribe payments and then concealing the proceeds through the financial system in the United States was corrosive to the rule of law and completely contrary to the interests of the citizens of Ecuador and the United States. Such conduct by public officials in positions of authority calls for appropriate sentences that can serve as a deterrent to the defendant and other foreign officials. In the context of white-collar offenses, the Eleventh Circuit has instructed: Because economic and fraud-based crimes are more rational, cool, and calculated than sudden crimes of passion or opportunity, these crimes are prime candidate[s] for general deterrence.... Defendants in white collar crimes often calculate the financial gain and risk of loss, and white collar crime therefore can be affected and reduced with serious punishment. Our assessment is consistent with the views of the drafters of As the legislative history of the adoption of 3553 demonstrates, Congress viewed deterrence as particularly important in the area of white collar crime. S.Rep. No , at 76 (1983), reprinted in 1984 U.S.C.C.A.N. 3182, Congress was especially concerned that prior to the Sentencing Guidelines, [m]ajor white collar criminals often [were] sentenced to small fines and little or no imprisonment. 9

10 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 10 of 12 Unfortunately, this creates the impression that certain offenses are punishable only by a small fine that can be written off as a cost of doing business. Id. United States v. Martin, 455 F.3d 1227, 1240 (11 th Cir. 2006)(certain internal citations omitted); Kuhlman, 711 F.3d at (same). Finally, the guidelines themselves provide that charitable contributions and acts of public service are not ordinarily relevant in determining whether a departure is warranted. U.S.S.G. 5H1.11. CONCLUSION A guideline sentence in the range of months appears appropriate and just in this case for an offense involving international corruption and money-laundering that includes the theft of public funds of Ecuador and exploitation of the financial infrastructure in the United States. Neither of the two bases of defendant s request for a downward variance is compelling, nor do the remaining Section 3553(a) factors suggest that the defendant should be sentenced outside the applicable guideline range. Accordingly, this Court should decline to vary from the guidelines. Respectfully submitted, 10

11 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 11 of 12 BENJAMIN G. GREENBERG UNITED STATES ATTORNEY BY: s/ Karen E. Rochlin Assistant U.S. Attorney Court I.D. No. A N.E. 4 th Street Miami, Florida (305) karen.rochlin@usdoj.gov SANDRA MOSER ACTING CHIEF, FRAUD SECTION DEBORAH L. CONNOR ACTING CHIEF, MONEY LAUNDERING & ASSET RECOVERY SECTION By: s/ David Fuhr Lorinda Laryea Randall Warden Trial Attorneys Department of Justice 1400 New York Ave. N.W. Washington, D.C Telephone: (202) david.fuhr@usdoj.gov lorinda.laryea@usdoj.gov randall.warden@usdoj.gov 11

12 Case 1:17-cr KMW Document 77 Entered on FLSD Docket 07/18/2018 Page 12 of 12 CERTIFICATE OF SERVICE I HEREBY CERTIFY that I electronically filed the foregoing with the Clerk of the Court using CM/ECF. s/ DAVID FUHR TRIAL ATTORNEY 12