Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 1 of 6 - Page ID#: 342

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1 Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 1 of 6 - Page ID#: 342 CRIMINAL ACTION NO KKC UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY CENTRAL DIVISION LEXINGTON Eastern Distl 1 1ct of Kentucky F ll ED OCT AT LEXINGTON ROBERT R. CARR CLERK U.S. DISTRICT COURT UNITED STATES OF AMERICA PLAINTIFF V. PLEA AGREEMENT GEORGE S. HOFMEISTER DEFENDANT * * * * * 1. Pursuant to Federal Rule of Criminal Procedure 11 (c), the Defendant will enter a guilty plea to Count 1 of the Indictment, charging a violation of 18 U.S.C. 664 (Theft from an Employee Pension Plan), Count 6, charging a violation of 18 U.S.C (Money Laundering), as well as the Forfeiture Allegation. Pursuant to Rule 11(c)(l)(A), the United States will move to dismiss any remaining counts at sentencing. 2. The essential elements of Count 1 are: (a) The Defendant stole and embezzled the money described in the Indictment; (b) Which, at the time, belonged to or was connected with the Hillsdale Hourly Pension Plan; and (c) Which was an employee pension benefit plan. 3. The essential elements of Count 6 are: (a) The Defendant knowingly engaged in a monetary transaction; (b) That involved property derived from specified unlawful activity (Theft from an Employee Pension Plan);

2 Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 2 of 6 - Page ID#: 343 (c) And that had a value greater than $10,000; (d) The Defendant knew that the monetary transaction involved criminally derived property; and (e) The monetary transaction took place within the United States. 4. As to Counts 1 and 6, the United States could prove beyond a reasonable doubt the following facts, which establish the essential elements of the offense, and the Defendant admits these facts: (a) On March 11, 2009, the Defendant became the Trustee oftwo pension plans -the Hillsdale Salaried and Hourly Pension Plans - both of which were defined benefit plans under ERISA. As the Trustee of the Plans, the Defendant was a "fiduciary" and, therefore, obligated by law to discharge his duties with respect to the Plans solely in the interest of the participants and beneficiaries; conversely, the Defendant was prohibited from "self-dealing" and engaging in transactions with "parties in interest." (b) On or about October 20, 2010, the Defendant used Plan assets to purchase a 65% ownership interest in SIF Technology Company, LLC ("SIF"), a Florida limited liability company that produced digital images on leather products. In doing so, the Defendant concealed his interest in the purchase of SIF and that of Revstone and the Hofmeister irrevocable family trusts. (c) Jeffrey Owen also invested in SIF. Revstone, a company owned by the Hofmeister family irrevocable trusts, owed Owen money from a previous business venture. The Defendant was the Chairman of and controlled Revstone. Further, the Defendant controlled the assets of the Hofmeister irrevocable family trusts. (d) The Hillsdale Plans to loaned additional money to SIF - in the amount of$414,000 (from the Hourly Plan) and $186,000 (from the Salaried Plan), respectively. On February 4, 2011, $600,000 was wired from the Plans to SIF, via wire transfers that were authorized by the Defendant. Owen, at the Defendant's direction, then wired $200,000 to AMI Morton Fabrications. AMI was owned by the Hofmeister irrevocable family trusts; and the Defendant was the Managing Member and sole Director. Those Plan assets were ultimately used for the Defendant's personal benefit. Per the Defendant's instructions, the remaining $75,000 was paid directly to Jeffrey Owen, as payment on the debt owed by Revstone. A wire transfer in that amount was sent from Palm Marketing to Owen

3 Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 3 of 6 - Page ID#: 344 on February 8, All of the wire transfer of funds were monetary transactions taking place within the United States. (e) In short, assets of the Hillsdale Hourly and Salary Pension Plans that were either invested in, or loaned to, SIF were used by Defendant to pay debts owed by Revstone to Owen and for the benefit of the Hofmeister family trusts. /.~~.~ /'J<:,., 5. The maximum statutory punishment for Count 1 is 5 years of imprisonment, _JI;> $250,000 fine, and 1 year of supervised release. The maximum statutory punishment for Count 6 is 10 years of imprisonment, a fine of not more than twice the amount of the criminally derived property involved in the transaction, and 3 years of supervised release. A mandatory special assessment of $100 per felony count applies, and the Defendant will pay this assessment to the U.S. District Court Clerk at the time of the entry of the plea. 6. Pursuant to Rule 11(c)(l)(B), and unless otherwise noted below, the United States and the Defendant recommend the following sentencing guidelines calculations, and they may object to or argue in favor of other calculations. This recommendation does not bind the Court. (a) United States Sentencing Guidelines (U.S.S.G.), November 1, 2015, manual, will determine the Defendant's guidelines range. (b) Pursuant to U.S.S.G. 1Bl.3, the Defendant's relevant conduct includes, but is not limited to, the facts outlined in paragraph 4. (c) Pursuant to U.S.S.G. 2B1.1(a)(2), the base offense level is 6. (d) It is the United States's position that, pursuant to U.S.S.G. 2B 1.1 (b )(1 )(H), the offense level should be increased by 14 levels because the amount of loss exceeded $550,000 but was less than $1,500,000. The Defendant disagrees and reserves the right to argue for a lower loss amount and resulting enhancement. (e) Pursuant to U.S.S.G. 2Sl.1(b)(2)(A), increase the offense level by 1 level because the Defendant is convicted of 18 U.S.C

4 Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 4 of 6 - Page ID#: 345 (f) Pursuant to U.S.S.G. 3B 1.3, increase the offense level by 2 levels for abuse of a position of public or private trust. (g) Pursuant to U.S.S.G. 3El.l and unless the Defendant commits another crime, obstructs justice, or violates a court order, decrease the offense level by 2 levels for the Defendant's acceptance of responsibility. If the offense level determined prior to this 2-level decrease is level 16 or greater, the United States will move at sentencing to decrease the offense level by 1 additional level based on the Defendant's timely notice of intent to plead guilty. (h) Pursuant to U.S.S.G. SELl, restitution is applicable and will be need to be determined at sentencing. 7. No agreement exists about the Defendant's criminal history category pursuant to U.S.S.G. Chapter The Defendant waives the right to appeal the guilty plea, conviction, and any sentence that is within or below the advisory Guideline range as finally determined by the Court. Except for claims of ineffective assistance of counsel, the Defendant also waives the right to attack collaterally the guilty plea, conviction, and sentence. 9. The Defendant reserves the right to argue for departures and/or variances from the Guideline range. 10. The United States will recommend releasing the Defendant on the current conditions for future court appearances if the Defendant does not violate the terms of the order setting conditions of release. 11. ross proceed obtained directl or indirectly, the offi nses alleged i Counts 1 and 6 ct to 4 _J~ ~~tn/

5 Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 5 of 6 - Page ID#: 346 forfeit(", but rzs 'ves the right to lgue that $7,000 is not. any /ocuments ecessary for thjorfeiture, ultimate! etermined b 12. After pleading guilty, the Defentlant will make a full and complete financial disclosure to the United States and will assist the United States in the gathering of all financial information. The Defendant will complete and sign a financial disclosure statement or affidavit, will sign financial releases prepared by the United States, and will submit to a deposition in aid of collection at times and places that the United States directs. The Defendant authorizes the United States to obtain the Defendant's credit reports. The Defendant agrees that any unpaid penalty will be submitted to the United States Treasury for offset. If the Defendant fails to comply with any of the provisions of this paragraph, the United States will not move the Court pursuant to U.S.S.G. 3El.1(b) to reduce the offense level by one additional level, and may in its discretion argue to the Court that the Defendant should not receive a two-level reduction for acceptance of responsibility pursuant to U.S.S.G. 3El.l(a). 13. If the Defendant violates any part of this Agreement, the United States may void this Agreement and seek an indictment for any violations of federal laws, and the Defendant waives any right to challenge the initiation of additional federal charges. ~1''9 /?./</1 14. This document and th g et:q.eat contain the complete and only Plea Agreement between the United States Attorney for the Eastern District of Kentucky and the Defendant. The United States has not made any other promises to the Defendant. 5

6 Case: 5:16-cr KKC-REW Doc #: 65 Filed: 10/20/17 Page: 6 of 6 - Page ID#: This Agreement does not bind the United States Attorney's Offices in other districts, or any other federal, state, or local prosecuting authorities. 16. The Defendant and the Defendant's attorney acknowledge that the Defendant understands this Agreement, that the Defendant's attorney has fully explained this Agreement to the Defendant, and that the Defendant's entry into this Agreement is voluntary. CARLTON S. SHIER, IV ACTING UNITED STATES ATTORNEY By: ~~~222d~ Robert K. McBride and Elaine K. Leonhard Assistant United States Attorneys GeorgeS. Defendant Date: I 0 / 20 } ( 1 ( t ~D~ Attorney for efendant 6