IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA. Richmond Division DEFENDANT EDWARD OKUN S POSITION ON SENTENCING

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1 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division UNITED STATES OF AMERICA, : : : v. : Criminal No. 3:08CR132 : Hon. Robert E. Payne EDWARD H. OKUN : : DEFENDANT EDWARD OKUN S POSITION ON SENTENCING COMES NOW the defendant, Edward Okun, by counsel, pursuant to the sentencing order filed in this case, and states that he has the following objections to the pre-sentence report ( PSR ) and the calculation of an advisory Sentencing Guidelines range of life. In determining what sentence to impose in this case, Mr. Okun emphasizes the following factors under relevant case law and 18 U.S.C. 3553(a) for the Court s consideration for the sentencing which is scheduled for August 4, Objections Mr. Okun objects to the suggested guideline sentence of life as presented in Worksheet D of the PSR as it exceeds the statutory maximum for Mr. Okun s convictions. The statutory maximum for 18 counts is 20 years (Counts 1-15, 19-22) and the other counts have a maximum of 10 years (Counts 23-25) and 5 years (Counts 26-27). Therefore, this Court cannot sentence Mr. Okun to a term of life but rather is limited to a term of years. Mr. Okun objects to paragraphs 13 through 97 of the PSR, which set forth the offense Page 1 of 13

2 conduct. Mr. Okun contested the factual allegations at trial and therefore disputes the accuracy of these paragraphs and objects to any reliance on them for sentencing purposes. Mr. Okun objects to the facts stated in paragraph 128 in the PSR, specifically the unadjudicated allegations of fraudulent activity from thirty years ago. The probation officer appears to be relying on press reports for the information, and has failed to attribute the allegations to any witnesses or law enforcement sources. These unadjudicated claims preclude the defendant from presenting evidence to rebut the claims, especially considering that the presentence report reflects that he has no history of other arrests. See PSR at 124. Additionally, the facts are irrelevant to the PSR and should not be included due to the age of the complaint and lack of proof of these allegations. Mr. Okun objects to the reference in the PSR at 114 which states that a least $25,857,748 was considered to have been laundered funds. The indictment does not appear to allege this amount, nor has the PSR cited any other support for it. Mr. Okun objects to the enhancement based on the estimation of the number of victims as reflected in paragraphs 99, 100 and 103 of the PSR. Therefore, the 6-level enhancement for more than 250 victims under USSG 2B1.1(2)(c) should not have been applied. As noted at 99 of the PSR, there are 232 alleged victims with undisputed claims. As noted by the Ninth Circuit in United States v. Showalter, a federal sentencing judge may not estimate the number of victims of a crime for purposes of enhancing a defendant's sentence under the U.S. Sentencing Guidelines. See United States v. Showalter, (9th Cir., No , 6/26/09). The Ninth Circuit vacated the defendant's sentence and remanded for resentencing, acknowledging that, due to the difficulty of accurately calculating monetary loss, the sentencing guidelines provide that a Page 2 of 13

3 sentence enhancement may be based on an estimate of loss. However, the Court noted that [t]he Guidelines do not, however, allow a district court to estimate the number of victims to enhance a sentence under 2B1.1(b)(2). The Court noted that when the defendant objected to the number-of-victims calculation in the PSR, the government had the burden of producing at least some evidence that the figure it advocated was valid. Essentially, it appears that the probation office said there were 117 victims because the bankruptcy trustee said so, without any explanation as to how the trustee came up with this number, it noted, and [t]his does not justify a conclusion that the government met its burden of establishing that there were 50 or more victims, the Court concluded. As in this case, the probation officer applied the enhancement based on a filing by the government, without any other evidence being examined. Therefore, the enhancement should be four levels rather than six based on the number of victims with undisputed claims. Discussion and Analysis I. The Advisory Guideline Range is Not to Be Presumed Reasonable In two recent summary reversals, the Supreme Court stated in no uncertain terms that the Guidelines cannot be used as a substitute for a sentencing court s independent determination of a just sentence based upon consideration of the statutory sentencing factors spelled out in 18 U.S.C. 3553(a). Nelson v. United States, 129 S. Ct. 890 (2009) (per curiam); Spears v. United States, 129 S. Ct. 840 (2009) (per curiam). The Court s decisions in Nelson and Spears built upon its earlier decisions in Kimbrough v. United States, 128 S. Ct. 558 (2007), and Gall v. United States, 128 S. Ct. 586 (2007), establishing the Sentencing Guidelines as simply an advisory tool to be considered alongside the other 18 U.S.C. 3553(a) statutory considerations. Page 3 of 13

4 Our cases do not allow a sentencing court to presume that a sentence within the applicable Guidelines range is reasonable. Nelson. 129 S. Ct. at 892. The Guidelines are not only not mandatory on sentencing courts; they are also not to be presumed reasonable. Id. (emphasis in original). In other words, sentencing courts commit legal error when they use a Sentencing Guidelines range as a default sentence, unless reasons exist to impose a sentence inside that range. Although sentencing courts must continue to consider the sentencing guidelines, Congress has required federal courts to impose the least amount of imprisonment necessary to account for the considerations and accomplish the sentencing purposes set forth in 18 U.S.C. 3553(a). These include (a) the nature and circumstances of the offense and the history and characteristics of the defendant; (b) the kinds of sentences available; (c) the advisory Guidelines range; (d) the need to avoid unwarranted sentencing disparities; (e) the need for restitution; and (f) the need for the sentence to reflect the following: the seriousness of the offense, promotion of respect for the law and just punishment for the offense, provision of adequate deterrence, protection of the public from future crimes and providing the defendant with needed educational or vocational training, medical care, or other correctional treatment. See 18 U.S.C. 3553(a); see also Kimbrough, 128 S. Ct. at 570. This statutorily mandated parsimony provision is not just another factor to be considered along with the others set forth in 18 U.S.C. 3553(a) it sets an independent limit upon the sentence. In addition, there is no limitation concerning the background, character, and conduct of a person convicted of an offense which a court of the United States may receive and consider for the purpose of imposing an appropriate sentence. 18 U.S.C Page 4 of 13

5 After thorough consideration of a sentence under the guidance of 18 U.S.C. 3553(a), a sentencing court may find that a particular case falls outside the heartland contemplated by the guidelines, or that the guidelines sentence itself fails properly to reflect the 3553(a) considerations, or that the case warrants a different sentence regardless. Rita v. United States, 127 S.Ct. 2456, 2465 (2007) (emphasis added). Although the District Court must begin its analysis by correctly calculating the advisory sentencing range, the sentencing court is then free, in light of the other statutory sentencing factors, to impose an entirely different sentence. This is because, under Rita, a district court is free simply to disagree, based on the 18 U.S.C. 3553(a) sentencing factors, with the USSG s rough approximation of the appropriate sentence for any given case. Id. II. A Sentence of Life, or its Functional Equivalent, Is Not Warranted in this Case Aside from the previously noted objection to the guidelines suggestion of a life sentence, this case does not warrant such a draconian sentence. As this Court is aware, Congress established the Sentencing Commission to formulate and constantly refine national sentencing standards. Kimbrough, 128 S. Ct. at 574; see also Rita, 127 S. Ct. at In its institutional role, the Sentencing Commission has the capacity courts lack to base its determinations on empirical data and national experience, guided by a professional staff with appropriate expertise. Kimbrough, 128 S. Ct. at 574, (quoting United States v. Pruitt, 502 F.3d 1154, 1171 (10th Cir. 2007) (McConnell, J., concurring)); see also Gall, 128 S. Ct. at 594 (noting that even though the Guidelines are advisory rather than mandatory, they are... the product of careful study based on extensive empirical evidence derived from the review of thousands of individual sentencing decisions. ). Page 5 of 13

6 1 As is evident from the attached Affidavit from Herbert Hoelter, the co-founder and Chief Executive Officer of the National Center on Institutions and Alternatives ( NCIA ), a life sentence is rarely imposed, even when suggested by the guideline range. (See Exhibit A). As explained in the affidavit, counsel for Mr. Madoff tasked Mr. Hoelter with providing them an analysis of the United States Sentencing Commission ( USSG ) data for the purpose of assisting the Court in imposing an appropriate sentence for Mr. Madoff. The data set maintained by Mr. Hoelter s organization includes all cases received by the USSG that were sentenced between October 1, 1998 and September 20, Based on his analysis and using the data sorting outlined in the affidavit, Mr. Hoelter advised the court that pursuant to USSG 2B1.1/2F1.1 sentences imposed, with a loss of over 100 million, but less than 400 million, the average sentence imposed was 94.6 months. In addition to the chart contained in the affidavit, Mr. Hoelter goes on to state that of the total number of sentences examined, 14 of them had a guideline range of Life Imprisonment. As reflected on the table attached to the affidavit, none of these 14 defendants received a life sentence. Rather, an average sentence of 184 months was imposed. This Court can look to the most notable multi-billion dollar fraud case to see how these statistics are borne out even in this political climate. In the case of United States v. Madoff, the government asked for and received 150 years for a case involving 170 billion in losses to thousands of victims and notable charitable and educational institutions. The guidelines suggested a sentence of life. (See Exhibit B). 1 Affidavit of Herbert Hoelter with attachment (chart) filed in U.S. District Court for the Southern District of New York, Case No. 1:09CR00213-DC, United States v. Bernard Madoff, ECF Pleading #84. Page 6 of 13

7 The other case, United States v. Marc Dreier also illustrates this point. Mr. Dreier, who abused a position of trust and lived a lavish lifestyle over a seven year period, committed fraud in the amount of 700 million dollars received a sentence of 20 years. In that case, the government asked for 145 years which was soundly rejected by the judge. This Court should note that the court-appointed receiver in the bankruptcy of Dreier s 250 attorney law firm reported that Dreier used investors' money to subsidize the money-losing firm, to pay off some of the victims of the scam and to buy luxuries for himself, including a 121- foot yacht, vacation homes in the Hamptons on New York's Long Island and a $39 million contemporary art collection. Judge Rakoff rejected the government s145 year recommendation and did so despite finding an "appalling" betrayal of trust. While the defendant would get "no sympathy from this court," Rakoff said, "he is not Mr. Madoff under any analysis, and I can t understand why the government is asking for 145 years." The Court stated, "Mr. Dreier's crimes, despicable though they may be, pale in comparison to Mr. Madoff's." (See Exhibit C). Not only is Okun no Madoff, he is no Dreier. The losses alleged from Okun's offense conduct are one-sixth that of the fraud perpetrated by Dreier and one-thousandth of the losses created by Mr. Madoff. Counsel understands that the government will be requesting what they determine is the maximum sentence in this case, or 400 years. This can only be accomplished by a stacking of the statutory maximums of all counts. This kind of action is rarely done by this Court and this case is not so unique as to justify such a sentence. As illustrated in the USSG 5G1.1, [w]here the statutorily authorized maximum sentence is less than the minimum of the applicable guideline range, the statutorily authorized maximum sentence shall be the guideline sentence. Additionally, under 3D1.2, [a]ll counts involving substantially the same harm shall be Page 7 of 13

8 grouped together into a single Group. Consequently, since all of the counts in this case involve substantially the same harm, the guideline sentence is 240 months, or 20 years, which is essentially a life sentence for Mr. Okun. Any upward departure or variance from such a sentence would not be justified by the facts and circumstances of the case or the history and characteristics of the defendant. Further, the imposition of that kind of sentence is simply not justified when compared with other infamous fraud defendants who were recently sentenced to lower sentences with dramatically larger losses. III. Sufficient Sentence Under 18 U.S.C. 3553(a) A ten to fifteen year sentence is more than sufficient to attain the goals of 18 U.S.C. 3553(a) and should be imposed by this Court based on the following points: 18 U.S.C. 3553(a)(1) requires this Court to consider the nature and circumstances of the offense and the history and characteristics of the defendant. This Court heard the evidence at trial and therefore there is no reason to recount those facts in this pleading. Previous to his arrest in March, 2008, Mr. Okun had never been to jail or arrested for anything but a driving while intoxicated charge decades before. Paragraphs of the PSR so indicate. Despite the government claims to the contrary (and the earlier objections as noted by counsel), there is no proof of the previous criminal allegations as contained in the PSR and this Court should not consider such alleged conduct when sentencing Mr. Okun. Once the search warrant was executed on Investment Properties of America in Midlothian, Mr. Okun made every effort to raise the capital to repay all of the money taken from the accounts. As the government and Court are well aware, Mr. Okun cooperated with the Bankruptcy Trustee and assigned all of his interests in his property and valuables to the Page 8 of 13

9 Bankruptcy Court in order for the money to be repaid. He remains frustrated that none of his money was given to the victims to date as well as the money seemingly squandered by the attorneys in this case. Since his conviction, Mr. Okun has maintained his efforts to make sure that the1031 clients are repaid. (PSR, ). As evidenced by the letter from counsel to the Class of 1031 Exchangers to the Court dated July 17, 2009, Mr. Okun has been a tremendous help to [them] in gathering information to assist in our prosecution of others who contributed to [their] client s losses. Edward Okun made himself available for debriefing, which helped us put together the facts of this very complex financial puzzle. (See Exhibit D). As the PSR indicates in paragraphs 129 and 139, Mr. Okun suffers from significant health problems - he had a triple coronary bypass surgery in 1990 when he was 39 years old. The records summarized by Mr. Brown in paragraph 139 proves that Mr. Okun continues to suffer from medical problems related to his heart as he suffered from angina when first arrested on these charges and he takes aspirin and Isordil for dilation of his blood vessels on a daily basis. The time that Mr. Okun receives will be especially harsh given this medical condition and counsel requests that the Judgement and Commitment Order reflect that Mr. Okun s medical condition be attended to by the Bureau of Prisons ( BOP ). Section 3553(a)(2)(A) requires this Court to impose a sentence that reflects the seriousness of the offense, promotes respect for the law, and provides just punishment. A sentence of ten to fifteen years reflects the seriousness of the offense as it provides just punishment for Mr. Okun and it is sufficient but not greater than necessary to accomplish the stated goals of 18 U.S.C. 3553(a). The victim impact information contained in paragraphs 98 to 110 of the PSR certainly Page 9 of 13

10 reflect the anger and resentment as is justified by their individual circumstances. However, the combination of these heartfelt statements, when combined with the government s stated desire for 400 years, suggests a type of vengeance that, if followed, would negate and render meaningless the role of the Court to impartially consider all factors in 3553(a) and Mr. Okun requests that the Court impose a sentence which reflects justice and not just vengeance. With respect to Section 3553(a)(2)(B), a ten to fifteen year sentence for taking 126 million provides an adequate deterrent for both Mr. Okun and the community at large. Given the notoriety of this case, and exposure from the media and internet, there is no question that everyone will know that this sentence is almost the equivalent of a life sentence for Mr. Okun and that is bound to deter others who have thoughts of entering into such a course of action. Further, there is considerable evidence that even relatively short sentences can have a strong deterrent effect on prospective white collar offenders. See United States v. Adelson, 441 F. nd Supp. 506, 514 (S.D.N.Y. 2006), aff.d, 301 Fed. Appx. 93 at **1 (2 Cir. Dec 9, 2008)(citing Richard Frase, Punishment Purposes, 58 Stanford L.Rev 67, 80 (2005). Regarding Section 3553(a)(2)(D), it is evident that Mr. Okun needs some new vocational training and a way to be a productive member of the institution community. It is clear from the PSR, paragraph 141, that Mr. Okun has battled with alcohol abuse in the past and therefore could benefit from treatment within the Bureau of Prisons in the Residential Drug Program. Mr. Okun requests that this Court order him to receive such programs while in the BOP. Section 3553(a)(6) requires this Court to avoid disparate treatment among similarly situated non-violent offenders such as Mr. Okun. As stated earlier, Mr. Dreier received a 20 year sentence for a 700 million dollar fraud, Mr. Madoff received a 150 year sentence for 170 billion Page 10 of 13

11 in losses. This Court should not follow the government s recommendation of 400 years as that would result in disparate treatment and an injustice to Mr. Okun. Section 3553(a)(7) requires this Court to impose restitution when applicable. Although there is a separate hearing for the determination of the exact amount of restitution, counsel wanted the Court to note at the time of sentencing that, according to paragraph 101 of the PSR which quotes the Bankruptcy Court website, the Trustee has secured a total amount of just over 88 million dollars. As stated in another pleading, Mr. Okun s restitution obligations should be offset by any recovery made by the Trustee. Finally, Mr. Okun requests that the Court put in the Judgment and Commitment Order that he be designated to an institution near his family so that he can receive the support so vital to incarcerated persons. Conclusion Courts have embraced the opportunity to sentence below the Guideline range on a variety of cases since Booker and especially since Kimbrough and Gall. Statistically, they have been especially embracing that opportunity in fraud cases such as this. These statistics as provided by the United States Sentencing Commission itself - reflect the well-considered views of courts that a fair and reasonable sentence for Mr. Okun would be no more than 15 years, as any greater sentence would effectively be a life sentence. As noted previously, 20 years is the sentence imposed on Mr. Dreier whose fraud amount was 6 times greater than the amount Mr. Okun was found guilty of taking from 1031 clients. A sentence of between ten and fifteen years reflects the seriousness of Mr. Okun s health status, the much smaller magnitude of his offense when compared to Dreier, and Okun's efforts Page 11 of 13

12 to compensate victims even before he was charged by the government. This Court should note that this sentence is substantially larger (indeed at the higher end of this range nearly double) the average sentence meted out for a fraud of more than $400 million, per the USSG Guidelines, Okun's fraud was less than half that 400 million dollar figure. In summary, a sentence of between ten and fifteen years recognizes the seriousness of the offense and the fact that Okun was found guilty of obstruction, while not unduly penalizing him for exercising his constitutional right to go to trial. This sentence would be sufficient, but not greater than necessary taking into account all of the circumstances of the offense and the defendant. Dated: July 22, 2009 Respectfully submitted, EDWARD H. OKUN By: /s/ Robert J. Wagner (VA Bar No ) Carolyn V. Grady (VA Bar No ) Office of the Federal Public Defender 701 E. Broad Street, Suite 3600 Richmond, Virginia (fax) robert_wagner@fd.org Barry J. Pollack (D.C. Bar No ) Miller and Chevalier, Chartered 655 Fifteenth Street, N.W., Suite 900 Washington, D.C (fax) bpollack@milchev.com Attorneys for Defendant Edward Okun Page 12 of 13

13 CERTIFICATE OF SERVICE nd I hereby certify that on the 22 day of July, 2009, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system, which will send a notification of such filing (NEF) to the following: Wingate Grant, Michael Dry, Brigham Cannon, Jessica Brumberg, Assistant United States Attorneys. Also, a copy of the filing was ed to Blakely Brown at the United States Probation Office. /s/ Carolyn V. Grady, Esq. Va. Bar # Counsel for Edward Okun Office of the Federal Public Defender 701 E. Broad Street, Suite 3600 Richmond, VA Ph. (804) Fax (804) Carolyn_Grady@fd.org Page 13 of 13

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