MDY Industries, LLC v. Blizzard Entertainment, Inc. et al

Filing 322

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Clark L. Derrick, #003046 Amy L. Nguyen, #023383 KIMERER & DERRICK, P.C. 221 East Indianola Avenue Phoenix, Arizona 85012 Telephone: 602-279-5900 Facsimile: 602-264-5566 Counsel for Defendant Hoffart UNITED STATES OF DISTRICT COURT DISTRICT OF ARIZONA ) ) Plaintiff, ) ) vs. ) ) Wilbert Hoffart, ) ) Defendants. ) ____________________________________) United State of America, No. CR06-560-PHX-DGC DEFENDANT'S SENTENCING MEMORANDUM Sentencing: 3/5/07 at 2:00 p.m. (Before the Honorable David G. Campbell) Defendant, Wilbert Hoffart, through undersigned counsel, respectfully submits the following Sentencing Memorandum and attached letters of support for this Court's consideration in determining an appropriate sentence in this case. RESPECTFULLY SUBMITTED this 26th day of February, 2007. KIMERER & DERRICK, P.C. S/Amy L. Nguyen CLARK L. DERRICK AMY L. NGUYEN Counsel for Defendant Hoffart 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 MEMORANDUM OF POINTS AND AUTHORITIES I. Factual Background Mr. Hoffart is before this Court for sentencing after entering into a plea agreement with the Government in which he pled guilty to one count of Bank Fraud, a class B felony offense. The plea agreement stipulates that the Government will recommend a sentence at the low end of the applicable guideline range, as well as a three-point reduction in the offense level pursuant to U.S.S.G. 3E1.1. The plea agreement also specifically states that Mr. Hoffart retains the right to move for a downward departure and a sentence below the applicable guideline range. II. Appropriate Sentence A. Base Offense Level and Loss Amount - U.S.S.G. 2F1.1 Mr. Hoffart agrees with the base offense level and loss amount set forth in the Draft Presentence Report ("the Report).1 Pursuant to 2F1.1, which was in effect on the date the offense was committed, Mr. Hoffart's base offense level is 6. The factual basis set forth in the plea agreement and admitted to by Mr. Hoffart states that Harris Trust and Savings Bank suffered a loss of $1,519,000.00. (Plea Agreement at 9). Using this loss amount increases the offense level by 12 points. B. Criminal History Category U.S.S.G. 4A1.1 Mr. Hoffart agrees with the Report's suggested Criminal History Category of I, as Mr. Hoffart has absolutely no criminal history. C. Acceptance of Responsibility U.S.S.G. 3E1.1 Mr. Hoffart requests this Court to adopt the recommendation of the Presentence Report and apply a three-point downward adjustment pursuant to 3E1.1(a) and (b). He has fully As of today's date, Mr. Hoffart has not received the final Presentence Report, but assumes the calculations will remain the same given that there were no objections from either party. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 admitted to committing the conduct underlying his conviction, as evidenced by his guilty plea, and expresses extreme remorse for his actions. Moreover, he provided complete information to the Government and notice of his intention to plead guilty in a timely manner. D. Downward Departure - U.S.S.G. 5K2.12, Coercion/Duress Pursuant to 5K2.12, this Court may decrease a sentence below the applicable guideline range "[i]f the defendant committed the offense because of serious coercion, blackmail or duress, under circumstances not amounting to a complete defense." That section further states: The extent of the decrease ordinarily should depend on the reasonableness of the defendant's actions, on the proportionality of the defendant's actions to the seriousness of the coercion, blackmail, or duress involved, and on the extent to which the conduct would have been less harmful under the circumstances as the defendant believed them to be. 5K2.12 (emphasis added). Although the guideline states that ordinarily, a departure will only be warranted when the coercion involves a threat of physical injury, substantial damage to property or similar injury resulting from the unlawful action of a third party, physical harm is not always necessary. See United States v. Garza-Juarez, 992 F.2d 896, 911-913 (9th Cir. 1993). In Garza-Juarez, the district court granted a downward departure based on coercion and duress where a government agent initially proposed the illegal activity and persistently contacted the defendant until the scheme was completed. Id. at 912. The Government appealed the court's decision to grant the departure, arguing that "some sort of physical harm is necessary to warrant a downward departure." Id. at 911. The Ninth Circuit rejected the Government's argument, stating that "the ordinary meanings of "coercion" and "duress" support the district court's action." Id. "To coerce is to nullify individual will, and this can be accomplished through intimidation as well as by force, power and violence." Id. (citing Webster's Third New International Dictionary 439 (1968)). "Duress is defined by Webster as `stringent compulsion by threat of danger, hardship or 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 retribution.'" Id. at 912. The Ninth Circuit, therefore, upheld the district court's decision, stating, "[t]his sort of aggressive encouragement of wrongdoing, although not amounting to a complete defense, may be used as a basis for departure under section 5K2.12." Id. Like Garza-Juarez, Mr. Hoffart was faced with severe intimidation and threats of hardship and retribution which led him to commit the instant offense. As stated in the factual basis for the plea agreement, Mr. Hoffart reported directly to Bruce Walderson, an executive officer of Southprint International ("SPI"). The factual basis also states that Mr. Hoffart falsely increased SPI's accounts receivables and devised a method of tracking the fraudulent invoices at the direction and instruction of Walderson. However, in addition to instructing Mr. Hoffart to perpetrate the fraudulent scheme, Walderson threatened Mr. Hoffart that if he did not do as he said, he would be fired from his job. Indeed, the fact that Mr. Hoffart received absolutely no financial gain from the commission of his offense further proves that he had no motive to "cook the books" other than to satisfy the demands of his employer. Being his sole source of financial support and having no other employment options at the age of 57, Mr. Hoffart complied with his boss' demands to save his job. Walderson's intimidation and threats of retribution effectively nullified Mr. Hoffart's "individual will" to do what he knew was right. See Garza-Juarez, 992 F.2d at 911-12. A downward departure based on duress and coercion under 5K2.12 is therefore warranted under these circumstances. E. Downward Departure U.S.S.G 5H1.4, Physical Condition Section 5H1.4 states that although physical condition is not ordinarily relevant in determining an appropriate sentence, "an extraordinary physical impairment may be a reason to depart downward; e.g., in the case of a seriously infirm defendant, home detention may be as efficient, and less costly than, imprisonment." 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Several circuits and district courts have applied and affirmed downward departures based on physical condition in circumstances similar to those of the instant case. In United States v. Rioux, the Second Circuit affirmed a downward departure pursuant to 5H1.4 where the defendant had a diseased kidney requiring regular blood tests and prescription medicines and underwent a double hip replacement after contracting bone disease. 97 F.3d 648, 663 (2nd Cir. 1996) (district court reduced the defendant's offense level from twenty to ten and sentenced him to three years probation and six months home confinement). Similarly, in United States v. Greenwood, the Fourth Circuit upheld a downward departure based on the fact that the defendant lost both of his legs below the knee in the Korean War and required treatment. 928 F.2d 645, 646 (4th Cir. 1991). Likewise, in Unites States v. Long, the Eighth Circuit affirmed a downward departure where the defendant presented reports of four doctors stating that if sentenced to prison, he would be exceedingly vulnerable to victimization and potentially fatal injuries due to his unspecified physical impairments. 977 F.2d 1264, 1278 (8th Cir. 1992) (holding that the district court did not err in concluding that "the imposition of a term of imprisonment could be the equivalent of a death sentence for Mr. Long."). Finally, in United States v. Hildebrand, the Eighth Circuit affirmed a downward departure where the defendant was seventy years old and had unspecified life-threatening conditions. 152 F.3d 756, 767-68 (8th Cir 1998) (holding that the district court did not abuse its discretion in departing from a sentencing range of fifty-one to sixty-three months and imposing a sentence of five years probation, with six months in a community correctional facility followed by eighteen months of home confinement). In the instant case, Mr. Hoffart was diagnosed with Emphysema in November of 2005, and only receives 16% of the air he should be receiving. He uses an inhaler every day and is 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 currently taking Pro Air and Albuterol. Since the diagnosis, Mr. Hoffart is required to see his physician every three to six months, depending on the severity of the disease. As a result of his condition, Mr. Hoffart was forced to leave his last job and is now qualified to receive social security disability, although he has not yet opted to receive those payments. According to his physician, the Emphysema has severely decreased Mr. Hoffart's life expectancy and estimates that he has 9-10 years to live. If he gets an infection or cold, his life expectancy can be reduced even more. In addition to Emphysema, Mr. Hoffart was also diagnosed with diverticilitis and moderate chronic obstructive pulmonary disease. He also has cracked vertebrae, rheumatoid arthritis in his back, degenerative discs and spurs on his vertebrae. Mr. Hoffart therefore requests this Court to apply a downward departure pursuant to 5H1.4 given his severe and potentially fatal physical health conditions. F. Factors under 18 U.S.C. 3553(a) In the consolidated case of United States v. Booker/Fanfan ("Booker"), 543 U.S. 220, 125 S. Ct. 738 (2005), the United States Supreme Court held that the Federal Sentencing Guidelines set forth in 18 U.S.C. 3551 are advisory, rather than mandatory, in nature. In so doing, the Court instructed the district courts to consider both the advisory guidelines and the factors listed in 18 U.S.C. 3553(a) in formulating an appropriate sentence. 125 S.Ct. at 757. An examination of these factors as they apply to Mr. Hoffart demonstrates that a sentence below that prescribed by the advisory sentencing guidelines is appropriate. The sentencing statute first requires a court to take into account "the nature and circumstances of the offense and the history and characteristics of the defendant." 18 U.S.C. 3553(a)(1). Significantly, Mr. Hoffart has absolutely no criminal history. To the contrary, for the first 57 years of his life, he was a productive, law-abiding citizen. He served four years in 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the United States Navy before being honorably discharged. He comes from a good, Christian family and has three siblings, all of whom are successful in their chosen careers. He is married with three children and has one grandchild with whom he is very close. His son works in quality control for an aluminum factory and his daughter is unemployed as the result of a severe blood disorder (TTP). Fortunately, Mr. Hoffart's family has supported him throughout his case and will continue to do so after he receives his sentence. (See attached Letters of Support). It is also significant to point out that upon the first contact by law enforcement regarding the fraudulent scheme, Mr. Hoffart immediately disclosed his participation in the scheme and offered his full cooperation. This included disclosing the operations of SPI, the location and significance of the false account receivables, other individuals participating/promoting the scheme, and the location of relevant documents. Mr. Hoffart also participated in several taped telephone conversations with Walderson at the Government's direction in an effort to obtain additional evidence against Walderson. Mr. Hoffart also agreed to wear a wire during a meeting with Walderson, but Walderson ceased all contact with him. Although Mr. Hoffart was not able to enter into a "Cooperation Plea Agreement," his efforts to assist the Government should be taken into account at sentencing. Additionally, the circumstances surrounding Mr. Hoffart's offense are not particularly heinous or destructive. Rather, as previously mentioned, he committed the offense at the direction of his boss and under the threat of losing his job. Although he will be held responsible for paying more than $1.5 million in restitution, he did not receive any monetary benefit from his offense. With that said, Mr. Hoffart readily acknowledges the wrongfulness of 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 his conduct and expresses extreme remorse for his actions. He is ashamed of his conduct and is very apologetic to those he has hurt in the process. The sentencing statute also requires that the sentence be "sufficient, but not greater than necessary" to achieve the purposes of the statute, among them the promotion of respect for the law, the provision of a just punishment for the offense, the adequate deterrence of criminal conduct, and the protection of the public from further crimes of the defendant. 18 U.S.C. 3553(a)(2). As previously mentioned, this conviction constitutes Mr. Hoffart's first and only criminal conviction, and can certainly be considered a gross deviation from his otherwise lawabiding life. With his background, age and physical condition, there is a very low risk of him re-offending, thereby decreasing the need for a lengthy or even somewhat significant prison sentence. Indeed, the fact that Mr. Hoffart will now have a serious felony on his record, lose his civil rights, have to pay more than $1.5 million in restitution and have extreme difficulty obtaining future employment is sufficient punishment for his crime. Imposing a lengthy prison sentence under these circumstances will undoubtedly prove to be counterproductive and more harsh than necessary to promote respect for the law. Lastly, the sentencing statute requires the Court to consider the need to provide restitution to any victim of the offense in determining an appropriate sentence. 18 U.S.C. 3553(a)(7). Pursuant to the plea agreement, Mr. Hoffart will be required to pay $1,519,000 in restitution to Harris Trust and Savings Bank. As pointed out in the Report, Mr. Hoffart's sole income comes from social security and his financial liabilities leave him with a negative monthly cash flow. In order to pay the restitution, he hopes to utilize his education and obtain employment as a tax consultant or Microsoft technician. However, a significant term of imprisonment would delay his future employment and, in turn, delay payment of restitution. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. G. Sentence Calculation Mr. Hoffart submits the following sentence calculation using a Criminal History Category of I: Base Offense Level (2F1.1): Adjustment for More Than Minimal Planning (2F1.1): Adjustment for Acceptance of Responsibility (3E1.1): 18 +2 -3 Total Offense Level = 17 (sentencing range of 24-30 months) Downward Departure Pursuant to U.S.S.G. 5K2.12: Downward Departure Pursuant to U.S.S.G. 5H1.4: Adjustment Based on 18 U.S.C. 3553(a) Factors: Sentence Recommendation Given the foregoing analysis, Mr. Hoffart respectfully requests this Court to grant a downward departure pursuant to U.S.S.G. 5K2.12 and 5H1.4. In addition, by applying the sentencing factors in 18 U.S.C. 3553(a), the Court should grant a sentence below the applicable guideline range. Because Mr. Hoffart pled guilty to a class B felony offense, he is ineligible for probation pursuant to 18 U.S.C. 3561(a)(1). However, a prison term is not warranted under the facts of the case, nor will it serve the ends of justice. Mr. Hoffart therefore requests this Court to impose the absolute minimum prison sentence it deems appropriate, followed by a term of supervised release. RESPECTFULLY SUBMITTED this 26th day of February, 2007. KIMERER & DERRICK, P.C. S/Amy L. Nguyen CLARK L. DERRICK AMY L. NGUYEN Counsel for Defendant Hoffart Discretionary Discretionary Discretionary 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 By: ___________________ COURTESY COPY of the foregoing faxed this 26th day of February, 2007, to: Elizabeth Gonshak-Peters United States Probation Officer 401 W. Washington Street, Suite 160 Phoenix, AZ 85003 Fax: 602-322-7419 CERTIFICATE OF SERVICE I hereby certify that on February 26, 2007, I electronically transmitted the attached Motion to the Clerk of the Court using the ECF System for filing and transmittal of a Notice of Electronic Filing to the following ECF registrants: Howard D. Sukenic Assistant U.S. Attorney Two Renaissance Square 40 N. Central Avenue, Suite 1200 Phoenix, Arizona 85004-4408 COURTESY COPY of the foregoing Emailed and mailed this 26th day of February, 2007, to: The Honorable David G. Campbell United States District Courthouse, Suite 623 District of Arizona 401 W. Washington, SPC 58 Phoenix, AZ 85003

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