defendant edward okun’s position on...

of 13

IN THE UNITED STATES DISTRICT COURTFOR 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, 2009.

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

of 13

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. 08-50109, 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

of 13

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.

of 13

“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. § 3661.

of 13

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 2464. 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.”).

Affidavit of Herbert Hoelter with attachment (chart) filed in U.S. District Court for the1

Southern District of New York, Case No. 1:09CR00213-DC, United States v. Bernard Madoff,ECF Pleading #84.

of 13

As is evident from the attached Affidavit from Herbert Hoelter, the co-founder and Chief1

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, 2008. 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).

of 13

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

of 13

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 119-124 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

of 13

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, ¶¶ 117-118). 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

of 13

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.

Supp. 506, 514 (S.D.N.Y. 2006), aff.d, 301 Fed. Appx. 93 at **1 (2 Cir. Dec 9, 2008)(citingnd

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

of 13

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

of 13

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. 27493)Carolyn V. Grady (VA Bar No. 30445)Office of the Federal Public Defender701 E. Broad Street, Suite 3600Richmond, Virginia 23219804.565.0808804.648.5033 (fax)[email protected]

Barry J. Pollack (D.C. Bar No. 434513)Miller and Chevalier, Chartered655 Fifteenth Street, N.W., Suite 900Washington, D.C. 20005-5701202.626.5830202.626.5801 (fax)[email protected] for Defendant Edward Okun

mailto:[email protected]

of 13

CERTIFICATE OF SERVICE

I hereby certify that on the 22 day of July, 2009, I electronically filed the foregoing with thend

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, AssistantUnited States Attorneys. Also, a copy of the filing was emailed to Blakely Brown at the UnitedStates Probation Office.

/s/ Carolyn V. Grady, Esq.Va. Bar # 30445Counsel for Edward OkunOffice of the Federal Public Defender701 E. Broad Street, Suite 3600Richmond, VA 23219Ph. (804) 565-0855Fax (804) [email protected]

mailto:[email protected]

defendant edward okun’s position on...

Documents