usa v marvin jemal - sentencing memorandum of u.s.a

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x UNITED STATES OF AMERICA : - v. - : 14 Cr. 117 (VEC) MARVIN JEMAL, : Defendant. : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

SENTENCING MEMORANDUM OF THE UNITED STATES OF AMERICA PREET BHARARA United States Attorney for the Southern District of New York Attorney for the United States of America Daniel S. Noble Assistant United States Attorney - Of Counsel -

Case 1:14-cr-00117-VEC Document 27 Filed 10/31/14 Page 1 of 12

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x UNITED STATES OF AMERICA : - v. - : 14 Cr. 117 (VEC) MARVIN JEMAL, : Defendant. : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

SENTENCING MEMORANDUM

The Government respectfully submits the following memorandum in connection with the

sentencing of defendant Marvin Jemal, which is currently scheduled for November 5, 2014 at

2:00 p.m. In its Presentence Investigation Report (PSR) dated October 28, 2014, the United

States Probation Department (Probation Department) correctly states that the applicable United

States Sentencing Guidelines (Guidelines or U.S.S.G.) range for the defendant is 41 to 51

months imprisonment. For the reasons that follow, the Government respectfully submits that a

sentence within the advisory Guidelines range would be sufficient, but not greater than

necessary, to serve the legitimate purposes of sentencing set forth in Title 18, United States

Code, Section 3553(a).

I. BACKGROUND

A. The Indictment and Guilty Plea

On February 19, 2014, Indictment 14 Cr. 117 (VEC) (the Indictment) was returned by

a Grand Jury sitting in this District, and charged the defendant in four counts. Count One of the

Indictment charged the defendant with conspiracy to commit bank fraud, in violation of Title 18,


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United States Code, Section 1349, while Count Two of the Indictment charged the defendant

with the substantive crime of bank fraud, in violation of Title 18, United States Code, Sections

1344 and 2. Count Three of the Indictment charged the defendant with making false statements

to influence bank action, in violation of Title 18, United States Code, Sections 1014 and 2, while

Count Four of the Indictment charged the defendant with money laundering, in violation of Title

18, United States Code, Sections 1956(a)(1)(B)(i) and 2.

On August 7, 2014, the defendant appeared before Your Honor and pleaded guilty to

Count Two of the Indictment, pursuant to a plea agreement with the Government. In the plea

agreement, the parties stipulated that the applicable Guidelines range was 41 to 51 months

imprisonment.

B. The Defendants Criminal Conduct

The defendants offense conduct can be described as nothing less than utterly shocking.

At all relevant times, the defendant was the founder and Chief Executive Officer of the ENE

Group, LLC (ENE), a company that operated as a designer, importer and distributor of

luggage, business bags, backpacks and accessories. The defendant employed Mark Bernstein as

the Chief Financial Officer and/or Chief Operating Officer of ENE.

On or about May 15, 2007, ENE entered into a Factoring Agreement with the Israel

Discount Bank of New York (IDB). IDB is a full service commercial bank chartered by the

State of New York and a member of the Federal Deposit Insurance Corporation. IDBs head

office is located in Manhattan, New York. Pursuant to the terms of the Factoring Agreement

between ENE and IDB, ENE would, among other things, assign and sell to IDB all of ENEs

interest in certain of its accounts receivable. In exchange, IDB would advance to ENE up to

eighty-five percent (85%) of the amount of those receivables. In connection with entering into


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the Factoring Agreement with ENE, IDB approved a $3 million secured credit facility. In

assigning certain of its accounts receivable to IDB, ENE was required to provide IDB with,

among other things, a listing of the accounts receivable that were to be assigned, copies of the

underlying customer invoices, and copies of corresponding shipping documents or other proof of

delivery. Only after ENE sold and shipped a product and billed a particular customer was that

account receivable eligible to be assigned to IDB under the terms of the Factoring Agreement.

Once those conditions were satisfied, IDB would advance 85% of the total value of that account

receivable to ENE (IDB would thereafter collect the entirety of the amount owed by that

customer to ENE from the customer directly; in so doing, the interest on the loan to ENE was

effectively 15%).

On or about August 18, 2008, ENE requested that its secured credit facility with IDB be

increased from $3 million to $7 million. IDB subsequently approved that increase on or about

September 8, 2008. In so doing, ENEs borrowing formula was modified to permit ENE to

obtain advanced from the secured credit facility in an amount consisting not only of eight-five

percent (85%) of the amount of the accounts receivables assigned to IDB, but also of fifty

percent (50%) of its eligible inventory.

Between at least in or about May 2009, up to and including at least in or about October

2009, the defendant, together with Mark Bernstein, engaged in a scheme to fraudulently induce

IDB to lend funds to ENE from the secured credit facility that ENE was not entitled to receive

under the terms of the Factoring Agreement. Among other things, the defendant and Bernstein

(1) prematurely assigned accounts receivable to IDB (that is, prior to the actual sale and

shipment of certain products); (2) created false invoices and shipping documents to suggest the

sale and shipment of a product that had never occurred; (3) created duplicate invoices and


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shipping documents (changing only the invoice or shipping document numbers) to suggest

multiple sales and shipments of products that had actually occurred in one instance only; (4)

concealed credits that ENE had awarded to certain customers after the corresponding account

receivable was assigned to IDB; and (5) directly collected and deposited payments from

customers on accounts receivable that had been assigned to IDB, without disclosing the same to

IDB. In addition, and as a further part of the scheme to defraud, the defendant and Bernstein (1)

concealed damages and other issues relating to its inventory from IDB; and (2) overstated the

volume of its inventory to IDB, to induce IDB to advance additional funds from the secured

credit facility.

As of on or about October 28, 2009, ENE had drawn down approximately $6.9 million

from its $7 million secured credit facility with IDB. By on or about July 12, 2011, ENE had

defaulted on the loan with IDB in the approximate amount of $6 million. Subsequent to July

2011, IDB successfully recouped a portion of ENEs outstanding draws from the secured credit

facility. As of August 2014, IDB was still owed $2,729,422.71 from the ENE secured credit

facility. The FBI identified $1,974,203.68 still owed to IDB that resulted directly from duplicate

and/or fraudulent invoices for accounts receivable that were assigned by the defendant and

Bernstein to IDB.

In addition, during the course of its investigation, the FBI determined that between on or

about May 11, 2007 and on or about February 29, 2012, the defendant used bank accounts in the

names of two shell corporations namely, Ricomax, N.A. and Grey Goose Marketing, Inc. to

move approximately $1.9 million that had been obtained fraudulently from IDB pursuant to the

Factoring Agreement into personal bank accounts that the defendant controlled so that those

funds could be used thereafter to pay for various personal expenses of the defendant and his


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wife. The funds that were transferred through these shell corporation accounts for the personal

benefit of the defendant were used for, among other things, paying down personal credit card

accounts, making payments on personal mortgage loans, and paying for a Porsche.

E. The Guidelines Calculation

The defendant pled guilty to Count Two of the Indictment, which charged him with bank

fraud, in violation of Sections 1344 and 2. Pursuant to U.S.S.G. 2B1.1(a), the base offense

level for Count Two is seven. As the loss amount exceeded $1 million but was not more than

$2.5 million, pursuant to U.S.S.G. 2B1.1(b)(1)(I), the offense level is increased by 16 levels.

Pursuant to U.S.S.G. 2B1.1(b)(16)(A), a two-level increase in the offense level is warranted

because the defendant derived more than $1 million in gross receipts from one or more financial

institutions. Finally, pursuant to U.S.S.G. 3E1.1(a) and (b), a three-level reduction is

warranted for the defendants demonstration of acceptance of responsibility. Thus, the

defendants total adjusted offense level is 22. Because the defendant has no known prior

criminal convictions, he is in Criminal History Category I, which yields a Guidelines range of 41

to 51 months imprisonment. The Probation Department has recommended a sentence

principally of 41 months imprisonment. (Sentencing Recommendation, PSR at 20).

II. APPLICABLE LAW

The Guidelines still provide strong guidance to the Court following United States v.

Booker, 543 U.S. 220 (2005), and United States v. Crosby, 397 F.3d 103 (2d Cir. 2005),

although they are no longer mandatory. [A] district court should begin all sentencing

proceedings by correctly calculating the applicable Guidelines range that range should be the

starting point and the initial benchmark. Gall v. United States, 128 S. Ct. 586, 596 (2007). As

the Second Circuit has remarked en banc, although the Guidelines do not dictate a presumptively


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reasonable sentence, they are not merely a body of casual advice. United States v. Cavera, 550

F.3d 180, 189 (2d Cir. 2008) (internal quotation marks omitted). The Guidelines relevance

throughout the sentencing process stems in part from the fact that, while they are advisory, the

sentencing statutes envision both the sentencing judge and the Commission as carrying out the

same basic 3553(a) objectives, Rita v. United States, 127 S. Ct. 2456, 2463 (2007), and the

Guidelines are the product of careful study based on extensive empirical evidence derived from

the review of thousands of individual sentencing decisions, Gall, 128 S. Ct. at 594; see also

Rita, 127 S. Ct. at 2464.

After making the initial Guidelines calculation, a sentencing judge must then consider

seven factors outlined in Title 18, United States Code, Section 3553(a): the nature and

circumstances of the offense and the history and characteristics of the defendant, 18 U.S.C.

3553(a)(1); the four legitimate purposes of sentencing, see id. 3553(a)(2); the kinds of

sentences available, id. 3553(a)(3); the Guidelines range itself, see id. 3553(a)(4); any

relevant policy statement by the Sentencing Commission, see id. 3553(a)(5); the need to avoid

unwarranted sentence disparities among defendants, id. 3553(a)(6); and the need to provide

restitution to any victims, id. 3553(a)(7). See Gall, 128 S. Ct. at 596 & n.6.

In determining the appropriate sentence, the statute directs judges to impose a sentence

sufficient, but not greater than necessary, to comply with the purposes of sentencing, which are:

(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;

(B) to afford adequate deterrence to criminal conduct; (C) to protect the public from further crimes of the defendant; and

(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner.


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18 U.S.C. 3553(a)(2). To the extent District Court imposes a sentence outside the range

recommended by the Guidelines, the Court must consider the extent of the deviation and

ensure that the justification is sufficiently compelling to support the degree of the variance.

Cavera, 550 F.3d at 189 (quoting Gall, 128 S. Ct. at 596).

III. DISCUSSION

As discussed more fully below, in light of the need to impose a sentence upon the

defendant that reflects the seriousness of the offense, promotes respect for the law, and provides

just punishment, and that has a sufficiently strong deterrent effect for this defendant and others,

the Government respectfully submits that a sentence within the advisory Guidelines range of 41

to 51 months imprisonment is entirely appropriate for Marvin Jemal.

A. A Guidelines Sentence Is Appropriate In Light of the Nature and Circumstances of the Offense, to Promote Respect for the Law, and to Provide Just Punishment

First, a substantial term of incarceration is necessary to reflect the serious nature of the

crime, to promote respect for the law, and to provide just punishment. See 18 U.S.C.

3553(a)(2)(A). Over the course of many months, the defendant fraudulently obtained funds

through ENEs Factoring Agreement by submitting false and fraudulent invoices and other

documentation to IDB Bank. The scheme, in which the defendant played a central role,

ultimately resulted in a loss to the bank of over $2 million. The defendants conduct was

calculated and intentional, and it was designed specifically to deceive the bank into providing

funds to ENE to which the defendant knew his company was not entitled. Further, the defendant

funneled a large portion approximately $1.9 million of the fraudulent proceeds through shell

company accounts and ultimately to personal bank accounts that the defendant controlled.

Thereafter, the funds were used to pay for various personal expenses of the defendant and his


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wife, including to pay down personal credit card accounts, to make payments on personal

mortgage loans, and to pay for a Porsche.

Moreover, the defendants involvement in the criminal activity was not some momentary

lapse in judgment or isolated to a single or even a few false invoices. To the contrary, the

defendants participation in this fraud lasted over many months. Here, then, the common white

collar appeal for leniency tends to understate the gravity of the underlying offenses by

compressing the defendants entire record of misconduct as if it were a single, isolated episode of

crime, a one-time or sometime thing that occurred over a lifetime of otherwise immaculate

behavior. There is a fallacy in this argument. It distorts the record. . . . United States v.

Regensberg, 635 F. Supp. 2d 306, 310 (S.D.N.Y. 2009). Such an appeal to this Courts mercy

would thus be wholly inappropriate given the nature, extent, and duration of the defendants

participation in the fraud.

In short, the defendants role was central to committing this serious fraud on IDB. The

defendant committed this fraud over a period of many months, and is therefore wholly deserving

of a sentence within the applicable Guidelines range. Such a sentence would reflect the

seriousness of her conduct, promote respect for the law, and provide just punishment.

B. A Guidelines Sentence Is Necessary to Afford Adequate Deterrence One of the most important factors that this Court must consider in imposing a sentence

under Section 3553(a) is the need for the sentence to afford adequate deterrence to criminal

conduct. 18 U.S.C. 3553(a)(2)(B). Given the inherent difficulties in detecting and pursuing

white collar financial fraud, and the defendants proven potential for engaging in dishonest acts,

a substantial term of imprisonment is necessary here.


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First, considering the nature of the fraud perpetrated by the defendant, general deterrence

is of great importance here. Unlike defendants in a gun or drug case, who often act without

reflection, there is reason to believe that individuals who engage in financial fraud can be

deterred by a substantial threat of penalties. Their actions are calculated. They choose to engage

in such white collar crime because they believe that the potential for significant financial benefits

outweighs the risk that they will be punished. General deterrence is achieved by sending a

message that such outrageous acts of fraud like the fraud perpetrated by the defendant in this

case will result in real penalties. This Courts sentence must send the important message that

when you get caught for engaging in fraud, you will go to prison. For this reason, a sentence

within the advisory Guidelines range would be appropriate for this defendant to deter others who

believe they can beat the system, fly under the radar of law enforcement, and profit from

brazen criminal financial activity.

Furthermore, a term of incarceration that achieves adequate specific deterrence is also

needed. Notwithstanding the letters submitted to the Court by defense counsel opining on the

defendants generosity, the fraud committed by the defendant reveals the defendants dishonest

and deceptive nature. The defendants crime shows that he is capable of calculated, dishonest

behavior over an extended period of time. While counsel argues that the defendant is unlikely to

recidivate given that he is 61 years old, it must be noted that the defendant committed this crime

only five years ago well after his conduct could be blamed on the defendants immaturity.

Accordingly, a sentence that includes a substantial period of incarceration is necessary to achieve

adequate deterrence.


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IV. CONCLUSION

For the foregoing reasons, the Government respectfully submits that a sentence within the

advisory Guidelines range of 41 to 51 months imprisonment for Marvin Jemal would be

sufficient, but not greater than necessary, to serve the legitimate purposes of sentencing. The

Government further requests that the Court order restitution to IDB in the amount of

$2,729,422.71.

Dated: October 31, 2014 New York, New York Respectfully submitted, PREET BHARARA United States Attorney Southern District of New York By: __________/s/_______________ Daniel S. Noble Assistant United States Attorney

(212) 637-2239


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AFFIRMATION OF SERVICE

The undersigned attorney, duly authorized to represent the United States before this

Court, hereby certifies that on the date below, he served or caused to be served the following

document(s) in the manner indicated:

SENTENCING MEMORANDUM OF THE UNITED STATES OF AMERICA

Service via electronic mail to: Benjamin Brafman, Esq. Joshua Kirshner, Esq. Counsel for Marvin Jemal Dated: October 31, 2014 __________/s/_________________ Daniel S. Noble Assistant United States Attorney (212) 637-2239


usa v marvin jemal - sentencing memorandum of u.s.a

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