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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
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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
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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.
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“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.
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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.
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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).
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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
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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
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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
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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
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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 12 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)robert_wagner@fd.org
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)bpollack@milchev.comAttorneys for Defendant Edward Okun
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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) 648-5033Carolyn_Grady@fd.org
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