Amy Kuhner Sentencing Memo

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UNITED STATES OF AMERICA :
v. : 3:12CR168 (AWT)
AMY KUHNER : DECEMBER 20, 2012
GOVERNMENTS MEMORANDUM IN AID OF SENTENCING
The defendant, Amy Kuhner, stands before the Court having been convicted of one count
of making false statements, in violation of 18 U.S.C. 1001(a)(2). For the reasons set forth
below, the Government respectfully submits that the defendant should be sentenced in a manner
consistent with the operation of the Sentencing Guidelines.
I. DISCUSSION: FACTS OF THE OFFENSE
Although the parties have agreed to a stipulation of offense conduct in the plea
agreement, in order to assist the Court in fashioning an appropriate sentence, the stipulated
conduct needs to be placed in a broader factual context.
According to the defendant, at some point in the 1990s, she decided to change the
direction of her life and to attend the Yale Divinity School. She brought a considerable
education and resum to her new field. She had graduated from Georgetown University, later
obtained an M.B.A. from UCLA, and thereafter worked for JP Morgan Chase in its foreign
exchange division. She ultimately completed her studies at Yale and obtained her Master of
Divinity degree in 1996.
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Case 3:12-cr-00168-AWT Document 23 Filed 12/20/12 Page 1 of 21
According to Kuhner, at or about the time she was at Yale, she conceived of creating a
hospice for terminally ill children. In 1996, she set up a non-profit organization known as
Sunshine House, and assembled a three-member board of trustees. She began fund raising
efforts and to research technical aspects of the project, including licensure, legislative approvals,
and regulatory issues.
The Federal Grant From HRSA
According to Kuhner, in approximately 2000, working with staff members from
Connecticuts congressional delegation, she received preliminary indications that Sunshine
House might be eligible for a federal grant to pay for part of the costs of constructing the hospice.
The grant was administered by the Health Resources Services Administration (HRSA), an agency
of the U.S. Department of Health and Human Services.
In June 2001, Kuhner submitted an initial application for the grant. She signed the
application for the grant as Executive Director of Sunshine House, and at all times Kuhner
remained the sole point of contact between Sunshine House and HRSA. In the initial
application, Sunshine House applied for $836,190 in federal funds.
In order to submit the grant, Kuhner reviewed a Grant Program Guide issued by HRSA.
The Guide contained the following paragraph:
Drawing Down of Grant Funds
Grants under this program will be awarded using the SMARTLINK access of the
Payment Management System. Funds may be drawn down as project costs are
incurred, in the same proportion as the grant is to the projected total costs.
For instance, consider a project in which the governments share is 80 percent
($400,000 grant/$500,000 total costs). The amount of funds that can be requested
for each draw request cannot be more than 80 percent of the cost incurred.
Therefore, when $50,000 of costs are incurred, $40,000 may be drawn down from
the grant. The balance should be paid for by the Grantees other sources of funds.
2
HRSA Grant Program Guide, Appendix to Governments Memorandum in Aid of Sentencing
(hereinafter App.) at A1, A10-A11 (emphasis in original).
In the initial application, Sunshine House did not provide a detailed budget for the
project, explaining, Until a site is identified, numbers provided here would merely be
academic. The application did set forth estimates of $1,000,000 for site/acquisition costs;
$250,000 for Soft Costs related to site; and $5,000,000 for Facility Construction. Because
HRSA required a grant application to provide detailed budget, on July 16, 2011, Kuhner faxed
revisions to Sunshine Houses application, in which Kuhner stated that the total cost of
constructing the minimum 20,000 square feet Sunshine House facility would be $7,806,250.
App. at A12-A14. After deducting costs that were not allowable under the grant, the total
allowable costs for construction would be $6,721,200, and the $836,190 grant would therefore be
used to fund approximately 12.44% of the total project. App. at A13. Under the line item of
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Administrative and legal expenses, Kuhner budged $250,000 of total costs, of which $191,200
was allowable. Id.
Kuhner also submitted cash basis income statements for Sunshine House for 1999 and
2000 showing that Sunshine Houses annual income for each of those years was approximately
$65,000. App. at A16-A17. According to the income statements, Sunshine House operated at a
modest loss each year, ending 2000 with $1,844 cash on hand. Id. In her detailed budget,
Kuhner stated that the non-grant portion of the construction costs would be funded by $850,000
The Government is unaware of detailed estimates to support the figures on the budget
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form Kuhner prepared. It appears that the overall figures may in part have been arrived at by
deriving figures that would result in the $836,190 grant funding between 10-15% of the overall
costs. In other words, the initial detailed budget demonstrated a familiarity with grant
requirements and a facility with deriving figures to justify the grant.
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in noncash assets, and $6,120,060 from other sources. App. at A18.
On September 13, 2001, HRSA notified Sunshine House that the grant had been
approved. App. at A21-A23. The grant was a construction grant, meaning that HRSA agreed to
fund a percentage of the costs of construction of Sunshine House. App. at A36. The Notice of
Grant Award again stated that Grant funds can only be drawn down from [The Payment
Management System] as costs are incurred, in the same proportion as the grant is to the
total project cost. App. at A30 (emphasis in original). Consistent with the budget Kuhner
submitted, the federal share was no more than 12.44 % of the project costs, and the drawdown
percentage was 10.71% of actual costs. App. at A36. In the two-page Specifics of Grant
document Kuhner signed as Executive Director of Sunshine House, the paragraph under
Restriction on Use of Grant funds stated Grant funds are not eligible for participation in . . .
administrative overhead. App. at A37. The Specifics of Grant provided that if the grantee had
not entered into a construction contract approved by HRSA within one year of the grant award
date, HRSA could consider withdrawing the grant. Id.
The initial period of the grant was about one year, from September 13, 2001 to September
22, 2002. The grant period was extended on at least two occasions, to September 31, 2005, then
finally to September 30, 2006. During 2006, it became clear that Sunshine House was not going
to meet any deadlines for beginning, let alone completing, construction. See App. at A39.
According to Kuhner, the delay was due to the inability to locate a site and obtaining the proper
property arrangements. As a result, at Sunshine Houses request, on August 15, 2006 the scope
and purpose of the grant were changed to a design only project. See App. at A39-A44. With
this designation, the grant could be used to pay expenses related to the design portion of the
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project. When Kuhner requested this change, she submitted a revised detailed budget that set the
eligible allowable costs for administrative and legal expenses at $83,000; architectural and
other engineering fees at $30,000 and other architectural and engineering fees as $723,190.
App. at A40.
Kuhners Salary
According to minutes of Sunshine Houses board of trustees meetings, the board had
approved an annual salary for Kuhner dating back to September 1996. Kuhners initial annual
salary was set at $36,000, and she was to provide her own health insurance. As it became clear
that Sunshine House did not have funds to pay Kuhners salary, it was agreed that Kuhner could
obtain retroactive compensation when funds became available. In December 1996, the board
voted Kuhner a retroactive salary increase to $43,000 annually, plus a monthly allowance of $150
for health insurance. Her salary was increased to $50,000 on June 1, 1997, and on August 1,
1998 to $75,000, plus payment of 80% of insurance. The August 1, 1998 resolution stated that if
funds were not available to pay Kuhner, Sunshine House could defer the obligation or be
discharged in full. On the boards meeting on February 22, 2006, Kuhner submitted an article
from The Nonprofit Times concerning the salaries of executive directors of nonprofit
organizations. The article stated that the average nonprofit executive directors salary was
expected to surpass $100,000 in 2006, and that the nonprofits in the health category had the
highest annual salaries, at approximately $139,000 in 2005. Kuhner also provided an analysis
showing that if her $75,000 salary had increased since 1998 at the average annual salary
increases from Money Magazine, her salary would be approximately $97,000. At that meeting,
the board voted to approve a cost of living adjustment for Kuhner increasing her salary to
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$97,000 effective January 1, 2006. On July 16, 2007, the board increased Kuhners salary to
$100,600 effective July 1, 2007. Kuhner was the only employee ever listed or paid by Sunshine
House.
As set forth below, during the early years of the federal grant period (2001-2004), Kuhner
did not receive her full salary, but in later years, she received her salary, any amount deferred,
and additional compensation, virtually all from the grant funds.
Drawdowns on the Federal Grant
The $836,190 in grant money was drawn down using the Payment Management System
(PMS), a web-based program. In order to make a drawdown, Kuhner logged into a web-based
program and transferred money from the grant to Sunshine Houses bank account, based on
Kuhners request and representation that Sunshine House had actually incurred eligible costs in
the requested amount. Kuhner was the only person from Sunshine House who handled the grant
funds and virtually the only one responsible for the bank account. Beginning on September 23,
2003 and through September 27, 2006, the grant was drawn down in 41 separate occasions, in
various amounts ranging from approximately $3,300 to $36,000. App. at A45.
How the Grant Money Was Used
During the grant period of 2001 to 2006, the $836,190 was by far the main source of
revenue for Sunshine House. Based on financial records, the Government has identified
approximately $100,000 obtained from private donations during this period as the only other
income for Sunshine House. These financial records establish that the grant funds were used
mainly to pay Kuhners salary and her health benefits, along with the employer share of taxes.
The timing of the drawdowns and salary payments to Kuhner establish that the grant funds were
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used in this fashion. Sunshine House used a payroll processing service to generate the payments
to Kuhner and related tax payments. During the period that drawdowns from the grant were
made, Kuhner received the following salary and benefits (in round amounts):
Gross Net Employer Health
Drawdown period Salary Salary Taxes Insurance
9/23/03-12/31/03 $ 93,772 65,423 7,193 2,073
2004 135,937 96,739 24,118 7,120
2005 121,491 87,514 8,352 6,276
1/1/06-9/27/06 66,732 51,980 10,822 6,827
TOTAL: 417,932 301,656 50,487 22,294
TOTAL GROSS SALARY, EMPLOYER TAXES AND HEALTH INSURANCE: $490,714
Kuhner drew these funds down and paid the amounts to herself, through the payroll
company. Except for relatively minor expenses, described below, Sunshine House did not incur
any costs other than Kuhners salary. The architect on the project had provided his services free
of charge. At Kuhners request, he agreed to accept a $20,000 token payment.
As can be seen, Kuhners annual salary exceeded the amount approved by the board of
trustees. In order to determine the basis for the salary drawn by Kuhner, the Government
attempted to determine the amount of approved salary Kuhner had deferred or not been paid
during the grant period. At the end of 2002, assuming a $75,000 annual salary in for 2001-2002,
Kuhner had been paid only a total of about $41,491, leaving a deferred amount of
approximately $108,500. Beginning in 2003, however, Kuhner began drawing an amount in
excess of the annual salary approved by the board, and as a result had wiped out any arrearage by
sometime in 2005. The following chart shows that Kuhner used grant funds to pay not only her
salary, but deferred compensation from years that predated the grant:
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Year Approved Paid Deferred Cumulative
Salary Salary Salary Deferred
2001 $ 75,000 25,540 49,460 49,460
2002 75,000 15,951 59,049 108,509
2003 75,000 99,272 (24,272) 84,236
2004 75,000 135,937 (60,937) 23,299
2005 75,000 121,481 (46,491) (23,191)
2006 97,000 96,264 736 (22,455)
2007 98,800 99,534 (734) (23,189)
2008 100,600 69,849 30,753 7,560
In sum, Kuhner used the grant funds to essentially pay 100% of her salary and benefits,
including deferred compensation, even though that was not the purpose of the grant. The grant
was initially to pay about 10.71% of actually incurred construction costs (App. at A36), and
following the amendment of the scope, to be used to pay for the technical costs of the design of
Sunshine House. At no time did HRSA agree to pay the full-time salary of Sunshine Houses
executive director, especially at an annual income that exceeded six figures and included health
benefits, nor did HRSA agree to pay Kuhner any deferred compensation she was due from
Sunshine House at the time she applied for the grant.
The rule of thumb for construction or design grants is that funding for administrative
expenses are limited to approximately 10% of any project, and it is clear Kuhner knew this. The
initial application Kuhner submitted budgeted administrative costs of approximately $92,000.
When Kuhner applied to have the nature of the grant changed to a design-only grant in August
2006, she listed $83,000 (10% of the $836,190 grant) as the allowable administrative expenses
for Sunshine House under its budget for the grant. App. at A40. The salary and benefits Kuhner
obtained from grant funds exceeded the 10% figure ($83,000) in 2003 alone, the first year she
began to use grant funds to pay herself.
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Kuhners misuse of the grant funds was not limited merely to the nature of the
expenditures; it extended to the timing of her use of the funds. HRSA had advised Sunshine
House the grant period would finally close at the end of September, 2006, and that grant funds
could only be used for actual expenses incurred before that date. As the grant period was
closing, Kuhner continued to draw down the grant funds, even though she had not incurred any
expenses, including her salary. Kuhner then began to transfer tens of thousands of dollars out of
Sunshine Houses bank account, and into a money market account. On May 31, 2006, she
transferred $116,000 into the money market account; on June 30, 2006, another $95,000, and
then $45,000 more on July 31, 2006. Over time, this money was transferred back to Sunshine
House and used mainly to pay Kuhners salary and benefits following the end of the grant on
September 27, 2006, including into 2007 and 2008. All told, the following chart sets forth the
amount Kuhner received from Sunshine House, in round figures:
Gross Net Employer Health
Year Salary Salary Taxes Insurance
2003 $ 99,272 70,523 7,193 6,289
2004 135,937 96,739 24,118 7,120
2005 121,491 87,514 8,352 6,272
2006 96,264 75,848 12,578 7,489
2007 99,534 76,796 7,641 9,698
2008 69,849 57,555 5,726 6,411
TOTAL: 622,348 464,976 65,612 43,282
GROSS SALARY, EMPLOYER TAXES, AND HEALTH INSURANCE: $ 731,242
Kuhners False Statements to HRSA
Toward the end of the drawdown period and as the grant was closing, HRSA asked
Sunshine House to provide an accounting for its expenditures of grant funds. HRSA also asked
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for a copy of Sunshine Houses Owner-Architect agreement. According to the architect on the
project, during this time Kuhner approached him with one page from a standard American
Institute of Architects (AIA) contract showing his fixed lump sum fee for Preliminaries and
Construction Document preparation for Sunshine House to be $723,190, the amount Kuhner
had previously stated to HRSA constituted Other architectural and engineering fees. See App.
at A40. The architect recalled Kuhner as being in a panic because Kuhner was afraid she
would lose the federal grant money if she didnt show she had a contract with an architect. Even
though he had been paid only $20,000, the architect did not want or expect to be paid any
additional fees at that time, having understood his services to be pro bono. He nonetheless
signed the page stating that the value of his services on the project would be $723,190, and
Kuhner submitted this document to HRSA. App. at A46.
HRSAs review of the grant continued into July 2007. Through a series of emails,
Kuhner suggested to the architect that the value of his services to Sunshine House through July
2007 was approximately $594,225. Kuhner derived this figure by suggesting the final cost of the
project to be $18 million, with the architects design fee as 6%, with 55% of the project being
completed, for a end result of $594,225. The architect responded via email, sure, if only I could
get that in the real world and suggested a completion percentage of 47.5%. At Kuhners
request, the architect prepared a Statement of Account on his letterhead stating that the value
of his services to date were $594,225. In order to agree with the $594,225 figure, the architects
fee was changed to 6.95% of the construction costs. App. at A48.
In response to HRSAs inquiry, on July 27, 2007 Kuhner provided HRSA with a written
statement that Sunshine House incurred the following Costs to Date:
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1. Administrative and legal expenses: Includes $ 83,000
costs of grant administration and some costs of
administrative time supporting technical aspects
of this project.
2. Architectural and engineering: Includes costs of $594,225
architectural services and design process work.
3. Other architectural and engineering fees: Includes $ 61,274
costs of engineering services and environmental
assessment.
App. at A47. To support the $594,225 figure, Kuhner provided the architects Statement of
Account document generated at her request. App. at A48.
The Costs to Date statement made it appear as though Sunshine House had incurred
architectural costs in the amount of $594,225, which was not true. Kuhner submitted the
Statement of Account from the architect to support the $594,225 figure, even though the
architect had received only $20,000 and was not going to be paid any additional fees. The
$61,274 figure in Other architectural and engineering fees was supported by actual invoices
from vendors for work done at Sunshine House. As noted above, it is significant that Kuhner
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used the rule of thumb calculation of 10% of the grant amount for administrative or overhead
costs.
HRSA also asked for a financial statement from Sunshine House for the grant period in
order to verify any costs Sunshine House claimed to have incurred. Kuhner met with an
accountant who was familiar with Sunshine House because the accountant had lost a child at a
Some of the invoices were for work done after the grant had closed in September 2006.
2
Because these costs were not actually incurred during the grant period, they would ordinarily
not be allowable under the terms of the grant. For purposes of this case and sentencing, however,
HRSA and the Government have treated all of the invoiced costs as allowable, which reduces any
loss amount attributable to Kuhner.
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young age. Kuhner provided the accountant with a Statement of Income and Expenditures for
Sunshine House for the grant period, September 2001 through September 2006, and asked for
assistance in typing up the final version of the statement. The accountant attempted to tie out the
various entries on the statement using Sunshine Houses records, but Kuhner prepared and typed
the final version of the statement that was submitted to HRSA. In the Income section of the
statement sent to HRSA, Kuhner had added in, under donations, the value of the architects
donated services of $723,190, and then listed that same figure in Expenditures as having
been expended for Architectural Design Fees. App. at A49. The statement also included
$545,563 in Employee Salaries, Taxes, Benefits. By misleadingly listing the donated
architectural work as income and then falsely deducting it as an expenditure, Kuhner was able to
disguise the fact that the grant funds were the bulk of Sunshine Houses income, and that the
grant had been used mainly to pay the salary of Sunshine Houses sole employee, Kuhner.
During the investigation of this case in 2011, the accountant reviewed the Statement of Income
and Expenditures Kuhner had provided to HRSA and described the statement as very misleading.
After receiving and reviewing these figures, HRSA began to realize that Sunshine House
appeared to have drawn down more grant funds than seemed justified, and the project had still
not been completed. An investigation was opened thereafter.
II. GUIDELINE CALCULATION
Section 2B1.1 of the Guidelines is used to determine the offense level for violations of 18
U.S.C. 1001. Under 2B1.1, for purposes of the Guidelines, loss is the greater of actual or
intended loss. U.S.S.G. 2B1.1, Application Note 3. Actual loss is defined as the
reasonably foreseeable pecuniary harm that resulted from the offense. Id, n. 3(A)(i).
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According to HRSA, their actual loss is $671,916, which is the amount of money HRSA would
disallow under the grant and seek to recoup. App. at A53-A54. HRSA essentially credited
Sunshine House with $83,000 for allowable administrative expenses, the $61,274 in actual
vendor costs, and the $20,000 Sunshine House paid to the architect. Id. The remaining amount,
most of which was used to pay Kuhners salary, is HRSAs loss under their calculations.
This loss was reasonably foreseeable to Kuhner. When HRSA began to audit the grant,
Kuhner realized she was in trouble. She knew that the grant was not intended to be used to pay
her salary, and that she could not establish that the money had been spent for any other purpose.
In an attempt to hide the use of the grant funds, Kuhner solicited statements from the architect
that made it appear that he had been paid by Sunshine House, or that Sunshine House had
incurred actual expenses for the architects work. She submitted these misleading documents and
statements based on them to HRSA in an attempt to hide the fact that she had paid herself with
the grant funds. There is no doubt that Kuhner foresaw that if she told HRSA the truth, HRSA
would at the very least seek to recoup the funds. The false statements were designed to hide
HRSAs loss from the agency.
The alternate calculation of loss under the Guidelines is intended loss, which is defined
as the pecuniary harm that was intended to result from the offense. U.S.S.G. 2B1.1,
Application Note 3(A)(ii). It may well be that in the early stages of her misuse of the funds,
Kuhner had not intended to harm HRSA. By the time the grant closed, however, and Kuhner was
making the false statements to HRSA, she plainly intended to hide her diversion of the grant
funds. She intended to hide the full amount of her salary and benefits from HRSA when she told
them Sunshine House had incurred $594,225 in architectural and other fees, and when she
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provided a false income and expenditure statement.
In her sentencing memorandum, Kuhner argues that her reimbursements for salary and
benefits may have been contrary to the terms of the grant, but that does not make them criminal
or losses attributable to the retrospective accounting. Deft. Sent. Mem. [doc. no. 22] at 3. This
argument seeks to divorce the false statement from the reason the statement was made. The
intent of the statement was to prevent HRSA from knowing where the money went. When
Kuhner was falsely drawing down the grant funds, in effect representing to HRSA that Sunshine
House had actually incurred expenses and, prior to the change in scope of the grant in August
2006, had actually incurred construction expenses those false statements were surely causing a
loss to HRSA. Kuhner provides no support for her claim that conduct predating the actual false
statement cannot be considered as relevant conduct under 1B1.3 of the Guidelines. The mere
fact that when asked, Kuhner did not immediately tell HRSA the grant funds were used to pay
her salary and benefits indicates that her use of the funds was knowingly wrongful at the time it
occurred, and was not a well-intentioned mistake. Contrary to her argument here, Kuhners own
actions indicate that the false statement was part of a continuing course of conduct.
The Government acknowledges that in pleading guilty to the false statement charge,
Kuhner has not admitted to possessing an intent to defraud at the time she drew down the grant
funds. Kuhner must acknowledge, however, that her use of the funds to pay her salary was a
material omission to HRSA, and that her representations to HRSA each time she drew down the
funds were materially false. The false statement charged in the Information came at the end of
other untruthful statements used to get the funds in the first place, and cannot be separated from
them. By way of contrast, if Sunshine House had received all of the $836,190 in a lump sum at
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the outset of the contract and placed that money in a bank account from which Kuhner later drew
her salary, her argument that her false statement at the conclusion of the grant was unrelated to
any loss might arguably be stronger. In this case, however, every time Kuhner drew down on the
grant, she was representing to HRSA that Sunshine House had actually incurred those costs in
eligible expenses, and that the grant could be used to pay a percentage of those expenses.
Moreover, assuming arguendo that one were to credit Kuhners assertion that she had not
knowingly acted wrongfully in using grant funds to pay her salary, there are no circumstances by
which Kuhner can justify her drawing down grant funds before Sunshine House had incurred any
expenses (including her salary) and moving those funds to the money market account. When
Kuhner drew down funds in large amounts in 2006, then moved a total of $256,000 into the
money market account between May 31, 2006 and July 31, 2006, she was plainly acting without
any good faith whatsoever. She has no justification for asserting that she believed that HRSA
agreed under the grant to pay for her salary in 2007 and 2008, long after the grant period had
closed, or that she had any authority to draw down funds in advance of Sunshine House incurring
any costs.
In sum, it is plain that Kuhners false statements were designed to conceal relevant
conduct under the Guidelines. Even if the guideline loss amount were not HRSAs claimed
actual loss, Kuhners false statements were designed in a criminal manner to conceal misuse of a
some portion of the grant funds. The Guidelines provide that in determining loss for Guidelines
purposes, the Court need only make a reasonable estimate of the loss, (U.S.S.G. 2B1.1,
application note 3(C)), and given the advisory nature of the Guidelines, an expanded range
would be sufficient to guide the Court. See United States v. Crosby, 397 F.3d 103, 112 (2d Cir.
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2005) (sentencing court need not resolve disputed issues to determine which of two ranges
actually applies). Using HRSAs actual loss figure of $671,916 results in a total offense level of
17 after credit for acceptance, for a range of 24 to 30 months before any adjustments. Before
receiving HRSAs calculation of its actual loss, the PSR calculated the Guideline loss as
Kuhners gross salary and benefits ($622,348 + 43,282 $665,630) minus an allowable $83,000,
resulting in a loss of $582,630 and the same total offense level of 17. (This method uses
approximately the gross gain to the defendant as the loss amount). An alternate loss figure may
be the $256,000 which Kuhner drew down in advance of incurring any expenses and transferred
to the money market account, for which there can be no justification. A loss amount of between
$200,000 and $400,000 yields an offense level of 15 and a range of 18 to 24 months. The
Government submits that the combined range of 18 to 30 months is a sufficient starting point
from which the Court can begin to consider any arguments concerning departures. See Crosby,
397 F.3d at 112 (sentencing court may consider two adjacent guideline ranges without resolving
disputed issues); U.S.S.G. 2B1.1 application note 3(C) (sentencing court need only make a
reasonable estimate of loss for Guidelines purposes).
III. DISCUSSION
This case presents the Court with somewhat unusual facts that operate at cross purposes
when weighed using the factors the Court must consider in determining the sentence to be
imposed under 18 U.S.C. 3553(a). The Government acknowledges that this defendant is
3
In relevant part, 18 U.S.C. 3553(a) provides as follows:
3
(a) Factors to be considered in imposing a sentence. -- The court shall impose a
sentence sufficient, but not greater than necessary, to comply with the purposes set forth in
paragraph (2) of this subsection. The court, in determining the particular sentence to be imposed,
shall consider --
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highly unlikely to reoffend, and that at other times in her life, by all appearances seems to be
motivated by a genuine compassion for others and a desire to serve and heal those in need,
perhaps more so since her conviction. She came to commit her crime while engaged in a
laudable effort, and one to which she brought significant effort and dedication.
It cannot be, however, that those praiseworthy ends obscure the wrongful means and
significant legal and ethical breaches the defendant knowingly committed in her work. The
public certainly has a right to expect that public funds will be properly handled, and not diverted
from the general purpose of helping seriously ill children to the specific purpose of helping one
individual. At a time when federal dollars, and in particular federal grant dollars, are both
scarcer and needed more than in long memory, misuse of such funds is a serious offense that
cannot go unsanctioned. When Amy Kuhner founded Sunshine House and obtained a federal
grant to help build a childrens hospice, she was not entitled to be supported at a significant
salary and benefits with taxpayer dollars, especially when those very same dollars were supposed
(1) the nature and circumstances of the offense and the history and characteristics of the
defendant;
(2) the need for the sentence imposed --
(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;
(3) the kinds of sentences available;
(4) the kinds of sentences and the sentencing range established for --
(A) the applicable category of offense committed by the applicable category of
defendant as set forth in the guidelines ...
(5) any pertinent policy statement [issued by the Sentencing Commission]..
(6) the need to avoid unwarranted sentence disparities among defendants with similar
records who have been found guilty of similar conduct; and
(7) the need to provide restitution to any victims of the offense.
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to be used to pay professionals like architects and construction workers to bring the hospice into
actual existence. Having obtained the federal grant to assist in the endeavor, it was incumbent
upon Kuhner either to get a job to support herself, or to raise donations or other grants to pay
Sunshine Houses administrative costs, including her salary. Instead, Kuhner took the ethical and
legal shortcut, if not to enrich herself, certainly to ensure that she had no worries about her
personal financial circumstances.
Kuhner engaged in this conduct despite being surrounded by individuals who not only
were every bit as committed to the vision of Sunshine House as she was, but who felt a personal
bond and respect for Kuhner. At no time during the four-plus years that Kuhner used grant funds
to pay herself did she approach trustees or others involved to explain what she had done and seek
to make it right. Even when given the opportunity by HRSA to simply tell the truth about where
the grant money had gone, she lied, and caused others involved in supporting Sunshine House,
including the architect and an accountant, to unknowingly aid her in creating her false statements.
Given Kuhners extensive educational training and her life experience, there is no doubt
that she clearly understood the grant restrictions and the proper use of the funds. The project
guidelines and communications from HRSA are written in plain English and are not complex.
Kuhner herself drafted the grant application, and displayed a sophistication in her dealings with
HRSA. The manner in which she reverse-engineered the amount she claimed to have paid the
architect, and her skillful manipulation of the figures on the income statement she provided to
HRSA show that this was not a case of mere negligence or inattention. In fact, Kuhners
competence led others involved in Sunshine House to trust in her day-to-day management of the
project and to defer to her explanations concerning grant funds or other financial matters. This
18
deference provided Kuhner with the opportunity to commit her crime without interference or
oversight, and enabled her to conceal it.
Thus, the nature and circumstances of Kuhners offense belie any assertion that she was
misled by complex grant rules or merely exceeded suggested caps on certain categories of
expenses under the grant. Rather, she appears to have been motivated by the same mixture of
self-righteous entitlement that motivates other white collar criminals to, for example, lie on their
income tax forms because they believe they are overtaxed, or upcode claims for their medicals
services because they believe they are underpaid by insurance companies, or to violate securities
laws to realize larger profits. And as is the case in those crimes, the salient point to be
4
considered in imposing sentence is general deterrence, which 3553(a) casts as the need to
promote respect for the law. The vast majority of citizens pay their fair share of taxes, or submit
accurate clams for payment, and adhere to the law because they believe that those who do not
will be punished. As a result, the tax system and the federal grant system function by trusting in
the truthfulness of citizens who follow the honor codes inherent in those systems. A lack of
appropriate sanction for criminal acts affecting those programs skews the calculus of those who
may be tempted to engage in dishonorable or illegal conduct.
Moreover, the defendants offense involved the defendants failure to tell the truth about
how she had handled hundreds of thousands of dollars in taxpayer funds over a period of several
Such conduct cannot accurately be described as more of a consequence of [a] self-
4
described compulsion to over-achieve than any criminal intent. Cf. PSR 74, Deft. Sent. Mem.
at 9. Anyone who knows right from wrong and that certainly includes highly educated over-
achievers is not entitled to blame deliberately criminal conduct on a desire to succeed or
achieve, any more than a strong desire to win the game exonerates one who cheats. To believe
otherwise is to hold highly motivated and skilled criminals less culpable than their lazier
counterparts.
19
years. The scope of her conduct and her abuse of the public fisc clearly involved a serious crime,
and the need for the sentence to provide just punishment for the offense should reflect these
facts.
The Government acknowledges that this case differs from criminal cases where a
defendant venally from the outset intends to defraud his victim through utter falsehoods, or
embezzles from his employer in order to finance an extravagant lifestyle. In this regard, because
the guideline range encompasses such other crimes, it may be that the range slightly overstates
the severity of this particular offense. In addition, given the nature of her crime, the defendant has
already felt a particular public disapprobation that, while the sign of healthy community,
nonetheless meaningfully humbles individuals who might otherwise be respected as women of
accomplishment. The Presentence Report and letters submitted to the Court indicate a profound
period of reflection by the defendant on her conduct and the circumstances that led her to this
point. By all appearances, after serving her sentence, the defendant will resume the law-abiding
path she traveled for nearly all of her life.
The sentence should, however, reflect the distinct importance of federal grant funds and
the serious consequences that must result from misrepresentations about the use of such funds.
To require those to whom grant funds are entrusted to simply tell the truth about what they did
with the money is a basic and obvious legal standard, rightfully expected by the taxpayers who
provide the funds. As a result, an individuals violation of that elementary requirement should
result in a period of confinement in order to deter others from misusing or misleadlingly
accounting for federal funds, regardless of the particular personal circumstances of the individual
who committed the violation.
20
In other words, the need for the sentence to provide general deterrence and just
punishment for the offense outweighs Amy Kuhners individual circumstances. Based on
Kuhners talents and motivations, a sentence that provides her an opportunity for a substantial
period of community service as part of supervised release may assist her in becoming established
and setting out in the right direction to the betterment of her fellow citizens.
IV. CONCLUSION
For all of the foregoing reasons, the Government respectfully submits that the Court
should sentence the defendant to a period of confinement and supervised release, consistent with
the operation of the Guidelines and the considerations of 18 U.S.C. 3553(a).
Respectfully submitted,
DAVID B. FEIN
UNITED STATES ATTORNEY
/s/
DAVID J. SHELDON
ASSISTANT UNITED STATES ATTORNEY
Fed. Bar No. ct07997
157 Church Street, 23d Floor
New Haven, CT 06510
(203) 821-3700
fax: (203) 773-5378
david.sheldon@usdoj.gov
CERTIFICATION
I hereby certify that on December 20, 2012, a copy of the foregoing was filed
electronically and served by mail on anyone unable to accept electronic filing. Notice of this
filing will be sent by e-mail to all parties by operation of the Courts electronic filing system or
by mail to anyone unable to accept electronic filing as indicated on the Notice of Electronic
Filing. Parties may access this filing through the Courts CM/ECF System.

/s/
DAVID J. SHELDON
21
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
UNITED STATES OF AMERICA :
v. : 3:12CR168 (AWT)
AMY KUHNER : DECEMBER 20, 2012
APPENDIX TO
GOVERNMENTS MEMORANDUM IN AID OF SENTENCING
Table of Contents
Excerpt from HRSA Grant Program Guide A1
Sunshine House Supplemental Grant Application A12
HRSA Notice of Grant Award A21
Specifics of Grant Acceptance A37
Application for Change of Scope to Grant A39
List of Drawdowns on Sunshine House Grant A45
Signature Page of AIA Document Submitted to HRSA A46
Costs to Date Submitted by Kuhner A47
Statement of Income and Expenditures for Grant Period A49
HRSA Statement of Loss A53
Case 3:12-cr-00168-AWT Document 23-1 Filed 12/20/12 Page 1 of 56
A1
A2
A3
A4
A5
A6
A7
A8
A9
A10
A11
A12
A
1
3
A14
A15
A16
A17
A18
A19
A20
A21
A22
A23
A24
A25
A26
A27
A28
A29
A30
A31
A32
A33
A34
A35
A36
A37
A38
A39
A
4
0
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A42
A43
A44
1

INQUIRY: Payment Data Listing Subaccts(if any), else same as PAY DATE: 2010
TIME: 03:11:07 PM
*** SEARCH PARAMETERS ***********************************
PIN:
*********************************************************
*ACCT** *PIN* ****EIN***** *****DUNS***** ********Organization Name********
Sunshine House, Inc.
HHS-REG: 01 STATE: CT PMT: ACH STOP: N MAN-REV: N 272: File GROUP: F21 USER: VNK5PA
T/C* ***DEBIT** **POSTED** ******AMOUNT****** *DATE**SCHED* **CONFIRM*
927 09/27/2006 09/26/2006 30,178.00 060926 93900 4031734687
927 07/19/2006 07/18/2006 16,200.00 060718 73599 4031656960
927 07/03/2006 06/30/2006 25,600.00 060630 63534 4031641401
927 06/23/2006 06/22/2006 35,800.00 060622 63497 4031595086
927 05/26/2006 05/25/2006 27,150.00 060525 53385 4031564695
927 05/15/2006 05/12/2006 34,200.00 060512 53332 4031551298
927 05/01/2006 04/28/2006 13,700.00 060428 43271 4031535232
927 04/25/2006 04/24/2006 29,680.00 060424 43246 4031527264
927 04/11/2006 04/10/2006 14,760.00 060410 43188 4031512287
927 04/06/2006 04/05/2006 36,420.00 060405 43171 4031507689
927 03/21/2006 03/20/2006 23,370.00 060320 33097 4031488426
927 02/27/2006 02/24/2006 32,500.00 060224 23000 4031462365
927 01/31/2006 01/30/2006 18,850.00 060130 13889 4031431773
927 12/30/2005 12/29/2005 6,975.00 051229 123769 4031399418
927 12/29/2005 12/28/2005 10,715.00 051228 123764 4031397848
927 12/14/2005 12/13/2005 9,450.00 051213 123702 4031381223
927 11/23/2005 11/22/2005 19,170.00 051122 113621 4031359317
927 11/15/2005 11/14/2005 24,310.00 051114 113585 4031348847
927 10/31/2005 10/28/2005 22,923.00 051028 103525 4031331577
927 09/29/2005 09/28/2005 9,298.00 050928 93395 4031294581
927 08/30/2005 08/29/2005 7,503.00 050829 83270 4031260670
927 06/30/2005 06/29/2005 12,656.00 050629 63021 1074237664
927 05/26/2005 05/25/2005 10,686.00 050525 53878 1104879243
927 04/26/2005 04/25/2005 17,415.00 050425 43744 1053139200
927 04/01/2005 03/31/2005 17,642.00 050331 33641 1055696597
927 02/28/2005 02/25/2005 10,769.00 050225 23497 1104560327
927 01/28/2005 01/27/2005 11,452.00 050127 13380 1104478929
927 12/30/2004 12/29/2004 8,110.00 041229 123262 1095562249
927 12/17/2004 12/16/2004 17,462.00 041216 123214 1095561021
927 09/29/2004 09/28/2004 16,508.00 040928 93893 1095272660
927 08/27/2004 08/26/2004 22,779.00 040826 83763 1043543558
927 07/30/2004 07/29/2004 26,055.00 040729 73647 1046106063
927 06/29/2004 06/28/2004 24,853.00 040628 63515 1043330156
927 05/12/2004 05/11/2004 17,338.00 040511 53324 1043225991
927 03/31/2004 03/30/2004 13,970.00 040330 33145 1048366791
927 02/13/2004 02/12/2004 7,914.00 040212 23956 1042933207
927 12/31/2003 12/30/2003 3,364.00 031230 123789 1033957611
927 12/11/2003 12/10/2003 18,374.00 031210 123712 1033912502
927 10/31/2003 10/30/2003 21,547.00 031030 103552 1033785321
927 10/27/2003 10/24/2003 88,000.00 031024 103528 2078172077
927 09/23/2003 09/22/2003 20,544.00 030922 93388 1036286443
PIN:A3281 ACC:A3281G1 836,190.00 Total Advances Listed Pay Hits: 41

A45
A46
A47
A48
A49
A50
A51
A52
A53
A54
CERTIFICATION
I hereby certify that on December 20, 2012, a copy of the foregoing was filed
electronically and served by mail on anyone unable to accept electronic filing. Notice of this
filing will be sent by e-mail to all parties by operation of the Courts electronic filing system or
by mail to anyone unable to accept electronic filing as indicated on the Notice of Electronic
Filing. Parties may access this filing through the Courts CM/ECF System.

/s/
DAVID J. SHELDON

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