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Case 3:10-cr-00035-JCH Document 118 Filed 01/18/11 Page 1 of 15

UNITED STATES DISTRICT COURT


DISTRICT OF CONNECTICUT

UNITED STATES OF AMERICA :


:
v. : CRIMINAL No. 3:10CR35(JCH)
:
SUSAN A. CURTIS AND : January 18, 2011
GARY J. STOCKING, JR.

MEMORANDUM IN CONNECTION WITH CHANGE OF PLEA HEARING

This memorandum is submitted in connection with the change of plea hearing of defendant

Susan Curtis. The change of plea hearing is currently scheduled before this Court for January 18,

2011. As set forth below, the Government respectfully requests that the Court – consistent with its

usual practice – fully and completely canvas the defendant on all of her rights including those set

forth in Rule 11, the elements of the offenses to which she intends to enter a plea of guilty, the

maximum possible penalties, and the collateral consequences associated with entering a plea of

guilty to the felony counts for which she intends to enter a plea of guilty. The Government also

respectfully requests that the Court confirm that the defendant understands that she is entering her

guilty plea without any promises from the Government and that she is not relying on any

representations by the Government in entering her plea. The Government also respectfully requests

that the Court inform the defendant of the principal of acceptance of responsibility as well as the

possible additional penalties associated with perjury if she were to knowingly provided false

information under oath either during her plea colloquy or at the trial of the above captioned matter.

Finally, the Government respectfully submits this memorandum in aid of the Court’s

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establishing a sufficient factual basis and a complete unraveling of the offenses such that the Court

can accept the change of plea. The Government also respectfully requests that the Court advise the

defendant that any statements she makes at the hearing and her guilty plea itself will be admissible

against her at the trial of the above captioned matter.

The Charges and Elements

The defendant has indicated that she intends to enter a plea of guilty to Counts One, Three,

Five, Six, Seven, and Eight of the Second Superseding Indictment. The defendant is charged in

Counts One and Three with bank fraud in violation 18 U.S.C. § 1344, and in Counts Five, Six,

Seven, and Eight with filing a false tax return in violation of 26 U.S.C. § 7206(1).

The Government respectfully requests that the defendant be canvassed about and indicate that

she understands that to be guilty of these offenses, each of the essential elements of the respective

offenses must be satisfied as set forth below. As to the counts of bank fraud:

First, that there was a scheme to defraud a bank or a scheme to obtain money or funds owned

or under the custody or control of a bank by means of materially false or fraudulent pretenses,

representations or promises, as charged in the indictment;

Second, that the defendant executed or attempted to execute the scheme with the intent to

defraud the bank; and

Third, that at the time of the execution of the scheme, the bank had its deposits insured by

the Federal Deposit Insurance Corporation.1

As to the counts of filing a false tax return:

First, the defendant made and subscribed a return which was false as to a material matter;

1
See Sand Jury Instructions 44-9.

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Second, the return contained a written declaration that it was made under the penalties of

perjury;

Third, the defendant did not believe the return to be true and correct as to every material

matter, which in this case was taxable income; and

Fourth, the defendant falsely subscribed to the return willfully, with the specific intent to

violate the law.

The Penalties

The Government respectfully requests that the defendant be canvassed about and indicate that

she understands that bank fraud carries a maximum penalty of 30 years imprisonment and a fine of

$1,000,000 on each count and that filing a false tax return carries a maximum penalty of three years

imprisonment and a $100,000 fine on each count. Additionally, under 18 U.S.C. § 3583, for Counts

One and Three, the Court may impose a term of supervised release of not more than five years and

for Counts Five through Eight the Court may impose a term of supervised release of not more than

three years, to begin at the expiration of any term of imprisonment imposed. The defendant should

understand that should she violate any condition of the supervised release during its term, she may

be required to serve a further term of imprisonment of as much as three years on Counts One and

Three and two years on Counts Five through Eight, with no credit for the time already spent on

supervised release. The defendant also is subject to the alternative fine provision of 18 U.S.C.

§ 3571(d). Under this section, the maximum fine that may be imposed on the defendant is the

greatest of (i) twice the gross gain to the defendant resulting from the offense; or (ii) twice the gross

loss resulting from the offense. The Government currently estimates the loss to be approximately

$6.6 million, which could result in a fine of as high as $13.2 million. In addition, pursuant to

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18 U.S.C. § 3013, the defendant is obligated to pay a special assessment of $100 on each count of

conviction. Moreover, the defendant is also subject to make mandatory restitution which could be

as high as $6.6 million. Further, should the Court impose a fine or restitution of more than $2,500

as part of the sentence, interest may be charged on the unpaid balance of the fine or restitution not

paid within 15 days after the judgment date pursuant to 18 U.S.C. § 3612(f), unless otherwise

ordered.

Restitution

The Government respectfully requests that the defendant be canvassed about and indicate that

she understands that in addition to the other penalties provided by law, the Court must also order that

the defendant make restitution under 18 U.S.C. § 3663A, and the Government fully expects to seek

restitution on behalf of all victims consistent with the provisions of § 3663A. The scope and effect

of the an order of restitution are set by the Court, but generally restitution is payable immediately

unless otherwise ordered by the Court. The Government estimates that restitution in the amount of

$6.6 million will be ordered, which represents the amount of money fraudulently obtained by the

defendant and her co-schemers from Webster Bank between 2002 and 2009 through the use of a

sham companies called New House LLC and Equity Realty LLC and the money fraudulently

obtained from Bank of America (less any funds eventually recovered from the collateral) as a result

of the bank fraud as charged in Count Three.

With regard to the tax offenses, the tax due and owing for the years in question including

penalties and interest will be due to the IRS.

Forfeiture

The Government respectfully requests that the defendant be canvassed about and indicate that

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she understands that it is the Government’s intention that, upon conviction of the charges of bank

fraud alleged in Counts One and Three of the Second Superseding Indictment, it will seek forfeiture

to the United States of America pursuant to 18 U.S.C. § 982(a)(2)(A), all right, title, and interest in

any and all property, real or personal, which constitutes or is derived from proceeds traceable to a

violation 18 U.S.C. § 1344, including but not limited to the items listed in the forfeiture count of the

Second Superseding Indictment.

The Sentencing Guidelines

Applicability

The Government respectfully requests that the defendant be canvassed about and indicate that

she understands that the Court is required to consider the applicable Sentencing Guidelines as well

as the other factors enumerated in 18 U.S.C. § 3553(a) to tailor an appropriate sentence in this case.

The defendant should understand that the Sentencing Guidelines determinations will be made by the

Court, by a preponderance of the evidence, based upon input from the defendant, the Government,

and the United States Probation Office. The defendant should further indicate that she understands

that she has no right to withdraw her guilty plea if her sentence or the Guidelines application is other

than she anticipated.

Estimated Sentencing Guidelines Calculation

As the Court is well aware, there is no agreement regarding the defendant’s potential

Sentencing Guideline range pursuant to the United States Sentencing Guidelines. The Government

respectfully requests that the defendant be canvassed about and indicate that she understands that the

Government currently estimates that the defendant’s applicable Sentencing Guidelines could be

determined to be at least a level 33 resulting in a range of 135-168 months of imprisonment and a

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fine up to twice the gross gain or loss pursuant to 18 U.S.C. § 3571(d) and U.S.S.G. § 5E1.2(c)(4).

Moreover, the defendant should indicate that she understands that this is not a representation that the

Government will recommend this range or that the Government agrees to advocate for only this level

and range or that the Government will take the position that a sentence within this range would be

presumptively reasonable. To the contrary the defendant should understand that this calculation is

merely an estimate based on the below referenced assumptions. Further, the Government

respectfully requests that the defendant be canvassed about and indicate that she understands that her

actual Sentencing Guidelines range has not yet been determined and that the final determination

could possibly be higher based on the Court’s findings.

The estimate of a level 33 is reached as follows: the base offense level under U.S.S.G. §

2B1.1(a)(1) would be 7. Under U.S.S.G. § 2B1.1(b)(1)(J), the offense level could be increased by

18 based on a loss that exceeds $2,500,000 but not more than $7,000,000.2 The offense level could

be further increased by 2 levels pursuant to § 2B1.1(b)(9)(C) because the defendant’s offense could

be found to have involved sophisticated means. The offense level could be further increased by 2

levels pursuant to § 2B1.1(b)(14)(A) because the defendant derived more than $1,000,000 in gross

receipts from one or more financial institutions. The Court may also find that an upward adjustment

of 2 levels is applicable for the defendant’s leadership role in the offense pursuant to U.S.S.G.

§ 3B1.1(c). The Court may also find that an upward adjustment of an additional 2 levels is

applicable for the defendant’s abuse a position of trust, pursuant to U.S.S.G. § 3B1.3. The resulting

2
This loss estimate is based on the estimated losses of Webster Bank and of the
Bank of America (the victim of mortgage fraud charged in Count 3) totaling approximately $6.6
million, however this loss figure could be found to be greater depending on the value of the
collateral in Count 3 at the time of sentencing and other factors that may be included in the total
economic loss.

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offense level would be level 33 which would yield a range of 135-168. This estimate is reached

without any consideration of any further adjustment for perjury or obstruction of justice which could

result if the defendant were found to have knowingly provided false information under oath either

during her plea colloquy or at the trial of the above captioned matter.

Acceptance of Responsibility

The Government respectfully requests that the defendant be canvassed about and indicate that

she understands that by entering a plea of guilty to certain counts, the Government is not agreeing

to recommend or required to recommend that the Court reduce by two levels the defendant’s

adjusted offense level under § 3E1.1(a) of the Sentencing Guidelines, for acceptance of

responsibility. Moreover, The defendant should understand that by entering a plea of guilty to

certain counts the Government is not required and does not intend to file a motion with the Court

pursuant to § 3E1.1(b) recommending that the Court reduce defendant’s adjusted offense level one

level.

The Government respectfully requests that the defendant be informed and indicate that she

understands that “a defendant who enters a guilty plea is not automatically entitled to an adjustment

for acceptance of responsibility.” United States v. Ortiz, 218 F.3d 107, 108 (2d Cir. 2000). Accord

United States v. Echevarria, 33 F.3d 175, 179 (2d Cir. 1994) (“a downward adjustment for

acceptance of responsibility is not automatically awarded as a result of a guilty plea” ). When a

defendant decides to plead guilty to an offense, “the district court may require a candid and full

unraveling, and need not accept lies or equivocation.” United States v. Reyes, 9 F.3d 275, 279 (2d

Cir. 1993). The Court is entitled to “a credible and complete explanation, evincing remorse or

contrition, for the conduct surrounding the . . . offense of conviction.” Id. at 280 (internal quotations

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omitted). In Reyes, the defendant equivocated, “admitt[ing] only that which could not be denied

under the circumstances.” Id. at 281. Thus, although the defendant in that case “accepted

responsibility for conduct that satisfie[d] the bare essentials of the offense of conviction, his

explanation of his conduct was, in the eyes of the district judge, ‘unbelievable.’” Id. Accordingly,

because a district court may conclude that an incomplete description of offense conduct on the part

of the defendant is inconsistent with acceptance of responsibility, the Second Circuit affirmed the

district court’s denial of the two-level downward adjustment. Id.

As the Commentary to the Guidelines makes clear, defendants are not entitled to an

adjustment “as a matter of right.” U.S.S.G. § 3E1.1, Application Note 3. The Sentencing Guidelines

state that “[t]he sentencing judge is in a unique position to evaluate a defendant’s acceptance of

responsibility. For this reason the determination of the sentencing judge is entitled to great deference

on review.” U.S.S.G. § 3E1.1, Application Note 5. See also Reyes, 13 F.3d at 640 (“a district

court's determination of whether a defendant has accepted responsibility is a factual finding that will

not be disturbed unless it is ‘without foundation.’”).

Obstruction of Justice

The Government respectfully requests that the defendant be canvassed about and indicate

that she understands that if the Court were to conclude that she willfully obstructed or impeded the

administration of justice or endeavored to do so, by, for instance, knowingly providing false

information under oath at her change of plea or at trial, this could provide a basis for an upward

adjustment for obstructing or impeding the administration of justice pursuant to Sentencing

Guideline § 3C1.1, even if she is not formally charged with the crime of perjury.

Additionally, if the defendant were to testify at trial in the above captioned matter and if it

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were determined that she testified falsely, she could be prosecuted for the separate crime of perjury

which could carry up to 5 years imprisonment and a fine.

Waiver of Trial Rights and Consequences of Guilty Plea

The Government respectfully requests that the defendant be canvassed about and indicate that

she understands that she has the right to be represented by an attorney at every stage of the

proceeding and, if necessary, one will be appointed to represent her. The Government respectfully

requests that the defendant be canvassed about and indicate that she understands that she has the

right to persist in a plea of not guilty, the right to a public trial, the right to be tried by a jury with the

assistance of counsel, the right to confront and cross-examine the witnesses against her, the right not

to be compelled to incriminate herself, the right to testify in her own defense, and the right to

compulsory process for the attendance of witnesses to testify in her defense. The defendant

understands that by pleading guilty she waives and gives up those rights and that, if the plea of guilty

is accepted by the Court, she will be adjudicated guilty on the counts to which she has pleaded guilty

and there will not be a trial as to her with respect to the specific Counts to which she is entering a

plea of guilty.

The Government respectfully requests that the defendant should be made to understand that,

if she pleads guilty, the Court may ask her questions about each offense to which she pleads guilty,

and if she answers those questions falsely under oath, on the record, and in the presence of counsel,

her answers may later be used against her including in a separate prosecution for perjury or making

false statements.

Acknowledgment of Guilt and Voluntariness of Plea

The Government respectfully requests that the Court confirm on the record that the defendant

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acknowledges that she is pleading guilty freely and voluntarily because she is guilty. The defendant

should acknowledge that she is pleading guilty without reliance upon any discussions between the

Government and her, without promise of benefit of any kind and without threats, force, intimidation,

or coercion of any kind. The defendant should further acknowledge her understanding of the nature

of the offenses to which she is pleading guilty, including the penalties provided by law. The

defendant should also acknowledge her complete satisfaction with the representation and advice

received from her attorney and that she is unaware of any conflict of interest concerning counsel’s

representation of the defendant in the case.

The defendant should acknowledge and understand that no representations have been made

to her with respect to any civil or administrative consequences that may result from her plea of guilty

because such matters are solely within the province and discretion of the specific administrative or

governmental entity involved. Finally, the defendant should acknowledge that she understands that

her plea does not eliminate any civil tax matters or tax liability that may be pending or which may

arise involving her.

Collateral Consequences

The Government respectfully requests that the defendant be canvassed on and indicate that

she understands that she will be adjudicated guilty of each offense to which she pleads guilty and

will be deprived of certain rights, such as the right to vote, to hold public office, to serve on a jury,

or to possess firearms. The Government respectfully requests that the defendant be canvassed on

and indicate that she understands that pursuant to section 203(b) of the Justice For All Act, the

Bureau of Prisons or the Probation Office will collect a DNA sample from the defendant for analysis

and indexing. Finally, the defendant should be canvassed on and indicate that she understands that

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the Government will likely notify any state or federal agency by which she is licensed, or with which

she does business, as well as any current or future employer of the fact of her conviction.

The Rule 11 Colloquy Should Result in a Full and Complete Unraveling

As the Second Circuit stated in Reyes, when a defendant decides to enter a plea of guilty to

an offense, “the district court may require a candid and full unraveling, and need not accept lies or

equivocation.” United States v. Reyes, 9 F.3d 275, 279 (2d Cir. 1993). Further, the Court is entitled

to “a credible and complete explanation, evincing remorse or contrition, for the conduct surrounding

the . . . offense of conviction.” Id. at 280 (emphasis added).

Accordingly, the Government respectfully requests that the Court should inquire of the

defendant as to her knowingly engaging in a scheme to defraud Webster Bank, a federally insured

financial institution, by making materially false and fraudulent statements and representations in

order to obtain money and property from that financial institution.

For instance, the Court should ask the defendant to describe her scheme to defraud Webster

Bank. The Court should ask how the scheme was devised and who devised the scheme. The Court

is also entitled to know who assisted the defendant in the execution of the scheme. The Court should

inquire as to what the defendant believes the material false statements and representations were that

were made to Webster Bank and others and why they were material. Moreover, the Court needs to

establish the knowledge and intent element and thus should inquire as to what the defendant’s state

of mind (i.e., mens rea) was when certain representations were made and certain actions were

undertaken.

As to the creation of New House, LLC, the Court should inquire as to who was involved in

the creation and use of New House, LLC as a fraudulent entity, and who coordinated the transactions

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through New House accounts. Similarly, as to the creation and use of Equity Realty, LLC (“Equity

Realty”), the Court should inquire as to who was involved in the use of Equity Realty, who was

involved in the creation of the entity, who registered it with the Secretary of State, who opened the

bank accounts, and who coordinated the transactions through the accounts. The Court should also

ask the defendant how she defrauded Webster Bank, what false paperwork was submitted, who

submitted the paperwork, how many fraudulent transactions were submitted for payment and how

much money she made in the scheme.

As to Count Three, the bank fraud committed against Bank of America in connection with

the $649,000 mortgage loan taken against 35 Days Point Road, East Hampton, CT, the Government

respectfully requests that the Court inquire of the defendant as to her knowingly engaging in a

scheme to defraud Bank of America, by making materially false and fraudulent statements and

representations in order to obtain the mortgage loan from that federally insured financial institution.

More specifically, the Court should ask the defendant to describe her scheme to defraud

Bank of America. The Court should ask how the scheme for submitting false statements in

connection with the mortgage loan was devised and who devised the scheme. The Court is also

entitled to know who assisted the defendant in the execution of the scheme. The Court should

inquire as to what the defendant believes the material false statements and representations were that

were made to Bank of America and Bank of America representatives, why the false statements were

material, and who made the materially false representations. Moreover, the Court needs to establish

the knowledge and intent element and thus should inquire as to what the defendant’s state of mind

(i.e., mens rea) was when certain materially false representations were made and certain actions were

undertaken in furtherance of the fraud.

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As to the execution and submission of the false statements, the Court should inquire as to

who was involved in the execution, that is, who the defendant coordinated with, communicated with,

and who was aware of the fraud as it was devised and executed. The Court should also ask the

defendant specifically what false paperwork was submitted, who submitted the paperwork, how

many materially false and fraudulent representations she made, and how much money she made as

a result of the particular mortgage fraud charged in Count Three.

As to the counts of filing a false tax return, the Court should inquire of the defendant if she

the defendant made and subscribed a return which was false as to a material matter and what the

material matter was that was false. She should be asked to acknowledge that the return contained

a written declaration that it was made under the penalties of perjury and acknowledge that she falsely

signed it regardless of the perjury. The Court should require the defendant to acknowledge that the

defendant did not believe the return to be true and correct as to every material matter, which in this

case included the income; and that the defendant falsely subscribed to the return willfully, with the

specific intent to violate the law. The Court should inquire as to who if anyone assisted the

defendant in this crime, what her intent was, and confirm her specific intent to violate the law.

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CONCLUSION

For the reasons set forth above, the Government respectfully requests the Court engage in

a detailed canvas consistent with Rule 11 and the precedent cited herein.

Respectfully submitted,

DAVID B. FEIN
UNITED STATES ATTORNEY

MICHAEL S. McGARRY
ASSISTANT UNITED STATES ATTORNEY
Federal Bar No. CT25713
157 Church Street, 23rd Floor
New Haven, CT 06510
(203) 821-3700

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CERTIFICATION

I hereby certify that on January 18, 2011, 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 Court's 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 Court's CM/ECF System.

/s/Michael S. McGarry
MICHAEL S. McGARRY
ASSISTANT UNITED STATES ATTORNEY

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