U.S. v. Brennan

• Decision Date: 19 December 2007
• Docket Number: No. 06-CR-334.,No. 05-CR-747.,No. 06-CR-170.,No. 06-CR-169.,No. 06-CR-336.,No. 06-CR-173.,No. 06-CR-172.,No. 06-CR-171.,No. 06-CR-335.,05-CR-747.,06-CR-169.,06-CR-170.,06-CR-171.,06-CR-172.,06-CR-173.,06-CR-334.,06-CR-335.,06-CR-336.
• Citation: 526 F.Supp.2d 378
• Parties: UNITED STATES of America, v. Robert BRENNAN, Robert Garcia, Richard Czark, Louis Sito, Gus Acosta, Ed Smith, Dennis Springer, John Faiella, Dorothy McKillop, Defendants.
• Court: U.S. District Court — Eastern District of New York

526 F.Supp.2d 378

UNITED STATES of America, v. Robert BRENNAN, Robert Garcia, Richard Czark, Louis Sito, Gus Acosta, Ed Smith, Dennis Springer, John Faiella, Dorothy McKillop, Defendants.

No. 05-CR-747.

No. 06-CR-169.

No. 06-CR-170.

No. 06-CR-171.

No. 06-CR-172.

No. 06-CR-173.

No. 06-CR-334.

No. 06-CR-335.

No. 06-CR-336.

United States District Court, E.D. New York.

December 19, 2007.

Cynthia M. Monaco, United States Attorneys Office, Central Islip, NY, for Plaintiff.

Edward A. McDonald, Morgan Lewis & Bockius LLP, New York, NY, for Robert Brennan.

Margaret M. Shalley, Fasulo, Shalley & DiMaggio, LLP, New York, NY, for Robert Garcia.

Peter E. Brill, Karasyk & Moschella, LLP, New York, NY, for Richard Czark.

Judd Burstein, Judd Burstein, P.C., New York, NY, for Loius Sito.

Robert Sale, Sale & Groothuis, Hempstead, NY, for. Dorothy McKillop.

James L. Sonageri, Sonageri & Fallon, LLC, Hackensack, NJ, for Gus Acosta.

Paul Shectman, for Edward Smith.

Francis J. Murray, Murray & Kelleher, Rockville Centre, NY, for Dennis Springer,

Kyle B. Watters, New York, NY, for John Faiella.

AMENDED MEMORANDUM & ORDER REGARDING RESTITUTION

JACK B. WEINSTEIN, Senior District Judge.

I.

Defendants in the above-captioned cases were predominantly long-term employees of Newsday and Hoy, two newspapers which were wholly-owned subsidiaries of the Tribune Company during the relevant period of time. These defendants were involved in defrauding thousands of advertisers for over $100 million who advertised in Newsday and Hoy. Eight of the nine defendants have pled guilty to conspiracy to commit mail fraud under sections 1341 and 1349 of Title 18 of the United. States Code. Gus Acosta ("Acosta") is the only defendant who pled guilty to the substantive offense—mail fraud in violation of section 1349 of Title 18. All defendants, except for John Faiella ("Faiella") and Dorothy McKillop ("McKillop") are scheduled to be sentenced by the court on December 20, 2007; Faiella and McKillop are scheduled to be sentenced on January 7, 2008.

Eight of the nine defendants have received letters pursuant to section 5K1.1 of the United States Sentencing Guidelines authorizing a sentence below the guidelines. See Letter dated Dec. 18, 2007 by Assistant United States Attorney Cynthia M. Monaco (Gov. Dec. 18.Ltr.) at 1. Richard Czark ("Czark") will not be receiving a letter. See id.

II.

On September 24, 2007, the court issued an order in preparation for the then-scheduled October 3, 2007 sentencing. See Order dated Sept. 24, 2007. That order provided as follows:

1. The Court is considering imposing fines greater than provided for by the guidelines in light of the alleged heavy damages incurred by advertisers. See Fed.R.Crim.P. 32(h); Burns v. United States, 501 U.S. 129, 135-36, 111 S.Ct. 2182, 115 L.Ed.2d 123 (1991); United States v. Anati, 457 F.3d 233, 235-36 (2006) (requiring district courts to give notice before imposing a non-Guideline sentence). The Court is considering incarceration for periods less than those provided by the guidelines in light of higher fines.

2. The Court is troubled by the lack of clarity respecting the relative culpability, if it exists, of those prosecuted compared to those of higher authority and the institutions themselves.

3. If the government is not seeking restitution in light of civil settlements and the difficulty in determining specific amounts, a certification to that effect from the government shall be promptly provided. See U.S.S.G. § 8B 1.1(b)(2)(B).

4. The government shall supply to the Court copies of plea agreements and 5K1 letters promptly so that they can be considered before the sentence.

5. In accordance with the practice of this court, a conference has been held with two judges, the Chief Probation Officer, and the sentencing judge. No decision on the sentences will be made until all parties and interested persons have been heard at the sentencing hearing.

6. Representatives of the Tribune Company, Newsday and Hoy shall be present at each of the sentences.

Id. At the request of the government, the October 3, 2007 sentencing was adjourned to December 20, 2007.

No communication responding to the court's order of September 24, 2007 was received.

Three days before the December 20, 2007 scheduled sentencing, the court issued another pre-sentence order, on December 17, 2007, noting that the court had not received a response from the government on the issue raised in paragraph three of the September 24 order. See Order dated Dec. 17, 2007 at 2. The order requested that the government respond to the following issues as well as those posed by the September 24, 2007 order:

3. Does any payment by the Tribune Company, Hoy and Newsday in civil proceedings waive mandatory criminal restitution for the above-captioned defendants? See 18 U.S.C. § 3664(f)(1)(B) ("In no case shall the fact that a victim has received or is entitled to receive compensation with respect to a loss from insurance or any other source be considered in determining the amount of restitution.").

4. Is the government prepared to submit calculation of the amount of restitution that the above-captioned defendants must pay jointly or individually?

5. Should the court order joint and several restitution by all nine defendants? See 18 U.S.C. § 3664(h) ("If the court finds that more than 1 defendant has contributed to the loss of a victim, the court may make each defendant liable for payment of the full amount of restitution or may apportion liability among the defendants to reflect the level of contribution to the victim's loss and economic circumstances of each defendant."). If not, how shall liability be apportioned?

6. Has the government identified the victims of the defendants' crimes and the amounts due to them, and will the government provide that information to the court at the December 20, 2007 hearing? See 18 U.S.C. § 3663A(c)(1) ("This section shall apply in all sentencing proceedings for convictions of, or plea agreements relating to charges for, any offense ... (B) in which an identifiable victim or victims has suffered a physical injury or pecuniary loss.") (emphasis added).

7. What is the government's position, if any, as to whether restitution in this case is impracticable or whether its benefits are outweighed by its burdens? See 18 U.S.C. § 3663A(c)(3) ("This, section shall not apply in the case of an offense described in paragraph (1)(A)(ii) if the court finds, from facts on the record, that—(A) the number of identifiable victims is so large as to make restitution impracticable; or (B) determining complex issues of fact related to the cause or amount of the victim's losses would complicate or prolong the sentencing process to a degree that the need to provide restitution to any victim is outweighed by the burden on the sentencing process.").

8. Is the government prepared to go forward with evidence of the above and other relevant issues at the December 20, 2007 sentencing? While it is apparently not essential to order restitution at the time of the sentencing, the court prefers to not postpone a decision on restitution.

9. Is the government prepared to explain why Newsday and Hoy and their owners are not being prosecuted; are they making a contribution to the restitution fund, and, if so, on what theory?

By letter dated December 18, 2007 (delivered to the court at 5:00 p.m. that day), the government informed the court that it "is not seeking restitution from the nine individual defendants because a mechanism to ensure the repayment of aggrieved advertisers has been established and funded...." See Gov. Dec. 18 Ltr. at 1. The government letter also informed the court:

On December 17, 2007, an agreement between the United States Attorney's Office and Tribune Company, the parent to Newsday, Inc. ("Newsday") and Hoy Publications, LLC ("Hoy") was fully executed. A copy of that agreement is attached hereto. Under the terms of this agreement, Newsday and Hoy have accepted responsibility for the unlawful circulation-reporting practices by those publications which were used in connection with setting advertising rates.

In addition to ongoing cooperation with the government, and the adoption of remedial measures outlined in the agreement, Newsday and Hoy have agreed to pay forfeiture to the United States in the amount of $15 million. This forfeiture is separate from the efforts of Newsday and Hoy to repay advertisers for inflated advertising charges. Newsday, and Hoy have outlined to the government their efforts to contact individuals and companies whom they have identified as having taken advertisements in their papers and have offered repayment according to a specified formula. To date, according to representations by Tribune Company's counsel, approximately $90 million has been repaid. The terms of the agreement with the United States Attorney's Office specify that any additional advertisers not identified previously may apply to the Department of Justice for restitution to be supplied from the forfeited amount. In light of this mechanism and the difficulty in determining whether additional restitution is owed to any victims who have yet to come forward beyond this mechanism, the government respectfully submits that pursuant to 18 U.S.C. §. 3663A(c)(3) restitution should not be ordered against the nine individual defendants.

With regard to the Court's request that the government explain why Newsday and Hoy and their owners are not being prosecuted, the government respectfully refers the Court to the agreement entered into between the government and those entities which sets forth the resolution of the matter. The government has brought charges against all individuals against whom it has sufficient evidence....

Id. at 2.

III.

A.

Since this is the third order by the court requesting that the government respond to issues of restitution in these cases, it is important to restate some principles of the law related...