U.S. v. O'Connor

• Decision Date: 15 June 2004
• Docket Number: No. Crim.1:00 CR 285.,Crim.1:00 CR 285.
• Citation: 321 F.Supp.2d 722
• Parties: UNITED STATES of America v. James F. O'CONNOR and James A. Geisler,
• Court: U.S. District Court — Eastern District of Virginia

321 F.Supp.2d 722

UNITED STATES of America v. James F. O'CONNOR and James A. Geisler,

No. Crim.1:00 CR 285.

United States District Court, E.D. Virginia, Alexandria Division.

June 15, 2004.

COPYRIGHT MATERIAL OMITTED

Robert Spencer, Dana Boente, U.S. Attorney's Office, Alexandria, for Plaintiffs or Petitioners.

Alan H. Yamamoto, Don Santarelli, Alexandria, for Defendants or Respondents.

MEMORANDUM OPINION

ELLIS, District Judge.

This successful immigration fraud criminal prosecution resulted in forfeiture and restitution orders, as well as convictions. At bar now is the government's post-sentencing motion "to remit special assessments and direct restitution payments." This motion, although unopposed, raises several issues that merit brief discussion.

I.

A brief summary of the facts and proceedings is useful to place the motion in context.¹ Following an eleven-day bench trial held on March 28 to April 18, 2001, defendants James F. O'Connor and James A. Geisler were found guilty of 48 counts charging them jointly with (i) conspiracy to commit immigration fraud, tax fraud and wire fraud, in violation of 18 U.S.C. § 371 (Count 1), (ii) immigration fraud, in violation of 18 U.S.C. § 1546(a) (Counts 2-25), (iii) conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h) (Count 26) and (iv) money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A) (Counts 27-48). See United States v. O'Connor and Geisler, 158 F.Supp.2d 697 (E.D.Va.2001). In addition to these joint offenses, O'Connor was separately charged and found guilty of filing false income tax returns, in violation of 26 U.S.C. § 7206(1) (Counts 49-50), and failure to file income tax returns, in violation of 26 U.S.C. § 7203 (Counts 51-52). See id. Geisler, in turn, was separately charged and found guilty of filing false income tax returns, in violation of 26 U.S.C. § 7206(1) (Counts 53-55), and bankruptcy fraud, in violation of 18 U.S.C. § 152 (Counts 56-61). See id.

The trial record demonstrated that O'Connor and Geisler had jointly devised a scheme and plan to induce alien investors who wished to receive green cards pursuant to the EB-5 investment visa program,² but who did not possess the requisite $500,000 investment, to invest some lesser amount of money, typically between $100,000 and $150,000, in a purported EB-5 program sponsored by The InterBank Group, Inc., a company owned and operated by O'Connor and Geisler. In the course of the scheme, to make it appear to the Immigration and Naturalization Service (INS) that each alien had invested the requisite $500,000 in the EB-5 program, O'Connor and Geisler devised a sham Bahamian loan transaction to be used in connection with the EB-5 applications filed by InterBank on behalf of alien clients. In this regard, O'Connor and Geisler created and sent false documentary wire transfers to and from the Bahamas to make it appear that each alien had invested the requisite $500,000 amount.

In all, from 1996 to 2000, InterBank filed with the INS, under oath, approximately 335 false EB-5 applications on behalf of alien clients, each of which was prepared at the direction of O'Connor and Geisler. Each petition stated falsely that the particular alien client had invested $500,000 in a new commercial enterprise, as required by the EB-5 program, and that each investment had created, or would create within two years, ten new American jobs. In fact, not a single alien client invested the requisite $500,000 in a new commercial enterprise. Each petition also failed to disclose that the bulk of the alien's alleged $500,000 investment was comprised of a sham Bahamian loan.

In the course of the scheme, InterBank collected approximately $21 million dollars from alien investors. Contrary to O'Connor's and Geisler's representations to the alien clients, these funds were not held by InterBank in escrow pending INS approval of the alien clients' EB-5 applications. Instead, shortly after InterBank received a particular alien client's funds, such funds were commingled with other funds controlled by O'Connor and Geisler and subsequently used by O'Connor and Geisler to fund the sham Bahamian loan transactions and other InterBank operations, and for personal uses. As a result, most of the alien clients suffered a total loss of the funds they entrusted to O'Connor and Geisler.

In addition to the fraudulent EB-5 investment scheme, the trial record also reflects that both O'Connor and Geisler had under-reported their income in various federal tax returns. The evidence also reflected that O'Connor had failed to file timely federal income tax returns in 1995 and 1996 and that Geisler had made numerous false statements in connection with a Chapter 11 bankruptcy proceeding.

Based on this offense conduct, on January 11, 2002, O'Connor was sentenced to the custody of the Bureau of Prisons for a total of 124 months,³ to be followed by three years of supervised release. He was also ordered to pay a special assessment of $5,050, pursuant to 18 U.S.C. § 3013(a). Geisler, in turn, was sentenced to a total of 112 months imprisonment,⁴ to be followed by three years of supervised release. His special assessment totaled $5,700.⁵

Additionally, both O'Connor and Geisler were ordered jointly and severally to pay restitution to the numerous victims of their offenses in the total amount of $17,591,365.17, pursuant to the Mandatory Victims Restitution Act of 1996 (MVRA), 18 U.S.C. 3663A, which mandates restitution for particular crimes, including defendants' fraud and money laundering convictions. The Judgment and Commitment Orders also provided that in the event this total amount was not paid in full immediately, as occurred here, O'Connor and Geisler were to pay restitution, as a special condition of their terms of supervised release, at the rate of $500 per month, with payments to commence within 60 days after their release from imprisonment.

Defendants' Judgment and Commitment Orders directed restitution payments to be distributed pro rata to each of the victims. In this regard, attached to each Judgment and Commitment Order was a chart specifically identifying 216 victims by name, but not by their respective loss amounts. The chart also contained complete or partial mailing addresses for most, but not all of the 216 victims and many of these addresses were overseas. Although not reflected in the chart, it appears from additional information provided by the government and the Probation Office that more than 60 of the 216 victims suffered an undetermined loss amount, while the remaining victims suffered individual losses ranging from $2,485 to $499,985.⁶

It appears from the record, and the government agrees, that a portion of the victims' losses can be recouped with the use of the proceeds from items and amounts defendants were ordered to forfeit to the government. In this regard, by Order of Forfeiture dated January 17, 2002, O'Connor and Geisler were ordered to forfeit $17,868,250 to the United States of America as illegal proceeds of their criminal activity, pursuant to 18 U.S.C. §§ 982(a)(1), 982(a)(6)(A) and (B) (incorporating the provisions of 21 U.S.C. § 853).⁷ See United States v. O'Connor and Geisler, Criminal No. 1:00cr285 (E.D.Va. Jan. 17, 2002) (Order of Forfeiture). And, to satisfy a portion of this forfeiture order, O'Connor and Geisler were further directed, pursuant to 18 U.S.C. §§ 982(a)(1), 982(a)(6)(A) and (B) and Rule 32.2(b), Fed.R.Crim.P., to forfeit to the government any interest they had in certain specifically described property, including, inter alia, several residences, bank accounts, motor vehicles and jewelry items, and the Attorney General or the Secretary of the Treasury was authorized to seize such property.⁸ See United States v. O'Connor and Geisler, Criminal No. 1:00cr285 (E.D.Va. Jan. 17, 2002) (Order of Forfeiture). Following additional proceedings pursuant to 21 U.S.C. § 853(n),⁹ the property ultimately forfeited to the United States, and seized by the Secretary of the Treasury,¹⁰ was as follows:

1. 1992 BMW 525I, with a net value of $1,031.60;

2. Real property located at 7416 Union Ridge Road, Clifton, Virginia, with a net value of $10,438.29;

3. $11,074.63 in proceeds generated from the trustee's sale of the real property located at 6310 Beverlys Mill Road, Broad Run, Virginia;

4. Bank of America account 9100007075532 in the name of Adele D. Geisler, POD James A. Geisler, with a net value of $1,083.67;

5. Bank of America account 91000019868239 in the name of Adele D. Geisler, POD James A. Geisler, with a net value of $99,106.76; and

6. Jewelry consigned to The Nugget in Alexandria, Virginia, by James F. O'Connor, with a net value of $964.21.

To date, $123,699.16 in forfeiture proceeds have been remitted by the Secretary of the Treasury to the Clerk's Office in this case. O'Connor has sent an additional $300 to the Clerk's Office, pursuant to the Bureau of Prisons' Inmate Financial Responsibility Program, and Geisler has sent an additional $50. Accordingly, a total of $124,049.16 has thus far been received by the Clerk's Office in connection with this case. Of this amount, it appears that the Clerk's Office credited approximately $900 of the funds received from the Secretary of the Treasury toward the defendants' special assessment obligations.¹¹

Now at issue is the government's motion "to remit special assessments and direct restitution payments." Specifically, the government requests that the significant special assessments imposed on the defendants at sentencing be set aside and that the Clerk's Office be directed to reapply any amount previously credited toward the defendants' special assessment obligations to their restitution obligations. The government further requests that the Clerk's Office be directed to disburse the $123,699.16 in forfeiture proceeds received from the Secretary of the Treasury, and the additional $350.00 received from the defendants, as partial...