U.S. v. Gentry

• Decision Date: 05 October 2006
• Docket Number: No. CR-06-0464-A-PHX-SRB.,CR-06-0464-A-PHX-SRB.
• Citation: 455 F.Supp.2d 1018
• Parties: UNITED STATES of America, Plaintiff, v. Ira W. GENTRY, Jr., Defendant.
• Court: U.S. District Court — District of Arizona

455 F.Supp.2d 1018

UNITED STATES of America, Plaintiff, v. Ira W. GENTRY, Jr., Defendant.

No. CR-06-0464-A-PHX-SRB.

United States District Court, D. Arizona.

October 5, 2006.

Marc Jeffrey Victor, Victor & Hall PLC, Mesa, AZ, for Defendant.

Michelle Rae Hamilton-Burns, U.S. Attorney's Office, Phoenix, AZ, for Plaintiff.

ORDER

ANDERSON, United States Magistrate Judge.

Oh what a tangled web we weave

When first we practice to deceive!¹

The Government seeks detention of Defendant Ira W. Gentry, Jr. ("Gentry") upon the grounds that he is a serious flight risk² and that no release condition or combination of conditions exist that would reasonably assure his appearance at future court proceedings. See, the Government's Detention Memorandum (docket # 11), Supplemental Detention Memorandum (docket # 40), Reply To Defendant Gentry's Response (docket # 88) and Supplemental Reply (docket # 89), filed on May 16, 2006, June 20, 2006, September 12, 2006 and September 18, 2006, respectively. After considering the parties' written detention pleadings and attached exhibits, including Defendant's Response To The Government's Detention Memorandum (docket # 70), filed on August 18, 2006; all the evidence and proffers;³ the arguments of both counsel; the controlling and persuasive authorities on the issues sub judice and all the factors set forth in 18 U.S.C. § 3142(g), the Court FINDS that the Government has proven by a preponderance of the evidence that Gentry is a serious flight risk and that no combination of conditions exist that would reasonably assure his appearance at future court proceedings if released from custody.

BAIL REFORM ACT OF 1984

"The Bail Reform Act [the `Act], 18 U.S.C. §§ 3141-3150, authorizes and sets forth the procedures for a judicial officer to order the release or detention of an arrested person, pending trial, sentence, and appeal."⁴ The Act requires a district court to order a defendant detained pending trial if "no condition or combination of conditions will reasonably assure the appearance of the person as required . . . ." 18 U.S.C. § 3142(e); United States v. Gebro, 948 F.2d 1118, 1121 (9th Cir.1991); United States v. Motamedi, 767 F.2d 1403, 1405 (9th Cir.1985). "The district court has a duty to engage in a two-step inquiry before ordering a defendant released or detained pending trial." United States v. Hollender, 162 F.Supp.2d 261, 264 (S.D.N.Y.2001); 18 U.S.C. § 3142(b) and (e). First, the district court must make a finding as to whether the defendant presents a "serious risk that such person will flee" if not detained. 18 U.S.C. § 3142(f)(2)(A). "Second, if the defendant is likely to flee, the district court must determine whether some set of conditions would sufficiently vitiate that risk." Hollender, 162 F.Supp.2d. at 264; 18 U.S.C. § 3142(g).

In making the determination whether conditions exist that would reasonably assure a defendant's appearance, Section 3142(g) requires the district court to take into account four statutory factors: (1) the nature and circumstances of the offense charged; (2) the weight of the .evidence against the person; (3) the history and characteristics of the person, including his character, physical and mental condition, family ties, employment, financial resources, length of residence in the community, community ties, past conduct, history relating to drug or alcohol abuse, criminal history, and record concerning appearance at court proceedings; and (4) the nature and seriousness of the danger to any person or community that would be posed by the person's release. 18 U.S.C. § 3142(g). The weight to be accorded to each of these factors rests in the Court's discretion. Hollender, 162 F.Supp.2d at 264. The Act, however, mandates release of a defendant facing trial under the "least restrictive" condition or combination of conditions that will reasonably assure the appearance of the defendant as required. 18 U.S.C. § 3142(c)(1)(B); Motamedi, 767 F.2d at 1405. The burden of proof rests with the Government which must establish risk of flight by a preponderance of the evidence, not by the higher standard of clear and convincing evidence. Id. at 1406. Reminding the district courts of the presumption of innocence and its corollary that the right to bail should be denied only for the strongest of reasons, the Motamedi court indicated that "[o]nly in rare circumstances should release be denied," and "[d]oubts regarding the propriety of release should be resolved in favor of the defendant." Id. at 1405, 1407.

A. RISK OF FLIGHT

Gentry is a 50-year old U.S. citizen who is facing, if convicted of all charged crimes, the possibility of spending the rest of his life in a federal prison. The Ninth Circuit permits the district court to consider possible punishment as an incentive for a defendant to flee in assessing a defendant's risk of flight. United States v. Townsend, 897 F.2d 989, 995 (9th Cir. 1990).⁵ The factual background and deallegations in this case are imperative in assessing Gentry's risk of flight.

Gentry and co-defendant Randy W. Jenkins (Jenkins) are accused of master-minding a series of fraudulent schemes, including, among others, the creation and/or use by Gentry of a fictitious identity, false passport and other counterfeit documents to profit from his criminal schemes and thereafter attempt to escape the Government's detection of his significant material gains. The pair are charged in a 59-count federal indictment for conspiracy, securities fraud, wire fraud, tax evasion and various kinds of money laundering, all allegedly occurring from 1997 to 2002. (docket # 3) The Government also seeks the criminal forfeiture of approximately $8.5 million dollars in U.S. currency and real estate.⁶

The Government asserts that the central issue in this criminal case is whether Gentry and Jenkins⁷ used numerous domestic and offshore nominee entities and aliases to: 1) gain control of millions of shares of stock in a corporation called UniDyn; 2) falsely and fraudulently inflate the value of the stock; 3) secretly sell the stock through Canadian brokerage accounts; and 4) launder the proceeds of the stock sales into nominee bank accounts in and outside of the United States. (docket # 11 at 4) The Government informs the Court that by using Mutual Legal Assistance treaties, it has obtained the Canadian brokerage account records that provide a road map to the stock sale activities orchestrated by Gentry and Jenkins that secretly earned them millions of dollars in income that were never reported to the Government. (Id.) The Government proffers that bank records and witness statements reveal Gentry's and Jenkins' exclusive control over the nominee entities that acquired UniDyn stock. (Id.) It contends that witness statements and documents establish that Gentry and Jenkins fraudulently inflated the value of UniDyn stock by publicly announcing, through press releases and SEC filings, a 200 million dollar, five-year contract between UniDyn and a Japanese company called Technet regarding the development of a circuit board quality control testing device called the "Sterling." (docket # 88 at 2-3). The Government claims that this contract was a nonexistent illusion created by Gentry. (Id.) The Government claims that a "cut and paste" version of the Technet "contract" was found in Gentry's office after he was terminated by the new CEO of UniDyn. The Government contends there is clear evidence that Jenkins, a disbarred attorney, furthered the scheme by representing himself as a practicing attorney representing UniDyn and writing opinion letters on the free-trading value of the stock UniDyn. (Id.)

The Government proffers that in December 1997, Gentry merged his Phoenix based computer software business with a public shell entity in order to allow his new company, called UniDyn Corp., to meet the requirements to be publically traded. (Id.) The new entity, UniDyn, began trading on the NASD Over-The-Counter Bulletin Board in early 1998. In the initial merger that formed UniDyn, Gentry, with the assistance of Jenkins, placed approximately 15,000,000 shares of the newly-issued UniDyn stock into various offshore entities they had created in order to allegedly disguise their true ownership of UniDyn stock. (Id.) The Government claims Gentry never disclosed, in either his SEC filings or on his tax returns, his true ownership of UniDyn stock. Shortly after going public, Gentry became the CEO of UniDyn and started pumping up the value of the stock through knowingly false and misleading press releases and SEC filings of the Sterling device. (Id. at 5)

In 2000, after the UniDyn stock was trading at several dollars per share, Gentry and Jenkins sold through two Canadian brokerage firms 3,000,000 shares of Gentry's undisclosed UniDyn holdings. At the detention hearing the Government contended that Gentry's stock sales resulted in his acquisition of $8,000,000.00. The brokerage accounts in Canada were opened using offshore entities, aliases, and false passports, created by Gentry and Jenkins. Thereafter, Gentry transferred the money into U.S. bank accounts controlled by Gentry and Jenkins. (Id.) After the UniDyn fraud came to light in 2001, UniDyn stock became worthless. Total losses to the 500 to 1000 UniDyn shareholder victims are estimated between 20 and 50 million dollars. (Id.)

The maximum statutory punishments for the various "white-collar" charges range from 5 years in prison for a conviction on the conspiracy charge (Count 1) to a high of 20 years imprisonment on each of the eleven (11) International Concealment Money Laundering Class C felonies (Counts 35 through 45) and each of the seven (7) Concealment Money Laundering Class C felonies (Counts 46 through 52).⁸ The Government writes that pursuant to United States Sentencing Guideline ("USSG" or "Guideline") § 2B1.1 and § 2S1.1,⁹ after applying the offense characteristics described therein, Gentry is facing a Guideline minimum...