U.S. v. Gordon
| Citation | 291 F.3d 181 |
| Decision Date | 30 May 2002 |
| Docket Number | Docket No. 00-1126(XAP).,Docket No. 00-1164.,Docket No. 00-1124.,Docket No. 00-1125.,Docket No. 00-1277.,Docket No. 00-1122 (L).,Docket No. 00-1123.,Docket No. 00-1181.,Docket No. 00-1235. |
| Parties | UNITED STATES of America, Appellee-Cross-Appellant, v. Bruce W. GORDON, Defendant-Appellant-Cross-Appellee, Tara Garboski, also known as Tara Green, Oral Frank Osman, also known as Frank Osman, also known as Frank Martin, Laura Weitz, also known as Laura Winters, Scott Michaelson, Steve Rubin, also known as Steve Ruben, also known as Steve Walden, Martin Reffsin, and Annette Haley, Defendants-Appellants, Who's Who Worldwide Registry, Inc., Sterling Who's Who, Inc., Defendants. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
Brian E. Maas, Beldock, Levine & Hoffman, New York, NY, for defendant-appellant Tara Garboski, aka Tara Green.
Alan M. Nelson, Law Office of Alan M. Nelson, Lake Success, NY, for defendant-appellant Oral Frank Osman, aka Frank Osman, aka Frank Martin.
John Laurence Kase, Kase & Druker, Garden City, NY, for defendant-appellant Laura Weitz, aka Laura Winters.
Martin Geduldig, Law Office of Martin Geduldig, Esq., Hicksville, NY, for defendant-appellant Annette Haley.
Thomas F.X. Dunn, Law Office of Thomas F.X. Dunn, Esq., New York, NY, for defendant-appellant Steve Rubin, aka Steven Ruben, aka Steve Walden, aka Steve Ruben.
Scott E. Leemon, Law Office of Scott E. Leemon, Esq., New York, NY, for defendant-appellant Martin Reffsin.
Paula Schwartz Frome, Law Office of Paula Schwartz Frome, Esq., Garden City, NY, for defendant-appellant Scott Michaelson.
Norman Trabulus, Storch, Amini, & Munves, New York, NY, for defendant-appellant Bruce W. Gordon.
Ronald White, United States Attorney's Office for the Eastern District of New York, Brooklyn, NY, for appellee.
Before OAKES, NEWMAN, and F.I. PARKER, Circuit Judges.
This is an appeal from the February 16, 2000 entry of judgment in the United States District Court for the Eastern District of New York (Arthur D. Spatt, Judge) following a jury trial convicting defendants-appellants on sixty-nine counts of mail fraud, conspiracy to commit mail fraud, money laundering, perjury, tax evasion, conspiracy to impair, impede, and defeat the IRS, filing false tax returns, filing false collection information statements, and obstruction of justice based on the defendants' roles in a scheme to market memberships in a supposedly prestigious "Who's Who" organization. The United States of America cross-appeals, alleging error in the grouping of defendant Gordon's mail fraud and tax evasion counts pursuant to United States Sentencing Guidelines Manual ("U.S.S.G.") § 3D1.2(c) (2000). The majority of the issues raised on appeal are addressed in a summary order filed today. This opinion addresses only three questions related to defendant Bruce W. Gordon's sentence: First, whether the district court erred by failing to consider applicable, but unclaimed, deductions in the calculation of tax loss for sentencing purposes under U.S.S.G. § 2T1.1; second, whether, as the government alleges on cross-appeal, the district court erred by grouping Gordon's mail fraud and tax evasion counts under U.S.S.G. § 3D1.2(c) rather than § 3D1.2(d); and third, whether the district court erred in imposing consecutive sentences on counts 54 and 55. We affirm the district court on the first question and vacate and remand on the second and third.
In 1989 and 1994 respectively, Bruce W. Gordon incorporated two companies, Who's Who Worldwide ("Worldwide") and Sterling Who's Who ("Sterling"), to produce "prestigious" directories of "noteworthy" individuals. United States v. Gordon, CR 96-1016, 1999 U.S. Dist. LEXIS 183, at *5-*6 (E.D.N.Y. Jan. 8, 1999). Gordon served as president and CEO of both organizations, supervising the companies' efforts to sell expensive memberships in the directories through an extensive telemarketing scheme. Id. After a thirteen-week jury trial, Gordon and nine other defendants were found guilty on 297 charges under the sixty-nine counts of the indictment. Id. at *2.
Although Gordon's companies promoted their listings as exclusive collections of leaders in various fields, potential members were actually solicited from ordinary mailing lists. Id. at *6. Worldwide and Sterling often distributed 100,000 letters at a time. The letters informed potential clients of their "nomination" for inclusion in one of the available registries even though most recipients were not nominated. Although at the time the letters were sent, the companies knew nothing about the intended recipients, a typical solicitation letter included language indicating that (i) Worldwide or Sterling was a leading publication of accomplished individuals, (ii) inclusion in the registry was limited to "exceptional" people who were highly successful in their fields, and (iii) inclusion in the registry was without cost to the "nominee." An enclosed questionnaire encouraged the recipient to "apply" for membership. If the "nominee" responded by filling out a personal information card, telemarketers then contacted the person to conduct a false evaluation interview. During the interview, the marketers read from "pitch sheets" that laid out false and misleading information aimed at encouraging the customer to join and specified fraudulent answers to common questions. Gordon, 1999 U.S. Dist. LEXIS 183, at *6-*7. The marketers stressed the exclusivity of membership and the great networking value membership would provide. "Memberships" were actually sold to anyone wishing to purchase.
After completing the interview, Gordon's sales force would ask the customer to purchase a membership (ranging in price from $75 to $750) and informed the new member of additional "perks" of joining, such as the opportunity to purchase a CD ROM with registry information, discounts on services from Airborne Express and other providers, and networking seminars.1 Id. at *7-*8. By the end of 1994, over 60,000 people, swept along by Gordon's scheme, had become members of the organizations, netting tens of millions of dollars for Gordon's companies. Gordon v. United States (), 68 F.3d 577, 578-79 (2d Cir.1995). Although Gordon claimed that his registries were composed of leaders in the international business community, many actual members were employed outside the big business arenas his promotional materials implied. Among the members of one registry were the manager of a Florida rental car agency, the owner of a Florida Dairy Queen, a nutritionist at a Virginia state prison, a Virginia high school teacher, a Massachusetts candy store owner, the manager of a Connecticut Radio Shack, and the manager of a Pennsylvania department store beauty salon.
Notably, the employees of Worldwide and Sterling had no misconceptions about the true nature of the memberships they sold. The Worldwide employee assigned to "review" applications after conclusion of the telephone interviews admitted that she, at Gordon's instruction, regularly altered members' job titles so that the members would appear more prestigious in the publication, for example, listing the owner of a business as a "President" with expertise in "Corporate Management," or a store manager as an "area manager" or "operations manager," and making even small operations sound like large corporations. Furthermore, while telling potential customers that they, as nominees, were the "creme de la creme" or that the marketers rarely spoke with people who weren't "multi-billionaires" or "CEO's", Gordon's employees, among themselves, considered it a "running joke" that anyone with a credit card could become a member of one of the registries.
At trial, the government presented twenty-three member witnesses who almost uniformly agreed that had they realized that the memberships they were offered were not prestigious, nor had they been nominated by their peers, they would not have been willing to pay for a membership and might not have purchased a membership at all. Even Gordon admitted that the value of his product lay in its appeal to customer egos.
Gordon's crimes extended beyond his telemarketing fraud. During the early 1990s, Gordon owed the IRS $3.5 million in back taxes, penalties, and interest. Gordon, 1999 U.S. Dist. Lexis 183, at *8-*9. Gordon told the IRS that he was an impoverished salesperson who slept in his car. Id. In reality, however, Gordon resided at two expensive properties, a Manhasset, New York, condominium and an East 54th Street penthouse apartment in Manhattan, the titles to which were in the name of Who's Who Worldwide. Gordon drove luxury cars leased by Worldwide and shopped at numerous premiere retail outlets. Id. at *12-*13.
Relying on Gordon's representations of poverty, the IRS, in 1991, offered to accept payments of $100 per month against Gordon's $3.5 million debt, while the tax division of the Department of Justice agreed to accept payments of amounts equal to one-half of Gordon's income over $50,000. Id. at *10-*11. In 1993, Gordon attempted to enter a further "offer in compromise" with the IRS under which he would pay $150,000 to resolve his entire debt. Gordon withdrew his offer before the IRS could accept when his arrest raised suspicions that he was more than simply a Sterling or Worldwide employee. Id.
Postal officials first inspected Gordon and his companies in 1994 on suspicions of mail fraud. In re Seizure, 68 F.3d at 579. That investigation ultimately led to grand jury review and an indictment against Gordon, Sterling, and Worldwide for conspiracy to commit mail fraud, mail fraud, and money laundering. A seventy-three count superseding indictment added counts for...
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United States v. Marsh, 10-CR-0480
...publications were selective and prestigious, but received some networking value from the publication), aff'd in part and rev'd in part, 291 F.3d 181 (2002). They urge that the total loss suffered by the victims was zero, since any loss attributable to defendant's fraudulent inducement was o......
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United States v. Marsh, 10-CR-0480
...publications were selective and prestigious, but received some networking value from the publication), aff'd in part and rev'd in part, 291 F.3d 181 (2002). They urge that the total loss suffered by the victims was zero, since any loss attributable to defendant's fraudulent inducement was o......
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United States v. Marsh, 10-CR-0480
...publications were selective and prestigious, but received some networking value from the publication), aff'd in part and rev'd in part, 291 F.3d 181 (2002). They urge that the total loss suffered by the victims was zero, since any loss attributable to defendant's fraudulent inducement was o......
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United States v. Marsh, 10-CR-0480
...publications were selective and prestigious, but received some networking value from the publication), aff'd in part and rev'd in part, 291 F.3d 181 (2002). They urge that the total loss suffered by the victims was zero, since any loss attributable to defendant's fraudulent inducement was o......
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Tax violations.
...and judge failed to consider relevant family circumstances); U.S.S.G. [section] 2T1.1 cmt. 1. (279.) Compare United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002) (holding that "determination of tax loss involves giving the defendant the benefit of legitimate but unclaimed deductions" (......
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TAX VIOLATIONS
...if the defendant offers convincing proof, and the revised calculation more accurately states tax loss), and United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002) (holding that the determination of tax loss involves giving the defendant the benefit of legitimate but unclaimed deductions......
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Tax Violations
...if the defendant offers convincing proof, and the revised calculation more accurately states tax loss), and United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002) (holding the determination of tax loss involves giving the defendant the benefit of legitimate but unclaimed deductions), wi......
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Tax Violations
...if the defendant offers convincing proof, and the revised calculation more accurately states tax loss), and United States v. Gordon, 291 F.3d 181, 187 (2d Cir. 2002) (holding that the determination of tax loss involves giving the defendant the benefit of legitimate but unclaimed deductions......