U.S. v. Ionia Management, S.A., Criminal No. 3:07cr134 (JBA).

• Decision Date: 03 March 2008
• Docket Number: Criminal No. 3:07cr134 (JBA).
• Citation: 537 F.Supp.2d 321
• Parties: UNITED STATES of America v. IONIA MANAGEMENT, S.A.
• Court: U.S. District Court — District of Connecticut

537 F.Supp.2d 321

UNITED STATES of America v. IONIA MANAGEMENT, S.A.

Criminal No. 3:07cr134 (JBA).

United States District Court, D. Connecticut.

March 3, 2008.

Order Clarifying Decision March 7, 2008.

George M. Chalos, Chalos, O'Connor & Duffy, LLP, Port Washington, NY, Patrick F. Lennon, Lennon Murphy & Lennon, Tide Mill Landing, Southport, CT, for Ionia Management, S.A.

Anthony E. Kaplan, John H. Durham, William M. Brown, Jr., U.S. Attorney's Office, New Haven, CT, for United States of America.

RULING AND ORDER ON DEFENDANT'S MOTION TO MODIFY FINE AND STAY PAYMENT AND/OR BOND [DOC. # 236]

JANET BOND ARTERTON, District Judge.

Defendant Ionia Management, S.A. ("Ionia") continues to assert that "the Court is aware [that it] is unable to pay" the $4,900,000 fine imposed at sentencing (Def.'s Jan. 28, 2008 Mem. at 1), somehow overlooking the fact that the Court has repeatedly cited the deficiencies in Ionia's evidence of its claimed financial inability to pay, both at sentencing and in regard to Ionia's purported rectification of the insufficiency of this showing.¹ Ionia is an ongoing shipping operation, and it carries the burden of proving that it is unable to pay the fine imposed. Given Defendant's unconvincing financial records submission, circular reasoning, and conclusory assertions, this burden has not been met. Ionia argues that "[e]ven a cursory reading of [its] audited Financial Statements reveals that it does not have the [ability] to pay the $4,900,000.00 fine." (Id. at 4.) Indeed, a "cursory reading" is all that is possible from the records Ionia has furnished, for the brief report provides such paltry detail that it is impossible to determine on what independent basis the auditor reaches his conclusions and what Defendant's assets are.

But even if there were some colorable showing of a destitute condition, Ionia has also failed to provide any authority supporting its claim that the Court has authority to modify, a sentence after it is imposed. In response to the Court's request for such authority, Ionia cited to an unpublished opinion from the Sixth Circuit, United States Greenberg, No. 96-3800, 1997 WL 570350 (6th Cir. Sept. 11, 1997), for the proposition that "[t]he Court has jurisdiction to reduce a fine after a judgment has been entered as the Court may modify any condition of probation during the entire period of probation." (Def.'s Jan. 28, 2008 Mem. at 2.) Ionia invokes 18 U.S.C. § 3563(c), under which the sentencing court "may modify, reduce, or enlarge the conditions of a sentence of probation at any time prior to the expiration or termination of the term of probation, pursuant to the [relevant] provisions of the Federal Rules of Criminal Procedure." This strained argument conflicts with both the nature of a criminal fine and the specific sentencing disposition of this prosecution. Special assessments, fines, and restitution orders imposed at sentencing, though referenced among the many conditions of probation, are nevertheless fully independent criminal penalties. Cf., e.g., United States v. Hamburger, 414 F.Supp.2d 219, 225 (E.D.N.Y.2006) (observing "that [defendant's] restitution order is not a condition of his probation, but an independent component of his criminal sentence," and denying his motion brought under 18 U.S.C. § 3563(c)). Moreover, the judgment entered in this case set out the nature of the fine ("$4,900,000.00 DUE IMMEDIATELY") under a separate section from the probation conditions, with the heading "Criminal Monetary Penalties."

During the sentencing hearing, after the Court imposed the $4.9 million fine, the following colloquy took place:

[Defense counsel]: Your Honor, with respect to the fine, this company cannot afford to pay 4.9 million in one lump sum. I would ask the Court to permit the company to pay it over time, over a period of time, maybe along the lines of the probation period in equal increments.

The Court: I think that you need to show me that they cannot pay that fine.

[Defense counsel]: Okay.

The Court: And upon a proper showing, the Court will consider a payment schedule, but I don't have that.

(Sent'g Hr'g Tr., 74:4-15.) Counsel for the Defendant now characterizes Ionia's financial condition as considerably more extreme, and argues in its most recent brief:

Even a cursory review of Ionia's audited Financial Statements reveals that it does not have the "income, earning capacity and/or financial resources" to pay the $4,900,000.00 fine. Specifically, Ionia's independently-audited and verified financial statements reflect a net profit for 2006 of only $134,000.00. Assuming that Ionia's net profit would stay consistent at such level (which it has not and will not due to Ionia's loss of clients since the M/T KRITON detention at New Haven), it would take over thirty-six (36) years for Ionia to earn sufficient profits in order to pay the fine assessed. The imposition of such a fine would place an impermissibly profound burden on Ionia and[,] in practical terms, would simply serve to bankrupt Ionia and put the company out of business.

(Def.'s Jan. 28, 2008 Mem. at 4 (footnote omitted and emphasis added).) This contention is as astonishing as it is inconsistent with counsel's previous position as stated on the record at sentencing. Indeed, this dramatic claim of poverty merely raises additional questions. How can Ionia square its supposedly insubstantial yearly profit with the $500,000 bond posted to secure the release of the M/T Kriton? How can Ionia obtain loan financing given this profit margin and "that it is simply a ship management company that does not own any vessels or other tangible assets apart from office supplies and some well-worn furniture"? (Id. at 6.) What financial documents beyond those received by the Court has Ionia provided to its supposed lender EFG...