United States v. Garza, EP-11-CR-3021-KC
| Decision Date | 05 June 2012 |
| Docket Number | EP-11-CR-3021-KC |
| Parties | UNITED STATES OF AMERICA v. ISIDRO GARZA, JR. AND MARTHA CATALINA GONZALEZ GARZA. |
| Court | U.S. District Court — Western District of Texas |
On this day, the Court considered the government's claims for restitution from Defendants Isidro Garza ("Isidro") and Martha Catalina Gonzalez Garza ("Martha") (collectively "Defendants"). For the reasons set forth below, the Court DENIES the government's claims for restitution as to both Isidro and Martha.
This case has a long history. For the purposes of this Order, though, a brief synopsis of the case will suffice. The Kickapoo Traditional Tribe of Texas (the "Tribe") hired Isidro to manage the Tribe's casino, the Lucky Eagle Casino ("Lucky Eagle Casino"). United States v. Garza, 593 F.3d 385, 387 (5th Cir. 2010). The Tribe also placed Isidro's wife, Martha, and their son, co-defendant Timoteo Garza ("Timoteo") on the payroll. Id. On December 9, 2004, the government charged Isidro, Martha, and Timoteo with various offenses relating to the misappropriation of tribal funds and tax evasion. Id. at 387-88; Indictment, ECF No. 8. The government alleged that Isidro improperly used the Tribe's money for personal expenditures. Garza, 593 F.3d at 386-87.
The judicial proceedings in this case began in the Del Rio Division of the Western District of Texas. Garza, 593 F.3d at 387. In May of 2006, the case was sua sponte transferred to the Waco Division of the Western District of Texas. Id.
In October of 2007, a jury returned verdicts against all three defendants. Id. at 388. The jury convicted Isidro and Timoteo of multiple counts of conspiracy to commit the offenses of theft from an Indian tribal organization, in violation of 18 U.S.C. § 371, and theft by officers or employees of gaming establishments on Indian lands, in violation of 18 U.S.C. § 1168. Verdict Form ¶¶ 1, 4, 7-8, 10-11, ECF No. 609. Additionally, the jury convicted all three defendants of conspiracy to evade the payment of taxes in violation of 18 U.S.C. § 371. Verdict Form ¶ 12. And finally, the jury convicted Isidro and Martha of four counts of tax evasion in violation of 26 U.S.C. § 7201. Verdict Form ¶¶ 13, 14a, 15a, 16. Defendants appealed their convictions in February 2008. Notice of Appeal 1, ECF No. 652; Corrected Notice of Appeal to the United States Ct. of Appeals for the Fifth Circuit 1, ECF No. 676.
In January 2010, the Fifth Circuit vacated the convictions and remanded the case for a new trial because the sua sponte transfer of venue violated Rule 18 of the Federal Rules of Criminal Procedure. Garza, 593 F.3d at 391. Upon remand to the district court in Del Rio, the presiding judge recused herself. The case was then subsequently assigned to this Court.
On March 14, 2012, Isidro pleaded guilty to two counts pursuant to a plea agreement. Minute Entry 1, ECF No. 971; Plea Agreement 1, 7-8, ECF No. 955. First, Isidro pleaded guilty to Count 1: violating 18 U.S.C. § 371 by conspiring to commit theft by officers and employees from gaming establishments on Indian land as prohibited by 18 U.S.C. § 1168. Minute Entry 1; Plea Agreement 7-8. Additionally, Isidro pleaded guilty to Count Twenty-One: violating 18U.S.C. § 371 by conspiring to impede, impair, obstruct and defeat the Internal Revenue Service's collection of income taxes. Minute Entry 1; Plea Agreement 8.
That same day, Martha pleaded guilty to Count Twenty-five of the Superseding Indictment which charged her with tax evasion in violation of 26 U.S.C. § 7201, pursuant to a plea agreement. Minute Entry ("Minute Entry for Martha") 1, ECF No. 972; Plea Agreement ("Martha's Plea Agreement") 1, 7, ECF No. 956. Specifically, Martha admitted that the government had evidence beyond a reasonable doubt that she and Isidro filed a false income tax return for the year 2002. Martha's Plea Agreement 7. Unlike Isidro, Martha did not plead guilty to a conspiracy crime. See id. at 1, 7.
In the plea agreements, the government, Isidro, and Martha agreed to have the Court determine the amount of restitution. Plea Agreement 5-6; Martha's Plea Agreement 5. At the hearing regarding the pleas, the parties initially wished to argue the issue of restitution. However, after a few minutes of argument it was clear that neither the government, nor the United State's Probation Office ("Probation"), nor Defendants were sufficiently prepared to address the issues of restitution. Accordingly, the Court ordered the parties to submit their arguments and evidence on paper.
On April 13, 2012, the government submitted a memorandum arguing that Isidro should pay $2,356,660.62 in restitution to the Tribe, and $566,473.00 in restitution to the United States for tax losses.1 Government's Submission in Supp. of Restitution and Tax Loss Amounts" ("Government's Memorandum") 9, ECF No. 981. The nine page document included threeexhibits. The first is a chart that adds up the amounts that government alleges that Isidro misapplied by spending the Lucky Eagle Casino and Tribe's money without authorization. Govt.'s Mem. Ex. A ("Chart A"), ECF No. 981-1. Chart A also includes citations to trial exhibits that the government submitted on a DVD. See id. The second chart is an alternative calculation omitting certain political expenditures. Govt.'s Mem. Ex. B ("Chart B"), ECF No. 981-2. And the third chart provides cryptic calculations regarding Isidro's federal taxes. Govt.'s Mem. Ex. C ("Chart C"), ECF No. 981-3.
On April 18, 2012, Isidro filed a response that largely focused on the presentence report that Probation had prepared in this case. Def. Isidro Garza's Resp. to Government's Submission in Supp. of Restitution and Tax Loss Amounts ("Isidro's Response") 4-13, ECF No. 982. Probation had originally created a presentence report in 2008 after the jury convicted Isidro on several counts. After the Fifth Circuit overturned the conviction and Isidro signed a plea agreement, Probation submitted a revised report. Presentence Investigative Report ("PSR") ¶¶ 10, 129-30, ECF No. 969. In the PSR, Probation contends that Isidro should pay the Tribe $1,605,460.36, and the United States $493,319.47. PSR ¶¶ 129-30. In his Response, Isidro argued that the PSR lacked a factual basis and Probation made calculation errors. See Isidro's Resp. 8-12.
The government replied and explained that it was not relying on the PSR, but instead was relying on its own submissions. Government's Reply to Def.'s Resp. to Government's Submission in Supp. of Restitution and Tax Loss Amounts 1 ("Government's Reply"), ECF No. 985.
On April 25, 2012, the Court considered these submissions and the law governing restitution and became concerned that the submissions were insufficient. See Order 1-4, ECF No. 986. Although the government provided charts of the alleged losses and some documentary evidence, the government failed to explain who created the documents, how the documents were relevant, or why the documents were created in the first place. See Govt.'s Mem. 2-4; Chart A; Trial Exs. 374-79. Further, and more troubling, the government did not provide any legal analysis explaining how the evidence met the legal requirements for an order of restitution. See Govt.'s Mem. 2-4; Chart A; Trial Exs. 374-79. Accordingly, the Court ordered the government to "submit a brief on or before May 2, 2012, explaining, and providing additional evidence if necessary, how each alleged loss in the government's [Charts] A, B, and C, fits the legal requirements [for restitution]." Order 4. Additionally, the Court ordered Isidro to respond by May 9, 2012. Id. The Court also provided that the government could file a reply by May 14, 2012, if it wished to do so. Id.
On May 2, 2012, the government submitted a six-page brief and ignored the Court's Order that the government explain how each alleged loss fits the legal requirements for restitution. See Government's Supplemental Submission in Supp. of Restitution and Tax Loss ("Government's Supplemental Memorandum") 1-5, ECF No. 987. Instead of following the Order, the government stated that "numerous witness at trial" established Isidro's misapplications of Lucky Eagle Casino money and then provided the following citation: "E.g. Juan Garza, Rolando Benevides, Mario Diaz and Cindy Salazar." Id. at 3 & n.5. Beyond not providing specific citations to their testimony, the government did not even supply the transcriptsof these witnesses.2 And despite the government's statement that "hard evidence in this case, both documentary and testimonial, clearly establishes" the appropriateness of restitution, the government did not include any additional evidence beyond their original submissions that the Court explicitly warned were inadequate. See id. at 6.
Isidro responded on May 8, 2012, by arguing that the government failed to follow the Court's Order. Def. Isidro Garza's Resp. to Government's Supplemental Submission in Supp. of Restitution and Tax Loss ("Isidro's Supplemental Response") 2, ECF No. 990. Isidro argued that "the government has failed to explain how [the convicted] conduct caused the alleged losses in government's exhibits A, B, and C and has failed to show the actual loss incurred by each alleged victim." Id. at 2. The government did not file a reply.
In regard to Martha, neither the government nor Martha has filed any submissions regarding restitution despite having ample opportunity to do so. However, Probation submitted a presentence report that contends Martha should be liable for $493,319.47 in restitution to the United States for taxes because Martha and Isidro filed their taxes jointly. See Presentence Investigation Report ("PSR for Martha") ¶¶ 35-38, ECF No. 968.
The government seeks restitution from both Isidro and Martha. After examining the general principles of restitution, the Court examines the case against Isidro and then the case against Martha.
Under the Mandatory Victims Restitution Act ("MVRA"),...
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