United States v. Wen, 6:17-CR-06173 EAW
| Decision Date | 21 December 2018 |
| Docket Number | 6:17-CR-06173 EAW,6:17-CR-06174 EAW |
| Parties | UNITED STATES OF AMERICA, v. BIN WEN a/k/a Ben, Defendant. UNITED STATES OF AMERICA, v. PENG ZHANG a/k/a Jessica, Defendant. |
| Court | U.S. District Court — Western District of New York |
On February 2, 2018, Defendants Bin Wen ("Wen") and Peng Zhang ("Zhang") (collectively "Defendants") waived indictment and entered guilty pleas. (Case No. 6:17-cr-06173, Dkt. 43; Case No. 6:17-cr-06174, Dkt. 41).1 Wen pleaded guilty to a two-count Information charging (1) a violation of 18 U.S.C. § 1349 ()and (2) a violation of 18 U.S.C. § 1957(a) (). (Wen Dkt. 43 at 1-2). Zhang pleaded guilty to a one-count Information charging a violation of 18 U.S.C. § 371 (). (Zhang Dkt. 41 at 1).
Presentence Investigation Reports ("PSRs") as to Defendants dated May 4, 2018, conclude that the total offense level applying to Wen's convictions is 26 (Wen Dkt. 47 (hereinafter "Wen PSR") at ¶ 214) and that the total offense level applying to Zhang's conviction is 25 (Zhang Dkt. 44 (hereinafter "Zhang PSR") at ¶ 203). The PSRs' calculation of the offense level as to each Defendant includes an 18-level enhancement pursuant to United States Sentencing Guideline ("U.S.S.G.") § 2B1.1(b)(1)(J) based on a finding that the total loss amount was $8,410,900; a two-level enhancement pursuant to U.S.S.G. § 2B1.1(b)(10)(C) based on a finding that the offense involved sophisticated means; and a two-level enhancement pursuant to U.S.S.G. § 3B1.3 based on a finding that Defendants abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense. (Wen PSR at ¶¶ 196-97, 199; Zhang PSR at ¶¶ 194-95, 197). Defendants object to the loss amount calculation, as well as to the sophisticated means and abuse of trust enhancements. (Wen Dkt. 53 at 14-28; Zhang Dkt. 49 at 14-28). Defendants also object to many other factual conclusions set forth in the PSRs. (Wen Dkt. 53; Zhang Dkt. 49).
On October 15, 2018, Revised PSRs were filed as to each Defendant. (Wen Dkt. 64; Zhang Dkt. 63). The Revised PSRs contain addendums addressing Defendants' factual and legal objections and continue to conclude that: (1) the loss amount is $8,410,900; (2) thesophisticated means enhancement applies; and (3) the abuse of trust enhancement applies. (Wen Dkt. 64 at 68-70; Zhang Dkt. 63 at 61-63).2
For the reasons set forth below, the Court concludes that the Government has shown, by a preponderance of the evidence, that the amount of the loss in this case is greater than $3,500,000, that Defendants have not shown that any credits apply against that loss, and that an 18-level enhancement under U.S.S.G. § 2B1.1(b)(1)(J) is warranted. The Court further finds that the Government has established by a preponderance of the evidence that the offense involved sophisticated means and that Defendants used special skills in a manner that significantly facilitated the commission or concealment of their offenses. As a result, the Court calculates total offense levels of 26 as to Wen and 25 as to Zhang. The Court resolves Defendants' additional factual objections as set forth in detail below, and reserves on the issue of the restitution owed by Defendants until the time of sentencing.
The factual underpinnings of Defendants' crimes are set forth in both Wen and Zhang's plea agreements. For ease of reference, the Court has cited solely to Wen's plea agreement in reciting the factual background.
Wen is Zhang's husband. (Wen Dkt. 43 at ¶ 4). On or about December 1, 2003, Zhang formed United Environment & Energy, LLC ("UEE"). (Id.). From about June 2010 and continuing until December 2015, Defendants, acting through UEE, participated in a schemeto defraud agencies and departments of the United States, including the National Science Foundation ("NSF"), the Department of Energy ("DOE"), and the Department of Agriculture ("USDA"), by submitting false information in Small Business Innovation Research ("SBIR") and Small Business Technology Transfer ("STTR")3 applications. (Id.). UEE submitted approximately 13 applications to the NSF totaling over $2.6 million, 10 applications to the DOE totaling over $5 million, and 4 applications to the USDA totaling approximately $650,000. (Id.). In total, Defendants, through their companies, received approximately $8.4 million in awards from the NSF, the DOE, and the USDA. (Id.).
In the application proposals and financial reports related to the various awards Defendants received, they submitted false information regarding the work done and payment received by various individuals. (Id.). Defendants used a substantial portion of the proceeds from their fraud for their own personal benefit. (Id.).
Defendants were charged by criminal complaints filed February 22, 2016, with conspiracy to make false claims and making false claims in violation of 18 U.S.C. §§ 286 and 287, conspiracy to commit wire fraud and wire fraud in violation of 18 U.S.C. §§ 1343 and 1349, a scheme to transfer funds obtained through specified unlawful activities in violation of 18 U.S.C. § 1957, and conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h). (Wen Dkt. 1; Zhang Dkt. 1).
On February 2, 2018, Wen waived indictment and pleaded guilty to a two-count Information charging: (1) a violation of 18 U.S.C. § 1349 (), for which the maximum possible sentence is a 20-year term of imprisonment, a $250,000 fine, a $100 mandatory special assessment, and a three-year term of supervised release; and (2) a violation of 18 U.S.C. § 1957(a) (), for which the maximum possible sentence is a 10-year term of imprisonment, a $250,000 fine, a $100 mandatory special assessment, and three-year term of supervised release. (Wen Dkt. 43). That same day, Zhang waived indictment and pleaded guilty to a one-count Information charging a violation of 18 U.S.C. § 371 (), for which the maximum possible sentence is a five-year term of imprisonment, a $250,000 fine, a $100 mandatory special assessment, and a three-year term of supervised release. (Zhang Dkt. 41).
The Court accepted Defendants' pleas. (Wen Dkt. 44; Zhang Dkt. 42). On May 4, 2018, the United States Probation Office filed Presentence Investigation Reports ("PSRs") as to each Defendant. (Wen PSR; Zhang PSR).
Defendants filed joint objections to the PSRs on July 30, 2018. (Wen Dkt. 53; Zhang Dkt. 49).4 The Government thereafter filed its response to Defendants' objections on September 14, 2018 (Wen Dkt. 61; Zhang Dkt. 60),5 and Defendants filed their replies onSeptember 28, 2018 (Wen Dkt. 62; Zhang Dkt. 61). The Revised PSRs were filed on October 15, 2018. (Wen Dkt. 64; Zhang Dkt. 63).
Oral argument before the undersigned was held on October 17, 2018. (Wen Dkt. 65; Zhang Dkt. 65). The Court reserved decision and scheduled sentencing for February 6, 2019. (Wen Dkt. 65; Zhang Dkt. 65). Thereafter, on October 31, 2018, Defendants submitted a letter containing supplemental authority regarding their arguments with respect to the loss calculation. (Wen Dkt. 67; Zhang Dkt. 67). The Government filed a response to this letter on November 13, 2018 (Wen Dkt. 68; Zhang Dkt. 68), Defendants filed a reply on November 20, 2018 (Wen Dkt. 69; Zhang Dkt. 69), and the Government filed a sur-reply on November 29, 2018 (Wen Dkt. 70; Zhang Dkt. 70). On December 14, 2018, the Government filed a letter containing supplemental authority as to the same issue (Wen Dkt. 71; Zhang Dkt. 71), to which Defendants filed a reply on December 19, 2018 (Wen Dkt. 72; Zhang Dkt. 72).
Pursuant to Federal Rule of Criminal Procedure 32, the Court must, prior to sentencing, "for any disputed portion of the presentence report or other controverted matter . . . rule on the dispute or determine that a ruling is unnecessary either because the matter will not affect sentencing, or because the court will not consider the matter in sentencing." Fed. R. Crim. P. 32(i)(3)(B). However, the Court is not required to "perform a line-by-line review of the PSR," so long as it "resolve[s] the substantive challenges" thereto. United States v. Reiss, 186 F.3d 149, 156-57 (2d Cir. 1999).
"At sentencing, disputed factual allegations must be proven by the government by apreponderance of the evidence. . . ." United States v. Rizzo
, 349 F.3d 94, 98 (2d Cir. 2003). However, sentencing proceedings are not "second trials," United States v. Fatico, 603 F.2d 1053, 1057 (2d Cir. 1979), and the sentencing court may use hearsay statements in determining the sentence, United States v. Lee, 818 F.2d 1052, 1055 (2d Cir. 1987).
With respect to the amount of loss and corresponding appropriate offense level, the Government bears the burden of proving by a preponderance of the evidence: "(1) defendant intended to inflict the loss; and (2) the amount of the . . . loss." United States v. Nachamie, 121 F. Supp. 2d 285, 291 (S.D.N.Y. 2000), aff'd
, 5 F. App'x 95 (2d Cir. 2001). The Government bears the same burden with respect to the appropriate amount of restitution. See United States v. Rutigliano, 887 F.3d 98, 109 (2d Cir. 2018) ().
Defendants have submitted numerous objections to the factual conclusions set forth in the PSRs. As noted above, the Court is not required to issue a ruling as to factual objections on matters that either "will not affect sentencing" or that "the court will not consider . . . in sentencing." Fed. R. Crim. P. 32(i)(3)(B). Acco...
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