Case 1:11-cr-00067-RC-KFG Document 167

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS BEAUMONT DIVISION UNITED STATES OF AMERICA VS. CALVIN GARY WALKER

Judge Clark CRIMINAL NO. 1:11-CR-67

GOVERNMENT'S SENTENCING MEMORANDUM COMES NOW, the United States of America, by and through the United States Attorney for the Eastern District of Texas, and files this Sentencing Memorandum in the above and would show the Court as follows: I. 18 U.S.C. 3553(a) states that the court in determining the particular sentence to be imposed, shall consider (1) the nature and circumstances of the offense and the history and characteristics of the defendant; and (2) the need for the sentence imposed (A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense; (B) to afford adequate deterrence to criminal conduct; and (C) to protect the public from further crimes of the defendant. The government has agreed to recommend a sentence of probation without imprisonment. Should the court impose a sentence of probation or in the event of a sentence of imprisonment the government request that the court impose the following discretionary conditions of probation or supervised release under 18 U.S.C. 3563(b) or 3583(d) to extent that such conditions are reasonably related to the factors set forth in 3553(a)(1) and (2): (1) that the defendant refrain from performing services for or in connection with public 1

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contracts in any manner from any public entity which receives taxpayer funds as its main source of revenue, including school districts, municipalities, municipal utility districts, and counties; or in the alternative, from performing services for or in connection with public contracts in any manner from the Beaumont Independent School District and the City of Port Arthur. 18 U.S.C. 3563(b)(5); U.S.S.G. 5F1.5. (2) That the defendant perform community service not to exceed 400 hours. U.S.S.G. 5F1.3. (3) that the defendant file all applicable federal and state tax returns, pay any tax due including tax years 2011 and 2012 (United States v. Merritt, 639 F.2d 254, 257 (5th Cir. 1981) and retain a certified public accountant to prepare and file any returns while under probation or supervision. 18 U.S.C. 3563(b)(22). II. Conduct of the defendant The defendant entered a guilty plea to a misdemeanor count of failing to pay a tax due and owing in violation of 26 U.S.C. 7203. For a various reasons the parties have chosen to enter into a plea agreement to this lesser charge by Information rather than the substantive charges as reflected in the indictment. As the presentence report (PSR) indicates, however, the defendants conduct in failing to pay his federal income taxes is as egregious as his conduct in dealing with other public entities such the Beaumont Independent School District and the City of Port Arthur as noted in paragraghs 26 and 27, PSR. As part of defendants plea the defendant also signed a factual basis which stated in part:

The defendant was aware of the additional business income as it resulted from the submission of invoices to the BISD. Records from the BISD reflect that on or about August 29, 2009, the defendant submitted an invoice for labor, materials, and rental equipment in the amount of $1,592,839.10
2

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for the electrical wiring of two temporary campuses. On or about September 9, 2009, the BISD issued a check in the amount of $1,592,839.10 for the payment of such materials as well for labor and equipment rental charges. The gross income from this check was never reported on the 2009 tax return of the defendant. Records of the BISD contained copies of bills of materials from third party electrical wholesale companies along with copies of unnegotiated checks drawn on defendants bank account in the same amounts, payable to said wholesalers. Included in the wholesale invoices was an invoice in the amount of $382,975.32 which had been altered to reflect it was an invoice when in fact the document was a quote and not an actual purchase. The defendants check payable to that wholesaler in the amount of $382,975.32 was never presented to the wholesaler or negotiated. Records of the BISD also contained similar altered documents purportedly from the same electrical supplier matching invoices submitted by the defendant for materials in other projects.
The defendants failure to report income and pay taxes had the same motive as his submission of altered documents to public entities - to cheat public entities for unwarranted personal gain. This is a familiar pattern for the defendant who pleaded guilty to insurance fraud on June 23, 2003, in 252nd District Court of Jefferson County. The fraudulent conduct involved the submission of altered and false documents to an insurance company. This first fraud plea resulted in a deferred adjudication of guilt which was dismissed on April 27, 2006, after completion of the terms of probation. See 404(b) motion at docket no. 55. The court allowed the use of this evidence at trial. In addition to the conduct in the indictment reflected in para. 26, PSR, the defendant also submitted altered documents to the City of Port Arthur totaling $426,826 in connection with a maintenance contract to provide routine electrical services and maintenance. PSR, para. 27; See also 404(b) notice, docket no. 143. The court ordered that this evidence could be introduced at the defendants retrial.

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III. Occupational restrictions The government is not seeking to impose a restriction on defendants occupation in general but rather a more limited restriction on particular entities to whom he may provide services or receive monetary benefits from, that is, public entities, which are a recurrent target of defendants fraudulent behavior or lack of integrity. District courts are authorized by statute to impose occupational restrictions as a condition of probation or supervised release, as long as the restrictions involve[ ] no greater deprivation of liberty than is reasonably necessary to promote criminal deterrence, protection of the public, and effective correctional treatment. 18 U.S.C. 3563. Such restrictions may include prohibiting a defendant from engaging in a specified occupation, business, or profession bearing a reasonably direct relationship to the conduct constituting the offense. 18 U.S.C. 3563(b)(5). In order to impose such restrictions, a district court must make two threshold determinations. U.S.S.G. 5F1.5(a) (implementing occupational restrictions authorized by 18 U.S.C. 3563(b)(5)). First, the court must determine that a reasonably direct relationship existed between the defendant's occupation, business, or profession and the conduct relevant to the offense of conviction. Id. Second, the court must determine that imposition of such a restriction is reasonably necessary to protect the public because there is reason to believe that, absent such restriction, the defendant will continue to engage in unlawful conduct similar to that for which the defendant was convicted. United States v. Wittig, 528 F.3rd 1280, 1287-89 (10th Cir. 2008). The defendants income from which he failed to pay taxes stem from fraudulent conduct engaged in with a public entity as admitted in the factual basis. He then took active steps on several occasions to hide this income from another public entity, the Internal Revenue Service. There is a reasonably direct

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relationship between the defendant's occupation, business, or profession and the conduct relevant to the offense of conviction. Given that the defendant engaged in fraudulent conduct on repeated occasions to generate income as admitted in the factual basis demonstrates that such a restriction is reasonably necessary to protect the public as the defendant will continue to engage in similar unlawful conduct. If a district court finds the existence of the threshold conditions and decides to impose employment-related restrictions on a defendant, it shall impose the condition for the minimum time and to the minimum extent necessary to protect the public. Id. Examples of employment related restrictions include: United States v. Jost, 2001 WL 871668 (10th Cir. 2001), where the court found no abuse of discretion in prohibiting a mail fraud defendant from engaging in any sales-related employment, any employment which required him to invest money for others, or any employment which required him to render investment advice; United States v. Choate, 101 F.3d 562, 563-566 (8th Cir. 1996), where a wire fraud conviction from a series of sham businesses promoting franchise opportunities led to the imposition of the special condition that Choate could not maintain self-employment during his supervised release. The court concluded that [t]he prohibition on self-employment seem[ed] a reasonable way to protect the public from Choate's practices and to channel Choate's energies into a less destructive path. Id., at 566. ; Similarly, United States v. Goodman, 232 F.3d 902 (10th Cir. 2000); United States v. Carlson, 406 F.3d 529, 531-32 (8th Cir. 2005), where the defendant, convicted of health care fraud, was prohibited from working in the medical field during a three year term of supervised release. Carlsons occupation as an orthopedic physician's assistant

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placed him in close proximity to prescription medication where he fraudulently obtained prescription medication hundreds of times over the course of several years. Carlson also used sample medications obtained through his employment on at least two previous occasions. United States v. Smith, 445 F.3d 713, 717-18 (3rd Cir. 2006), where following a conviction for a wire fraud scheme related to a legal-consulting business of the defendant wherein he crafted fake purchase orders and corporate letters, the defendant's conditions of supervised release were modified barring employment with an attorney or law firm. Finding the restriction was not an abuse of its discretion, the court found that the conduct relevant to Smith's wire fraud conviction was his employment in a law-related business as a legal consultant, his decision to draft a fraudulent purchase order and forge a letter, and his decision to trade on his position in order defraud members of the lay public, was plainly related to his employment. Smith also had prior convictions for tampering with records and forgery; U.S. v. Carter, 652 F.3d 894, 897 (8th Cir. 2011), where the defendants conviction was for unlawful possession of a firearm under 18 U.S.C. 922(g)(1), the court imposed a special condition restricting his ability to work at certain financial institutions based on Carter's prior convictions for theft and robbery which are criminal offenses involving dishonesty or a breach of trust. IV. Community Service Community service may be ordered as a condition of probation or supervised release. Generally, such service should not exceed 400 hours as longer terms may impose heavy administrative burdens such as suitable placements for service and monitoring of attendance. U.S.S.G. 5F1.3.

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V. File all Applicable Tax Returns As part of a sentence of probation a defendant can be ordered to file all applicable federal and state tax returns and pay any tax due, not only for any years being the subject of an indictment or litigation, but also for any taxes which fall due during the probationary period. United States v. Merritt, 639 F.2d 254, 257 (5th Cir. 1981) (defendants convicted of multiple counts of 26 U.S.C. 7203, failure to file tax return). The defendant should be ordered to file all applicable tax returns during the period of probation, including tax years 2011 and 2012. Because the PSR reflects that the defendant sought out different tax preparers to avoid reporting business income, the defendant should be ordered to retain a certified public accountant to prepare and file the returns. 18 U.S.C. 3563(b)(22). Wherefore, the Government requests that for purposes of any sentence of probation or supervised release the court consider sentencing the defendant to the special conditions of 400 hours of community service, the occupational restrictions prohibiting business involving public contracts, and the employment of a CPA for the filing of all tax returns. Respectfully submitted, JOHN M. BALES UNITED STATES ATTORNEY /s/ Robert L. Rawls ROBERT L. RAWLS ASSISTANT UNITED STATES ATTORNEY 350 Magnolia, Suite 150 Beaumont TX 77701 (409) 839-2538 (409) 839-2538 (fax) La. Bar No. 17235

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CERTIFICATE OF SERVICE I hereby certify that a copy of this Government's Sentencing Memorandum was delivered by facsimile or electronic means to counsel for the Defendants on this the 4th of December, 2012. /s/ Robert L. Rawls ASSISTANT UNITED STATES ATTORNEY