Case 1:15-cr-00093-VEC Document 263 Filed 04/20/16 Page 1 of 6

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA,

v.

No. 15-cr-093 (VEC)

SHELDON SILVER,
Defendant.

DEFENDANTS SUPPLEMENTAL SENTENCING

MEMORANDUM OBJECTING TO THE STATED FORFEITURE PENALTY

Joel Cohen
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, New York 10038
Telephone: (212) 806-5644
Facsimile: (212) 806-6006

Steven F. Molo
Robert K. Kry
Justin V. Shur
MOLO LAMKEN LLP
540 Madison Avenue
New York, New York 10022
Telephone: (212) 607-8160
Facsimile: (212) 607-8161

Attorneys for Defendant

Case 1:15-cr-00093-VEC Document 263 Filed 04/20/16 Page 2 of 6

Defendant Sheldon Silver respectfully submits this supplemental memorandum objecting

to the Probation Offices forfeiture calculation and, alternatively, requesting that any forfeiture
award be reduced by the tax payments Mr. Silver made on his allegedly unlawful gains.
ARGUMENT
I.

THE GOVERNMENT HAS FAILED TO PROVE FORFEITURE

In its final Presentence Report (PSR), the Probation Office directs that Mr. Silver

forfeit $5,179,106.12 as proceeds purportedly traceable to or obtained . . . as a result of the

charged crimes under 28 U.S.C. 2461, as that statute incorporates the civil forfeiture provisions
of 18 U.S.C. 981(a)(1)(C). 1 (PSR 9, 128 & pp. 33, 36.) A $5,179,106.12 forfeiture award is
unwarranted in this case.
The Court may not order forfeiture without a reasonable estimate of the loss (or gain)
caused by the alleged misconduct. United States v. Treacy, 639 F.3d 32, 48 (2d Cir. 2011); see
also Libretti v. United States, 516 U.S. 29, 49 (1995) (observing that criminal forfeiture is an
aspect of sentencing). The amount sought to be forfeited must be reasonable, United States v.
Uddin, 551 F.3d 176, 181 (2d Cir. 2009), and proven by the Government by a preponderance of
the evidence, United States v. Jafari, 85 F. Supp. 3d 679, 693 (W.D.N.Y. 2015). Although the
total amount of forfeited assets may be determined by conservatively estimating the revenue
regularly collected or received, the evidence of such revenue may not be overly speculative.
United States v. Basciano, No. 03-cr-929-NGG, 2007 WL 29439, at *2 (E.D.N.Y. Jan. 4, 2007)
(citing United States v. Corrado, 227 F.3d 543, 552 (6th Cir. 2000)).
For the reasons discussed more fully in Mr. Silvers Sentencing Memorandum, dated and
filed April 20, 2016, the Government has failed to prove that $5,179,106.12 reflects a reasonable
1

Title 28, section 2461 permits the government to request forfeiture in any criminal case in
which either civil or criminal forfeiture is authorized for the charged offense. United States
v. Torres, 703 F.3d 194, 197 (2d Cir. 2012).
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estimate of Mr. Silvers gain.

Regarding the mesothelioma charges, for which the PSR

calculates Mr. Silvers gain as $3,057,901.07 (PSR 41(b)), Dr. Taub treated patients who
retained Weitz & Luxenberg regardless of whether he ever recommended the firm, Tr. at 436-19437:3 (Taub), while Mr. Silver received asbestos referrals from sources other than Dr. Taub, see
Tr. at 1103:-1104:19 (Taub). Moreover, the medical records offered by the Government show
only that Dr. Taub may have once treated a particular patient. See Tr. at 1115:3-1117:12 (Klein).
The absence of proof of the proceeds obtained . . . as a result of of the charged crimes in turn
forecloses a reasonable estimate of the investment income traceable to the proceeds. (Cf. PSR
pp. 26, 36-37.) 2
Consequently, the Court has no reasonable basis to calculate Mr. Silvers total income
from his unlawful proceeds absent sheer speculation. The Governments failure to sufficiently
prove Mr. Silvers unlawful proceeds forecloses the $5,179,106.12 forfeiture penalty sought in
this case. See, e.g., United States v. Rutgard, 116 F.3d 1270, 1293 (9th Cir. 1997) (reversing
forfeiture award for money laundering conviction where government failed to prove that all
of Rutgards practice was a fraud such that it could not establish that the $7.5 million dollars
transferred by wire were subject to criminal forfeiture); United States v. Fleishman, No. 11-CR32 (JSR), 2012 WL 1611375, at *1 (S.D.N.Y. May 7, 2012) (rejecting governments request that
defendant forfeit all income that he received from business entity where evidence showed that
entity received significant revenues from consultants that did not participate in the conspiracy,
requiring court to subtract income he received from legitimate business).

Indeed, both the Probation Offices calculation and the Governments case fail to account for
the funds that were in Mr. Silvers bank accounts before he received any referral fees from
Weitz & Luxenberg or from Goldberg & Iryami. Cf. GX 1507 (alleging that Mr. Silver
began receiving Goldberg fees in 2004 and W&L Taub fees in 2005).
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II.

ALTERNATIVELY, ANY FORFEITURE PENALTY SHOULD BE REDUCED

TO ACCOUNT FOR THE TAXES MR. SILVER PAID ON HIS GAINS
Should this Court determine that the Government has met its burden of proving the

amount of Mr. Silvers unlawful gain, it should discount any corresponding forfeiture award by
the amount of taxes paid by Mr. Silver on those gains. It is well-established that a defendant
cannot be ordered to forfeit profits that he never received or possessed. United States v.
Contorinis, 692 F.3d 136, 145 (2d Cir. 2012). While criminal forfeiture is designed to punish
a defendant, it is axiomatic that such a penalty is usually based on the defendants actual gain.
Id. at 146 (emphasis added) (vacating order of forfeiture that improperly included proceeds that
[were] never acquired by the defendant or his co-conspirators).
A fair and equitable calculation of Mr. Silvers actual gain should account for the taxes
he paid on the referral income at issue. Every year during the relevant time period, Mr. Silver
lawfully paid all applicable federal and state taxes, regardless of the source of that income.
Furthermore, the Probation Office concedes that Mr. Silver consistently filed U.S. income tax
returns and calculates that Mr. Silver paid no less than $1,150,401 in federal income tax for the
five-year period from 2011 through 2014.

(PSR 112.)

Requiring Mr. Silver to forfeit

$5,179,106.12 in gross income on which he paid millions in taxes is neither reasonable, Uddin,
551 F.3d at 181, nor in keeping with the principle that that a defendant should not be required to
forfeit the same gain twice, cf. United States v. Genova, 333 F.3d 750, 762 (7th Cir. 2003)
(vacating forfeiture in public corruption case due to impermissible double counting of bribes
with increase in equity in defendants home, reasoning that if the supplies that [defendant]
furnished came from criminal proceeds, then the value may be forfeited once, as cash or as an
interest in the property, but not twice).
The Second Circuits reasoning in Contorinis is instructive. In that case, the court
reversed a $12.65 million criminal forfeiture order under 18 U.S.C. 981(a)(1)(C) because the
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forfeiture order included the total profits of a fund traceable to the illegal behavior even though
the defendant never received or possessed those profits. See 692 F.3d at 145. While the court
recognized that a defendant may forfeit proceeds received by others who participated jointly in
the crime, it refused to extend[] the scope of a forfeiture to include proceeds that have never
been acquired either by a defendant or his joint actors. Id. at 147. To do so, the court
explained, would be at odds with the broadly accepted principle that forfeiture is calculated
based on a defendants gains. Id.; see also id. at 148 n.4 (remanding for district court to
calculate [t]o what extent appellants interest in salaries, bonuses, dividends, or enhanced value
of equity in the Fund can be said to be money acquired by the defendant through the illegal
transactions resulting in the forfeiture). Although the defendants conviction in Contorinis was
for securities fraud, the panels invocation of general, equitable principles to limit the
defendants forfeiture to his actual gain offers a sound basis on which to properly discount any
forfeiture award in this case. 3
In sum, the Government failed to carry its burden of proving its requested forfeiture
penalty beyond a preponderance of the evidence. Should the Court find otherwise, the forfeiture
penalty should be fairly and equitably reduced to reflect the tax payments Mr. Silver paid on his
allegedly unlawful gains. Cf. United States v. Annabi, 746 F.3d 83, 86 (2d Cir. 2014) (noting
that for fraud offenses involving unlawfully obtained loans, 18 U.S.C. 981(a)(1)(C) permits
an offset for that portion of the loan that was repaid with no loss to the victim).

Although the Second Circuit has denied requests to withhold tax payments from forfeiture
orders for criminal RICO convictions, see United States v. Lizza Indus., Inc., 775 F.2d 492
(2d Cir. 1985); United States v. Fruchter, 137 F. Appx 390 (2d Cir. 2005) (unpublished), the
unique circumstances under which Mr. Silver earned the disputed income, coupled with
equitable considerations described above, militate in favor of a reduction in forfeiture for his
tax payments.
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CONCLUSION
For the foregoing reasons, we respectfully request that the Court not order forfeiture as
calculated by the Probation Office, or, alternatively, that any forfeiture penalty be reduced by the
amount of taxes Mr. Silver paid on his allegedly unlawful gains as described above.

Dated:

April 20, 2016

New York, New York

Respectfully submitted,

/s/ Joel Cohen

STROOCK & STROOCK & LAVAN LLP
Joel Cohen
Dale J. Degenshein
180 Maiden Lane
New York, New York 10038
Telephone: (212) 806-5644
Facsimile: (212) 806-6006

/s/ Steven F. Molo

Steven F. Molo
Robert K. Kry
Justin V. Shur
MOLO LAMKEN LLP
540 Madison Avenue
New York, New York 10022
Telephone: (212) 607-8160
Facsimile: (212) 607-8161