Case 1:09-cr-00029-GLS Document 278 Filed 04/23/10 Page 1 of 14

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA, :

: Crim. No. 09-CR-029
v. : (Hon. Gary L. Sharpe)
:
JOSEPH L. BRUNO, :
:
Defendant. :
:

GOVERNMENT'S SENTENCING MEMORANDUM

On December 7, 2009, a jury returned a verdict finding

Defendant guilty of two counts of honest services mail fraud

(Counts 4 and 8), in violation of 18 U.S.C. §§ 1341 and 1346. The

jury found Defendant not guilty of Counts 1, 2, 5, 6, and 7, and

was unable to reach a verdict on Count 3. The United States

submits this Sentencing Memorandum in anticipation of sentencing,

which is scheduled for May 6, 2010.

For the reasons set forth below, the United States agrees with

the Guidelines calculations in the Presentence Report and

respectfully requests that this Court sentence Defendant to a term

of imprisonment of 97 months. In addition, pursuant to the terms

of the Stipulated Resolution of Forfeiture and Restitution, the

United States requests that this Court impose restitution and

forfeiture of $280,000.

I. APPLICABLE STATUTORY AND GUIDELINES PROVISIONS

A. Statutory Maximum Sentences

Defendant's honest services mail fraud convictions subject him

to a statutory maximum term of twenty years of imprisonment, 18

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U.S.C. §§ 1341 and 1346; a three-year term of supervised release,

see 18 U.S.C. § 3583; and a fine of up to $250,000, see 18 U.S.C.

§ 3571.

B. Factual Findings

The United States adopts the facts set forth in the

Presentence Report submitted by the United States Probation Office.

The United States disagrees with the facts as set forth by

Defendant in the addendum to the Presentence Report.

C. Calculation of the Sentencing Guidelines Range

The United States adopts the offense level computations, the

criminal history score, and the resulting Sentencing Guidelines

range set forth in the Presentence Report in all respects for the

following reasons:

1. U.S.S.G. §2C1.1 Is The Applicable Guideline.

The applicable guideline for honest services mail fraud is

§2C1.1. The Statutory Index for § 1341 refers to both §2C1.1 and

§2B1.1. U.S.S.G. App. A. Where the statutory index refers to more

than one guideline, "the guideline most appropriate for the offense

conduct charged in the count of which the defendant was convicted"

is used. U.S.S.G. App. A, intro. Here, it is clear that the

applicable guideline is §2C1.1 because its title, statutory

provisions, and background all specifically refer to honest

services mail fraud. See U.S.S.G. §2C1.1, title ("Fraud Involving

the Deprivation of the Intangible Right to Honest Services of

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Public Officials"); id. at comment. (statutory provisions)("1341

(if the scheme or artifice to defraud was to deprive another of the

intangible right of honest services of a public official)"); id. at

backg'd.("Section 2C1.1 also applies to fraud involving the

deprivation of the intangible right to honest services of

government officials").

2. Application of §2C1.1

Section 2C1.1 states in pertinent part:

2C1.1 Offering, Giving, Soliciting or Receiving

a Bribe; Extortion Under Color of
Official Right; Fraud Involving the
Deprivation of the Intangible Right to
Honest Services of Public Officials;
Conspiracy to Defraud by Interference
with Governmental Functions

(a) Base Offense level

(1) 14, if the defendant was a public official

(b) Specific Offense Characteristics

(2) If the value of the payment, the benefit

received or to be received in return for the
payment, the value of anything obtained or to
be obtained by a public official or others
acting with a public official, or the loss to
the government from the offense, whichever is
greater, exceeded $5,000, increase by the
number of levels from the table in
§2B1.1(Theft, Property Destruction, and Fraud)
corresponding to that amount.

(3) If the offense involved an elected public

official or any public official in a high-
level decision-making or sensitive position,
increase by 4 levels. If the resulting
offense level is less than level 18, increase
to level 18

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Defendant was a public official (base offense level 14), who

was "in a high-level decision-making or sensitive position" (4-

level increase). In addition, "the value of anything obtained by"

Defendant, for the counts of conviction, was more than $200,000

resulting in a 12-level increase pursuant to §2C1.1(b)(2).1

Because honest services fraud cases "typically involve an improper

use of government influence that harms the operation of government

in a manner similar to bribery offenses," U.S.S.G. §2C1.1,

backg'd., it is appropriate to apply this specific offense

characteristic. See United States v. Woodard, 459 F.3d 1078, 1087

(11th Cir. 2006) (concluding that where police captain benefitted

from undisclosed conflict of interest resulting from a business he

created whereby his wife contacted people whose property was being

held by the police department and, for percentage, obtained return

of property, "every dollar RAP took from the City resulted from

1
Although Defendant was acquitted of the charges in Counts 1,
2, 5, 6, and 7, and the jury was unable to reach a verdict on Count
3, this Court may include the payments relating to those counts as
"relevant conduct" in determining defendant's sentencing range.
See United States v. Vaughn, 430 F.3d 518, 527 (2d Cir. 2005)
(district court may consider acquitted conduct when sentencing
within the statutory range authorized by the jury's verdict). The
extent to which to include those payments is a matter committed to
this Court's sound discretion. See id. ("We restate, however,
that while district courts may take into account acquitted conduct
in calculating a defendant's Guidelines range, they are not
required to do so. Rather, district courts should consider the
jury's acquittal when assessing the weight and quality of the
evidence presented by the prosecution and determining a reasonable
sentence."). Inclusion of those payments, which would bring the
total payments to approximately $3.2 million, would result in an
additional 6-level increase.

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depriving the City of [defendant's] honest services."); United

States v. Antico, 275 F.3d 245, 270, 271 (3d Cir. 2001) (concluding

that loss was the amount received by girlfriend's company where

public official failed to recuse or to disclose conflict of

interest resulting from his approval of permits for girlfriend's

company); United States v. Parrish, 84 F.3d 816, 819 (6th Cir.

1996) (stating that where defendant, in breach of her fiduciary

duty to her employer, accepted commissions from contractor in

exchange for recommending that contractor to her employer,

commission payments "rightly formed the basis for determining the

appropriate offense level under the guidelines;" "A fiduciary who

violates her duties for her own profit 'is accountable . . . for

all the profits obtained . . . although the . . . [party owed the

duty] may not have been injured thereby.'") (quoting Jackson v.

Smith, 254 U.S. 586, 588-89 (1921)).

The total adjusted offense level is therefore 30.

3. The 2009 Guidelines Manual, Which Does Not Have a

Cross-Reference to §2C1.3, Applies.

The 2009 Guidelines Manual is the appropriate manual. See

U.S.S.G. §1B1.11 (directing application of Guidelines Manual in

effect on the date of sentencing instead of the Guidelines Manual

in effect on the offense date unless that would violate the ex post

facto clause). Here, the mailings identified in Count 4 occurred

between March 2, 2004 and November 29, 2004, while the mailing

charged in Count 8 occurred on November 15, 2005. The dates of the

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mailings in Count 4 straddle the November 1, 2004 guideline

amendments, including an amendment affecting the applicable

guideline for honest services fraud. Consideration of the effect

of the November 1, 2004 guideline amendments is therefore

necessary.

Before November 1, 2004, the applicable guideline for honest

services mail fraud was §2C1.7 and that guideline contained a cross

reference to §2C1.3 (Conflict of Interest). U.S.S.G. §2C1.7(c)(4)

(2003) ("If the offense is covered more specifically under [§2C1.1,

2C1.2, or §2C1.3], apply the offense guideline that most

specifically covers the offense."). Since November 1, 2004, the

applicable guideline for honest services mail fraud has been §2C1.1

and that guideline does not cross reference §2C1.3.

The current guideline applies here because the mailing charged

in Count 8 occurred more than one year after that guideline was

last revised. See §1B1.11(b)(3) (“If the defendant is convicted of

two offenses, the first committed before and the second after, a

revised edition of the Guidelines Manual became effective, the

revised edition of the Guidelines Manual is to be applied to both

offenses.); see also United States v. Broderson, 67 F.3d 452, 456

(2d Cir. 1995) (affirming district court's application of manual in

effect on the sentencing date where last count of indictment

charged wire communication after effective date of enhancement

reflected in manual in effect on the sentencing date). As a

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result, it is unnecessary for this Court to decide whether the ex

post facto clause applies at all now that the Guidelines are not

mandatory. See United States v. Johnson, 558 F.3d 193, 194 n. 1

(2d Cir. 2009) (noting that issue is "open question"). It is the

government's position that the ex post facto clause does not apply

now that the Guidelines are not mandatory.

Even assuming for the sake of argument that the deleted cross-

reference should be examined, neither its plain language nor

interpretative case law would warrant its application here.

On its face, §2C1.3, "Conflict of Interest; Payment or Receipt

of Unauthorized Compensation," does not more specifically cover

Defendant's honest services mail fraud offense. In fact, the plain

language of §2C1.1 makes clear that it is the applicable guideline

for honest services mail fraud. See supra at 3 (title and

commentary refer to honest services mail fraud). See also United

States v. Seminerio, 2010 WL 148618, at *13 (S.D.N.Y. 2010)

(concluding that the "Sentencing Commission intended Section 2C1.1

to apply to [honest services mail fraud]" because the §2C1.1

Commentary lists honest services fraud while the §2C1.3 Commentary

does not).

In addition, virtually all of the courts that have examined

whether the deleted cross-reference should be applied to honest

services fraud cases have concluded that it should not. For

example, in United States v. Grandmaison, 77 F.3d 555, 558 (1st

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Cir. 1996), the First Circuit affirmed the district court's refusal

to apply §2C1.3 where an alderman, who also worked for a

construction company, recused himself for construction company

bids, but "secretly took steps to manipulate the contacts he

enjoyed as an alderman to Eckman Construction's advantage." As the

First Circuit explained:

Defendant maintains that he is mainly guilty of not

revealing a conflict of interest. To be sure, his
conduct involved some element of such a violation. It
does not follow from this, however, that he should not be
sentenced pursuant to section 2C1.7, the guideline
corresponding to the mail fraud statute to which he pled
guilty. First, we are convinced that 18 U.S.C. §§ 1341,
1346 encompasses crimes of the sort committed by
defendant. Second, even if the applicability of section
1346 were suspect, we are not at all certain that
downward departure to the sentence prescribed by section
2C1.3 would be appropriate. This is principally because
section 2C1.3 linguistically does not apply to defendant
or his conduct; that guideline only addresses conflicts
of interests by present or former federal officers and
employees and, therefore, does not reach state or local
officials such as defendant. In the final analysis,
defendant has managed to persuade us of only one thing:
that had he been a federal employee or official, the
government might have been able to charge him with
violating other statutes as well. See U.S.S.G. §2C1.3
(listing statutory provisions corresponding to that
guideline). Because this argument clearly does not merit
the application of a lower sentencing range defendant
seeks, we affirm the district court's refusal to depart
downward by analogy to section 2C1.3.

77 F.3d at 567.

The Eighth Circuit also upheld the district court's

application of §2C1.7 instead of §2C1.3 in an honest services fraud

case. United States v. Jennings, 487 F.3d 564, 586-88 (8th Cir.

2007). As the Eighth Circuit explained, §2C1.7 was the appropriate

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guideline because the legislator not only failed to disclose a

conflict of interest, but he also used his position of power to

lobby for personal interests and to influence colleagues.

Defendant relies on the exception to this line of cases,

United States v. Hasner, 340 F.3d 1261 (11th Cir. 2003). Although

the Eleventh Circuit affirmed the district court's application of

§2C1.3 to an honest services fraud conviction in Hasner, its

conclusion was limited: "Because the offense at issue essentially

involved Hasner's failure to disclose his conflicts of interest,

the district court did not clearly err by applying section 2C1.3 to

Fisher and Hasner's offenses." Id. at 1276. The Jennings court,

which cited and considered both Grandmaison and Hasner, concluded

that, as with Grandmaison, "there was more to [the legislator's]

scheme than a conflict of interest." Jennings, 487 F.3d at 588.

Here, as in Jennings and Grandmaison, even assuming for the

sake of argument that the deleted cross-reference should be

considered, §2C1.1 should still be applied because there was more

to Defendant's scheme than just an undisclosed conflict of

interest. As alleged in the Indictment and proven at trial,

Defendant devised "a scheme to defraud New York and its citizens of

the intangible right to his honest services by (a) contacting for

personal compensation and enrichment, and (b) entering and

attempting to enter into direct and indirect financial

relationships with, persons or entities who were pursuing interests

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before the Legislature or State agencies, and by concealing,

disguising, and failing to disclose the existence and nature of

such compensated contacts and financial relationships, and the

resulting conflicts of interest." Indictment, ¶ 18. Defendant

also "contact[ed] persons or entities who had business before the

Legislature or State agencies . . . exploiting his official

position for personal compensation and enrichment, knowing and

believing that his reasonably perceived ability to influence

official action would, at least in part, motivate those he

contacted to enter into financial relationships beneficial to his

personal financial interests." Indictment, ¶ 19. Defendant "did

not perform legitimate work commensurate with the payments from

Jared E. Abbruzzese through the Abbruzzese Companies and, as a

result, the payments were, in whole or in part, gifts." Indictment

¶ 51.

The nature of Defendant's scheme and his actions – targeting

individuals and entities over whom he held official power,

concealing relationships by use of a "straw" consulting business,

and taking official action benefitting these individuals and

entities, – demonstrate that this case involves far more than an

undisclosed conflict of interest.2

2
There was also significant evidence that Defendant used state
employees to conduct his personal business.

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4. Acceptance of Responsibility

Defendant is not entitled to a downward adjustment pursuant to

U.S.S.G. §3E1.1(a) because he has not accepted responsibility. See

United States v. Reifler, 446 F.3d 65, 110 (2d. Cir. 2006)

(adjustment "'not intended to apply to a defendant who puts the

government to its burden of proof at trial by denying the essential

factual elements of guilt [and] is convicted,' even if he 'then

admits guilt and expresses remorse.'") (quoting U.S.S.G. §3E1.1,

Application Note 2).

5. Criminal History Category

The government agrees that Defendant's criminal history is I

as set forth in the Presentence Report.

6. Forfeiture, Restitution, and Fine

The parties have agreed to a total monetary sanction of

$280,000. Defendant consents to (1) an order of forfeiture of

$280,000, and (2) an order of restitution of $280,000. Payment of

restitution will be credited to the forfeiture money judgment.

7. Guidelines Range and Sentence

As described above and set forth in the presentece report, the

total offense level is 30, and the criminal history category is I.

Defendant should therefore receive a sentence of 97 to 121 months

imprisonment and a supervised release term of 2 to 3 years absent

a departure or variance from the applicable guidelines range

pursuant to United States v. Booker, 543 U.S. 220 (2005).

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The government objects to the imposition of a sentence below

the applicable guidelines range. The record reveals no mitigating

factors not adequately considered by the Sentencing Commission that

would remove this case from the "mine-run" of similar cases, see

Rita v. United States, 551 U.S. 338, 352 (2007).

III. GOVERNMENT'S SENTENCING RECOMMENDATION

Based on all of the information before the Court, the

government respectfully recommends a sentence of 97 months (the low

end of the Guidelines range)3 and requests that this Court order

forfeiture and restitution of $280,000. This recommended sentence

is "sufficient, but not greater than necessary," to comply with the

sentencing purposes in 18 U.S.C. § 3553(a)(2).

The nature and circumstances of this offense are particularly

egregious. Defendant, whose position as New York State Senate

Majority Leader made him one of the three most powerful men in New

York State, exploited his office for his own personal gain. Under

the guise of a "consulting" business, Defendant enriched himself by

contacting people and entities with business before the New York

3
"[I]n the ordinary case, the Commission's recommendation of
a sentencing range will 'reflect a rough approximation of sentences
that might achieve § 3553(a)'s objectives.'" Kimbrough v. United
States, 552 U.S. 85 (2007); see, e.g., Gall v. United States, 552
U.S. 38 (2007) (Guidelines are "the product of careful study based
on extensive empirical evidence derived from the review of
thousands of individual sentencing decisions"). Moreover,
within-guidelines sentences promote Congress's goal in enacting the
Sentencing Reform Act -- "to diminish unwarranted sentencing
disparity." Rita v. United States, 551 U.S. 338, 354 (2007).

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State Senate. Defendant was well aware that the people he

solicited understood the breadth and scope of the power he enjoyed

as a result of his office. This enabled Defendant to extract

exorbitant payments while performing no legitimate services

anywhere commensurate with the magnitude of those payments.

Despite the resulting material conflicts of interest,

Defendant took official action benefitting the interests of the

people and entities he contacted. He also used his "consulting"

business to conceal and disguise the true nature of the payments

from the public. For example, the agreements with Communication

Technology Advisors LLC and Capital & Technology Advisors LLC were

with Joseph L. Bruno individually. Defendant nevertheless directed

that payments from these companies be reported as if the agreements

were with his "consulting" business, Capital Business Consultants

LLC. There was no legitimate reason for this, and the plain

purpose was to conceal and disguise the true source of the

payments. Without information about who was paying Defendant, the

citizens of New York State and members of the legislature were not

able to evaluate whether Defendant had placed his financial self-

interest above the public interest.

Defendant further abused his public office by directing state

employees to deposit payments, transfer funds, follow up on late

payments, and review "consulting" agreements. These state

employees often did this work on state time.

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The massive amount of taxpayer money Defendant directed to the

Capital District by virtue of his control of members items and

other state money does not warrant a lower sentence. Neither does

his age.

Defendant has eroded the confidence of the citizens of New

York State in the proper functioning of their government by

choosing to put his own personal financial interests ahead of the

interests of those who elected him to serve them. Given the

duration, complexity, and magnitude of Defendant's conduct, a

sentence of 97 months is necessary "to reflect the seriousness of

the offense, to promote respect for the law, . . . to provide just

punishment for the offense[,] and to afford adequate deterrence to

criminal conduct."

Dated: April 23, 2010 Respectfully submitted,

RICHARD S. HARTUNIAN
United States Attorney

By: /s/ Elizabeth C. Coombe

Elizabeth C. Coombe
Bar Roll No. 511925
William C. Pericak
Bar Roll No. 102352
Assistant U. S. Attorneys

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