Michael Brown Prosecution Sentencing Memo

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 1 of 28

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA UNITED STATES OF AMERICA v. MICHAEL A. BROWN, Defendant. : : : : : : : CRIMINAL NO. 13-164 (RWR)

GOVERNMENT=S MEMORANDUM IN AID OF SENTENCING The United States of America, by and through its attorney, the United States Attorney for the District of Columbia, respectfully submits this memorandum in aid of sentencing concerning Defendant Michael A. Brown. Procedural Background On June 10, 2013, Defendant, a former member of the Council of the District of Columbia (“D.C. Council”), pled guilty to a one-count Information charging bribery of a public official for a scheme in which Defendant accepted a total of $55,000 in a series of meetings, spanning eight months, with undercover FBI agents posing as officials of a company that purportedly wanted to win government contracting opportunities. Defendant entered his guilty plea before the Honorable Robert L. Wilkins, pursuant to a Plea Agreement dated May 30, 2013. See ECF No. 8 (the “Original Plea Agreement”). The guilty plea was pursuant to Rule

11(c)(1)(C) of the Federal Rules of Criminal Procedure and capped the maximum term of incarceration at 37 months, which was at the low-end of the advisory Guidelines range stipulated to by the parties (37-46 months). During the plea proceeding, Defendant acknowledged the factual basis for his plea of guilty as presented in the Statement of the Offense and Other Conduct. See ECF No. 9 (the “Original Statement of Offense and Other Conduct”). Judge 1

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 2 of 28

Wilkins concluded that Defendant’s guilty plea was knowing, voluntary, and with a sufficient factual and legal basis, but deferred ruling on whether or not to accept the Rule 11(c)(1)(C) guilty plea until completion of a Pre-Sentence Report and arguments from counsel. As part of the Original Plea Agreement, Defendant agreed to cooperate with the government in ongoing criminal investigations. On January 16, 2014, this matter was reassigned to this Court after Judge Wilkins was elevated to the United States Court of Appeals for the District of Columbia Circuit. On February 7, 2014, the parties filed a Joint Status Report and Joint Motion to Amend Plea Agreement and Statement of Offense and Other Conduct. See ECF No. 25. The Amended Plea Agreement modified Paragraph 4 of the Original Plea Agreement to change only the agreed sentence under Rule 11(c)(1)(C), specifically, that a sentence of up to 43 months of incarceration, rather than 37 months of incarceration as provided in the Original Plea Agreement, is the appropriate sentence in this matter pursuant to the sentencing factors set forth in 18 U.S.C. § 3553(a). Sentencing in this matter is scheduled for May 8, 2014, at 10:00 a.m. Summary of the Government’s Sentencing Recommendation For the reasons discussed further below, pursuant to Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure, the government respectfully requests that the Court accept the Amended Plea Agreement between the government and Defendant. As provided in the

Amended Plea Agreement, the government recommends that this Court sentence Defendant to 43 months of incarceration, which is the maximum period of incarceration allowed under the Amended Plea Agreement, impose a forfeiture money judgment in the amount of $35,000, and impose a three-year period of supervised release. As discussed further below, when one views 2

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 3 of 28

Defendant’s history and characteristics, his financial condition at the time of the offense, the nature and circumstances of the offense, the seriousness of the offense, and the need for avoiding unwarranted sentencing disparities, there can be little doubt that a sentence of 43 months is sufficient but not greater than necessary to comply with the sentencing factors in 18 U.S.C. § 3553(a). More particularly, based on the defendant’s prior criminal history, which significantly graduated in severity over time from a misdemeanor campaign finance violation in 1997, to more serious campaign finance violations in at least 2007 and 2008, and to the instant offense of bribery in which Defendant sold his elected office for personal gain, the government respectfully submits that a period of incarceration of 43 months, which is slightly higher than the mid-point of the advisory Guidelines range of 37-46 months, is the appropriate sentence here. The Offense Conduct Defendant was elected as an at-large member of the D.C. Council in November 2008 and took office in January 2009. He left office on January 2, 2013, following his defeat in November 2012 for re-election. Defendant then launched a bid to win another at-large Council seat in a special election scheduled for April 23, 2013. Defendant withdrew his candidacy on April 2, 2013, less than three weeks after he was confronted by law enforcement in the bribery scheme. Defendant’s at-large Council duties included acting as Chair of the Committee on Economic Development and Housing. The committee is responsible for matters related to economic, industrial, and commercial development. The bribery scheme focused largely on a special program run by the District of Columbia government to help its small, local businesses become economically viable: the certified business enterprise (CBE) program. Status as a CBE carries preferential procurement and contracting opportunities. To be eligible for this

3

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 4 of 28

designation, businesses must meet certain requirements and be certified by the District of Columbia’s Department of Small and Local Business Development (DSLBD). Prior to July 11, 2012, Defendant had discussions about obtaining assistance of $50,000 to $75,000 for Defendant from a government contractor. Defendant expected to assist the government contractor with its business if the contractor provided such financial assistance to Defendant. These discussions led to a series of meetings with two undercover FBI agents, posing as employees of a Maryland company – referred to in court papers as “Company M” – that wanted CBE approval and contracting opportunities. Between July 2012 and March 2013, Defendant met in person with one or both of the undercover agents a total of eight times. He communicated primarily with an agent described in the court documents as “Undercover Employee 1” or “UCE1.” He was in contact with this undercover agent on more than 30 separate days, in person, by phone, or by text, frequently seeking payment, in whole or in part, for the efforts he was making on the company’s behalf. Indeed, over the months, Defendant made calls on the company’s behalf to the director of the DSLBD, introduced the undercover agents to a contractor at a symposium he sponsored, directed the Committee Director of the Committee on Economic Development and Housing to assist the company, and took other actions meant to speed through the company’s attempts to win approval as a CBE. He continued these efforts even after his defeat in the November 2012 election and even after leaving office on January 2, 2013. The payments to Defendant were made during the following meetings: July 11, 2012: Defendant met UCE-1 at the Channel Inn, a restaurant in the District of Columbia. Prior to July 11, 2012, Defendant had not met UCE-1. UCE-1 was introduced to 4

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 5 of 28

Defendant as an employee of Company M, which was purportedly interested in obtaining CBE approval and contracting opportunities in the District of Columbia. During the meeting,

Defendant accepted $15,000 in cash from UCE-1 as part of a promised amount of $50,000 for Defendant’s efforts to use his official position to assist the company in becoming a CBE and obtaining contracting opportunities. The cash was in denominations of $100 bills and in a duffel bag with a Washington Nationals baseball hat and two Nationals T-shirts. August 7, 2012: Defendant met with UCE-1 at the Channel Inn and accepted an additional $10,000 in cash in exchange for continuing to assist the company in obtaining approval of its CBE application and contracting opportunities. The cash was in denominations of $100 bills and placed inside a Washington Redskins coffee mug. 1 During the meeting on August 7, 2012, UCE-1 stated that Defendant would get “the other 25” upon approval, and Defendant said, “or north.” Defendant said he would call the DSLBD after the company submitted the necessary paperwork for the CBE application and aim to have the application moved “to the top of the pile.” August 28, 2012: Defendant again met with UCE-1 at the Channel Inn and accepted $5,000 in cash in exchange for Defendant’s assistance with the CBE application and contracting opportunities. The cash was in denominations of $100 bills and in a silver coffee mug. 2 During

Prior to that meeting, Defendant and UCE-1 had met on August 2, 2012, at the Four Seasons Hotel in the District of Columbia, to discuss Company M’s CBE application and its contracting opportunities. During the conversation on August 2, 2012, Defendant suggested that Company M could pay him an amount of money “north of” – meaning more than – the $35,000 balance that Company M owed to Defendant. The payment happened a day after Defendant and UCE-1 spoke by telephone on August 27, 2012. During that call, UCE-1 told Defendant that UCE-1 had a meeting at the DSLBD scheduled for August 30, 2012, but that UCE-1 might have to attend the meeting at the DSLBD without a certificate of occupancy as part of Company M’s CBE application. Defendant told 5
2

1

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 6 of 28

the meeting on August 28, 2012, Defendant said he would continue efforts to move the company’s application as quickly as possible. November 29, 2012: After losing his bid for re-election as an at-large member of the D.C. Council on November 6, 2012, Defendant continued to perform his duties as a Councilmember and, among other things, hosted an economic development symposium. During the symposium, Defendant introduced the two undercover agents to the director of the DSLBD concerning the company’s CBE application. Defendant also introduced the undercover agents to a local businessman, who, according to Defendant, facilitated financing for contractors. That night, Defendant met UCE-1 at the Chanel Inn and accepted another $5,000 in cash as payment for his assistance with the CBE application and contracting opportunities. The cash was in denominations of $100 bills and in an envelope. 3 March 14, 2013: After leaving office on January 2, 2013, Defendant continued to attempt to meet and talk to the undercover agents. On March 14, 2013, Defendant met the two undercover agents at a conference room at the Marriott Wardman Park Hotel, after being told the company was pleased with how quickly its application was moving along and ready to make its final payment. During the meeting, Defendant accepted $15,000 in cash as fulfillment of the UCE-1 that Defendant would call the District of Columbia’s Department of Consumer and Regulatory Affairs (DCRA) to check on the status of Company M’s certificate of occupancy. Later, on August 27, 2012, Defendant called UCE-1 and stated that he had called the “head dude” at the DCRA to “see what’s up.” This payment followed a meeting on the evening of November 15, 2012, between Defendant, UCE-1, and UCE-2 at The Hamilton restaurant in the District of Columbia. During the meeting, Defendant stated he was continuing to look into a “waiver” for Company M’s CBE certification. In addressing the approach Defendant anticipated that the DSLBD would take to approve Company M’s CBE application, Defendant stated, “I don’t think they’re going to do just one company out of the whole. You have to be in a group of companies . . . they’re trying to figure out how many to put . . . in another wave that’s about to come through. And then we can put you guys in that wave. Rather than just you by yourself because then there’s less scrutiny.” 6
3

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 7 of 28

company’s promise to pay $50,000 to Defendant for assistance in obtaining CBE approval and government contracting opportunities. Defendant also accepted a “bonus” of $5,000 cash for Defendant’s past official acts on behalf of the company and future influence if Defendant were re-elected to public office. The cash was in denominations of $100 bills and wrapped with a rubber band. At the end of the meeting, law enforcement agents entered the room to announce their presence and seized the $20,000 in cash from Defendant. Other Conduct Admitted by Defendant As part of his plea, Defendant also admitted to additional criminal conduct relating to campaign finance violations concerning his 2007 and 2008 campaigns for D.C. Council. Specifically, Defendant admitted to receiving “off-the-books” campaign contributions from Jeffrey Thompson (“Thompson), a local businessman in the District of Columbia, who Defendant knew through family connections and mutual friends. Thompson directed payments to Defendant’s campaigns through another co-conspirator, Eugenia C. Harris (“Harris”). Secret Funding for Defendant’s Campaign for the Ward 4 Seat on the D.C. Council (2007) In the Spring of 2007, Defendant was an announced candidate in a special election for the Ward 4 seat on the D.C. Council. In or around that time, Defendant met Thompson to address Defendant’s 2007 campaign for the Ward 4 seat. Defendant understood from his discussion with Thompson during that meeting, and from similar discussions with Thompson during Defendant’s candidacy for Mayor in 2005-06, that Thompson would not contribute to Defendant’s campaign in a public manner due to Thompson’s perception that his business activities required him to publicly support different candidates based on the contemporaneous political dynamics. During the same meeting, however, Thompson agreed to contribute to Defendant’s campaign in a non7

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 8 of 28

public manner. Defendant understood that these contributions would be publicly disclosed as having been contributed in the name of another person and also would exceed the limits on the amount that an individual could contribute to a political campaign. At the end of the meeting, Thompson told Defendant that he would hear from somebody to arrange Thompson’s contribution to Defendant’s political campaign committee. Defendant was later contacted by Harris, who discussed with Defendant the arrangement through which Thompson would contribute to Defendant’s campaign. Specifically, Harris and Defendant agreed to mask the contribution from Thompson as a campaign contribution directly from Defendant to his own political campaign (since there was no limit on the amount that a candidate could contribute to his or her own campaign, provided the candidate publicly disclosed the contribution). Pursuant to the agreement, Thompson provided the money to Harris, who then sent two wire transfers in the amount of $10,000 each to Defendant’s personal account in April and May 2007. Defendant, in turn, contributed the funds to his political campaign and filed campaign finance reports with the District of Columbia’s Office of Campaign Finance (OCF) publicly disclosing that Defendant made an individual contribution of $25,000 to his political campaign in April 2007. Defendant knew that this false disclosure disguised the fact that Thompson was the source of a $20,000 contribution. Defendant was not successful in the election for the Ward 4 seat on the D.C. Council. Secret Funding for Defendant’s Campaign for At-Large Member of the D.C. Council (2008) After losing the election for the Ward 4 seat, Defendant decided to enter the election for At-Large Member of the D.C. Council, which was scheduled to be held on November 4, 2008. Defendant met with Thompson again in 2008, during which Thompson agreed to support 8

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 9 of 28

Defendant’s campaign for an At-Large seat on the D.C. Council by helping to solicit contributions, but not in a public manner. Thereafter, Defendant’s campaign received donations from individuals and entities associated with Thompson. When Defendant’s campaign started to experience financial troubles in October 2008, including at least one check returned for insufficient funds, Defendant again met with Thompson and sought an in-kind contribution in excess of $100,000 to fund get out the vote efforts in support of and in coordination with Defendant’s campaign. During the meeting, Thompson discussed and agreed with Defendant to the following: (i) Thompson would contribute to Defendant’s campaign, but not in a public manner; (ii) Thompson’s contribution would exceed the limits for an individual contribution under campaign finance laws; and (iii) Harris, at Thompson’s direction, would be in contact with Defendant to arrange Thompson’s in-kind contribution. Defendant understood from the

discussion that Thompson’s contribution would not be disclosed to OCF. Following this meeting, at Thompson’s direction, Defendant met with Harris and provided her with a list of expected campaign expenses to be paid with funds from Thompson. For example, on October 29, 2008, at Thompson’s direction, Harris sent a $35,000 wire transfer to a vendor for services provided to Defendant’s campaign. Additionally, on November 3, 2008, the day before the general election, at Thompson’s direction, Harris issued a check for $44,150 payable to Defendant, which Defendant cashed the same day. Defendant provided $39,850 in cash and a cashier’s check in the amount of $4,300 to a campaign consultant to pay for get out the vote efforts. Defendant subsequently filed false and misleading campaign finance disclosures with OCF that misrepresented and concealed the in-kind contributions provided directly and indirectly by Thompson and Harris. 9

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 10 of 28

In November 4, 2008, Defendant was elected an At-Large Member of the D.C. Council. Statutory Penalties Defendant faces a maximum sentence of 15 years of imprisonment; a fine of up to $250,000; a term of supervised release of up to three years; and a $100 special assessment. PSR && 5, 170, 181, 190 (citing relevant statutory sections). Sentencing Guidelines A district court “should begin all sentencing proceedings by correctly calculating the applicable Guidelines range.” United States v. Gall, 552 U.S. 38, 49 (2007) (citation omitted). The Guidelines are “the product of careful study based on extensive empirical evidence derived from the review of thousands of individual sentencing decisions,” id. at 46, and are the “starting point and the initial benchmark,” id. at 49. The district court should next consider all of the applicable factors set forth in 18 U.S.C. § 3553(a). Id. at 49-50. Indeed, the Guidelines

themselves are designed to calculate sentences in a way that implements the considerations relevant to sentencing as articulated in § 3553(a). Rita v. United States, 551 U.S. 338, 348-49 (2007). The parties stipulated that Defendant’s total offense level under the Guidelines was 21. With a total offense level of 21 and a criminal history of Category I, the parties agreed that the applicable Guideline range is 37 to 46 months of imprisonment. The Presentence Investigation Report (“PSR”) places Defendant=s total offense level at 23. PSR & 119. The PSR calculates Defendant=s criminal history in Category I (0 points). PSR & 126. The Guideline range for a total offense level of 23 with a criminal history of Category I is 46 to 57 months of imprisonment. PSR & 171. The Guidelines recommend a period of

10

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 11 of 28

supervised release of one year to three years for a defendant convicted of 18 U.S.C. § 201. PSR & 182. The difference between the PSR’s Guideline range and the parties’ stipulated Guideline range is that the parties stipulated that a six-level adjustment would be proper under § 2B1.1(b)(1)(D) for a value of payments in excess of $30,000, but less than $70,000. By contrast, the PSR applied an eight-level adjustment under § 2B1.1(b)(1)(E) and § 2C1.1(b)(2) for a value of payments in excess of $70,000, but less than $120,000. PSR & 110. The government respectfully submits that the PSR’s reliance on § 2B1.1(b)(1)(E) as the appropriate specific offense characteristic for purposes of calculating the value of the payment pursuant to § 2C1.1(b)(2) is without factual or legal basis. It is undisputed that, as noted in the original and amended plea agreements, the value of the bribe payment in this case was $55,000, which falls under § 2B1.1(b)(1)(D), as it exceeds $30,000, but is less than $70,000. The PSR does not contend otherwise. Instead, to reach its higher loss amount under the Guidelines, the PSR includes some – but not all – of the amounts encompassed in defendant’s unrelated and uncharged campaign finance violations from 2007 and 2008. See PSR at p. 45. Except for being illegal and involving Defendant, the campaign finance violations in 2007 and 2008 have no commonalities or connection to the 2012-13 bribery charge. The factual stipulations concerning defendant’s campaign finance violations were included in Defendant’s statement of offense as information to assist the Court in determining an appropriate sentence under 18 U.S.C. § 3553(a). Such unrelated and uncharged conduct was not intended as – and should not be considered – conduct for purposes of the advisory Guidelines. Accordingly, the appropriate specific offense characteristic for purposes of calculating the value of the payment pursuant to §

11

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 12 of 28

2C1.1(b)(2) requires the addition of six levels instead of eight levels, resulting in an adjusted offense level of 24 and a total offense level of 21. Cooperation and Government’s Sentencing Recommendation Based on the factors set forth in § 3553(a), the government recommends that the Court sentence Defendant to 43 months of incarceration, impose a forfeiture money judgment in the amount of $35,000, and impose a three-year period of supervised release. The § 3553(a) factors include the following: (1) the nature and circumstances of the offense and the history and characteristics of the defendant; (2) the need for the sentence imposed to reflect the seriousness of the offense, to provide just punishment for the offense, to afford adequate deterrence to criminal conduct, to protect the public from further crimes of the defendant, and to provide the defendant with needed correctional treatment; (3) the Sentencing Guidelines and related Sentencing Commission policy statements; and (4) the need to avoid unwarranted sentence disparities. Defendant’s History and Characteristics Defendant did not face the hardships and personal challenges that many criminal defendants who come before this Court face in their daily lives. He was not born into poverty or a broken home, or forced to endure the risk of violence and crime as part of his day-to-day activities. By all accounts, Defendant had a very fortuitous childhood and family upbringing by two parents who treated him well, cared for him, and provided him with every opportunity to succeed. His parents both maintained successful careers and, largely as a result of his family’s hard work and venerated name, Defendant was afforded advantages and opportunities that few others have. As noted in the PSR, Defendant “considered himself very fortunate and his family regularly traveled with his father which exposed them to a variety of experiences.” PSR ¶ 133. 12

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 13 of 28

Defendant, for example, had the benefit of a high school, college, and law school education. He graduated from Archbishop Carroll High School in the District of Columbia and Clark University in Worcester, Massachusetts, where he earned a Bachelor of Science degree in political science. PSR ¶ 149. He later obtained his Juris Doctorate from Widener University School of Law in May 1991. PSR ¶ 150. Following his graduation from law school, Defendant obtained employment from law and lobbying firms in New York and Washington, D.C. PSR ¶¶ 155-58. Defendant had the honor of serving as a surrogate speaker during the 1992 and 1996 Clinton-Gore presidential campaigns, representing the candidates in debates and other political functions. PSR ¶ 158. Despite the advantages and benefits provided by his upbringing, education, and employment opportunities, an earlier campaign finance violation evidenced a flaw in Defendant’s character. Defendant served as an officer and shareholder of Dynamic Energy, Inc., a natural gas company located in Oklahoma in 1994. PSR ¶ 121. In 1997, Defendant pleaded guilty to a misdemeanor campaign finance violation related to conduit contributions that Defendant made to a congressional and senatorial campaign with funds he received from Dynamic Energy. Id. As noted in the PSR, Defendant made these conduit contributions through a secretary and two partners at a law firm where he worked in July and September 1994. Id. Despite his misdemeanor conviction, Defendant maintained his position at a prestigious law firm, Patton Boggs. He also served as the National Finance Vice Chairman of the

Democratic National Committee from 2000 until 2004. PSR ¶ 152. In addition, he served as a surrogate speaker for the Obama-Biden presidential campaigns, and has twice been appointed as a member of the United States Delegation to Africa. Id.

13

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 14 of 28

Such high-level professional positions, however, masked the continuing flaw in Defendant’s character that had appeared originally with Defendant’s misdemeanor campaign finance violation in 1997. That is, we know now – and Defendant has admitted – that he committed additional campaign finance violations during his failed 2007 Ward 4 campaign and his successful 2008 at-large campaign. Those campaign finance violations took the form of Defendant agreeing to accept off-the-book campaign contributions from Jeffrey Thompson, who at the time was the head of the City’s largest government contractor, and filing false reports with OCF to conceal those contributions. In November 2008, with the assistance of over $100,000 in off-the-book contributions from Thompson, Defendant was elected as an At-Large member of the D.C. Council, an elected position in which he served from January 2009 to January 2013, earning an annual salary of $128,000. PSR ¶ 153. The elected position provided Defendant with new responsibilities and a new income source. According to the PSR, Defendant’s 2009 tax return reflects total wages of $227,287 from his work as a lobbyist and $120,984 from the District of Columbia government, as well as additional income from legal services. PSR ¶ 155. At the time of the offense conduct, Defendant was a partner at another lobbying firm in Washington, D.C., earning income that ranged from $5,000 to $10,000 per month ($60,000 to $120,000 annually), in addition to his salary from the District of Columbia government. PSR ¶ 152. Defendant’s Financial Condition at the Time of the Offense Defendant had many of the qualities of successful politicians. He had a politically connected and venerated family name, good looks, and a charming personality. Those qualities helped him to win an at-large seat on the D.C. Council in 2008. Those qualities also helped him

14

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 15 of 28

to obtain the coveted chairmanship of the D.C. Council=s Committee on Economic Development in 2012. And those qualities put him on the short list of potential Mayoral candidates. But when it came to the qualities that should matter most for elective office – honesty and integrity – Michael Brown was simply unfit for the political heights he had reached. A review of Defendant’s character demonstrates that, in spite of the many advantages and opportunities he was afforded throughout his life, Defendant nevertheless chose to walk a path marred by shortcuts, easy money, and corruption. Those character flaws also demonstrate why a substantial period of incarceration is both necessary and proper. Understanding what drove Defendant to commit the charged offense, as well as the other conduct outlined in the Amended Statement of Offense, requires greater insight into what appears to have been the primary source of Defendant’s character flaw: his fondness for money and all that it could buy him. From the government=s perspective, there was one thing that brought balance to Michael Brown=s life more than anything else. It was money. When

Defendant had money, he could put his life in reasonable balance by satisfying his many creditors, the IRS, and, importantly to him, his fondness for nice things and an affluent image commensurate with that of high-profile politicians, lobbyists, and business people. The problem, and it was a problem of his for a long time, was that he never had enough money. And so his life – personally and professionally – was in a perpetual state of imbalance. To fully understand the offense conduct, therefore, a certain context concerning Defendant’s financial condition in the time period leading up to and during the commission of the offense is required. As outlined above, Defendant had the benefit of obtaining well-paid employment from various lobbying and law firms following his graduation from law school in 1991. Since 2007, Defendant earned an average annual salary of approximately $180,000 to 15

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 16 of 28

$300,000, comprised of his combined earnings as a lobbyist and as a member of the D.C. Council. PSR ¶¶ 152-55. According to the PSR, Defendant’s 2011 and 2012 tax returns reflect an adjusted gross income of $230,898 and $224,627, respectively. PSR ¶ 167. 4 As described in greater detail below, however, even that level of income was not sufficient to support Defendant’s lifestyle and spending habits. The government’s investigation revealed that Defendant’s financial condition had been in dire condition for a long period of time preceding the FBI undercover operation that led to the offense conduct. As noted in the PSR, the defendant had three federal tax liens filed in 2010, 2011, and 2012, relating to unpaid income taxes in the total amount of $86,656. 5 PSR ¶ 166. Defendant also owes money to banks and other retail organizations in the total amount of $249,266. 6 PSR ¶ 165. Moreover, the house that Defendant purchased with his then-wife in 1997 had three foreclosure notices recorded in 2009. PSR ¶ 162. Although Defendant advised the United States Probation Office that “his monthly mortgage payment of $7,000 was suspended pending sale of the property,” PSR ¶ 162, he omits the fact that he failed to make consistent payments on his mortgage obligation since at least April 2010. See Declaration of Special Agent Mary Gleason (“Gleason Decl.”) ¶ 5, attached as Exhibit A hereto. Additionally, according to In 2012, according to census data, any household that earned in excess of $146,000 and $191,156 constituted the top 10 percent and 5 percent, respectively, of household incomes in the country. See Income, Poverty, and Health Insurance Coverage in the United States: 2012, Table A-2, Selected Measures of Household Income Dispersion: 1967 to 2012 (available at https://www.census.gov/prod/2013pubs/p60-245.pdf). Assuming that Defendant’s “only” income were his salary as a private lobbyist and as a member of the D.C. Council, his household income would fit comfortably inside the top 5 to 10 percent of household incomes in the country. According to the PSR, the federal tax lien filed on February 24, 2011, in the amount of $13,773, was released on June 14, 2011. PSR ¶ 166. Based on the figures provided in the PSR, it appears that the correct total amount owed is $248,924. PSR ¶ 165. 16
6 5 4

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 17 of 28

records relating to Defendant’s mortgage, the outstanding balance on his loan, as of May 2012, was approximately $1.46 million, including the payment amount, late fees, and other fees. Id. Further, Defendant was delinquent in making payments for his 2008 Jeep Commander automotive loan. Gleason Decl. ¶ 6. According to records, a balance of $23,088 was

outstanding as of April 2012. Id. As noted in the PSR, Defendant also was sued three times for the late payment of rent on an apartment he rented in Northwest Washington, D.C. PSR ¶ 163. The failures and dysfunction in Defendant’s personal finances raise three significant questions. First, if Defendant was not using the money earned by his more than $200,000 annual salary to pay his taxes, mortgage, or creditors, what was he doing with the money that he earned? Second, if Defendant was not paying out those hefty expenses, why did he need even more money? Finally, from what other sources did Defendant obtain money to support his

unaffordable lifestyle? Each of those questions will be addressed in turn. Defendant’s Spending As part of its investigation, the government obtained evidence relating to Defendant’s personal finances for the last several years. Although largely unknown to the government when it initiated the instant investigation and made the first payment to Defendant through the undercover agent, it subsequently became clear that the financial pressure placed on Defendant was overwhelming. Without question, this financial pressure largely resulted from Defendant’s desire to live his life surrounded by finer amenities and luxuries such as an expensive golf course membership, rent for a high-end apartment, travel, hotel stays, and purchases at high-end retail stores. Gleason Decl. ¶ 7. In addition to his own household expenses, the subsequent

investigation revealed that Defendant incurred expenses on behalf of others relating to rent and mortgage payments, food expenses, health care expenses, and educational costs. Id. Those 17

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 18 of 28

financial pressures, coupled with the constant shadow of multiple looming creditors, easily allowed Defendant’s monthly spending to far exceed his monthly income. Id. Defendant’s Need for More Money The picture of Defendant’s finances illustrated an individual operating at a loss on an almost monthly basis. Driven by a need to satisfy his many creditors, dependents, and the IRS, as well as by his fondness for nice things, Defendant was desperate to find a way to fund his lifestyle and attempt to maintain balance in his personal finances. As described in the Amended Statement of Offense, Defendant chose to step across a line by accepting a bribe as a means of obtaining the money that he so desperately needed. Other Sources of Money By virtue of his family, Defendant was afforded resources well beyond the income that he earned and – for a time – he used that as a means and source of money as well. In particular, based on the government’s investigation, Defendant obtained large sums of money from the brokerage account of a close relative. Gleason Decl. ¶ 8. Specifically, according to financial records, between approximately July 2011 and May 2012, there were multiple payments made to Defendant’s American Express account from the relative’s brokerage account, totaling at least $140,000. Id. Defendant and his relative maintain the funds were loaned to Defendant. Beginning in May 2012, however, Defendant was no longer able to access the funds belonging to this particular close relative. Id. With no other additional sources of money to fund his lifestyle and maintain the outward appearances of an affluent politician and businessman, it turned out that Defendant’s need for money had grown greater and greater by the day. By the time Defendant met with the undercover agent on July 11, 2012, Defendant was delinquent on his mortgage and car loan, behind on his taxes, and without available credit lines. Over the 18

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 19 of 28

course of the months that followed, as the financial pressure on Defendant continued to grow greater, Defendant continuously sought additional cash payments from UCE-1 and UCE-2, which he often referred to as a “piece” or a “piece of the piece,” in exchange for the official acts he performed. The Nature and Circumstances of the Offense At the time of the offense conduct, Defendant appeared to be driven by a sense of entitlement and rationalization that his conduct was acceptable. What was made unmistakable to him, however, was the simple fact that the government contractors with whom Defendant believed he was dealing (i.e., UCE-1 and UCE-2) had a corrupt purpose in mind. Despite Defendant’s multiple attempts during his conversations with the undercover agents to minimize and mischaracterize the cash payments as a “loan” and to suggest that “one thing has nothing to do with the other,” the corrupt intentions of the people from whom he was receiving the bribe payment were crystal clear. As UCE-2 explained to Defendant during a call on November 26, 2012, “I'm not a bank – whether it’s a loan, whether you’re paying me back, or whether I'm giving it to you – really to me, that's miniscule. But, the thing is – I loaned it, gave it, or whatever it is, in an effort to get some access.” Amended Statement of Offense ¶ 35. UCE-2 also added that the cash payments made to Defendant were “linked together” with the access and assistance that Defendant was providing. Id. Despite being told explicitly by the undercover agent that the payments were linked to official acts, Defendant continued to accept payments from the agents posing as businessmen. Defendant acknowledged the connection between the payment and his official acts during a call with Person A on December 20, 2012, when Defendant stated that he needed to see UCE-1 for another payment (i.e., “the other piece”), explaining very clearly, “[B]ecause I did my part.” 19

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 20 of 28

Amended Statement of Offense ¶ 51. Defendant expanded on this entitlement to the money the following day, in another call with Person A. During that call, Defendant explained [T]hese are important people, and there is certainly a way they can equate, but when people hire lobbyists to do stuff – you know, this shit ain’t – no, it’s not cheap to get people on top of the pile. I can’t – you know, shit that’s not my fault that’s how the process works. The process is what it is, but they are way ahead of the curve. Way ahead! I mean, you probably could count on one hand how many applicants get to talk to the Director – and meet the Director. Amended Statement of Offense ¶ 54. In this way, Defendant committed one of the gravest acts for an elected public official – he sold himself and his office for personal gain. In so doing, Defendant betrayed the trust of every citizen of the District of Columbia and, in particular, all of the voters who entrusted him with their vote and support. Defendant also had corrupt purposes in mind in 2007 and 2008, when he accepted “offthe-books” campaign contributions from Jeffrey Thompson, knowing that those payments would not be disclosed to OCF. As outlined in the Amended Statement of Offense and Other Conduct, Defendant accepted $20,000 in unlawful campaign contributions in 2007 and $127,000 in unlawful, in-kind contributions in 2008. One of the payments in 2008 consisted of a $44,150 check that Defendant cashed at the bank on the day prior to the election. There can be no material doubt that, as Defendant walked the streets of the District of Columbia with approximately $40,000 in cash in his pocket, he knew and understood that what he was doing was wrong. Elected officials in the District of Columbia are bestowed an honor and a privilege by the voters who entrust them with the care of their City. They are entrusted, among other things, to ensure that the smallest and poorest of their constituents are treated as fairly and properly as the largest and most wealthy. They are entrusted to demonstrate, as true leaders, that they play by 20

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 21 of 28

the rules. Defendant’s repeated and willful participation in a “pay to play” system erodes the public’s confidence in the governmental process, the political process, and its elected representatives. Defendant has shown, through his acceptance of a $55,000 bribe payment in 2012, his acceptance of nearly $150,000 in “off-the-books” campaign contributions in 2007 and 2008, and his campaign finance violation dating back to 1997, that he is either unwilling or incapable of playing by the rules. Instead, his preferred path involves shortcuts and easy avenues of fast cash. Seriousness of the Offense; Punishment; and Deterrence The seriousness of this offense cannot be overstated. Defendant’s acceptance of a

$55,000 bribe payment was an offense driven by greed, entitlement, and self-interest. Through his conduct, Defendant evidenced disrespect for the law and disregard for the public office that he held and the people he had sworn to represent in office. When viewed in the context of the illegal campaign finance conduct in which Defendant engaged in 1994, 2007, and 2008, the offense conduct is all the more serious and disturbing. As such, the sentence the Court imposes should seek to: 1) deter others from engaging in similar conduct that might further undermine the integrity of the system; 2) provide confidence that public officials will be dealt with harshly if they sell their political office; and 3) clearly demonstrate that the culture of “pay to play” and “business as usual” will not be tolerated. A sentence of 43 months of incarceration also will serve as an appropriate punishment for Defendant, who has a prior conviction relating to campaign finance violations. Interestingly, at the time of sentencing in that matter, Defendant’s counsel submitted a sentencing memorandum on his behalf noting that the letters of support submitted therewith should “give the Court confidence that Mr. Brown will not repeat the mistakes that gave rise to this offense and that 21

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 22 of 28

there is no need or basis for requiring any conditions other than that he not break the law.” Defendant’s Memorandum in Aid of Sentencing in United States v. Michael A. Brown, 97-cr336, attached hereto as Exhibit B, at 2. Not only did Defendant “repeat the mistakes” of his prior campaign finance conviction in 2007 and 2008, he also advanced to public office and then sold that office in exchange for $55,000 in bribe money. Indeed, whatever “confidence” that may have existed at the time of Defendant’s previous sentencing has been shattered by repeated criminal and corrupt conduct. Defendant’s criminal behavior. Sentencing Guidelines and Unwarranted Sentence Disparities Consistent with the nature and circumstances of this offense and its seriousness, Defendant’s offense level calls for a significant period of incarceration. When one compares the government’s recommended sentence to the sentences imposed on similarly situated public officials who accepted similar types of bribe payments, it becomes clear that the recommended sentence of 43 months of incarceration in this case is warranted and appropriate: • United States v. Fitzroy Salesman, 467 Fed. Appx. 835 (11th Cir. 2012) (unpublished opinion) – an elected city commissioner from Miramar, Florida was convicted at trial of accepting bribes relating to programs receiving federal funds (18 U.S.C. § 666) and attempted extortion under color of official right. The defendant accepted $3,430 in bribe payments from undercover FBI agents in exchange for assistance with government contracts over the course of a 2-3 year investigation. Although the bribe payments totaled $3,430, the district court’s guidelines calculation accounted for the total benefit received by the undercover company, which totaled approximately $22,000 in profit, resulting in a total offense level of 24, and a guidelines range of 51-63 months of incarceration. He was sentenced to 51 months of incarceration. United States v. Terry Spicer, 11-cr-186 (MHT-WC) (M.D. Ala. 2012) – an elected member of the Alabama House of Representatives pleaded guilty to one count of accepting bribes relating to programs receiving federal funds (18 U.S.C. § 666). The defendant accepted in excess of $70,000 in bribe payments from two businessmen in exchange for official acts over the course of three years. He was 22 In this instance, a harsh punishment is required to address

•

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 23 of 28

sentenced to 57 months of incarceration, which was at the low-end of the advisory Guidelines range of 57-71 months of incarceration. • United States v. Jack B. Johnson, 11-cr-0075 (PJM) (ECF No. 50) (D. Md.) – a county executive from Prince George’s County, Maryland pleaded guilty to extortion and witness/evidence tampering relating to a conspiracy in which the defendant accepted as much as $1 million in bribe payments. He was sentenced to 87 months of incarceration, a fine of $100,000, and forfeiture of $78,000 and an antique car. See also Jack Johnson, former Prince George’s Exec, Sentenced to 7 Years (available at www.washingtonpost.com/local/former-pr-georges-execjack-b-johnson-is-sentenced-to-7-years/2011/12/01/gIQAKa7iZO_story.html). Defendant’s Cooperation Defendant has provided substantial assistance in the investigation and prosecution of others. As discussed further below, however, the government is not moving for a downward departure under § 5K1.1 of the Guidelines because of its concerns that Defendant was not entirely candid during debriefings with law enforcement agents. Accordingly, in the

government’s view, a departure below the applicable Guidelines range is not warranted for Defendant’s cooperation and substantial assistance. Defendant’s cooperation related to the following subject matters: (i) information

concerning the investigation of Jeffrey Thompson, identified as “Co-Conspirator 1” in the Amended Statement of Offense and Other Conduct; (ii) cooperative steps taken by Defendant as part of his cooperation in non-public criminal investigations, including his withdrawal from the special election race for the At-Large seat on the D.C. Council in April 2013; 7 and (iii) information and assistance concerning the investigation of Hakim Sutton, Defendant’s former campaign manager, who was recently indicted for allegedly stealing approximately $114,000 from Defendant’s campaign account in 2011-2012. Each of those areas will be addressed below. Additional information concerning Defendant’s cooperation in non-public law enforcement activities are set forth in a sealed addendum the Government will be filing concurrently with the instant Memorandum in Aid of Sentencing. 23
7

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 24 of 28

Jeffrey Thompson Investigation Defendant was interviewed by law enforcement on two occasions, during which he provided information relating to “off-the-books” campaign contributions that he received from Jeffrey Thompson for Defendant’s 2007 and 2008 campaigns for D.C. Council. In his initial debriefing on May 14, 2013, Defendant provided information consistent with what is contained in the original Statement of Offense and Other Conduct (ECF No. 9, at 28-31.) It bears noting that, prior to Defendant’s initial debriefing, the government’s investigation already had uncovered the two $10,000 wire transfers that Defendant received in April and May 2007. These transactions also had been corroborated by another witness. During his initial debriefing,

Defendant acknowledged the wire payments and provided previously unknown details with respect to the manner in which they originated from Thompson. As the government’s investigation relating to Jeffrey Thompson continued, however, evidence was uncovered relating to additional payments that Thompson made in relation to Defendant’s 2008 campaign for the At-Large Seat on the D.C. Council, none of which had been disclosed by Defendant during his initial debriefing in May 2013. Defendant acknowledged these additional payments from Thompson only after the evidence had been discovered by the government. Defendant was subsequently interviewed by law enforcement a second time on January 14, 2014, during which he provided the details relating to these payments, which are contained in the Amended Statement of Offense and Other Conduct (ECF No. 25-3, at 31-34.) In light of the similarities between the circumstances and individuals involved in the 2007 and 2008 payments, it is hard to imagine that Defendant simply did not recall the criminal conduct from 2008 at the time of his initial debriefing. It appears far more likely that Defendant simply did not want to disclose information relating to issues about which he did not believe the 24

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 25 of 28

government already had corroborative evidence, particularly since such information exposed Defendant to additional criminal charges, brought more personal shame to him, and tainted the only City-wide election Defendant ever won. When confronted with the corroborative evidence, however, Defendant acknowledged the additional misconduct. As a consequence of Defendant’s lack of candor and incomplete disclosure, Defendant agreed to enter a revised plea agreement that raised the Rule 11(c)(1)(C) cap from 37 months to 43 months incarceration, and in exchange, the government agreed not to charge Defendant separately for the misconduct relating to the 2008 campaign. In addition, the parties also agreed to enter a revised statement of offense that included details relating to the payments Defendant received from Thompson in 2008. The parties filed a Joint Motion to Amend Plea Agreement and Statement of Offense with the Court on February 6, 2014, and attached a copy of the revised plea agreement and revised statement of offense. Based on Defendant’s lack of candor and incomplete disclosure concerning the 2008 payments, the government also has decided not to move for a downward departure under § 5K1.1 of the Guidelines. After the parties filed the joint motion and revised plea papers with the Court, Jeffrey Thompson entered a guilty plea on March 10, 2014. See United States v. Jeffrey Thompson, 14cr-00049 (CKK). As part of his plea, Thompson agreed to a Statement of Offense that included details relating to yet other alleged payments that he authorized for Defendant’s benefit, which related to Defendant’s unsuccessful campaign for Mayor in September 2006. Thompson

Statement of Offense, 14-cr-00049 ECF No. 6 ¶¶ 44-51. The government’s investigation with respect to these alleged payments is ongoing, as is Defendant’s cooperation. The government does not intend to offer any such evidence relating to the alleged September 2006 payments for purposes of increasing or decreasing the government’s recommended sentence in this case. 25

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 26 of 28

Agreement regarding April 2013 Campaign As part of his cooperation, Defendant also agreed to withdraw from the special election race for the At-Large seat on the D.C. Council in April 2013. This allowed Defendant an opportunity to cooperate with the government’s investigation relating to Jeffrey Thompson, as described above. Assistance in the Hakim Sutton Investigation Defendant also has been providing assistance with respect to an additional investigation relating to the alleged theft of $114,000 from his 2012 campaign for D.C. Council by the former treasurer of the campaign, Hakim Sutton. Defendant assisted law enforcement during the initial part of the Sutton investigation and provided an interview in October 2012, which was before Defendant was made aware of the undercover operation. During Defendant’s second debriefing session on January 14, 2014, which was after Defendant agreed to plead guilty and cooperate with the government, Defendant answered additional questions relating to the Sutton investigation, and facilitated the cooperation of at least one other individual formerly associated with Defendant’s campaign as part of the Sutton investigation. Sutton was indicted by a federal grand jury in February 2014, and the case is currently pending. See United States v. Hakim Sutton, 14-cr-00032 (RJL). Additional Areas of Cooperation Not Rising to the Level of Substantial Assistance Defendant also provided investigators and prosecutors with information on other matters under investigation. Although Defendant attempted to be helpful in discussing his knowledge of these and other matters, Defendant’s information did not rise to the level of substantial assistance. Nevertheless, to the extent that the Court wants to be informed about those other areas, the government will make such information available to the Court. 26

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 27 of 28

Government’s Recommendation with Respect to Sentencing In the government’s view, a downward departure from the applicable Guidelines range is not appropriate in light of Defendant’s lack of candor during his debriefing sessions and his failure to make a full disclosure regarding all payments received from Jeffrey Thompson. As described above, Defendant’s plea agreement and statement of offense were amended specifically to account for his lack of candor and completeness in cooperating with law enforcement, resulting in an increase to the agreed-upon cap from 37 months to 43 months incarceration. As consideration for the increase in the cap, the government agreed not to

separately charge Defendant for the criminal conduct related to the payments he received from Thompson in 2008. Consistent with the revised plea agreement and in light of Defendant’s egregious offense conduct and shortcomings in cooperation, the government respectfully submits that a sentence of 43 months of incarceration is appropriate. Accordingly, in light of the § 3553(a) factors, the United States respectfully requests that this Court accept the Amended Plea Agreement, and recommends that this Court sentence Defendant to 43 months of incarceration, impose a forfeiture money judgment in the amount of $35,000, 8 and impose a three-year period of supervised release.

8

Defendant’s forfeiture obligation in the amount of $35,000 was satisfied on July 21, 27

2013.

Case 1:13-cr-00164-RWR Document 33 Filed 04/24/14 Page 28 of 28

Respectfully submitted, RONALD C. MACHEN JR. UNITED STATES ATTORNEY D.C. Bar No. 447-889 /s/ Michael K. Atkinson David A. Last Anthony Saler D.C. Bar No. 430517 (Atkinson) D.C. Bar No. 476335 (Last) Assistant United States Attorneys 555 4th Street, N.W. Washington, D.C. 20530 (202) 252-7914 (Atkinson) (202) 252-7020 (Last)

28

Case 1:13-cr-00164-RWR Document 33-1 Filed 04/24/14 Page 1 of 4

Case 1:13-cr-00164-RWR Document 33-1 Filed 04/24/14 Page 2 of 4

Case 1:13-cr-00164-RWR Document 33-1 Filed 04/24/14 Page 3 of 4

Case 1:13-cr-00164-RWR Document 33-1 Filed 04/24/14 Page 4 of 4

Case 1:13-cr-00164-RWR Document 33-2 Filed 04/24/14 Page 1 of 6

Case 1:13-cr-00164-RWR Document 33-2 Filed 04/24/14 Page 2 of 6

Case 1:13-cr-00164-RWR Document 33-2 Filed 04/24/14 Page 3 of 6

Case 1:13-cr-00164-RWR Document 33-2 Filed 04/24/14 Page 4 of 6

Case 1:13-cr-00164-RWR Document 33-2 Filed 04/24/14 Page 5 of 6

Case 1:13-cr-00164-RWR Document 33-2 Filed 04/24/14 Page 6 of 6