Court filing
Transcript of Sentencing as to Eric Dean Sheppard held on 06/07/2024 — USA v. Sheppard (Dkt. 283, S.D. Fla.)
Filed July 16, 2024 in USA v. Sheppard; one of 253 filings from this case.
Record facts
| Court | U.S. District Court for the Southern District of Florida |
|---|---|
| Filed | 2024-07-16 |
U.S. District Court for the Southern District of Florida · No. 1:22-cr-20290-BB · Doc. 283 · 2024-07-16 · Docket on CourtListener
Full text
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO. 1:22-cr-20290-BB-1
UNITED STATES OF AMERICA,
Plaintiff,
June 7, 2024
9:38 a.m.
vs.
ERIC DEAN SHEPPARD,
Defendant.
Pages 1 THROUGH 154
______________________________________________________________
TRANSCRIPT OF SENTENCING
BEFORE THE HONORABLE BETH BLOOM
UNITED STATES DISTRICT JUDGE
Appearances:
FOR THE GOVERNMENT: UNITED STATES ATTORNEY'S OFFICE
AIMEE C. JIMENEZ, AUSA
ANA MARIA MARTINEZ, AUSA
MITCHELL E. HYMAN AUSA
99 Northeast 4th Street
Miami, Florida 33132
FOR THE DEFENDANT: BLACK SREBNICK, PA
HOWARD M. SREBNICK, ESQ.
201 South Biscyane Boulevard, Suite 1300
Miami, Florida 33131
SALE & WEINTRAUB, PA
JAYNE C. WEINTRAUB, ESQ.
2 South Biscayne Boulevard, 21st Floor
Miami, Florida 33131
NELSON MULLINS
JONATHAN ETRA, ESQ.
CHRISTOPHER C. CAVALLO, ESQ.
2 South Biscayne Boulevard, 21st Floor
Miami, Florida 33131
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
APPEARANCES CONTINUED:
FOR THE DEFENDANT:
O'MELVENY
JASON ZARROW, ESQ.
400 South Hope Street, 18th Floor
Los Angeles, California 90071
COURT REPORTER: Yvette Hernandez
U.S. District Court
400 North Miami Avenue, Room 10-2
Miami, Florida 33128
yvette_hernandez@flsd.uscourts.gov
ALSO PRESENT:
Stephanie Galvez, USPO
Special Agent Sarah Halleran
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
COURTROOM DEPUTY: Calling Criminal Case Number
22-20290, United States of America v. Eric Dean Sheppard.
Counsel, please state your appearances for the record.
MS. JIMENEZ: Good morning, Your Honor. Aimee Jimenez
on behalf of the United States. With me is Assistant United
States Attorney Ana Maria Martinez, Assistant US Attorney Mitch
Hyman, FBI Special Agent Sarah Halleran.
THE COURT: Good morning to each of you.
MR. SREBNICK: Good morning, Judge. Howard Srebnick,
together with Mr. Zarrow, Mr. Cavallo, Ms. Weintraub, Mr. Etra,
on behalf of Mr. Sheppard, who is present. And two of my
paralegals are here helping me with some of the IT.
THE COURT: Hi. Good morning to each of you.
Mr. Sheppard, good morning once again, sir.
THE DEFENDANT: Good morning, Your Honor.
THE COURT: As you know, the purpose of this morning's
proceeding is to determine an appropriate sentence in your
case, a sentence that is sufficient but is not greater than
necessary to serve the goals of sentencing.
As you know, on January 12th of this year, you were
found guilty by a jury of your peers to Counts 5, 6, 7, 8, 9,
13, and 14 of a 14-count Superseding Indictment. Counts 5, 7,
8, and 9 charged you with wire fraud, in violation of 18,
United States Code, Section 1343, and Count 13 and 14 charged
you with aggravated identity theft, in violation of 18, United
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
States Code, Section 1028A. The Court subsequently entered a
judgment of acquittal, ECF 251, with regard to Counts 13 and
14. You were found not guilty as to the remaining counts of
the Superseding Indictment.
The Government is seeking forfeiture in this case, as
well as restitution. And as you know, the Court did enter an
order that rescheduled the restitution, as well as the
forfeiture hearing, for August of 23rd of this year.
In preparation for this morning's proceeding, the
Court has received and reviewed the following items. I will
refer to each by its docket entry. There were two sealed --
actually, three sealed filings, because Mr. Cupersmith's letter
is also a sealed filing. So I will refer to those filings as
well, since the Court did review each of those.
Docket Entry 190 is the jury's verdict; Docket Entry
226 is the Draft Disclosure of the Presentence Investigation
Report; Docket Entry 235 is the Government's Objections to the
Presentence Investigation Report; Docket Entry 236 is the
Defendant's Notice of Filing a Redacted Copy of the Sentencing
Memorandum; and the sealed -- 238 is the Defendant's Sealed
Sentencing Memorandum with Objections; Docket Entry 241 is the
Government's Response to the Defendant's Objections; and Docket
Entry 242 is the Defendant's Response to the Government's
Objections; Docket Entry 246 is the Final Addendum 1 Disclosure
of the Presentence Investigation Report.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And Docket Entry 248 is a sealed filing, and that
consists -- the filing is the Defendant's Notice of Filing
Letters in Support of Sentencing, and consists of letters
written by Alan Glaser, Carrie Meyers Garazi, Edward Garazi,
Eric Gordon, Gerson Sepin, Jarred Axson, Jennifer Rapp, Jordan
Sheppard, Judi Meyers, Lee Zimmerman, Liad Zadok, Lloyd
Nechtman, Mark Raymond, Michael Tobin, Pablo Carreno, and Rabbi
Robert Davis.
Docket Entry 253 is the Government's Notice of
Unresolved Objections; and Docket Entry 258 is the Government's
Sentencing Memorandum Regarding Restitution for Victim Under
the Mandatory Victims Restitution Act; and Docket Entry 261 is
a sealed letter from Neil Cupersmith.
Have you had a full opportunity to review each of
these documents with your attorneys?
THE DEFENDANT: I have, Your Honor.
THE COURT: Do you need any additional time, sir?
THE DEFENDANT: No, Your Honor.
THE COURT: Are there any additional documents that
the Court should have received and reviewed in preparation for
this morning's proceeding? I'm not sure if I should direct
this to you, Mr. Srebnick, or to the other attorneys.
MR. SREBNICK: Judge, I did submit, this morning,
which I'll use during the course of the proceedings, a
demonstrative exhibit that is the -- what I call the loan
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
table. But other than that, there's no additional papers to be
submitted this morning.
THE COURT: All right. And I did receive this. My
courtroom deputy provided a three-page table. Has the
Government received this as well?
MS. JIMENEZ: I did receive it this morning, Your
Honor. The Government will be referring to one trial exhibit.
That's Government's Exhibit 72, which is the summary of the
loans. I can provide the Court a copy. I had offered it.
THE COURT: That was referred to in the Government's
objections, as well as its argument with regard to the loss
amount. So certainly if you wanted to publish it at this time,
or the appropriate time, you may certainly do so.
So other than the three-page table that Mr. Srebnick
has provided to the Government and to the Court this morning,
are there any other documents that the Court should have
received and reviewed in preparation for today?
MR. SREBNICK: Judge, there's one other thing that we
provided the Government that's reflected in the table. And
that is that three of the loans that were the EIDL loans have
been repaid in full prior to today. We provided the Government
with proof that Mr. Sheppard has repaid those loans, and it's
reflected on the table that I have provided to the Court this
morning.
THE COURT: All right. I believe that the payoff of
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
those loans was also attached to the Defendant's reply,
correct? Are we referring to different loans?
MR. SREBNICK: They were the ones that you have just
made reference to, and then the additional loans of the EIDL
brand.
THE COURT: All right.
MS. MARTINEZ: Your Honor, I just want to let the
Court know that to the extent that the Court would rely on
that, I would need to verify with the SBA the amounts on behalf
of the victim; however, I think you have bifurcated that issue,
and I'm sure Mr. Srebnick and I can resolve that; in other
words, just the verification of it. But as of now, I cannot
verify that with the victim.
THE COURT: All right. I understand.
Are there any other documents that the Court should
have received and reviewed in preparation for today,
Mr. Srebnick?
MR. SREBNICK: No, Your Honor.
THE COURT: Ms. Jimenez?
MS. JIMENEZ: No, Your Honor.
THE COURT: And Mr. Srebnick, is there any legal
reason why sentence should not be imposed today?
MR. SREBNICK: No legal reason.
THE COURT: All right. There are several objections.
If we can proceed to the specific objections with regard to the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
facts relating to Paragraphs 11, 12, and 15, and then we'll
address the other objections that relate to the proper
calculation of the advisory guidelines.
MR. SREBNICK: Your Honor, I believe the Probation
office has included our objections, and they don't go to the
guideline computations. And so we would be satisfied with the
Probation office's response for the purposes of today.
THE COURT: All right. So are you requesting that
that -- I just want to make sure that with regard to the
Probation officer's response, that that was properly
incorporated in ECF 246. If not, I would direct the Probation
office to prepare another revised PSI.
MR. SREBNICK: Understood.
THE COURT: So what is it that you're requesting,
Mr. Srebnick? Are you requesting that the Probation officer
prepare another PSI reflecting those changes?
MR. SREBNICK: No, Your Honor. The addendum suffices.
THE COURT: All right. Thank you.
And for the record, may I have the name of the
Probation officer that is with us this morning.
PROBATION OFFICER: Good morning, Your Honor.
Stephanie Galvez, US Probation.
THE COURT: Good morning.
All right. So have we addressed the specific
objections to Paragraphs 11, 12, and 15?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. SREBNICK: Yes, Your Honor.
THE COURT: All right. Then let's perhaps move
chronologically to -- I believe the next objection is the loss
amount, Paragraph 57.
MR. SREBNICK: Yes, Your Honor.
The question of loss, Your Honor, in this case, is one
that is atypical for most cases. And let me -- of course,
those persons that were involved in the case know that I did
not participate in the trial. So I've reviewed the record,
including some of the features of this case that make this very
different than most.
The Government is seeking -- despite verdicts of not
guilty on more counts than were found guilty of, the Government
is seeking that the Court apply a loss figure that includes all
of the loan amounts that were applied for, even those that were
not charged, even those for counts that resulted in acquittals,
and even for those that have been repaid in full before today.
As we stand today here before the Court, Eric Sheppard
has repaid all of the loans that are the object of counts of
conviction.
THE COURT: But how is that relevant under Eleventh
Circuit case law? The fact that Mr. Sheppard may have repaid
some of the loans, how is that relevant to calculating the
proper loss amount, when the Court is to look at the greater of
the actual or intended loss?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. SREBNICK: Understood.
So if actual is loss is zero, and the Court is looking
to intended loss, the question in a loan case for intended loss
is whether the Defendant genuinely intended to repay the loan
as scheduled.
And in this case, as to the counts of conviction, and
indeed as to every single loan, with the exception of the
original PPP loan -- and we'll get to that in a moment --
Mr. Sheppard has repaid those loans in full. And that goes to
whether the Court believes that he intended to do so, as
promised when he took out the loan.
The Government values the loss in this case as the
face amount of the loans. But a loan, by its terms, is not
intended to be kept forever. By way of analogy, someone who
leases a car for the weekend, and gives a bad check for the
lease of the car, the loss, the intended loss, is not the value
of the car. It's the rental amount. And in this case the
Government seeks to hold Eric Sheppard responsible for the full
value of the loss of the full amount of the loans, and that is
not consistent with the case law.
We've cited several cases that explain that intended
loss in a loan case, different from a typical theft case, takes
into account the Defendant's intent, the genuine intent that is
reflected by his actions.
In our pleading, we refer to United States v.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Henderson, 19 F.3d 917, a Fifth Circuit case, 1994, quote:
"Where the defendant intends to repay the loan, or replace the
property, the intended loss is zero. The district court must
determine if the defendant actually intended to cause a loss to
either the bank -- and if so, the amount of the intended loss.
Only if this value is greater than the actual loss to the banks
should it be used to determine the defendant's sentence."
Another Fifth Circuit case, in 2010, United States v.
Harris, instructs the Court that: "Obtaining a loan
fraudulently is different from stealing property outright
because defendants who fraudulently obtain loans often intend
to pay them in full." And here, the district court in that
Fifth Circuit case was ordered consider whether the defendant
had intended any loss at all.
In the Eighth Circuit, United States v. Hartstein,
2007, quote: "We've repeatedly characterized intended loss
with reference to a defendant's actual subjective intent. That
intent should drive our analysis."
In the Third Circuit, quote from United States v.
Diallo, D-I-A-L-L-O, 2013: "We caution that fraud guideline
has never endorsed sentencing based to the worst-case scenario
potential loss, and admonished sentencing courts to consider
actual or intended harm." Quote: "We look to the defendant's
subjective expectation, not to the risk of loss to which he may
have exposed his victims." Quote: "It is clear that a
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
district court errs when it simply equates potential loss with
intended loss without deeper analysis."
Quote: "We reproach the government for its argument
that district courts can implicitly draw reasonable references
that a defendant intended to cause the full potential loss,
noting, if district courts could silently draw such inferences,
there would be little left of our court's admonition that
district courts must perform a deeper analysis than simply
calculating the potential loss."
And finally, Judge, the Third Circuit, in a case
called Kopp, K-O-P-P, 1991: "The district court here erred by
equating the loss with the full amount of the loan. We hold
that fraud loss is, in the first instance, the amount of money
the victim has actually lost estimated at the time of
sentencing, not the potential loss as measured at the time of
the crime."
Now, in this case, since we have a verdict, and the
verdict tells us much about what the nature of the so-called
scheme was -- we have a group of loans, roughly $1.9 million
worth, that were applied for that the Government seeks to hold
Eric Sheppard responsible for under the EIDL program. The jury
acquitted Mr. Sheppard of the EIDL counts.
The scheme that the Government was left to proceed
with then was under the PPP program. And in that regard, the
jury rendered a mixed verdict. I'd like to put on the screen
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the counts -- I'll put it on the ELMO, if that's okay, Judge.
And I've highlighted in yellow the counts of
conviction, 5, 7, 8, and 9. And what is significant about the
dates is that Counts 1, 2, 3, and 4, all acquittals, all not
guilty, reflect a jury verdict that, prior to the date of Count
4, the jury rejected the Government's claim that there was
fraud in the application process, and that alleged fraud
included both an EIDL submission and a PPP program submission.
And so the verdict of not guilty on those counts means
something. And it means that the jury did not accept the
Government's view that a scheme to defraud was hatched before
January of 2021. And yet, the Government is ambitiously
seeking to hold Mr. Sheppard responsible for all of the loans
for which there were applications, including loans that were
not even funded, and including loans where one pot of money was
being sought through multiple applications; the first
application might be rejected, then Mr. Sheppard would apply
again. The Government treats that as two losses, even though
it's only one loan amount that's at issue, and I'll get into
some details with the chart.
And so what I think is a fair inference in terms of
the loss, and the intended loss, is that first we define the
scheme that the jury accepted as one that began on or about --
not before, but on or about February of 2021. And so,
temporally, whatever relevant conduct the Court's going to
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
consider would start with that date, with that time period, and
it would have to exclude the prior applications because we have
an affirmative verdict of not guilty that precedes it.
Second, the scheme would have to exclude the EIDL
program altogether, because the only verdicts about EIDL were
verdicts of not guilty.
We created a table that I submitted this morning. I
suppose I'll just mark it as Defense Sentencing Exhibit Number
1. And it expanded upon the table that we had included in our
Sentencing Memo. And so the first page of this three-page
exhibit relates to loans that the Government seeks to hold Eric
Sheppard responsible for under a relevant conduct theory prior
to the date that the jury's verdict reflects a scheme began.
And therefore, we submit that those loans, both temporally and
those related to EIDL, cannot be considered and are not part of
the so-called relevant conduct.
THE COURT: So Mr. Srebnick, talk to me about the
Eleventh Circuit case law. Because the United States has cited
Eleventh Circuit case law that tells this Court that the Court,
for purposes of calculating the intended loss, can include the
conduct that constitutes acquitted conduct.
So -- and they've cited two Eleventh Circuit cases.
United States v. Campbell and United States v. Barakat. I know
you've cited to the Seventh Circuit, the Third Circuit. Why
should the Court follow those circuits, when the Eleventh
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Circuit has told this Court that the Court should consider that
conduct in determining the intended loss?
MR. SREBNICK: Well, as we've previewed, the
Sentencing Commission is now rejecting that theory that the
courts have followed until now. And effective November, the
theory would no longer hold. That means that, effective
November, the Court would not be able to consider acquitted
conduct, that our court system will respect jury verdicts.
Otherwise, why are we having trials at all, if the acquittal is
going to count for nothing?
And so that's my first response. And I think
appellate review of this case will be governed by that new
sentencing guideline application. And so the Court would be
well-served to -- as some other judges have already in this
district -- to apply that principle going forward.
Second, given the difference in the features between
the EIDL loans and the PPP loans, I think the Court can be very
comfortable that because the EIDL loans did not focus on the
distinction the Government urged the jury to draw between W-2
employees versus independent contracted workers that the EIDL
loans don't share the same features that the PPP loans -- which
there are two convictions of PPP loans, of course. And so the
Court should feel comfortable that excluding EIDL loans not
only is respectful of the jury's verdict, but also consistent
with our theory that it doesn't even fall within the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
relatedness to the PPP loans, totally different features, and
therefore not relevant conduct for purposes of evaluating the
loss associated with the scheme involving PPP loans.
We also have another feature of this case that makes
it atypical in deciding what loss is. Remember that this was a
program -- the PPP program was a program by which the lenders
were giving money guaranteed by the SBA and did not expect
repayment of those loans. They were forgivable. And so had
Eric Sheppard not been the borrower in this instance, but some
other applicant had been the borrower for the exact same amount
of money, that other borrower would have sought forgiveness of
the loan and the lender would be in exactly the same position.
The SBA, on the other hand, had as its objective, its
policy objective, to have these funds available for companies
to continue to employ real people who needed jobs. And I don't
need to get into the distinction for purposes of this hearing
between W-2 or 1099. Suffice it to say that Eric Sheppard --
his companies used these monies to pay real people, workers,
consistent with the objective of our Congress in making sure
that companies like Eric's companies would function during the
pandemic and keep people off the unemployment lines.
And so whether it's fraudulent or not -- and you've
heard our arguments under Rule 29 and why we believe that the
Court should have granted a Rule 29 on the loan fraud theory
that the Government advanced -- even at this point, where we
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
accept the Court's ruling for purposes of today's discussion,
the money still went through Eric Sheppard's company into the
hands of people who needed work, and performed work, honorable
work, real work, which distinguishes this case from the many
different cases we've seen in this district where the borrower
literally takes the money and runs, where the borrower doesn't
even have a real company that's putting people to work, where
the borrower takes the money and buys Lamborghinis, Ferraris,
vacations, luxury homes.
None of that happened here. To my knowledge, this may
be the only case in our district where the borrower used the
money as the program intended, albeit understanding that it was
not supposed to -- according to the Government's
presentation -- go to so-called 1099 independent contractors,
but was limited to W-2s.
Now, had this loan -- these loans been restructured,
it could have been done perhaps more properly, and perhaps Eric
Sheppard wouldn't be here today. But still, for purposes of
you deciding what is the appropriate punishment for a man who
borrowed these funds not for personal frolics, but to put
people back to work during the pandemic, I submit to you that
in calculating the loss the Court should rely exclusively on
the fact that Mr. Sheppard repaid all the loans of conviction.
Second, intended to repay the loans and not seek
forgiveness for all of the other loans, with the exception
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
of -- the very first loan is the only one that was forgiven,
and it's the here at the top of table, and it's the very first
loan at the earliest stages of the application process. And
from my review of the record, and my understanding of how that
loan came to pass, obviously, the Government made a decision in
the original Indictment to ask the grand jury to indict him for
that, and then made a second presentation to the grand jury, a
Superseding Indictment, which removed, dismissed, and abandoned
from the trial jury's consideration, and indeed perhaps even
from the grand jury's consideration, whether that very first
loan was even part of the scheme.
And so I think the Court should hold the Government to
its decision, its decision to abandon the theory that the very
first loan application was fraudulent. And the jury obviously
didn't accept it because they acquitted Mr. Sheppard of every
single count occurring in 2020. And then, most tellingly,
Judge, the jury acquitted Mr. Sheppard of Count 4, which was a
second draw on that same April 2020 PPP loan that the
Government abandoned. And so to the extent that the jury
rejected the Government's theory that Mr. Sheppard was scheming
as late as January 19 of 2021, it necessarily follows the jury
would have rejected, had the Government not abandoned, the
claim that the scheme began almost one year earlier.
On the chart, one of the things I've tried to
illustrate, on this page in particular, under the Government's
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
theory, the Court should hold Mr. Sheppard liable both for the
$203,000 related to Counts 4, 5, and 6, which, as the right
column reflects, was not funded, and then Mr. Sheppard
reapplied with a different processor, Bank Processor 1 and Bank
Processor 2, for the same loan. It was funded in an amount of
$148,000, plus or minus. Under the Government's theory,
because he applied twice for that same loan -- he would have
only been granted one -- the Government says the Court should
consider both of those amounts in computing intended loss, in
the face of him having paid it off in full.
And so, in deciding, Judge, whether it be under our
circuit or any other circuit, intended loss always goes to the
defendant's intention. And the facts in this case establish
that Mr. Sheppard intended to, and indeed did, repay every
single loan that was in the time frame of the conspiracy.
Now, to the extent that the Court -- if this were a
civil courtroom, and the Court was pondering this very first
transaction, the forgiven one which I've just addressed --
certainly if the Court thought that it's appropriate for
Mr. Sheppard to repay that loan, as -- in fact, he did get the
loan. He did use it for the intended purpose of hiring
workers. But yes, he got forgiveness for that loan. As we see
it, if the Court thought that that was the appropriate
disposition, certainly if this was a civil case, Mr. Sheppard
is in a position to repay that loan because certainly it was a
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
loan, and it was forgiven. And if forgiveness had not been
granted, he would have repaid the loan. But it was granted.
If I can have one moment, Your Honor.
THE COURT: Certainly.
(Pause in proceedings.)
MR. SREBNICK: Your Honor, my colleagues have aptly
pointed out that the cases from the Eleventh Circuit -- and I
should have been more direct about it -- those were not loan
cases that the Government cites, Campbell and Barakat. Those
are actual taking the money and not ever intending to repay
those tax cases, for example. So those cases don't share the
same features as the loan cases that I have cited to.
With regard to acquitted conduct that Your Honor
inquired about, while it is true that, as of the Eleventh
Circuit law today, you may consider acquitted conduct before
the guidelines change, if the Court goes that way, the Court
need not. It's not obligatory. The Court isn't bound to do
so. The Court can choose to reject, as the jury did, the
Government's theory, particularly with regard to the EIDL
loans, which, as I pointed out earlier, don't share the same
features as the PPP program loans. And so, in deciding whether
the EIDL loan applications, and that so-called scheme that the
Government would suggest -- in deciding whether it's, quote,
related to the PPP program, related to being the test, the
Court can, and should, as we submit, given particularly the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
jury's verdict, reject the theory that they are related.
The Government put forward what it thought was its
best case on the EIDL loans, the ones that Mr. Sheppard himself
handled. And so I go back to my demonstrative exhibit. The
Government started its EIDL scheme theory in its original
Indictment, but then dismissed and abandoned those counts when
it superseded the Indictment. And then opted, instead, to go
with the EIDL count referenced in Count 4 -- excuse me -- Count
4 -- excuse me -- the original Count 4, which was now Counts 1,
2, and 3 of the Superseding, and the jury rejected it. And
those were the loans where the Government surely thought it had
its best case against Mr. Sheppard. And still, the jury
rejected the Government's theory.
And then none of the modifications of those loans were
even charged. And yet, the Government, as you can see from the
table, is seeking over a million dollars in EIDL loan losses
that were not even funded and would not have been forgiven.
Those were loans that would be repaid.
And so we suggest that the Court should reject the
Government's ambitious effort to saddle Mr. Sheppard with loss
figures -- we're not here for restitution or forfeiture. But
in terms of deciding what he intended to do, in suggesting that
he intended to take those funds, particularly the EIDL funds,
and keep them forever. That's simply not supported by this
record.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And does the Court follow -- just to be sure that I've
made the point about double counting, where the Government
says, for example, this 150 -- excuse me -- the same loan
203,000 was not funded, that was ultimately funded in the
March 11, 2021 application, under the Government's theory, a
double count for that.
And so what I leave the Court with as to the counts of
conviction -- and you can find those amounts here:
March 11, 2021, Count 7; Count 9, March 12 of 2021, two loans,
each in the approximate amount of $148,000, for a grand total
of $296,000 of PPP loans that Mr. Sheppard obtained, if you
accept the jury's verdict, with inaccurate information about
the workers, for a total of 296,000, that Mr. Sheppard has paid
in full. And so we submit to the Court loss should be zero.
But in all events, the loss should never exceed the
$296,000 that were the subject of the two counts that I just
referenced.
THE COURT: All right. Let me ask you -- because I do
see that the Government's citation is not a wire fraud case.
But let me ask you with regard to the Court's concern with
regard to unwarranted sentencing disparities, if, in fact,
courts in this district have been putting aside the amounts in
terms of calculation of the intended loss with regard to
acquitted conduct.
I understand the argument; however, the Government is
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
making -- and will make an argument -- they've certainly made
it in their briefs -- that the uncharged conduct was part of
the relevant conduct. They're going to make that argument. So
I'm going to give you an opportunity to make your argument with
regard to the relevance that the Eleventh Circuit tells the
Court that the Court should consider the relevant conduct.
As well, with regard to the payoff, where would the
Court find -- I understand, Mr. Srebnick, that that is how you
define the intended loss. But if the Court rejects that
definition -- that is, regardless of the payoff, that the
intended loss was the loss of each of the loans that were paid
to Mr. Sheppard through his companies, and that would include
the uncharged conduct, but would not include the acquitted
conduct. So I just -- because I know you're going to make an
argument in response. But Ms. Jimenez has been very clear in
her briefing that the uncharged conduct, that is the -- Counts
1, 2, 3 -- all of the EIDL loans -- that that uncharged conduct
was part of the relevant conduct.
As well, the argument has been made that the acquitted
conduct should be part of the relevant conduct. I somewhat
agree that -- and I want to hear the Government respond with
regard to the unwarranted sentencing disparities, if, in fact,
the Court considers the acquitted conduct. And regardless of
whether Congress applies the guideline retroactively or not,
there will be individuals post-November that will be calculated
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
differently in terms of the intended loss.
So can you address the uncharged conduct, as part of
the relevant conduct. And if you can advise the Court of the
amounts that you believe the intended loss should be, putting
aside the payoff by Mr. Sheppard.
MR. SREBNICK: So when we say: "Uncharged," it means
uncharged in the second Indictment --
THE COURT: That's correct.
MR. SREBNICK: -- the Superseding Indictment. Right.
But -- and that's where I think the focus of the Court
can include the fact that they were initially charged and the
Government abandoned those charges. So the grand jury was
presented with an Indictment a second time. And I don't know
if it was because the grand jury decided, upon further review,
that these events that occurred in 2020 are not supported by
the Government's theory. We don't know because we're not
there. We do know, though, that the grand jury dismissed the
charges that had been initially brought in the first
Indictment.
I think the Court has to give some consideration to
that and hold the Government to that. Because otherwise it's a
manipulation of the process, asking you, Your Honor, to make a
finding that a jury was supposed to make had the Indictment not
dismissed those charges. And you can reasonably infer that if
the jury returned not guilty verdicts for everything that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
occurred in 2020, up through February of 2021, that same jury
would have made the same finding if the Government hadn't
dismissed and abandoned those charges relating to events in
2020.
With regard to your question as to EIDL as to the
relevant conduct component, the Court needs to assess if
it's -- the EIDL loans are, quote, related to the PPP loans in
terms of the alleged scheme. The PPP loan scheme was focused
on the distinction between independent contractors and
employees, which is not a feature of the EIDL loan
applications. And so those loan programs, while they're both
loans, and they have, you know, the same general features of
loans that you borrow money and you repay them, the nature of
the programs and the alleged scheme regarding mischaracterizing
independent contractors as employees is not a feature of the
EIDL loan applications or that so-called scheme that the
Government would have. So they are not sufficiently related to
allow the Court to consider them as relevant conduct,
particularly when you have acquittals that would suggest the
jury rejected the Government's theory outright.
I hope I've answered your question.
THE COURT: You've answered -- because there's three
arguments that are being made. One is the uncharged conduct,
the EIDL loans. The second is the acquitted conduct. And the
third is the Court should consider, for purposes of a proper
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
calculation, Mr. Sheppard's payoff of the loans.
MR. SREBNICK: Right. And so --
THE COURT: And the arguments are diverging, and I'm
failing to see how the payoff of the loan -- where there's any
case law that would support the Court's consideration of that.
With regard to acquitted conduct, I obviously am well
aware that Congress will -- or the Sentencing Commission has
certainly recommended the Court not consider acquitted conduct
post-November.
And the uncharged conduct certainly bleeds into the
entire argument that it's relevant conduct, which the Eleventh
Circuit has said the Court should consider for purposes of the
Defendant's scheme.
MR. SREBNICK: Let me start where you ended.
Consider -- the courts have said it can be considered
if they are sufficiently related, and if you find by a
preponderance of the evidence that the Defendant committed the
misconduct that the jury said he didn't commit, particularly as
to acquitted conduct. And in this case, you have the benefit
that the uncharged conduct occurred before the acquitted
conduct. And so, if the jury found not guilty in 2021, or
early 2021, there's little reason to conclude that a jury --
and therefore, we suggest a court -- should hold him guilty as
if he had committed those same alleged crimes in 2020.
With regard to the loan repayment, I'm going to use
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the words from the other circuits, because there are several
circuits that use these three words. You have the actual loss
to consider, the intended loss, but the courts all reject the
potential loss. And that's the number the Government is trying
to give you. They're actually giving you something worse.
They're giving you potential, plus multiple attempts at the
same loan.
So they're saying it's not just the potential
$203,000 he was trying to get that ultimately only ended up
being 148. They're saying double count it, potential 203, plus
148, which he paid off. And to me, that atypicality tells you
that this is a case that's very different from every single
case that the Government has cited.
Thank you, Judge.
THE COURT: All right. Thank you, Mr. Srebnick.
Ms. Jimenez?
MS. JIMENEZ: Yes. Thank you, Your Honor.
All right. On the issue of loss, I think we start
with intended loss. The Government is not aware of -- at least
in the Eleventh Circuit, of any carve-out for a wire fraud
involving loans versus wire fraud involving other types of
scheme -- schemes.
The Government charged in the Superseding Indictment a
scheme to defraud, a scheme to defraud that went on for about
six pages of the Indictment. And as the Court knows, you have
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
a scheme to defraud, the Defendant's participation in the
scheme to defraud, and the Defendant intending to defraud. And
that's what the jury found. And then there are specific wires
in furtherance of that scheme, interstate wires in furtherance
of that scheme, that are examples of carrying out the scheme.
I don't think that Defense counsel should speculate as
to changes made to the Superseding Indictment. Clearly, the
Superseding Indictment is somewhat different from the original
Indictment. And that was intended to focus, and did focus, on
the identity theft and the forgeries that occurred in relation
to the loans; however, the scheme that was charged remained the
same. The Government charged the same scheme in the original
Indictment that it charged in the Superseding Indictment. The
Government charged the same time frame in both, which started
in April of 2020, with that first PPP loan that was submitted
to PayPal and WebBank.
The Government, at no point in its presentation to the
jury, abandoned any aspect of the Defendant's conduct that
constituted that scheme to defraud. It was pandemic fraud. He
intended to defraud the SBA. He intended to defraud the
lenders. He intended to get whatever money was available from
those programs from beginning to end.
In fact, the Court allowed what the Defense calls
uncharged conduct. We don't believe it to be uncharged
conduct. It was part of the Defendant's scheme. It was part
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
of the Government's evidence about the scheme. And the Court
allowed -- and in fact, the Defense did not even object to the
presentation with the PayPal witness that involved the
April 2020 loan, which was fraudulent, the subsequent
forgiveness of that loan, which was fraudulent. There was not
even any objection to that.
There was the submission of the first PPP loan on
behalf of HM Management, in January 2020, to Cross River Bank,
which did not result in a loan. That was fraudulent. That was
not objected to at trial.
So it was a scheme that actually began at the end of
March, with the testimony of Mr. Jeff Graff, who talked about
submitting an EIDL loan on behalf of HM Four to the SBA, when
essentially the SBA had not even set up its portal. So the
Defendant went from attempting to submit an SBA loan -- an EIDL
loan to the SBA, to April of 2020, when the PPP program kicked
off, submitting a fraudulent loan there. When those funds ran
out, he turned back to the EIDL program and submitted
fraudulent loans to the SBA, including loans -- talk about
double counting -- including a loan for the parent company HM
Four, after the original company HM-UP Development Alafaya
Trails had received a loan.
And then, in January 2020, when the PPP loan program
was re-funded, he turned back to that program. And then when
that program ended, he then continued with the EIDL loan
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
modifications for the three loans that had been funded in 2020.
So it was ongoing conduct that went back and forth.
With respect to the intended loss, the guidelines say
it's pecuniary harm that the Defendant purposely sought to
inflict, which includes pecuniary harm that would have been
impossible or unlikely to occur, for instance, in a Government
sting operation. So it is everything the Defendant intends to
do, all of the harm the Defendant intends to cause. And of
course, here we have findings that he intended to defraud the
SBA and the lenders.
Now, I'm not aware of any case that says if you, on
the eve of your sentencing, pay off these loans, you now get to
eliminate the loss amount. I'm not aware of any case that says
that.
THE COURT: I agree with you. I agree with you on
that point. And I have not -- I understand the Defendant's
argument with regard to defining intended loss, but I agree
with you.
Putting that part aside, I do want to ask you about
the acquitted conduct.
MS. JIMENEZ: Certainly.
THE COURT: Because it would appear to the Court that
that may result in unwarranted sentencing disparity, if the
Court specifically calculates the loans that the Government is
seeking to include in the intended loss, if, in fact,
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Miami, Florida 33128
(305) 523-5698
Mr. Sheppard was acquitted of those counts.
MS. JIMENEZ: So obviously we start with the current
state of the law, which is that acquitted conduct can be
considered, as long as it's been proved by a preponderance of
the evidence, which I submit to the Court it was.
But let me focus on the upcoming amendment, which
says: "Relevant conduct does not include conduct for which the
defendant was criminally charged and acquitted in federal
court, unless such conduct also establishes in whole or in part
the instant offense of conviction."
So we have HM Four wire fraud counts for which the
Defendant was acquitted. And I think, for purposes of loss
amount, obviously, Count 1 is the submission of the HM Four
loan application. Now, the Defendant admitted that he
submitted that loan application. There was also conduct,
ongoing conduct, that occurred over the course of a month.
Between October of 2020 and November of 2020, there were
multiple wires. And there was a variety of conduct, some of
which -- I think a lot of it was not in dispute. That is that
he used his wife's name to submit this loan application, that
he claimed his wife was 80 percent owner and that he was
15 percent owner, when the tax returns showed for both of those
years, 2019 and 2020, that there was no change in the
ownership.
There was a bank statement that -- and I'm not talking
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Miami, Florida 33128
(305) 523-5698
about the banker's letter. But there was a bank statement the
Defendant submitted to the bank, which is not in dispute -- I'm
sorry -- to the lender, which is not in dispute. He creates
the bank account for HM Four October 20th, the day that he
applies. He then transfers $60,000 from the Alafaya Trails
account into the HM Four account on November 16th, 2020. He
pulls out a bank statement to reflect that money in the
account.
On the very same day -- the following day,
November 17, he withdraws $50,000 back to the Alafaya Trails
account. But in the meantime, he's generated this bank
statement that he supplies to the SBA, and he tells the SBA in
his email that the money was for ACH, and vendors, and
essentially for the business activity in the account, which was
false. And when the Defendant was presented with that email on
the stand, he basically acknowledged -- and I have it in my
notes -- the email said: "Used for ACH or wire to fund either
the payroll account and vendor account for the work that is
ongoing," and the -- which is Exhibit 58-4. And the Defendant
said on the stand: "Well, that's a stupid statement because I
was clearly confused between HM-UP and HM Four. So I think I
miswrote that."
So a lot of the conduct involving HM Four, the
Defendant acknowledges or cannot be disputed because it's in
the bank statements.
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THE COURT: But I guess I'm failing to follow your --
you're, in essence, arguing the evidence that the Government
put forth. But the jury rejected that. With regard to Count
1, the jury rejected the wire fraud on October 22nd, 2020.
MS. JIMENEZ: That was the submission of the
application. And it did.
THE COURT: And the jury rejected the
November 4th, 2020, November 12th, 2020, and January 19th,
2021.
MS. JIMENEZ: Well, sticking with the HM Four, Your
Honor, the -- I think that the thrust of the concern, or what
they acquitted on, was the aggravated identity theft with
respect to the banker's letter and the lease agreement.
And yes, they did. But my point is there were other
wires, there was other conduct that is essentially not in
dispute relating to the HM Four account -- the HM Four loan
application.
With respect to the second draw PPP loan, again, I go
back to the amendment, which is: "Relevant conduct does not
include conduct for which the defendant is criminally charged
and acquitted, unless such conduct also establishes in whole or
in part the instant offense of conviction."
The Defendant was convicted of Count 5 in the
Superseding Indictment, which are the Forms 941 that were
submitted in support of that loan application.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Well, in support of Alafaya Trails's PPP
second draw loan application.
MS. JIMENEZ: Correct. Which was acquitted Count --
acquitted Count -- it was acquitted Count 4, Your Honor.
So Counts 4, 5, and 6 relate to that PPP second draw
loan application in 2021 to PayPal.
Count 5, which are the Forms 941, I think standing
alone don't mean a whole lot. And I think that that's where
the Court can consider what the amendment says, which is:
"Unless such conduct also establishes in whole or in part the
instant offense of conviction." The jury convicted the
Defendant on the submission of those false Forms 941, which
related to that loan application, which was Count 4 of the
Superseding Indictment. So clearly, we've got mixed messages
from the jury.
But nevertheless --
THE COURT: Hold on. When you say: "Mixed
messages" --
MS. JIMENEZ: Well, I mean --
THE COURT: -- they specifically looked at different
wires that constituted the wire fraud.
MS. JIMENEZ: They did.
THE COURT: So if you're asking the Court to consider
the acquitted conduct in Counts 4 and 6, then, if you can
address the argument that's been made that it's double dipping,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
if, in fact, the second draw loan application was for $203,125.
MS. JIMENEZ: Well, it was made to a different lender.
It -- it was a loan application that had the submission of
wires and false -- falsified documents between January and
March of 2021. It was, again, ongoing, and it involved
multiple wire transmissions.
The Defendant did -- did try again with a different
lender. But I do think that under -- under what intended loss
is, that that wire should count. And even under the acquitted
conduct amendment, it relates to a count of conviction that
makes the count of conviction relevant, that is, the Forms 941.
And I think the Court can consider it as part of the loss
amount.
I would add that the acquitted conduct amendment also
does not prohibit the Court from considering acquitted conduct
as a sentencing factor under 3553(a). And in fact, the
commentary to the amendment says: "Nothing in the guidelines
manual abrogates the Court's authority under 18 USC, Section
3661, which states: 'No limitation shall be placed on the
information concerning the background, character, and conduct
of a person convicted of an offense, which a court of the
United States may receive and consider for the purpose of
imposing an appropriate sentence.'"
And so it just goes to the ongoing, relentless,
repetitive conduct of submitting false information and false
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
documents that occurred between the beginning of the scheme and
the end of the scheme that was charged in this case.
Uncharged loans. I mean, I don't agree with the
characterization that they are uncharged. I think that they
were part of the scheme, and the Government presented evidence
about all of those loans, and the Court is required to consider
and include relevant conduct in its calculation.
So either it's part of the scheme -- which we submit
it was, and it was presented as evidence in the trial, and also
relevant conduct, all acts and omissions that were part of the
same course of conduct or common scheme or plan as the offense
of conviction. And I've extensively briefed that issue why all
of these loans were related to each other. Whether it was
going to PayPal or Cross River, or Northeast Bank, or the SBA,
it was for the purpose of obtaining pandemic relief funds, and
there were lies and misrepresentations throughout.
I would add that, with respect to the amendment, it
says that uncharged, dismissed, or other relevant conduct was
expressly excluded from the acquitted conduct amendment. And
that is -- and the Court, under the relevant conduct guideline,
shall consider the relevant conduct. And that is conduct that
is part of the same scheme or course of conduct.
I want to address this general benefits rule that the
Defendant cited. And I don't think he expressly referred to it
this morning as general benefits rule. But it's this guideline
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
provision -- I have not seen it used in any PPP fraud or EIDL
loan fraud. But I don't think the Court has to rule whether or
not these programs constituted a government benefit because the
Defendant has not claimed -- and I don't think he can claim --
that his businesses were intended recipients of this money.
And so, unless the Court wants me to address that
further -- I actually have case law -- again, it's not in the
PPP context or EIDL context, but I don't think in my filing I
had actually cited to any case law. So I want to point out a
couple of cases.
THE COURT: Well, I was going to ask about that, as
well as the Stafford Act.
MS. JIMENEZ: Sure.
THE COURT: Because I know that they are filed
objections. So if you want to address it, certainly.
MS. JIMENEZ: Right. So if I could just -- just on
this government benefits rule, the way that this provision
reads, it says: "In cases involving a government benefit, loss
shall be considered to be not less than the value of the
benefits obtained by unintended recipients or diverted to
unintended uses, as the case may be."
So it establishes a floor for the loss amount in cases
involving government benefits. And again, I have not seen any
case that treats these programs specifically as government
benefits, at least under this provision; however, I would like
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
to cite a couple of cases, United States v. Aldissi,
A-L-D-I-S-S-I, which is 758 Fed. Appx. 694. This is Eleventh
Circuit 2018. It involved wire fraud convictions. These were
scientists who submitted fraudulent research proposals to
obtain federal funds under a small business research program.
The court upheld the intended loss amount of
24 million, which was 10 million awarded research proposals,
12 million of unfunded proposals. The defendants there argued
that there was no loss because they had performed all the work
under the contract. And there was not an issue with respect to
whether or not it was a government benefit. The court found
that it was, but the court essentially ended its inquiry when
it found that the scientists were not eligible for the funding;
in other words, they were not intended recipients because they
had committed fraud in obtaining those loans.
Same with United States v. Agrawal, A-G-R-A-W-A-L,
97 F.4th 421. This is a Sixth Circuit case from this year,
2024. Similarly, it was a Department of Energy grant to fund
research. And there the court went through the mechanisms of
applying the government benefits rule and reiterated the point
that it sets a floor for the loss amount. And the court
basically said this was an unqualified recipient and therefore
the loss was the total amount of the grant.
The court said that the misrepresentations in the
applications meant that, in this case, the Department of Energy
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
would not have funded these grants, if they had known of the
misrepresentations. And so the court treated the recipients of
the loans -- I'm sorry -- of the grants, as unintended
recipients.
I think that is the case here. Both of the PPP loans,
without W-2 employees, these businesses were not intended
recipients. And for the EIDL loans, as Mr. Motes testified,
without an economic injury, these businesses should not have
been applying. Not to mention that multiple of those EIDLs
involved parent companies -- HM Four, Sheppard Flagler
Holdings, HM Six -- companies with no actual businesses, no
actual income of their own.
So on the other enhancement, my partner here, Annie
Martinez, is going to address that, Your Honor.
THE COURT: All right. Let me just stay with the
intended loss. That if the Court were to not consider the
acquitted conduct, and only the four counts of conviction,
Counts 5, 7, 8, and 9, can you advise the Court, of the loans
that were sought with regard to the PPP second draw loan
application on February 11th, the Alafaya Trails second draw
loan application, and as to Counts 8 and 9, the second draw
loan application, as well as the loan related to the
application on March 12th, what are the amounts?
MS. JIMENEZ: So Your Honor, with respect to the PPP
loans that were funded, we start with April 15, 2020, which was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
funded and then forgiven. And if the Court recalls, there was
evidence about that loan where the Defendant submitted a
spreadsheet with purported salaries and withholdings, of which
there were none. And he disavowed that that spreadsheet was --
he said that -- he stated that he had applied for that loan,
but then he disavowed that spreadsheet when it was presented to
him, and said that somebody else had put it in the loan file.
So that loan was funded, which was April 15th, 2020.
And then the forgiveness application, which was in
2021, that was approved, again, with false information. He
submitted a false labor report, indicating a long list of
individual who had purportedly received wages, and these were
individuals who were independent contractors. Mr. Jeff Graff
was on that list. Mr. Martin Joe Beirne was on that list. And
that application was funded, and that application was forgiven,
and both of those were fraudulent.
And then, in terms of other funded PPP loans, we have
the March -- so the first one was 146,587. The two other
funded PPP loans for March 11 and March 12, to Northeast Bank
and to Cross River Bank, and those amounts are 148,397 for the
Northeast Bank loan and 148,591 for the Cross River Bank loan.
I will add that there was a January Cross River Bank
loan application that was denied, that was also fraudulent,
where there was a false Form 940 submitted with respect to that
loan as well.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Okay. Is there anything further with
regard to the intended loss?
MS. JIMENEZ: No, Your Honor. Not on intended loss.
THE COURT: Okay. Anything further, Mr. Srebnick?
MR. SREBNICK: Yes, Judge.
I want to address Your Honor's point about the loan
repayment by the time of sentencing. I understand that you're
focusing on that. And I'd ask you to consider for the moment,
let us assume that Eric Sheppard had not yet repaid the loans
because under the terms of the loans they were over time. The
Court would still have to engage in the inquiry as to what was
his intent when he took the loan. Was his intent -- as I used
the example with renting a car -- was he intending to steal the
car for good, and then you use the value of the car, versus was
Eric Sheppard intending, particularly with the EIDL loans, to
take the money and never pay it back. And indeed he was paying
it back, but accelerated the repayment in light of these
proceedings. But still, it establishes that he wasn't
intending to take the money and never pay it back, and we know
he had the ability to pay it back.
THE COURT: And Mr. Srebnick, what case would the
Court look to that the Court should factor in the Defendant's
intention to pay back a loan when the Defendant obtains a false
and fraudulent loan?
MR. SREBNICK: I would go right to the guideline.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
I'll just direct you to -- we've already cited the
out-of-circuit cases that apply that guideline. I'm sorry. I
grabbed the wrong -- thank you.
Give me one moment. It is 3 --
THE COURT: What provision under 2B1.1 should the
Court look to?
MR. SREBNICK: I think it's -- the cases that I cite
reference the guideline application -- bear with me one second.
3B1, under the notes, "Loss under subsection" -- I'll
put it on the ELMO. I just reproduced it. And forgive my
editorializing.
THE COURT: I'm sorry. You said 3?
MR. SREBNICK: 3B.
THE COURT: The role in the offense?
MR. SREBNICK: No. No I'm sorry. Under the notes of
2B --
THE COURT: Okay. 2B1. All right.
MR. SREBNICK: That defines loss.
THE COURT: All right.
MR. SREBNICK: Means the pecuniary harm that Defendant
purposely sought to inflict. So that's how you determine what
did he purposely seek to inflict. And it's a pecuniary harm.
How much financial harm did he intend to inflict upon the
lender? That's why I think the simplest example I've reverted
now three times is to borrowing a car, or leasing a car, and
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
stiffing the rental company for the loan -- for the lease
amount.
It doesn't mean the defendant wasn't going to return
the car, when he rents it for the week and gives a bad check.
It's not the full value of the car. It's the -- how much did
the defendant take in terms of the value of the lease for that
week. Here, it's the value of the time, value of money, the
interest. But these loans, particularly the EIDL loans, Eric
Sheppard was paying interest on those loans, 3.5 percent, which
at the time was roughly the market rates for those EIDL and
other loans in the marketplace, given what the interest rates
were at the time.
And the fact that Eric was paying those back, and then
ultimately accelerated the payment before today, is, in my
view, telling that he wasn't going to keep the money
indefinitely. He was try treating it like any other loan his
businesses have taken over the course of the last several
decades.
And so, in deciding did he purposely seek to inflict
the full face value of the loan as a loss to the lender, or to
the SBA, I think the evidence doesn't support the Government's
theory that the Court should apply the full amount of the loan.
That would be what we described in other cases as the potential
loss. If he didn't intend to repay it back, that would be how
you would calculate the loss.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Next, in terms of how he deployed the funds, at trial,
the Court saw the -- saw exhibits -- I think it was Defense
Exhibit Z3, that Eric Sheppard, his business -- to keep the
business going during the pandemic, he spent of his own money,
apart from the loan amounts, well over $4 million, to keep the
business going, so that, among other things, people could
remain in the workforce.
And so the loan amounts -- I think the grand total of
the loans that Eric obtained during the time period from these
EIDL, SBA, was approximately $893,000 -- is dwarfed by the
amount of money that he personally used of his business funds
apart from the loans to keep the businesses going. And the
amounts of money me he borrowed were deployed in an amount that
is consistent with what is -- maybe it was just characterized
as payroll, but for workers, to keep people working.
And so it's significant that the money was used for
that purpose, which makes it very different from these other
cases. There is an Eleventh Circuit case -- these government
contracts cases that the Government has cited to today are --
first of all, those are grant cases, gift cases, not loan
cases. And in then some government contract cases, a case
called Bazantes, B-A-Z-A-N-T-E-S, 978 F.3d 1227, Eleventh
Circuit, 2020, the court does consider, in the Eleventh
Circuit, even when someone obtains the money, a loan that he
should not have obtained, he wasn't qualified for, there may
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
have been fraud involved, but provides services for that money,
the court does offset -- does offset -- the amounts in
determining what loss or what intended loss the Defendant had
in mind.
And so the combination of these cases, particularly
the out-of-circuit cases, make it super clear that in a loan
case you do consider, Judge, what was the course of conduct by
the Defendant to establish what was his intent. And with the
exception of the first PPP loan, where it was forgiven, before
the jury finds there to have been any scheme, that is the only
amount, $146,000.
And so I think, in answer to your question -- I did
the math for you, Judge -- the two counts of conviction, Counts
4 and 9 -- and I'll get in a moment to Count Number -- bear
with me -- Counts 7 and 8. I'll get to that in a moment,
because 7 and 8 just replicate Count 4. I hope the Court's
followed me on that. He applied for the loan. It was denied
in the first instance, went to another bank and got 148,000.
The Government says to you: "Let's use the larger amount
because that was the more ambitious application," but it was
the same pot of money.
THE COURT: So hold on. If you can go back --
MR. SREBNICK: Yes, Judge.
THE COURT: -- with regard to the argument. So you're
saying the $203,125 was never obtained?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. SREBNICK: Correct. Not funded.
THE COURT: Not funded. So part of the intended loss,
not the actual loss.
MR. SREBNICK: Except that it was eventually funded by
a different bank, 148,397. The first bank --
THE COURT: Right. But there were two separate banks.
MR. SREBNICK: But he would only qualify for one loan,
and a single -- only one institution could lend the money. And
so it wasn't like he could qualify for both. He could only
qualify for one. He tried it with one bank. It didn't work.
He tried with another one. It does work for the amount of
148,397.
But even giving the Government credit for the larger
amount, the original application, that would be 203,125, plus
the 148,591 -- I did the math wrong -- 591. And I'll do the
math in a moment. It's those two loan transactions that
matter, for purposes of limiting the exposure to just the
counts of conviction. And I'll just do the math in the moment.
I'm sure someone at Defense counsel table can do it better than
I can.
And even if you include the third PPP loan, it still
is less than $550,000 between all three of them, which is the
breakpoint under the guidelines.
THE COURT: I'm looking at the Bazantes case,
Mr. Srebnick, and I'm failing to see how that would be
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
relevant, when that relates to services provided.
MR. SREBNICK: So in Mr. Sheppard's case, as I've just
described, the money was used to pass it on to workers. And I
understand he didn't qualify for it, those workers were not
correctly categorized as W-2 under the IRS rules, and the
Government's position is that that therefore created a fraud,
and we've dealt with that. But the money went to them. The
intended purpose of the money from the Congress was to get the
money into the hands of workers, and that's where the money
went.
And so, in terms of loss, who is the loser here? Who
is the financial loser in this case? It wasn't the banks.
They didn't lose any money. And the SBA gave the money to
Mr. Sheppard through the banks, and he then transmits it to the
workers who really were the intended beneficiaries of these
programs. And that goes back to our argument that, under the
cases of government programs, you do consider if the money went
for its intended purpose.
And I began my presentation with this simple point:
If Eric Sheppard had never applied for this money, and someone
else had, the SBA would not have received the money in return,
because these were forgivable loans. And so the SBA is in no
worse position for Eric Sheppard having obtained these loans,
so he could pay workers, than the SBA would have been had some
different company characterized those exact same human beings
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
as W-2 employees in a way the Government would have found
acceptable.
THE COURT: All right. So continuing with the -- and
Ms. Jimenez, are you in agreement with regard to -- and I
understand that there was an effort with regard to Bank
Processor 1 and 2, but would you agree that the amount that was
obtained was, in fact, the $148,397?
MS. JIMENEZ: That's correct. Yes.
THE COURT: All right. All right. Anything further?
MR. SREBNICK: One moment, Your Honor.
No, Your Honor.
MS. JIMENEZ: Your Honor, again, I go back to the very
first PPP loan, April 15th, 2020, that was attained and was
forgiven, both fraudulently. The fact that the Defendant took
the money from those loans, that he wasn't supposed to be
getting in the first place, because he actually had operating
businesses that were successful, and he just put the money into
his businesses and that money just flowed through the
businesses, and he used the money, as we saw during the trial,
for business purposes, for personal purposes, that doesn't mean
that you get to take the money that you have in those
accounts -- because he had private loans of millions of
dollars, he had rental income from the Alafaya Trails
business -- because he had that money, that he was -- because
he had operating businesses, it doesn't mean that now that he
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Miami, Florida 33128
(305) 523-5698
shows a chart where he lumps together the funds that come into
his various businesses over the course of a year and a half,
that he gets to negate an intended loss, where he intended to
obtain the full amount of each of those loans that he -- some
of which he was successful for and some of which he was not.
And the relevant conduct guidelines and the intended loss
guidelines tell the Court that he should be held responsible
for all of it.
THE COURT: All right. I understand the argument.
Let me state that the argument is preserved, but I do
not believe that the payoff of the loan by Mr. Sheppard is
properly calculated by this Court in determining the intended
loss.
As we know, the loss amount under 2B1.1 is the greater
of the actual or intended loss. And with regard to the
intended loss, let me make a comment that I am somewhat
concerned that the Court should be considering acquitted
conduct, but I agree that uncharged conduct that is relevant
conduct is important for the Court to consider. And based on
what has been presented to the Court, understanding that
Mr. Sheppard has been found guilty by the jury of Counts 5, 7,
8, and 9, it would appear to the Court that the loans, based on
the Government's Exhibit 72, as well as what has been presented
to the Court this morning, would appear to include as the
intended loss the loan of 146,587, the loan of 148,397, and the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
loan of 148,591. And that is the Court's ruling with regard to
the intended loss.
The Government does bear the burden by a preponderance
of the evidence, and the objection is sustained in part, and
that is the amount of the loss -- or the intended loss that the
Court is calculating.
So if Probation can advise of the amount, and I
believe the advisory guideline calculation should change as a
result of that.
PROBATION OFFICER: Yes, Your Honor.
The total offense level is then reduced by four
levels, resulting in a total offense level of 21.
THE COURT: Can you give me the amount of the intended
loss, calculating the three loans, please, and where that falls
under 2B1.1 in terms of the enhancement.
PROBATION OFFICER: Would you like me to start from
the base offense level?
THE COURT: I don't need -- I just need, on the 2B1.1,
the loss and the total loss, and then I'll determine the
enhancement.
PROBATION OFFICER: Okay. So with a loss of 443,575,
that results in 2B1.1(b)(1)(G), which is 12 points.
THE COURT: Okay. If I could just be mindful of my
staff, particularly my court reporter, let's go ahead and take
a 10-minute recess, please.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
COURT SECURITY OFFICER: All rise.
(Recess from 11:04 a.m. to 11:15 a.m.)
THE COURT: All right. Go ahead and have a seat.
Welcome back.
MS. WEINTRAUB: Judge, Mr. Sheppard is in the men's
room. He'll be right out.
THE COURT: All right.
(Pause in proceedings.)
THE COURT: All right. Let us -- let me acknowledge
the presence of the Defendant.
Let us continue to address the objections to the PSI
or the calculation of the advisory guidelines.
On behalf of the Defendant?
MR. SREBNICK: Judge, I'm sorry. I couldn't hear.
THE COURT: On behalf of the Defendant, let us
continue to address the objections to the PSI, or the
calculation of the advisory guidelines.
MR. SREBNICK: I believe our next objection was to the
sophisticated means enhancement. And our objection is at
Docket Entry 238, the sealed version, or the unsealed version
at Page 20. And the Government -- if we can turn to the
Probation office -- suggests that this particular scheme should
include a two-level upward adjustment for sophistication. And
yet, the hallmark of one of these loan fraud cases is the
submission of something false.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And so the question is: Was there something
particularly sophisticated about characterizing workers as
employees, when they were independent contractors? Because
that's the heart of what the Government's case is, that these
workers, these real people, were mischaracterized, even though
they were indeed workers.
And we submit that the documents the Government relies
upon to support its suggestion that there was some level of
sophistication are just run-of-the-mill documents. You see
them in tax cases. You see them in loan cases. It's a loan
application that contains, according to the Government's
theory, misrepresentations, but nothing out of the ordinary.
This case does not involve offshore accounts. It does not
involve the kind of long planning of sophisticated activities
to, you know, fool the world.
And so we suggest that this case does not fit within
the sophisticated means enhancement. We cited United States v.
Adepoju, A-D-E-P-O-U -- excuse me -- A-D-E-P-O-J-U, Fourth
Circuit, 2014, that the complexities and intricacies must be,
quote: "Above and beyond," close quote, "the complexities and
intricacies that are already inherent in the alleged fraud."
And in that case, like this case, it involved
allegations of bank fraud, allegations of stolen identity, as
well as allegations of forged checks in order to withdraw money
from an account. And in that case, the Fourth Circuit agreed
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
with the defense that such conduct did not rise to the level of
a sophisticated means.
Thank you, Judge.
THE COURT: Thank you, Mr. Srebnick.
Ms. Jimenez?
MS. JIMENEZ: Yes, Your Honor.
Sophisticated means enhancement can apply to the
execution or the concealment of the offense. And in this
district, I think we see a lot of -- for instance, in the
healthcare fraud realm for sure, a lot of sophisticated means
enhancements imposed because of the concealment aspect, where
you have shell companies and money disappearing through those
shell companies.
But it also applies to the execution of the scheme.
And the sophisticated means enhancement example, as to the
sophisticated scheme and the way it was executed, provides this
example: A telemarketing scheme. Locating a main office of a
telemarketing scheme in one location and the soliciting
operations of the scheme in a different location, that
indicates sophisticated means under the guidelines.
And the case law in the Eleventh Circuit is clear that
each action on its own need not be sophisticated, but
repetitive and coordinated conduct, though no one step is
particularly complicated can be a sophisticated scheme. And
that's US v. Barrington 648 F.3d --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: And I have Barrington, and I have the
Bruey cases that you have cited. And in each of those cases --
for example, in the Bruey case, there was the establishment of
fictitious entities, corporate shells. What is it here that
was especially complex or especially intricate in terms of
filing these loan applications?
MS. JIMENEZ: Well, there were income tax returns that
were fraudulent. There were income tax returns that the
Defendant prepared and submitted in the spring of 2021, many
months before his own accountant would have started working on
those income tax returns. And these are not 1040EZ. These are
corporate partnership income tax returns that had false
information about revenues and salaries. And they were
entirely prepared without any input from the accounting firm,
which had, for 25 years, prepared those partnership income tax
returns.
There were a number of the 941s, which report
quarterly wages, federal income tax withholdings on those
wages, Medicare, and Social Security taxes owed. There were
unemployment tax forms, the 940s, that also have to report
unemployment taxes. There were the spreadsheets with false
labor and wage reports. There were, submitted to -- well, also
in connection with the EIDLs, but he submitted false profit and
loss statements for Alafaya Trails, and on and on and on.
I mean, some of the conduct, I would submit to the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Court, was sophisticated, and I would say particularly those
income tax returns, the changing of the business code to
reflect a construction business, instead of being a landlord of
real estate -- of commercial real estate. And then there was
also repetitive, ongoing conduct, which was the false -- all of
these false -- particularly the false tax forms, including also
Florida Department of Revenue forms, throughout the period of
the scheme that does qualify as sophisticated conduct.
I mean, we've seen a number of PPP loan fraud cases
where the defendants essentially outsource that part of the
fraud to somebody else. I mean, there was a large case here in
the Southern District where many, many people were charged and
they were paying a very hefty accommodation to Mr. James Stote,
who was preparing all the false documentation. So for those
individuals, who outsourced that aspect of the fraud, we were
not seeking sophisticated means.
But here, it was homegrown. It was all in-house. It
was all the Defendant. And these were company partnership
returns. And so I think that there was a level of
sophistication that merits the enhancement, Your Honor.
THE COURT: Is there any other cases besides Bruey and
Barrington that you're relying upon? Because I see a
distinction in each of those cases. And the Eleventh Circuit
notes that, in Bruey, she created false business -- Google
business pages, business websites to correspond to the business
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
information, Google reviews by alias accounts, which had
purported feedback.
In all, the court notes the totality of the
circumstances show that Bruey created false documents. Twelve
applications were funded, two dozen fraudulent applications
were in all submitted. I'm trying to see the difference
between creating false documents and submitting them through
portals, where the sophistication lies, where the Eleventh
Circuit has told the courts that, in looking at sophisticated
means, there has to be something more. There has to be
something specific that would tell the Court that this is
sophisticated. Other than the creation of false documents and
the submission, what other actions would constitute
sophisticated means?
MS. JIMENEZ: Well, they are not just any false
documents. Like I said, some are sophisticated income tax
returns. The Defendant submitted or created false business
records, those profit and loss statements, board minutes. The
Defendant also created a false impression about banking
activity for HM Four by moving money into that -- first of all,
he created a number of bank accounts for businesses on the EIDL
side, for businesses that otherwise did not have bank
accounts -- Sheppard Flagler Holdings, HM Six, HM Four -- and
then he moved money in and out of the HM Four account to create
essentially a false bank statement that left the impression
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
there was activity in that business.
So I think -- and there are a number -- I haven't
cited them, but there are a number of cases that do say what
Barrington says, that is, ongoing, repetitive, coordinated
conduct, even if looking at each individual act on its own is
not sophisticated, it does amount to sophisticated means. And
I would submit here we have both. We have the representative
conduct, and some of the supporting documentation, you know,
required some sort of expertise. I don't think anyone could
have -- just anyone could have prepared those income tax
returns.
THE COURT: But is it the mere preparing and
submission? Because, in Barrington, the court noted that after
the conspirators failed to obtain unique registrar employee
passwords that they installed key loggers on registrar
computers, using stealthy means and personal contacts, where
the passwords were changed. They gained after-hours access. I
mean, the totality of those circumstances certainly showed
sophisticated means. They had to learn to negotiate the FAMU
computer system. They logged on to -- multiple occasions, to
practice and learn.
Here you have Mr. Sheppard's computer and the
submission of documents to a portal. I understand -- I'm
asking because the Court has had many cases involving the CARES
Act and PPP loans, and I'm failing to find what here is truly
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
sophisticated.
MS. JIMENEZ: Well, Your Honor, like I said, I've had
cases where the individual was submitting one loan, or a couple
of loan applications, and I've had cases where they're
submitting tax forms. And for the most part, at least what
I've seen, those tax documents tend to be outsourced to either
a tax preparer, who is in on the fraud, or someone with that
sort of expertise. And here, we did not see any evidence of
anyone who was preparing these documents, particularly the tax
documents, on behalf of the Defendant.
THE COURT: All right. Is there anything further?
MR. SREBNICK: Only if you have questions, Your Honor.
THE COURT: I don't. Because I find -- certainly the
Court sat through the trial, and I do not find that
Mr. Sheppard's actions were especially complex or especially
intricate conduct pertaining to the execution or concealment of
the offense. And I don't find, based on a preponderance of the
evidence, that the Government has sustained its burden, and the
objection would be sustained to the enhancement, and the
two-level enhancement will not apply.
What other objections do we have?
MR. SREBNICK: Your Honor, we object to the adjustment
upward for obstruction, which my colleague Mr. Cavallo will
address any details. But the general proposition, we have a
mixed verdict, which suggests the jury accepted some --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
certainly some of Mr. Sheppard's testimony and acquitted on
that basis. The Government is suggesting that because the jury
did not accept all of the Defense arguments for acquittal that
the Court should find an obstruction based on his testimony. I
think that, given a few factors -- one is under Dunnigan -- the
Court would need to have a finding of a particular fact that
was a statement by the Defendant that was demonstrably false,
not simply lapses in memory, not simply a credibility contest
over who is more credible, et cetera.
In every civil case that Your Honor's ever heard,
where there are witnesses for each side, one side wins, one
side loses. But it's not the case that every time someone
loses a case that the parties on the losing side are accused of
obstructing or perjury. People's recollections, people's way
they express themselves can differ. Juries can make
credibility findings without making a finding by the Court that
there's any kind of obstructive effort by the person who is on
trial.
And particularly given the Sixth Amendment rights at
stake, to find that a defendant who goes to trial and
testifies, where a jury finds him not guilty of more counts
than they find him guilty of, we suggest that applying an
obstruction enhancement in that case wouldn't be appropriate
and would really chill defendants' rights to testify.
And if the Court has any specific questions about the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
trial testimony, Mr. Cavallo's available.
THE COURT: All right. Mr. Cavallo?
MR. CAVALLO: Thank you, Your Honor.
So just going in order as they're addressed in the
briefing, the first alleged act of obstruction was
Mr. Sheppard's testimony that he did not decide who was W-2 and
who was independent contractor status at his companies, and
that he denied knowledge of who was an employee versus W-2 at
his companies.
And, as far as I can tell, the primary thing the
Government cited -- or was cited in the PSR, was Mr. Sheppard's
2019 deposition, so a deposition before any of the conduct at
issue, in which he acknowledged that Mr. Graff, who testified
at trial, and some CJUF workers, were independent contractors.
And in the same deposition, he also testified that HM
Management had, quote, payroll taxes for some employees, but no
payroll for independent contractors.
So based on this, the Government is alleging that
Mr. Sheppard committed perjury and lied at trial, when he said
he didn't know who was W-2 and who was an independent
contractor.
So the first point I want to make is that Mr. Sheppard
didn't testify that he didn't know the difference between W-2
and 1099. His trial testimony was mostly that he was
uninvolved in determining which was which, and he was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
uninformed about the hiring process and how workers -- upon
their hiring, how they are classified. And he was also
confused on the differences in independent contractors and W-2
employees, as far as how that would be reflected in their
paychecks and any resulting tax implications. So I think the
Government's trying to oversimply his testimony.
And I also would say his trial testimony is actually
perfectly consistent with his 2019 deposition. In the 2019
deposition, as at trial, he admitted HM Management paid payroll
taxes through 2019. That's exactly what he testified during
his deposition. He also testified, contrary to Mr. Graff's
testimony, that it was Mr. Graff who decided to be a 1099
independent contractor, again, long before any of the conduct
at issue.
And Mr. Sheppard's testimony was never disproven. In
fact, the Government put on its own evidence that it was
Mr. Graff who benefited from the change from a W-2 employee to
a 1099 contractor. And we saw those in the tax documents,
where Mr. Graff ended up declaring much less income tax to the
State of Florida after that change. So we don't believe
Mr. Sheppard's testimony on this point was conclusively
disproven.
And by the way, as a final point, the Government could
have put on Jeanette Gonzalez. She was a witness who had
immunity. She never testified as to who made the decision to
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
be W-2 or 1099. They had every opportunity to put her on, and
they chose not to.
So that's the first obstruction point. I can move on,
unless Your Honor has any questions.
THE COURT: Well, the Government is raising four
specific times when Mr. Sheppard's testimony was false, and
has, in fact, referenced the fact that Mr. Sheppard testified
to the jury that it was Mr. Vasilas who may have been
responsible. But testimony admitted into evidence, including
the exhibits, showed that, in fact, the loan applications were
following the death of Mr. Vasilas. So it seems like that
would not be -- that would be completely contrary to the
evidence. And I think you're asking the Court to find that the
testimony in this case was not --
MR. CAVALLO: Your Honor, I don't want to cut you off,
but that was just my argument on the very first point of four.
THE COURT: Right. There's four specific parts that
the Government relies upon. And it's incumbent -- obviously,
it is an enhancement. It's incumbent upon the Government to
show that this is more than just Mr. Sheppard not remembering,
that, in fact, it could be argued to the jury, and the jury
could believe the testimony -- and in fact, they did -- on
several of the counts.
But I am trying to reconcile some of the evidence that
was directly shown that contradicted Mr. Sheppard's testimony.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And that's what the Government bears out in its briefing.
MR. CAVALLO: Let me jump right into just I think what
you believe are the main issues then.
First of all, I think it's really important to look at
Count 6. Count 6 of the Superseding Indictment is
February 26th, 2021, and it's submission of a false tax return.
And it's after they found Mr. Sheppard guilty of Count 5, a few
weeks earlier, for submitting false 941s.
What does this tell us? The only thing that this can
tell us, unless this is a conflicted verdict, is that the jury
believed someone else was involved. The jury did not reject
that Mr. Vasilas or someone else was involved in this, period.
The Government also wanted an aiding and abetting jury
instruction. So we can't draw from -- conclusively from these
verdicts that Mr. Sheppard was the one who hit submit,
Mr. Sheppard is the one who filled in the documents,
Mr. Sheppard -- you know, all the things they are alleging he
lied about. We cannot conclusively draw that from the jury's
verdict. And I think the jury was telling us: "We do believe
someone else was involved in this."
So I think -- and by the way, on the last argument
they make, I just completely disagree with. Their last
argument for obstruction, Mr. Sheppard obstructed by falsely
denying that he had any knowledge or participation in the
loans. And then their reasoning is that the money went into
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
his bank account -- his companies' bank accounts, he was the
sole signer on the accounts, he controlled the accounts, all
the IP addresses for the applications come from his house, his
email is used, so on and so forth. None of that proves that
Mr. Sheppard is the one who did these things, and not someone
else, like Mr. Vasilas.
And I would add there was ample evidence, undisputed
trial evidence, Jeff Vasilas had authority to come and go to
the house, even when Mr. Sheppard wasn't home. Mr. Vasilas had
easy access to Mr. Sheppard's home, and he was there often.
There was evidence he stayed overnight when Mr. Sheppard wasn't
home. We put a gate proposal in evidence, if Your Honor
remembers. I don't have the exact trial number. But it's a
gate proposal that Mr. Vasilas DocuSigned from Mr. Sheppard's
house, and it has Mr. Sheppard's IP address on it. And
Mr. Glenn Sheppard testified he was at the house all the time
with Mr. Vasilas, and Mr. Vasilas was always on Mr. Sheppard's
computer doing work. So these indicia of it being obstruction
just don't add up, and they cannot lead you to a conclusion
that Mr. Sheppard's testimony was willfully wrong.
So -- and I believe I've addressed the really -- the
heart of the obstruction. I don't believe the jury rejected
that Mr. Vasilas was uninvolved and couldn't have been the one
to fill out some of these forms.
I would add that Mr. Graff wasn't shown all of the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
941s. He was shown a lot of them, but he wasn't shown all of
them. I think he admitted there was different handwriting on
them in places. Some of them were typed. The signatures
varied wildly. The signatures varied on them. Mr. Sheppard's
name was spelled wrong in some of the signature areas.
So I don't believe you can take the jury's verdict and
just say: "Well, it's got to be obstruction. They just
totally disregarded everything he said." I don't believe that
you can take the verdict and say: "This must mean there was
willful false testimony."
THE COURT: Have you addressed each of the four
points? Because it is incumbent upon this Court to make
specific findings, if the Court finds that the Defendant
obstructed justice. So I just want to make sure I give you the
opportunity, before Ms. Jimenez speaks, in terms of the
specific evidence or testimony that would lead this Court to
believe that it was not a willful intent, but rather confusion,
mistake, or a faulty memory.
MR. CAVALLO: There's one more I don't think that has
come up in your questions, or of what I've said, which is that
the Government alleges that Mr. Sheppard testified falsely that
he spoke to Cupersmith and Zaslow, the accountants.
THE COURT: Yes. With regard to the employees.
MR. CAVALLO: Regard to -- well, I believe it said --
THE COURT: With regard to the PPP loans and whether
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
he should -- what he should to do with the employees versus the
independent contractors.
MR. CAVALLO: Correct, Your Honor. And I think our
briefing pointed out that, even I believe the testimony they
cited, or at least other parts of the testimony, Mr. Sheppard's
language was very hedging, you know, "I believe that was our
conversation," couldn't get into details, "Can't exactly tell
you the specifics of the conversation." And so we think that
reflects uncertainty and faulty memory, not willful intent.
And most importantly, Mr. Zaslow did confirm that
Mr. Sheppard affirmatively raised the issue of applying for the
government programs in an email, and that email is in evidence.
And Mr. Zaslow did confirm there was a subsequent phone call a
few weeks later.
Also, again, this doesn't go to any of the counts. I
mean, the Defense's position is that this April 2020 loan was
uncharged. That amount hasn't been included in the Court's
loss calculation. So this is a very early conversation in 2020
before the conduct. So we don't believe it goes to any of the
guilty counts.
Oh, sorry. One other important thing, Your Honor. I
believe you said some of the applications were submitted after
Mr. Vasilas died. Mr. Vasilas died after all the successful
applications. Mr. Vasilas was alive for all of the
applications. I believe the only applications Mr. Vasilas had
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
passed away was much later EIDL extensions that don't involve
W-2, don't involve 1099, don't involve 941s, don't involve tax
returns.
THE COURT: Well, I'll read from what the Government's
contention is: "The EIDL modification files from the SBA show
that the Defendant continued to submit false and forged
documents to support his loan applications after Mr. Vasilas
died. Mr. Vasilas's last text message to the Defendant was
dated July 14th, 2021, and the resolution and certification
documents submitted for the HM Management and Alafaya Trails
modifications were dated September 2021."
MR. CAVALLO: Right, Your Honor. But that -- I don't
even believe we argued Mr. Vasilas was involved in EIDL. It
was Nationwide, and Mr. Sheppard admitted he did the EIDL for
HM Four. Mr. Vasilas was there to assist with PPP. So
Mr. Vasilas not being around for later EIDLs is meaningless,
frankly, Your Honor. I don't believe that was ever our
position. And there was no evidence from the SBA that there
was any false returns they obtained, even for those specific
loans you're talking about. They totally rejected that they
had received any false returns.
Thank you, Your Honor.
THE COURT: Thank you, sir.
Ms. Jimenez?
MS. JIMENEZ: Yes, Your Honor.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
So I tried to set out four categories of testimony the
Defendant gave that was intentionally false and material.
The first category was the Defendant denying that he
decided, that he was a decision-maker at his companies, as to
who was W-2 and who were independent contractors, and he denied
knowing whether the people who worked were W-2s or 1099s. And
and I cited testimony, which I'm not going to read now -- but I
cited testimony where he gave that testimony.
Mr. Graff testified that the Defendant was the
decision-maker as to who was W-2, who was 1099. It was
established at trial that there was one company, HM Management
and Development, that had three employees up until 2018, no
other company. And that one of those three employees, W-2
employees, was the Defendant's housekeeper Elba Baluarte. It
is incredible to think that Jeanette Gonzalez, Jeff Graff,
Jeanette Gonzalez's daughter, Vanessa Gonzalez, at HM
Management, would have decided that Elba Baluarte, the
housekeeper, was a W-2 employee because of them, not because of
the Defendant.
The deposition transcripts -- I don't have them in
front of me -- 79-1, 79-2, 79-3, taken in 2019, just before he
started applying for these loans, there was no hesitation. It
was clear. It was direct. These people were contractors.
They are not W-2 employees. They all received 1099s. That's
what he said, did not equivocate.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Neil Cupersmith, of course, testified no companies had
W-2 employees, except HM Management, which had three
historically. Then, of course, that's corroborated by the tax
returns, the IRS records, the Defendant's 404(b) letter to
counsel. He says: "I make all decisions at the company and
Jeff Graff is a consultant. He's not an employee."
That was Paragraph 58 in the PSR. Paragraph 59 in the
PSR, the category is these Forms 941. The Defendant, at trial,
denied -- and I have the testimony laid out in my response --
denied knowing what the forms were for, denied having seen them
before -- that is the ones that were submitted to the lender --
denied that he submitted them to PayPal, denied that the
handwriting was his. Now, the jury did convict the Defendant
on that count as to those 941s.
The Defendant's own exhibit, Exhibit P1, was an email
to PayPal on that day, February 11th, 2020, the day of the
submission of those 941s to PayPal. The Defendant's email --
in that email, he says to PayPal: "I received them from the
accounting department and I have submitted them to you."
That's what he says. Which, at trial, he said: "Oh, I didn't
write that email. I didn't," even though that was the
Defense's own exhibit at trial.
Jeff Graff recognized the Defendant's handwriting as
to those 941s that had handwriting. Some of them were typed.
It was the Defendant's signature on those 941s. The jury was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
shown withdrawal slips from the bank, that had handwriting of
the Defendant, withdrawing funds from the HM-UP Development
Alafaya Trails account. They were shown those withdrawal slips
next to the Forms 941 that were handwritten with the name of
the business; same handwriting. The Defendant denied on the
stand, directly to me, that that was his handwriting.
Jeff Graff, knowing the Defendant his entire life, I
would submit, is a -- beyond a handwriting expert. He was
intimately familiar with the Defendant's handwriting and his
signature. His signature was on the bank records. His
signature was on those forms.
Then Paragraph 60, the next category, advice the
Defendant received from his accountants, on direct, and then on
cross-examination, the Defendant -- first of all, they put in
an April 20, 2020 email, which I don't have in front of me.
Then we put in an April 21, 2020 email, again, setting up a
phone call that occurred the following morning,
April 22nd, 2020 with both of his accountants. And the
Defendant testified that the accountants gave him advice about
the PPP program. That he -- that they gave him the advice as
to which company should be the applicant, which was HM
Management, instead of HM-UP. That he had indicated 80
employees on that PayPal application, but they told him: "No
you need to refer back to 2019, the number of employees or
workers you had in 2019."
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
He gave specific details about this purported advice
that the accountants gave him. Both Mr. Cupersmith and
Mr. Zaslow denied that in that conversation that they had with
the Defendant on April 22nd, 2020, or at any point when they
dealt with the Defendant, that they discussed with him anything
about the PPP program. Nothing at all was asked by the
Defendant about it -- PPP or EIDL, I should say, either one --
and no advice was given by them, solicited or unsolicited, on
that issue at any point. It was unequivocal.
And I cited for the Court an Eleventh Circuit case,
where there was an obstruction of justice enhancement imposed,
where the Defendant denied engaging in drug-trafficking
activity, and there were two witnesses who contradicted that.
I think, based on the accountants' testimony alone, this
obstruction of justice enhancement should be imposed. Their
testimony was uncontrovertible. The jury believed them. The
Defendant's own exhibit -- well, not his exhibit, but our
April 21st email corroborates that.
There is no possibility, on that issue, on that
subject, that the Defendant was testifying from faulty memory
or was confused. He gave specific items of advice that these
accountants purportedly gave him, which they flat out denied.
THE COURT: So let me -- I just want to -- because I'm
following you with regard to the three -- now the fourth point.
MS. JIMENEZ: We're getting to four.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Well, the fourth point is with regard to
Cupersmith and Zaslow, right?
MS. JIMENEZ: No. The fourth point is Jeff Vasilas.
THE COURT: Jeff Vasilas, which is what I asked
Mr. Cavallo, in terms of the submission of the applications.
MS. JIMENEZ: Right.
THE COURT: Then if I can stay on the point with
Mr. Cupersmith and Mr. Zaslow.
MS. JIMENEZ: Yes.
THE COURT: Because the law requires that the Court
find, obviously, the testimony was under oath -- it was -- that
it was false, material, and given with the willful intent to
provide false testimony.
So if I look at the testimony, when Mr. Sheppard was
asked: "So you told the accountants you had applied on behalf
of HM-UP for this PPP loan application, and their advice back
to you was: 'No, you should have applied on behalf of HM
Management.' Is that what they told you?"
And the Defendant says: "Again, I don't know the
exact conversation from four years ago, but it was -- the only
thing I remember talking about was HM Management is the company
that I should apply for the PPP loan. That's my recollection."
So where would the Court find the willful intent to
provide false testimony? I understand that you've cited to a
case where two individuals said that the defendant was involved
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
in the criminal activity, the defendant denied it, and the
court found that that was sufficient. But here -- because the
other two, I'm wrestling with the testimony the Defendant was a
decision-maker regarding employees and who are the W-2s or
1099s. Mr. Graff testified. The jury was free to accept or
reject his testimony. They rejected it on some. They accepted
it on some. Elba Baluarte didn't testify.
So it's hard to find that the mere fact that Mr. Graff
testified, and contradicted Mr. Sheppard, that this Court
should make a finding that the Defendant willfully obstructed
justice.
MS. JIMENEZ: Well, Mr. Graff testified -- and that --
with respect to the Forms 941, Mr. Sheppard testified that he
had not seen them before, didn't know what they were, didn't do
anything related to them. Mr. Graff specifically recognized
the Defendant's handwriting on the Forms 941 that were
submitted to the lender, that the Defendant denied having ever
seen before. His handwriting, Mr. Graff testified, was on
those forms.
That was corroborated by bank withdrawal slips that
were shown to this jury, withdrawal drawl slips of the
Defendant that were put side by side with those handwritten
941s that had the same handwriting. The Defendant denied it
was his handwriting, and he also denied that he had ever seen
those forms. So that is the Jeff Graff testimony that I am
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
speaking about.
With respect to Mr. Cupersmith, on direct, it was
elicited from the Defendant: "In terms of getting assistance
generally for the first PayPal loan application" -- again, that
was April 2020 -- "who did you speak with to get help? Who do
you recall speaking to?"
"Well, I spoke to Neil Cupersmith, Alex Zaslow, and I
was taking information from what Jeff Graff told me."
That's where he starts. That was on direct,
December 19, 2023, p.m. session, Pages 39 to 40.
He goes on: "Did you have -- did you speak to the
accountants around this time period?"
"Yes."
"What do you recall about that?"
"I recall the email -- we emailed back and forth about
setting a time to call because I was trying to get guidance
about this application, and we set up a phone call and -- a
phone call regarding that."
"What do you recall about the discussion with the
accountants about -- as reflected here about this?"
"I don't remember all the conversation." And then he
goes: "I asked him about the 2019 compared to 2020, and that's
when they said: 'You have to use 2019 workers.'" And he said:
"You can get -- Jeanette knows all about this stuff" --
referring to what Cupersmith and Zaslow said to him. "Jeanette
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
knows about all this stuff."
And I said: "Okay."
And he also said: "From -- how do you call it -- an
LLC, he was telling me that it really should be HM Management."
So this is brought out on direct examination that he
received advice from his accountants in April of 2020, when
he's starting to apply to PayPal, about the workers, about the
company, and that the accountants gave him advice about the
PPP. And that is to suggest to this jury that: "Whatever I
did with respect to PPP, I got advice from my accountants," and
that was false.
THE COURT: And that was directly contradicted by
Mr. Cupersmith and Mr. Zaslow?
MS. JIMENEZ: Correct. Mr. Cupersmith was asked,
12/12/23, p.m., at Pages 18 to 19: "Did the Defendant, at any
point when COVID began, reach out to you to ask about how to
qualify for a PPP loan?"
"No, he didn't."
"Did the Defendant reach out to ask about how to apply
for a EIDL loan?"
"No, he didn't."
And it was much more specific with Mr. Zaslow because
Mr. Zaslow testified on rebuttal after the Defendant had given
testimony about the advice that Mr. Zaslow and Mr. Cupersmith
had given him on the phone about the PPP. And Mr. Zaslow was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
asked, Trial, January 10, 2024, p.m., Pages 137 to 138: "What
was the situation you discussed in that call with the
Defendant?"
"That he had not paid us for the returns that we
prepared, and we weren't going to release them until he did."
As part of the emails that had been introduced, there
was a discussion about the Defendant wanting his tax returns
completed. Then the next question: "All right. In that
conversation, did Mr. Sheppard ask you anything about Paycheck
Protection Program loans?"
Answer: "No, he did not."
"Did he ask you anything about Economic Injury
Disaster Loans?"
"No, he did not."
"Did he ask you anything about any government loans?"
"No, he did not."
"Did he ask you whether -- you know, as to what
company should be applying for any type of government loan?"
"No, he did not."
"Did he ask you about what tax year or what year --
what year's figures or number of laborers he should be using
for any type of loan?"
Answer: "No, he did not."
"Did you provide him -- you -- was Mr. Cupersmith on
the call as well?"
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Answer: "Yes."
"Did you or Mr. Cupersmith provide him or offer him
any advice -- given the time frame we were talking about, April
of 2020, did you provide him -- irrespective of whether he
requested it, did you provide him any advice regarding applying
for any government type of loan?"
Answer: "No. We provided no advice on government
loans."
"Did you -- subsequent to that conversation that
occurred shortly after this email, did you at any point in
2020, or in 2021, provide Mr. Sheppard any advice regarding any
COVID-related government loan?"
Answer: "No, we did not."
That was, as I said, January 10th, 2024, p.m., at
Pages 137, 138.
And as I argued in my response, the juxtaposition of
the Defendant's testimony and the accountants' testimony, which
was unequivocal -- it removes any possibility that he was
unable to recall. It was brought out on direct examination of
the Defendant.
The last category was denying that he took part in the
preparation for the submission of false documents to the
lenders in 2021. He denied that he had anything to do with the
submission of false documents to the lenders in 2021. He
admitted that he submitted loan applications in 2021, but
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
denied knowing about or having anything to do with the
preparation or submission of any false documents to the lenders
in 2021. And for that, he blamed Mr. Jeff Vasilas.
And I gave examples of the testimony -- well, no --
right -- that he did it -- I mean, right -- that he doesn't
know anything about the preparation or the submission of the
false documents. So it's not only that Jeff Vasilas did it.
It's that it was done, obviously, without his knowledge,
without his consent. And you know, I point out all the
evidence in the case where, of course, everything goes to him,
all the email communications are with him, the IP address
coming back to his house.
The false documents that I referenced that occurred in
September 2021, I reference them because they included -- not
only do they have false information about the management -- who
was the management of the companies, HM Management and HM-UP,
which did make it to the SBA, but they had signatures, and they
included the purported signature of Jeanette Gonzalez. And
Jeff Graff had testified about Jeanette Gonzalez's signature.
There was a check that was shown to the jury that had an
endorsed check by Jeanette Gonzalez, which was very different
from the signature on those documents, and that was
September 2021.
And nothing that the Defense put in involving Jeff
Vasilas had anything to do -- except Jeff Vasilas doing his
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
work as a contractor. That's who he was, he was a contractor.
But I think the clearest and I think irrefutable
evidence of obstruction of justice has to do with the testimony
about the advice the accountants gave him, and the testimony
about denying having anything to do with 941s, that he, in an
email, says he submitted to PayPal. And two, where his
handwriting is recognized on those very same 941s, corroborated
by the bank records, the withdrawal slips that show the same
handwriting -- his withdrawal slips.
THE COURT: Anything further?
MS. JIMENEZ: No, Your Honor, unless you have
questions.
THE COURT: Mr. Cavallo?
MR. CAVALLO: Yes. May I please approach?
The Government spent a lot of time talking about -- I
lost track of the numbering, but the conversation with the
accountants about applying.
First of all, I would point out that when
Mr. Cupersmith testified he claimed that there was never any
communication whatsoever about the government loan programs.
It was on us, the Defense, in our cross-exam, to show him
emails that he never produced to the Government, that we
obtained ourselves, that there was emails that specifically
referenced -- from Mr. Sheppard to the Cupersmith firm, talking
about: "I'm applying for government loans. I'm applying for
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
the government programs."
THE COURT: What exhibit are you referring to, sir?
MR. CAVALLO: I will get you the exhibit number, Your
Honor. I don't have it in front of me.
THE COURT: Well, if you're showing that that refutes
the direct testimony of Mr. Cupersmith and Mr. Zaslow, then
yes, it would be important, because I am finding that that
testimony is material.
MS. JIMENEZ: Your Honor, if I could just add, there
was an email which precipitated ultimately the phone call on
April 22nd. There was an email on April 20th -- I also don't
have it in front of me -- where he mentions to the accountants
that he was applying for government loans. The thrust of the
email was that he wanted to get his tax returns, but he
mentions in the email government loans.
Mr. Cupersmith, I acknowledge, did not remember -- I
had not seen that email -- but Mr. Cupersmith did not remember
that that had been brought up in some email. He did -- he was
adamant that they had no discussion about any PPP loans or
government loans. But there was, in an email, a mention of
that, when the Defendant was emailing them to set up a phone
call about getting his tax returns.
THE COURT: Well, was Mr. -- was Mr. Sheppard
referring to his communication with Mr. Cupersmith's office
with regard to the PPP loans in that email?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: It just --
MR. CAVALLO: Yeah.
THE COURT: Well, what does the email say?
MR. CAVALLO: Your Honor, I'm sorry. The Internet
went out. I have it on my computer. I just have to pull it
up. But the email says, in black and white, to
Mr. Cupersmith -- and I will get it -- even if we have to move
on to the next topic, I'll get it and blow it up. The email
says: "I'm applying for government loans. We have to talk."
And then there's more to the email, which we'll show
you. And then, subsequently, there's emails that we put into
in evidence, also where Mr. Sheppard is setting up a phone call
with Mr. Zaslow and Mr. Cupersmith. There is then a PayPal
document that was produced by PayPal, that's a Government
exhibit, that says -- a message from Mr. Sheppard to PayPal,
that says: "I spoke with my accountants. I need to change
some of the things on the application."
And then, Your Honor, there is a corrected application
that is submitted that changes things from the original
application. That is the timeline. We went through it in
trial. The PayPal representative didn't dispute that another
application had been submitted on that date and was ignored.
MS. JIMENEZ: That was not in evidence.
MR. CAVALLO: It's in evidence --
THE COURT: All right. Well, I would like to see that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
evidence if, in fact, you're claiming it refutes Mr. Cupersmith
and Mr. Zaslow's testimony.
MR. CAVALLO: We'll put it up. And Mr. Zaslow was
brought on, I would also add, after the Defense case, as a
rebuttal witness. He was brought in at the very end of the
case, even after the Defense case.
And also, I think it's really, really important to go
back to something Mr. Srebnick said. In the Superseding
Indictment, they removed this April 2020 application. It was a
count in the original Indictment, and they removed it. If the
jury believed that that application was fraudulent, and there
was misrepresentations in it, there is no way that the jury
would have acquitted Mr. Sheppard of Count 4.
Count 4 is a second draw based on the -- some of the
same data to the same entity. If the jury believed there was
anything wrong or fraudulent in that April 2020 application and
loan, there is no way they would have acquitted on Count 4.
The jury believed that the bad acts, the misconduct,
the crime, began -- Count 5, February 11, 2021, when 941s were
submitted. That's what the jury found.
So all of this stuff about April 2020, and did he call
about the application, and did he ask questions, there's
evidence he did, which we can show you. There's Mr. Zaslow's
testimony that he didn't ask some questions. And you have
couched language from Mr. Sheppard: "I don't remember the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
exact conversation."
I mean, I don't know how you can make a finding of
perjury based on this mishmash, and then especially given the
jury's acquittal on Count 4. Count 4 is just an extension of
everything that happened that they're talking about in this
loan from April of 2020.
THE COURT: I would like to see that email because I
think, if that directly refutes Mr. Cupersmith's testimony,
then certainly that would be important for the Court in making
any type of finding.
MR. CAVALLO: The Government has it. They know it
exists. We have it. It's in evidence. We'll get it pulled up
somehow.
MS. JIMENEZ: There was an April 21st email as well.
MR. CAVALLO: We'll get it pulled up somehow.
So in Docket Entry 238, it's also quoted, Your
Honor -- well, there's testimony about this email on Page 33 to
34. So I want to give Your Honor time to get there.
THE COURT: Yeah, I am.
MR. CAVALLO: The bottom of 33.
THE COURT: Hold on.
(Pause in proceedings.)
THE COURT: This is a sealed filing, so it's just
taking me a long time.
MS. JIMENEZ: There's also Government's Exhibit 81,
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(305) 523-5698
which, again, is the April 21st email.
THE COURT: Just read it to me.
MS. JIMENEZ: I don't have it, Your Honor.
THE COURT: What does it say?
MS. JIMENEZ: I have it referenced in my response.
THE COURT: All right. Here it is.
Monday, March 30th, 2020: "Hi, Alex. Hope all is
good and healthy. Please let me know if you filed my personal
2018. I applied for some of the government programs. They
asked for tax returns. The 2018 is not on. They will not
process the application."
Is that the email you're referring to, Mr. Cavallo?
MR. CAVALLO: I believe so, Your Honor. There's a
subsequent email. It's Government Trial Exhibit 81, on
April 21st, and that also talks about getting PPP.
(Pause in proceedings.)
MR. CAVALLO: So the point is, Your Honor, he -- there
are emails in evidence where he's talking about the government
programs with the accountants, and his language is couched as
to: "I don't remember the exact conversation. I don't
remember specifics." But it's absolutely true that he
referenced the government programs and even in emails. And
it's also true from the PayPal exhibits that -- that references
a call with accountants.
THE COURT: All right. Is there anything further,
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Mr. Cavallo?
MR. CAVALLO: Yes, Your Honor.
On the 941s issue, the Government -- one of the things
the Government argues is that this is perjury because Mr. Graff
said: "That's Mr. Sheppard's handwriting on the 941s. He
filled them out." That is an opinion, Your Honor, opinion
testimony. I don't believe that that's sufficient, for lay
opinion testimony on handwriting to make a finding of perjury
that that had to be Mr. Sheppard who filled those out because
that's what Mr. Graff says.
And again, I go back to there's clear indications from
the jury that they believe someone else was involved, when you
look at Count 6, and that there was someone else doing things
and submitting things. So again, I don't believe that the
Government has met their burden of convincing you, on a mixed
verdict case, that the jury had to, you know, believe
Mr. Sheppard was lying.
THE COURT: All right.
MS. JIMENEZ: Your Honor, if I could just add --
THE COURT: Is this with regard to the exhibit?
MS. JIMENEZ: Yes. So first with respect to the 941s,
there's also -- like I said, the Defendant's own exhibit, P1,
which the Defendant then disavowed. In P1, it's an email to
PayPal, where he's telling them: "I got the 941s from my" --
so-called -- "accounting department, and I submitted it to
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you." That was February 11, 2021, the day of the wire
transmission to PayPal. That's for the 941. On the stand, he
said somebody else wrote that, he didn't write that email.
On the accountants, there was testimony at the trial
because the Defense brought up this email. And the testimony
was that what we discussed -- so the email was essentially
asking to speak to these accountants. That's what that email
was, because he wanted the tax returns because he was applying
for government loans. The discussion with the witnesses, both
witnesses, was: "Well, did you end up speaking with the
Defendant?"
"Yes."
"What did you discuss?"
"The tax returns. That we were not going to turn over
to tax returns until he paid us."
And the questions then about: "Any discussion about
PPP loans, any discussion about government loans?"
"No. No. No."
That's what -- so it was an email requesting to speak
with them. They flatly denied having any discussion with him
about any government loans, and the Defendant's testimony was
that he received advice from them about the government loans.
THE COURT: All right.
Anything further?
MR. CAVALLO: I would just say, again, Your Honor,
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this all relates to an April 2020 loan that --
THE COURT: Well, it certainly does. I mean, the
email on the Government's Exhibit 81 is from Mr. Sheppard to
Mr. Cupersmith on April 21st, 2020, where he says: "Up until
today, I still don't have my 2018 return and still cannot get
the PPP money again starting tomorrow."
MR. CAVALLO: Correct. If the jury believed there was
anything wrong with that loan, there's no possible way they can
acquit on Count 4. It's not possible. It's an extension of
the loan, a second draw with the same entity, based on the same
underlying data. If the jury believed there was anything wrong
with April 2020, they do not acquit on Count 4. It's the same
facts, the same company, the same everything.
THE COURT: All right.
MS. JIMENEZ: I don't have a case to cite to the Court
on drawing whatever Defense counsel wants to draw out of an
acquittal on a particular count. What we can draw from the
acquittal on a particular count is that the jury believed the
Government did not prove that count beyond a reasonable doubt.
And all of these inferences about what it suggests about other
counts and other parts of the Indictment is completely
improper. And the case law says that, that you cannot draw
these types of conclusions from a jury's verdict.
The advice was -- yes, it was in April of 2020. But
that was the kickoff of the PPP program. And the advice was --
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to suggest to this jury that his accountants had given him
advice on the PPP loans and the workers, or use 2019 workers,
where these accountants very well knew that this Defendant did
not have W-2 employees in 2019 and 2020 and going forward.
MR. CAVALLO: That's not even accurate, Your Honor.
THE COURT: Again, I don't want to retry this case.
MS. JIMENEZ: Okay.
THE COURT: I mean, the Government --
MS. JIMENEZ: Nor do I.
THE COURT: -- is seeking an enhancement under
obstruction of justice. The Government bears the burden.
Is there anything further, Mr. Cavallo?
MR. CAVALLO: No, Your Honor.
THE COURT: All right. With regard to the obstruction
of justice enhancement, it is this Court's responsibility to
make specific findings. And I just want to state with regard
to this last point, that the testimony that the Government
provided to the Court with regard to this question, is
question: "So you told the accountants you had applied on
behalf of HM-UP for this PPP loan application. Their advice
back to you was: 'No. You should have applied on behalf of HM
Management.' Is that what they told you?"
Mr. Sheppard: "Again, I don't know the exact
conversation from four years ago, but it was -- the only thing
I remember talking about was HM Management is the company and
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should apply for the PPP loan. That's my recollection, and --"
"So did you tell them you were applying on behalf of
80 employees?"
"I told them I'm supposed to apply for workers in
2020. And I told them, no, it was 2019," and then he goes on.
But with regard to whether there was a conversation,
whether there was not, there's now two exhibits into evidence
that show that there was a some knowledge given to
Mr. Cupersmith that Mr. Sheppard applying for the loan.
With regard to the content of the conversation that
was testified to at trial, for testimony to warrant the
enhancement under 3C1.1, it has to be false concerning a
material matter and result from the willful intent to provide
false testimony, as opposed to from confusion, mistake, or
faulty memory.
The Government has cited to a case that directly
shows -- that's United States v. Vera -- that the testimony of
two witnesses contradicted flatly and was irreconcilable with
the Defendant's testimony, and that was with regard to the
involvement in a marijuana growing operation.
With regard to these four prongs, let me say that I
cannot find and make specific findings that there was
obstruction of justice with regard to the testimony of
Mr. Graff opposing the testimony of Mr. Sheppard.
The denial with regard to the handwriting -- and quite
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frankly, at the time of the trial, I was surprised that the
Government didn't bring in a handwriting expert. It relied
upon Jeff Graff, and the jury was free to accept it or reject
it. But I can't find that that constitutes obstruction of
justice.
And with regard to the conversation with Cupersmith
and Zaslow, and the advice that was given, again, based on the
testimony, the Court cannot find that there was a willful
obstruction of justice, and the Government has not met its
burden, and the objection is sustained.
What other objections do we have to the PSI?
MR. SREBNICK: I think from the Defense, that's it.
The Government has an objection regarding the Stafford Act.
MS. MARTINEZ: Your Honor, the objection relates to a
guideline enhancement, B12. It is the disaster fraud
enhancement.
What I'm going to give the Court is a little bit of
background, just to let the Court know the importance of what
this particular enhancement is. Then I'll give you just a
little bit of what I have in terms of the case law. And then
also acknowledge from the outset that you will sentence this
Defendant based on the 3553 factors. In the end, you're going
to determine what is a fair sentence to him. The reason that
I'm raising this enhancement is because, before we get to 3553,
we do need to look at the guidelines and see where he fits in
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connection with his offense in this case versus other offenses
that don't involve disaster fraud.
So to tell you about the context of this enhancement,
this enhancement is unlike other enhancements. This
enhancement came at the direction of Congress. Congress told
the Sentencing Commission: "We need this." There was an act
that was passed in 2007. And it was signed by the President in
January of 2008. That Act wanted -- and it was entitled an act
that is going to have enhanced penalties in disaster fraud
cases. In short form, it's called the Disaster Fraud Act.
That act did three things, Your Honor. It did not only create
this particular enhancement. It also created the statute 18
USC 1040.
In addition, that act created increased penalties
under wire fraud and mail fraud for cases involving disaster
fraud. And third, it created a -- it directed the Sentencing
Commission to create this disaster enhancement.
Again, Your Honor, just to get to the bottom line, the
reason that I'm raising the importance of it is because I know
in the end you're going to sentence this Defendant based on the
3553 factors. And regardless of what you rule on what I'm
raising, I want the Court to be aware that this is a disaster
fraud case. This is not like other cases that are not disaster
fraud cases. And Congress specifically wanted for the
guidelines to reflect an enhanced penalty.
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So what happened? Congress creates that act and makes
that direction. The Sentencing Commission gets running and
creates an emergency amendment, which is not the one that you
have now. The emergency one -- I'm going to read it to you,
the way that I started out. And this is cited in our brief,
but what I'm referring to is the report to Congress from the
Sentencing Commission.
When they first wrote the emergency amendment, they
said this enhancement was going to apply if the offense
involved fraud or theft involving any benefit authorized,
transported, transmitted, transferred, disbursed, or paid, in
connection with -- in connection with a declaration of a major
disaster or emergency, period.
THE COURT: Under the Stafford Act.
MS. MARTINEZ: No. I'm talking now about the
emergency amendment. It's not what it ultimately turned out to
be. I'm talking about the report to Congress from the
Sentencing Commission.
What they first did, immediately right after the
statute was signed, they passed an emergency amendment to the
guidelines that went into effect immediately, that read: "If
the offense involved fraud or theft involving any benefit
authorized, transported, transmitted, transferred, disbursed,
or paid, in connection with the declaration of a major disaster
emergency or -- major disaster or an emergency."
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The reason I point that out is because the report then
goes on to say that when they changed the wording to refer to
the statute, what they meant to do -- what the Sentencing
Commission meant to do was to make it broader -- not to narrow
it -- to make it broader than the original emergency amendment.
That's what they intended to do.
So the first thing is just to give you the context.
It was never meant to be narrow. It was meant to be broad. It
was broad initially, and the Sentencing Commission meant to
make it broader by referring it to the statute.
Now, I do want to go to how we analyze it legally,
Your Honor, you know, because we do have to go then to
statutory interpretation. And we did go in our brief to the
point that the statute -- if you just look at the statute,
1040, it uses the word "or," Your Honor, number one. It could
be authorized or paid in connection with a declaration. It
also uses the words "in connection with," not "funded by" or
anything like that -- in connection with the Stafford
declaration.
Now, in this case, the facts are there was a Stafford
declaration for the disaster, for the pandemic. There was an
emergency declaration under the Stafford Act. There were both.
There were both. So there is no doubt -- there is no doubt
that this case involved disaster fraud in connection with a
Stafford Act declaration, because they were both, emergency
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and -- the way that it works, Your Honor, is, that -- you know,
that the President makes the initial declaration. And then
after that, the President approves disaster requests that are
made by the states. The President did that with respect to all
50 states. So there's no question about that.
The only issue that we have, Your Honor, is that here
we are, you know, in the United States of America. We're
lawyers. And people get into -- you know, get a little bit
into: Could we slice it and dice it in a different way? And
yes, you could somehow read "in connection" out of it, and read
this thing more narrowly to think that it means only if it was
paid pursuant. If we were in that world, in that incredibly
narrow world, let me tell you where we would be -- and it's not
surprising for courts to be -- you know, to be careful. And I
understand if the Court wants to be careful --
THE COURT: Well, I'm just questioning -- because I've
handled a lot of these cases. Has the Department of Justice or
your office ever sought to seek this enhancement here in the
Southern District of Florida?
MS. MARTINEZ: In my understanding, in the Southern
District, I have not found another case.
THE COURT: And how many PPP or CARES Act cases has
the Department of Justice had since the pandemic?
MS. MARTINEZ: Let me address that, Your Honor.
Without a doubt -- and I'm going to give you where you
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could stand on all fours and be completely correct applying
this, and where there's even any room for saying that it would
not apply. But let me tell you the background. The background
is that the United States did determine to be conservative
initially. Conservative, I mean not politically, obviously.
But conservative in the sense of not reaching out for it
initially.
THE COURT: But do you believe that it's fair --
MS. MARTINEZ: Yes.
THE COURT: -- that today --
MS. MARTINEZ: Yes.
THE COURT: -- you're seeking an enhancement in this
case, where you've told the Court that your office has never
sought this enhancement in any of the cases, in any of the
divisions, in any of the courthouses --
MS. MARTINEZ: Sure.
THE COURT: -- from Fort Pierce all the way to Miami?
MS. MARTINEZ: Let me address that.
First of all, I am proud to work for an office that
was conservative at first. Okay? So I am not going -- I'm not
going to fault that to begin with. I am proud for an office
that was not overreaching and was not -- was conservative at
first.
We have received guidance based on recent case law,
where it was affirmed on standards of harmless error and --
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THE COURT: You mean the case in the Middle District?
MS. MARTINEZ: There was two cases. There was a case
in the Fourth Circuit. There is also another case in the
Middle District that was affirmed by the Eleventh Circuit.
So I'm just saying -- I'm telling you where we're
coming from. We are coming from that we have been given
guidance that the case law is developing, that it has been
affirmed, even if it hasn't been directly addressed. Because
as the Court knows, in the Fourth Circuit, it was addressed as
harmless error. And in the Eleventh Circuit case that came out
of the Middle District, as the Court knows, in that one, what
it was is that the Eleventh Circuit allowed the attorney to
withdraw with an Anders Brief, saying that there was no
meritorious issue to raise in the case.
But we, as AUSAs, have been given the guidance that
the case law is developing and that it would be appropriate in
particular cases to seek it. But the reason that I also think
it's fair -- and remember, I started my discussion by telling
you I know the Court is ultimately going to sentence on the
3553 factors, and I just want the Court to consider what
Congress wanted when it initially passed this, and I just
wanted to tell you where I think you are on all fours.
THE COURT: No. I understand. I'm just concerned
with regard to the selective application of this -- of this
enhancement, where, in other cases, particularly before this
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Court, the Government has never sought that enhancement.
MS. MARTINEZ: Again, Your Honor, the Court knows how
much I respect you. I do absolutely reject the wording of
selective --
THE COURT: Well -- but if it applied to one and not
the other, is it a direction from your office that: "Beginning
in" --
MS. MARTINEZ: No.
THE COURT: -- "June of 2024, we shall seek the
enhancement with regard to all cases involving the CARES Act or
PPP loans"?
MS. MARTINEZ: The direction nationally was to take a
look at the cases that have come up, meaning that now we have a
Fourth Circuit case, now we have an Eleventh Circuit case.
Last night, I found a Southern District of New York District
Court, which I can cite to the Court, but it was in a plea
agreement situation, Your Honor. But in that case also the
Court applied it.
So the guidance that we're getting is that we should
look at it. And when I looked at it, Your Honor, I looked at
what Congress intended. I also looked at the law. And we
provided you a brief with statutory interpretation that I
strongly believe is legally correct. So it's only to -- I
mean, as prosecutors, to bring to the Court the importance of a
disaster fraud case and a legally correct statutory
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interpretation.
But let me add one more thing, Your Honor. As part of
your decision, I want to make you aware that -- and I think we
said it in our brief. It's stronger on the EIDL -- the
argument is stronger on the EIDL because that is absolutely
funded through the Stafford Act. And in addition, in the case
law that I found, Your Honor, it has involved EIDL.
I do strongly believe that the scheme in this case
involved EIDL, because the Defendant was following the money.
The first time that he considered filing for a pandemic loan,
it was a Jeff Graff, HM Four, where Jeff Graff was telling him:
"That's not a company that incurred the loss or any loss. So
you shouldn't be applying for that." But that's what that they
applied first. Then they went to PPP. Then they went to EIDL.
And when he went to EIDL, as the Court knows, it was
not just one loan, but multiple. So he was trying to double
dip. Even if the Court, as you have done -- you're not
considering the HM Four Economic Injury Disaster Loan. Even as
that, the Defendant had already received two other EIDL loans
for companies where he is trying to claim a loss or some kind
of economic injury that you couldn't possibly double dip. You
couldn't possibly have HM Four receiving it and Alafaya
receiving it, which it had, because one was owning the other.
So you couldn't possibly have that. And he was now, for the
third time, trying to claim economic injury on EIDL.
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And in the first place, I have exhibits in evidence
that there was no rental loss to begin with. There was no
loss, meaning no economic injury. But then, even so, if you
are giving him the HM Four one, he certainly wasn't then
entitled to the Alafaya one. You can't claim the same economic
injury over and over again.
And the only reason for raising that, Your Honor, is
just to tell you that there is no question that this scheme to
defraud involved Economic Injury Disaster Loans, and there's no
question that you are on all fours. Every single case that has
been affirmed is an Economic Injury Disaster Loan case. And
that was funded by the Stafford Act, so it does apply.
And so, at a minimum, with the guidance that we've
been given and as correct -- because I really did study it,
Your Honor -- I really strongly do believe it's legally
correct. It's just that we were conservative about it. And I
don't think we should be blamed. I think it's fair to consider
it. And why? Because a defendant next door, who is not being
so relentless in a disaster fraud case, is different.
And let me tell you one more thing from the
Commission's report to Congress. The reason that they're so
concerned about disaster fraud -- one of the many reasons is
that there's attention. When you do disaster fraud, they need
to get the money out. So they don't have all the normal
safeguards. And this is what the Sentencing Commission
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discussed when it was giving the report to Congress, and
understanding. So Congress really thought it was very
important to send a message to tell people, to recognize, that
disaster fraud is different because you needed to get the money
out. You couldn't protect -- have the normal protections for
credit checks, blah, blah, blah.
So Your Honor -- and again, I understand the Court may
wish to rule one way or another on this. I just ask you to
consider it both as a guideline matter, and then, if not, as a
3553 matter.
THE COURT: All right. Thank you, Ms. Martinez.
Any response?
MR. SREBNICK: Judge, I don't know of any case in this
district that's ever applied this. Even presently, as we speak
today, the Government hasn't said there's another court with
this kind of objection pending. The Probation office has
reported none. And we're talking about two different acts
altogether.
The Government's reliance on harmless error cases, as
if that has become national policy, is curious to me. And how,
under the guideline regime, which is supposed to have
uniformity across the country -- that's the whole purpose of
the guidelines -- we're now hearing that each district gets to
decide how the Stafford Act applies to this guideline. It's a
pure statutory question. And not one court in this district or
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anywhere else has -- on a full briefing has ever held
consistent with the Government. It is deeply troubling that
they picked Mr. Sheppard to test this issue, deeply troubling.
THE COURT: All right. Thank you, Mr. Srebnick.
Anything further, Ms. Martinez?
MS. MARTINEZ: No, Your Honor.
THE COURT: All right. Let me state that, first, I
don't find that this is conduct related to the Stafford Act. I
find that this is wholly unconnected.
I also, quite frankly, am concerned because this is
conduct to which Mr. Sheppard has been acquitted. As you
acknowledge, this is not with regard to the PPP. It's with
regard to the EIDL loans.
Moreover, it's a question of fairness and creating
unwarranted sentencing disparities. Because this Court has
been involved in sentencing many individuals who have been
involved in wire fraud related to PPP loans, related to the
CARES Act, and this is the first time that the Court has
addressed this issue. And I just -- I think it's a question of
fundamental fairness. So the Court rejects the request for the
enhancement and the objection is overruled.
Are there any further objections by either side to the
facts contained in the Presentence Investigation Report or the
calculation of the advisory guidelines?
MR. SREBNICK: We would be seeking, of course, a
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downward departure at the appropriate time, and a variance.
THE COURT: In terms of a variance -- well, let me
calculate the guidelines, if there are no further objections.
On behalf of the Government, any further objections?
MS. JIMENEZ: No, Your Honor.
THE COURT: All right. Then the Court accepts all
remaining facts in the Presentence Investigation Report. And
with regard to the calculation of the advisory guidelines, it
begins with a base offense level of seven.
As the Court has found with regard to the loss of the
$443,550, there's a 12-level enhancement. The Court has
rejected that this conduct constituted sophisticated means. As
well, the Court has rejected that there should be an
obstruction of justice enhancement.
As such, the adjusted offense level is 19.
Mr. Sheppard has no criminal history, is entitled to a
two-level reduction as a zero-point offender under 4C1.1. As
such, the total offense level is 17.
With a criminal history category of I, the guideline
range with regard to Counts 5, 7, 8, and 9, is 24 to 30 months;
is that correct?
MR. SREBNICK: Yes.
MS. JIMENEZ: Yes, Your Honor.
THE COURT: In addressing the 3553(a) factors,
Mr. Sheppard, certainly your attorneys have done an excellent
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job of compiling letters, and the Sentencing Memorandum that
they've filed on your behalf; however, I want to ensure that
you know that if there is anything that you would like to say,
certainly you may do so. If there are individuals that are
present on your behalf that would like to speak, they may
certainly do so.
MR. SREBNICK: Would you like to do that now, Judge?
Are we ready to go? I need a break.
THE COURT: Yeah, I know. I need to be mindful to my
team. So why don't we -- it's 12:40. Can we take a lunch
recess until 1:30. I'll see you back here at 1:30.
Okay. See you back here at 1:30.
COURT SECURITY OFFICER: All rise.
(Recess from 12:41 p.m. to 1:32 p.m.)
THE COURT: All right. Welcome back.
Go ahead and have a seat.
All right. We had previously addressed the
calculation of the advisory guidelines. I have advised
Mr. Sheppard that he has the right to speak and certainly
allocute, and individuals certainly have the right to speak on
Mr. Sheppard's behalf.
As well, I also want to mention that, as the Mandatory
Victims Restitution Act applies, while the Court is scheduling
a separate restitution hearing, I do want to advise the
Government that if there are individuals that wish to be heard
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before the Court imposes a sentence, certainly those
individuals may be heard as well.
On behalf of the Defendant?
MR. SREBNICK: Yes, Judge.
Thank you.
Judge, we have asked for the Court to vary down from
the guidelines. And our ask is going to be consistent, we
believe, with the atypicality of this case and other sentences
that have been imposed in PPP cases. Your Honor has imposed
many such sentences, as have other judges in this district and
around the nation. And I think one thing we've seen about this
case, it is quite different for the reasons we've discussed
earlier today. One of which is that the monies that were
borrowed were used for the very purpose of being able to keep
people in our Florida communities employed during a very
stressful time for many people, including for Mr. Sheppard.
I understand from the trial Your Honor heard testimony
how the pandemic was going to adversely affect Mr. Sheppard's
businesses precisely because people weren't working. His
subcontractors were going out of business. There were not
people available readily to finish the jobs that needed to be
finished. It was putting his companies under severe financial
stress. This Burlington Coat contract, penalties would be
accruing. He needed people to get to work.
To do that, he took money of his own to get the
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business moving forward. And as the Court has found, used the
PPP funds as well, as part of an effort to generate work for
people in the community to get the job done. And that's
exactly what he did. You saw the demonstrative exhibit. You
saw the evidence at trial about Mr. Sheppard investing over $4
million of his own money, then some of the PPP money. At this
point, we're talking about somewhere in the neighborhood of
half a million dollars, based on the Court's finding today.
And so that money was deployed not so that
Mr. Sheppard could go on vacation, and go spend it, in the
proverbial terms of the Seventh Circuit, on wine, women, and
song, but because -- for the exact reason why Congress passed
this statute, these programs; in order to make sure that monies
would be available to put people to work.
And I'd like the Court to have some background about
Mr. Sheppard from the people who have known him the longest in
his life. Today, as live witnesses, I just have two. I have
someone who's known him since he was born, and that's his aunt,
the Honorable Amy Donner, who's known him since the day he was
adopted. And I also would like his daughter Jordan, who's
known Eric since the day she was born, to tell the Court the
two chapters of his life, his childhood through the eyes of his
aunt, who saw him since the day of his birth, and through the
eyes of his daughter, who has counted on Eric to be everything
to her, and to her brother Jake, both of whom are in court
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today. And then I'll address why I think their testimony, plus
the letters you've read and other comments that -- I'd like to
share why they would warrant the Court to impose a sentence
that doesn't require that he be taken from the community, that
don't require that he be unable to continue to employ people
through his businesses.
So, at this time, I'd ask Judge Donner to join me at
the podium.
THE COURT: It's a pleasure to see Judge Donner.
Let me disclose that I worked with Judge Donner over
the years when I worked as a state court judge.
It is good to see you.
JUDGE DONNER: Nice to see you too, Judge.
Judge, would you like me to be sworn in?
THE COURT: No. It's not necessary.
JUDGE DONNER: As you know, my name is Amy Steele
Donner.
The first time I met Eric, he was a few days old, but
I wasn't his aunt. I was the wife of his father's partner in
the practice of law -- at a firm that probably you know, but
many people here do not, Meyer, Weiss, Rose & Arkin -- Baron de
Hirsch Meyer, who was very instrumental in giving lots of money
to the University of Miami to be so successful, its school of
law, and having written the letter for me to go to law school.
I met Eric when his parents received him, and they
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invited me to his house, their house, to meet him. So I know
him -- I'm probably the oldest person in this courtroom, I'm
unhappy to say. And I do know Eric the longest. He was a tiny
baby, probably as bald as he is tonight. And I knew him for
several years while I was not his aunt. Thereafter, his father
and mother were related to my husband, my second husband,
William Donner, who was Rosalie Donner Sheppard's brother.
And so, when I married him, Eric became my nephew. So
from a child that I knew as a friend's child, he became my
nephew. And I considered him my nephew from that time on.
Eric had a very difficult childhood. Difficult,
because his mother, my sister-in-law, who I knew well, had lots
of issues. The day Eric turned basically 12, I called his
mother up to say that her father had died. And she was very
angry. And I said: "Why are you so angry? Your dad just
died." And she said: "Because today's the day I'm leaving my
husband," and that was the day she left her husband and left
her children.
And Eric was very sad about the relationship because
his mother wanted to take him away from his father and take him
to New Mexico, and then to North Carolina, and it was very
difficult for him. He had an older brother and a younger
sister, and he was very attached to his father. And for a long
time he wasn't able to spend as much time with his father as he
wanted.
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But by the time he was 12 or 13, he was able to go
back to live with his father, which happened to be around the
corner from me. So Eric spent a lot of time at my house
playing with my children, and my children played with him. So
I knew him as an infant, and as a teenager, and then as a young
adult. And his life was not easy. There was not a lot of
money and there was a lot of stress. His mother resented
greatly the fact that he wanted to live with his father, and
she made his life very difficult.
And the more important part about his life with his
family was that his mother was a very unloving person. She was
rather cold. And then, when she went to New Mexico, when she
ran away from the family, she was hit by a car and she became
brain damaged, and she is to this day. And that has been very
difficult for Eric to accept and to live with, because he loved
his parents -- loved both of them. But he was very attached to
his father, who then died.
Fortunately for him, he met his wife. Because with
his wife came the parents he never had, which were Hillie and
Judi Meyers. They were the people that gave him stability and
gave him a lot of love.
Eric's not had an easy life. When you look at him
today, and you hear about the fact that he became successful,
that's just by accident. Because, from where he started, he
shouldn't have been successful, because nobody else in his
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family was. But he became successful, and he worked hard, and
he had the family now that he needed.
But he also has children now, two children. Jordan,
who is already in college and doing very well, and his son who
is only 15. His son is going to have to spend -- depending
upon what sentence you bestow upon him, his high school --
perhaps many of his high school years without his dad. They
are exceptionally close.
I have listened for the last three or four hours to
the presentation that this Court has received. I spent almost
28 years on the bench. I've heard many of these same stories.
I spent years on the criminal bench. I heard these stories. I
heard the lives of the defendants. I've heard the lives of
individuals they touched. This is a different kind of case.
The people that were touched in this particular case happen to
be the government.
The government is stronger than any one of us. It's
not like a personal injury. It's not like armed robbery, or
murder, or assault. It is a case that the government brought,
which they had the right to bring, because they chose to. But
I also see that the government is very punitive. Even the last
request that you received to enhance the sentence, which has
never been enhanced before, makes me understand why there was a
14-count Indictment, which is now a four-count conviction.
I don't believe that anything that happened before
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that was indicted even should be taken into consideration. And
I'm asking this Court, because of everything I know about Eric,
everything I know about his love for his family and his
children, and everything I know about his children's love for
him, that I'm requesting that this Court, in its discretion,
give him probation, let him go home to his family.
You're going to have a restitution order, which he is
going to have to fulfill. My understanding is, from the
testimony I heard today, that he has paid back the loans that
he received. I know that in white-collar crime that's not the
issue. The issue is the crime itself. But I have to look at
the cost analysis benefit to the country, because this is the
United States, and to the Defendant. And I cannot see a cost
benefit analysis in putting Eric in jail, and I'm asking this
Court to give him probation. It is solely up to you, Judge,
and I know you will do what you think is right.
I thank you.
THE COURT: Thank you, Judge Donner.
MR. SREBNICK: Judge, I'd like to present Eric's
daughter, Jordan.
THE COURT: Hello, Jordan.
MS. J. SHEPPARD: Good afternoon, Judge Bloom.
My name is Jordan Sheppard, and I'm Eric Sheppard's
daughter. I'm a rising senior at the University of Michigan,
on the premedical track, and pursuing a bachelor of science in
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sociology of health and medicine. I came here today not only
to support my father, and speak about what he has done for
others, but about the strength of character and exceptional
moral integrity that drives him to make a significant impact on
people's lives.
My upbringing instilled in me a profound sense of
compassion and generosity towards people from all walks of
life. While both my parents played a pivotal role in shaping
these values, it was undoubtedly my father, Eric Sheppard, who
served as my guiding light, nurturing my sense of empathy and
showing me the importance of giving back.
Throughout my life, my father's unwavering generosity
has been a constant presence. Regardless of the time or
expense involved, he never hesitated to assist anyone who
sought help.
Despite everything my family has been going through
the past two years now, my father still continues to prioritize
helping others. Recently, at a basketball tournament in
Orlando, a father on the team could not afford a hotel room and
was sleeping in his car with his four-year-old daughter. As
soon as my dad found out about this, he not only put them up at
a hotel, but made it a point to be there to help drive the son
to games while the father cared for his daughter.
To my dad, life is not about personal gain or awaiting
something in return. He does not think twice about lightening
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the weight off of anybody's shoulders. His actions are quite
the opposite of performative and rather demonstrate the
sincerity of his heart and the pure honesty of his actions.
He himself doesn't understand this innate gift that he
possesses to brighten someone's day, or even make a profound
impact on people's lives by treating them with kindness,
respect, and dedicating himself to making life slightly easier
for others.
Many of my brother's and my teammates experience
hardships, in which basketball is their only chance of
receiving an education, or they are assisting a single parent
raising their siblings, or they do not know where their next
meal may come from. I can talk about countless instances where
my dad has not only helped to support these individuals and
their families, but has been a fatherlike figure and a constant
source of reliability in this unpredictable world.
Our teammates call him when they need advice, when
games go poorly, or even if they need a ride across town to get
to practice. He is always there and holds such a strong
presence in many individuals' lives.
The examples of how my father has used his special
character to help others is infinite, and I am blessed to have
such an inspiration in my life with a true heart of gold.
Beyond the profound influence my father has had on
many others, I do not know how I can articulate the depth of
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his impact on my own life. Eric Sheppard is not only my
father, he's my best friend, my biggest supporter -- I'm
sorry --
THE COURT: Take your time.
MS. J. SHEPPARD: -- and the only person who believes
that the sky is my limit.
After having an extremely difficult upbringing and
course of life himself, I can say with confidence that he chose
the right path on how to raise his children. My father has an
unbelievably strong work ethic, and although he has a busy
schedule, he always makes time for his family.
Growing up, my dad drove me to school every morning.
We would listen to the Y-100 Elvis Duran Morning Show, and
laugh until I would hug him and kiss his bald head goodbye for
the day. No matter how much more time he had before work, he
always made our morning car ride a part of our routine.
When I played basketball, I was always reassured that
my dad would be sitting there in the first row of all my games,
cheering me on and coaching me from the sidelines. No matter
if my games or tournaments were in Miami Shores, or all the way
out in Phoenix, Arizona, he was always there to support me.
When I was diagnosed with a chronic disease at 11
years old, I was confined to a hospital bed for weeks at one of
my lowest points. I needed a blood transfusion, iron infusion,
regular hospital visits, and was placed on an extremely strict
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regimen, taking 26 pills a day and following a strict diet.
Not being able to eat the foods I loved, and only
tolerating binding foods, my dad would come every day, all the
way to South Miami, to bring me a fresh baguette from a nearby
bakery. No matter how busy he was, he would never fail to
brighten my dark days with his small gestures that meant the
world to me.
Applying to college was a daunting process, and this
was when I first encountered severe anxiety. My dream school
had always been the University of Michigan, but I was
pessimistic in my chances of being accepted. The rest of my
family would always say that I shouldn't get my hopes up, but
my dad was the only one who would remind me of my potential and
believed in my ability to achieve my goals. Without my dad's
motivation and support, my dreams would have never become a
reality. No matter what everyone else says, my dad is always
there to believe in me.
My dad has been the guiding light, illuminating my
path and supporting me through every endeavor at every stage of
my life. From the infinite instances where he has uplifted me,
to his consistent presence in every aspect of my life, he
embodies the essence of a nurturing and supportive father.
The values he has instilled in me stem from his
authentic character and the profound empathy he displays
towards others. He is the dad that all my friends grab the
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phone to talk to when we are on a call. He is the father that
shows up for their child, despite a busy work schedule. He is
the father that never fails to remind his daughter of her
beauty and worth. He is the husband who sets an example for my
younger brother to bring just-because flowers for my mom, who
always deserves them. He is a friend who supports the people
in his life through thick and thin. He is a stranger who lends
a hand to anybody in need.
As part of this statement, I also wanted to speak on
behalf of my younger brother Jake, who is not a teenager of
many words, but whose actions eloquently convey his thoughts
and feelings. The bond between my 15-year-old brother and my
dad is inseparable, to say the least. Their father-son
connection transcends anything I've seen before, and my dad is
the only person in the world my brother will open up to.
My brother looks up to my dad like no other, and the
relationship holds paramount importance in his life. From
talking sports all day, to showing my brother how to respect
women and be a gentleman, Jake flourishes with my dad's love
and guidance. When Jake is with my dad, he blossoms, revealing
his full potential and the outstanding person he truly is.
However, when he's apart from him, he tends to withdraw, become
less talkative, especially now during this exceedingly
stressful time and situation in our lives. Nobody else knows
how to connect with him like my father does.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
I was lucky enough to have my dad present in both
milestones and my everyday life. But the thought of not seeing
him in the crowd at my college graduation, or being able to
hear his voice to call me before an exam, or teach my brother
how to drive, or talk about our days every night at the dinner
table, is shattering.
The thought of my brother not having him here and
present during such formative years in his life is both
gut-wrenching and detrimental. We all need my dad, but my
brother Jake needs him the most.
My family has endured, and been enduring, an immense
amount of pain and suffering the past two years. I myself, as
strong as I may hold myself to be, have been crumbling to
pieces at the thought of mine and my family's lives being
turned upside down more than already has.
Eric Sheppard is a prime example of how to be a good
person with a sensational moral compass. He embodies
everything that I aspire to one day become. As I previously
stated, I do not know if words are sufficient to explain the
man that my father is, and what an honor it is to be his
daughter. My father is the most honest, good-hearted,
charitable, and brilliant man that I know. And I hope I have
provided reason as to why I believe the Court should be lenient
with his sentencing.
Judge Bloom, as much as my family needs my father, I,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
from the bottom of my heart, believe that this world is a
better place with Eric Sheppard integrated within society.
Thank you so much.
THE COURT: Thank you for your words.
MR. SREBNICK: Judge, the sentiments expressed by
Jordan are shared by so many people in the community. And you
have read the letters, I know. Eric has been a fixture of our
community for decades. And I think it's significant that he's
53 years old, and until this case, an unblemished record.
And what you have heard from Jordan about his acts of
kindness, random acts of kindness -- he's not a guy that looked
for fame and recognition on plaques, hospital walls, or gala
dinners. He's the guy that a worker, who no one else knows who
is suffering from an ailment, can turn to, or, without
soliciting, have Eric show up and say: "How can I help you?"
I know you read about the Brazilian family who came
here. It was recounted in two of the letters that were shared
with you, Mr. Sepin's letter, and the letter provided by one of
the other writers, Liad Zadok, about this Brazilian family came
here, family member gets ill. These are people that Eric had
no, you know, history with. But their kids played on the same
ball team together. Eric made it his mission to help this
family get the medical attention they could not afford. He
didn't ask for reimbursement. He didn't care what insurance
they did or didn't have.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Eric is the guy that every kid in the neighborhood
wanted to hang out with. He's a superdad. And most of us as
fathers would dream to have all the kids in the neighborhood
wanting to come hang out with us, and Eric has filled that role
in a way that makes other fathers aspire to do just that.
Turns out, Eric is an old friend of my sister's. Jen,
his wife, grew up with my sister. And although Eric and I,
we're unacquainted, other than through knowing his name, I
certainly heard of him. And the letters say exactly what I had
heard about him, what I had heard about him through other
family members.
You read the letters of his sister-in-law Carrie --
that's his wife Jen's sister -- her husband Eddie Garazi, both
of whom are here today. Footnote, Eddie Garazi and I grew up
together since we were five years old. Our mothers were best
friends since Cuba.
And so these are people who have a reputation in our
community, the Sheppards. And Eric has the reputation of the
guy you go to whenever you're in crisis. And that's why, when
today he's in crisis, you see people turning out for him.
He's been described as loving and kind, reliable,
supportive, not just by one person, but by everyone. And given
the circumstances of this case, the uniqueness of this case,
the atypicality of this case, it would be just, it would be
fair, it would be proportional for the Court, in fashioning a
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
sentence, to consider all of those good deeds for which he's
never received any recognition, all of the mitzvahs he's done
in his lifetime that no one else knew about.
And given that the crime for which he stands before
the Court is one so different than the ones you've seen every
day in the last four years here in this district, where people
take money and spend it like rock stars, spend it like they are
on someone else's dime -- that's not what Eric Sheppard did.
And the Court should think about that in deciding what is the
appropriate way to send the message to the community that it's
not right to provide inaccurate information when applying for a
loan. But likewise, it shouldn't result in the crushing of a
human being, crushing his children, crushing his family,
crushing the community. Because it would be awfully ironic
that the man who borrowed this money so that he could put
people to work would be relegated to a cage, where he can't put
people to work, where he wouldn't be able to continue the
tradition of using his best efforts to create jobs, to create
opportunities for people.
You read the letters of the people who have worked
with him or for him for years, some decades. Those are the
people that would also be affected by a sentence that would
incarcerate him, when the Court can fashion a sentence that
doesn't require that he be removed from the community to the
point where he can't even work, can't provide community
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
service.
The sentences that have been imposed in these PPP
cases that we cataloged for you, Judge, cases you will find on
Page 36 of our Sentencing Memo, cases like United States v.
Finley, where the district court in Brooklyn imposed a sentence
of 24 months, where there was a total loss of $2.2 million from
29 PPP and EIDL loans; a case like Aqeel, A-Q-E-E-L, sentences
ranging from 18 months to 44 months, for a $20 million SBA
fraud. These are cases where people literally had no regard
for how the money was going to be deployed. These were cases
where the people thought they could take the money and use it
however they wished.
Given the circumstances, where Eric was under a
financial stress, and he applied for loans so he could keep
people working -- and of course it benefits him to be able to
keep his business moving forward. Of course it benefits him to
avoid these really Draconian financial penalties that some of
the contractors and people doing business with him were
prepared -- and did, in fact, impose penalties for not getting
the job done on time. I think there was a $1 million penalty
because he couldn't get the job finished on time. It wasn't
considered a force majeure, even though the whole world was
paralyzed.
And so, in deciding what sentence do we impose for
someone who borrowed roughly $500,000, has paid all of it back,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
with the exception of the 140-some-odd thousand that was a
count -- that wasn't a count of conviction, but which he stands
ready to repay, he can repay. He could pay it Monday, if not
today -- knowing he has repaid all the loans, and knowing that
he wasn't looking to go on a frolic with this money, I submit
that the Court can, as Judge Donner suggested, impose a
sentence that doesn't require incarceration per se.
It can be a sentence of probation with a condition
that he be on home detention, where he can work, but cannot
partake in other social events. He should be able, I suggest
to the Court, continue providing for his -- emotional support
for his children, that he could, for example, be able to take
his children, his son, to activities. He could be a dad and
continue in that role.
But not much is served by taking a bed over at the
Federal Correctional Institute and putting Eric there for a
period of months, when we can accomplish so much more by,
number one, having him working while under home detention. All
the restitution will have been paid. And no one will want to
put themselves in the position that Eric finds himself today.
Because as we all know from the criminal justice system, they
say: "You can beat the rap, but you can't beat the ride." And
it's out been a two-year ride for his family. No one would
want to find themselves in the position that Eric finds himself
in today for no financial gain. No financial gain.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
So with that said, Judge, I suggest that the 3553
factors, which include the nature of the offense, and
particularly the nature of the Defendant, and all the other
atypical factors in this case, warrant a sentence that allows
Eric to continue being a productive member of the community for
this first-time offense.
Thank you.
THE COURT: Thank you, Mr. Srebnick.
Ms. Jimenez?
MS. JIMENEZ: Yes, Your Honor.
First of all, I know Your Honor did receive
Mr. Cupersmith's letter. There was also a letter that had been
provided to me some time ago, way before even the initial
sentencing had been scheduled. It was my fault that I had
saved it, but then ultimately did not file it with the Court.
And it is from Mr. Leon Wildstein, who was referenced during
the trial, and his grandson is here with us today. Could you
please stand, sir.
What is your name?
UNIDENTIFIED SPEAKER: (Inaudible.)
MS. JIMENEZ: And Mr. Wildstein is 96 years old. He
would have wanted to be here, but cannot be here. But he had
provided this letter, which is addressed to Your Honor:
"Honorable, Judge Bloom. By way of introduction, my
name is Leon Wildstein. I was born in Czechoslovakia in 1928,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
and emigrated to Montreal, Canada in 1948 after World War II.
"I have had many trades during my lifetime, but my
most successful trade has been as a real estate developer.
I've had the opportunity to develop all types of commercial and
residential real estate, with many different partners, both in
the United States and Canada. As I'm sure Your Honor
remembers, I was mentioned several times during the course of
the trial by both Mr. Sheppard directly and by his Defense
counsel in their closing arguments.
"It is not really in my nature to write a letter of
this type, and this is the first time I have ever done so;
however, after hearing that Mr. Sheppard repeatedly lied about
me to you and the jury, and seeing his Defense counsel endorse
those lies during closing arguments, I decided it was important
to be heard.
"Around 2009, I was introduced to Eric Sheppard by a
real estate broker. Over time, I learned of various projects
that Mr. Sheppard was involved with, and he expressed an
interest in having me join him on a few real estate ventures.
"The main project we did together was the development
of a 250000-thousand-square-foot shopping center in Miami, with
major nationwide tenants. The business was structured so I was
to be the main equity partner. We obtained a mortgage, and
Mr. Sheppard was to develop it. I started this venture in my
mid-80s, with the best of intentions to participate in a
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
successful commercial real estate project.
"Once construction was complete, and all tenants
commenced paying rent, the shopping center was, in fact,
financially successful. Despite this, and the continued high
occupancy of the shopping center, no distributions of any kind
were made to me for over two and a half years. And when money
was disbursed, I was consistently shortchanged.
"To further my concern, I received a default notice
from the lender that the shopping center was in foreclosure.
My immediate -- I immediately approached Mr. Sheppard about how
this could happen, and all I received in response were lies.
About two years went by, and I kept questioning and pleading
with him about where all the money was going. I simply kept
receiving excuses and lies.
"I came to discover that Mr. Sheppard had instructed
most of the tenants to divert their rent payments directly to
his management company, HM Management and Development. He was
using the money for all kinds of things unrelated to the
shopping center. This, of course, was in violation of the
controlling loan documents. And at that point, I had no choice
but to file suit against Mr. Sheppard.
"With the help of my grandson, and millions of dollars
in legal fees, after four years in the state court system, we
were able to regain management control over the shopping
center.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
"During course of my litigation against Mr. Sheppard,
we retained nationally recognized forensic experts, who
determined that he had indeed diverted the rent payments of
several of the tenants to entities he controlled and for his
personal benefit. Mr. Sheppard also provided me forged and
false financial statements and other documents to support the
fraud he was committing.
"In the end, he diverted over $8.4 million of rent
monies during his time as manager of the shopping center.
Mr. Sheppard used these diverted funds to pay for his personal
expenses and maintain his lifestyle, including purchasing a
striptease establishment. He used my money and our business as
his personal piggy bank.
"Taking advantage and victimizing an elderly person in
this late stage of his life shows that Mr. Sheppard will prey
on anyone he deems vulnerable. Mr. Sheppard cares only for his
own personal financial gain and is simply motivated by greed.
He will lie and steal without hesitation to get what he wants.
He does not care about who he tramples over in the process,
even if it is those closest to him.
"The tiresome litigation process, enormous financial
theft, and my inability to stop it sooner, really had an impact
on me. I was frustrated and emotionally drained. The
emotional and financial toll that Mr. Sheppard has caused me
and my family during this late stage of my life is significant.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
"Unfortunately, it seems I am one of his victims most
impacted by his lies. One thing has become clear to me during
the trial. I am but one in a long list of people Mr. Sheppard
has tried to blame for his illegal conduct. I'm also just one
on an even longer list of people Mr. Sheppard has hurt.
"Mr. Sheppard has never suffered any consequences for
the harm he has caused to me and many others. I ask the Court
to impose a substantial sentence on Mr. Sheppard to deter him
from ever victimizing anyone else with his deceitful ways.
"Thank you for your consideration in taking the time
to read this letter."
That's from Mr. Leon Wildstein.
MR. SREBNICK: May I request a copy of the letter?
MS. JIMENEZ: Yes. Of course.
MR. SREBNICK: Like now, please.
MS. JIMENEZ: I just have one copy of the letter.
MR. SREBNICK: Your Honor --
THE COURT: You want to look at it, Mr. Srebnick?
MR. SREBNICK: Yes, please.
THE COURT: Of course.
MS. JIMENEZ: I also have the letter from
Mr. Cupersmith, who, as the Court knows, is too ill to be here
in person. And Mr. Cupersmith was interviewed for the first
time in July of 2022, and at that point the Government did not
know if Mr. Cupersmith was a co-conspirator or a victim. And
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
it was immediately clear from the interview that the FBI
conducted that Mr. Cupersmith was victimized in this case.
And Mr. Cupersmith -- I think the letter was that very
same day. After having a relationship with the Defendant for
25 years, he sent Mr. Sheppard a letter that very same day in
July of 2022, telling him that he was discontinuing his
services as Mr. Sheppard's accountant and the accountant for
all of his businesses on that day.
And Mr. Cupersmith, who was reluctant to come down
here to testify -- he was ill. He had actually had glaucoma
surgery and then had heart issues. It was a great -- a great
effort to him physically, and I think emotionally, to come down
here to testify. And I can attest to that, having dealt with
Mr. Cupersmith directly.
So in his letter, he says: "I'm now too ill to attend
the sentencing in person" -- after he introduced himself in the
letter -- "and therefore submit this letter. I have been
informed that Mr. Sheppard remains convicted of the four wire
fraud counts, although the convictions for the identity theft
charges were reversed.
"I am a CPA, licensed in the Commonwealth of
Pennsylvania and the state of New Jersey. I have been a
practicing accountant, preparing tax returns for my clients for
57 years. I am a member in good standing with the AICPA of
Pennsylvania and the New Jersey Society of CPAs. I note that I
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
have served on several charitable boards in my community. I
have raised millions of dollars for charitable causes and have
improved the quality of life for the people, both young and
old.
"I have prepared the financial documents to be used
for the Jewish Community Center, built in 1997, and a new
senior living home, providing independence, skilled nursing,
and final care for the older citizens, built in 2008. I have
always believed, if you're successful, you must donate your
services back to the community.
"As I note below, I testified in the case involving
Mr. Sheppard, and my partner Alex Zaslow also testified in this
case. I want to describe to you how my health has deteriorated
from July 28, 2022 until now.
"At least in part, I believe that my health
deteriorated after I learned that Eric Sheppard stole my
identity and fraudulently changed my firm's tax returns to
enable him to receive funds from the Paycheck Protection
Program.
"My profession and personal reputation have been and
are very dear to me. I learned of the theft when two FBI
agents showed up at my office. I received grand jury, and then
trial subpoenas, that required me to spend a significant amount
of time reviewing emails, correspondence, and past years' tax
returns, producing documents, consulting with the United States
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Attorney's office, and ultimately testifying.
"Mr. Sheppard changed the section of the returns
dealing with the number of employees that I prepared, and
forged my signature on the returns.
"As this Court recalls, I spent a significant amount
of time on the witness stand, and counsel for Mr. Sheppard
seeking to have me admit, among other things, that the returns
I prepared were not accurate and that therefore it did not
matter that my signature was forged on tax returns or that
figures were changed. I testified in December 2023 for over
five hours one day, and then two hours the next day.
"For the last two years, I have been on medicine to
quiet my nerves. During the period that led up to the trial, I
was treated for cardiac issues. On March 6th, 2024, I had my
aortic valve replaced at Jefferson Hospital in Philadelphia.
Before the case, the valve was only partially closed. The
operation was successful; however, a piece of debris broke off
from my heart and went into my brain, which caused a
ministroke. I then suffered from vertigo, which caused severe
dizziness. I only work part-time now.
"I can never be sure, but I believe the continued
stress and aggravation as a result of subpoenas, production,
interviews, and testimony caused my valves to continue to close
and required surgery. I believe I have always had an excellent
reputation as an accountant, and it hurt me deeply to see how
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Miami, Florida 33128
(305) 523-5698
the returns were altered and have my reputation subject to
attack at the trial.
"I ask the Court to consider this background in
setting an appropriate sentence."
That's from Mr. Cupersmith.
I think Ms. Martinez would like to speak to the Court.
MS. MARTINEZ: Your Honor, I just want to make a
couple of points regarding the way the money was used.
THE COURT: All right.
MS. MARTINEZ: Your Honor, first, just to -- I
understand Mr. Srebnick's point about some of the cases in this
district, you know, where a company didn't even exist, whatnot.
I understand that. I just want to tell you what I have in the
bank accounts, and also tell you what this case is not.
This is not a case where the Defendant, say, had, you
know, 20 W-2 employees, and he rounded up to 25 because some
were 1099 and he didn't realize it. This is a case where an
intelligent man, with an economics degree, repeatedly told
banks that he had 80 W-2 employees, and also forged multiple
types of different types of tax forms that -- every employer
knows you have to withhold for a W-2. And every employer knows
who they have as a W-2, because it's significant to the
survival of the business, versus someone who is a 1099 that you
could delay the payment on.
So the first thing to say is that the conduct in this
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
case would drop the jaw of any business owner that is trying to
live legitimately, because they know what it means to have
somebody on your payroll and have to withhold, and then have to
quarterly give that to the IRS, and they know the difference.
And this Defendant not only ignored that, to the tune of 80,
but then he did the same 80 -- Your Honor, the same 80? This
is flagrant. The same 80 purported workers, those 1099s that
came here and testified that they ultimately were not paid
their last payment -- he took those same 80 and he repeated the
80 for another company with another bank.
So -- and then, on top of that, Your Honor, he took
the same number of people and submitted a fraudulent
forgiveness application, so that he would never have to pay
back one of the loans that you have found to be included.
So first, I just want to say that it may be less
dramatic than a Lamborghini case, but it still would drop the
jaw of all the legitimate small business owners, who, Your
Honor, did not do this -- did not do this, and they struggled
during the pandemic and did what they could to survive legally.
And then, with respect to the usage of the money, Your
Honor, I'm going to break it down the way it should be. Right?
You apply for these loans by company. It has to be a real
business, and you have to have employees for that real
business. What the Defense has given you is a blob, a blob of
taking every business he ever had together and trying to blob
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
together all the money, and then extending the time period way
beyond the time period; in other words, their expert took money
all the way until the end of December 2021, a time period that
far exceeded the time period.
So my first point is it's analyzed incorrectly. It's
analyzed overbroadly. And then I'm just going to give you the
facts from the evidence in the case. The evidence in the case
is that Exhibit 41-2, which was a summary exhibit of the money
flow to HM Management and Development -- that particular
company, I pointed out because it received, in Exhibit 41-2 --
that particular company received two of the PPP loans that you
have found are included. So that particular company, that
particular bank account, received about 300,000, about 150 or
so for each one.
Out of that bank account, Your Honor, during the
relevant time period, which we actually exceeded -- we went
through October of 2021. So we went, from when the money went
in, to October. From that bank account, he paid his Bal
Harbour home mortgage, $117,287. And the reason I point that
out is because even if he had used it to pay some 1099s, you
know, wouldn't people like to have, you know, an extra $117,000
that you can use to pay the mortgage on your Bal Harbour home?
I mean, you cannot ignore that he received this extra
money and used it for his personal benefit out of the bank
account of HM Management -- two of the loans. Because one of
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Miami, Florida 33128
(305) 523-5698
the loans, which was for a different company, he instead
deposited it into the HM Management account.
He also used, out of that account -- about $290,000 of
the money he used for American Express card and other credit
card payments. And as the Court knows, those were things that
he mixed personal and business.
And then, of course, there was a number of other
things. I just want to move on to the next loan that he
deposited. The next loan that you included is the Northeast
PPP loan. And that one he deposited into the HM-UP Development
Alafaya Trails account. In Exhibit 41-3, we can see that, out
of that account, he also paid at least $23,000 of his home
mortgage in Bal Harbour and 388,000 in credit cards combined --
again, that he combines personal and business.
My point is, he may have used it for some 1099s, but
he certainly took a personal benefit that was very significant.
MS. JIMENEZ: Your Honor, I'm just going to make a
couple of points about the sentence.
Going back to the enhancement that is not being
applied, the pandemic enhancement. Obviously, this is pandemic
funds. It's most certainly not selective prosecution. We
received guidance recently about the application of that
particular enhancement. And I think it applies in every PPP
case, quite frankly.
And so this was money the Defendant didn't need and
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Miami, Florida 33128
(305) 523-5698
the Defendant was not entitled to get. And he's not one of
these street fraudsters, who files something in Sunbiz, create
a corporation that doesn't exist, and then go commit a fraud.
This is a businessman with real businesses, someone who knows
better. And I think, you know, to whom much is given, much is
expected.
The Defendant could have paid this money back right
away, if he learned or realized at some point he had committed
a, quote, mistake. He could have paid it back when he knew
that he was under investigation by the FBI. He could have paid
it back when he was arrested in July of 2022. And instead, he
pays it back just a couple days ago, or in the last -- some --
last night.
And I've had defendants come in to court, with much
smaller sums, of course, and at sentencing pay the debt that
they owe, or pay a portion of the debt that they owe. And all
of those defendants stand in a very different posture than this
defendant. Those are defendants who pled guilty, who accepted
responsibility for their criminal conduct, who have lawyers who
can make a credible argument that they're remorseful, and they
are making efforts to make amends.
That is not the posture in which this Defendant finds
himself today. This Defendant has never accepted
responsibility for his criminal conduct. And he is, in my
view, attempting to manipulate the Court because he's always
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Miami, Florida 33128
(305) 523-5698
had the ability to pay this money back. It was money his
businesses did not need.
So he stands here saying to this Court that he has
done nothing wrong. He does not accept responsibility. In my
view, he has compounded that conduct with his trial testimony.
Which, in the Government's view, he made numerous false --
knowingly false statements to deceive this jury, and committed
obstruction of justice. And so I don't believe he is in a
posture, like any other defendant who I see come to a
sentencing to obtain leniency from the Court, having accepted
responsibility and trying to show remorse and make amends.
That is not this Defendant.
Just a note about Mr. Cupersmith. The Defendant had
Mr. Cupersmith as his accountant for 25 years for all of his
businesses. The Defendant -- the conduct in this case showed
he did not hesitate to use Mr. Cupersmith's identity on those
tax returns to forge his signature. And then he victimized
Mr. Cupersmith again, in my view, by suggesting to this jury on
the witness stand that Mr. Cupersmith and Mr. Zaslow, his
accountants, had given him PPP advice about the very issue that
was in this case.
And I know now that the Defendant's position regarding
restitution is that Mr. Cupersmith is not a victim, that he's
not entitled to restitution, that he's not entitled to recover
his attorney's fees or his lost income.
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Miami, Florida 33128
(305) 523-5698
And then, the last thing -- and I know -- I know that
the Court denied the Government's request for an obstruction of
justice enhancement, but I know that the Court, as the
Government, takes lying on the witness stand seriously. And I
think obstruction of justice is an offense that's committed
against all of us. And while I think the Court, for whatever
technical reasons, did not find that there was actual
obstruction of justice in this case, I think that there was
ample evidence that the Defendant knowingly lied on the witness
stand, and I think that that should factor into the Court's
sentence.
I think the Defendant needs to know that he cannot be
placed under oath, and then address the jury of his peers, and
lie to them with impunity. I think that that is conduct that
should be reflected in the Defendant's sentence.
And I also am troubled by the substance of the false
testimony that the Defendant gave. There were attacks on his
lifelong friend, Mr. Graff, who was accused of -- baselessly
accused of committing tax fraud. He blamed his accountants, as
I mentioned, for giving him advice, faulty advice about the PPP
program. He blamed his loyal bookkeeper for, I don't know,
slipping false papers in the piles to have him unwittingly sign
documents. And then, of course, there was the ultimate empty
chair defense, blaming his deceased friend and business
partner, who obviously could not come to court to clear his
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Miami, Florida 33128
(305) 523-5698
name.
And I'll say, at no point during this investigation or
during the prosecution of this case -- and the investigation
continued until the day we were in trial -- did we ever see one
item of evidence to suggest that Mr. Jeff Vasilas was involved
in committing this crime with the Defendant. And what I've
seen in other cases is the defendant blaming the co-conspirator
whom the Government wasn't able to arrest, or blaming the
co-conspirator who's pled guilty, but the Government hasn't
called for some reason. But I have to say there was a certain
level of -- I don't know if outrage is the right word, but
offense taken by blaming his deceased friend, again, whom the
Government found not a single item of evidence. And we had
ultimately obtained the phone communications between the
Defendant and Mr. Vasilas, which also contained nothing.
So I ask that the Court take into consideration the
Defendant's conduct. Obviously, the Court knows in every time
it sentences someone that it's always the family who is
impacted the most. But I think the criminal conduct in this
case was serious, I think the Defendant's conduct displayed
during the trial was serious, and I think the Court should take
it all into consideration in its sentence.
Thank you, Your Honor.
THE COURT: Thank you, Ms. Jimenez.
Mr. Srebnick, is there anything further, sir?
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Miami, Florida 33128
(305) 523-5698
MR. SREBNICK: Yes, Judge.
So in terms of the victim impact statements that the
prosecutor read, so they read to us a letter I've not seen
before today, but apparently the prosecutor has had since
January 30 of 2024, or sometime shortly thereafter, that talks
about the personal dispute between a Leon Wildstein, who signs
the letter, and Mr. Sheppard, a matter that I understand was
discussed during the trial. And there was apparently
litigation between Mr. Wildstein and Mr. Sheppard that resulted
in Mr. Wildstein, I understand, having to tender funds. And
so, since I was not familiar with that coming in today, I just
ran a search of who is Mr. Wildstein.
And what I found is a United States Court of Appeals
Decision, Case Number 21-12780, in the United States Court of
Appeals for the Eleventh Circuit, US Bank National Association,
as Trustee v. Leon Wildstein. And if the Government knows that
I have found the wrong Leon Wildstein, I'm sure they'll correct
me.
And here's what the Eleventh Circuit was litigating --
was resolving litigation. US Bank National Association sued
Wildstein for breach of contract. In its first motion for
summary judgment on the issue of breach, US Bank argued that
Wildstein breached the parties' guaranty agreement, when, one,
he diverted to himself commercial real estate rental payments
that should have been paid into a collateral bank account; two,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
when he, Wildstein, refused to surrender those rent payments on
demand.
In a second motion for summary judgment on damages,
the bank argued there was no genuine dispute, that it was owed
the total value of the rents diverted by Wildstein. The
district court agreed and granted both motions for summary
judgment.
On appeal, Wildstein argues there's a dispute of
material fact about whether he willfully breached the guaranty,
whether he was protected by the limitation of liability
provision in the guaranty, and the amount of damages he owes.
"After careful review, we affirm the district court's grant of
summary judgment."
Now, this is what I just found in two minutes by
Googling "Wildstein," who apparently has himself found himself
on the opposite end of the accusation of diverting funds. And
the Court knows that to find summary judgment on behalf of a
plaintiff of willful misconduct by a defendant in a civil
case -- that's an extraordinary event in a civil courtroom,
that someone can be found to have acted willfully with bad
purpose on summary judgment.
And yet, the Eleventh Circuit found that Leon
Wildstein acted willfully, which I understand to mean with bad
purpose, doing something he knows the law forbids, in
attempting to recover money, or to take money that he had
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Miami, Florida 33128
(305) 523-5698
diverted for his own benefit. Sounds very similar to what he
was trying to accuse Mr. Sheppard of. And that case went to
civil court, and it didn't turn out well for Mr. Wildstein
there either.
Now, of course, Wildstein is not connected at all to
this litigation in criminal court. He's just a disgruntled,
losing litigant, in civil court, who is going to take out his
venom on Mr. Sheppard. And I find it troubling that we're
hearing about this for the first time on the last few minutes
of Mr. Sheppard's sentencing.
And as with Mr. Cupersmith, while certainly his
identity was misused, he had the option -- I'm told he could
have appeared by Zoom. He didn't have to go through to all the
trouble that the Government put him through. There was no
dispute about his ID being used. And while certainly
Mr. Cupersmith would have been stressed out about it, the
suggestion about this causing Mr. Cupersmith's significant
health issues being brought about on the day of Mr. Sheppard's
sentencing seems to me to be a bit much. But in all events,
what we know today about that is simply that Mr. Cupersmith,
like other people in criminal cases, was a witness in the case.
With regard to the Government talking about how
Mr. Sheppard would pay his mortgage with monies that he
genuinely earned and legally earned from his business, the
Government, of course, knows, and it was not a dispute at the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
trial, that Mr. Sheppard had bank accounts where the funds were
commingled. And so now the Government is cherry-picking and
saying: "Well, if some of the money went to his mortgage
payments" -- they're trying to connect those payments as if
those were loan payments or loan monies from the SBA.
But of course, you heard the undisputed evidence that
Mr. Sheppard had well more than the loan amounts in the bank
accounts from other sources, not the SBA, and that historically
Mr. Sheppard, of course, paid his household expenses, paid his
mortgage, and that was just routine.
But there's been no rebuttal by the Government to what
you heard today about Mr. Sheppard's characteristics that
defined him for the first 50 years of his life. And it's those
characteristics, combined with the other factors we've already
discussed today, that I think should guide the Court.
And if I could just have a moment to consult with my
colleagues.
THE COURT: Yes. Of course.
(Pause in proceedings.)
MR. SREBNICK: Thank you, Judge. That's all.
THE COURT: All right. Thank you, Mr. Srebnick.
I want to thank the parties for a very thorough
presentation.
And Mr. Sheppard, I want to first state the obvious.
And that is that, at the age of 55, you've had no involvement
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
in the criminal justice system until the conviction of the four
counts of wire fraud. The jury found you not guilty of the
other counts. And with regard to the aggravated identity
theft, the Court believed that it applied the law in finding
that it should grant a judgment of acquittal with regard to
those two counts.
Sentencing an individual who has been significantly
involved in the community, where the Court has received many
letters attesting to your generosity, your love, your support,
your kindness -- your daughter Jordan was extremely articulate
with her thoughts and emotions. And I've heard, not only
through the letters, but certainly here in the courtroom, from
individuals that I greatly admire and respect, your aunt, Judge
Amy Donner; your rabbi, Rabbi Davis, who is one of my rabbis,
as well as my husband's.
You've had a significantly talented trial team
throughout the course of the 17-day trial and the full-day
sentencing hearing that we've had today, and it's been a
pleasure working with them. And here we are at the time of
your sentencing.
It is always the hardest on the family. Your family
has been here each day throughout the 17-day trial. They've
been here supporting you, crying at moments, certainly crying
today. And it is certainly a blessing to have their love and
support, and I'm certain that you appreciate that.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A jury of your peers found you guilty of four counts
of wire fraud. They found that you willfully enriched
yourself, that you engaged in a fraudulent act, and received
money to which you were not entitled. And I do acknowledge
that you have repaid most of those loans. And I've heard the
request that you not be taken from your community and that the
funds available put people to work, but the trial testimony
also revealed that you received money to which you were not
entitled. And whether it was from the government or a private
entity, you committed a fraudulent act, a scheme, and the jury
found you guilty.
Certainly this case did not involve Lamborghinis or
expensive jewelry. But the evidence reflected that you
received those monies, monies to which you were not entitled,
that you fabricated documents, filed documents to receive
monies that you knew you had no entitlement to.
I certainly credit you for having no involvement in
the criminal justice system until this point in your life. It
is clear that, in looking at the goals of sentencing, that
there is an extremely low risk of you being involved in this
type of activity. So rehabilitation certainly weighs in your
favor.
But let me state that, with the amount of fraud and
the amount of money that you, through your companies, enriched
yourself, taking into consideration your personal history and
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Miami, Florida 33128
(305) 523-5698
characteristics, it is clear to this Court that a
non-incarcerative sentence would not promote respect for the
law. It would not serve as an adequate deterrent to you or to
others contemplating this behavior. It would create an
unwarranted sentencing disparity among individuals similarly
situated here in this district and throughout the country. And
certainly the Court can consider the advisory guidelines, but I
believe that the guidelines are greater than necessary to serve
those goals.
And as such, Mr. Sheppard, I've certainly considered
the statements of all the parties. I have considered all of
the filings, the Presentence Report, which does contain the
advisory guidelines. And I've fully considered the statutory
factors of 18, United States Code, Section 3553(a).
You have a financial ability, and the Court is finding
that you have the ability to pay a fine, and a fine will be
imposed. As well, restitution is mandatory. And as you know,
the hearing is scheduled for August 23rd.
Mr. Sheppard, it is the judgment of this Court that
you, Eric Dean Sheppard, will be committed to the Bureau of
Prisons to be imprisoned for 18 months as to each of Counts 5,
7, 8, and 9, to be served concurrently with each other.
It is further ordered that you shall pay to the United
States a total fine of $20,000. The fine is payable to the
Clerk of the United States Court and shall be forwarded to the
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Miami, Florida 33128
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US Clerk's office. The fine is payable immediately.
The US Bureau of Prisons, the US Probation Office, and
the US Attorney's Office are responsible for enforcement of
this Court's order.
You shall pay restitution in the amount determined on
August 23rd, 2024, pursuant to 18, United States Code, Section
3664.
Once restitution has been determined, you shall pay
restitution during your period of incarceration as follows: If
you earn wages in a Federal Prison Industries job, then you
must pay 50 percent of the wages earned toward the financial
obligations imposed in this judgment. If you do not work in a
Federal Prison Industries or UNICOR job, then you must pay a
minimum of $25 per quarter toward the financial obligations
imposed in this order.
Upon your release from incarceration, you shall pay
restitution at the rate of 10 percent of your monthly gross
earnings, until such time as this Court alters the payment
schedule in the interests of justice.
The US Bureau of Prisons, the US Probation Office, and
the US Attorney's Office shall monitor your payment of
restitution and report to this Court any material change in
your ability to pay.
The payments do not preclude the Government from using
any other anticipated or unexpected financial gains, assets, or
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Miami, Florida 33128
(305) 523-5698
income that you may have to satisfy the restitution
obligations. And the restitution shall be payable to the Clerk
of the United States Court and forwarded to the victims.
Upon your release from imprisonment, you shall be
placed on supervised release for a term of three years. This
term consists of three years as to each of Counts 5, 7, 8, 9,
all such terms to run concurrently.
Within 72 hours of your release from the custody of
Bureau of Prisons, you shall report in person to the Probation
office in the district where you are released.
While on supervised release, you shall comply with all
mandatory and standard conditions of supervised release. And
that's referenced in Part F of your Presentence Investigation
Report.
You shall comply with the following special
conditions, and there will be a permissible search, a financial
disclosure requirement, no new debt restriction, a
self-employment restriction, and the payment of any unpaid
restitutions, fines, or special assessments.
It is further ordered that you shall immediately pay
to the United States a special assessment of $100, as to each
Counts 5, 7, 8, and 9, for a total of $400.
With regard to forfeiture, that will be determined on
August 23rd. And now that the sentence has been imposed, do
you or your attorneys --
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Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Your Honor, I'm sorry -- I'm sorry to
interrupt. But I think -- with respect to forfeiture, I think
we would ask -- we would ask the Court to enter a general order
of forfeiture.
THE COURT: I'll order a general order, with the full
findings by the Court to be made on August 23rd.
MS. JIMENEZ: Thank you, Your Honor.
THE COURT: And if you want to submit a proposed order
within three days of these proceedings with regard to the
general order.
PROBATION OFFICER: Your Honor, may I have one second
to speak to the Government?
THE COURT: Certainly.
PROBATION OFFICER: Thank you.
(Pause in proceedings.)
THE COURT: Is there anything to place on the record?
Mr. Sheppard, now that the sentence has been imposed,
do you or your counsel object to the Court's findings of fact
or the manner in which the sentence was pronounced?
MR. SREBNICK: Those that we've already reserved. I
assume we don't need to repeat them.
THE COURT: You do not, sir.
Mr. Sheppard, you do have the right to appeal the
sentence imposed. Any Notice of Appeal must be filed within 14
days of entry of the judgment.
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If you're unable to pay the cost of the appeal, you
may apply for leave to appeal in forma pauperis, which means
there would be no cost to you.
As the Court stated in its order, I advised the
parties that I would address the issue with regard to a
self-surrender the time of the sentencing hearing. I do note,
Mr. Srebnick, that, in reviewing the Presentence Investigation
Report, on Page 23, Paragraph 93, while I was aware by way of
Mr. Sheppard's testimony that he is a survivor of testicular
cancer, I did not know whether there were medical records or
medication that the Court needs to be aware of that would
support a delayed surrender.
MR. SREBNICK: What I was going to request, since the
Court has set a restitution and forfeiture hearing that
Mr. Sheppard would need to attend, perhaps the Court would
simply allow him to continue on the same bond until that date.
He'll appear on that date.
I presume the Bureau of Prisons will start the
designation process as soon as they get your judgment and
commitment order. And at that time, we may already know where
he's going to be designated, and then the Court could set the
surrender date at that time.
THE COURT: Does the Government wish to be heard?
MS. JIMENEZ: Well, Your Honor, I thought that he was
going to receive a standard self-surrender date, something like
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Case 1:22-cr-20290-BB Document 283 Entered on FLSD Docket 07/16/2024 Page 148 of 154
149
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
30 days out in the future, and that would be my request. I
don't --
THE COURT: Well, I think what Mr. Srebnick is
suggesting is, since the parties had requested the forfeiture
and restitution, the Court scheduled that for a separate
hearing on August 23rd, that in order to ensure that
Mr. Sheppard is here to attend the hearing that he be allowed
to self-surrender on that date. Is that correct?
MR. SREBNICK: What I'm --
THE COURT: You want Mr. Sheppard to self-surrender on
August 23rd, correct?
MR. SREBNICK: Not exactly. I want him to remain on
bond until August 23rd. And on that date, the Court would --
if we finish the hearing that day, self-surrender to wherever
he needs to go. Because he may be designated to Pensacola and
would need to travel to Pensacola.
If he surrenders before the 23rd, the marshals are
going to have to move him to bring him back here for that
hearing anyway. So my suggestion is we come on the 23rd. As
soon as he gets designated, I'll let everybody know where he's
designated to. Obviously, if he's designated here in Miami, he
could report within 48 hours. If he has to travel somewhere,
Mississippi or wherever they send him -- so the Court -- I'm
expecting that he would surrender within a few days of that
23rd, maybe seven days, depending on where the designation is
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Case 1:22-cr-20290-BB Document 283 Entered on FLSD Docket 07/16/2024 Page 149 of 154
150
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
by the BOP.
THE COURT: Or he would surrender to the Office of the
United States Marshals service on that date.
MR. SREBNICK: That's -- that's always an option. But
that's a costly option for the marshals because then they have
to transport him to Mississippi.
THE COURT: To the extent that his designation is in
Mississippi and not in South Florida.
MR. SREBNICK: True. But either way, they have to
move him. So he can drive to Homestead that same day, is my
point. We'll know before the 23rd, I expect, where he's
designated to, and we can address it as soon as we hear from
the marshals.
THE COURT: Is there any objection?
MS. JIMENEZ: No, Your Honor.
THE COURT: All right. Then the Court will allow
Mr. Sheppard to remain on the same conditions that were
originally set by the magistrate judge. And those conditions
remain from this point forward until Mr. Sheppard appears
before this court on August 23rd for the restitution and
forfeiture hearing.
The Probation officer has possession of the
Defendant's passport. I would ask that the Probation officer
retain the passport until the Defendant timely surrenders.
MS. JIMENEZ: Your Honor, I believe Mr. Hyman has
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Case 1:22-cr-20290-BB Document 283 Entered on FLSD Docket 07/16/2024 Page 150 of 154
151
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
something additional he wants to address with the Court about
forfeiture.
THE COURT: Yes, sir?
MR. HYMAN: Just really quick, Your Honor. In regards
to the general order of forfeiture, I just wanted to clear up
our position is that the general order of forfeiture should
require that the Defendant forfeit proceeds derived from his
fraud scheme, pursuant to Title 18, United States Code,
Sections 981, Subsection (a)(1)(C), and 982, Subsection
(a)(2)(A).
And I just wanted to confer with the Court what you
wanted in the general order of forfeiture.
THE COURT: Mr. Srebnick, is there any objection to
that?
MR. SREBNICK: Certainly, as to their request that it
include a reference to 982, there's an objection, because it's
not alleged in the Indictment. That was the subject of the
Government's amended motion, and that was something I brought
to the Court's attention in our motion to continue the
forfeiture hearing. The Government is seeking effectively to
amend the Indictment to add a new theory of forfeiture.
THE COURT: It should be pursuant to 18, United States
Code, Section 981(a)(1)(C).
MR. HYMAN: Your Honor, I want to preserve for the
record that, you know, we're of the position that it should
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Case 1:22-cr-20290-BB Document 283 Entered on FLSD Docket 07/16/2024 Page 151 of 154
152
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
include both 981(a)(1)(C) and 982(a)(2)(A) because the PPP
loans affected a financial institution.
THE COURT: I understand that's your position, but
that's not alleged in your forfeiture count.
MR. HYMAN: I understand that, Your Honor. And I
assume that Mr. Srebnick's response in opposition to our
preliminary order of forfeiture will address that. And I think
the Court will find that, even though it's not in the
Indictment, that case law says that if we correct it prior to
sentencing, and make sure -- and make clear that our intent is
to seek forfeiture -- and in this case, in the Superseding
Indictment, we went above and beyond that by saying that we
want to forfeit the full amount of the proceeds.
And by making that correction prior to sentencing, I
think the Court will find that you -- the Court can allow for
forfeiture under 982 as well.
THE COURT: Well, at this point, Mr. Hyman, why don't
you submit the order. And with regard to any legal challenge,
or any legal basis to expand the scope of forfeiture, we can
address that on August 23rd.
MR. HYMAN: Yes, Your Honor.
THE COURT: Is there anything further on behalf of
Mr. Sheppard?
MR. SREBNICK: No, Your Honor.
THE COURT: Is there anything further on behalf of the
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Case 1:22-cr-20290-BB Document 283 Entered on FLSD Docket 07/16/2024 Page 152 of 154
153
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Government?
MS. JIMENEZ: No, Your Honor.
THE COURT: All right. Have a nice afternoon.
The best of luck to you, Mr. Sheppard.
COURT SECURITY OFFICER: All rise.
(Proceedings concluded at 2:55 p.m.)
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Case 1:22-cr-20290-BB Document 283 Entered on FLSD Docket 07/16/2024 Page 153 of 154
154
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
UNITED STATES OF AMERICA )
ss:
SOUTHERN DISTRICT OF FLORIDA
)
C E R T I F I C A T E
I, Yvette Hernandez, Certified Shorthand Reporter in
and for the United States District Court for the Southern
District of Florida, do hereby certify that I was present at,
and reported in machine shorthand, the proceedings had the 7th
day of June, 2024, in the above-mentioned court; and that the
foregoing transcript is a true, correct, and complete
transcript of my stenographic notes.
I further certify that this transcript contains pages
1 - 154.
IN WITNESS WHEREOF, I have hereunto set my hand at
Miami, Florida, this 16th day of July, 2024.
/s/Yvette Hernandez
Yvette Hernandez, CSR, RPR, CLR, CRR, RMR
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
yvette_hernandez@flsd.uscourts.gov
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