Sentencing Memorandum and Objection to Defendants Sentencing Memorandum by USA — USA v. Gauthier (Dkt. 43)

Record facts

D.N.H. · No. 1:23-cr-00015-JL-TSM · Doc. 43 · 2024-06-24 · Docket on CourtListener

Full text

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IN THE UNITED STATES DISTRICT COURT 
FOR THE DISTRICT OF NEW HAMPSHIRE 
  
 
UNITED STATES OF AMERICA  
) 
 
 
 
 
 
 
 
) 
  
vs. 
 
 
 
 
 
)  
Case No. 1:23-cr-00015-JL-TSM 
 
 
 
 
 
 
) 
  
HEATH GAUTHIER 
 
 
) 
 
) 
 
 
 
GOVERNMENT’S SENTENCING MEMORANDUM AND  
OBJECTION TO DEFENDANT’S SENTENCING MEMORANDUM 
 
 
The defendant stands convicted fraud and possession of child pornography.  During the 
height of the COVID-19 pandemic, Heath Gauthier stole the identities of more than ten dead 
people and created fake companies to submit numerous applications through the Paycheck 
Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program to steal funds 
Congress secured to help Americans struggling during the worst health crisis in a century.  The 
defendant attempted to steal more than $1.3 million of these pandemic relief funds and 
successfully obtained nearly $200,000.  The investigation also revealed that the defendant, a 
convicted sex offender, maintained a collection of more than 1,500 images of child sexual abuse 
material (CSAM) on his computer.   
The party’s binding plea agreement contemplates a sentence of just over 12 years, or 145 
months’ imprisonment as well as full restitution for the defendant’s fraud and to the identified 
victims of his sex offense.  The United States urges the Court to accept the parties’ plea 
agreement and impose a sentence of 145 months’ imprisonment and restitution of at least 
$202,507.  Such a sentence is sufficient but not greater than necessary to achieve the purposes of 
sentencing and is appropriate in this case.  
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I. 
Factual Background 
A. 
Pandemic Relief Programs 
On March 13, 2020, the President declared a nationwide disaster in response to the 
ongoing COVID pandemic and resulting economic crisis.  PSR ¶ 11.  Shortly thereafter, 
Congress passed the CARES Act, which among other things created the PPP.  Under the PPP, 
small businesses could apply for loans from lenders at 1% interest.  If the borrower spent the 
bulk of the loan proceeds on payroll, the loans would be forgiven.  Id.  The CARES Act also 
expanded the Small Business Administration’s (SBA) EIDL program.  Like PPP loans, EIDLs 
were low-interest loans which were supposed to be used to help businesses pay their operating 
expenses.  Id.  Because PPP loans were federally guaranteed and EIDL monies were directly lent 
by the SBA, American taxpayers served as the backstop for both types of loans.  
B. 
The Defendant’s Fraud 
During the height of the COVID-19 pandemic in 2020 and 2021, the defendant applied 
for sixteen PPP and EIDL grants/loans using fake business names and the stolen identities of 
more than ten deceased individuals. PSR ⁋ 12-14, 17.  The object of the defendant’s fraud was 
simple:  to obtain pandemic release funds for his own personal use.  For example, the defendant 
used some of the stolen pandemic relief funds to send Venmo payments for “pics” and “meet up” 
to an individual he met on Grindr.  Id. ⁋ 47. 
To obtain a PPP loan, the applicant was required to state the business’s average monthly 
payroll expenses and number of employees. These figures were then used to calculate the 
amount of money the small business was eligible to receive under the PPP. Similarly, to obtain 
an EIDL, the applicant was required to provide information about its operations, such as the 
number of employees, the entity’s gross business revenues, and cost of goods sold.  To perpetrate 
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this fraud, the defendant applied for loans using fake business that he created:  Sellingham 
Farms, Lilac City Home Car, and New England Power and Light.  To fool his lenders and the 
SBA, the defendant created fake federal tax records and fake municipal and business records so 
that these would appear to be legitimate businesses in need of pandemic relief.  Id. ⁋⁋ 15-16, 20-
33, 35-39.  The defendant often listed himself as the owner of these fake companies but also 
applied for some loans using the stolen identities of two deceased individuals, going so far as to 
create counterfeit driver’s licenses using their personal identification information. Id. ⁋⁋ 17-19.  
The defendant also stole and used the identities of nine other dead individuals to commit this 
fraud, claiming in several of the applications and in fake tax and payroll records that they were 
employees of his fake companies.  Id. ⁋⁋ 17-40. 
While several lenders identified the false applications and denied them, others, relying on 
his lies, wired the defendant approximately $186,007 in PPP funds and the SBA wired the 
defendant approximately $10,500 in EIDL funds. Id. ⁋⁋ 20-40.  The defendant also requested to 
have his PPP loans forgiven by the SBA, repeating the lies he used to obtain the loans.  Relying 
on these falsehoods, the SBA forgave the loans.  Id. ⁋⁋ 12, 20, 25. 
As charted below, the defendant successfully stole $196,507 in pandemic relief funds and 
attempted to steal an additional $1,309,607.  Id. ⁋⁋ 34, 40. 
PPP Loans: 
Company 
Date of 
Application 
Lender 
Amount 
Awarded 
Heath R. Gauthier 
05/19/2020 
Itria Ventures, LLC 
$70,000 
Yes 
Sellingham Farms 
08/04/2020 
Itria Ventures, LLC 
$99,000 
No 
Sellingham Farm 
02/09/2021 
Harvest Small Business 
Finance, LLC 
$116,007 
Yes 
Lilac City Home 
Care 
04/28/2020 
WebBank 
$34,000 
No 
New England 
Power and Light 
05/04/2020 
Cross River Bank 
$11,250 
No 
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Heath Gauthier 
07/04/2020 
Fountainhead SBF, LLC 
$70,000 
No 
Sellingham Farm 
08/11/2020 
Fountainhead SBF, LLC 
$99,000 
No 
Sellingham Farm 
01/20/2021 
Northeast Bank 
$90,090 
No 
Sellingham Farm 
02/12/2021 
Customers Bank 
$99,090 
No 
Sellingham Farm 
02/12/2021 
ReadyCap Lending, LLC 
$99,000 
No 
Sellingham Farm 
02/12/2021 
ReadyCap Lending, LLC 
$99,090 
No 
Sellingham Farm 
03/26/2021 
ReadyCap Lending, LLC 
$99,090 
No 
Total Attempted 
 
 
$787,527 
 
 
EIDL Loans/Grants: 
Company 
Date of 
Application 
Lender 
Amount 
Awarded 
New England Power 
and Light 
04/15/2020 
SBA 
$10,500 
Yes 
Heath Gauthier 
06/18/2020 
SBA 
$174,000 
No 
Sellingham Farm 
06/29/2020 
SBA 
$165,180 
No 
Sellingham Farm 
01/06/2021 
SBA 
$172,400 
No 
Total Attempted 
$522,080 
 
C. The Defendant’s Collection of Child Sexual Exploitation Videos and Images 
While searching the defendant’s electronic devices for evidence of his fraud, 
investigators found images of child sexual abuse material (CSAM), commonly known as child 
pornography.  PSR ⁋⁋ 41- 42.  After obtaining a second warrant to search for and seize such 
material, found approximately 1,536 files that contained CSAM on the defendant’s Toshiba 
Laptop and backed up on a Western Digital Hard Drive.  Id. ⁋⁋ 42-45.  Of these files, twelve 
were videos and ten were sadomasochistic in nature.  Id. ⁋ 45.  In addition to these images, 
investigators found Skype chats between the defendant and others from 2014 in which the 
individuals requested images of child pornography and the defendant sent files with names 
consistent with those requests.  Id. ⁋ 46.1 
 
1 Investigators were not able to recover the actual files that the defendant sent through the Skype chats.  
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II. 
Guidelines Calculation and the PSR 
The Government agrees with the Probation Office’s calculated Guidelines range of 97-
121 months’ imprisonment based off a total offense level of 29 and Criminal History Category of 
II.  PSR ¶ 57-87, 110.  The Government further agrees with the Probation Office’s conclusion 
that defendant faces two mandatory minimum sentences:  120 months for his possession of child 
pornography and a consecutive 24-month sentence for aggravated identity theft.  Id. ⁋ 108-110.  
The defendant therefore faces an effective guideline range of 144 to 145 months’ imprisonment.  
Id. ⁋ 110. 
The defendant objects to the PSR and moves to strike to paragraphs 47 and 48 of the 
PSR.  The Court should deny the defendant’s motion. 
 Both paragraphs 47 and 48 of the PSR are directly relevant to the Court’s consideration 
of the statutory sentencing factors and are properly included.  As Congress has made clear, “[n]o 
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.”  18 U.S.C. § 3661 (emphasis added).  As 
the Sentencing Commission explained, “[a] court is not precluded from considering information 
that the guidelines do not take into account in determining a sentence within the guideline range 
or from considering that information in determining whether and to what extent to depart from 
the guidelines.” USSG § 1B1.4 commentary; see also id. (“In determining the sentence to 
impose . . . the court may consider, without limitation, any information concerning the 
background, character and conduct of the defendant, unless otherwise prohibited by law.”).  
Paragraph 47 describes how, instead of spending pandemic relief funds on payroll and 
other business expenses as he represented in his loan applications, the defendant wired some of 
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his fraudulently obtained funds to a person he met on Grindr, earmarked for “pics” and “meet 
up.”  The defendant asserts that because he did not know the person he paid was minor, that the 
Court should not consider this conduct.  ECF No. 42 at 3.  But, regardless of whether the 
defendant knew he was paying a minor or thought he was paying an adult, he knew he was 
paying him with stolen COVID-19 relief funds.  This wasn’t payroll.  Put simply, spending 
CARES Act Loan funds to a stranger online for “pics” and “meet up” rather than for designated 
business expenses is an “act[] . . . committed . . . by the defendant . . . that occurred during the 
commission of the offense of conviction.”  USSG §1B1.3. It is direct evidence of the defendant’s 
fraud and is properly included in the PSR.  Regardless, the defendant’s use of Grindr and Venmo 
to solicit of pornography and likely a sexual encounter is relevant in the Court’s evaluation of the 
3553 factors, particularly in light of his prior online sex offense and possession of CSAM. 
The defendant also asserts that the Court should not consider the facts in paragraph 48 of 
the PSR because, when interviewed, the defendant’s minor family member “provided no 
evidence that any sexual assaults occurred” and “failed to establish a base level of probable 
cause to issue a warrant or charges.”  ECF No. 42 at 4.  But, as laid out in the PSR, the facts in 
paragraph 48 are not based solely on his minor family member’s interview.  In December 2021, a 
police department in Maine conducted an investigation after the defendant’s then 9-year-old 
family member made explicit sexual statements and several of the minor relative’s classmates 
reported that the defendant engaged in sexually charged chats while playing online video games 
with them and the defendant’s minor family member.  PSR ⁋ 48.  When interviewed by law 
enforcement, several of these minor classmates stated that while playing Fortnite with the 
defendant, he made inappropriate sexual comments and gave them online gifts.  Id.  Finally, 
while the defendant correctly states that his minor relative did not disclose that the defendant 
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sexually assaulted him, during his interviews with interviewers at the Child Advocacy Center, he 
did say he spent time alone with the defendant and that what they did together is “hard to 
explain.”  He further stated that he was told the defendant “would go to jail and would be taken 
away” if he said anything.  Id. 
Though not relevant conduct under section 1B1.3, the facts in paragraph 58 are directly 
relevant to the Court’s evaluation of the 3553 factors, particularly the defendant’s history and 
characteristics, the need to protect the public from the defendant, and to provide adequate 
deterrence.  
The Court should reject the defendant’s request to strike these paragraphs from the PSR. 
III. 
Argument 
A. A 145-Month Sentence is Appropriate.  
During the height of the COVID-19 pandemic, the defendant stole the identities of more 
than ten dead people and created fake companies to steal or attempt to steal nearly $1.5 million 
in COVID-19 pandemic relief funds.  The defendant, who was previously convicted of felonious 
sexual assault, also maintained an extensive collection of CSAM.  A substantial prison sentence 
is necessary to account for “the nature and circumstances of the offense,” “the history and 
characteristics of the defendant,” and the “need for the sentence imposed to reflect the 
seriousness of the offense, to “promote respect for the law,” to “afford adequate deterrence to 
criminal conduct,” and to “protect the public from further crimes of the defendant.”  18 U.S.C. 
§ 3553(a)(1), (2). 
The defendant’s actions here are outrageous.  Hiding behind a computer, he exploited the 
worst public health crisis in a century for his own enrichment and preyed on the most vulnerable 
in our society.  Unlike many who appear before this Court, the defendant’s personal 
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circumstances are not mitigating.  In 2005, the defendant was sentenced for felonious sexual 
assault and prohibited use of computer services.  See PSR ⁋ 85.  Then, the defendant used a 
computer to exchange messages with an undercover police officer that he believed to be a 14-
year-old child, where he arraigned to travel to engage in sexual acts. Id.  In 2021, he was the 
subject of an investigation involving multiple allegations that he engaged in sexually explicit 
conversations with minors, including a 9-year-old relative, while playing online video games. Id. 
⁋ 48. Undeterred, the defendant amassed a collection of more than 1,500 images and videos of 
child exploitation material and shared such material with others over the internet.   
The government is not asking the Court to punish the defendant for his prior crimes and 
other conduct.  But in considering the appropriate sentence for the instant offense, the 
defendant’s prior conviction, his solicitation of pornography and a sexual encounter over the 
internet with CARES Act funds, and evidence of his behavior with other minors are aspects of 
his history and characteristics that strongly supports the joint recommendation for a sentence of 
145 months.  The defendant is a recidivist sex offender and a fraudster.  He committed the 
instant offenses in the same way that he targeted is prior victims and other minors:  behind the 
cloak of a computer.  The fact that the defendant was required to register as a sex offender did 
not dissuade him from continuing to amass and distribute child pornography.  Nor did his prior 
sex offense conviction deter him from concocting and executing a massive fraud scheme.  
A 145-month sentence is necessary to account of the seriousness of these offenses and the 
defendant’s troubling history and characteristics, to deter the defendant, and, importantly, to 
protect the public.  The Court should accept the parties’ agreed-upon sentence.   
 
 
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A. The Court should order restitution of at least $202,507.  
The provisions of the Mandatory Victim Restitution Act apply to the defendant’s crimes, 
so restitution is mandatory in this case.  The defendant successfully obtained $196,507 in 
CARES Act loan funds from lenders and the SBA.  Because the SBA forgave the PPP loans, the 
Court should order $196,507 in restitution be paid to the SBA. PSR ⁋ 49, 122. 
The defendant agrees that his child pornography victims are entitled to restitution. PSR ⁋ 
8.  As laid out in the PSR, law enforcement has identified two victims in the defendant’s CSAM 
images.  Under 18 U.S.C. § 2259(b)(2)(B), each victim is entitled to restitution of at least $3,000.  
These victims have provided impact statements for the Court to consider, and each requested 
$5,000 in restitution.  PSR ⁋⁋ 50-51, 122.  The government therefore requests that the Court order 
restitution of $206,507 and no less than $202,507. 
IV. 
Conclusion 
For these reasons, the Government respectfully requests the Court impose a sentence of 
145 months’ imprisonment. 
 
Dated:  June 24, 2024  
 
 
Respectfully submitted, 
 
 
 
 
 
 
 
JANE E. YOUNG 
 
 
 
 
 
 
 
United States Attorney 
 
 
 
 
 
 
 
 
/s/ Matthew T. Hunter  
 
 
By: 
Matthew T. Hunter 
Kasey A. Weiland 
Assistant U.S. Attorneys  
53 Pleasant Street, 4th Floor 
Concord, New Hampshire 03301 
(603) 225-1552 
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