Sentencing Memorandum - United States v. Andrew Marnell

Record facts

U.S. District Court for the Central District of California · No. 2:20-cr-00319-RGK · Doc. 79 · 2023-07-03 · Docket on CourtListener

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E. MARTIN ESTRADA 
United States Attorney 
MACK E. JENKINS 
Assistant United States Attorney 
Chief, Criminal Division 
KERRY L. QUINN (Cal. Bar No. 302954) 
Assistant United States Attorneys 
Major Frauds Section 
1100 United States Courthouse 
312 North Spring Street 
Los Angeles, California 90012 
Telephone: (213) 894-5423  
Facsimile: (213) 894-6269 
E-mail: 
Kerry.L.Quinn@usdoj.gov 
 
Attorneys for Plaintiff 
UNITED STATES OF AMERICA 
 
UNITED STATES DISTRICT COURT 
FOR THE CENTRAL DISTRICT OF CALIFORNIA 
UNITED STATES OF AMERICA, 
Plaintiff, 
v. 
ANDREW MARNELL, 
Defendant. 
No. 2:20-CR-00319-RGK 
GOVERNMENT’S SENTENCING POSITION 
 
Plaintiff United States of America, by and through its counsel 
of record, the United States Attorney and Assistant United States 
Attorney Kerry L. Quinn, hereby files its sentencing position for 
defendant ANDREW MARNELL. 
This sentencing position is based upon the attached memorandum 
of points and authorities; the files and record in this case; and   
// 
// 
// 
// 
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such further evidence and argument as the Court may permit at the 
hearing on defendant’s sentencing. 
Dated: July 3, 2023 
Respectfully submitted, 
 
E. MARTIN ESTRADA 
United States Attorney 
 
MACK E. JENKINS 
Assistant United States Attorney 
Chief, Criminal Division 
 
 
      /s/ 
 
KERRY L. QUINN 
Assistant United States Attorney 
 
Attorneys for Plaintiff 
UNITED STATES OF AMERICA 
 
 
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TABLE OF CONTENTS 
 
Contents 
TABLE OF CONTENTS...................................................1 
MEMORANDUM OF POINTS AND AUTHORITIES................................1 
I. 
INTRODUCTION...................................................1 
II. 
STATEMENT OF FACTS.............................................1 
A. 
The PPP Loan Program......................................2 
B. 
The EIDL Program..........................................3 
C. 
The Offense & Related Conduct: Bank & Wire Fraud..........3 
III. ARGUMENT.......................................................5 
A. 
Advisory Sentencing Guidelines............................5 
B. 
Analysis of the § 3553(a) factors.........................7 
1. 
Nature and Circumstances of the Offense..............8 
2. 
Need for Deterrence..................................9 
3. 
Defendant’s History and Characteristics..............9 
IV. 
RESTITUTION...................................................10 
V. 
CONCLUSION....................................................11 
 
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TABLE OF AUTHORITIES 
CASES 
Gall v. United States,  
552 U.S. 38 (2007).............................................7 
Molina-Martinez v. United States,  
578 U.S. 189 (2016)............................................7 
United States v. Carty,  
520 F.3d 984 (9th Cir. 2008)...................................7 
United States v. Rita,  
551 U.S. 338 (2007)............................................7 
STATUTES 
18 U.S.C. § 1028(d)(1)..............................................6 
18 U.S.C. § 1344(2).................................................1 
18 U.S.C. § 1957....................................................1 
18 U.S.C. § 3553(a)..............................................7, 8 
18 U.S.C. § 3663A(c)(1)(A)(ii).....................................10 
18 U.S.C. § 3663A(c)(1)(B).........................................10 
18 U.S.C. § 3664(f)(1)(A)..........................................11 
OTHER AUTHORITIES 
USSG § 2B1.1(a)(1)..................................................5 
USSG § 2B1.1(b)(1)(K)...............................................5 
USSG § 2B1.1(b)(10)(C)..............................................5 
USSG § 2B1.1(b)(11)(A)(ii)....................................1, 5, 7 
USSG § 2B1.1(b)(17).................................................5 
USSG § 2S1.1........................................................5 
USSG § 3E1.1........................................................6 
USSG § 5E1.1.......................................................11 
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MEMORANDUM OF POINTS AND AUTHORITIES 
I. 
INTRODUCTION 
On September 14, 2021, defendant ANDREW MARNELL (“defendant”) 
pled guilty pursuant to a plea agreement [docket no. 38] (the “Plea 
Agreement”) to one count of bank fraud in violation of 18 U.S.C. 
§ 1344(2) and one count of money laundering in violation of 18 U.S.C. 
§ 1957.  On January 3, 2022, the United States Probation and Pretrial 
Services Office (“USPO”) filed a Presentence Report [docket no. 49] 
(“PSR”), proposing a total offense level of 29 under the United 
States Sentencing Guidelines (“USSG”) and calculating defendant’s 
criminal history category (“CHC”) at level II.  The government 
concurs in the PSR’s guideline calculation except it respectfully 
asks the Court to impose, in addition to the enhancements recommended 
in the PSR, a +2 enhancement for the use of authentication feature 
under USSG § 2B1.1(b)(11)(A)(ii).  The government is however moving 
for a 2-level departure for reasons stated in a separate filing, so 
the government agrees the total offense level is 29 and the 
recommended guideline range is 97-121 months, and the government is 
recommending a low-end 97-month sentence.  The government is also 
seeking restitution in the amount of $5,647,176. 
II. 
STATEMENT OF FACTS  
As soon as the federal government declared a national emergency 
and took action to respond to the COVID-19 pandemic, defendant 
started scheming to steal relief funds intended to save small 
businesses from going bankrupt and millions of individuals from 
losing their jobs.  Defendant was one of the first people arrested in 
this district for pandemic-related fraud, and thus he was one of the 
first out of the proverbial gate to start defrauding programs 
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designed to provide emergency assistance and relief to those impacted 
by the pandemic, including owners of small businesses.  Defendant was 
not one of those people.  Defendant nevertheless falsely claimed he 
owned companies that employed numerous people, and he used the fake 
companies with fake employees to seek more than $10,000,000 in loans 
through the Paycheck Protection Program (“PPP”), and he sought 
additional emergency business loans under another emergency loan 
program called the Economic Injury Disaster Loan program.   
A. 
The PPP Loan Program 
The Coronavirus Aid, Relief, and Economic Security (CARES) Act 
was a federal law that was enacted in March 2020 and designed to 
provide emergency financial assistance to the millions of Americans 
who were suffering the economic effects caused by the COVID-19 
pandemic.  One source of relief provided by the CARES Act was the 
authorization of up to $349 billion in forgivable loans, through the 
PPP loan program, to small businesses for job retention and certain 
other expenses.  In April 2020, Congress authorized over $300 billion 
in additional PPP funding. 
In order to obtain a PPP loan, a qualifying business was 
required to submit a PPP loan application signed by an authorized 
representative of the business.  The PPP loan application required 
the business, through its authorized representative, to acknowledge 
the program rules and make certain affirmative certifications in 
order to be eligible to obtain the PPP loan.  In the PPP loan 
application, the applicant (through its authorized representative) 
was required to state, among other things, its: (a) average monthly 
payroll expenses; and (b) number of employees.  These figures were 
used to calculate the amount of money the small business was eligible 
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to receive.  In addition, the applicant was required to provide 
documentation showing its payroll expenses.  Once a PPP loan 
application was received and processed, a lender could approve the 
loan application and fund the loan using its own money.  PPP loan 
proceeds were required to be used by the business on certain 
permissible expenses: payroll costs, interest on mortgages, rent, and 
utilities. 
B. 
The EIDL Program 
The Economic Injury Disaster Loan Program (“EIDL”) is another 
program administered by the Small Business Administration (“SBA”) 
that provides low-interest financing to small businesses, renters, 
and homeowners in regions affected by declared disasters.  The CARES 
Act authorized the SBA to provide EIDL loans of up to $2 million to 
eligible small businesses experiencing substantial financial 
disruption due to the COVID-19 pandemic.  The qualifying business was 
required to submit an application that provided information about the 
number of employees a business employed and business’s gross revenues 
for the 12-month period preceding the disaster.  EIDL loan funds 
could be used for payroll expenses (so long as the applicant did not 
also receive PPP loans for this purpose), sick leave, production 
costs, and business obligations, i.e., debts, rent, and mortgage 
payments. 
C. 
The Offense & Related Conduct: Bank & Wire Fraud 
From March 2020 until July 16, 2020, defendant knowingly and 
with intent to defraud, executed a scheme to defraud PPP lenders and 
the SBA by using false and misleading pretenses, representations and 
promises to obtain funds owned and controlled by those lenders and 
the SBA. 
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Among the misrepresentations, defendant claimed the fake 
companies employed numerous people and maintained a large payroll.  
In fact, as defendant knew, the fake companies were not functioning 
businesses beyond being registered with the Secretary of State; they 
did not have employees or any payroll expenses, nor did they conduct 
any business whatsoever.  Rather, they were shell companies whose 
only purpose was to perpetrate fraud.  For all the loans, defendant 
presented himself as the principal and authorized representative of 
the fake companies, and at times, he used different names or aliases 
to apply for PPP loans including: Tyler Lerman, Andrew Maxwell, and 
Andrew Merrill.  Defendant also submitted fake payroll records and 
identification documents to obtain the loans, including fake 
passports that included fake seals and other authentication features.  
An example of a fake passport submitted to a PPP lender as part of 
the fraud is attached as Exhibit A (redacted in part). 
As a result of defendant’s misrepresentations, lenders approved 
PPP loans to the fake companies and transferred funds via interstate 
wires to those entities, to accounts defendant controlled.  In total, 
defendant submitted applications for PPP loans in amounts exceeding 
$10,000,000, and lenders funded nearly $9,000,000 in loans to the 
fake companies.  In addition, Marnell requested EIDL loans from the 
SBA in the amount of $320,000, and of that amount, $170,000 was 
funded.  Defendant did not use any of the money for authorized 
payroll expenses or any authorized purpose.  Instead, he took the 
money to Las Vegas and otherwise used it for gambling and gaming 
activities, as well as for luxury goods. 
The government seized numerous items in a search of defendant’s 
residence on the day of his arrest in July 2020, including a new Land 
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Rover, a new Ducati motorcycle, Rolex watches, and hundreds of 
thousands of dollars in cash (defendant was also found in possession 
of a large amount of methamphetamine, for which he was never 
charged).  The government also seized more than $1.5 million from 
various accounts defendant maintained, funded with fraud proceeds.  
In total, after all the seizures and claw backs, a total of 
$5,647,176 is still outstanding and is the amount the government is 
seeking in restitution. 
III. ARGUMENT 
As explained below, the government recommends that defendant be 
sentenced to a term of 97 months’ imprisonment, followed by a five-
year period of supervised release, and that the Court order 
restitution in the amount of $5,647,176 to the entities and in the 
sub-amounts listed on a schedule to be filed separately under seal.   
A. 
Advisory Sentencing Guidelines 
Based on the stipulations in the Plea Agreement and the facts 
referenced above, the government submits that the following advisory 
sentencing guidelines apply: 
Base Offense Level: 
7 
USSG § 2B1.1(a)(1) 
Fraud loss is greater 
than $9,500,000 but 
less than or equal to 
$25,000,000 
+20 
USSG § 2B1.1(b)(1)(K) 
Sophisticated means 
+2 
USSG § 2B1.1(b)(10)(C) 
Use of authentication 
feature 
+2 USSG § 2B1.1(b)(11)(A)(ii) 
$1,000,000 from a 
financial institution 
+2 
USSG § 2B1.1(b)(17) 
18 U.S.C. § 1957 money 
laundering 
+1 
USSG § 2S1.1(a)(1) and 
(b)(2)(A) 
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Acceptance of 
Responsibility 
-3
USSG § 3E1.1(a), (b) 
Total Offense Level 
31 
The government agrees with the USPO in its reasoning for the base 
offense level and application of the loss and victim enhancements, 
but the government submits a +2 enhancement for use of an 
authentication feature should also apply. 
Section 2B1.1(b)(11) provides in relevant part that a +2 
enhancement should apply “If the offense involved (A) the possession 
or use of any ... (ii) authentication feature.”  The Commentary 
provides: “‘Authentication feature’” has the meaning given that term 
in 18 U.S.C. § 1028(d)(1),” and 18 U.S.C. § 1028(d)(1) further 
provides: “the term ‘authentication feature’ means any hologram, 
watermark, certification, symbol, code, image, sequence of numbers or 
letters, or other feature that either individually or in combination 
with another feature is used by the issuing authority on an 
identification document . . . or means of identification to determine 
if the document is counterfeit, altered, or otherwise falsified.”   
Defendant’s use of a fake passport to obtain loans in the names 
of his aliases is a classic example of a case where the 
“authentication feature” enhancement applies.  Defendant used what 
appears to be an identical copy of his real passport with 
modifications solely to the name, date of birth, and passport number.  
He kept every one of the authentication features of the real passport 
– including the Great Seal of the United States, which is the coat of 
arms showing a bald eagle bearing an olive branch and arrows, a shield 
in front of its breast between its outstretched wings, a scroll 
bearing the motto “E pluribus unum” in its beak, and over its head a
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cloud-like shape; this seal is used to authenticate documents issued 
by the United States, including United States passports.  The fake 
passport contained other authentication features as well, including a 
larger image of a bald eagle in front of a background of an American 
flag, an excerpt from the United States constitution, logos and 
insignia of the United States, and other security features. 
This is a classic case where defendant used an “authentication 
feature” as part of the fraud, and the government respectfully 
submits the +2 enhancement under USSG § 2B1.1(b)(11)(A)(ii) should 
apply.  For reasons set forth in a separate under-seal filing, the 
government is however recommending a 2-level departure, so the total 
offense level is still level 29, which is what the PSR recommended, 
albeit under different reasoning. 
B. 
Analysis of the § 3553(a) factors 
The Court should impose a sentence sufficient, but not greater 
than necessary, to reflect the purposes of sentencing identified in 
18 U.S.C. § 3553(a).  United States v. Carty, 520 F.3d 984, 991 (9th 
Cir. 2008).  The advisory Guidelines range provides the “starting 
point and . . . initial benchmark” for this Court’s consideration of 
an appropriate sentence.  Molina-Martinez v. United States, 578 U.S. 
189, 198 (2016) (quoting Gall v. United States, 552 U.S. 38, 49 
(2007)).  Although the Guidelines are not binding, they “reflect a 
rough approximation of sentences that might achieve section 3553(a)’s 
objectives.”  United States v. Rita, 551 U.S. 338, 350 (2007). 
The government submits that a sentence of 97 months is 
sufficient but not greater than necessary to comply with the 
sentencing goals set forth in 18 U.S.C. § 3553(a). 
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The factors to be considered when imposing sentence, as set 
forth in 18 U.S.C. § 3553(a), include:  
(1) The nature and circumstances of the offense and the 
history and characteristics of the defendant;  
 
(2) The need for the sentence imposed – 
 
(A) to reflect the seriousness of the offense, to 
promote respect for the law, and to provide just punishment 
for the offense; 
 
(B) to afford adequate deterrence to criminal conduct; 
[and] 
 
(C) to protect the public from further crimes of the 
defendant . . . 
 
 
(3) The kinds of sentences available; 
 
(4) [the applicable sentencing guidelines]; 
(5) [the applicable sentencing guidelines policy 
statement]; 
(6) The need to avoid unwarranted sentence disparities 
among defendants who have been found guilty of similar 
conduct; and  
(7) The need to provide restitution to the victims of the 
offense. 
 
 
18 U.S.C. § 3553(a).  The factors most relevant to the sentence in 
this case are as follows: 
1. 
Nature and Circumstances of the Offense  
The offense conduct in this case was serious.  Defendant began 
stealing disaster relief funds as soon as the money became available, 
when the country was grappling with a public health crisis and faced 
the very real prospect of an economic collapse.  Defendant was one of 
the first people in this district arrested for pandemic-related 
fraud, and he should be punished commensurate with the zeal he showed 
in committing fraud and his brazenness in what he did.  Put simply, 
everything in the PPP applications he submitted was fabricated; it 
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was all made up, and he used the stolen money to go to Vegas and 
gamble it away, and he otherwise entered into risky and ultimately 
unsuccessful stock market trades – all for his personal gain and 
amusement.  He took advantage of a vulnerable government program in a 
situation where benefits needed to be pushed out quickly to keep 
businesses afloat and people working and getting paid, so they could 
put food on the table and otherwise continue to provide for their 
families.  Defendant stole this money and went to Vegas. 
2. 
Need for Deterrence
For similar reasons the sentence needs to send a deterrent 
message both to defendant himself and to others who might engage in 
this type of criminal conduct, whether in this pandemic or another 
emergency.  A significant prison sentence will send a message to 
people who think about stealing from government benefit programs 
particularly those that provide emergency aid and are therefore more 
vulnerable to fraud. 
3. 
Defendant’s History and Characteristics
Defendant deserves a sentence of 97 months.  This is not a 
first-time or low-level offender.  Defendant has a long history of 
criminal behavior endangering others.  He has numerous arrests and 
convictions for drunken driving (which appear to be related to both 
alcohol and drug consumption), hit-and-run accidents he caused while 
drunk driving, bouncing a check, forging an opioid prescription, and 
cruelty to animals.  As just one example of his callous and cruel 
behavior, he left a pet German Shepard in a cage to die without water 
or food – it was found during a welfare check conducted at 
defendant’s apartment after he failed to pay rent or to respond to 
calls.  As the PSR described it, when officers arrived at defendant’s 
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apartment: “The open windows revealed a German Shepherd in a 
small cage; it smelled of feces, and feces was on the floor near 
the cage.  There was no food or water in the dog cage. . . . The 
dog rattled the cage and whimpered; the outline of the dog’s rib 
bones was visible.  Officers let the dog out, and it ran to a 
bedroom that had two bowls of water, before he drank from a pot 
of water.  The dog was later weighed to be 48 pounds, when it 
should average 60-75 pounds.  Marnell later responded on the 
phone that he was out of town for four to five days and would be 
back several days later; he did not want to speak to the officer 
until then.”  Defendant has shown no compassion or remorse for the 
victims of his past crimes, as he repeatedly endangered and harmed 
other people with his reckless and criminal behavior – drunk driving 
and otherwise – and he continued to show a lack of compassion and 
empathy in targeting and victimizing a vulnerable government program 
designed for victims of a catastrophic pandemic.  He deserves a 
sentence of 97 months. 
IV.
RESTITUTION
In addition to the period of incarceration, defendant should be
ordered to pay restitution to victims.  The Mandatory Victim 
Restitution Act (“MVRA”), 18 U.S.C. § 3663A and § 3664, applies to 
“an offense against property under this title . . . including any 
offense committed by fraud or deceit.”  18 U.S.C. 
§ 3663A(c)(1)(A)(ii).  Under the MVRA, a district court must order
restitution in such a case where “an identifiable victim or victims
has suffered a . . . pecuniary loss.”  18 U.S.C. § 3663A(c)(1)(B).
With this statutory background, this Court is required to impose an
order of restitution in this case in favor of the victims for the
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full amount of their losses, without consideration of the defendant’s 
ability to pay. 18 U.S.C. § 3664(f)(1)(A); USSG § 5E1.1.  The 
government is attempting to reach an agreement with defense to the 
restitution amount, which the government submits is $5,647,176. 
V.
CONCLUSION
For the reasons set forth above, the government recommends that
defendant be sentenced to a 97-month term of imprisonment, a five-
year period of supervised release, and ordered to pay restitution in 
the amount of $5,647,176. 
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EXHIBIT A 
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USAO_Marnell_00000168
 
CONFIDENTIAL INFORMATION – SUBJECT TO PROTECTIVE ORDER
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