Court filing
Rahul Shah’s Sentencing Submission and Objections to the PSR — United States v. Shah (Dkt. 311, N.D. Ill.)
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Rahul Shah's sentencing submission and objections to the presentence report in United States v. Rahul Shah, Case No. 20-CR-293, in the U.S. District Court for the Northern District of Illinois before the Honorable Manish S. Shah, filed December 15, 2025 as Document #: 311 by Steptoe LLP. The submission states that Shah accepts the jury's findings and describes his building of Katalyst, which it says was driven into default by the Sudhir Valia partnership. It asks the court to impose only the mandatory sentence of two years and two days' imprisonment and objects to the sentencing recommendation's loss amount of $59,796,475.26. It runs 51 pages.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Filed December 15, 2025 in Rahul Shah; one of 2 filings from this case.
Record facts
| Court | U.S. District Court for the Northern District of Illinois |
|---|---|
| Filed | 2025-12-15 |
Cite this document
“Rahul Shah’s Sentencing Submission and Objections to the PSR — United States v. Shah (Dkt. 311, N.D. Ill.).”
U.S. District Court for the Northern District of Illinois, No. 1:20-cr-00293, Doc. 311, filed 2025-12-15. Archived at Pandemic Darlings, https://pandemicdarlings.com/court-filings/full-docket-rahul-shah-ilnd-376844/2025-12-15-gov-uscourts-ilnd-376844-311-0-doc-311/
, SHA-256 bbe62817a9e9c8861e4da7d0fe93a21b75c4c900b6a87da32f4c628a1304e2cd.Full text
Case: 1:20-cr-00293 Document #: 311 Filed: 12/15/25 Page 1 of 51 PageID #:3378
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
UNITED STATES OF AMERICA, )
)
Plaintiff, )
) Case No. 20-CR-293
-v- )
) Honorable Manish S. Shah
RAHUL SHAH, )
)
Defendant. )
RAHUL SHAH’S SENTENCING SUBMISSION
AND OBJECTIONS TO THE PSR
Dated: December 15, 2025 STEPTOE LLP
Christopher S. Niewoehner
227 West Monroe Street, Ste. 4700
Chicago, IL 60606
Telephone: (312) 577-1300
cniewoehner@steptoe.com
Drew C. Harris (pro hac vice)
1114 Avenue of the Americas
New York, NY 10036
Telephone: (212) 506-3900
dcharris@steptoe.com
Caroline A. Covington (pro hac vice)
1330 Connecticut Avenue NW
Washington, DC 20036
Telephone: (202) 429-6269
ccovington@steptoe.com
Case: 1:20-cr-00293 Document #: 311 Filed: 12/15/25 Page 2 of 51 PageID #:3379
TABLE OF CONTENTS
INTRODUCTION ........................................................................................................................................ 1
I. RAHUL SHAH’S PERSONAL BACKGROUND AND CHARACTER ............................................ 2
A. Background................................................................................................................................... 2
B. Rahul Is a Committed Family Man and a Supportive Member of His Community ..................... 4
C. Rahul Built Katalyst from the Ground Up .................................................................................... 9
D. The Sudhir Valia Partnership Directly Caused Katalyst to Default ........................................... 12
E. Rahul’s Life Has Been Upended by Katalyst’s Collapse and by this Case ................................ 16
II. THE COURT SHOULD IMPOSE ONLY THE MANDATORY SENTENCE OF TWO YEARS
AND TWO DAYS’ IMPRISONMENT ............................................................................................. 18
A. Guidelines ................................................................................................................................... 18
1. Loss .................................................................................................................................... 18
2. Additional Specific Offense Characteristics....................................................................... 22
B. Section 3553(a) Factors .............................................................................................................. 24
1. The Nature and Circumstances of the Offense Support a Below-Guidelines Sentence ..... 25
2. Rahul’s Extraordinary Personal History and Characteristics Support a Below-Guidelines
Sentence.............................................................................................................................. 30
3. Rahul Suffers a Panoply of Medical Issues that BOP Will Not Be Able to Adequately
Manage ............................................................................................................................... 31
4. Deterrence Goals Are Still Met by a Below-Guidelines Sentence ..................................... 32
III. FINE AMOUNT CAPPED BY APPRENDI ...................................................................................... 35
IV. RESTITUTION .................................................................................................................................. 37
A. The Court Should Not Find Impose Restitution for Losses Rahul Did Not Cause .................... 37
B. The Court Should Not Impose Restitution on Amounts Beyond the Principal .......................... 39
C. The Court Cannot Impose Restitution Pursuant to Apprendi ..................................................... 42
V. OBJECTIONS TO PRESENTENCING REPORT AND SENTENCING RECOMMENDATION . 43
CONCLUSION ........................................................................................................................................... 45
i
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TABLE OF AUTHORITIES
Page(s)
Cases
Apprendi v. New Jersey,
530 U.S. 466 (2000) ................................................................................................................. 35, 36, 42
Ellingburg v. United States,
No. 24-482 ............................................................................................................................................ 42
Gall v. United States,
552 U.S. 38 (2007) ............................................................................................................................... 24
Hester v. United States,
586 U.S. 1104 (2019) ........................................................................................................................... 42
Lagos v. United States,
584 U.S. 577 (2018) ............................................................................................................................. 41
Robers v. United States,
572 U.S. 639 (2014) ............................................................................................................................. 39
Simon v. United States,
361 F. Supp. 2d 35 (E.D.N.Y. 2005) .................................................................................................... 34
Southern Union Co. v. United States,
567 U.S. 343 (2012) ....................................................................................................................... 36, 42
United States v. Arvanitis,
902 F.2d 489 (7th Cir. 1990) ................................................................................................................ 40
United States v. Barker,
80 F.4th 827 (7th Cir. 2023) ................................................................................................................. 19
United States v. Betts,
99 F.4th 1048, 1061 (7th Cir. 2024) ............................................................................................... 37, 40
United States v. Buchanan,
Nos. 22¬3301/3697, 2023 WL 5352223 (6th Cir. Aug. 21, 2023) ...................................................... 40
United States v. Burns,
843 F.3d 679 (7th Cir. 2016) .......................................................................................................... 19, 21
United States v. Cabrera,
567 F.Supp.2d 271 (D. Mass. 2008) ..................................................................................................... 34
United States v. Carruth,
418 F.3d 900 (8th Cir. 2005) (Bye, J., dissenting) ............................................................................... 42
United States v. Chemetco, Inc.,
274 F.3d 1154 (7th Cir. 2001) .............................................................................................................. 36
ii
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United States v. Darway,
255 Fed. App’x 68 (6th Cir. 2007) ....................................................................................................... 34
United States v. Hamilton,
323 Fed. App’x 27 (2d Cir. 2009) ........................................................................................................ 34
United States v. Higdon,
531 F.3d 561 (7th Cir. 2008) ................................................................................................................ 22
United States v. Hill,
645 F.3d 900 (7th Cir. 2011) ................................................................................................................ 24
United States v. Isaacson,
752 F.3d 1291 (11th Cir. 2014) ............................................................................................................ 20
United States v. Johnson,
471 F.3d 764 (7th Cir. 2006) ................................................................................................................ 24
United States v. Jordan,
435 F.3d 693 (7th Cir. 2006) ................................................................................................................ 24
United States v. LaGrou Distribution Sys.,
466 F.3d 585 (7th Cir. 2006) ................................................................................................................ 36
United States v. Leahy,
438 F.3d 328 (3d Cir. 2006) (en banc) ................................................................................................. 42
United States v. Lloyd,
807 F.3d 1128 (9th Cir. 2015) .............................................................................................................. 21
United States v. Lonich,
23 F.4th 881 (9th Cir. 2022) ................................................................................................................. 20
United States v. McCormack,
152 F.4th 428 (3d Cir. 2025) ................................................................................................................ 40
United States v. Mitchell,
876 F.2d 1178 (5th Cir. 1989) ........................................................................................................ 40, 41
United States v. Moore,
52 F.4th 697 (7th Cir. 2022) ........................................................................................................... 18, 22
United States v. Nellum,
2005 WL 300073 (N.D. Ind. Feb. 3, 2005) .......................................................................................... 34
United States v. Newton,
76 F.4th 662 (7th Cir. 2023) ................................................................................................................. 18
United States v. Powell,
576 F.3d 482 (7th Cir., 2009) ............................................................................................................... 31
iii
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United States v. Printz,
594 F. App’x 883 (7th Cir. 2015) ......................................................................................................... 42
United States v. Rothwell,
387 F.3d 579 (6th Cir. 2004) ................................................................................................................ 20
United States v. Rutley,
482 Fed. Appx. 175 (7th Cir. 2012) ..................................................................................................... 41
United States v. Scott,
405 F.3d 615 (7th Cir. 2005) ................................................................................................................ 40
United States v. Sharp,
927 F.2d 170 (4th Cir. 1991) ................................................................................................................ 40
United States v. Simon,
No. 3:10-CR-00056(01)RM, 2011 WL 924264 (N.D. Ind. Mar. 14, 2011) ......................................... 23
United States v. Treadwell,
593 F.3d 990 (9th Cir. 2010), overruled on other grounds by United States v. Miller,
953 F.3d 1095 (9th Cir. 2020) .............................................................................................................. 21
United States v. Urbina,
2009 WL 565485 (E.D. Wis. Mar. 5, 2009) ......................................................................................... 34
United States v. Ward,
814 F. Supp. 23 (E.D. Va. 1993) .......................................................................................................... 34
United States v. Warner,
792 F.3d 847 (7th Cir. 2015) ................................................................................................................ 24
United States v. Wolfe,
701 F.3d 1206 (7th Cir. 2012) .............................................................................................................. 42
United States v. Young,
590 F.3d 467 (7th Cir. 2010) ................................................................................................................ 24
Yes Bank Ltd. v. Katalyst Tech., Inc.,
No. 2025L002650 (Cir. Ct. Cook Cty., Feb. 24, 2025) ........................................................................ 15
Statutes
18 U.S.C. § 1028A(b)(2) and (4) ................................................................................................................ 25
18 U.S.C. § 1257(b)(2) ............................................................................................................................... 37
18 U.S.C. § 1957(b)(2) ............................................................................................................................... 35
18 U.S.C. § 3147 ......................................................................................................................................... 25
18 U.S.C. § 3553 ......................................................................................................................................... 24
iv
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18 U.S.C. § 3553(a) ............................................................................................................................. passim
18 U.S.C. § 3571(b)(1) and (3) ............................................................................................................. 35, 37
18 U.S.C. § 3571(d) .............................................................................................................................. 35, 37
18 U.S.C. § 3663A .......................................................................................................................... 37, 39, 41
18 U.S.C. § 3663A(a)(2) ............................................................................................................................. 37
18 U.S.C. § 3663A(b)(1)............................................................................................................................. 40
18 U.S.C. § 3663A(b)(2)............................................................................................................................. 40
U.S.S.G. § 1B1.3......................................................................................................................................... 21
U.S.S.G. § 2B1.1.................................................................................................................................. passim
U.S.S.G. § 3C1.1......................................................................................................................................... 23
U.S.S.G. § 5E1.1 ......................................................................................................................................... 41
U.S.S.G. § 6A1.3(a) .................................................................................................................................... 18
Other Authorities
Andrew von Hirsch et al., Criminal Deterrence and Sentence Severity: An Analysis of
Recent Research 1-2 (1999) ................................................................................................................. 33
David Weisburd et al., Specific Deterrence in a Sample of Offenders Convicted of White
Collar Crimes, 33 Criminology 587 (1995) ......................................................................................... 34
Indian Ministry of Corporate Affairs,
https://www.mca.gov.in/content/mca/global/en/mca/master-data/MDS.html ..................................... 38
Michael Tonry, Purposes and Functions of Sentencing, 34 Crime & Just. 1, 28 (2006)............................ 33
Nicole B. Godfrey, Decades of Indifference and Failures in Accountability in the
Provision of Medical Care in Federal Prisons, 25 Nev. L.J. 755, 759 (2025) .................................... 32
Shankar Acharya, India: Crisis, Reforms and Growth in the Nineties (2022), available at
https://kingcenter.stanford.edu/publications/working-paper/india-crisis-reforms-and-
growth-nineties ....................................................................................................................................... 3
Trump Administration, Prisonology (Jan. 23, 2025),
https://www.prisonology.com/blog/sweeping-changes-for-the-bureau-of-prisons-
under-the-trump-administration ........................................................................................................... 32
Zvi D. Gabbay, Exploring the Limits of the Restorative Justice Paradigm: Restorative
Justice and White Collar Crime, 8 Cardozo J. Conflict Resol. 421, 447-48 (2007) ...................... 33, 34
v
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INTRODUCTION
Rahul Shah, by and through the undersigned counsel, submits this Sentencing Submission,
along with the attached letters and other exhibits.
There is no question that Rahul Shah will suffer severe consequences as a result of this
matter—he already has. Rahul has suffered physically and mentally since he was first arrested in
August 2020. Rahul has been detained in India and separated from his family for months because
of his vindictive former business partner, Sudhir Valia. Rahul faces financial ruin, as the company
that he spent his career building has been taken away from him, and somehow he alone must bear
the financial responsibility for money that Katalyst received that Valia still has and refuses to pay.
Both the Guidelines calculations that Rahul faces and the sentence recommended in the PSR
would, especially in light of his health conditions, including diabetes and asthma, condemn him
to spend the remainder of his life in prison. Even the minimum of two years and two days’
imprisonment that Rahul faces will be especially difficult for him because of his health issues.
This is stunning for someone whose life has been devoted to his family and working in a
company that has helped thousands of people—many from low-income households—find jobs,
both in the United States and India. Rahul has been an important pillar within his family and
within the many communities in which he has resided. When his father fell ill and then passed
away at only 45 years of age, Rahul returned home from college to shepherd his family, and the
family business, through those dark times. When Rahul’s sister-in-law, fleeing an abusive
marriage, and niece needed a place to stay, Rahul welcomed them into his home on a long-term
basis, becoming so close with his niece that she still calls him “dad.” When a Katalyst employee
with no family in the United States was hospitalized, Rahul canceled a major family vacation to
look after him. Throughout his life, Rahul has consistently put others’ needs before his own,
exhibiting a unique generosity of spirit.
1
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In the face of all this, Rahul will try to do what is right. He recognizes and accepts the
jury’s findings. He will do his best to repay the banks’ losses, even though the equity in Katalyst
that could pay those debts is now under Valia’s control. Rahul is willing to give up his 33%
personal ownership stake in Katalyst to the banks—wiping out the last 25 years of his life’s
work—as the best he can do.
Rahul asks this Court to take the entirety of his life, not just the events portrayed in the
trial, to fashion a sentence that is sufficient, but not greater than necessary, as required by 18
U.S.C. § 3553(a).
I. RAHUL SHAH’S PERSONAL BACKGROUND AND CHARACTER
A. Background
Rahul Shah was raised in Pune, India, by his parents and members of his extended family
who lived nearby. PSR ¶ 83; 6/20 Tr. 49:20-23.1 Rahul’s father ran an industrial hardware
distribution business, and his parents emphasized to him and his older brother, Chirag, the
importance of education and hard work. Id.; see also Ex. A (Letter of Chirag Shah) (“Rahul and I
were raised in a close-knit family in Pune, India, grounded in the values of respect, truth, and
service to others.”).
Rahul looked up to his brother and followed in his footsteps in many ways. Chirag
participated in the Rotary Youth Exchange program with a Mormon family in Mesa, Arizona, and
Rahul later stayed with the same family. PSR ¶ 84; 6/20 Tr. 50:1-5. Chirag attended Brigham
Young University, studying engineering, and Rahul followed suit, enrolling in the undergraduate
chemical engineering program there. PSR ¶ 84; 6/20 Tr. 50:8-13.
1
All citations to the trial transcript refer to Rahul’s testimony.
2
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During Rahul’s first year at BYU, tragedy struck when his father grew ill and then passed
away at the young age of 45. Id. ¶ 85. His father’s death was a shock in more ways than one. In
addition to taking an emotional toll on Rahul, Rahul’s father’s death had tremendous financial
implications for his family during what was already a tumultuous time in India, amidst the balance
of payments crisis,2 with banks attempting to recall loans made to the Shah family’s business.
“After the death of his father[,] he had to grow up very fast.” Ex. B (Letter or Taranum Chaudry).
Rahul rose to the occasion, immediately returning home to help. As his brother, Chirag,
explains, “At only twenty-two, Rahul set aside his own dreams to take responsibility for the family
and its businesses during one of India’s worst economic crises. Through determination and
courage, he stabilized the companies, paid every lender and creditor in full, and protected our
family’s reputation. When stability returned, rather than profit for himself, Rahul chose to
withdraw from the family business so our mother could join us in the United States, where she
could be cared for.” Ex. A (Letter of Chirag Shah).
Through those difficult years, there was a bright spot: During his time at BYU, Rahul met
Shobha Shagle. 6/20 Tr. 50:20-22. In her letter to the Court, Shobha speaks glowingly of the
Rahul she knew at BYU, explaining that he is still the same man today. Rahul “was the first to
offer to help any international student arriving to the university, whether picking them up from the
airport, providing short term funds or being there for them in their times of need.” Ex. C (Letter
of Shobha Shah). As Shobha writes, “This value system has been carried throughout his life and
continues to do so even today despite the multitude of challenges he faces both mentally, and
Healthwise. The Rahul I know would give the last dollar he has to help someone in need.” Id.
2
See Shankar Acharya, India: Crisis, Reforms and Growth in the Nineties (2022), available at
https://kingcenter.stanford.edu/publications/working-paper/india-crisis-reforms-and-growth-
nineties.
3
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Despite considerable pressure from her family to study home economics and enter into an
arranged marriage, Shobha struck out on her own, pursuing a doctorate in statistics in the United
States and marrying Rahul. After several years in a long-distance relationship, with Shobha in the
United States and Rahul supporting his family in India, they married in 1994 and settled down in
the United States, moving to Skokie and then Evanston so that Shobha could pursue a fellowship
at Northwestern University. PSR ¶ 85. They began their life together in a modest and inexpensive
apartment. Ex. C (Letter of Shobha Shah).
Rahul and Shobha have one son, Naman, whom they raised together in Chicagoland. Id.
¶ 86. Now 28, Naman is pursuing his MBA at Columbia University in New York. Id. Naman
speaks lovingly of his childhood, and his dad’s central role in it, in his letter to the Court. Ex. D
(Letter of Naman Shah). Naman describes the time his dad spent with him even when his work
was busy, including the “countless hours” Rahul would spend taking him to practice sports, and
the values Rahul shared with Naman, including “the spirit of kindness, accepting people as they
are,” and “helping marginalized individuals.” Id.
As discussed below, beyond serving as loving, supportive parents to Naman, Rahul and
Shobha have played an essential role in raising their niece, Neha.
B. Rahul Is a Committed Family Man and a Supportive Member of His
Community
Rahul’s deeds prove that he is a fundamentally kind person, who is generous with others
and always willing to help. Rahul offers to those around him a “quiet reliability and devotion to
family,” which “have earned him the admiration and gratitude of everyone who knows him.” Ex.
E (Letter of Trideep Shah). His “empathy and commitment to helping others reflect a deep moral
strength and sense of duty.” Id.
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Perhaps nothing better illustrates these truths than Rahul’s act of welcoming with open
arms his sister-in-law, Asha Shagle, and his niece, Neha Shagle, during a profoundly troubling
time in their lives. Asha testified, under subpoena, at trial, but then proactively furnished a letter
in support of Rahul, attached as Exhibit F. In her letter, Asha described Rahul’s “compassion and
generosity,” describing “how Shobha and Rahul sheltered me in their home for a couple years,
when I left California to get away from an abusive marriage.” Ex. F (Letter of Asha Shagle). At
a time when Asha had “tried to end her life,” Ex. C (Letter of Shobha Shah), Rahul and Shobha
were, as Asha explains in her letter, “instrumental in getting my life back together,” with Chicago
becoming her home “for nearly twenty years because of them.” Id. Asha warmly recalled “Rahul’s
popular saying ‘my home and heart is always open’” and described him as “a people’s person,
committed to family, friends, and to the community.” Id. As Shobha notes, “Rahul essentially
dropped everything to ensure Asha and her daughter Neha were protected, safe and made sure they
were comfortable in our home in Skokie. Rahul raised Neha [beginning when she] was 18 months
old when she moved as his own child, [and] made sure there was no difference in care, affection,
love, opportunities between our son Naman. Neha . . . has never met her biological father, [and]
still calls and considers [Rahul] ‘Dad.’” Ex. C (Letter of Shobha Shah).
In his letter to the Court, Rahul’s brother speaks about Rahul’s commitment to taking care
of others, explaining that he “has supported relatives through medical and financial crises, paid for
children’s education, and quietly stepped in wherever help was needed.” Ex. A (Letter of Chirag
Shah); see also Ex. E (Letter of Trideep Shah) (explaining that Rahul has “supported extended
family members in tangible ways, from assisting with college expenses to providing care for my
father [Rahul’s uncle] when health challenges arose”). Echoing Shobha, Chirag notes that even
now, after everything that Rahul has been through, “Rahul’s moral compass remains unchanged.
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Those who know him—family, employees, and friends—see a man guided by empathy and
fairness, someone who believes in accountability but also in forgiveness. He has never sought
personal enrichment at the expense of others and has lived his life in service to family, work, and
community.” Id.
Throughout their marriage, Rahul has steadfastly supported Shobha’s career. They moved
to Illinois so that Shobha could pursue her career there; Shobha pursued a fellowship at
Northwestern University’s Center for Urban Affairs and Policy Research from 1993 through 1995,
and thereafter became a research associate and consultant at NU. In 2001, she joined the National
Opinion Research Center at the University of Chicago as a survey director, later becoming a
research scientist. Rahul fully supported Shobha’s career in academia, and she left to manage HR
for DSR Management, Katalyst’s predecessor, only in 2005, by which time the success of the
consulting business was evident.
Outside of his family, Rahul has dedicated significant time and resources to educational,
medical, and religious causes. Rahul has mentored numerous Northwestern University students
and other community members of Indian origin over the years. He has regularly made significant
donations to numerous charitable causes as well:
1. From 2008 through 2020, Rahul and Shobha donated approximately $15,000 to $20,000
per year to Door Step Schools in India, which provides basic education to 3-5 year old
children of transient construction workers. These donations have enabled the provision of
educational necessities, such as books and writing supplies, to thousands of children. See
Ex. D (Letter of Naman Shah).
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2. Rahul and Shobha donated over $100,000 to the construction of a Jain temple in Phoenix,
and helped the temple avoid bankruptcy. He and Shobha continue to support Jain and
Hindu temples in the Phoenix and Chicagoland areas.
3. Rahul and Shobha support the Inga Foundation program in India, which provides surgical
support to children with cleft lip in India.
4. Rahul and Shobha have supported the Ravinia Festival, the Art Institute of Chicago, and
various other Chicagoland community and cultural organizations over the past 15 years.
6/24 Tr. 90:12-16.
5. Through Katalyst, Rahul and Shobha supported Culinary Care, an organization that
provides meals to families of cancer patients in the Chicagoland area, and provided job
training and internships in partnership with Launch U for local low-income children.
In business, too, Rahul has shown generosity in numerous ways. Over the years, as Rahul
built Katalyst, he would always say, “We should be the last in line to be paid.” Ex. C (Letter of
Shobha Shah). As an employer, Rahul was generous, kind, and well-liked: “Rahul made it a
priority to hire individuals from underrepresented backgrounds, creating opportunities for those
often overlooked by society. Many of his employees have remained with him for over fifteen years,
not because of financial rewards, but because of his kindness, mentorship, and personal concern
for their wellbeing.” Ex. A (Letter of Chirag Shah). He treated his employees as “an extended
family” that “we needed to take care of,” even canceling a family vacation to India once to help
care for an employee who had been hospitalized but had no family in the United States. Ex. D
(Letter of Naman Shah).
Prajakta Gandhi, who testified at trial, submitted a letter to the Court based on the almost
five years during which she worked directly under Rahul’s leadership at Katalyst, during which
7
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time Rahul guided her as she transitioned from Executive Administrator to manager of the Global
Marketing & Communications team. Ex. G (Letter of Prajakta Gandhi). In her letter, Prajakta
describes how “Mr. Shah consistently demonstrated exceptional leadership qualities underscored
by a profound sense of compassion and personal integrity,” “always prioritiz[ing] the well-being
and personal circumstances of his team members” and treating them “as an extension of his
family.” Id. In one memorable instance, Rahul even offered Ms. Gandhi, who was then pregnant,
use of his personal car when hers broke down. Id. Others shared similar stories. A letter from
Shweta Rohra, another former Katalyst employee who testified at trial, identifies Rahul as “an
insightful mentor and dedicated teacher” who paid employees using personal funds after Katalyst,
which he no longer controlled, abruptly terminated their employment, and describes the “immense
personal support” Rahul and his family provided her, “making them feel like my extended family.”
Ex. H (Letter of Shweta Rohra). Indeed, Rahul would support his employees to such a great extent
that it “sometimes made difficult financial decisions challenging,” as when he “didn’t have the
heart to” lay people off. Ex. I (Letter of Allen Frank).
Similarly, N2N (d/b/a Boardshare) represented a direct effort to enhance educational
opportunity in the United States and India. As Shobha explains in her letter, “The reason for
creating Boardshare wasn’t to enrich our family. Boardshare was [created to] bridge the digital
divide in the world and even [today] we have many low-income schools reach out to us to provide
units for their classroom.” Ex. C (Letter of Shobha Shah). By creating an interactive whiteboard
solution that would cost significantly less than the flatscreen-television-based units that were then
proliferating in higher-income school districts, Boardshare was able to expand the subset of
schools that could afford to furnish teachers with digital whiteboards. Rahul and his family
personally invested at least $2-3 million to develop the product, and Boardshare has donated
8
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thousands of units to schools in the United States and India. Touchingly, N2N’s name is a double
entendre, meaning both “end to end” and “Naman to Neha.” Ex. D (Letter of Naman Shah).
While Rahul and Shobha have been unable to access their Katalyst shareholdings in India,
they “have committed to give away 90% of wealth (assume we get access to these funds)–to the
less fortunate in this world. This has been Rahul’s guiding principle from day 1.” Ex. C (Letter of
Shobha Shah). As Shobha explains, “material wealth has never . . . nor will mean anything to us”;
the Shah’s idea of a fun night out is “going to dinner at Olive Garden and watching movies at the
local AMC on Bargain Tuesday ($6). Spending time with our family, kids and being supportive of
our community has always been Rahul’s way of enjoying the ‘good life.’” Id. At trial, the
government attempted to paint a picture of Rahul as prideful, as a means of explaining his desire
to see Katalyst continue to grow. But Rahul explained, “We are fortunate enough to be successful
and we wanted to share our success with the community. . . . It’s not a question of being proud.
It’s a responsibility towards the community.” 6/24 Tr. 90:3-13.
C. Rahul Built Katalyst from the Ground Up
As Rahul described on the witness stand, he is a self-made man—one who has managed to
balance work and family needs to an admirable degree. When he returned to the United States
with Shobha in 1994, he took university-level computer science courses and found a job at a small
company, Computer Power Group, where he worked for about two years in the testing department.
6/20 Tr. 52:1-5. Desiring more flexibility to ensure he had sufficient time to focus on raising
Naman, Rahul left Computer Power Group in 1996, becoming an independent consultant focused
on software quality assurance and testing programs. Id. at 52:5-6. In 2000, Rahul stepped back,
taking a six-month break to evaluate possible next steps, including the possibility of returning to
India. Id. at 52:23-53:2.
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But global events created an unexpected opportunity: when the dot-com bubble burst, many
talented software engineers were suddenly out of work and looking to keep busy, even if it meant
taking lower compensation for project- or task-based work. Id. at 53:9-21. Having developed
relationships with various clients over the years, Rahul spotted an opportunity to place experienced
software engineers in the United States with his own former clients. Id. Thus was born DSR
Management, Katalyst’s predecessor entity. Rahul funded DSR with his personal savings, using
his Skokie basement as an office. Id. at 54:1-9. Focusing on the same type of quality assurance
work that Rahul had learned through prior experience the company gradually grew, taking in
talented young engineers and quality assurance analysts, who would work for such clients as
Allstate, the American Red Cross, and large school districts. Id. at 55:1-5; see also Ex. J (Letter
of Ravi Ramnath) (discussing QA project at Allstate in 2001/2002). Rahul invested a lot of time
recruiting the right talent to meet DSR’s clients’ needs, and clients in turn appreciated the quality
work that DSR’s consultants consistently provided. 6/20 Tr. 55:16-20. Rahul focused on sales
and recruiting, and a small team in the United States handled payroll, invoicing, and collections.
Id. at 58:12-22.
By 2005, DSR had approximately 60 employees and a separate cadre of subcontractors,
servicing approximately 15 clients and generating about $9 million in annual revenue. Id. at 57:9-
11, 58:1-11. DSR expanded to India in 2005, opening a small back office in Pune to provide
support services, including the finance functions that had previously been handled by DSR’s team
in the United States. Id. at 56:6-9. In 2010, DSR acquired Leadsoft, a small Indian software
company, in part with a $375,000 loan made directly by Rahul to DSR. Id. at 61:15-62:23; GX-
612. Through the acquisition, Rahul hoped to move DSR up the value chain, from providing staff
augmentation services to implementing entire SAP projects. 6/20 Tr. 63:12-25.
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But the Leadsoft acquisition was only the start. To really grow in the project-based space,
DSR would need more growth capital than Rahul was able to provide himself. DSR engaged
investment bankers in the United States and India to assist with fundraising, and through that
process, Rahul was introduced to Sudhir Valia, a wealthy Indian businessman whose brother-in-
law, Dilip Shanghvi, founded and helmed Sun Pharmaceuticals. Id. 65:10-66:6. A group led by
Valia ultimately invested in DSR, which had recently rebranded as Katalyst, in March 2013, taking
a 50% stake. Id. at 66:9-10; GX-214 at 18. With that acquisition, Valia’s investor group took
control over Katalyst’s finance, accounting, and banking functions. Id. at 75:10-21. Following
the March 2015 acquisition of Idhasoft, Valia acquired an additional 8% of the Company, bringing
their bloc’s holdings to 58% and the Shah family’s down to 42%. Id. at 78:1-5. As a result, Valia
gained formal control over the Company as well.
Initially, the arrangement with Valia seemed to be working out; and though their
relationship was, initially, purely professional, the two developed a nearly familial bond, at least
for a time. PSR ¶ 95.
Under Rahul’s management, Katalyst continued to grow for almost a decade, eventually
surpassing 1,000 employees on payroll, spread throughout offices all over the globe. 6/20 Tr.
79:17-80:23; DX-647; 6/23 Tr. 7:14-8:17; DX-649A. As Asha, who lived with Rahul and Shobha
for years, noted in her letter of support, Rahul’s “professional accomplishments” included
“encouraging and creating opportunities for thousands.” Ex. F (Letter of Asha Shagle). Shobha
similarly notes that Rahul is a “builder,” adding that as “an entrepreneur, he truly believes that
business creates more opportunity for growth and success for all. At Katalyst, he has created
1000’s of jobs, provided job opportunities for individual[s] from low-income household in India
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and uplifted the lives of their families.” Ex. C (Letter of Shobha Shah); see also Ex. A (Letter of
Chirag Shah) (“They employed hundreds of people domestically as well as globally.”).
D. The Sudhir Valia Partnership Directly Caused Katalyst to Default
Beginning in 2014, at Valia’s urging, Katalyst’s U.S. entity, Katalyst Technologies, Inc.
(“KTI”), entered into a series of line-of-credit and loan transactions with the U.S. branches of
certain Indian banks. These transactions, which are the principal focus of the instant prosecution,
eventually left KTI with an oppressive credit structure. And at every turn, when Rahul attempted
to find ways to make the banks whole, Valia blocked Rahul’s efforts. Looking back, Rahul “made
an error in judgment by” failing to take Shobha’s “advice on not taking funds or diluting the equity
in Katalyst” and instead “trusting the Valia and Shanghvi family.” Ex. C (Letter of Shobha Shah).
That decision, though mistaken, was in keeping with, and a product of, Rahul’s character: “Rahul
Shah has always been eternally optimistic and trusting individual,” a good trait that has “also been
abused by others” to Rahul’s detriment. Id.; see also generally Ex. M (Letter of Nishant
Upadhyay).
From 2014 until the end of 2019, KTI remained current on its interest payments. KTI
began falling behind on its payment obligations only in late 2019. See GX-321; GX-152. Indeed,
as Bank of Baroda representatives pointed out to Rahul shortly after KTI took out the $32 million
loan with Yes Bank, the Yes Bank loan—which had been entered into at Valia’s insistence—was
poorly structured and would result in higher payments by KTI than the prior arrangement with
Bank of Baroda, which had been a line of credit. See GX-315. This untenable capital structure
eventually led KTI to default on its obligations to all three banks with which Katalyst had
outstanding loans (Yes Bank, Bank of Baroda, and State Bank of India).
KTI began to fall behind on its loan payments in 2019. That same year, another issue arose:
Valia had previously caused Katalyst to make an off-the-books payment of approximately $30,000
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to the Cleveland Clinic, and Rahul became aware that the payment was made on behalf of the
nephew of a judge in India who had an important matter regarding Sun Pharmaceuticals’ tax
liability on his docket. Rahul was so concerned about this that he retained DLA Piper, which
helped him file an FCPA complaint against Valia with the Department of Justice in December
2019.
Within weeks, Valia seized formal control of Katalyst. On January 31, 2020, Valia called
an extraordinary general meeting of Katalyst India shareholders, at which Valia’s bloc used its
voting power to remove four Katalyst India directors, including Rahul’s wife. A fifth director then
resigned in protest. DX-150 at 1-2; DX-651 at 25. A few months later, in April 2020, Valia called
for another extraordinary general meeting, which was held on June 20, 2020. At that meeting,
Valia’s bloc stacked Katalyst India’s board with Valia loyalists who had extensive ties to Valia’s
family but who lacked the significant industry experience and other qualifications held by the
directors Valia had previously ejected. DX-150 at 2.
As he cemented his control over Katalyst, Valia took steps to prevent Rahul from making
the banks whole. Valia opposed additional debt financing and refused to infuse, or allow Rahul to
infuse, equity, in part due to Valia’s concern that his stake would be diluted, which would limit
his control over the board and Company. DX-150 at 2. Valia also rejected Rahul’s proposal to
sell Katalyst’s stake in Nova Techset Private Limited via an IPO or strategic sale. DX-150 at 3.
The sale could have raised as much as Rs. 500 Cr., equivalent to approximately $70 million at that
time. Id. Although this sale could have raised significantly more than all outstanding liabilities
of the group and allowed Katalyst to repay all of its outstanding bank loans, Valia’s bloc voted
Rahul’s proposal down at an April 29, 2021 extraordinary general meeting. Id.
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Valia’s coup de grâce was a final, January 2022 extraordinary general meeting notice,
calling for removal of Rahul from all roles within the Katalyst group of companies. Having already
lost control of the board and seeing no path forward, Rahul resigned as KTI CEO that same month.
Id. Soon thereafter, Valia pulled Katalyst out of the United States entirely, terminating the
employment of U.S. personnel and vacating the Company’s offices. See, e.g., Ex. K (Letter of
Venkat Rao) (“Katalyst was stripped of many valuable assets, including clients and
relationships . . . In a single meeting, Mr. Valia promised he would take care of the team, but we
never heard back.”). As a final move, Valia attempted to divest Rahul of all the value he created
at Katalyst through a Scheme of Arrangement, which Rahul is challenging in Indian court. Ex. M
(Letter of Nishant Upadhyay).
Over three years later, Katalyst still has no U.S. presence, as far as Rahul is aware. And,
now entirely outside of Rahul’s control, Katalyst still has not repaid the banks, even though it
indubitably has the resources to make full or, certainly, partial repayment. As the full history laid
out here makes clear, and as Shobha explains in her letter to the Court, “if Rahul had the ability
and access to repay all the debt owed to the banks, which he tried many times, he would do it in a
heartbeat.” Ex. C (Letter of Shobha Shah). Indeed, Katalyst in India “continues to thrive and
make significant money – where we have no control or visibility.” Id. see also Section IV.B, infra
(discussing Katalyst’s current financials). But Valia has continually prevented Rahul from
effectuating repayment to the banks.
That Valia is responsible for KTI’s current insolvency and failure to repay the banks is not
just Rahul’s view; it is also Yes Bank’s. In a complaint filed earlier this year against KTI, Katalyst
India, and Sudhir Valia, Yes Bank made the following allegations:
“At all times described in this complaint [that is, beginning in December 2017], KSSL was
controlled by Sudhir Valia.”
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“Valia introduced Rahul Shah and KTI to YES Bank.”
“On behalf of KTI, Valia personally negotiated terms of the Loans with YES Bank.”
“Corporate management of KTI was not conducted by a board or its officers; rather, all
corporate decisions were made by KSSL and/or Sudhir Valia.”
“All vendor accounts, loan payments, and other financial arrangements of KTI were
managed by KSSL in India.”
“KTI had no meaningful corporate existence apart from KSSL.”
“Prior to KTI making payments to Plaintiff, numerous wire transfers were made from KTI
to KSSL for round-number amounts.”
“KSSL is controlled to such an extent by Valia that it is, in fact, his alter ego.”
“KSSL has systematically looted KTI rendering it insolvent and unable to pay its debts.”
“Valia specifically directed KTI and KSSL not to pay the sums due to Plaintiff.”
“Valia, while holding a controlling interest in KSSL and contrary to his contractual
obligations under the first and second letters of comfort, caused, consented to, suffered or
allowed KSSL to transfer assets, including large sums of money, from KTI to KSSL; thus
making those funds unavailable for KTI to pay its obligation to YES Bank.”
Complaint at ¶¶ 3, 8, 9, 22, 23, 27, 28, 30, 33, 40, 41, Yes Bank Ltd. v. Katalyst Tech., Inc.,
No. 2025L002650 (Cir. Ct. Cook Cty., Feb. 24, 2025) (attached hereto as Ex. L).
Valia’s actions caused Katalyst to default and prevented Rahul from effectuating
repayment of KTI’s lenders. Rather than permitting Katalyst to live up to its contractual
obligations, Valia has attempted to appropriate its assets for himself. Although Rahul and his
family remain 42% shareholders of the Company, Katalyst becomes less valuable by the day as
Valia siphons off its assets into entities Valia fully controls.
In 2021, Valia filed a criminal complaint against Rahul in Indian court, alleging that Rahul
improperly lured Valia’s group into financing the acquisition of Idhasoft. It was because of this
complaint that Indian authorities initially would not allow Rahul to return to the United States
when he traveled to India in 2023; however, Rahul was able to disprove Valia’s allegations,
demonstrating through historical emails that the Idhasoft acquisition transaction was Valia’s idea,
not Rahul’s. See Ex. M (Letter of Nishant Upadhyay). Once the charges were cleared, Rahul
dutifully returned to the United States as soon as possible to face trial in the instant case.
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E. Rahul’s Life Has Been Upended by Katalyst’s Collapse and by this Case
Rahul’s loss of control over Katalyst, and the litigation and prosecution that have ensued,
have profoundly impacted his health. As Shobha explains, these “significant health issues,”
described below, are “of concern to me and I fear that his health may not hold up in [a] prison
environment and I may never see him again.” Ex. C (Letter of Shobha Shah).
Rahul grapples daily with various medical afflictions, which rapidly worsened beginning
in 2018, after Katalyst’s planned IPO fell through and as the rift between Shah and Valia’s
controlling shareholder group worsened. Rahul suffers a family history of diabetes and
cardiovascular disease; his grandfather, father, and uncle all suffered from both, and his father’s
death was caused by diabetes and cardiovascular issues. These conditions were exacerbated for
Rahul by the stress caused by Katalyst’s collapse, by the civil litigation against him, and by this
case.
Rahul was diagnosed with diabetes in 2004 or 2005. In 2018, Rahul’s A1C level (a
measure of average blood sugar, which is used to evaluate how well diabetics’ blood sugar levels
are managed) leapt from 6.5 to over 10. This A1C spike continues to impact Rahul in a variety of
ways:
Beginning in 2018, Rahul suffered significant chest pains and numbness in his right arm.
He was hospitalized approximately three or four times for observation and cardiovascular
disease.
Despite his doctors’ efforts to bring his A1C back under 7 through the administration of
multiple diabetes drugs, due to continued stress, Rahul’s A1C level actually further
increased.
Rahul’s elevated A1C level impacted his vision, lowered his ability to heal from cuts and
bruises, and led to numbness and loss of strength in his left arm.
In 2019, Rahul was rushed to emergency room on two separate occasions for chest pains;
he underwent a battery of tests for cardiovascular diseases.
In 2004, Rahul was also diagnosed with asthma. He takes Advair and uses an albuterol inhaler
twice per day as a result. PSR ¶ 91.
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Beginning in 2020, after the government first filed charges against Rahul, his A1C reached
an all-time high, and he suffered a significant mental breakdown, requiring the prescription of
antidepressants and anti-anxiety medication as well as a course of psychotherapy. In December
2020, he had a medical emergency involving severe chest pain, constant numbness in his left hand,
and loss of sensation and strength.
Then, when Rahul’s 2022 trip to India was prolonged by unexpected legal complications,
stress and a lack of access to his diabetes medication resulted in Rahul’s blood sugar significantly
escalating, causing a lack of sensitivity in his hands and feet and, ultimately, hospitalization for
several days in Mumbai.
Rahul is currently on Ozempic, which controls his A1C better than earlier medications, but
particularly in light of his religiously mandated vegetarian diet, he has continued to lose weight to
a concerning extent. Rahul also regularly takes metformin and insulin (Lantus) to control his
diabetes. PSR ¶ 91. He wears a continuous glucose monitor and carries around candy to keep his
sugar level at 70 mg/dL or higher. He experiences hypoglycemia (dangerously low blood sugar)
a few times per month, particularly when he is experiencing significant stress. Rahul also suffers
from Dawn Phenomenon, in which naturally occurring early-morning hormones inordinately
affect his blood sugar.
Beyond diabetes, asthma, and cardiovascular issues, Rahul suffers from high cholesterol,
acid reflux, and Benign Prostatic Hyperplasia, for which he takes Lipitor, Rabeprazole, and
Flomax, respectively.
Rahul’s mental health has also suffered as a result of everything that has transpired over
the past several years. Between 2019 and 2022, Rahul experienced anxiety and frequent panic
attacks, as well as chest pain, numbness of the limbs, tingling sensations, and difficulty sleeping,
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resulting in an emergency room visit. PSR ¶ 93. Rahul saw a therapist during that period and
received counseling from Dr. Caroline Loeb at Northwestern Hospital, who prescribed
Clonazepam for anxiety. Id. Rahul continues to face feelings of depression over Valia’s profound
betrayal and the dismantling of Katalyst, a company he worked so hard to build. PSR ¶ 95.
Compounding these issues is the loss of important relationships, as Rahul and Shobha have seen
friends and even family members withdraw from their lives as a result of the ordeal. Id. ¶ 85.
II. THE COURT SHOULD IMPOSE ONLY THE MANDATORY SENTENCE OF
TWO YEARS AND TWO DAYS’ IMPRISONMENT
A. Guidelines
The PSR calculates a total offense level of 36 and a criminal history category of I. PSR
¶ 51-77. The government calculates a higher total offense level of 38, but agrees that the
appropriate criminal history category is I. Government’s Version at 20. Both offense-level
calculations are wrong: they dramatically overstate the loss attributable to the offenses of
conviction, and the government (though not the PSR) incorrectly applies the obstruction
enhancement.
1. Loss
The government has the burden of establishing, by a preponderance of the evidence, the
losses that were inflicted as a result of the offense conduct. United States v. Newton, 76 F.4th 662,
672 (7th Cir. 2023). The evidence supporting the loss calculation must have “sufficient indicia of
reliability to support its probable accuracy.” U.S.S.G. § 6A1.3(a) (emphasis added); see Newton,
76 F.4th at 674 (“A defendant is entitled to have sentencing determinations made based on reliable
evidence rather than speculation or unfounded allegations.” (quoting United States v. Nelson, 774
F.3d 1104, 1107 (7th Cir. 2014)). The government cannot rely on “unsupported assumption[s]”
in proving loss. United States v. Moore, 52 F.4th 697, 701 (7th Cir. 2022) (“[A] defendant whose
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liberty is at stake is entitled to hold the government to its burden of proof by a preponderance of
reliable evidence.”). Indeed, Rahul has “a due process right to be sentenced based on reliable
information.” United States v. Barker, 80 F.4th 827, 833 (7th Cir. 2023).
Under Note A to Guideline § 2B1.1(b)(1), “loss” is defined as “the greater of the actual
loss or intended loss.” Here, the Government does not argue, or provide any evidence supporting
the contention, that any loss was intended. Accordingly, under the Guidelines, the actual loss, if
any, governs. Note C(i) to Guideline § 2B1.1(b)(1) defines “actual loss” as “the reasonably
foreseeable pecuniary harm that resulted from the offense.” And “[r]easonably foreseeable
pecuniary harm,” in turn, is defined as “pecuniary harm that the defendant knew or, under the
circumstances, reasonably should have known, was a potential result of the offense.” Guideline
§ 2B1.1(b)(1), Note (C)(iv). The Court’s determination of “whether loss was reasonably
foreseeable” requires “two separate [causation] analyses: but for causation and proximate
causation.” United States v. Burns, 843 F.3d 679, 688 (7th Cir. 2016). The Government may not
rely on losses attributable to “superseding causes.” Id. at 689.
In the case of a secured loan, loss shall be reduced by “the amount the victim has recovered
at the time of sentencing from disposition of the collateral, or if the collateral has not been disposed
of by that time, the fair market value of the collateral at the time of sentencing.” § 2B1.1 App.
Note 3(E)(i)–(ii).
The 22-level enhancement to the offense level proposed by the government because “the
total loss amount for purposes of § 2B1.1(b)(1) should be approximately $46,337,117.05,”
Supplemental Government’s Version at 2, is unsupported by the evidence, and it would be
inappropriate under the Guidelines to apply such an enhancement.3
3
Defendant also notes the broad agreement that the Guidelines’ loss table is unduly harsh, so much
so that in a recent Federal Register notice, the United States Sentencing Commission announced
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To calculate the “actual loss,” the government and the PSR simply add up the amounts
Katalyst owes to Bank of Baroda, State Bank of India, and Yes Bank (there are no funds owed to
Bank of India or PNC Bank). This approach is inadequate to prove actual loss for several reasons.
First, even assuming that Rahul made knowingly false statements to the banks, this fact
alone is insufficient to prove that the false statements caused the banks’ loss. See United States v.
Rothwell, 387 F.3d 579, 584 (6th Cir. 2004) (where the Government provided no “explanation of
why or how Rothwell’s fraudulent conduct during the construction of the building made it more
likely that Rothwell would later default on the loan,” loan losses could not be attributed defendant);
United States v. Isaacson, 752 F.3d 1291, 1305–07 (11th Cir. 2014) (finding “far too much
speculation is necessary to attribute that investment loss to the conspiracy to defraud the auditors”
and remanding for resentencing); United States v. Lonich, 23 F.4th 881, 918 (9th Cir. 2022)
(vacating and remanding for resentencing where the loss amount was premised on defendants
having caused the bank to fail, but the government failed to prove causation). Here, the
government has not proven, and does not know, what Katalyst’s true accounts receivable and
revenue figures were, as it never obtained Katalyst’s internal books and records. (Rahul is no
longer an employee of Katalyst and likewise lacks those records, having in his possession only a
fraction of his own Katalyst email account and little else from the Company.) Borrowers default
on loans for all sorts of reasons, and it is far from clear that the reason Katalyst defaulted had
anything to do with any possible inflated accounts receivable and revenue figures provided to the
banks. See Rothwell, 387 F.3d at 584 (“There are myriad explanations for the default—an unsound
that one of its “policy priorities for the upcoming amendment cycle” is to reexamine whether “the
guidelines appropriately reflect the culpability of the individual and the harm to the victim,
including (A) reassessing the role of actual loss, intended loss, and gain [and] (B) considering
whether the loss table in §2B1.1 should be revised to simplify application or to adjust for inflation.”
Final Priorities for Amendment Cycle, 90 Fed. Reg. 24710 (Aug. 6, 2025).
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business risk, a poor economy, excess warehouse or office space in the local market, or
developments in unrelated transactions affecting Rothwell’s ability to repay the SBA loan—all of
which are more likely causes than the fraud-induced progress payment.”).
Second, while the government bears the burden of proof as to loss, only the defense that
has proffered evidence directly showing why the banks were not repaid by KTI: the intervening
and unforeseeable actions taken by Sudhir Valia. In calculating the loss amount, the defendant
may not be held responsible for losses caused by others unless those losses were reasonably
foreseeable and within the scope of the criminal activity that the defendant “agreed to jointly
undertake.” USSG § 1B1.3, comment. (n.3(B), (D)). And as discussed above, losses attributable
to a “superseding cause that breaks the causal chain” are not part of the loss amount. United States
v. Burns, 843 F.3d 679, 689 (7th Cir. 2016). Thus, United States v. Burns, the Seventh Circuit
found reversible plain error because a Ponzi scheme about which the defendant did not know,
rather than the defendant’s own conduct, may have been responsible for the loss. Id. See also
United States v. Lloyd, 807 F.3d 1128, 1142, 1145 (9th Cir. 2015) (reversing District Court
attribution of fraud losses from a California telemarketing “boiler room” where defendant
managed only a separate, Florida boiler room, because defendant did not design the overall
scheme, did not pool resources, and was compensated from commissions from only his operation).
Even in the context of a conspiracy, “a district court may not automatically hold an individual
defendant responsible for losses attributable to the entire conspiracy, but rather must identify the
loss that fell within the scope of the defendant’s agreement with his co-conspirators and was
reasonably foreseeable to the defendant.” United States v. Treadwell, 593 F.3d 990, 1002 (9th Cir.
2010), overruled on other grounds by United States v. Miller, 953 F.3d 1095 (9th Cir. 2020).
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Here, there was no allegation or finding of a conspiracy between Valia and Rahul, and
Valia’s actions were neither foreseeable at the time the loans were entered into nor something
Rahul “agreed to jointly undertake.” Instead, Valia’s actions—including, as set forth in greater
detail above, his takeover of the Katalyst board, refusal to ratify any of the measures proposed by
Shah to allow for repayment of KTI’s debts, ejection of Rahul from the Company, and withdrawal
of Katalyst from the United States—resulted in Rahul losing control over the Company and
preventing Rahul from ensuring that Katalyst lived up to its obligation to repay the banks.
Because the government has provided no evidence as to causation, while the defense has,
the government’s unsupported conclusion that the misrepresentations to the banks caused the
banks’ losses should be disregarded. See United States v. Moore, 52 F.4th 697 701 (7th Cir. 2022)
(“Because [defendant] provided ‘some evidence’ . . . and because the government submitted no
evidence in response, the district court erred when it accepted the government’s unsupported
assertions and effectively shifted the burden of persuasion to [defendant].”).
Where the loss caused by the defendant is not reasonably determinable, the increase in the
offense level under Guidelines § 2B1.1 is determined by reference to the gain that resulted from
the offense. As discussed below, there is no gain. See Section II.B.1.a, infra.
2. Additional Specific Offense Characteristics
a. The Sophisticated Means Enhancement Does Not Apply to the
“PPP Scheme” (Counts 12-17)
The sophisticated means enhancement applies to “especially complex or especially
intricate offense conduct pertaining to the execution or concealment of an offense.” § 2B1.1 App.
Note 9(B). To qualify, the offense must have been more complex than a “garden-variety . . .
fraud.” United States v. Higdon, 531 F.3d 561, 564 (7th Cir. 2008). Examples of sophisticated
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means are “hiding assets or transactions, or both, through the use of fictitious entities, corporate
shells, or offshore financial accounts.” § 2B1.1 App. Note 9(B).
To the extent that the Court disagrees with the government’s grouping analysis, the defense
notes that the PPP loan-related counts (counts 12-17), which the Government’s Version groups
together as the “PPP scheme,” are premised on the submission of false documents. Because this
scheme was carried out in a “garden variety” manner, the sophisticated means enhancement should
not be applied to the relevant counts. See, e.g., United States v. Simon, No. 3:10-CR-
00056(01)RM, 2011 WL 924264, at *7, 12 (N.D. Ind. Mar. 14, 2011) (applying sophisticated
means enhancement to tax counts, for which defendant used “multiple entities to hide and disguise
income,” but rejecting enhancement for wire fraud counts, for which defendant simply used false
tax forms to obtain financial aid). The PSR agrees with this conclusion. See PSR ¶ 61.
b. Rahul Did Not Commit Obstruction
The PSR correctly concludes that no enhancement for obstruction of justice is warranted
here. Under Guideline § 3C1.1, the offense level is increased by 2 levels if the defendant “willfully
obstructed or impeded, or attempted to obstruct of impede, the administration of justice with
respect to the . . . prosecution . . . of the instant offense or conviction.” Guideline § 3C1.1. As the
Commentary to that provision notes:
This provision is not intended to punish a defendant for the exercise of a
constitutional right. A defendant’s denial of guilt (other than a denial of guilt under
oath that constitutes perjury), refusal to admit guilt or provide information to a
probation officer, or refusal to enter a plea of guilty is not a basis for application of
this provision. In applying this provision in respect to alleged false testimony or
statements by the defendant, the court should be cognizant that inaccurate
testimony or statements sometimes may result from confusion, mistake, or faulty
memory and, thus, not all inaccurate testimony or statements necessarily reflect a
willful attempt to obstruct justice.
Guideline § 3C1.1 App. Note 2. The only false testimony identified in the Government’s Version
concerns Rahul’s knowledge; the government infers from the fact that “the jury found . . . that he
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acted knowingly and with intent to defraud” that Rahul committed perjury in denying that he knew
that the submitted information was false. Government’s Version at 18-19. Yet the jury made no
specific findings as to which statements Rahul knew to be false, and the government points to no
direct evidence contradicting Rahul’s statements. Rahul’s statements amounted to a mere denial
of guilt, not “a willful attempt to obstruct justice,” which is what the Guidelines require. See also
PSR ¶ 67 (“The defendant is entitled to exercise his right to a trial and, in doing so, to deny his
guilt.”).
B. Section 3553(a) Factors
In determining an appropriate sentence, the Court must comply with 18 U.S.C. § 3553(a),
which requires that the court “impose a sentence sufficient, but not greater than necessary” to
achieve the purposes of sentencing. In applying the § 3553(a) factors, the Court enjoys broad
discretion “to fashion an appropriate, individualized sentence” that “fit[s] the offender and not
merely the crime.” United States v. Warner, 792 F.3d 847, 855 (7th Cir. 2015) (quoting Pepper v.
United States, 562 U.S. 476, 487-88 (2011)). A Guidelines sentence is not presumptively
reasonable, nor is a below-guideline sentence presumptively unreasonable. United States v. Hill,
645 F.3d 900, 905 (7th Cir. 2011); see also United States v. Jordan, 435 F.3d 693, 698 (7th Cir.
2006). Indeed, as the Supreme Court has made clear, no “extraordinary circumstances” are
required to support a variance from the advisory Guidelines range, or even to justify a sentence of
probation. Gall v. United States, 552 U.S. 38, 47 (2007). The sentencing court’s guiding principle
mut be to “make an individualized assessment based on the facts presented.” Id. at 50; see also
United States v. Young, 590 F.3d 467, 474 (7th Cir. 2010). It is the sentencing court’s decision
what weight to place on any one of the factors identified in 18 U.S.C. § 3553. See Gall, 552 U.S.
at 47; United States v. Johnson, 471 F.3d 764, 766 (7th Cir. 2006) (“The statute does not weight
the factors. That is left to the sentencing judge, within the bounds of reason, which are wide”).
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Here, the § 3553(a) factors strongly support a below-Guidelines sentence of two years and
two days of imprisonment, which is the statutory mandatory minimum.4
1. The Nature and Circumstances of the Offense Support a Below-
Guidelines Sentence
In determining an appropriate sentence, the Court must consider the “nature and
circumstances of the offense” as they pertain to Rahul. 18 U.S.C. § 3553(a)(1).
a. Indian Bank Loans
It is the government’s position that Rahul should be sentenced as if he is the only person
responsible for the false statements made to the banks and the only person who benefitted from
the loans made to Katalyst. Neither proposition is true, and the government’s position, and the
concurring Guidelines calculation, dramatically overstate Rahul’s culpability here. As a result,
this factor weighs heavily in favor of a lesser sentence than argued by the government or suggested
by the Guidelines.
The government treats Rahul as if he was solely responsible for the initiation of the bank
loans, the creation and presentation of false documents to the banks, and the decision not to repay
those loans. This unfairly ignores the central role that Valia and others in the Katalyst organization
played.
4
Each count of aggravated identity theft (Count Sixteen and Seventeen) carries a two-year
mandatory minimum sentence which must be consecutive to any other sentence imposed, but
which may run concurrently with each other. 18 U.S.C. § 1028A(b)(2) and (4). Count Six, which
included the violation for committing an offense while on release (18 U.S.C. § 3147), also requires
the imposition of a consecutive term of imprisonment to follow the underlying bank fraud count.
The Court should impose a term of imprisonment of one day on each of the underlying fraud or
money laundering counts (Counts Twelve and Thirteen), to be served concurrently, with a
consecutive sentence of one day of imprisonment for the violation of 18 U.S.C. § 3147 under
Count Six, and then a consecutive sentence of two years’ imprisonment on Counts Sixteen and
Seventeen, which should be served concurrently with each other.
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As an initial matter, the loans were arranged by Valia, the billionaire who had the
relationships with the banks in India, not Rahul. The banks made the loans to Katalyst because of
their interest in working with Valia’s companies, not because they had any relationship with Rahul.
Valia controlled the bank relationships; as Rahul explained at trial, Valia’s group insisted that
“[t]hey would like to manage the financing because they had an incredible Rolodex of bankers and
investment bankers and they didn't want me to worry about that piece of it, how to finance
the company. They wanted me to focus on growing the business.” 6/20 Tr. 74:1-8. Ultimately, in
terms of securing the bank loans themselves, “All the banking relationships, all the interactions
were done by Mr. Valia.” 6/24 Tr. 93:18-94:7. Moreover, Katalyst’s finance department was, at
the relevant times, based on India, and Valia installed his own people into various finance and
accounting positions. 6/20 Tr. 75:7-21.
Rahul was involved in the loans only because the banks in India decided that due to Indian
banking regulations, they needed to make the loans from their American subsidiaries rather than
from India-based banks. As a result, the banks insisted that an American citizen signed the loans
at issue—which meant that it was Rahul, rather than Valia, who had to sign and guarantee the
loans, while Valia merely had to sign a “letter of comfort” with the banks. But it was Valia’s
relationships that led to each bank loan.
Further, as described above, Rahul was not the person who created the false records
submitted to the banks. At trial, the defense presented substantial evidence showing that others at
Katalyst were responsible for preparing submissions to KTI’s lenders. For example, the defense
introduced numerous emails attaching borrowing base statements and other financial data that
were sent not by Rahul, but rather by the Katalyst Finance Department. See, e.g., DX-162
(February 19, 2020 email from Katalyst Finance Department to State Bank of India regarding
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Borrowing Base Statement as of January 2020); DX-328 (January 26, 2017 email from Katalyst
Finance Department to Bank of Baroda attaching drawing power calculations); DX-328A
(accounts receivable and drawing power calculation attachment, with metadata showing that the
document was created and last modified by Manjari Gupta). In contrast, the government presented
no witness, nor any documents or metadata, that suggested that Rahul created anything related to
the borrowing base submissions. Which makes sense: Katalyst’s organization charts showed
workers based in India (led by an Indian-based CFO) did the bulk of the financial work for Katalyst
(led by an Indian CEO). The testimony from both government and defense witnesses was
consistent: Rahul focused on sales and management. No one suggested that he was in charge of
finances at Katalyst.
Instead, deposition testimony from Mitesh Shetty, a former Katalyst India employee,
(which the jury did not hear) showed that the falsified bank statements were prepared by the
company’s Indian CFO, Chandrashekar Venkatraman. Further, Mr. Shetty had no reason to
believe that Rahul had any involvement in the process of creating the bank statements, or even had
reason to know that false bank statements were created:
On many occasions over the years, Mr. Shetty saw Mr. Venkatraman modifying
PDF bank account statements, including statements for an account at JPMorgan
Chase bank belonging to Katalyst Technologies. . . . Mr. Shetty . . . has never seen
or heard anything suggesting that Rahul was involved with or even aware of the
process of modifying bank statements.
See ECF No. 267 at 2.
Finally, the government’s position overstates Rahul’s culpability because it treats him as if
he personally received or benefitted from the entirety of the loans that were provided to Katalyst.
This was demonstrably not true; Rahul poured significant funds from his personal savings into the
company, while the loan money was overwhelmingly used to run and grow Katalyst and remains
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locked into the equity that Katalyst still has. But Katalyst is now controlled by Valia, who has
decided that he will not pay.
The Government’s Version takes issue with the use of loan funds obtained from Bank of
India, noting that $1 million sent by Bank of India was used to fund the purchase of real property
by the Shah family in September 2015. Government’s Version at 5. But Rahul did not
misappropriate loan funds to buy himself a house. Instead, Katalyst used loan proceeds to repay
working capital loans Rahul had earlier made to Katalyst, which was a permissible use of the funds.
In just the seven-month period before the real-property acquisition, the Shah family had loaned
Katalyst approximately $1,362,240—significantly more than the million the government focuses
on. DX-521. Moreover, only $824,750 of the funds from the Bank of India line of credit draw
were sent along for use in the real property purchase transaction. And apart from that $824,750
from Bank of India, the government has shown only two other transactions in which bank-loan
funds were transferred to Rahul, totaling $305,000. See GX-910 (Flow of Funds – September 11,
2019 State Bank of India Draw); GX-917 (Flow of Funds – July 2, 2018 State Bank of India Draw).
Thus, even disregarding, counterfactually, the Shah family’s loans to Katalyst, the government has
shown, as most, a gain derived from loan funds of $1,129,750.5 And taking into account loan
funds furnished by the Shahs to Katalyst, Rahul’s net gain from loan funds is zero. See DX-521.6
The government’s suggestion that Rahul caused Katalyst to borrow almost $62 million so
he could line his own pockets, but then derived zero net gain from the bank loans, makes no sense.
It also is not an accurate reflection of what really happened. Rather, Rahul was a bit player in
5
That gain would result in a 14-level enhancement under § 2B1.1(b)(1)(H), rather than the 22-
level enhancement applied by the PSR. PSR ¶ 59.
6
Similarly, Rahul earned a total of $0 from the PPP loan applications at issue.
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Valia’s larger scheme to use Rahul’s U.S. company to extract millions of dollars from Indian bank
branches in the United States, remit the funds to India, deprive Rahul of control over the funds,
and deny the banks the interest and principal payments they were owed—leaving Rahul to hold
the bag. Indeed, we have been able to identify over $9 million in transfers from KTI to KSSL in
the government’s authentic-bank-statement compilation exhibit. See GX-400B; Ex. N (list of
payments from KTI to KSSL from 2015-2020). Thus, while some of the bank funds remained in
the United States to support KTI operations, a large portion was funneled by Valia directly to
KSSL, and are now out of Rahul’s reach.
b. PPP Loan Application
The sky-high guidelines range the government supports also dramatically overstates any
culpability that Rahul has in relation to the PPP loan counts. At root, there was no loss for the PPP
loan, nor was there ever any real chance there would be. The two-year-and-two-day mandatory
minimum sentence that is required more than punishes Rahul for this aspect of the crime.
Again, the government did not present any witnesses or documents that showed that Rahul
directed that false documents be created, or participated in creating the false submissions himself.
Instead, the only evidence from any witnesses about the creation of the PPP loan documents,
including not just Rahul but also through the deposition testimony of Jibi John, Katalyst’s head of
operations in India, was that Rahul simply asked for the necessary documents to be prepared, not
that false documents be created. John Dep. 8:40:18–8:51:43. As John explained, the false N2N
tax forms were provided by an N2N payroll analyst in India, Niranjan Challa, whom Rahul did not
ask to provide false information.
What is also undisputed is that Katalyst and Codesoft sought and received PPP loans for
significantly more money at the same time as the N2N application, and that those applications
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were both appropriate and prepared by other Katalyst personnel. The same was true of the N2N
application, which Rahul lacked the necessary skills to create himself.
The government’s assertion that Rahul “knew that N2N’s total yearly employee
compensation in 2019 was only $48,870.17” is baseless. The government merely asserts this, and
provide no citation or any other evidence that Rahul knew what N2N’s total yearly employee
compensation was in 2019, or any other year. The government’s assertion is also belied by the
fact that contemporaneous employee timesheets showed 3,894.25 employee hours billed to N2N
in 2019—a number that did not account for time spent on N2N business by Ray Bellan, a senior,
highly compensated employee who testified that he was running N2N at the time, or by Rahul and
Shobha Shah. See DX-522. Assuming conservatively that the average N2N employee’s labor was
worth $25/hour, the 3,894.25 employee hours logged in the timesheets would result in $97,356
worth of annual labor—over double what Rahul supposedly “knew” was the true payroll amount.
And again, this excludes time spent on N2N work by Bellan and the Shahs. Moreover, given that
Katalyst and N2N shared employees, Rahul was not aware of the precise allocation of employee
time, or employee compensation expenses, between the two companies. It is entirely reasonable
that Rahul would have believed in good faith that N2N’s monthly payroll was consistent with the
data provided to him by Challa, the N2N payroll analyst in India.
There were errors in what was submitted in N2N’s loan application, but they were not
errors created by or directed by Rahul. In any event, PNC Bank never approved the PPP loan, and
no funds were disbursed to N2N or Rahul as a result of any of the PPP loan applications.
2. Rahul’s Extraordinary Personal History and Characteristics Support
a Below-Guidelines Sentence
The Court is also required to consider the “the history and characteristics of the defendant.”
§ 3553(a)(1). These weigh heavily in favor of a far-below-Guidelines sentence. Business,
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financial, and legal troubles have devastated Rahul and his family over the past several years, but
as letters submitted to the Court from Rahul’s family, friends, and former colleagues demonstrate,
Rahul is compassionate, kind, and generous with both time and money. This is evident from the
letters submitted to the Court detailing how Rahul has taken care of his extended family, including
by dropping out of college to return home to Pune to care for his ailing father and save the family
business, and by welcoming his sister-in-law, Asha, and her daughter, Neha, into his home with
open arms in their time of intense need, treating Neha like a daughter. It’s evident in the letters
from former Katalyst employees, who described Rahul as a compassionate boss who “always
prioritized the well-being . . . of his team members.” Ex. G (Letter of Prajakta Gandhi). And it’s
evident from Rahul’s track record of support for the communities in which he has lived—from
mentoring Northwestern students to steadfastly supporting various educational, artistic, and
religious causes.
3. Rahul Suffers a Panoply of Medical Issues that BOP Will Not Be Able
to Adequately Manage
The Court should also consider Rahul’s age and serious medical issues to a sentence
well below the Guidelines. See United States v. Powell, 576 F.3d 482, 499 (7th Cir., 2009)
(remanding because district court failed to “consider Powell’s arguments about his advanced
age and infirm health in light of the factors outlined in 18 U.S.C. § 3553(a)”).
As discussed above, Rahul battles daily with numerous physical and mental health
afflictions, including diabetes, asthma, high cholesterol, acid reflux, Benign Prostatic
Hyperplasia, cardiovascular issues, and anxiety and panic attacks, requiring regular and
consistent treatment through a veritable alphabet soup of medications, including a continuous
glucose monitor, insulin, metformin, Ozempic, Lipitor, Flomax, Rabeprazole, an albuterol
inhaler, and Advair.
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It is doubtful that the Bureau of Prisons will be able to provide Rahul with medical care
adequate to manage his many health conditions. Reporting indicates that providing medical
care for inmates is not a priority of the current administration. See Walter Pavlo, Sweeping
Changes for the Bureau of Prisons Under the Trump Administration, Prisonology (Jan. 23,
2025), https://www.prisonology.com/blog/sweeping-changes-for-the-bureau-of-prisons-
under-the-trump-administration (“[m]edical professionals, essential to the BOP’s ability to
address the needs of an aging and often ill inmate population, were notably absent from” the
list of exemptions from a government-wide hiring freeze). And even in the best of times, the
Bureau of Prison’s (BOP) chronically fails to provide adequate medical care to inmates; indeed,
“BOP’s medical care system is known for its failure to provide timely and sufficient medical
care for serious conditions.” See Nicole B. Godfrey, Decades of Indifference and Failures in
Accountability in the Provision of Medical Care in Federal Prisons, 25 Nev. L.J. 755, 759
(2025). The reasons for this are myriad:
[C]hronic staffing shortages delay the provision of care to incarcerated people
suffering from serious illnesses; a refusal to engage in robust and critical mortality
reviews for each in-custody death inhibits the BOP’s ability to make critical
procedural and structural changes in the provision of care; the aging of the federal
prison population increases the number of people incarcerated in federal prisons
who are in need of critical care; a failure to utilize the mechanisms of compassionate
release ensures that the burdens of care remain on the BOP; and an overall lack of
accountability and oversight of the federal prison system in its entirety allows these
failures to continue unchecked for decades.
Id. at 760-61. In short, the BOP is unlikely to provide Rahul with adequate medical care, and
given his serious medical conditions, a failure to consistently provide adequate medical care
could place his life in jeopardy.
4. Deterrence Goals Are Still Met by a Below-Guidelines Sentence
There is no question that Rahul will be punished severely here. Not only is he going to
be sentenced to at least two years and two days’ imprisonment, but the company to which he has
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devoted his working life has been taken from him, and he faces financial ruin and serious health
challenges. Thanks to Valia’s actions, Rahul has lost all control over Katalyst—and will hand
over his entire interest in the company to the banks to compensate them. And, as detailed above,
over the past several years, Rahul has lost friends and familial relationships, suffered serious
health setbacks, and struggled with anxiety and panic attacks. In short, he is devastated in every
aspect of his life. The negative business, financial, personal, emotional, health, and familial
consequences suffered by Rahul will deter him and similarly situated individuals from engaging
in illegal conduct in the future. Nothing more is needed to serve the purposes of specific and
general deterrence.
Further, the harsh penalties sought by the government will not advance any goals of
deterrence. Academic literature has found that “increases in severity of punishments do not yield
significant (if any) marginal deterrent effects.” Michael Tonry, Purposes and Functions of
Sentencing, 34 Crime & Just. 1, 28 (2006) (emphasis added). “Three National Academy of
Science panels . . . reached that conclusion, as has every major survey of the evidence.” Id.; see
also Zvi D. Gabbay, Exploring the Limits of the Restorative Justice Paradigm: Restorative
Justice and White Collar Crime, 8 Cardozo J. Conflict Resol. 421, 447-48 (2007) (“[C]ertainty
of punishment is empirically known to be a far better deterrent than its severity.”); Andrew von
Hirsch et al., Criminal Deterrence and Sentence Severity: An Analysis of Recent Research 1-2
(1999), summary available at http://members.lycos.co.uk/lawnet/SENTENCE.PDF
(“[C]orrelations between sentence severity and crime rates . . . were not sufficient to achieve
statistical significance . . . the studies reviewed do not provide a basis for inferring that increasing
the severity of sentences is capable of enhancing deterrent effects.” ).
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This finding holds true specifically with respect to white collar offenders as well. See
David Weisburd et al., Specific Deterrence in a Sample of Offenders Convicted of White Collar
Crimes, 33 Criminology 587 (1995); see also Gabbay, supra, at 448-49 (“[T]here is no decisive
evidence to support the conclusion that harsh sentences actually have a general and specific
deterrent effect on potential white-collar offenders.”).
The case law, too, makes clear that the Court should consider the statistically low risk of
recidivism presented by Rahul’s history and characteristics in determining what constitutes a
“sufficient, but not greater than necessary,” sentence. As a 56-year-old first-time offender who
is now a convicted felon, Rahul is unlikely to recidivate. See, e.g., United States v. Urbina, 2009
WL 565485, at *3 (E.D. Wis. Mar. 5, 2009) (considering low risk of recidivism indicated by
defendant’s lack of criminal record, positive work history, and strong family ties); Simon v.
United States, 361 F. Supp. 2d 35, 48 (E.D.N.Y. 2005) (basing variance in part on defendant’s
age of 50 upon release because recidivism drops substantially with age); United States v. Nellum,
2005 WL 300073, at *3 (N.D. Ind. Feb. 3, 2005) (granting variance to 57-year-old defendant
because recidivism drops with age); United States v. Ward, 814 F. Supp. 23, 24 (E.D. Va. 1993)
(granting departure based on defendant’s age as first-time offender since guidelines do not
“account for the length of time a particular defendant refrains from criminal conduct” before
committing his first offense); United States v. Darway, 255 Fed. App’x 68, 73 (6th Cir. 2007)
(upholding downward variance on basis of defendant’s first-offender status); United States v.
Hamilton, 323 Fed. App’x 27, 31 (2d Cir. 2009) (“[T]he district court abused its discretion in not
taking into account policy considerations with regard to age recidivism not included in the
Guidelines”); United States v. Cabrera, 567 F.Supp.2d 271, 279 (D. Mass. 2008) (granting
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variance because defendants “with zero criminal history points are less likely to recidivate than
all other offenders”).
Here, a sentence of incarceration beyond the mandatory two-year minimum is not
necessary to send Rahul, or individuals like Rahul, a message to dissuade them from participating
in the same kind of conduct. Put differently, the two-year mandatory sentence of imprisonment
here meets the test of being sufficient, but not greater than necessary, such that no further
punishment is just.
III. FINE AMOUNT CAPPED BY APPRENDI
The PSR recommended correctly that no fine is appropriate here. PSR Rec at 1. In the
event the Court disagrees, the maximum fine is limited to the provisions set forth in 18 U.S.C. §
3571(b)(1) and (3), which point the Court to either the specific fine amount set forth in the crime
of conviction or the statutory default amount of $250,000 for an individual.
Under those provisions, the maximum statutory fine for Rahul is $1,000,000 per count for
Counts One through Eight and Twelve through Fifteen, and $250,000 per count for Counts Nine,
Ten, Sixteen and Seventeen. But neither the Alternative Fine Act (18 U.S.C. § 3571(d))7 nor the
alternate fine provision in 18 U.S.C. § 1957(b)(2)8 can apply here (notwithstanding the PSR’s
conclusion to the contrary on the latter provision (PSR at ¶125)) because Rahul was not charged
7
18 U.S.C. § 3571(d), titled “Alternative Fine Based on Gain or Loss,” states “[i]f any person
derives pecuniary gain from the offense, or if the offense results in pecuniary loss to a person other
than the defendant, the defendant may be fined not more than the greater of twice the gross gain
or twice the gross loss, unless imposition of a fine under this subsection would unduly complicate
or prolong the sentencing process.”
8
18 U.S.C. § 1957(b)(2) states “[t]he court may impose an alternate fine to that imposable under
paragraph (1) of not more than twice the amount of the criminally derived property involved in the
transaction.”
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in the Second Superseding Indictment, nor has a jury found the facts that would be necessary to
determine a punishment under either provision.
The Fifth and Sixth Amendments to the U.S. Constitution require that “any fact (other than
prior conviction) that increases the maximum penalty for a crime must be charged in an indictment,
submitted to a jury, and proven beyond a reasonable doubt [or admitted by the defendant].”
Apprendi v. New Jersey, 530 U.S. 466, 476 (2000). The principles set forth in Apprendi apply
equally in the context of criminal fines. See Southern Union Co. v. United States, 567 U.S. 343,
360 (2012) (holding that Apprendi applies to fines).
Those principles guard “against[] judicial factfinding that enlarges the maximum
punishment a defendant faces beyond what the jury’s verdict or the defendant’s admissions allow.”
Id. at 352. Accordingly, courts cannot impose fines that require judicial fact-finding to increase
the statutory maximum. For example, where a corporation violated a statute imposing a maximum
fine of $50,000 for each day of violation, a fine of more than $50,000 could not be imposed without
a jury finding regarding “the number of days the company violated the statute.” Southern Union,
567 U.S. at 359.9 Similarly, where a corporation violated a statute imposing a maximum fine of
$500,000 or two times the gross loss from the offense, the judge could not impose a fine of more
than $500,000 without “a jury finding [as to] loss amount.” United States v. LaGrou Distribution
Sys., 466 F.3d 585, 594 (7th Cir. 2006).
Here, the Second Superseding Indictment does not allege, nor did the jury find, that anyone
derived a “pecuniary gain” or anyone suffered a “pecuniary loss,” nor what twice any resulting
9
Before Southern Union, the Seventh Circuit had determined the opposite: that Apprendi did not
apply to a statute permitting fines of $50,000 per day because that statute “does not have a
prescribed statutory maximum penalty.” United States v. Chemetco, Inc., 274 F.3d 1154, 1160-61
(7th Cir. 2001). That result is irreconcilable with Southern Union and is no longer good law.
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gross gain or gross loss might be for purposes of the Alternative Fine Act. Similarly, there is no
allegation or jury finding as to what “twice the amount of the criminally derived property involved
in the transaction” is for purposes of 18 U.S.C. § 1257(b)(2). In the absence of any such charges
or findings, there cannot be judicial fact-finding on those points, and Rahul cannot receive a fine
in excess of the maximum fines set under the respective criminal provisions or the statutory default
provision in 18 U.S.C. § 3571(b)(3).
IV. RESTITUTION
A. The Court Should Not Find Impose Restitution for Losses Rahul Did Not
Cause
The applicable restitution statute requires that the Court order the defendant to make
restitution to the victim of the offense, in an amount equal to the value of the property the victim
lost. 18 U.S.C. § 3663A. But as discussed extensively above, Rahul did not cause the banks’
losses in this case; Valia did. It was Valia, not Rahul, who siphoned Katalyst’s U.S. assets to India
then removed Rahul’s ability to control those assets or the Indian assets of KSSL. Rahul cannot
be made to pay restitution for a loss he did not cause. See 18 U.S.C. § 3663A(a)(2) (defining
“victim” as a person “directly and proximately harmed as a result of the commission of an offense
for which restitution may be ordered”); United States v. Betts, 99 F.4th 1048, 1061 (7th Cir. 2024)
(“To determine whether a victim's actual losses are “directly and proximately” caused by the
offense of conviction as set forth in 18 U.S.C. § 3663A(a)(2), courts look at both cause-in-fact
(but-for causation) and proximate cause.”).
Notwithstanding this, in the interest of helping to make the banks whole for the loans to
KTI, Rahul is willing to hand over to the banks his entire shareholding in KSSL. Based on the
limited information available to him, Rahul believes KSSL is worth as much as $100 million today,
and his stake is approximately 33% (Naman, Asha, and Neha each own 3%, bringing his family’s
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total shareholdings up to 42%). Attached as Exhibit O is an annual report for KSSL (which Rahul
has had no managerial control over since his January 2022 resignation) for the year ending March
2025. The report details KSSL’s finances for the most recent full fiscal year. KSSL and its
subsidiaries lost a significant amount of business after retreating from the United States and as
former employees have taken clients with them, but the report indicates that KSSL nonetheless
earned a profit of approximately $1.2 million in the year ending March 2025, even after paying
over $1.2 million in high-cost interest. Ex. O at 25, 85.10 Based on the sector’s PE multiple of
55.53x, KSSL is worth approximately $67 million.11 Rahul has attempted to use the Indian courts
to prevent Valia from expropriating KSSL’s assets, and in spite of everything (and without Rahul’s
involvement), HDFC Bank Limited recently (September 2023) loaned over $1.5 million to KSSL,
affirming that KSSL holds real value.12 In exchange, Rahul asks merely for an offset of the
restitution owed in the amount of the market value of his KSSL shares.
The Probation Office’s Sentencing Recommendation advises that the Court should require
that a “partial lump sum of $1 million . . . be paid within 60 days of sentencing.” Sentencing Rec.
at 5. Rahul does not have $1 million in liquid assets. As noted below, the PSR triple-counts
Rahul’s N2N Technologies India stock, which is in any event a relatively illiquid asset. The vast
majority of Rahul’s other assets are also illiquid. Rahul will not be able to meet this condition,
10
The applicable exchange rate on March 31, 2025 was approximately 85.10 INR per 1 USD. See
https://mumbaiport.gov.in/show_content.php?lang=1&level=2&ls_id=1342&lid=1067.
11
See https://www.moneycontrol.com/india/stockpricequote/finance-
investments/n2ntechnologies/VM03.
12
Information available from the Indian Ministry of Corporate Affairs,
https://www.mca.gov.in/content/mca/global/en/mca/master-data/MDS.html. The HDFC loan was
previously registered with Katalyst Software Services Limited, but is now registered with Nova
Techset Limited.
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and it should not be imposed on him; rather, Rahul will turn over all of his KSSL shares to make
a down payment on whatever quantum of restitution the Court determines Rahul owes.
B. The Court Should Not Impose Restitution on Amounts Beyond the Principal
The government seeks restitution for interest (both “normal” and “penal”) and other
expenses beyond the principal of the loans that were made to Katalyst. See Gov. Supplemental
Version at 1.13 This is improper. The MVRA does not allow restitution for anything beyond “the
value of the property,” which in this case is the money lent—not the interest that the banks hoped
to earn as profit. Indeed, the MVRA does not permit “lost profits” to be the basis for restitution.
Accordingly, the government’s proposed restitution goes beyond what is permissible under the
MVRA, and should be denied to the extent it seeks anything beyond return of the principal.
The MVRA allows restitution of “the value of the property,” 18 U.S.C. § 3663A, and in
the context of a bank loan, the property “is the money lent.” Robers v. United States, 572 U.S. 639,
641 (2014); see also id. at 643 (“if the ‘property’ that was ‘damage[d],’ ‘los[t],’ or ‘destr[oyed]’
was the money, then ‘the property ... returned’ must also be the money” (alterations in original)).
As a consequence, the interest or other fees that the banks might charge related to the loan, such
as penalty provisions, are not the “property” that the MVRA recognizes. Instead, interest or related
fees are functionally the profit that the banks might receive from loaning the principal.
That distinction is important because “lost profits” are not available for property crimes
under the MVRA. The fraud and money laundering counts here are offences against property—
not bodily injury to a person—which is a critical distinction. The MVRA allows “income lost by”
13
The government seeks a total of $22,015,135.50 in restitution on behalf of State Bank of India
(including “normal” and “penal” interest (Supplemental Government’s Version Ex. L)),
$10,050,785.15 on behalf of Bank of Baroda (including “normal” and “penal” interest
(Supplemental Government’s Version Ex. N)), and $27,730,554.61 on behalf of Yes Bank Limited
(including “interest” and “penal” entries (Supplemental Government’s Version Ex. M)).
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the victim to be awarded only “in the case of an offense resulting in bodily injury to a victim,” but
not “in the case of an offense resulting in damage to or loss or destruction of property.” Compare
18 U.S.C. § 3663A(b)(2) with 18 U.S.C. § 3663A(b)(1). As a result, the “measure of relief
[permitted by the MVRA] is less generous than common law damages, since it does not extend to
consequences beyond the diminution of the value of the property stolen or damaged, consequences
that could easily exceed that diminution.” United States v. Scott, 405 F.3d 615, 618 (7th Cir. 2005)
(citation omitted); accord United States v. McCormack, 152 F.4th 428, 430–31 (3d Cir. 2025)
(“And lost sales . . . are consequential damages not covered by the MVRA. . . . As the government
concedes, the District Court should not have compensated the gun store owners for their lost
income.”)(citation omitted); United States v. Buchanan, Nos. 22¬3301/3697, 2023 WL 5352223,
at *9 (6th Cir. Aug. 21, 2023) (“Because the [MVRA] does not provide for the recovery of lost
income for offenses resulting in property damage, the district court’s restitution order including
lost potential income during the time period the store was closed for repairs was in error.”); United
States v. Mitchell, 876 F.2d 1178, 1183 (5th Cir. 1989) (“Congress is clearly capable of authorizing
restitution for lost income when it chooses to do so. Despite this fact, it has not included lost
income in the type of restitution that may be ordered in property cases and, unless and until it
amends the statute to include lost income, courts may not order such restitution in property cases.”
(citation omitted)); United States v. Sharp, 927 F.2d 170, 174 (4th Cir. 1991); United States v.
Arvanitis, 902 F.2d 489, 497 (7th Cir. 1990).14
14
Mitchell, Sharp, and Arvanitis predate the MVRA and instead construe its predecessor, the
Victim and Witness Protection Act of 1982, but the Seventh Circuit has recognized that “the
VWPA and the MVRA are nearly identical in authorizing an award of restitution” such that “court
decision in interpreting the language of the VWPA are helpful in construing the language of the
MVRA.” Betts, 99 F.4th at 1061 n.4 (quoting United States v. Randle, 324 F.3d 550, 555 n.2, 556
n.3 (7th Cir. 2003)).
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The government cites to one case, United States v. Rutley, 482 Fed. Appx. 175, 178-79 (7th
Cir. 2012), to suggest that awarding restitution for interest on a loan is proper under the MVRA.
Id. at 178-79 (“Restitution is calculated under 18 U.S.C. § 3663A and U.S.S.G. § 5E1.1, and those
provisions do not exclude bargained-for interest [or finance charges] from a restitution award.”).
But Rutley’s approach—allowing restitution because the MVRA purportedly does not “exclude”
interest as a basis for restitution—is foreclosed by the subsequent Supreme Court decision in Lagos
v. United States, 584 U.S. 577 (2018).
As Lagos made clear, the MVRA permits restitution only for the specifically enumerated
losses and expenses contained therein, not for more generalized concepts of potential loss:
Congress has enacted many different restitution statutes with differing
language, governing different circumstances. Some of those statutes
specifically require restitution for the “full amount of the victim’s losses,”
defined to include “any . . . losses suffered by the victim as a proximate
result of the offense.” See 18 U.S.C. §§ 2248(b), 2259(b), 2264(b), 2327(b).
The Mandatory Victims Restitution Act, however, contains no such
language; it specifically lists the kinds of losses and expenses that it
covers.175
Id. at 583-84. As a consequence, it would be error for this Court to simply “interpret [the MVRA]
in a way that favors an award.” Id. at 583. Instead, the Court must determine whether the MVRA
allows a particular loss to be included in a restitution order, which in turn requires consideration
of “the statute’s wording, both its individual words and the text taken as a whole.” Id. at 581.
And again, because the MVRA permits reimbursement of lost income only for offenses
resulting in bodily injury, not property offenses, the MVRA does not allow for recovery of lost profits,
such as loan interest, in this case. See, e.g., Mitchell, 876 F.2d at 1183 (“Congress is clearly capable
of authorizing restitution for lost income when it chooses to do so. Despite this fact, it has not included
lost income in the type of restitution that may be ordered in property cases and, unless and until it
41
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amends the statute to include lost income, courts may not order such restitution in property cases.”
(citation omitted)).
C. The Court Cannot Impose Restitution Pursuant to Apprendi
The government also failed to either charge in the Second Superseding Indictment or to
prove to the jury beyond a reasonable doubt the facts about any victim’s loss that would allow this
Court to impose a restitution judgment against Rahul. This is critical, as the protections of the
Sixth Amendment identified in Apprendi that preclude judicial factfinding that increases any
maximum sentence, penalty, or punishment should apply in the restitution context as well. See
Southern Union, 567 U.S. at 350 (“[W]e have never distinguished one form of punishment from
another.”).
Individual judges have agreed that Apprendi should preclude judges from finding the facts
relating to victim loss in order to impose restitution. See, e.g., Hester v. United States, 586 U.S.
1104, 1105-06 (2019) (Gorsuch, Sotomayor, J.J., dissenting from denial of certiorari) (arguing that
Apprendi applies to restitution); United States v. Leahy, 438 F.3d 328, 339 (3d Cir. 2006) (en banc)
(McKee, et al., J.J., concurring in part and dissenting in part) (same); United States v. Carruth, 418
F.3d 900, 905 (8th Cir. 2005) (Bye, J., dissenting) (same).
To be clear, this is not yet the law in the Seventh Circuit, which has rejected similar
arguments. United States v. Wolfe, 701 F.3d 1206 (7th Cir. 2012); United States v. Printz, 594 F.
App’x 883 (7th Cir. 2015). However, the Supreme Court recently heard oral argument in
Ellingburg v. United States, No. 24-482, regarding whether restitution under the MVRA is penal
for purposes of the Ex Post Facto Clause. The federal government has taken the position in
Ellingburg that restitution is criminal and applying the MVRA retroactively is therefore
unconstitutional. If Ellingburg results in an opinion that restitution is not a civil remedy, that would
implicitly overrule Seventh Circuit precedent like Wolfe holding otherwise.
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Accordingly, while recognizing the current state of the law in the Seventh Circuit, the Court
should not impose restitution here in light of government’s failure to allege in the Second
Superseding Indictment or to obtain a jury finding regarding the facts necessary to determine
restitution here.
V. OBJECTIONS TO PRESENTENCING REPORT AND SENTENCING
RECOMMENDATION
Rahul objects to the PSR’s characterization (on pages 25-26) of his personal finances, as
follows:
The PSR triple-counts Rahul’s N2N Technologies India stock, listing it under “BSE
(stocks)” (BSE is the Bombay Stock Exchange), “N2N Technologies (1.7 million
shares),” and “Business – N2N Technologies India.” In reality, Rahul owns
approximately $646,000 worth of stock in N2N Technologies India, and the PSR’s
error results in a $1.2 million overstatement of Rahul’s total assets and net worth.
The PSR erroneously states that Rahul owes only $15,000 on the
8918 Pottawattami Drive mortgage. That was the amount currently due at the time
of the submission to the Probation Office. As Note E, on page 27 of the PSR,
correctly observes, the full outstanding balance is approximately $130,000. This
error results in a $115,000 understatement of Rahul’s total liabilities and a $115,000
overstatement of Rahul’s net worth.
There are no longer any funds in the Fidelity Cash Management personal checking
account.
Accordingly, the PSR overstates Rahul’s net worth by at least approximately
$1,338,000.
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Moreover, without the PSR appears to add an additional approximately $1.5 million
to Rahul’s net worth without explanation; the Total Net Worth line on page 26 is
not equal to Total Assets minus Total Liabilities.
The PSR misspells Rahul’s father’s name. PSR ¶ 82. Rahul’s father was Dilip, not Dilib.
For the reasons stated in Section II.A.1 above, Rahul objects to the conclusion in the
Sentencing Recommendation that the loss amount was $59,796,475.26. Sentencing
Recommendation at 2.
Similarly, for the reasons stated in Sections II.A.1 and IV above, Rahul objects to the
Sentencing Recommendation’s statement that the amount of restitution owed is $59,796,475.26,
and to the recommendation that he be ordered to make a partial lump sum payment of $1 million
within 60 days of sentencing.
Rahul objects, for the reasons explained above in Section I.E, to the statement that “the
nature of the defendant’s health issues is not such that the Bureau of Prisons cannot provide
adequate care for Mr. Shah.” Sentencing Recommendation at 3.
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CONCLUSION
Rahul is a compassionate and generous person, who grew Katalyst from nothing, and
personally received very little, if any, of the bank loan funds at issue in this case. For these reasons,
and all the others set forth above, we respectfully urge the Court to impose a sentence of two years
and two days’ imprisonment.
Respectfully submitted,
/s/ Christopher S. Niewoehner
Christopher S. Niewoehner
STEPTOE LLP
227 West Monroe Street, Ste. 4700
Chicago, IL 60606
Telephone: (312) 577-1300
cniewoehner@steptoe.com
Drew C. Harris (pro hac vice)
1114 Avenue of the Americas
New York, NY 10036
Telephone: (212) 506-3900
dcharris@steptoe.com
Caroline A. Covington (pro hac vice)
1330 Connecticut Avenue NW
Washington, DC 20036
Telephone: (202) 429-6269
ccovington@steptoe.com
CERTIFICATE OF SERVICE
I, Christopher S. Niewoehner, an attorney, hereby certify that on December 15, 2025, I
caused a true and correct copy of the foregoing submission to be served via the Court’s ECF system
upon all counsel of record.
/s/ Christopher S. Niewoehner
Christopher S. Niewoehner
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