Court filing
Information — United States v. Shibley (Dkt. 164, W.D. Wash. No. 2:20-cr-00174)
Filed April 12, 2022 in Shibley; one of 140 filings from this case.
Record facts
| Court | U.S. District Court for the Western District of Washington |
|---|---|
| Filed | 2022-04-12 |
U.S. District Court for the Western District of Washington · No. 2:20-cr-00174-JCC · Doc. 164 · 2022-04-12 · Docket on CourtListener
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Sheri L. Schelbert, RMR, CRR - Federal Reporter - 700 Stewart St. - Seattle WA 98101
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON AT SEATTLE
_____________________________________________________________
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UNITED STATES OF AMERICA,
Plaintiff,
v.
ERIC SHIBLEY,
Defendants.
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CR20-174-JCC
Seattle, Washington
March 8, 2022
9:00 a.m.
Sentencing
_____________________________________________________________
VERBATIM REPORT OF PROCEEDINGS
BEFORE THE HONORABLE JOHN C. COUGHENOUR
UNITED STATES DISTRICT JUDGE
_____________________________________________________________
APPEARANCES:
For the Plaintiff:
LAURA CONNELLY
BRIAN WERNER
Assistant United States Attorneys
700 Stewart St., Ste. 5220
Seattle, WA 98101
For the Defendant:
MICHAEL NANCE
Attorney at Law
615 2nd Avenue, Ste. 760
Seattle, WA 98104
P r o c e e d i n g s s t e n o g r a p h i c a l l y r e p o r t e d a n d t r a n s c r i p t
p r o d u c e d w i t h c o m p u t e r - a i d e d t e c h n o l o g y
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I N D E X
March 8, 2022
SENTENCING
PAGE
Argument by Mr. Nance..........................
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Defendant's Allocution.........................
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Argument by Ms. Connelly.......................
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Court's Ruling.................................
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THE DEPUTY CLERK: The first matter on the calendar is
CR20-174-JCC, United States of America versus Eric Shibley.
Counsel, please make your appearances for the record.
MS. CONNELLY: Laura Connelly for the United States.
MR. WERNER: Good morning, Your Honor. Brian Werner
on behalf of the United States.
MR. NANCE: Good morning, Your Honor. Michael Nance
for Eric Shibley.
THE COURT: Mr. Nance, has he had an opportunity to
review and comment on the Presentence Report?
MR. NANCE: Yes, Your Honor.
THE COURT: All right. Wish to be heard?
MR. NANCE: Yes. Your Honor, as set forth in our
sentencing memorandum, we are recommending 24 months of
detention with credit for time served, a period of supervised
release, and appropriate restitution and other non-mandatory
costs and penalties be waived.
Our objections to the Presentence Report and to the
guideline application is set forth in the briefing, and I
will rely largely on that.
I would just want to comment briefly on this attempt to
enhance with obstruction. We don't feel it's appropriate
particularly as to the points specifically raised in both the
PSI and the Government's briefing. There were two components
to it. The first was that, in response to a grand jury
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subpoena, that Mr. Shibley submitted IRS forms, W-3 and 941
forms, that the Government says were fabricated and not filed
with the IRS. That may be so. It may well be that they
weren't, but the subpoena requested supporting documents that
were submitted in connection with the PPP loans, and these
were, in fact, submitted, and these were simply a copy of
what had been provided.
If you take the Government's approach to this, it's a
catch-22. There would be an automatic obstruction merely
flowing from the fact that the loan applications were
fraudulent. If you don't produce what you supplied with it,
that's obstruction, and yet, if you do and it's not true,
that's obstruction, so you can't win. That's --
THE COURT: Isn't that one of the problems you get
into when you engage in the kind of conduct your client did?
MR. NANCE: Well --
THE COURT: You kind of create a catch-22.
MR. NANCE: You kind of do, but he's being -- he's
being punished, essentially -- it's a double punishment
otherwise. The obstruction, as I understand it, refers to
obstructing the investigation process.
The falsity was a part of the -- initially -- a part of
the crime. It was essentially complete. They asked for
supporting documents that he provided, and in these
instances, he provided those. So that's the first component.
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The other is this offhand comment he made, and you know,
he testified for the better part of a day here, and there was
one cherry-picked line where he said -- and they quoted it --
but he chose not to provide the names of employees of Dituri
Construction. Of course, on the one hand, the Government is
saying, "Well, you had no employees," and now he's being
challenged because he chose not to provide the names of these
nonexistent employees. I mean, that can't be obstruction.
And the other part of it is that, again, the subpoena asks
for documents. It didn't ask for the names. It asked for
documents listing employees, and there's no indication that
any such documents existed or that Mr. Shibley had access to
such documents. There's no affirmative duty for him to
compile a list. The subpoena doesn't require that, if you
look at it closely, or to affirmatively testify about
nondocumentary matters.
The other --
THE COURT: Well, I can understand somebody taking
the Fifth Amendment and refusing to testify, but once you
take the stand and testify at length, don't you have an
obligation to testify truthfully?
MR. NANCE: Yes, you do. You do.
THE COURT: Don't you have an obligation to respond
to questions like, "Tell us who these employees were."
MR. NANCE: Well, Mr. Shibley did -- he did some of
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that in this trial.
THE COURT: But he didn't do some of it, too.
MR. NANCE: Well, I mean, we can -- I guess we can
interpret what he said as he said it, but he even provided
some documentation.
In any event, I think it's a close question. I don't --
it's their burden to show. I would submit that they haven't
met that.
The other component -- I've addressed it, but I will
mention it again -- is this notion of his ability to pay, and
they keep referring to these great properties he has. He had
a residence. He still, in name -- his name is still on that
property, and he's got three rental properties, but they're
in very, very sad shape. They're -- he's really hanging by a
thread on all of them. He's over a year overdue in mortgage
payments and installment loan payments on these properties.
He's been trying to stave off foreclosure. They're all in
foreclosure, but that's been staved off. He's bought a
little time by filing bankruptcy, and we don't know where
it's going to go, but it doesn't look good. I mean, all
these properties now have squatters. They're not paying
rent. They're -- it's been difficult to get a realtor even
to get into the properties. I mean, you basically need a
sheriff's deputy to go into these places. They're dangerous.
They have been vandalized and severely neglected, and to say
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that he's going to be able to clear much on this is a real
stretch. I mean, I would venture to think that he'd be lucky
to break even.
This is a case with -- I recognize there are really
disparate recommendations here. We are recommending
24 months. The Government is some multiple of that. There
is no mandatory minimum. The Court has fairly unbridled
discretion to do the right thing here, and if you look at
Mr. Shibley, he's kind of a mixed bag, I would venture. He's
intelligent; he's creative; he's ambitious; and I
characterize it as him having a large blind spot. He's used
to living on the edge. He's used to pushing the envelope,
and the most generous interpretation I think you could make
in this case would be that he pushed too hard, he cut too
many corners and took too many liberties, and of course, the
jury found -- they found fraud.
I would suggest that a trial in this case was appropriate,
and it was necessary. It was a cathartic process for
Mr. Shibley. Some cases need to be tried. This was one of
them. Mr. Shibley accepts the process. He's prepared to
move ahead with his life. He actually has constructive
plans. He actually thinks he still has something to
contribute. He wants to write, and he's got some expertise,
and he thinks he could use that to benefit himself and
others.
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He has spent 18 months, roughly, in jail. It's been
fairly hard time. Much of the time he's been in jail has
been in lockdown. He's probably spent as much time in
lockdown or in quarantine as out. He did suffer a rather
pronounced case of COVID-19 while in custody. He's got drug
and mental health issues, which the Court heard about during
the trial.
Of course, he's lost his medical license. It's unlikely
he will ever practice medicine again. He's lost or is about
to lose his home and properties. I would suggest that he
doesn't need to spend more time in prison to be held
accountable.
Our 24-month recommendation is in line with three other
PPP loan cases in this district, including one in this court,
I believe. In this district, no one has received more than
24 months, including at least one of the individuals that had
a loan loss that was well in excess of what Mr. Shibley
faces. No one's gotten more than 24 months, and neither
should Mr. Shibley. Thank you.
THE COURT: Does he wish to speak?
MR. NANCE: Yes.
THE COURT: Go ahead. You can take your mask off.
THE DEFENDANT: Your Honor, I made a big mistake. I
should never have done such a terrible thing. I am
expressing my clear and unequivocal apology to the honorable
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Court, to the people of my country, to my Government. I made
a terrible mistake. I regret every minute for that.
I have -- I have taken a completely different course from
what I have done, all the things that I've done in my life.
It is a complete change in course of my life. I'll not go
back to the things that led me to this situation. I embark
on a new path. I think that I -- I'm able to do things in an
intellectual and scholarly manner, which I'm good at. I
started writing books on various scientific topics, including
medical sciences, medicine, psychology, psychiatry, molecular
evolutionary biology, astrophysics, war history, things like
that.
I'd be very much willing to start publishing books, and
that's what I want to do going forward.
I made a mistake. I paid a heavy price for it. I'm
asking the Court to look at me with leniency and give me an
opportunity to embark on a new course in my life. Thank you.
THE COURT: All right. Ms. Connelly.
MS. CONNELLY: Thank you, Your Honor. Just to touch
on the obstruction piece before heading into my other
remarks. The basis for the obstruction enhancement is
twofold, as the Government has outlined in its sentencing
memorandum, but first, the grand jury's subpoena response.
These W-3s were not provided to the Government as part of a
loan package. In fact, they were provided and we were told
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that the loan documents would be sought out and provided
later. So these were provided as tax documents and not
provided separately.
But, in the alternative, Mr. Shibley testified extensively
-- it wasn't just a one-off comment about not providing
documents -- in response to repeated questioning from
Mr. Werner, Mr. Shibley testified that he chose not to turn
over documents, repeatedly. And while the Government concurs
that it's likely these documents don't exist, either the
defendant was lying about those documents existing in his
testimony repeatedly or he was concealing responsive
documents in response to a grand-jury subpoena, and either
way, that is a basis for the obstruction enhancement.
In addition to the perjured testimony about these
documents and him not turning them over and the fact that
they existed, Mr. Shibley repeatedly lied about having
employees, having businesses, and he really doubled down in
his testimony, and thus, the Government believes that an
obstruction enhancement is appropriate in this case.
Turning to the Government's recommendation, which is for a
97-month term of imprisonment followed by three years of
supervised release, it's really hard to believe that at this
point we have been living with COVID for two years, and it's
easy to forget where we started, but in March 2020, almost
two years ago to the day, everything shut down across America
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and here in Seattle. Businesses and the economy were
devastated, and there was uncertainty about when things could
reopen again, and so, in response, the Government put forward
the PPP or the Paycheck Protection Program and expanded the
EIDL program. Both of these programs were meant to help
small businesses with their expenses and, most importantly,
keep employees on the payroll in the face of this
unprecedented devastation.
And in the face of this, the defendant chose, instead, to
engage in a cash-grab. He submitted over 25 PPP applications
and 13 EIDL applications. He made up numbers to put on those
documents, and he created false tax forms to go along with
them.
The defendant submits that a 24-month sentence is
appropriate and cites to other cases in this district that
have dealt with COVID relief fraud, but in this case, and in
particular, this defendant, there are many distinguishing
factors that require a significantly higher sentence.
So turning to, first, the conduct, which the Court is well
aware of -- and I will not rehash at length here -- but there
are certain pieces of this conduct that call for a higher
sentence, the first being the volume of applications.
Mr. Shibley submitted significantly more applications than
the other defendants that have been sentenced in this
district. The second is the fact that the defendant didn't
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stop this behavior even with significant law enforcement
intervention. At every step with which he was confronted, he
chose to double down instead. So the banks called him and
asked questions, and he continued to apply. The Government
seized money at the end of May, and he continued to apply for
these loans. He was approached by law enforcement agents and
served with grand jury subpoenas, and he continued to apply
for these loans. So the defendant had every opportunity to
stop this behavior and, instead, continued to double down.
Furthermore, the use of other people's identities is
significant here. The defendant actually stole people's
identities to submit to the bank to conceal his crimes. That
included an individual who had died in 1987 and a woman who
had never heard of him or worked for him, and he submitted
their Social Security numbers and names as his employees.
The second distinguishing factor is his complete lack of
acceptance of responsibility in this case. The other three
defendants who were sentenced all pled guilty before trial
and accepted responsibility early. While Mr. Shibley is now
kind of vaguely apologizing for his behavior, in his trial
testimony he repeatedly doubled down that he had these
employees and had these businesses. He continued to assert
that to probation, as was seen in the PSR, and then, to top
it all off, he tried to obtain some of the illegally-obtained
funds back through a bankruptcy proceeding just recently.
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And while the bankruptcy filing may have been coincidental,
the fact that he is trying to use the bankruptcy process to
receive illegally-obtained funds back suggests that he does
not accept that those funds were, in fact, illegally
obtained.
The third factor to consider is his conduct while on
pretrial release in this case. It shows that he's been
incapable of abiding by the terms set by this Court. He was
arrested after two incidences of domestic violence while on
pretrial release. He also attempted to purchase another
property while out on pretrial release, against the
requirements of both the Court and the pretrial services
officer. So, in order to get around that, he had his then
girlfriend, who was the victim of the domestic violence
offenses, act as a straw buyer for that purchase in order to
circumvent the Court and pretrial services.
And finally, in addition to the actions while on pretrial
release, the defendant has shown he's incapable of following
direction from courts and other authority in many other
instances. First, looking at his career in the medical
profession, certain issues demonstrate his willingness to
skirt the law when it suits him. Most notably, he continued
to prescribe controlled substances after his license to
prescribe controlled substances was revoked in January of
2020, and that's especially relevant because some of the
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people that Mr. Shibley claimed as employees in this case
were actually patients of his who he was prescribing to.
Second, while the defendant's criminal history puts him at
a Category II, the fact that he committed this crime while on
probation for another domestic violence offense should be
considered in fashioning an appropriate sentence, and it's
clear that court supervision did not deter him from
committing other crimes while on probation for that offense.
And while the Government acknowledges that that crime was, in
fact, a misdemeanor, it was a misdemeanor violation of a
no-contact order from a court, and so that, yet again,
demonstrates Mr. Shibley's unwillingness to abide by court
orders and the need for significant personal deterrence in
fashioning a sentence in this case.
So because of the severity of the crime and the
defendant's personal history, the Government requests that
the Court impose a term of 97 months imprisonment followed by
three months -- or three years of supervised release. The
Government also requests that the Court enter an order of
restitution in the amount detailed in the sentencing memo to
the victims.
THE COURT: Mr. Nance, do you have any objection to
the restitution amounts that were set forth in the
Government's brief?
MR. NANCE: No.
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THE COURT: Okay. So I'll affix restitution at the
amounts set forth in your brief.
I am overruling the defendant's objections to the
Presentence Report. I find the total offense level is 29,
the criminal history category is II, which gives a guideline
range of 97 to 121 months. I'm imposing a period of
confinement of 48 months, a period of supervised release of
three years, subject to standard conditions, together with
those additional conditions set forth in the Presentence
Report.
I'm waiving the fine due to the defendant's financial
condition and the restitution obligation. He'll be required
to pay the special assessment for each of the counts of
conviction, which will be a total of $1,500. The sentence is
a product of the guidelines schedule, together with the
factors of 18 USC 3553, and I'm adopting the Presentence
Report, the probation officer's reasons for the sentence, as
the Court's reasons for the sentence. And I'm emphasizing,
in particular, the blatant nature of the fraud and its size,
the fact that there's significant distinctions between the
other cases that were involved in this court, and the Court's
reaction to the defendant's testimony in the case, which was,
I have to say, one of the worst performances of a criminal
defendant on examination. I'm not punishing him for going to
trial, but I do think it's appropriate to take into
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consideration the fact that he had very little willingness to
adhere to the truth while testifying.
Mr. Shibley, you have the right to appeal this sentence.
If you wish to file a notice of appeal, it must be filed
within 14 days of today. If you wish the assistance of an
attorney in filing a notice of appeal and cannot afford one,
one will be appointed to assist you if you so request. If
you wish the assistance of the clerk in filing a notice of
appeal, he will assist you if you so request.
Do you understand, sir?
THE DEFENDANT: Uh-huh (affirmative).
THE COURT: Anything further, Counsel?
MR. NANCE: Yes, Your Honor. I would ask that the
Judgment reflect the recommendations for his placement in the
drug and alcohol program.
THE COURT: That's fine.
MR. NANCE: And secondly, we would ask for a
placement recommendation to the federal prison camp at
Sheridan.
THE COURT: That's fine.
MS. CONNELLY: Your Honor, the only -- we would ask
that the Judgment reflect the forfeiture order.
THE COURT: I'm sorry?
MS. CONNELLY: That the Judgment reflect the
forfeiture order that was already entered by this Court.
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THE COURT: Yes.
MS. CONNELLY: Thank you.
MR. NANCE: Your Honor, we would ask the Court to
waive the interest.
THE COURT: No.
MR. NANCE: No?
MR. WERNER: Your Honor, may I approach?
THE COURT: Yes. Thank you, Counsel.
(Proceedings concluded.)
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C E R T I F I C A T E
I certify that the foregoing is a correct transcript from
the record of proceedings in the above-entitled matter.
/s/ Sheri Schelbert
SHERI SCHELBERT
COURT REPORTER
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