Court filing
Defense Sentencing Memorandum — U.S. v. Shibley (W.D. Wash.)
Filed March 2, 2022 in U.S. v. Shibley; one of 10 filings from this case.
Record facts
| Court | U.S. District Court for the Western District of Washington (Seattle) |
|---|---|
| Filed | 2022-03-02 |
U.S. District Court for the Western District of Washington (Seattle) · No. 2:20-cr-00174-JCC · Doc. 149 · 2022-03-02 · Docket on CourtListener
Full text
Honorable John Coughenour
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON, SEATTLE
UNITED STATES OF AMERICA,
)
) No. CR20-174 JCC
Plaintiff,
)
) DEFENSE SENTENCING
v.
) MEMORANDUM
)
ERIC SHIBLEY,
)
)
Defendant.
)
_______________________________________)
Following a four-day jury trial, defendant Eric Shibley was convicted of wire
fraud (7 counts), bank fraud (3 counts), and money laundering (5 counts), respective
violations of 18 USC §1343, §1344(2), and §1957. The application of the advisory
guidelines is disputed, and the statutes of conviction do not provide for a mandatory
minimum sentence. As argued below, compelling reasons support a sentence of 24
months.
Sentencing is scheduled for March 8, 2022.
1. Sentencing Recommendation
1. Twenty-four (24) months of detention with full credit for all time served;
2. Three (3) years of supervised release;
3. Restitution to be determined;
4. All non-mandatory penalties should be waived.
1
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 1 of 15
2. Objections to Presentence Report and U.S. Guideline application
The defense objects to all matters contained with the Presentence Report that are
inconsistent with arguments made herein. The burden of proof on the applicability of
particular enhancements are on their proponents. The defense calculates the advisory
guidelines as follows:
6 - base offense level
16 – intended loss between $1.5 million and $3.5 million (USSG §2B1.1(b)(1)(I))
1 - convicted under §1957 (USSG §2S1.1(b)(2)(A)
23 – total offense level
Utilizing a Criminal History Category II, Mr. Shibley’s advisory guideline range is
51 - 63 months.
a. Loss amount
The proper loss amount is the greater of actual or intended loss. “Intended loss”
includes “the pecuniary harm that the defendant purposely sought to inflict” .
Application Note 3(A)(ii) to USSG §2B1.1. Mr. Shibley received approximately $2.8
million in funded loans but the great majority of that was seized or frozen before it could
be diverted further. According to an early government estimate, about $255,000 remains
unrecovered. Dkt #91, p. 22. In calculating a proper loss amount for guideline purposes,
the government seeks to count additional loan application amounts never received and
which Mr. Shibley assumed would not be totally funded. Even if the most punitive
2
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 2 of 15
interpretation is applied, the aggregate amount ($3.639 million) is a small percentage
above the $3.5 million threshold for triggering application of level 18 loss amount. A
benefit of a doubt would accord him only a 16 level enhancement.
b. Sophisticated means
“Sophisticated means” means especially complex or especially intricate offense
conduct pertain to the execution or concealment of an offense. Application Note 9(B) to
USSG §2B1.1. Any fraud of the magnitude in question must by its very nature involve
some degree of sophistication. Nothing about Mr. Shibley’s fraudulent activity manifests
a sophistication any greater than a garden-variety fraud of similar magnitude. If
anything, Mr. Shibley’s utter lack of sophistication in basic business, accounting and
record-keeping conventions contributed to his undoing.
c. Obstruction
An obstruction enhancement under USSG §3C1.1 requires that a defendant
willfully obstruct or impede the administration of justice with respect to the investigation
or prosecution. The PSI (p. 8, par. 31) cites two bases for the application: Mr. Shibley’s
production, in response to grand jury subpoenas, of false IRS Forms 941 and W-3 that he
had abutted in support of his fraudulent PPP applications and his trial testimony that he
“chose not to” turn one the names of certain employees of alleged employees fo Dituri
Construction. Neither example supports an obstruction enhancement.
3
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 3 of 15
i. The grand jury subpoena response
On or about June 9, 2020, Mr. Shibley was served with a subpoena duces tecum
that requested production of a number of documents relating to various LLC entities that
he controlled. Among the various documents demanded were
All documents relating to any loans applied for, including but not limited
to, loans associated with the Paycheck Protection Program under the
CARES ACT or the Economic Injury Disaster Loan (EIDL) program,
including, but not limited to:
. . .
2. All documents relating to payroll information submitted as part of
the loan application include but not limited to payroll information,
any underlying documents to support payroll figures, and relevant
documents including IRS Forms W-2, W-3, W-4, or MISC-1099;
(emphasis supplied).
Mr. Shibley was not able to produce many of the requested documents because
they either did not exist or could not be located. The complained of Forms W-3 and 941
that he produced in response to the subpoenas, whether actually ever filed with the IRS
and whether facially accurate or not, were related to the loans in question because they
had been previously supplied in support of those applications. Their production was a
literal compliance with the subpoenas and cannot constitute obstruction.
ii. Mr. Shibley’s trial testimony
Mr. Shibley should not be punished for exercising his constitutional right to testify
in his own defense. His denial of guilt is not a basis for obstruction. Even testimony that
is not fully accurate may result from confusion, mistake or faulty memory and does not
4
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 4 of 15
necessarily reflect a willful attempt to obstruct justice. Application Note 2 to USSG
§3C1.1.
Mr. Shibley testified for several hours during which he made an offhand comment,
now cited as obstructive, that “he chose not” to turn over employee names for Dituri
Construction to the grand jury. But it has never been established that his business
actually possessed documents available to him that listed the names of his purported
employees. Initially, Mr. Shibley cannot be guilty of withholding the names of
employees if, as the government insists, the employees do not exist. Even if employees
did exist at some point or if Mr. Shibley believed they did, the subpoena commanded
only that documents referencing them be produced. The subpoena did not ask that he
prepare or compile a list of employees. Mr. Shibley’s trial testimony that he chose not to
provide names of employees, even if true, did not evidence a willful failure to comply
with a subpoena that requested only documents.
No obstruction enhancement is appropriate.
d. Financial Condition/Ability to Pay
The Presentence Report (par. 64-65) greatly overstates Mr. Shibley’s financial
condition and his "ability to pay". While, on paper, he owns a residence and three rental
properties, there are serious problems with all of them. All face imminent foreclosure for
non-payment of mortgages and back-taxes. All currently house non-paying squatters who
have trashed the properties, stolen property from within, and refused to leave. If the
5
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 5 of 15
houses can be cleared of squatters and sold before pending foreclosures occur (a very iffy
proposition), he may realize a modest return on his investments. Just as likely he loses
everything to foreclosure and salvages nothing. Either way, he has court judgments
(including likely forfeiture and restitution obligations in this case), back child support and
unpaid tax obligations and outstanding bills. He is in no position to pay a fine.
3. The court should impose a reasonable sentence crafted to fit the
circumstances of the case and those of Mr. Shibley. A prison
sentence of twenty-four months would be reasonable and achieve
the stated purposes of § 3553(a), as clarified by recent Supreme
Court guidance.
2
As determined by the jury, Mr. Shibley fraudulently procured loan proceeds from
Covid-19 relief programs (the Paycheck Protection Program and the Economic Injury
Disaster Loan Program) using applications contain false information about payroll and
employees. For reasons that follow, the sentencing purposes of 18 USC 3553(a) can be
satisfied with a sentence of twenty-four months followed by three years of supervised
release.
Sentencing courts now have the authority and a Supreme Court mandate to
2
impose sentences that are not greater than necessary to satisfy the statutory purposes of
sentencing, to consider all of the characteristics of the offender and circumstances of the
offense, to reject advisory guidelines that are not based on national sentencing data and
empirical research, and to serve their function in the constructive evolution of responsible
guidelines. See United States v. Booker, 543 U.S. 220 (2005); Rita v. United States, 127
Ct. 2456 (2007); Gall v. United States, 128 S. Ct. 586 (2007); Kimbrough v. United
States, 128 S. Ct. 558 (2007). The court must calculate the sentencing guideline range
and then determine the appropriate sentence for the individual defendant in light of the
statutory factors of 18 U.S.C. § 3553(a). Nelson v. United States, 129 S.Ct. 890 (2009).
6
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 6 of 15
a. Nature and circumstances of the offense and history and
characteristics of the defendant (§ 3553(a)(1))
Eric Shibley is an intelligent, creative and ambitious man with a large blind spot.
He is quite capable of mastering difficult subject material (like internal medicine), of
trying new things (like a new life in a new country amidst an alien culture), and of
willingly assuming high risk ventures (i.e., witness his foray into the hyper-competitive
world of highly-leveraged real estate investment). But he operates from a very different
cultural perspective and a lack of personal insight that have created major adjustment
problems and conflicts with authorities and in personal relationships. His self-perception
as an outsider or outlier, together with his obsession to succeed has clouded his judgment
and led to rash actions. His actions in this case, fueled by his recent self-distancing from
the medical profession and community anxiety over the Covid pandemic, were an
outgrowth of these aspects. They do not excuse his actions but perhaps help explain
them.
As depicted at trial, Mr. Shibley is from a prominent family in Bangladesh and
distinguished himself early as a good student with a bright future. Motivated to fix the
broken world he saw, he wanted to develop his interest in the healing arts and to be
materially successful. While still in Bangladesh, he earned his medical degree and then
pulled up roots and left behind all that he knew to move to the United States, the land of
opportunity. Once here, he learned English and sought to navigate American culture and
gain acceptable credentials here to practice medicine. He became a naturalized
7
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 7 of 15
American citizen and then a licensed, practicing physician. He practiced in several states,
specializing in internal medicine. Eventually, he came to Washington State and initially
worked in large hospitals.
As recounted at trial Mr. Shibley, then Dr. Shibley, became disillusioned with the
American health-care system and eventually attempted to transition into something that
appealed to him but about which he lacked a detailed understanding: real estate
investment and renovation. His plans lacked clear detail, documentation, licensing and
permitting, budgeting, and accounting and financial management, to mention just some of
their shortcomings.
In the wake of the pandemic in early 2020 he was undoubtedly tempted by the
prominent promotions for PPP loan relief and the seeming readiness of lenders to extend
forgivable loans in a streamlined application process. But even allowing for
overconfidence and the mistaken belief that some of his workers qualified as employees
for PPP purposes, he clearly overreached in his numerous loan applications. A jury
determined his actions to be fraudulent.
The intended recipients of the PPP and EIDL loan funds were, indeed, businesses
with legitimate employees. But the trial did not reveal a single legitimate PPP applicant
who was denied a loan for lack of available funds. See trial testimony of SBA attorney
Kathleen Littwin, who also testified that there was a substantial amount of authorized and
8
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 8 of 15
available PPP loan funds available when the program ended. US v. Shibley trial
transcript, testimony of Kathleen Littwin, November 15, 2021, p. 170, lines 3-18.
Perhaps as a sign of his evolving empathy, Mr. Shibley feels some remorse for his
actions. See his attached letter to the court.
b. Sentencing purposes (§ 3553(a)(2))
Deterrence, incapacitation, and rehabilitation are prospective and societal
– each looks forward and asks: What amount and kind of punishment will
help make society safe? In contrast, retribution imposes punishment based
upon moral culpability and asks: What penalty is needed to restore the
offender to moral standing within the community?
United States v. Cole, slip op., 2008 WL 5204441 *4 (N. D. Ohio Dec. 11, 2008).
i. Seriousness of the offense
Section 3553(a)(2)(A) requires the court to consider “the need for the sentence
imposed . . . to reflect the seriousness of the offense, to promote respect for the law, and
to provide just punishment for the offense.” A sentence that is excessive in light of the
seriousness of the offense promotes disrespect for law and provides unjust punishment.
Further incarceration of Mr. Shibley would be needlessly counterproductive. In
his circumstances additional jail time will not promote respect for the law and is not
necessary to hold him fully accountable.
ii. Deterrence to Criminal Conduct
Section 3553(a)(2)(B) requires the court to consider “the need for the sentence
9
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 9 of 15
imposed . . . to afford adequate deterrence to criminal conduct.” But the proper question
for the court is “marginal deterrence,” i.e., whether any particular quantum of punishment
results in increased deterrence and thus decreased crime. Here, the findings are
uniformly negative: there is no evidence that increases in sentence length reduce crime
through deterrence. “Three National Academy of Science panels, all appointed by
Republican presidents, reached that conclusion, as has every major survey of the
evidence.” Michael Tonry, Purposes and Functions of Sentencing, 34 Crime and Justice:
A Review of Research 28-29 (2006).
In one of the best studies of specific deterrence, which involved federal white
collar offenders (presumably the most rational of potential offenders) in the pre-guideline
era, no difference in deterrence was found even between probation and imprisonment.
See David Weisburd et. al., Specific Deterrence in a Sample of Offenders Convicted of
White-Collar Crimes, 33 Criminology 587 (1995).
Mr. Shibley has already suffered severe collateral consequences from this
conviction in the form of his revoked medical license and the devastation of his once-
promising and long-neglected real estate investments. An additional jail term would
1
serve little deterrence purpose.
Even if not directly collateral, his summary medical license suspension in August 2020
1
related to conduct occurring concurrently with the charged conduct. In any event these
convictions make the likelihood of his ever regaining his medical license very remote.
10
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 10 of 15
iii. Protection of the public from further
crimes of the defendant
Section 3553(a)(2)(C) requires the court to consider “the need for the sentence
imposed . . . to protect the public from further crimes of the defendant.”
Mr. Shibley has little desire to ever again practice medicine or pursue a career in
real estate investment, as both endeavors have brought him little but personal and
financial misery. Even without additional prison time, the proposed special conditions of
his supervised release will allow for close monitoring of his financial dealings and serve
as substantial protection of the public.
iv. Rehabilitation in the most effective manner
Section 3553(a)(2)(D) requires the court to consider “the need for the sentence
imposed . . . to provide the defendant with needed educational or vocational training,
medical care, or other correctional treatment in the most effective manner.”
Mr. Shibley would likely benefit from mental health and substance abuse
treatment and counseling, either within the BOP as a RDAP program participant or as a
condition of his supervised release.
Once he is out of custody Mr. Shibley hopes to write commercially concerning his
interests in the healing arts and science. He believes staying active and productive,
particularly in areas in which he has expertise, will be most beneficial to himself and
others.
11
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 11 of 15
v. Consideration of Unwarranted Disparities
Section 3553(a)(6) requires the court to “avoid unwarranted sentence disparities
among defendants with similar records who have been found guilty of similar conduct.”
Disparity gets its content from the purposes of sentencing. “Unwarranted disparity is
different treatment that is unrelated to our legitimate sentencing goals or uniform
treatment that fails to take into account differences among offenders that are relevant to
our purposes and priorities.” Paul J. Hofer, Immediate and Long-Term Effects of United
States v. Booker, 38 Ariz. St. L.J. 425, 442 (2006).
Defendants with similar records convicted of similar conduct vary widely in their
culpability, risk of recidivism, dangerousness, and rehabilitation needs. Courts must now
take account of these variations, and uniformity for its own sake is no longer the goal of
the sentencing system. See Kimbrough v. United States, 128 S. Ct. 558, 574 (2007)
(“[S]ome departures from uniformity were a necessary cost of the remedy we adopted.”).
Three other PPP cases from this district serve as obvious bases for comparison and
all suggest the recommended sentence. See United States v. Zhang, WDWA #CR20-169
RAJ, United States v. Mohan, WDWA CR21-41 JCC, and United States v. Hsu, WDWA
#CR20-191 JLR. All the defendants in these cases, like Mr. Shibley, were professionals
who were convicted of filing multiple fraudulent CARES Act loan applications. Unlike
Mr. Shibley, who has typically led a relatively modest lifestyle, those defendants
defrauded the CARES program to finance exotic lifestyles. Defendant Mohan, a business
12
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 12 of 15
executive, sought to steal $5.6 million in CARES funds while he and his wife were
employed at jobs earning $500,000/year. He received a sentence of 24 months.
Defendant Hsu, who earned $54,000 per month as a chiropractor and drove a Porsche,
sought to steal $1.2 million in CARES funds. He received 24 months. Defendant
Zhang, a software engineer earning $19,000/month, sought over $1.5 million in CARES
funds. He received a sentence of 60 days.
A 24-month sentence for Mr. Shibley would be in line with the punishment these
comparable PPP defendants received and consistent with the imperative to avoid
unwarranted disparities.
vi. Other considerations
The Presentence Report correctly notes other bases for a downward variance.
These include Mr. Shibley's substance abuse and mental health issues, which are
substantial, and his almost 18-month in-custody history involving a severe Covid-19
infection and multiple lockdowns at FDC. See United States v. Carty, 264 F.3d 191 (2d
Cir. 2001)(downward variance proper where defendant confined in particularly harsh
conditions).
4. Conclusion
Eric Shibley should suffer consequences appropriate to his transgressions, taking
into account all of the sentencing factors of 18 USC § 3553(a). He made a grievous
mistake in trying to appropriate government-guaranteed loan money intended for
13
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 13 of 15
distressed businesses. He has fallen a long way from his days as a respected medical
internist and just wants to begin his redemption.
Under the totality of circumstances, he can easily be held accountable by a
sentence of twenty-four months, eventually to be released to negotiate a more promising
path than that last trodden.
Respectfully submitted this 2nd day of March, 2022.
/s/ Michael Nance WSBA #13933
Attorney for Eric Shibley
14
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 14 of 15
Certificate of Service
I hereby certify that on the 2nd day of March, 2022, I electronically filed the
foregoing with the clerk of the court using the CM/ECF system. Notice and copies of
this filing will be sent electronically to counsel of other parties who are parties to the ECF
system.
/s/ Michael Nance, WSBA # 13933
email: michaelnancelaw@gmail.com
15
Michael Nance
Attorney at Law
P.O. Box 11276
Bainbridge Island, WA 98110
(206) 624-3211
Case 2:20-cr-00174-JCC Document 149 Filed 03/02/22 Page 15 of 15File and source
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