Government’s Response and Objection to Presentence Report for Defendant Jon Hallford — United States v. Jon M. Hallford, No. 24-cr-00113-NYW (Dkt. 68, D. Colo.)

Summary

The government's response and objection to the presentence report (ECF No. 64) in United States v. Jon M. Hallford, Criminal Case No. 24-cr-00113-NYW, in the U.S. District Court for the District of Colorado, filed as Dkt. 68 on February 13, 2025. It agrees with the report's recommended sentence of 180 months (15 years) imprisonment and says it intends to seek an upward departure and/or variance. It argues that the loss amount should be no more than $1,080,818.56, not $1,200,354.08, because loss excludes $119,535.52 in accrued interest; that total includes the undisputed $189,371 related to the Return to Nature Funeral Home. It limits restitution for the SBA to $876,447.56, the remaining EIDL principal, and says it may supplement restitution for the funeral home victims. It argues that a $7,716,220 state civil judgment against Hallford Homes, LLC does not affect restitution.

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Criminal Case No. 24-cr-00113-NYW

UNITED STATES OF AMERICA,

Plaintiff,

1. JON M. HALLFORD,

Defendant.

GOVERNMENT’S RESPONSE AND OBJECTION TO PRESENTENCE REPORT
FOR DEFENDANT JON HALLFORD (ECF No. 64)

The United States of America hereby files this Response and Objection to

Presentence Report for Defendant Jon Hallford (ECF No. 64).

The Government agrees with the final sentencing recommendation contained

within the Presentence Report (“PSR”), Exhibit A, R-1, that the appropriate sentence in

this matter is 180 months (15 years) imprisonment. As reflected within the parties’ plea

agreement, PSR ¶¶ 2, 3, the Government intends to seek an upward departure and/or

variance from the applicable guidelines in support of such a sentence.

The Government objects and responds to the PSR’s: (1) loss amount calculation,

(2) calculation of restitution, and (3) consideration of a state civil judgment.

(1) Loss Amount Should Not Include Interest

The PSR calculates the total loss amount from the offense conduct as

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$1,200,354.08, resulting in a +14 increase under U.S.S.G. § 2B1.1(b)(1)(H) (more than

$550,000 but less than $1,500,000). PSR ¶ 84. The Government agrees with +14

increase but disagrees with the amount and submits that the loss amount in this case

should be no more than $1,080,818.56.

That total includes the undisputed $189,371 related to the fraud involving the

Return to Nature Funeral Home. PSR ¶ 74.

But the PSR also includes prejudgment interest to reach a loss amount from the

EIDL fraud of $1,010,983.08. PSR ¶ 84. Specifically, the PSR included “accrued

interest” of $119,535.52. Under U.S.S.G. § 2B1.1, app. note 3(D)(i), however, loss

should not include “interest of any kind.” Thus, none of this interest should be included

in the loss amount for purposes of § 2B1.1. See generally United States v. Dadyan, 76

F.4th 955, 960 (9th Cir. 2023) (distinguishing between restitution, which “can include

prejudgment interest,” and loss amount, which cannot).

Similarly, the PSR includes an additional $15,000 in EIDL loan advances as part

of the loss figure. PSR ¶ 69. The Government did not seek these loan advances as part

of the plea agreement and thus, it does not seek to include such advances as part of

the loss amount now. Excluding the $119,535.52 in accrued interest and $15,000 in

loan advances, the total amount of loss to the SBA would be $ 876,447.56 per the

Government’s calculations. Even if the $15,000 is included, it does not affect the +14

increase for loss amount since the total amount remains more than $550,000 but less

than $1,500,000. § 2B1.1(b)(1)(H). ($189,371 for funeral home case + $876,447.56 for

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EIDL fraud + $15,000 for EIDL advances = total loss of $ 1,080,818.56).

(2) – The Government May Supplement the Restitution Amount

The PSR calculates the restitution owed to the victims of Return to Nature

Funeral Home as $189,371. PSR ¶ 74. The Government agrees that this is the

minimum amount owed to such victims. But restitution may also include additional

expenses, of the type described in the various victims’ claims submitted to the Probation

Office.

For example, many of the victims’ claims include travel costs to meet with

investigators or prosecutors. See, e.g., PSR, Ex. B, at 33. Reimbursement of such

“transportation” expenses “incurred during participation in the investigation or

prosecution of the offense” is proper under the Mandatory Victims Restitution Act

(MVRA). See 18 U.S.C. § 3663A. Other victims’ claims may not be compensable under

the MVRA, such as certain payments to third parties after the date of the victim’s loss.

Because of the complexity involved in tabulating and verifying such restitution figures for

the numerous victims, the Government anticipates that it will supplement restitution

totals in advance of sentencing. If such losses “are not ascertainable by the date that is

10 days prior to” the sentencing hearing, the Government may request a hearing within

90 days following the sentencing hearing to determine the full amount of restitution

owed to each of the victims. 18 U.S.C. § 3664(d)(5)1. The Government will continue to

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To be clear, the Government maintains that the “loss amount” for purposes of the §
2B1.1 calculation on the Return to Nature Funeral Home is $189,371 and does not

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exercise due diligence in tabulating final restitution figures and will make a decision in

the coming weeks whether it will request additional time post-sentencing for a separate

restitution determination.

The PSR also calculates a higher amount of restitution amount owed to the SBA

($1,010,983.08) than in the plea agreement. PSR ¶ 77. Similar to the loss amount noted

above, because the Government agreed within the plea agreement to a lesser amount

of restitution for the SBA, the Government will stand by the lesser amount and limit its

request to $876,447.562 in restitution for the SBA.

The PSR also includes $15,000 in EIDL advance payments and $119,535.52 in

accrued interest as part of restitution. PSR ¶¶ 68, 69, 77. Because the Government did

not seek these losses as part of the plea agreement, however, it does not request such

funds as part of restitution.

Nevertheless, the Government agrees with the Probation Office that accrued

interest may properly be sought under the law as part of restitution. Although the MVRA

is silent about whether restitution may include prejudgment interest, the Tenth Circuit

has held that “lenders are entitled to interest as a component of restitution.” United

anticipate that this figure will change before sentencing.
2 The parties originally agreed within the plea agreement that the total amount owed to
the SBA was $882,300. PSR ¶ 44. Because the Hallfords made some small
repayments towards their EIDL loan, the principal balance now stands at the slightly
lower amount of $876,447.56. See PSR ¶ 68. As a result, the Government now seeks
restitution for the SBA for $876,447.56 which represents the remaining principal balance
owing on the EIDL loan.

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States v. Arnold, 701 Fed. Appx. 702, 706 (10th Cir. 2017); see also United States v.

Patty, 992 F.2d 1045, 1049-50 (10th Cir. 1993) (“Prejudgment interest reflects the

victim's loss due to his inability to use the money for a productive purpose, and is

therefore necessary to make the victim whole.”). As a result, should the Court

determine that accrued interest should be included within its restitution order, it may

properly include such amount under the law.

(3) A Related Civil Judgment against Hallford Homes Does Not Affect Restitution

The PSR notes that a civil judgment in the amount of $7,716,220 was entered

against Hallford Homes, LLC in a state civil action and that there may also be other

ongoing civil cases against the Hallfords. PSR ¶ 76. As further noted in the PSR,

under 18 U.S.C. § 3664(j)(2), “p[a]ny amount paid to a victim under an order of

restitution shall be reduced by any amount later recovered as compensatory damages

for the same loss to the victim in -- (B) any State civil proceeding to the extent provided

by the law of the State.” Id. (emphasis added). This statute is designed to prevent

victims from making a double recovery.

But it is inapplicable here. Although a civil judgment has entered against Hallford

Homes, LLC in a related state proceeding, there is no indication that the plaintiffs

(presumably some of the victims in this case) have “recovered” any funds. Until

recovery (i.e. collection) has occurred related to the civil judgment, the above statute is

not triggered. Further, even if a collection were to occur, it still must be determined

under § 3664(j)(2) whether the recovery is to a “victim in the current case” and shown

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that the “recovery” was for “compensatory damages for the same loss by the victim.” Id.

Only after all of these statutory hurdles are cleared may the Court offset a valid

restitution judgment in a federal criminal case with a state civil judgment. See United

States v. Nelson, 106 F.4th 719, 724-25 (8th Cir. 2024) (offset of restitution order in

criminal case not required where defendant failed to show that the victims had received

any funds under the terms of a settlement in a related civil case); United States v.

Louper-Morris, 672 F.3d 539, 566 (8th Cir. 2012) (rejecting defendant’s request for an

offset where defendant failed to show that the victim had received any payments in

satisfaction of a civil judgment related to the federal criminal case).

Until sufficient evidence is presented to the Court that victims have successfully

made a “later recovery for compensatory damages for the same loss by the victim” in a

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state civil proceeding, the Court needs to take no action on this issue.

Respectfully submitted this 13th day of February, 2025.

J. Bishop Grewell
Acting United States Attorney

By: s/ Tim Neff
Tim Neff
Assistant United States Attorney
United States Attorney’s Office
1801 California Street, Suite 1600
Denver, Colorado 80202
Telephone: (303) 454-0100
Fax: (303) 454-0405
E-mail: Tim.Neff@usdoj.gov
Attorney for the Government

By: s/ Craig G. Fansler
Craig G. Fansler
Assistant United States Attorney
United States Attorney’s Office
1801 California Street, Suite 1600
Denver, Colorado 80202
Telephone: (303) 454-0100
Fax: (303) 454-0405
E-mail: Craig.Fansler2@usdoj.gov
Attorney for the Government

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CERTIFICATE OF SERVICE

I certify that on this 13th day of February, 2025, I electronically filed the foregoing
GOVERNMENT’S RESPONSE AND OBJECTION TO PRESENTENCE REPORT FOR
DEFENDANT JON HALLFORD (ECF No. 64) with the Clerk of the Court using the
CM/ECF system which will send notification of such filing to counsel of record in this
case.

By: s/Ilmira Allazova
Legal Administrative Specialist
United States Attorney’s Office

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