Patrick Walsh’s Motion for Variance, Motion for Downward Departure, and Memorandum in Aid of Sentencing — United States v. Patrick Parker Walsh, No. 1:22-cr-00024-AW-GRJ (Dkt. 32, N.D. Fla.)
Summary
Patrick Parker Walsh, who pleaded guilty in the Northern District of Florida, asks the court in this sentencing memorandum for a variance and a downward departure and for a sentence of 18 months imprisonment with no fine. The memorandum says Walsh admits falsifying corporate information to obtain PPP and EIDL loans in excess of what the companies qualified for after the Williston, Florida aerial advertising and blimp business stopped generating revenue in April 2020. It describes the companies as having $16 million in blimp sales in 2019 and approximately 80 employees, and says the loans saved the companies and their staff. It reports repayments of $1,612,487.04 to date and objects that the government is also pursuing Walsh civilly for treble damages under the False Claims Act.
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UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF FLORIDA
GAINESVILLE DIVISION
UNITED STATES OF AMERICA )
)
v. )
) Criminal No. 1:22-cr-00024-AW-GRJ
)
PATRICK PARKER WALSH )
)
Defendant. )
PATRICK WALSH’S MOTION FOR VARIANCE, MOTION FOR
DOWNWARD DEPARTURE, AND MEMORANDUM IN AID OF
SENTENCING
Patrick Parker Walsh, having pleaded guilty and accepted responsibility,
respectfully, through his counsel, submits this memorandum to provide information
to assist the Court with fashioning a sentence that is “sufficient but not greater than
necessary” to achieve the statutory purposes of punishment and a just sentence. Mr.
Walsh respectfully requests the Court to consider the multiple factors pursuant to 18
U.S.C. §§ 3553(a)(1)-(7) that warrant a variance and a sentence significantly below
the advisory guidelines range. Mr. Walsh also respectfully requests the Court grant
a motion for a downward departure pursuant to USSG §2B1.1, Application Note
21(C). For the reasons set forth below, Mr. Walsh respectfully requests the Court
sentence him to 18 months imprisonment and not order a fine.
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I. INTRODUCTION
Patrick Walsh is a 42-year-old devoted father of 11 children, loving husband,
local business owner, and valued member of his church and community. Mr. Walsh
has devoted most of his life to serving others through missionary work, charitable
organizations, and his church. These are not mere platitudes – Mr. Walsh’s
dedication to others is demonstrable and longstanding.
He grew up with loving and nurturing parents, yet his childhood was far from
conventional. He was the second oldest of 9 children. When he was 5 years old, his
parents filled a call to be missionaries and moved the family to Belize. Over the next
few years, the family moved throughout South America, wherever the need to help
others was greatest. The family was passionate about helping children and they
sought missionary trips that would best serve children in need. Throughout Mr.
Walsh’s youth, the family created self-sustaining food programs to feed the poor.
They helped build soy factories in Guatemala and El Salvador to provide a
sustainable food source to feed children living in orphanages. This way of life taught
Mr. Walsh the importance of family and forged his innate need to care for, support,
and provide for others.
As the family continued to grow, it became difficult to raise 9 children abroad
and Mr. Walsh’s family returned to the United States and established a home in
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Florida near his grandparents. The family continued to feel the call to service of
others and they took multiple missionary trips to Africa and Mexico throughout Mr.
Walsh’s teenage years. When they weren’t traveling, the family became active
members of the Faith Baptist Church in Williston, Florida and participated in various
charitable organizations.
Service to God, family, and community remains the family priority. Mr.
Walsh acknowledges that he was raised with a strong moral foundation and the
guiding premise of helping and supporting others. His greatest regret is that when he
was faced with a difficult situation and his faith was tested, he failed the test. He is
deeply remorseful for his bad decisions and the devastating consequences his
choices have had, and will continue to have, on his wife, children, family,
employees, and community. He stands before the Court as a first-time offender with
sincere remorse, embarrassment, and regret for making poor decisions that now
overshadow decades of service to others, hard work, and attempts at an exemplary
life. Through this submission, Mr. Walsh provides the Court with additional
information to consider in formulating a just sentence.
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II. MOTION FOR A VARIANCE AND ANALYSIS OF STATUTORY
FACTORS AS APPLIED TO THIS CASE
A. Nature and Circumstances of the Offense, 18 U.S.C. § 3553(a)(1)
Mr. Walsh admits to falsifying corporate information to obtain both PPP and
EIDL loans in excess of what his companies qualified for. It is important for the
Court to understand the background and circumstances surrounding Mr. Walsh’s
poor decisions when formulating a sentence.
The Walsh family’s missionary calling led to somewhat of a wandering
“gypsy” lifestyle which was not conducive to a traditional education. Mr. Walsh was
homeschooled and earned his high school diploma at Williston Christian Academy.
It was during his teenage years, that Mr. Walsh fell in love with aviation. At
the age of 16, he attended the International Alert Academy in Watersmeet, Michigan,
where he studied aviation and earned his pilot’s license in 1998. The Alert Academy
provided a forum for Mr. Walsh to combine his passion for aviation with his drive
to serve. The program taught students skills to participate on disaster response teams.
He experienced numerous deployments throughout south and central America and
provided support and relief in the United States in times of crisis. Mr. Walsh is most
proud of his search and recovery efforts after the Space Shuttle Columbia crash,
where he worked alongside the FBI and NASA to provide valuable and necessary
assistance.
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Over the next few years, Mr. Walsh earned multiple aviation licenses and
certificates including aircraft maintenance, single and multiple-engine aircraft,
private and commercial aircraft, flight instructor, and instrument panel reading. His
career path naturally combined his love for flying with his passion to help others. He
worked as Chief Pilot for the Center of BioEthical Reform, a company doing
missionary student outreach on college campuses.
Mr. Walsh was married at this time to his first love, Hannah, and this job
opportunity allowed him to follow his dreams, while providing financial stability to
his young wife and first-born son, Patrick Adrian. The young family flew around the
United States so Mr. Walsh could pilot planes and supervise other pilots in an
airplane banner campaign. The family hoped this would eventually lead to a life of
continued missionary work.
In 2007, the Walsh’s second son, Brandon, was born with a serious congenital
heart defect – the left side of his heart was not fully formed. He miraculously
survived an experimental heart surgery and is now 15-years old. Brandon has had
three major open-heart surgeries and various smaller surgeries to repair aortic valves
and place stents; he remains on the heart transplant list.
Knowing that the missionary lifestyle was not conducive to a young child with
significant health issues, Mr. Walsh elected to change his career path. His employer
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offered him the opportunity to purchase the company’s five planes when funding for
the air banner campaign was depleted. Mr. Walsh saw this entrepreneurial
opportunity as a chance to continue to do what he loves, while creating a stable and
financially sound future for his family. He borrowed money from friends and created
AirSign Airship Group in Williston, Florida, in 2008, an aerial advertising company
focused on selling airplane banners to local businesses to fly banners over nearby
beaches. Mr. Walsh enjoyed success in his local business and decided to expand his
client base nationally to incorporate larger corporate clientele. He developed
relationships with large advertisers for national campaigns, subcontracting work to
local providers and flying his own fleet.
The business unfortunately suffered tragedy in 2010; a pilot flying one of the
corporate planes crashed and died on assignment. One week later, another pilot ran
out of fuel mid-flight but survived. Business partners pulled out due to the potential
liability and advertisers canceled contracts due to negative publicity. Mr. Walsh
struggled to meet ends and rebuild the business.
To meet the growing demands of the market, Mr. Walsh secured funding and
expanded business services, offering helicopter, skywriting, and digital skywriting.
This business strategy paid off and the business continued to flourish, affording Mr.
Walsh the opportunity to expand into the blimp business in 2015. The Walsh family
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also flourished during this time and the family proudly welcomed 3 daughters and 2
additional sons. Mr. Walsh and his wife Hannah explored real estate investments
and began flipping homes as an additional source of income so that Hannah could
stay home with the children and provide for their education. One real estate purchase
in 2019, included Sweetheart Island for approximately $116,550. This was not the
purchase of a tropical paradise for entertainment, but a real estate opportunity where
Mr. Walsh hoped to generate new revenue.
Airsign Airships Group continued to enjoy success and garnered national
acclaim in 2017, winning a prestigious Telly Award for advertising. This success
brought on greater opportunities and a blimp was commissioned by a large bank to
advertise over the US Open Golf Tournament in Wisconsin. Tragedy struck once
again and the blimp caught on fire, falling to the ground on live television. The pilot
amazingly survived but with serious injuries. Clients began pulling out because of
the disaster and Mr. Walsh’s business faced financial ruin.
Again, Mr. Walsh persevered, learning from prior business failings to refocus
business priorities. He sold all his planes so he could purchase almost every other
airship company in the country, besides Goodyear. To accomplish this expansion
goal, he took on risk and accumulated significant high-interest debt. The company
went from a small business with some successes and challenges to a company with
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fifteen blimps, expanding quickly with a high growth curve. The business grew
nationally and internationally over the next several years, and Mr. Walsh created
subsidiaries for each new market.
In 2019, the companies had $16 million in blimp sales and expanded into the
Latin America and Asian markets. The companies grew to approximately 80
employees, including seasonal and advertising campaign-specific temporary
employees and employees for various international projects. The air sign business
secured $19 million in sold contracts pending delivery to start January 2020,
including Carnival Cruise Lines and several other renowned brands. Mr. Walsh
assumed he could easily pay-off the high-interest loans incurred during the
expansion with income from these lucrative projects.
And then the devastating global pandemic hit. Covid-19 did not slow
down business, it killed it. In April 2020, all air ship business operations were
terminated. Mr. Walsh’s business went from sales of millions per month to almost
zero, while expenses and debt remained relatively high and interest on the corporate
loans continued to grow exponentially.
When Mr. Walsh realized that Covid was not a short-term problem, he
panicked. In 2020, Mr. Walsh and his wife had 10 children and he was the sole
financial provider for his family. His son Brandon suffered from critical, ongoing
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health issues and Mr. Walsh needed to maintain his health insurance to be able to
afford a life-saving future heart transplant for his son. He employed a large number
of employees who relied on their jobs to feed and house their families. This
background information is not provided to make excuses for Mr. Walsh’s bad
decisions, but to provide the Court with the reason those bad decisions were
improperly made.
Mr. Walsh succumbed to fear – fear of the fact that he would lose the business
he built over the past 18 years, fear that he would not be able to provide for his
family, fear that he would jeopardize his son’s life, fear that his business decisions
in obtaining those high-interest loans would be his personal and professional
downfall. For a person who spent his life serving others and being the “hero,” these
failures were not something he could easily face. Greed did not motivate Mr. Walsh
to falsify information for those loans, rather, it was desperation, the pressure of his
overwhelming responsibilities, and the fear of failing and letting down those around
him that led him to make these extremely poor decisions.
Unlike many of the PPP fraud cases that have been prosecuted nationally, Mr.
Walsh had actual, viable businesses with employees. While he took advantage of a
program and obtained loan proceeds beyond what his companies qualified for, Mr.
Walsh did not use the loan proceeds to go on lavish trips or to buy expensive cars,
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boats, or jewelry. Mr. Walsh paid his employees, and he used the majority of the
proceeds to keep his businesses afloat and to keep his staff employed. Unfortunately,
Mr. Walsh viewed the loans as inexpensive capital to replace his high-interest debt
and became aggressive in his loan applications, seeking funds over and above which
his companies were entitled. To the obtain the loans, Mr. Walsh made poor choices,
including fabricating documents when necessary to obtain the loans.
The blimp business was decimated by Covid and stopped generating any
revenue when the pandemic shut down the entertainment industry, and the world, in
April 2020. It was unclear when or if the blimp business would return to normalcy.
Because of the sudden termination of revenue and the financial uncertainty of when
the business would be able to turn a profit, Mr. Walsh used the loan proceeds to
pursue other business opportunities, including continuing to purchase and flip real
estate through his prior established businesses and venturing into the oil business to
replace the revenue lost from the pandemic. The money generated from his other
businesses provided a sustainable income for his family and allowed him to maintain
some staff.
Mr. Walsh did not apply for forgiveness of loans, and he always intended to
pay back the outstanding loans when the pandemic was over, and the entertainment
industry returned. Ironically, the PPP and EIDL loans enabled Mr. Walsh to save the
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airship companies and retain staff. Business returned slowly as the economy
rebounded. The company recently secured a large project, wrapping two airships as
sharks to promote the high-profile Shark Week for the Discovery Channel.
Mr. Walsh acknowledges that these recent successes do not absolve his prior
mistakes and he deeply regrets falsifying any information on the PPP and EIDL loan
applications. He understands and appreciates the gravity of his mistakes and the
damage he has done to other viable businesses worthy of SBA disaster funds. He
also understands the pain and hardship he has inflicted upon his family, children,
and employees. He is currently selling off his business assets to pay restitution to the
SBA and begin to make amends.
B. Characteristics of the Defendant, 18 U.S.C. § 3553(a)(1)
Mr. Walsh is a first-time offender and, with the exception of these offenses,
has led a truly exemplary life. He adores his wife and is a supportive and loving
spouse. He is an amazing father to his 11 children and is always active and present
in their lives. They are an extremely close family; his children are home-schooled
and they live on a farm where they have horses, chickens, and cows. Patrick and
Hannah believe that these surroundings help the children not only to appreciate each
other, but to appreciate nature and its blessings. Mr. Walsh often arranges his work
schedule to attend his kids’ activities including, karate, volleyball, horseback riding,
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and animal husbandry. He takes his family on extended business trips so that he can
provide support to his wife and be continuously present in their lives.
Mr. Walsh has dedicated his life to helping others and serving those less
fortunate. He dedicated many years of his life through missionary work, helping to
build sustainable food systems for the orphaned children and indigent communities.
He hoped to continue this life work as he grew older, however missionary work
proves difficult with 11 children, especially with a child who requires specialized
healthcare. Over the past several years, Mr. Walsh has focused on community
projects and service through his church to fulfill his drive to help others and give
back to his community. He has donated a great deal of time to a local association,
the Arc of Levy County, that provides assistance to mentally disabled citizens and
disabled persons. When Mr. Walsh and his friends recognized that there was a lack
of resources in their rural community for the mentally challenged, they helped build
a local chapter, the Gulfhammock Wild Hog Canoe Race. They raised tens of
thousands of dollars by hosting events, organizing yard sales, and throwing
community cookouts over the years to sponsor this nonprofit organization. Keith
Maynard, President of the 501(C)(3), praises Mr. Walsh and his dedication to charity
in his letter to the Court:
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Patrick is a man with a huge heart!! He has been a blessing to me AND
my organization. Patrick and his family have always volunteered to
help us put on the Wild Hog Canoe Race and every year for the past 11
years. Always willing to help in any way needed. He has donated his
time and money to help make the event a big success, even participating
in the race itself with his children. Patrick is a good family man!!
Patrick owns an aerial advertising business and blimp business in
Williston, FL. There are 3 warehouses on the property. He has let us
one of the warehouses to store donated items and put on yard sales for
about 9 years and never once asked for any rent.
Mr. Walsh is steadfast in his faith and attends church multiple times per week
with his family. He and his wife encourage their children to give back to the
community through volunteer work with Awana, a faith-based organization that
focuses on the spiritual devotion of children. For most his life, Mr. Walsh followed
the gospel he studied and tried to emulate his life to reflect his deep Christian faith.
As evidenced by the letter from his Pastor, Reverend Kendall, Mr. Walsh
sought spiritual guidance early in this investigation and appears to be genuinely
repentant. He also commented on Mr. Walsh’s compassion and generosity:
Patrick has also demonstrated a generosity to others. He has employed
many people who have been in financial need. He has graciously helped
them get on their feet and established. I have known him to be a
generous man who is concerned about the welfare of others, and I have
seen this concern drive him to take action to help.”
This sentiment is corroborated by employee Greg Jacobs, who writes:
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As if 11 children weren’t too much to watch over, Patrick and Hannah,
for that matter, welcome us, as employees into the fold. He has this
sense of obligation to each of us to be sure he is taking care of us as
well. Whether it is through our payroll or needing time off for personal
matters, he is sure to be there for us like he would for his own.
This sense of obligation kept Mr. Walsh on a faithful path for most of his life
and it also made him stumble from that path in a time of great distress. He has prayed
on this issue and accepted responsibility early during his criminal prosecution to
become a better role model for his children and community.
Mr. Walsh’s drive to help has been a life-long endeavor; it did not start at the
inception of this case, and it will not end after his sentencing. He has been working
closely with Prison Professors Charitable Corporation, a charitable organization
dedicated to critical prison reform that creates programs to teach and inspire people
in prison and at-risk youth valuable life skills. Mr. Walsh created a lesson plan for
distribution in jails and prisons across America. Mr. Walsh’s lesson plan, “Teaching
People in Prison with Patrick Walsh” will also be used as a resource for training to
help formerly incarcerated people transition into the labor market.
Mr. Walsh attaches and incorporates letters of support as Exhibit A.
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C. To reflect the seriousness of the offense, to promote respect for the law,
and to provide just punishment for the offense. 18 U.S.C. §
3553(a)(2)(A).
Mr. Walsh understands the seriousness of his offenses, but in assessing a
“just” punishment, asks the Court to consider that these were non-violent offenses
committed by a man with no prior criminal history and the proceeds of his crimes
were used largely in support of his businesses, and not to fund a lavish or extravagant
lifestyle. Mr. Walsh accepted responsibility early and pled guilty to a pre-indictment
plea. He has been cooperative with law enforcement and worked with the
government to create a business plan that allows him to pay restitution as soon as
possible. Over the past few months, he has been working diligently to pay off his
debts and make his victims whole, selling business assets and properties (with DOJ
approval) and wiring the proceeds of these sales to government escrow accounts.
To date, Mr. Walsh has made total repayment proceeds in the amount of
$1,612,487.04. Mr. Walsh recently submitted an updated plan to the government
regarding the sale of additional assets and properties to pay complete restitution
payments.
Mr. Walsh has also been working diligently to keep his business afloat and
his staff employed. Thomas Oakes, a consultant for Mr. Walsh’s airship companies,
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also praised Mr. Walsh’s hard work and dedication to making his businesses
succeed:
We ancticipate the future growth of the LED Airship to be potentially
explosive and want to expand to other markets such as Los Angeles,
Las Vegas, and New York to give advertisers the ability to expand their
reach…Now to bring this full circle, if it has not been for Patrick’s calm
demeanor and dedication to achieving great things none of this business
could have happened.
The possible loss of his aviation business that he spent the past decade
building, the significant amount of money owed in restitution, the pending demand
for treble damages via a civil lawsuit by the government, the sale of his assets, and
the substantial harm to his reputation are all significant punishments. The harshest
punishment, however, is Mr. Walsh knowing the harm and hurt that he has brought
to his family who still very much needs him to be present in their lives. No matter
his sentence, Mr. Walsh considers himself lucky to have his family’s continued love
and support.
D. To afford adequate deterrence to criminal conduct. 18 U.S.C. §
3553(a)(2)(B).
The prosecution Mr. Walsh brought upon himself has devastated him
personally, professionally, and financially. The charges and intense negative media
coverage surrounding the case have had a detrimental impact on his family and his
business. Mr. Walsh is selling off his personal and business assets to pay restitution
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and make his victims whole. He faces losing the aviation business he spent over a
decade building. The USAO and DOJ Civil Divisions are conducting civil
investigations of Mr. Walsh and his entities for alleged violations of the False Claims
Act and, even with a request for a pre-indictment global settlement, are demanding
treble damages in addition to the restitution and forfeiture in the criminal case. This
aggressive dual prosecution will cripple Mr. Walsh and is family for years to come.
Mr. Walsh was always proud of his ability to provide financial and emotional
support to family; his ability to provide for his family is now gone and he is
struggling to figure out a plan to support his wife and 11 children during any term
of incarceration.
A lengthy jail sentence is not called for in this case and would not further the
statutory goals of sentencing. As a result of this widely reported case, the public now
understands what can happen when the full prosecutorial force of the United States
government is brought down upon an individual, and would-be violators have been
generally deterred from engaging in similar conduct.
E. Protecting the public from further crimes. 18 U.S.C. § 3553(a)(2)(C)
Mr. Walsh does not present a risk of recidivism. His age, lack of record,
supportive family, employment history, and unwavering faith show there is an
extremely low risk that he will recidivate. He took responsibility for submitting false
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information to support the applications in a pre-indictment plea and has done
everything possible to make reparations prior to his sentencing date.
F. Kinds of Sentences Available, 18 U.S.C. § 3553(a)(4)
A period of significant incarceration would not benefit anyone in this case.
Mr. Walsh accepted responsibility, has been actively working to pay off restitution,
and has been cooperative throughout the prosecutorial process. He has the capability
of being released from prison to successfully build his other businesses in the real
estate and oil fields, allowing him to create employment opportunities in other rural
communities. It would also allow him the ability to financially recover and provide
for his wife and 11 children. An 18-month sentence would allow Mr. Walsh to
continue to be a contributing member of society without being a financial burden to
an already overly crowded prison system still suffering from the ramifications of
COVID-19, of which Mr. Walsh contracted in 2021 and almost died.
G. Need to Avoid Unwarranted Sentencing Disparities
We would ask the Court to take into consideration not only the sentences that
have been given in PPP cases that have been prosecuted but also the Government’s
disparate charging decisions. Here, in addition to pursuing Mr. Walsh criminally,
despite his demonstrated commitment to rapidly paying restitution, the government
is also pursuing Mr. Walsh civilly and is demanding he pay treble damages in
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addition to the restitution and forfeiture to be ordered at his sentencing. While
parallel criminal and civil actions are not unusual or inherently unfair, here, the
government’s insistence is that Mr. Walsh plead guilty, accept responsibility, pay
restitution, pay forfeiture, go to jail, and then also pay treble damages. The
government has the discretion to proceed how it deems appropriate but the blatant
piling-on in this case is disparate from other reported cases in this District and
otherwise. The Court should be aware of the government’s unique aggressive-stance
with respect to Mr. Walsh – the impact of his sentence will likely be more significant
than usual as a result.
Certain factors, not present here, lead to lengthier jail sentences. Those factors
include lavish spending, boasting about the crime publicly, and lack of
remorse/acceptance in procurement of the proceeds. Mr. Walsh, unlike some of the
individuals receiving lengthier jail sentencing, and without minimizing what he did
do, did not spend lavishly on luxury cars, trips or consumer goods, did not boast
about stolen funds and a lavish lifestyle on social media, and did not obstruct the
government’s investigation. On the other hand:
1. In United States v. Benjamin Tifekchian, 3:21-cr-00244-IM, District of
Oregon, received a 21 month prison sentence. There, the defendant, who
was also wanted for murder in his home country of Armenia, fraudulently
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obtained $910,773.35, which he spent on travel and gambling instead of
for legitimate purposes.
2. In United States v. Shahank Rai, No. 1:21:cr-00009, Eastern District of
Texas, the defendant received 24 months imprisonment. There, the
defendant filed 2 PPP loan applications seeking $10 million and $3 million
respectively and claimed to have 250 employees earning wages in each
application when, in fact, no employees worked for his purported business.
3. In United States v. Julio Lugo and Rosenide Venant, No. 8:21-mj-01295,
Middle District of Florida, Julio Lugo received 42 months imprisonment.
The defendant there submitted at least seventy (70) false and fraudulent
loan applications seeking PPP and EIDL funds, including for shell
companies established by the defendants and their relatives. The defendant
also spent lavishly, including paying off a luxury vehicle, spending more
than $62,000 at casinos, and for other personal purposes. Additionally, the
conspirators withdrew at least $320,000 in cash. On top of that conduct,
Lugo also boasted about the misuse of the SBA funds in a Facebook video
featuring a hotel room littered with $100 bills and at least $5,000 in
merchandise from Louis Vuitton.
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4. In United States v. David T. Hines, 1:21-cr-20011, Southern District of
Florida, the defendant received 78 months imprisonment. There, the
defendant fraudulently obtained approximately $3.9 million, which he
spent on a $318,000 Lamborghini Huracan for himself and other personal
expenses.
5. In United States v. Lee E. Price, III, 4:20-cr-00522, Southern District of
Texas, the defendant received 110 months imprisonment. There, the
defendant obtained approximately $1.6 million in loans, which he spent on
a Lamborghini Urus, a Ford F-350 and a Rolex watch. The defendant also
used the identity of another person, identified by the government as Victim
1, a deceased person, to obtain a small business construction PPP loan.
Mr. Walsh’s sentence should account for the disparity in the type of criminal
behavior he committed, because that conduct, while very serious, was different than
other conduct that resulted in the above-described lengthy jail sentences.
H. Restitution
Mr. Walsh negotiated and entered into a Plea Agreement Rider to memorialize
his agreement and plan to actively and quickly pay restitution to the government. He
provided the government with two avenues of repayment: 1) sell his company which
would have provided enough money to satisfy his restitution obligation or 2) sell his
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airship assets and various properties which would also satisfy his restitution
obligation but over a longer period of time. Mr. Walsh had a buyer for his airship
business, entered into a sales contract, and had a closing date. Unfortunately, the
negative publicity associated with Mr. Walsh’s plea of guilty caused the purchaser
to back out of the transaction.
Mr. Walsh started actively selling his properties and assets. To date, Mr.
Walsh has worked hard to liquidate his assets on a near fire-sale basis and has made
total repayment proceeds in the amount $1,612,487.04 to the government thus far.
Specifically, he has sold the following assets:
Sold the 7005 State Highway 183 Cisco, TX 76437
o Transferred full proceeds of $453,510.95 on 11/16/22
Sold A60 Airship
o Transferred full proceeds to SBA and DOJ of $1,150,000.00
Sold lot on US HWY19 in Dixie County, FL
o Full proceeds of $8,976.09 transferred to title company 01/13/23
Mr. Walsh continues to work aggressively to liquidate and dispose of his
assets in an orderly fashion, in compliance with his Plea Agreement Rider and in
consultation with the government. He has submitted to the government a timeline
of contracts that are scheduled to close within the next 120 days. The proceeds from
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these closings will be transferred to the Department of Justice and, hopefully, will
completely satisfy his restitution.
In addition, the Department of Defense has an interest in four (4) of Mr.
Walsh’s airships as an experimental platform for military purposes. The airships are
unique, and it would likely be difficult or impossible for the DOD to source them
elsewhere. Mr. Walsh has agreed to surrender the airships to the government, the
value of which should exceed the restitution owed. If this transaction does not
transpire, Mr. Walsh will continue to sell his assets and properties as expeditiously
as possible to make his victim whole.
III. MOTION FOR A DOWNWARD DEPARTURE
Factors exist that warrant a downward departure. Specifically, according to
USSG §2B1.1, Application Note 21(C), if the Court determines that the figure for
loss (intended or actual) substantially overstates the seriousness of the instant
offense, especially as it related to the defendant’s participation, a downward
departure may be warranted. Here, these factors include: i) Mr. Walsh applied for
$14,772,399 but received approximately half that amount, $7,818,167; ii) Prior to
learning the existence of the instant investigation, Mr. Walsh voluntarily elected to
withdraw his applications for four PPP loans.
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Mr. Walsh’s election to withdraw these applications demonstrates that their
inclusion in his sentencing calculation overstates his intended crimes and a departure
is appropriate. Even if they are not included as intended loss, Mr. Walsh’s actions
demonstrate he was not driven blindly by greed, trying to claim as much money from
the government as he possibly could. Instead, he withdrew these applications.
Specifically, Mr. Walsh withdrew:
A. American Blimp Company ($636,610),
B. Airsign Airship Group ($1,111,488.00),
C. Airsign, Inc. ($1,313,092) with Chase Bank, and
D. Airsign Airships America ($809,642) with WebBank.
See PSR Par. 16. iii). Mr. Walsh has accepted responsibility for his criminal choices,
but the Court should also acknowledge the choices he made to limit or avoid other
criminal choices. A downward departure would do so.
Mr. Walsh offered and attempted to provide substantial assistance to the
Government in the investigation of other crimes and remains cooperative. See
United States v. Fernandez, 443 F.3d 19, 33 (2nd Cir. 2006) (Section 3553(a)
analysis should include consideration of attempts at cooperation and characteristics
evidenced by those attempts, even if government does not move to recognize the
cooperation efforts); see also United States v. Barner, 572 F.3d 1239, 1250 (11th
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Cir. 2009) (“a judge basing a sentence under the considerations outlined in 18 U.S.C.
§ 3553 may take a defendant's substantial assistance into account even if a prosecutor
withdraws (or does not file) a §5K1.1 motion."). Notwithstanding that the
Government does not appear to be seeking a downward departure pursuant to USSG
§5K1.1, Mr. Walsh’s willingness and attempts to cooperate, and what that says about
the nature of his character and the sincerity of his acceptance of responsibility,
should be considered when the Court evaluates the overall seriousness of the offense,
Mr. Walsh’s actions, and whether a departure from the §2B1.1 loss calculation is
warranted.
IV. OBJECTIONS TO LOSS AMOUNTS
Mr. Walsh objects to the intended loss of $14,772,399 being used for the
guideline calculation. The actual pecuniary loss of $7,818,167 is the only loss
amount that should be considered by the Court.
On January 18, 2022, after the PSR was drafted, the Eleventh Circuit ruled en
banc in United States v. Brandon Romel Dupree, that where the text of a sentencing
guideline is not ambiguous, the Court cannot rely upon the guideline’s commentary.
United States v. Dupree, No. 19-13776, 2023 WL 227633 (11th Cir. Jan. 18, 2023).
The Eleventh Circuit stated:
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Because the Guideline is unambiguous, he argues, we must not defer to
the commentary's broader definition of controlled substance offense to
include inchoate offenses. We agree.
Id. at *3 (footnote omitted). This holding represents a significant departure
from previous Eleventh Circuit precedent and specifically overruled any contrary
prior Eleventh Circuit decisions. Id. at 8-9. Following Dupree, as it applies to Mr.
Walsh, the only loss the Court can and should consider is the actual loss he caused
– so-called intended loss is no longer applicable. See Id. at *8 (the text is
unambiguous and so “we have no need to consider, much less defer to the
commentary…”).
The question presented in the petition for the en banc Dupree rehearing was
whether the Application Note 1 (§ 4B1.2—which renders certain conspiracy
offenses “controlled substance offense[s]) is unenforceable because it adds to, not
interpret, the plain text of the guideline. The Eleventh Circuit agreed with Dupree
and plainly held where the text of a guideline is not ambiguous – using every
available tool for statutory interpretation – the court should not apply the
commentary to the guideline. Id. By extension, and as other courts have held, the
term loss in Section 2B1.1 is not ambiguous, needs no further interpretation or
clarification, and means actual loss and only actual loss.
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Section 2B1.1 of the USSG specifies an offense level increase “[i]f the loss
exceeded $6,500.” USSG §2B1.1(b)(1) (emphasis added). The commentary
includes a lengthy advisory regarding how to calculate loss, including through the
use of so-called intended loss. Id. at Commentary Application Note 3. However,
because the word “loss” is not ambiguous, this Court need not, and cannot, use the
guideline commentary to increase Mr. Walsh’s offense level. Intended loss is no
longer applicable.
The Third Circuit recently reached this same conclusion in United States v.
Frederick Banks. United States v. Frederick Banks, No. 19-3812 (3d Cir. 2022).1
There, the Third Circuit held that the “loss enhancement in the Guideline’s
application notes impermissibly expands the word “loss” to include both intended
loss and actual loss.” Noting the Guideline does not mention “actual” versus
“intended” loss; that distinction appears only in the commentary. That absence alone
indicates that the Guideline does not include intended loss. Id. (quoting United States
v. Nasir, 982 F.3d 144, 471 (3d Cir. 2020). There is no ambiguity in the text of the
§2B1.1 guideline requiring the Court to look to the commentary for guidance. Id.
1
At least one District Court has recently agreed with the analysis in Banks and has refused to
“consider the commentary's definition of “loss” as including “intended loss” in applying § 2B1.1.”
See United States v. McKinney, 2022 WL 17547467 (EDMI, December 9, 2022).
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Following this reasoning, Mr. Walsh should not be sentenced based on a
guideline loss amount which was unreasonably determined under guideline
commentary based on “intended loss” not actual loss, particularly because the text
of the guideline is clear. As such, the actual loss of $7,818,167 should be the loss
amount for purposes of the loss calculation pursuant to USSG §2B1.
If the Court adopts the actual loss analysis of $7,818,167, an 18-level upward
adjustment should be applied which renders a base offense level of 25. Per the
Court’s Order, a separate memorandum regarding the Dupree ruling will also be
filed.
V. THE GOVERNMENT’S OBJECTION TO ¶26 SHOULD BE
OVERRULED
The Government’s objection to ¶26 of the draft Presentence Investigation
Report should be overruled. The enhancement fails both legally and factually. The
law does not support the enhancement and there is no factual foundation – that is to
say, no evidence – in the PSR or otherwise to support the facts required to determine
that this enhancement applies.
The Government incorrectly contends that the guidelines should include a
two-level enhancement pursuant to USSG §2B1.1(b)(17)(A). The 11th Circuit has
examined the application of this guideline and stated:
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[w]e hold today that, to trigger the [enhancement], at least in a case
involving property held by a financial institution for a depositor, the
financial institution
(1) must be the source of the property, which we interpret as
having property rights in the property, and
(2) must have been victimized by the offense conduct.
United States v. Muho, 978 F.3d 1212, 1221 (11th Cir. 2020). The 11th Circuit
further stated that the threshold question is whether “[i]n shorthand, the financial
institution “holds” the property” and “[t]he financial institution must be a target of
the offense conduct.” Id. at 1222. The standard the government proposes, which
the 11th Circuit has rejected, is akin to “affected” rather than “deriving from.” Id.;
see also Stinson, 734 F.3d at 186 (“mere tangential effects on financial institutions
will not support application of the enhancement.”).
Here, the SBA, not a financial institution, is the source of the property and no
financial institution was victimized by the conduct. Rather, the financial institution
administered the loan and was repaid by the SBA, who is the victim in this case and
who will receive restitution from the Defendant. “The loans were administered by
the private sector (e.g., banks, credit unions, existing SBA Section 7(a) lenders), but
they were fully funded and guaranteed by the federal government.” Sport & Wheat,
CPA, PA v. ServisFirst Bank, Inc., 3:20-CV-5425-TKW-HTC, 2020 WL 4882416
(N.D. Fla. Aug. 17, 2020).
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The Defendant’s conduct here (albeit illegal) is akin to his cashing a check
issued by the SBA. The SBA offers and guarantees funds, and the Defendant
presents information to a financial institution to obtain the benefits of that offer.
Similarly, a consumer presenting a check to the financial institution is asking that
financial institution to honor the guarantee of that document and to provide the
consumer with funds on behalf of the check issuer. The 11th Circuit could not be
more clear here –
[i]n no way would the guideline apply to either ordinary wire transfers
or checking transactions, not because of the source requirement, but
because of the victimization requirement.
Muho, 978 F.3d at 1226. They also observed the guideline does not apply to a check
cashing scenario because:
[f]unds pass from one bank to another, not through a bank. The sending
bank possesses the funds initially; the recipient bank possesses them
ultimately.
Id.; See United States v. Huggins, 844 F.3d 118, 122 (2d Cir. 2016) (no enhancement
for “passage of money through a financial institution”).
Even if the Government’s arguments were legally accurate, which they are
not, the Government’s claim requires factual support not present here. The 11th
Circuit mandated “[t]he source prong requires an intentional, close examination and
finding of from whence the property is derived[.]” The government has provided
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zero factual support for such an intentional examination in this case. For example,
the government contends:
in the event of a default by a borrower – including one related to a
borrower’s conviction for PPP-related fraud – the lender must take
numerous steps before seeking a guaranty purchase from the SBA.
Doc. 27 at 2. But there is no discovery or evidence, and certainly no factual
support in the PSR, that any lender took any steps here, let alone numerous
steps, and there is no evidence in the PSR or otherwise that the banks were
actually harmed in this case – specifically and based on actual evidence. The
government also claims that the financial institutions “were temporarily
deprived of their own funds until the SBA made guarantee purchase payments
for Mr. Walsh’s PPP loans.” But again, there is no evidence in the PSR or the
discovery to support this conclusion and the government’s own conclusions
based upon its reading of the facts is not sufficient to support an enhancement
of this nature.
In addition, the Government’s own conclusion does not support the imposition
of this enhancement under (17)(A). The government concludes that the
enhancement must: be included in Mr. Walsh’s guideline calculation in this case. By
fraudulently borrowing from financial institutions, Mr. Walsh put the financial
safety and soundness of those institutions at risk; Doc. 27 at 3 (emphasis added).
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However, that argument is irrelevant because it relates to an enhancement under
§2B1.1(b)(17)(B) – jeopardizing the financial safety of a financial institution –
which plainly does not and cannot apply here. Rather, the Government has claimed
that (b)(17)(A) (not (B)) applies based on the alleged harm caused to financial
institutions.
The enhancement simply does not fit these facts and should not be applied.
VII. TEXAS PROPERTY
The Final PSR (paragraph 65, note 8) discussed a Texas property not
previously disclosed to Probation. Mr. Walsh was the grantor of the Walsh
International & Irrevocable Family Trust Indenture (the “Trust”), legally removing
all his rights of ownership to the assets and the trust on August 17, 2020. The legal
ownership of the trust and its assets belongs to the Trustee, Georgetown Trust. The
Ovalo property is wholly owned by Shiloh Oil Company and 1402 CR 161 LLC, a
company owned by the Trust. The property is utilized for business purposes for
Shiloh Oil Company. Defense counsel has provided this information to the
government, as well as the name of the trust attorney in hopes of resolving this issue
prior to sentencing. Mr. Walsh will be prepared to address this issue further at
sentencing if it cannot be resolved.
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However, Mr. Walsh wants to be clear that he was never attempting to hide
assets. He disclosed this Trust to the government at least twice and disclosed the
specific real property to Probation on September 22, 2022. The Walsh Family
International & Irrevocable Trust was timely disclosed in the financial disclosure
forms to Probation prior to completion of the draft Pre-Sentence Investigation
Report. In addition, on December 22, 2022, in connection with the Department of
Justice’s Civil Division parallel investigation, Mr. Walsh provided the government
a Financial Statement of Debtor form and on page 3 stated:
The Walsh Family International & Irrevocable 1) the trust has no liquid money
other than a couple thousand to cover trust fees a 2) the Trust does own Shiloh
Oil Company Inc which still has operated at a loss and has not recognized a
profit yet.
Mr. Walsh also sent a letter to U.S. Probation Officer Minafield on September 22,
2022, requesting permission to travel to the Texas property for business purposes.
Clearly Mr. Walsh would not be providing the address of a location to the United
States government, while announcing his stay at this property for an extended period
of time for business, if he was trying to hide the property. The letter to Probation is
attached and incorporated as Exhibit B.
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VII. CONCLUSION
Mr. Walsh respectfully requests the Court to consider the factors and
arguments presented and sentence Mr. Walsh to a fair and just sentence of 18 months
with no fine.
Respectfully Submitted,
/s/ Nicole Hughes Waid /s/David G. Lazarus__________
Nicole Hughes Waid David G. Lazarus (pro hac vice)
FisherBroyles LLP Verrill Dana LLP
Florida Bar #0121720 One Federal Street
625 Tamiami Trail North, Suite 203 20th Floor
Naples, FL 34103 Boston, MA 02110
P: (202) 906-9572 P: (617) 292-2859
E: Nicole.waid@fisherboyles.com E: dlazarus@verrill-law.com
CERTIFICATE OF SERVICE
I, David G. Lazarus, attorney for Patrick Parker Walsh, do hereby certify
that I have, this day, filed the foregoing with the Clerk of Court via the CM/ECF
system, which has caused a true and correct copy to be served on all counsel of
record.
/s/ David G. Lazarus
David G. Lazarus, Esq.
CERTIFICATE OF WORD LIMIT
I, David G. Lazarus, attorney for Patrick Parker Walsh, do hereby certify
pursuant to L.R. 7.1(f) and L.R. 5.1(C) that this Sentencing Memorandum contains
less than 8,000 words in 14-point font.
/s/ David G. Lazarus
David G. Lazarus, Esq.
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