Opinion
03 Crim. 406 (HB)
October 22, 2003
OPINION ORDER
Defendant moves, pursuant to Federal Rule of Criminal Procedure 35 (a) for an order to correct the judgment. For the following reasons, defendant's motion is granted.
I. BACKGROUND
Defendant J. Bryan Williams pled guilty on June 12, 2003 to one count of conspiracy to defraud the IRS, in violation of 18 U.S.C. § 371, and one count of tax evasion, in violation of 26 U.S.C. § 7201. On September 18, 2003, Williams was sentenced to 46 months of imprisonment and three years of supervised release. In the judgment, Williams was ordered as a special condition of supervision to make restitution to the IRS on the amount equal to the balance in a bank accounts in Switzerland under the name Alqi Holdings, which was estimated to contain about $8 million. The judgment directs Williams to pay $8 million to the Clerk of the Court of the Court of the Southern District of New York by November 17, 2003.
On September 29, 2003, Williams moved pursuant to Federal Rule of Criminal Procedure 35(a) for the Court to amend the judgment to set the amount of restitution at $3.512 million. Williams contends that the judgment did not reflect the sentence imposed by the Court. Williams contends that the understanding of the parties and the order of the Court was that restitution was to be $3.512 million, which represents the stipulated-to amount of the readily provable tax loss. Williams contends that this amount was to be paid out of the Alqi Holdings accounts and that the entire amount of the Alqi Holding accounts was to be transmitted to the Clerk of the Court, who was to hold the balance — i.e., the amount in the accounts less $3.512 million — while Williams and the IRS negotiated the amount of penalties and interest he owes. The government, on the other hand, contends that the order of restitution of $8 million in the judgment accurately corrects the sentence imposed.
"Within 7 days after sentencing, the court may correct a sentence that resulted from arithmetical, technical, or other clear error." Fed.R.Crim.P. 35(a). Although Williams's motion was on September 29, eleven calendar days after the sentencing, it was nevertheless timely because weekend days are excluded from the calculation of time in this situation. See Fed.R.Crim.P. 45(a)(2).
My understanding of what sentence I imposed is in accord with Williams's interpretation. The issue of restitution occupied a considerable portion of the sentencing, much of which involved whether the not-yet-determined penalties and interest were to be included in the order of restitution; there was no dispute that at a minimum the restitution would include the $3.512 million that the parties agreed was the readily provable tax loss. Although both parties agreed that Williams and the IRS were to negotiate the penalties and interest, it appears upon close inspection of the sentencing transcript that they each seemed to think that the other side agreed with their position, when in fact they did not ever reach an agreement about whether these penalties were to be included in or excluded from the order of restitution. The government's position all along appears to have been that the amount of penalties and interest was to be determined within 90 days, and that once determined this would be added to the agreed-upon $3.512 million, pursuant to 18 U.S.C. § 3664(d)(5). Williams, on the other hand, seemed to maintain all along that these amounts would be excluded from restitution.
At the outset, I stated:
[T]here is some agreement that with respect to the taxes evaded, not counting the penalties, it comes to $3.51 million, and that that is part of what the restitution will include. I am not positive as to whether the restitution -1 gather there has been no calculation with respect to penalties and interest, and I am not including that in the restitution amount, but as I understand it, you have agreed to pay what you and the government conclude amount to those penalties."
Transcript of 9/29/03 Sentencing at 20-21.
As I explained, I was uncertain about the propriety of including in the order of restitution an amount that had not yet been determined:
The reason why I was hesitant to go forward this morning is I don't think anybody here is ready to buy a pig in a poke. This is a figure that has not yet been negotiated. I am — perfectly happy to say that the balance in the Swiss account should be sent here and made out to the clerk as you suggest and forwarded to the IRS. . . . As for the negotiation with respect to penalties, I am not at all certain what it is my role should be and whether or not I am allowed to just say, you guys go and come back, and if I agree I will add my imprimatur, which I gather is what you're asking me to do.
Transcript of 9/29/03 Sentencing at 32.
Count One falls under 18 U.S.C. § 3663A, which requires a court to order restitution. Count Two is under Title 26 and thus not covered by the restitution statutes. The parties dispute whether penalties and interest can be ordered as part of restitution here. I need not resolve this issue because it was not my intention in sentencing Williams to include in the restitution the not-yet-determined penalties and interest.
AUSA Urofsky set out his position as follows:
[Y]our Honor set that the $3.512 million be due and payable two months, 60 days from today, which would be November 17. That would give us enough time to notify the Swiss, for Mr. Williams to sign the necessary documents for the transfer of the funds . . . . Then under Section 3664(d)(5), we ask for 90 days to provide the Court with a number for the penalties and interest, and the Court at that time would set a date certain for the payment of that, which I would assume would be immediate payment out of the balance of whatever is left in the Swiss account and then a schedule of payments if there is any balance left after that.
Transcript of 9/29/03 Sentencing at 28.
Williams responded as follows:
Our understanding of the plea agreement with the government and what would happen today is that we stipulate as to the tax loss of $3.512 million. We always understood that the Court's restitution order would be an order requiring Mr. Williams to pay $3.512 million to the IRS, and that's essentially all that this Court would be required to do. Our agreement is that we will then sit down with the IRS and we will determine with the IRS what penalties and interest Mr. Williams owes, and separate and apart from anything that this Court has to do, Mr. Williams will pay that money to the IRS.
Transcript of 9/29/03 Sentencing at 29.
The source of the confusion, amongst others, was that despite my concern that the matter was not yet ripe for sentencing, both sides urged that I go forward, a course I followed but which has now turned out to have generated some, in my view, unnecessary discord. Finally, I expressed a strong preference — and the parties agreed — that all the money be sent at one time and be placed under this Court's jurisdiction while Williams resolved his penalties and interest with the IRS. Accordingly, it was ordered that all of the approximately $8 million in the-Alqi Holding accounts was to be forwarded to the Clerk of this Court. It was not my intention that all these fluids were to be ordered part and parcel of the order of restitution. Rather, I understood and intended that while all the funds from the Alqi Holding accounts were to be forwarded to the Clerk of this Court by or before November 17, 2003, only $3.512 million of this amount was restitution, the balance to be held by the Clerk of this Court until Williams and the IRS reached an accord and that dollar amount was then to be forwarded to the IRS.
After I expressed my reservation about going forward with the sentencing without an agreed-upon amount of penalties and interest, I stated my preference that the balance of the Alqi Holding account be transferred to the Clerk of the Court here, to which Mr. Schertler responded, "Absolutely. We agred to the entire balance going to the clerk of the court in this district." Transcript of 9/29/03 Sentencing at 33.
III. CONCLUSION
For the foregoing reasons, defendant's motion, pursuant to Federal Rule of Criminal Procedure 35(a) for an order to correct the judgment, is granted and the judgment is amended as follows: Williams is ordered to pay the entire amount in the Alqi Holdings accounts to the Clerk of this Court by November 17, 2003. Williams is ordered to pay $3,512,000 as restitution. The balance shall be held by the Clerk of the Court pending the resolution of the amount Williams owes the IRS for penalties and interest and then forwarded to the appropriate IRS division. An amended judgment has been entered reflecting this decision.
IT IS SO ORDERED.