 Welcome back. Okay, so we've finished the sentencing phase, and here's where we stand. RCI has begun its term of probation, and Slick and Moneymaker have begun their terms of supervised release. RCI has revamped its ethics and compliance program, and they all lived happily ever after. But if it were only that simple, after the plea but prior to sentencing, Moneymaker transferred ownership of his house to his second-former wife. The house had been their marital home owned in joint tenancy, until the transfer. It has a market value of $500,000 with equity of $400,000. And during supervision, Slick filed for bankruptcy. Paul O'Connor, you're our supervision officer in this case. What's your role in tracking assets of these co-defendants? It's a very important role amongst many other issues we address during supervision. The probation officer serves his eyes and ears of the court. We are to carry out the orders of the court. It's incumbent upon the probation officer to continually assess the finances of an offender. I choose what a multifaceted approach, if you will, in my assessment and continue monitoring of the offenders. First, I'm going to look at the finances. I'm going to look at them pre-indictment. I'm going to look at the pre-sentencing phase, post-sentencing phase, and in most cases a post-incarceration phase, to see what the money was at the beginning and what it is at present. I'm going to identify non-essential assets to apply towards the monetary penalties. Also, I'm going to look to identify possible movement of assets, such as Mr. Moneymaker's movement of his home and to others' names. That's when I'm going to turn to the Financial Litigation Unit of the U.S. Attorney's Office and assessing the need for a fraudulent conveyance action at that point. The second facet, I'm going to look at the future earnings of that offender that we'll probably have under supervision. In the 11th Circuit, we do have some leeway in setting the payments if the court has not specifically set minimum monthly payments. So we're going to base them on the gross earnings or the earning capacity for those offenders who choose to purposely limit their income. Northern District, Georgia, we use a standardized payment schedule, which brings somewhat of a consistency amongst the offenders under our supervision, once again based upon their gross income. The third facet is the continued assessment of the finances. At least every six months on some of those cases, I'm continuously doing it on a monthly basis. The routine net worth statements follow up on those, cash flow statements, your databases, choice point searches, real property searches to see if offenders have properties under their name, but also family members. We're going to look at the Secretary of State to see what kind of corporations have been formed in the past, what kind of corporations are formed in the future, once again under the individual offender's name, but also the family members. I have found that a lot of the white collar offenders, they trust their family members and will place corporations in their name. Many times they will not step beyond that close circle. And so make sure we look at the family members in those databases as well. Also, review those tax returns, verify that that is indeed the information that was furnished to the Internal Revenue Service, wealth of information on those tax returns when they are completed properly. Some of the other areas that I always look at is if there's ever been mortgage applications filed. Why would you do that? That is important because the offender at that point in time, they are trying to convince the lender of their great credit worthiness. So I want to look at those because that will, a lot of times, have a whole different story than what has been portrayed to the Probation Office. So then we have to determine now which one is the correct story. Also, I'm going to remain very vigilant on the self-employed offenders. That was what I wanted to ask you about and was hoping you'd be able to touch on because we have this guy, Money Maker, who's got a condition in terms of self-employment. He seems to be the entrepreneurial type. Talk a little bit about that. The self-employed offenders are the hardest to supervise. That leaves so much leeway for their ability to be creative. So much leeway for them to generate sizable income, because a lot of these people are very capable people to generate income, but creative in where they direct that income. And when it comes to supervision, it's not usually income that's directed to the offender directly. So it's a constant test to watch what an offender is doing. And I personally, if at all possible, steer them away from self-employment opportunities because verification is so, so important in supervision in this situation and many other situations under supervision. So I don't, if I can steer away from it and work with someone directly and know what the offender is really doing on a daily basis, I feel much more comfortable and feel that everybody is going to be served more properly. One other aspect which is really very elementary as far as a probation officer goes, and that is the very important home visit. And that is the continued assessment of the standard of living. Look in those closed garages and see what kind of automobiles are parked in them. Once again, it's just an elementary tool of supervision, but it's a very important tool. And make sure you take note of the value of the television and VCR. That's a big screen TV. Thanks. You made reference to the financial litigation unit, so I want to turn to Tamara Fine and talk about, or get Tammy to talk about your involvement at this stage and can you help? Oh, absolutely. First off, I have to say I'd be thrilled to get two solvent defendants in one case. It would be incredible. We are in very close cooperation. We work with the probation officers. We have annual cross training with probation and with the clerk's office and Bureau of Prisons. And I probably feel at least a phone call a day from probation officers somewhere in our district. We work as essentially litigation support and we assist them in some financial analysis. While a person is on supervised release, it's really the probation officer's ball game, so we don't do anything without speaking with them, but we're certainly available, for example, with regard to the transfer of the property that Mr. Moneymaker was involved with. Now, again, I'd be really surprised because in my experience, Mr. Moneymaker would have already transferred all his assets after he had his first brush with the law and the statute of limitations for fraudulent conveyance actions would have already run on all of those. But since he did this relatively recently, that would not be something that would be too difficult to get voided, I would expect. I would have to look carefully at how title was held, as you've already mentioned, and also whether there was some sort of separation agreement or property settlement agreement in the divorce with his wife, because it may be, although the house was titled in both their names, she gave it to him as part of a property settlement. Depending on how it's titled and who was entitled to the property, I would try to recover half of the value, possibly all of the value, again, depending on the facts. Similarly, the bankruptcy would concern me very much. Ms. Slick has declared bankruptcy during the course of supervised release. I would hope, and it would certainly be the case in our district that the probation officer would immediately contact me since I'm also the person who handles bankruptcy cases. And we would do a whole variety of things. First, because of the automatic stay, we would immediately cease all collection activity in the flu unit. Secondly, let me stop you there and just explain the automatic stay briefly. The automatic stay is essentially an injunction against collection action that goes into place automatically when an individual files a petition in bankruptcy. And that applies to the government as well. It applies to the government if what we're doing is engaging in collection activity. It wouldn't, for example, bar criminal prosecution. In some circuits, it wouldn't bar a false claims act prosecution, but it would bar a collection of the judgments received in either of those. The second thing I would do is I would immediately go into the bankruptcy court, get a copy of the petition, the schedules, the statement of financial affairs, and I would put on my calendar when the first meeting creditors are sometimes referred to as the 341 meeting is. And either I or the probation officer or both of us would go to that meeting. I'm looking for a couple of things here. I'm looking for any sort of activity financial-wise that might make me question what's being done with the finances of this individual incurring a large amounts of debt, attempts to encumber assets between the time before the government could get its lien in place, but, for example, after entering into the plea bargain. But I would also be looking at it because I wear a different hat in my district. I think a lot of flu attorneys are also the bankruptcy attorneys and quite often the bankruptcy fraud attorneys. I'm the bankruptcy fraud coordinator in my case. And so I would also be looking at it as I do every bankruptcy I handle to see whether or not I think that there's something fishy going on, particularly when you have an individual who has a history of fraud. You have to be concerned about whether or not they're engaging in yet another fraud in the filing of their petition. Sometimes they are, sometimes they aren't, but it's something that's in the back of my mind. There was one thing that you mentioned that we kind of glossed over and wanted to make sure that we pinpointed it because when I was doing the research, putting together this program at the very beginning, spoke with several officers in the field who voiced frustration with the bankruptcy filing process. What do I do when one of my offenders under supervision files for bankruptcy? Where do I go? Who do I talk to? Talk a little bit about that. Well, you come to your flu attorney because they are used to handling these things. And one of the things we'll immediately put your mind at rest about is whether or not the defendant, we call them the debtor, is going to be able to get the restitution order discharged. Restitution orders are not subject to discharge. What about fines? To some extent it depends, but restitution orders, which is largely where the huge amounts of money are generally coming from in all of these cases, are not. With fines, there are a whole variety of factors including what chapter they're in. Okay, didn't mean to throw more. That's okay. So it's more complicated. But again, your flu attorney will sit down, look at the facts of your case, look at when the fine was imposed, look at what it was imposed for, look at what chapter of bankruptcy the individual is in and be able to work through with you whether or not something is dischargeable in bankruptcy or not. It may depend on what statute the fine was imposed under. So I couldn't really talk about that in the abstract. But the restitution isn't. And then the flu attorney or the bankruptcy attorney, whomever you get in contact with, will essentially hold your hand and walk you through the process. I would always file a notice of appearance in any of these cases so that I get every pleading that comes in the case. And that again helps me track what's being done in the bankruptcy. A lot of times it's very straightforward. A lot of times the offender doesn't even attempt to discharge the restitution, he's really dealing with other obligations and that's fine, but we want to keep a close eye on it. Very good. You've made reference to your particular district so I wanted to turn now briefly to Stan Pfeiffer. I know that you have a relationship with the flu unit in your district and I was just wondering if you could talk about that just so we could get a different perspective. About two or three years ago, our flu unit and the probation office and the clerks office developed a interoffice working relationship and agreement similar to one that's being proposed by the Monograph 114 and I think early on we were a little bit skeptical about this working agreement and identifying what each agency was going to do. In retrospect, it has been an excellent opportunity as well as an event for us because as probation officers we have learned so much from the assistant U.S. attorney and the paralegals in the flu unit helping us in terms of knowing what we can and can't do in debt collection. Just getting to know them is very good and vice versa, they have a better understanding of our roles and having that understanding in terms of how we work and I don't want to bring the clerks office into this too has created a working relationship that has increased the amount of debt that we are collecting toward restitution and fine. I think last year we quadrupled our monies in Nebraska and that was just because of the joint efforts. Paul, what's the experience been in the northern district of Georgia? We have also developed a memorandum of understanding with the United States probation office, the clerk of court and the United States attorney's office. The heads of each of those departments signed off on it and it was presented to the court for its comments and review as well. The idea is while all of us are working for the same common goal regarding the financial end of it and the collection of the debt it basically streamlined a lot of processes and we really have become more efficient and effective. We've had great increases as well in the collection of fines and restitution. It's really been a good thing for all of us because we communicate we meet once a month and bring up issues to the table. Out of that we began using the department of justice as U.S. attorney's office the billing system which the offenders are actually receiving monthly statements like they would on a credit card statement. That's been helpful to us as well. It's been a good fit for everybody and it is consistent with the criminal monetary penalties, monograph 114 that all districts should get together and work towards that common goal. Very good. I'm glad you mentioned the monograph 114 as well as we're also considering here concerned with the financial investigation desk reference and I just want folks to take a note that we're hoping that you all will or the field will take this program to consideration along with those two important documents and do your training based on this as a package. Hopefully it will provide a sort of a well-rounded approach to dealing with white collar and financial investigation issues and that kind of thing. I just wanted to make a note of that. Judge Forrester, I know you were involved in the front end of the goings-on in the northern district of Georgia. I was hoping you'd comment on that. The Chief Judge asked me to present the program that Paul and the others came up to the units committee which supervises, among other things, activities of probation of and early on her concern and I think it rose from interaction with the clerk was that the clerk was a little prickly about this. Tammy, I found out that you've got a silver bullet for bringing the clerk on board. You might want to tell everybody about it. Sure, I say to the clerk, I can make your life easier and they're always on board. It's actually remarkable how much we can make all of our lives easier when we communicate with one another and it's really the critical piece of making the entire system work. In the clerk's office, for example, we're about to make a distribution in a telemarketing fraud case to avoid the clerk having to sit there and have someone type in the names and addresses we're providing them on CD-ROM so they can simply be uploaded into the computer. If we didn't talk to them, we wouldn't know that that was a problem and that we needed to address it but the solution is really simple once we know that it's a problem. So it's critical to talk and to view yourselves essentially as a member of a team that's trying to, each with different responsibilities but each trying to assist the other in the performance of their duties. Along that line, I actually want to mention one other thing. Oftentimes, we have probation officers who are having difficulty getting financial information out of individuals. Now, generally, again, we follow the lead of the probation officer but the flu unit has a lot of tools available to obtain financial information including debtor depositions and we will conduct debtor depositions in situations where we don't believe that the financial statements are complete and thorough and we need to follow up on those or we're not getting them at all and if individuals don't show up for their debtor depositions, we'll summon them to appear before Magistrate Judge and have their deposition taken that way. So it's a good tool for getting information if the probation officer is being stymied. Very good. Judge Foster in a reaction. Okay, again, we don't want to give our corporate or organizational co-defendant short shrift here so I want to shift a little bit to Marcelo Rodriguez. You are supervising RCI in this case. One of our organizational co-defendants, RCI, has a special condition requiring the development of a compliance program that actually works. Tell us a little bit about some of the guidelines that you would follow in supervising RCI and some of the problems that could be involved, especially in a case of this level of complexity. Well, it becomes, Mark, a very complex issue because now the probation officer is entrusted upon verifying and documenting what the compliance program is all about and the organization itself has certain industry guidelines that the probation officer may be totally clueless as to what they are. So it becomes a process of educating yourself. Ideally, you want to get the regulatory officers or agencies involved in conjunction with the supervision process to a certain point by having an independent auditor involved in the process with the expenses to be paid by the organization would be much more efficient which is what we've got in place here for all the parties involved because he's to a certain point an expert and he can convey to the probation officer whether or not any irregularities once the compliance program has been put in effect whether or not there's any irregularities that are going on. So you can convey that to the court or at the same point correct those deficiencies that may be ongoing. It's also important for the officer to take an active role as it was said during the previous segment by Paula if the compliance program has no backing from the top of the organization it's pretty much a worthless program. So the officer needs to become involved, attend if at all possible the board of directors meetings, make sure that the items on the agenda concerning the compliance program are brought forth and through the independent auditor network and communicate and get a feel as to whether or not the organization now is in compliance with the program. So the supervision officer really has to develop a significant degree of expertise in the industry in which the organization is involved in order to effectively supervise in the case of this level of complexity. That is correct. Now of course there are other cases of caseload so I would imagine that perhaps there are other avenues that could be pursued and Paula I wanted to just turn to you to just get your reaction in terms of that level of complexity and what some of the creative alternatives might be. I'm pretty bemused at the thought of a probation officer at the board of directors meeting. I don't think many directors would be very surprised to see who their new colleague is. When we speak to organizations we do remind them that they're better off taking a stab at running and having a good compliance program themselves before the government comes in to help you do it. That said I think Marcelo's point is very well taken that it is I think a virtual impossibility for a probation officer to try and be the compliance officer or to oversee a compliance officer for a major company like this one which has probably different business units some of which do health some of which probably do manufacturing etc. I mean totally different unrelated industries so what I would suggest and I do suggest when we get calls about this is that at the time as a condition of probation in addition to or as part of the package the independent auditor the auditor is really for financial but in many cases the compliance doesn't go to financial irregularities it goes to fraud and that's a whole different area and it also goes to changing a corporate culture on reporting and finding problems and bringing them to attention which seem to be the problem in this case as nobody came forward there were probably a lot of signs nobody stopped it early and it became endemic and systematic. So what I would suggest is that probation officers consider as a condition of probation asking the court complex case to actually appoint a monitor can be called a special monitor it's done in all kinds of cases and that person has the responsibility of assessing the compliance efforts and reporting to the court and to the probation officer but it keeps the probation officer available to do the rest of his or her job which otherwise just monitoring can be a full time job and this has been done before it has been done courts have done it successfully it was done in the case of Con Edison the utility for New York City the probation the court appointed someone who had some experience in environmental matters and he provided very detailed reports to the court which are publicly available by the way. Just very briefly Judge we've got about a minute before we go to question and answers I just wanted to get your brief reaction how would you feel about imposing that kind of a situation or not a condition but a circumstance on a corporate defendant? I've had experience with monitors and receivers in a number of different contacts never this one and I have found that if you're careful with selecting them they're a wonderful resource the question I would have is who's going to pay them in this case I guess it's like a bracelet you could impose the cost of the monitor on the defendant that was done and again that was done pursuant to agreement but it becomes I think to a corporate defendant a much more palatable choice than having Marcello sit in on the meetings right Tim Delaney I saw you nodding that's your experience as well and that was that experience with healthcare in particular I had a large-scale Medicare Freud case in New York and the agreement was reached that the defendant would pay for the monitor and they conducted the billings and their normal operations the monitor had two people there full-time who oversaw and kind of did spot audits on the billings and we did that for a period of I believe nine months till we were satisfied that they were on the straight and narrow and that their compliance program would work Marcello I gather just to make a comment in the course of currently supervising a corporation in south Florida we've implemented some of these guidelines as well I didn't actually meant to be physically involved in the board of directors meetings but what we do is the first item on the agenda is the issue of the compliance program so the officer physically goes prior to the meeting gets together with the board of directors and ensures that it's on the agenda exactly or their representatives and then ensures that the items are carried out to make sure that the compliance program is being followed as required let's go to our questions and answers again we've got a couple of faxes in from the field the first is from Vanessa Thuman of Oklahoma western and her question is this according to the additional facts of the sentencing slick money maker RCHS where each ordered to pay $15 million in restitution are we just to assume this is joint and several who do you want to respond to that Tamara yes thanks I would assume that it was joint and several I'd probably seek some sort of clarification from the court if it didn't specify that but given that our loss is 15 million and that each of the defendants has been sentenced to pay 15 million I think it's a reasonable assumption and several liability and therefore any money paid by any one of the defendants will reduce the obligation of each of the defendants very good other reactions or Tom yes that's right another question comes from Rene Harriet supervising US probation officer from the southern district of California in the pre-sentence unit her prefaces her question with this this is a restitution question the total quote-unquote loss under the guidelines and per the facts in this case and this goes to the facts that we've added in this discussion has been established at 15 million dollars however the plea agreement sets forth a lower figure of five million dollars furthermore the court the count of conviction does not set forth an exact loss amount for purposes of restitution is the PSR bound by the five million dollars stated in the loss restitution in the submitted recommendation for restitution or is the 15 million dollars to be the recommended restitution amount what would the court do in this instance any takers judge forester thanks for bailing me out of that one the court is going at the sentencing hearing is going to establish the amount of loss at the in the count of conviction and you can't impose a sentence until you do that so if you've conducted a proper sentencing hearing that gets done and that can be different in relevant conduct so it's possible and very frequently the case that the the loss amount in the count of conviction and the relevant conduct number are different that's fairly unusual however where you have a conspiracy or plead to a conspiracy because the amount in the the loss in the count of conviction are usually co-extensive or at least that's the way we do it in our world any other reactions to Renee's question no takers huh we have now reached the end of our third segment in the program I would like to thank our panelists for joining us before we get to our closing we first review our final set of learning principles that brings us to the end of our program here today it's been a unique opportunity to have so many perspectives represented at once and we've discussed a lot of issues in the last two hours but the reality is we've barely scratched the surface this conversation about white collar crime is truly just beginning if you're a district representative for this series you can join our current online conference but before we go I would of course like to thank our wonderful group of panelists I'd like to thank the participants here with us and those of you watching in the field as always if you have any suggestions for future special needs offenders programs please feel free to email me at msherman at fjc.gov finally remember to fill out and return your evaluations and rosters your feedback helps us improve the quality of our programming thank you again for participating in this special needs offenders program and we'll see you next time