130949725v3 0920216

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF AMERICA

v.

JAMES DAVIS

)

)

)

)

)

Case No. 11 CR 54-8

Judge: Charles R. Norgle, Sr.

DEFENDANT JAMES DAVIS' SENTENCING MEMORANDUM

Defendant, James Davis, by and through his attorney, Daniel M. Purdom, for his 

Sentencing Memorandum, states as follows:

1. Introduction

Defendant James Davis stands before the Court humbled and embarrassed for the shame 

he has brought upon himself and his family. Mr. Davis, pursuant to a plea declaration, entered a 

guilty plea to one count of conspiracy to commit health care fraud in violation of 18 U.S.C. 

§1349. For the reasons set forth below, Mr. Davis respectfully requests that the Court impose a 

sentence of probation, a sentence that is “sufficient but not greater than necessary” to achieve the 

statutory purposes of punishment, as required by 18 U.S.C. § 3553(a).

2. Legal Standard

As the Court is well aware, the Supreme Court’s decision in U.S. v. Booker, 125 S.Ct. 

738 (2005), restored the district courts’ ability to consider factors other than the sentencing range 

prescribed by the advisory guidelines and tailor a sentence in accordance with the individual 

aspects of a case and a defendant. The advisory guidelines range is only one of many factors to 

be considered in determining a defendant’s sentence, and district courts must not presume that a 

guideline sentence is reasonable. Rita v. U.S., 127 S.Ct. 2456 (2007); Gall v. U.S., 128 S.Ct. 586 

(2007). In order to comply with the mandate to impose a sentence that is “sufficient, but not 

greater than necessary,” courts are required to consider other factors under 18 U.S.C. § 3553(a), 
2

130949725v3 0920216

including the nature and circumstances of the offense, the history and characteristics of the 

defendant, and the need for a sentence to meet the purposes of sentencing, namely, just 

punishment, deterrence, protection of the public from further crimes by the defendant and 

rehabilitation. Id. 

When considering all the § 3553(a) factors, the sentencing court must not elevate the 

guideline range over any other consideration in § 3553(a). U.S. v. Schmidt, 495 F.3d 860, 864-

65 (7th Cir. 2007). A court’s choice to sentence inside or outside the guideline range is 

discretionary; and as long as all of the factors under § 3553(a) have been considered a court’s 

“freedom to impose a reasonable sentence outside the range is unfettered.” U.S. v. Dean, 414 

F.3d 725, 795 (7th Cir. 2005).

3. Applicable Advisory Guideline Range

a. The Government's Loss Calculations Overstate the Seriousness of the 

Offense.

Based upon the government's calculations, it seeks to attribute the entire loss caused by 

Perpetual during the time that Mr. Davis was employed. Under that analysis, where the 

attributable loss is $18,250,117, a 20 level increase is appropriate under § 2B1.1(b)(1)(K) (where 

the loss is more than $7 million but less than $20 million). Mr. Davis does not contest the 

government's calculations nor the manner at which it arrived at these numbers. However, as 

addressed more fully below, Mr. Davis contends that the loss amount overstates the seriousness 

of the offense, resulting in a sentencing range which is unreasonable under the Federal 

Sentencing Guidelines and 18 U.S.C. §3553(a). Not only was Mr. Davis a minor participant in 

the conspiracy, but he did not realize much, if any of the proceeds of the scheme, and in fact was 

himself victimized by Gabriel's actions during the course of the conspiracy.
3

130949725v3 0920216

b. Acceptance of Responsibility

For purposes of calculating any advisory sentencing guideline, Mr. Davis should 

absolutely be afforded the maximum reduction for acceptance of responsibility. Mr. Davis has

been completely forthright about his actions and has taken full responsibility for them. Mr. 

Davis waived his constitutional right to an indictment in this matter, sparing the government the 

time, money and resources to formally charge him in this case. Mr. Davis has pleaded guilty per 

his plea declaration, admitting guilt and taking personal responsibility for his actions. As 

recognized by the Probation Officer, Mr. Davis has clearly demonstrated acceptance of 

responsibility for the offense and is deserving of a two level reduction under USSG § 3E1.1(a). 

Mr. Davis has also assisted authorities both in the investigation and prosecution of his own 

misconduct by timely notifying the government of the intention to enter a plea of guilty, and 

doing so at a very early stage in the criminal case. He has likewise met with prosecutors on 

several occasions to assist with their prosecution. Accordingly, and as acknowledged by the 

Probation Officer, the offense level should be decreased by one additional level pursuant to 

USSG § 3E1.1(b). 

c. Sophisticated Means

Mr. Davis disagrees with the Government's position that the sophisticated means 

enhancement should apply under §2B1.1(b)(9)(c). As the Government has clearly recognized, 

Mr. Davis was a minor participant in the scheme, only conducting basic data entry at Jacinto 

Gabriel's direction. He was merely a pawn used by Jacinto Gabriel to reap millions for Gabriel's 

sole benefit. The Government takes the position that, while Mr. Davis and other similarly 

situated defendants may have been minor participants, the scheme itself was very complex and 

sophisticated, making the enhancement appropriate. Mr. Davis's participation in the scheme, 

however, clearly did not involve any sophisticated means, merely entering data as directed by his 
4

130949725v3 0920216

superior. In the event this Court agrees with the Government, Mr. Davis is nonetheless entitled 

to a variance based upon his very minor role in the conspiracy.

d. Minor Participant

The Parties agree that Mr. Davis was a minor participant in the conspiracy, entitling him 

to a two-level decrease under §3B1.2(b).

e. Criminal History Category

Mr. Davis has no criminal history. Accordingly, his criminal history points equal 0 and 

his criminal history category is I.

4. § 3553(a) Factors Warranting a Sentence of Probation 

a. Nature and Circumstances of the Offense

Mr. Davis is not a highly educated individual. He only received his high school diploma 

and has only had some college education. Prior to working for Gabriel, Mr. Davis had no prior 

experience in the healthcare field, and no relevant experience from which to draw. Mr. Davis 

had met Gabriel previously and Gabriel recruited him to come work for Perpetual. Mr. Davis 

was hired by Gabriel in 2006 to perform data entry, a job requiring minimal skill and offering 

decent pay.

Having no background in the field, all of Mr. Davis' training was provided by Gabriel, 

and Mr. Davis mistakenly relied upon Gabriel to teach him to do his job the right way. Gabriel 

provided training on the software used for entering patient information, and when Gabriel 

provided that information on "cheat sheets," instructing Mr. Davis to enter the information that 

was contained on these sheets, Mr. Davis had no reason to question Gabriel, nor was he in a 

position to do so. Mr. Davis entered the information provided by his boss as he had been 

instructed and trained to do.
5

130949725v3 0920216

Mr. Davis admits that he eventually learned that the information contained on the cheat 

sheets came directly from Gabriel, having no relation to the actual care provided (or not 

provided) to the patients. Likewise, Mr. Davis eventually learned that the information that was 

being provided by Gabriel was being used solely for the purpose of maximizing reimbursements 

being made by Medicare to Perpetual and eventually Legacy, with no regard to the services 

actually provided. Despite this, Mr. Davis continued working as he had, entering the data 

provided to him by his boss. Mr. Davis valued his job, a job which allowed him to provide for 

his family, and felt he could not afford to put that at risk. Mr. Davis fully acknowledges that this 

rationalization serves as no excuse for his behavior, however, and he is terribly sorry for this.

Mr. Davis recognizes that in retrospect any benefits that he received by working for 

Perpetual and Legacy are far outweighed by the consequences. Those consequences go beyond 

the instant offense and the punishment that Mr. Davis now faces. In addition to the shame and 

embarrassment Mr. Davis endured as a result of this criminal scheme, for which Mr. Davis takes 

full responsibility for the role he played, Gabriel has directly damaged Mr. Davis and his family. 

Taking advantage of the situation on multiple occasions, Gabriel would write checks on either 

Perpetual's or Legacy's accounts made payable to Mr. Davis or to his wife. Per instructions from 

Gabriel, Mr. Davis would cash these checks and give Gabriel the money, out of which he would 

then occasionally provide Mr. Davis cash in return, ranging from about $50.00 to $100.00. 

Without Mr. Davis' knowledge, however, Gabriel caused Perpetual to issue Form 1099 for these 

checks Mr. Davis was cashing for Gabriel. As a result, this caused Mr. Davis to incur tax 

liability of those funds, as well as headaches and additional attorney's fees in having to address 

these issues with the IRS when Mr. Davis failed to report this "income" (which he did not 

receive) on his tax returns, which income was actually received by Gabriel.
6

130949725v3 0920216

Likewise, and as set forth in Mr. Davis' plea agreement, at Gabriel's direction, Mr. Davis 

allowed Gabriel to use his name to lease several vehicles for Gabriel's and Perpetual's use and 

enjoyment, deriving no personal gain himself. Mr. Davis ended up having to pay over $10, 000 

on monthly payments for two cars used by Gabriel until Mr. Davis was able to sell one and the 

FBI seized the other. As a result of Gabriel's actions, Mr. Davis was required to pay the monthly 

car payments as well as legal fees to clear up the tax liability resulting from the false Forms 1099 

that Perpetual issued to him. These car payments and debts led Mr. Davis to file Chapter 7 

bankruptcy protection in Sept 2011.

b. History and Characteristics of Mr. Davis

As noted above, Mr. Davis is not a highly educated individual, only holding a high school 

diploma. Nonetheless, he has worked hard all his life to provide for his wife of almost ten years

and his two young children, ages 8 and 4. Despite his troubles, he has remained devoted to his 

family, dedicated to provide for them even in the face of the hurdles the instant conviction 

presents. Each of the character letters attached hereto as Exhibit A portray Mr. Davis as being 

completely devoted to his family. (See Character Letters, Exhibit A). His daughters' 

letters/drawings depict a father that they know to be incredibly involved in their lives, providing 

a very positive influence. His wife, Rossana Davis, explains this even further, describing Mr. 

Davis as an "extraordinary husband and an excellent father." She also explains that they are 

active in their church and with their daughters' after school activities.

Mrs. Davis also relates Mr. Davis' devotion not just to his wife and kids, but also to his 

Mother who is 71 years old and recently lost her other son, Mr. Davis' brother, in a tragic 

accident. Since his brothers' death, Mr. Davis has taken on a much larger role in the care of his 

mother, whose health is deteriorating. Mrs. Davis explains that Mr. Davis uses his lunch hour to 

go visit his mother every single day just to make sure that she is okay. 
7

130949725v3 0920216

Mr. Davis has always been and remains incredibly devoted to his family. In fact, since

the indictment, Mr. Davis has taken classes in order to obtain his Certificate in Supply Chain 

Management so that he could continue to provide for his family. Mr. Davis has, with the 

exception of this offense, led a law-abiding and upstanding life. If Mr. Davis were sent to 

prison, his family would suffer greatly. It is hard to imagine how his wife and kids would cope 

without him, not to mention his elderly mother whose health is deteriorating and who has already 

recently lost her other son. The financial strain and emotional void left in his absence would be 

enormous and detrimental to his family, and particularly to his two young daughters.

Mr. Davis is extremely remorseful and ashamed of his conduct in this offense, and he is 

deeply saddened by how it has impacted his family and friends. He bears the burden of his 

mistake and has taken responsibility for it. Mr. Davis is 39 years old and will continue to pay for 

his actions into the foreseeable future. His age and the circumstances of the offense, as well as 

his particular and unique characteristics, demonstrate that Mr. Davis is not going to be a repeat 

offender or engage in any similar conduct. Mr. Davis only requests that the Court consider his 

aberrant conduct in the context of his whole life and impose a sentence that will allow him to 

continue to care for himself and his family and make restitution.

c. Potential Sentence Disparities

Pursuant to §3553(a)(6), another factor to be considered by the Court is the need to avoid 

unwarranted sentence disparities among defendants with similar records and who had been found 

guilty of similar conduct. Accordingly, this Court should consider the sentences that it has 

imposed on the other defendants in this case and assess whether the proposed sentence would be 

proportionate to those imposed on similarly situated individuals. United States v. Bradley, 675 

F.3d 1021, 1027 (7th Cir. 2012) (vacating sentence based in part on the failure to consider 

disparities). 
8

130949725v3 0920216

To date, the following sentences have been imposed:

Defendant Date of Sentencing Count Sentence Imposed

Ricardo Gonzales August 16, 2013 1 3 Years Probation

Rosalie Gonzales August 16, 2013 46 2 Years Probation

Charito Dela Torre July 11, 2014 65 3 Years Probation

Regelina Queenie David August 22, 2014 1 1 day imprisonment (credited for 

time served); 2 years supervision

Nessli Reyes November 13, 2014 1 2 Years Probation

As the Government has recognized in its Version of the Offense, Davis was a low-level 

employee of Perpetual, performing data-entry at Gabriel's Direction. In fact, the Presentence 

Investigation Report sets forth a tiered system of culpability in the scheme. (PSR, ¶22). Under 

that structure, Gabriel started the whole thing and was in the first tier of culpability. Pursuant to 

the PSR and the Government, defendants Jassy Gabriel, Lubaton, Reyes, Ricardo Gonzales and 

Dela Torre were in "[t]he second tier of culpability of the individuals charged in the instant 

scheme." (PSR, ¶22). Defendants Davis, Galang, Pacis, David and Lomillo were in the next tier, 

referred to as "low level employees but necessary to the scheme." (PSR, ¶22). Finally, Rosalie

Gonzales was considered the least culpable. (PSR, ¶22). Based on this structure explained by 

the Government to probation, three of the above identified defendants having greater culpability 

in the scheme than Davis have already been sentenced, Ricardo Gonzales, Nessli Reyes and 

Charito Dela Torre. Each of them received terms of probation. Co-defendant David, who is in 

the same category as Mr. Davis, received a sentence of one day imprisonment, credited for time 

served, and a term of supervision. 

Based upon the representations made to Probation by the government as to levels of 

culpability and the sentences imposed by this Court to date, it is necessary that this Court, in 

order to avoid sentencing disparities among similarly situated defendants, impose a term of 
9

130949725v3 0920216

probation on Mr. Davis, similar to those sentences imposed upon the other defendants in this 

matter to date.

d. Just Punishment and Deterrence

The sentencing goals would be satisfied without a term of imprisonment. As expressed 

above, Mr. Davis acknowledges his mistakes, is humbled and embarrassed. A term of probation, 

however, would adequately serve the interests of justice and would sufficiently punish Mr. 

Davis.

In addition to the criminal sanctions he now faces, Mr. Davis has already been 

significantly punished for this offense. Because of his offense, Mr. Davis will forever be 

branded a convicted felon. He will constantly need to deal with the inevitable obstacles 

associated with this stigma. His felony conviction will negatively impact his future in terms of 

career possibilities, earning capacity and his ability to provide for his family. This price will be 

felt forever, regardless of the sentence this Court imposes. Additionally, while a participant of 

the conspiracy, Mr. Davis was at the same time a victim of Jacinto Gabriel's. Gabriel's conduct 

had a significant financial impact on Mr. Davis, causing Mr. Davis to incur tax liability for funds 

which he never received from Gabriel, as well as headaches and attorney's fees he had to incur in 

addressing these issues with the IRS when he failed to report this "income" that he did not 

receive. Likewise, Mr. Davis naively allowed Gabriel to use his name to lease several vehicles 

for Gabriel's and Perpetual's use and enjoyment, causing Mr. Davis to make monthly payments 

in excess of $10,000. These IRS liabilities, expenses and debts ultimately required Mr. Davis to 

file for Chapter 7 bankruptcy protection in September 2011.

Consideration of the collateral consequences of the offense is consistent with 

§3553(a)(2)(A) and (B)’s directive that sentences reflect “just punishment” and “adequate 

deterrence.” U.S. v. Pauley, 511 F.3d 468, 474-75 (4th Cir. 2007) (non-guideline sentence 
10

130949725v3 0920216

imposed where the defendant lost his teaching certificate and state pension). Certainly, the 

collateral consequences Mr. Davis has suffered will alone be enough to deter him from any 

future offenses.

Mr. Davis is 39 years old, and his lack of any prior criminal history clearly indicates that 

this offense was aberrant behavior which will not recur. He will never be in the criminal justice 

system again. A prison sentence will add nothing to further deter this man—with an 

unblemished record until now—from further crimes.

A sentence of probation would be significant punishment for Mr. Davis. As the Supreme 

Court in Gall stated, probation is far from a free pass, and “[o]ffenders on probation are . . . 

subject to several standard conditions that substantially restrict their liberty.” Gall v. U.S., 128 

S.Ct. 586, 595. While Mr. Davis would be subject to numerous probationary restrictions and 

conditions curtailing his liberty, a sentence of probation would allow Mr. Davis to restore some 

financial stability and continue his responsibilities to work and family. Mr. Davis would be a 

model probationer as evidenced by his full compliance and reporting with Pretrial Services while 

on pretrial release. 

5. Conclusion

Mr. Davis offers the Court no excuses, only a humble and respectful request that the 

Court consider the circumstances of this offense in the context of the circumstances he faced, his 

acceptance of responsibility, full cooperation and substantial assistance provided to the 

Government, his lack of any criminal history, his good character as a family man and friend, the 

impact of a prison sentence on his family, and the significant other punishment he has already 

suffered, and will continue to suffer, as a result of his felony conviction and his involvement in 
11

130949725v3 0920216

the conspiracy. In light of these considerations, Mr. Davis respectfully submits that a sentence 

of probation, is sufficient, but not greater than necessary, to satisfy the purposes of sentencing.

Respectfully submitted,

HINSHAW & CULBERTSON LLP

By: s/Daniel M. Purdom

Daniel M. Purdom

Daniel M. Purdom

Hinshaw & Culbertson LLP

4343 Commerce Ct., Suite 415

Lisle, IL 60532

(630) 505-4110

dpurdom@hinshawlaw.co.