taking adequate account of the factors required to be considered
under § 3553(a).
D. Law

Law, through his attorney, argues that his 84-month
sentence under the Guidelines fails to adequately take into
account that, although more than $11,000,000 was lost by
investors, he kept approximately $100,000 in proceeds (after
splitting proceeds with Wardell and Iles) and that he had no
decision-making control over other defendants. He contends that,
following Booker, an appropriate sentence for him would be 60
months' incarceration. In an undated letter faxed to the court
on May 16, 2005, Law himself contends that the appropriate
procedure to follow is to require that all facts considered for
sentencing be proved to a jury beyond a reasonable doubt. In
support of this contention, Law cites to Justice Stevens' opinion
in Booker, 125 S, Ct. at 755-56. Law ignores that the Booker
decision is contained in part in Justice Stevens' opinion and in
part in Justice Breyer's opinion. Justice Breyer's opinion
contains the remedial provisions that are joined in by 5 of the
justices. See Booker, 125 S. Ct. at 746, 756-57. As was set
forth above, the Supreme Court resolved a constitutional problem
by excising § 3553(b)(1)'s provision that the sentencing range
under the Guidelines must be followed. Booker, 125 S. Ct.
at 764. Since the Guidelines sentencing range is not binding, it
is permissible for the sentencing court to find facts that are
the basis for determining the sentencing range. McReynolds,
397 F.3d at 481. Law is not entitled to a new sentencing hearing

at which facts must be proven to a jury.

- 20 -


None of the particular facts about Peitz's involvement in
the offenses or his background, either viewed separately or as a
whole, support that the Guidelines sentencing range fails to
provide a reasonably adequate estimate of the sentence
appropriate to serve the purposes set forth in 18 U.S.C.
§ 3553(a) (2) or that that range was reached without taking
adequate account of the factors required to be considered under
§ 3553(a).

B. Benson

Benson presents no specific argument as to why his
sentence should be any different than was previously imposed. As
indicated above, it is appropriate to give Benson and Peitz the
same sentence based on Benson's lengthier involvement and receipt
of additional proceeds, but his lesser role as a manager instead
of a leader.? Benson's PSR has been examined. Limited
information about his family background shows that his parents
were divorced when he was young, he lost contact with his father
shortly thereafter, his mother remarried a number of times, and
that, since high school, he has had little contact with his
mother, stepfather, or siblings. There is undetailed information
about abuse. The background information about Benson is not
particularly remarkable. The court finds no information that
would be good reason to sentence Benson outside his Guidelines

sentencing range.

5The 1l-level difference between a manager and leader is
why Benson's Guidelines sentencing range is lower than Peitz's.
See Peitz, 2003 WL 1964241 at *1.



were sources of a large portion of the investments. Therefore,
there is a firm basis for considering the $11,000,000 plus in
losses when determining a sentence for her. She is less culpable
than Law and that is represented by a sentence that is 6 months
shorter than Law's. As was true with Law, Iles is more culpable
than Paladino, but received less benefits than Paladino. A
higher sentence for Iles than Paladino is appropriate in that
Iles has the past criminal history and, unlike Paladino, was
violating an order prohibiting her from being involved with
investment activity. The fact that Iles had previously been
convicted and was violating an order related to that prior
criminal activity overrides the present representations that she
is a generally honest person who will not again be in trouble
with the law. Following Booker, the court would still impose a
sentence at the bottom end of Iles's Guidelines sentencing range.
Neither Iles's arguments nor a reexamination of her PSR discloses
a good reason to impose a lesser sentence.

None of the particular facts about Iles's involvement in
the offenses or her background, either viewed separately or as a
whole, support that the Guidelines sentencing range fails to
provide a reasonably adequate estimate of the sentence
appropriate to serve the purposes set forth in 18 U.S.C.
§ 3553(a) (2) or that that range was reached without taking
adequate account of the factors required to be considered under

§ 3553(a).

- 24 -


that the Guidelines should play under the post~Booker regime.
Defendants contend the Guidelines are just one of many factors to

consider under 18 U.S.C. § 3553(a). Cf. United States v. Ranum,

353 F. Supp. 2d 984, 986-87 (E.D. Wis. 2005). The government
contends that the Guidelines range should still be applied unless
unusual or exceptional circumstances exist for imposing a

sentence outside the Guidelines range. Cf. United States v.

Wilson, 350 F. Supp. 2d 910, 912, reconsideration denied, 355

F. Supp. 2d 1269 (D. Utah 2005).

In Booker, the Supreme Court held that, absent a
defendant's waiver of factfinding by a jury, it would be
unconstitutional to apply mandatory Sentencing Guidelines ranges
determined in whole or in part by factual findings made by a
judge. Booker, 125 S. Ct. at 748-56. To avoid a constitutional
infirmity, the Supreme Court severed and excised the provision of
the Guidelines (18 U.S.C. § 3553(b)(1)) that required sentencing
courts to impose a sentence within the applicable Guidelines
range (absent adequate grounds for departure). Booker, 125
S. Ct. at 764. Following Booker, facts affecting the statutory
sentencing range still must be proved beyond a reasonable doubt
or be admitted by the defendant (in a plea agreement or
otherwise). Facts establishing the nonmandatory Guidelines
sentencing range may still be found by the sentencing court by a

preponderance of the evidence. McReynolds v. United States,

397 F.3d 479, 481 (7th Cir.), cert. denied, 125 S. Ct. 2559

(2005); United States v. Smith, 359 F. Supp. 2d 771, 773
{E.D. Wis. 2005). The Sentencing Guidelines are not mandatory

and the sentencing court retains authority to sentence within the


At the time of sentencing, this court found that,
pursuant to U.S.S.G. § 3Bl.1(c), Law's total offense level should
be increased 2 levels as a manager of the scheme. That
adjustment was not challenged or overturned on appeal. Law
marketed the investment program to brokers and investors.
Although he personally received approximately $100,000 in
proceeds for himself, he obtained $250,000 and split the funds
with Wardell and Iles. Law was involved in marketing the
investment program to brokers and investors who provided the bulk
of the misappropriated investments. Law also provided misleading
information to Iles that was to be passed directly to investors.
Law had a knowledge and understanding of the scope and structure
of the scheme. Even after the investments had been made, Law
remained active in the scheme by continuing to provide assurances
that the money had been invested and that returns were
forthcoming. Law was fully involved in the scheme. Facts do not
support reducing Law's sentence based on limited involvement;
instead the court found it appropriate to increase his Guidelines
offense level based on being a manager.

Although Law personally kept only $100,000 of the
fraudulent proceeds, he was involved in most of the investments.
Even if not following the Guidelines, the court would consider
Law's crime to be one involving approximately $11,000,000 in
victim losses. Law was highly culpable in this case. He was
given a sentence in the low-middle part of his sentencing range.
That adequately takes into account the comparatively low amount
of the benefits he received. Also, Law was more culpable than

Paladino in that he was involved in passing on misrepresenta-


fully believed the investments were legitimate until she learned
otherwise at trial.

The jury found that Iles had the necessary intent to be
found guilty and her conviction has been affirmed on direct
appeal. It must be taken as true that Iles intended to defraud
the investors. Like Law, Iles did not organize the scheme. She
did, however, actively promote it to brokers and investors. She
was the contact for submitting paperwork and she passed on to
investors many of the post-investment assurances that the
investments remained safe. Iles apparently had less access to
information than Law, but she had enough information to know that
she was not passing on truthful information. Still, the court
considered her to be somewhat less culpable than Law. That, plus
the fact that she received limited proceeds were the reasons for
sentencing her at the bottom of her Guidelines sentencing range.
That does not mean, however, that she was unaware that she was
engaged in wrongdoing nor was she unaware that large sums of
money were involved. Particularly troubling with Iles is the
fact that, because of a prior conviction related to marketing
illegal tax shelters, she was subject to an SEC administrative
order prohibiting her from engaging in this type of activity even
if the investment program had been legitimate. TIles's total
offense level was increased two levels based on violating this

order. See U.S.S.G. § 2F.1(b) (3) (B) (1997); Peitz, 2003 WL

1964241 at *2.
Although Iles received only a limited amount of investor
proceeds and did not organize the scheme, she still had an

important role and was involved with investors or brokers that

- 23-


Paladino, Law, and Iles all had the same total offense levels,°
Law and Iles had higher Guidelines ranges because of their higher
Criminal History Category. Paladino received substantially more
proceeds than the other two. While it is appropriate to sentence
Paladino to less time than Law and Iles, his sentence should
still remain close to that of the other two. The 72-month
sentence appropriately takes into consideration Paladino's
involvement, his background, and the sentences imposed on the
other defendants.

Paladino also points to the difficult time that his
family, particularly his wife, will have while he is away at
prison. He relies on the same information that was provided at
the time of sentencing. At this time, his family has already
been through approximately two years of Paladino's absence. It
is not unusual that a family will have difficulty when separated
from an incarcerated defendant. Submissions support that
Paladino's wife was likely to have more difficulty than the usual
family member. It was not, however, enough to support a downward
departure under the Guidelines. Given the seriousness of the
offense and taking into account the greater flexibility post-
Booker, still the situation would not be a basis for imposing no
incarceration at all. Even if the court were to be convinced
that the situation otherwise justified a substantial reduction,

such as 1 or 2 years less incarceration, there would still be a

For the wire fraud offenses, Law and Iles were actually
2 levels higher than Paladino. However, Paladino's total offense
level for money laundering was equal to the wire fraud total
offense levels for Law and Iles. See Peitz, 2003 WL 1964241
at *2.



Having a 30-year statutory maximum would also have been the basis
in this case for imposing a 5-year period of supervised release
based on a Class A felony instead of the 3-year period for a
Class D felony. See 18 U.S.C. §§ 3581(b), 3583(b); U.S.S.G.

§ 5D1.2(a). The PSR's for each of the defendants assumed the
statutory maximum for the wire fraud charges was 30 years (and
the defendants' conduct did adversely affect a financial
institution). No defendant nor the government raised this error
prior to sentencing. For each defendant, the sentence on each
wire fraud charge exceeded the 5-year maximum and every defendant
except Iles received a sentence that included five years'
supervised release. Apparently, the only defendant to raise this
issue on appeal was Peitz, who contended it was plain error. The
government conceded it was error, but argued it was harmless
because 188 months' incarceration was imposed on the § 1956

money laundering counts also (which have a 20-year maximum for
each count). The government did concede that Peitz's supervised
release should have been only 3 years. The Seventh Circuit did
not address this issue on appeal. See Paladino, 401 F.3d at
479-80. However, the only issue before this court on the limited
remand is whether a different sentence would have been imposed
had this court known the Guidelines are not binding.

Peitz now argues that his Guidelines sentencing range is
incorrect because it incorrectly assumes a 30-year maximum for
the wire fraud charges. His sentencing range was based on a
total offense level of 35 for the wire fraud charges. The total
offense level for the money laundering charges was 34. See

Peitz, 2003 WL 1964241 at *1. He contends that the wire fraud

-10-


In United States v. Dean, F.3d , 2005 WL 1592960

(7th Cir. July 7, 2005), the Court of Appeals for the Seventh

Circuit recently provided guidance for the application of factors

in § 3553(a) and sentencing within and outside the Sentencing

Guidelines range. See also United States v. Mykytiuk,
, 2005 WL 1592956 (7th Cir. July 7, 2005).

Section 3553(a), unlike the guidelines
themselves after Booker, is mandatory. United
States v. Booker, supra, 125 S. Ct. at 764-65.
The sentencing judge cannot, after considering
the factors listed in that statute, import his
own philosophy of sentencing if it is
inconsistent with them. And therefore he can, as
a matter of prudence, unbidden by either party,
do what Dean wants him to do--write a
comprehensive essay applying the full panoply of
penological theories and considerations, which is
to say everything invoked or evoked by section
3553(a)--to the case before him.

But that is not required; like Chief Judge
Randa in the present case, the sentencing judge
can discuss the application of the statutory
factors to the defendant not in checklist fashion
but instead in the form of an adequate statement
of the judge's reasons, consistent with section
3553(a), for thinking the sentence that he has
selected is indeed appropriate for the particular
defendant. United States v. Hadash, 408 F.3d
1080, 2005 WL 1250331, at *3 (8th Cir. May 27,
2005); United States v. Mares, 402 F.3d 511,
518-20 (Sth Cir. 2005). "Judges need not
rehearse on the record all of the considerations
that 18 U.S.C. § 3553(a) lists; it is enough to
calculate the range accurately and explain why
(if the sentence lies outside it) this defendant
deserves more or less." United States v. George,
403 F.3d 470, 472-73 (7th Cir. 2005). This
shortcut is justified by the indeterminate and
interminable character of inquiry into the
meaning and application of each of the
"philosophical" concepts in which section 3553(a)
abounds.

kk Oe

Our focus thus far has been on cases in
which the sentencing judge is minded to impose a
sentence outside the guidelines range.
Recognizing that the guidelines are promulgated

F.3d


applicable statutory range. Booker, 125 S. Ct. at 765-67; United
States v. Schlifer, 403 F.3d 849, 853 (7th Cir. 2005). "Asa
practical matter, . . . sentences would be determined in the same
way [as before Blakely and Booker]; the only change would be the
degree of flexibility judges would enjoy in applying the
guideline system." McReynolds, 397 F.3d at 481.

Booker did not hold the provisions of 18 U.S.C. § 3553(a)
to be unconstitutional. In exercising its discretion, the
sentencing court must take into consideration the factors set
forth in § 3553(a). That statute includes the overall guide that
the sentence imposed be "sufficient, but not greater than
necessary, to comply with the purposes set forth in"

§ 3553(a) (2). Subsection (a) (2) provides that the court shall
consider:
(2) the need for the sentence imposed--

(A} to reflect the seriousness of the

offense, to promote respect for the law, and

to provide just punishment for the offense;

(B) to afford adequate deterrence to

criminal conduct;

(C) to protect the public from further

crimes of the defendant; and

(D) to provide the defendant with needed

educational or vocational training, medical

care, or other correctional treatment in the

most effective manner;
18 U.S.C. § 3553(a) (2). Other factors listed in § 3553(a) are
the nature and circumstances of the offense and the history and
characteristics of the defendant; the kinds of sentences
available; the Guidelines ranges and options; Guidelines policy

statements; the need to avoid unwarranted sentencing disparities;

and the need to provide restitution to victims of the offense.


4-to-5-year separation. That would not avoid the effect of a
lengthy separation. Following Booker, the court does not find
the family situation to be a reason to reduce Paladino's
sentence,

The other factor that Paladino urges the court to
consider is his diminished role in the offense. He was not
directly involved with providing false information to investors.
Also, initially, he was unaware of the fraudulent nature of the
scheme. Paladino, however, became aware of the true nature of
the scheme. He was involved in the transfer of funds and was
well aware of the scope of the scheme, including the large amount
of monies involved. Under the Guidelines, the court applied a
2-level reduction for a minor role in the offense. See U.S.S.G.

§ 3B1.2(b); Peitz, 2003 WL 1964241 at *2. The Guidelines

adequately take into account Paladino's diminished involvement in
the offense.

As the previous discussion indicates, the three factors
raised by Paladino are overlapping. Even considering the factors
together, along with all the facts and circumstances concerning
Paladino and his involvement in the offenses, the court does not
find good reason to reduce Paladino's sentence below the
Guidelines sentencing range. None of the particular facts about
Paladino's involvement in the offenses or his background, either
viewed separately or as a whole, support that the Guidelines
sentencing range fails to provide a reasonably adequate estimate
of the sentence appropriate to serve the purposes set forth in

18 U.S.C. § 3553(a) (2) or that that range was reached without

- 19 -


limited Guidelines failed to result in an adequate implementation
of § 3553{a)'s purposes and factors as regards each individual
defendant under consideration.

In determining whether good reason exists to impose a
sentence outside the Guidelines sentencing range, the particulars
of the defendant's crime and background will have to be
considered. In most cases, the Guidelines will adequately take
these factors into account. In some cases, they will not.
Additionally, when considering whether good reason exists to
sentence outside the Guidelines range, the court will have
greater latitude to consider the personal characteristics of the

defendant than are available under the Guidelines.

iit.

The substantive wire fraud and money laundering counts in
this case occurred in 1996 and 1997. Peitz was sentenced to 188
months' incarceration on each of eight wire fraud counts, the
conspiracy count, and the two § 1956 counts, and 120 months’
incarceration on each of the four § 1957 counts, all to run
concurrently. Peitz complains that this was improper in that,
as of 1997, the maximum sentence for a wire fraud conviction was
5 years' incarceration (cumulatively 40 years) unless the
violation affected a financial institution. If the violation
affected a financial institution, the maximum statutory sentence
was 30 years' incarceration (cumulatively 240 years). See 18
U.S.C. § 1343 (1997). However, affecting a financial institution
was not charged or found by the jury. The government concedes

that the statutory maximum for each wire fraud count was 5 years.



ve

For the foregoing reasons, the court would not change any
defendant's sentence in light of Booker. As was noted above,
there was an error in imposing sentences of more than 60 months
for individual wire fraud counts. The same total sentence of
incarceration would be imposed, but it would be distributed
differently among the counts. Also, in light of the correct
statutory maximum for the wire fraud offenses, the court would
sentence each defendant to three years' supervised released. All
defendants, except Iles, received a supervised release sentence
of five years. No defendant raised this issue at the time of
sentencing. Peitz raised this issue on direct appeal, but the
issue is not addressed in the Seventh Circuit's opinion. If the
Seventh Circuit deems it appropriate to remand this case to
change the incarceration sentence on individual counts and modify
the length of supervised release, the court will take appropriate
action.

IT IS THEREFORE ORDERED that, in accordance with the
limited remand of the Seventh Circuit, the court finds that,
taking into account that the sentencing range determined under
the Sentencing Guidelines is not mandatory, the court would still
impose the same total sentences of incarceration for each
defendant that was previously imposed. Separate from the
"Booker" issue, the court notes an incorrect statutory maximum
was used when imposing sentences on individual counts. That did

not affect the total sentences of incarceration, but it did



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

UNITED STATES OF AMERICA,
Plaintiff,

v. No. 01 CR 852-1, 2, 4, 5, 6
FRANK L. PEITZ, DANIEL B.
BENSON, ROBERT D.

PALADINO, RANDALL W. LAW, and
MONICA M. ILES,

(On limited remand from
the United States Court

of Appeals for the Seventh
Circuit. Appeal Nos.
03-2296, 03-2383-86)
Defendants.

MEMORANDUM OPINION AND ORDER

i

Following a jury trial, defendants Frank Peitz, Daniel
Benson, Robert Paladino, Randall Law, and Monica Iles were found
guilty on all counts but one. All were found guilty of eight
substantive counts of wire fraud in violation of 18 U.S.C.
§ 1343. Defendants Peitz, Benson, and Paladino were found guilty
of a conspiracy in violation of 18 U.S.C. § 1956(h) under which
they agreed to (1) engage in wire fraud violations that were
designed to conceal the source and ownership of unlawful proceeds
in violation of 18 U.S.C. § 1956(a) and (2) engage in monetary
transactions in criminally derived property with a value greater
than $10,000 in violation of 18 U.S.C. § 1957(a). Peitz, Benson,

and Paladino were also found guilty of four substantive money


supervised release could be reduced to 3 years. The version of
the Rules of Criminal Procedure applicable to this case do not
permit this court to make such corrections at this time. See
Fed. R. Crim. P. 35, 36. The limited remand also does not permit
the court to actually change any sentence at this time. If,
following today's ruling, the Seventh Circuit remands the case to
modify the sentences to correct the inaccurate assumptions about
the wire fraud statutory maximums, the court will do so at that
time. Otherwise, if cognizable on such a motion, defendants
would have to bring § 2255 motions in order to seek correction of

their sentences.

Iv.
A. Peitz

Peitz argues that he should be sentenced to less than the
Guidelines range based on facts that did not affect his total
offense level under the Guidelines. He contends the court should
take into consideration that he received approximately $2,500,000
of the proceeds, which is about half of what Benson received and
substantially less than the $11,000,000 plus of losses resulting
from the entire scheme that was taken into consideration under
the Guidelines. He also contends that it should be taken into
account that, although 4 levels were added for his role as a
leader of the wire fraud scheme, he did not remain a leader
throughout the entire scheme. He further contends that it should
be considered that his abuse of a position of trust related to
only part of the scheme and not the entire scheme. Other than a

present expression of remorse, see Letter from Peitz dated

-12-



sentencing range should have been limited to a maximum 60 months
and that he instead should have been sentenced based on the 34
total offense level, which would have been a 151-188 month
sentencing range. Peitz's contention is incorrect. If he had
been convicted on only one count of wire fraud and no other
offense, his sentencing range would be 60 months. See U.S.S.G.
§ 5Gl.1(a). A different rule applies to convictions on multiple
counts. Assuming there are sufficient counts to reach the
sentencing range without violating the statutory maximum for
individual counts, the applicable Guideline sentencing range is
still calculated the same, but applied by stacking consecutive
sentences. See id. § 5G1.2(d). In Peitz's case, the 188-month
sentence could have been reached by imposing three consecutive
terms of 60 months' incarceration for three wire fraud counts and
8 months’ incarceration on one or more other counts to run
consecutive to the aforementioned three consecutive wire fraud
counts. Moreover, the 188-month terms imposed on the money
laundering counts were lawful. Similarly, the other defendants
each could have had an appropriate combination of consecutive and
concurrent sentences in order to achieve the total incarceration
to be imposed.

The sentences for all defendants could be modified to
avoid the sentences on individual wire fraud counts that are in
excess of the 60-month statutory maximum. The government
concedes that the modifications for individual counts should be
made for all defendants. Such changes would not affect the total
terms of incarceration. As to all defendants, except Iles whose

term of supervised release is already 3 years, the term of


and continually revised by an agency staffed by
experts (the Sentencing Commission), the court in
United States v. Mares, supra, 402 F.3d at 519
said that "if the sentencing judge exercises her
discretion to impose a sentence within a properly
calculated Guideline range, in our reasonableness
review we will infer that the judge has
considered all the factors for a fair sentence
set forth in the Guidelines . .. . When the
judge exercises her discretion to impose a
sentence within the Guideline range and states
for the record that she is doing so, little
explanation is required." But the defendant must
be given an opportunity to draw the judge's
attention to any factor listed in section 3553 (a)
that might warrant a sentence different from the
guidelines sentence, for it is possible for such
a variant sentence to be reasonable and thus
within the sentencing judge's discretion under
the new regime in which the guidelines, being
advisory, can be trumped by section 3553(a),
which as we have stressed is mandatory. Simon v.
United States, 361 F. Supp. 2d 35, 39-41
(E.D.N.Y. 2005); United States v. Kelley, 355

F. Supp. 2d 1031, 1035-37 (D. Neb. 2005); United
States v. Ranum, 353 F. Supp. 2d 984, 985-86
(E.D. Wis. 2005).

Dean, 2005 WL 1592960 at *4-5.

The sentencing range as determined under the Guidelines
will be the starting point for imposing a sentence. Possible
departures under the Guidelines must also be considered. In the
present case, the sentencing ranges have already been
established? and it has already been determined that no grounds
for a Guidelines departure exist. Therefore, as to each
defendant, it must be considered whether good reason exists to
impose a sentence outside the Guidelines range. It must be

considered whether the generalized and necessarily imprecise and

?Ppeitz points to an error regarding a statutory maximum
with respect to the wire fraud counts and the government concedes
there was error. That issue is separately addressed in § III
infra.


tions. Compared to Paladino, though, Law received substantially
less in benefits. Additionally, it must be considered that,
unlike Paladino, Law has a prior criminal history. It was
appropriate to impose a sentence on Law that is one year longer
than Paladino's.

Further, the court has again examined Law's PSR and has
found no good reason to impose a lower sentence. None of the
particular facts about Law's involvement in the offenses or his
background, either viewed separately or as a whole, support that
the Guidelines sentencing range fails to provide a reasonably
adequate estimate of the sentence appropriate to serve the
purposes set forth in 18 U.S.C. § 3553(a)(2) or that that range
was reached without taking adequate account of the factors
required to be considered under § 3553(a).

E. Iles

Iles argues that, following Booker, she should receive a
lighter sentence--time already served is suggested--because the
Guidelines provision holding her responsible for the $11,000,000
plus loss overstates her involvement. She points to the fact
that she received approximately $49,000 in proceeds, which was
about the same as the expenses she incurred related to the
investments. She also points to the fact that she was not the
organizer of the scheme and minimizes her contact with investors.
A May 9, 2005 letter from one of Iles's daughters emphasizes that
Iles is a loving, caring, and good person, even if naive and less
inquisitive than necessary to be involved in the investment of
other people's money. In a May 20, 2005 letter from Iles

herself, Iles emphasizes her lack of knowledge, contending she


light of Booker, any defendant should receive a different
sentence. Defendants themselves were not brought before

the court, but defendants themselves were permitted to submit
letters to the court and counsel were permitted to make oral
presentations in support of their written arguments. Such a
procedure is consistent with the Paladino decision. See

Paladino, 401 F.3d at 484 (quoting United States v. Crosby,

397 F.3d 103, 120 (2d Cir. 2005)). Defendants were permitted to
proffer any additional evidence that they might desire to submit.
The government argues that the decision as to whether a different
sentence would have been imposed should be limited to evidence
that was before the court at the time of the original sentencing.
The court has not so limited the defendants. If this court
indicates that it would impose a different sentence, the existing
sentence will be vacated and a new sentencing hearing will be
held. Such a hearing would not be limited to information and
evidence previously before the court. Also, there may be
information that is relevant post-Booker, but which defendants
did not previously submit because not relevant to Guidelines
sentencing. In any event, defendants apparently have not
proffered any new information or evidence other than their
personal appeals that make some reference to post-incarceration
conduct and changes of heart. All the information and arguments

that have been submitted will be considered.

Il.
Before turning to the particulars of each defendant, one

general issue will be addressed. The parties dispute the role


None of the particular facts about Benson's involvement
in the offenses or his background, either viewed separately or
as a whole, support that the Guidelines sentencing range fails
to provide a reasonably adequate estimate of the sentence
appropriate to serve the purposes set forth in 18 U.S.C.

§ 3553(a) (2) or that that range was reached without taking
adequate account of the factors required to be considered under
§ 3553(a).

¢. Paladino

Paladino was sentenced to 72 months’ incarceration, the
shortest sentence of any of the five defendants who went to
trial. That sentence is 6 months less than Iles's sentence and
12 months less than Law's sentence. Unlike Iles and Law,
Paladino was involved in the money laundering offenses as well as
the wire fraud offense. Paladino obtained $1,078,182 of the
proceeds of the fraud. Only $6,084 of the proceeds he obtained
was recovered by the receiver. Paladino contends that three
factors support sentencing him below his Guidelines sentencing
range: (a) his cooperation with the SEC investigation; (b) his
character and family background; and (c) his limited involvement
in the offense. At the time of sentencing, the latter two were
argued as grounds for a downward departure. Items (a) and (c)
were also argued as part of the reasons for a reduction based on
a diminished role in the offense and as grounds for sentencing
Paladino on the low end of his sentencing range.

When the SEC was conducting its civil investigation,
Paladino provided some assistance in that investigation. He

informally provided information, he testified at a deposition


same, that would have reduced his total offense level to 25 and
his Guideline range to 57-71 months, a range reduction of 13-16
months. Since Paladino did not actually accept responsibility,
any adjustment based on his limited assistance with the civil
case should be for less than 13-16 months. Sentencing Paladino
toward the lower end of his Guidelines sentencing range
adequately took into account his cooperation with the SEC. Based
on that cooperation, the court would not reduce Paladino's
sentence further knowing that the Guidelines are not mandatory.
It is argued that Paladino has an exemplary personal and
family background. It is certainly commendable that Paladino has
loving family relationships, but the court does not find that to
be a basis for reducing his sentence. To the extent Paladino was
generally of honorable and honest character, that generally goes
along with the fact that he initially believed he was involved
with a legitimate investment vehicle, but failed to pull out
after it became evident that the investments were not legitimate.
That is taken into account by the 2-level reduction for a minor
role in the offense. Paladino received substantial proceeds and
substantially aided the scheme even after he had information
revealing the nature of the scheme. He was willing to receive
dishonest proceeds that were needed to keep his business
endeavors from failing. Even if his character indicates a
reduced chance of recidivism, that must be balanced against an
appropriate sentence for the serious crime that was committed and

avoiding unwarranted disparities with other defendants. While


concurrently. With a Guidelines range of 70-87 months, Paladino
was sentenced to 72 months' incarceration to be followed by 5
years' supervised release on the wire fraud counts and three
years supervised release on the money laundering counts to run
concurrently. With a Guidelines range of 78-97 months, Law was
sentenced to 84 months' incarceration to be followed by 5 years'
supervised release. With a Guidelines range of 78-97 months,
Iles was sentenced to 78 months' incarceration to be followed by
3 years' supervised release. Peitz, Benson, and Paladino were
ordered to pay $11,419,970 in restitution. Law and Iles were
ordered to pay $11,109,970 in restitution. The sentences were
imposed on April 30, 2003, before the Seventh Circuit or Supreme
Court held that the Sentencing Guidelines were unconstitutional
if treated as mandatory and based on factual findings made by

the court. See United States v. Booker, 375 F.3d 508 (7th Cir.

2004), aff'd & remanded, 125 S. Ct. 738 (2005). See also
Blakely v. Washington, 542 U.S. 296 (2004).

On direct appeal, the Seventh Circuit affirmed the

convictions of all five defendants. United States v. Paladino,

401 F.3d 471, 474-77 (7th Cir. 2005). Two challenges to the
Guidelines calculations were denied. See id. at 479-80. The
Seventh Circuit, however, ordered a limited remand for the
purpose of determining whether this court would have imposed a
different sentence had it been known, in light of the Supreme
Court's decision in Booker, that the Guidelines were not
mandatory. See Paladino, 401 F.3d at 481-85.

Following the remand from the Seventh Circuit, the

parties submitted briefs addressing the question of whether, in


affect the length of supervised release imposed for defendants
Peitz, Benson, Paladino, and Law.

The Clerk of this Court is directed to furnish copies of
this Opinion and Order to the Clerk of the United States Court of

Appeals for the Seventh Circuit forthwith.

Wiepen, 7 (dee—~

UNITED STATES DISTRICT JUDGE

ENTER:

DATED: JULY A] 1 2005

- 26 -


laundering counts of violating 18 U.S.C. § 1957 and two
substantive money laundering counts of violating 18 U.S.C.

§ 1956(a) (1) (B) (i). The scheme in which defendants were involved
resulted in investors losing approximately $11,000,000. A
receiver appointed at the request of the Securities and Exchange
Commission was able to recover only $860,000.

All defendants except Benson objected to the Sentencing
Guidelines calculations contained in their presentence reports
("PSR"), defendant Paladino moved for a downward departure, the
government raised objections as to each PSR, and the government
moved for upward departures as to each defendant. Following a
hearing on the various sentencing issues, the court determined
the applicable sentencing ranges and denied all departure

requests. See United States v. Peitz, 2003 WL 1964241 (N.D. Ill.

April 25, 2003) (summarizing rulings made at the hearing). The
Sentencing Guidelines range for each defendant and the custody
and supervised release term actually imposed on each defendant
were as follows.’ With a Guidelines range of 168-210 months,
Peitz was sentenced to 188 months' incarceration to be followed
by 5 years' supervised release on the wire fraud counts and three
years supervised release on the money laundering counts to run
concurrently. With a Guidelines range of 151-188 months, Benson
was sentenced to 188 months' incarceration to be followed by 5
years' supervised release on the wire fraud counts and three

years supervised release on the money laundering counts to run

‘The sentences for each count were concurrent with each
other. Law's sentence was consecutive to a state sentence he was
already serving.


May 23, 2005, Peitz points to nothing from his personal
background that would support sentencing him below his Guidelines
sentencing range. The personal history contained in his PSR has
been examined and the court has found nothing that requires
particular consideration regarding a possible sentence outside
the Guidelines sentencing range.

The factors cited by Peitz do not provide a good reason
to sentence him outside his Guidelines range. Peitz was the
principal organizer of the scheme. He organized schemes that
were designed to cheat investors out of more than the
approximately $11,000,000 that was actually lost. That Peitz was
not directly involved in every aspect and stage of the schemes
was not Peitz's choice. He endeavored to remain involved in the
schemes, but was closed out by Benson. When there are multiple
participants in a scheme, it is certainly no surprise that no
individual receives the entire benefits of the scheme. Peitz,
however, was a member and organizer of a group endeavor--one that
was found to be a conspiracy. The court agrees with the
Guidelines' principle that a member of a group activity be held
responsible for all the losses resulting from that activity.
Peitz was not someone on the fringes who might be considered less
responsible. While Benson received a larger amount of proceeds
and remained in the scheme for a longer period of time, he was
less of a leader and organizer than Peitz. Thus, it was fair to
give both Peitz and Benson the same sentence. Now knowing that
the Guidelines are not mandatory, and even taking into
consideration Peitz's present and belated expression of remorse,

the court would not give Peitz a different sentence.



(which was used against him at his criminal trial),‘ and he aided
the SEC and a receiver in locating assets. As to the criminal
charges, Paladino and the government discussed a possible plea
agreement, but no agreement was reached and Paladino did not
provide any actual assistance to the prosecution. No basis
existed for a downward departure pursuant to U.S.S.G. § 5K1.1
because the government did not move for a such a departure

and Paladino did not provide substantial assistance in the
prosecution nor, apparently, the criminal investigation. He now
contends that, not being limited by the Guidelines provisions
regarding downward departures, the court can take into account
the cooperation with the SEC investigation. Paladino also places
weight on the view of the SEC attorney involved in the civil
investigation that he did not recommend criminal charges against
Paladino.

In sentencing Paladino near the low end of his sentencing
range, it was considered that he had provided some cooperation
with the civil investigation. It was also considered that he had
testified at trial and essentially admitted some of the
allegations against him. While admitting facts against his
interest, Paladino was still attempting to avoid a conviction,
which was certainly within his rights. Under the Guidelines, if
Paladino had fully accepted responsibility, he would have
received a 2-level reduction. See U.S.S.G. § 3E1.1(a). Assuming

all other aspects of his Guidelines calculation remained the

*Paladino also testified at trial, substantially
admitting many of the government's allegations against him.