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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

Criminal Action No. 11-cr-00355 

UNITED STATES OF AMERICA, 

 Plaintiff, 

vs. 

JOHN PHILLIP GALLEGOS, 

 Defendant. 

_______________________________________________________________ 

REPORTER'S TRANSCRIPT

(Sentencing Hearing: Order) 

_______________________________________________________________ 

Proceedings before the HONORABLE MARCIA S. KRIEGER,

Judge, United States District Court for the District of 

Colorado, commencing at 1:46 p.m., on the 19th day of 

September, 2013, in Courtroom 901A, United States Courthouse, 

Denver, Colorado. 

THERESE LINDBLOM, Official Reporter 

901 19th Street, Denver, Colorado 80294 

Proceedings Reported by Mechanical Stenography 

Transcription Produced via Computer 

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APPEARANCES

LINDA KAUFMAN and MARTHA PALUCH, Assistant U.S. 

Attorneys, 1225 17th Street, Suite 700, Denver, Colorado, 

80202, appearing for the Government. 

DARLENE BAGLEY, Attorney at Law, Ridley, McGreevy, & 

Winocur P.C., 303 16th Street, Suite 200 Denver, Colorado, 

80202, appearing for the Defendant. 

WILLIAM TAYLOR , Attorney at Law, 303 16th Street, 

Denver, Colorado, 80202, appearing for the defendant. 

(The following proceedings were had and entered of

record after the Court heard the arguments of counsel and

statement of defendant:)

THE COURT: Thank you.

Then I'll announce the sentence I intend to impose

here. Of course, counsel, you'll have a final opportunity to

make legal objections before judgment is actually entered. And

if you believe that the sentence is premised upon error or I

raise an issue you haven't had adequate opportunity to

consider, then I invite you to request a continuance.

Imposition of a sentence in a federal criminal case is

governed by a number of statutes. The umbrella statute is 18

U.S.C. Section 3553. In imposing sentence in this case, the

Court has considered the objectives and the factors that are

set out in that statute. That statute requires that the

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 2 of 18
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sentence be sufficient but not greater than necessary to

satisfy particular objectives: To reflect the seriousness of

the offense; to promote respect for the law; to provide just

punishment; to adequately deter criminal conduct; to protect

the public from further crimes by the defendant; to provide the

defendant with needed educational or vocational training,

medical care, or other correctional treatment in the most

effective manner.

To fashion a sentence that meets these objectives, the

statute directs me to consider the nature and circumstances of

the offense; the history and characteristics of the defendant;

the kinds of sentences that are available; the sentence

prescribed by the federal sentencing guidelines; the need to

avoid unwarranted sentence disparities among defendants with

similar records found guilty of similar conduct; and in the

appropriate case, the need for restitution.

Now, at the beginning of this hearing, I identified

those documents that I had considered. Some of the documents

were motions to restrict access to other documents. And I

denied all of those motions with one limitation, and that was

document -- Exhibit B to Document No. 264. The Government's

motions to restrict all concerned trying to find Ms. Weingart

and her husband after they absconded in violation of the terms

of their pretrial release. They have both been apprehended,

and as a consequence, there is no need to restrict those --

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access to those documents.

In addition, the Government filed a sentencing

statement that was filed under restriction. Our local rules

provide that sentencing statements are not filed under

restriction, either for the defendant or for the prosecution.

Now, I suspect that the reason it was filed under restriction

was because the defense had asked for their sentencing

statement to be filed under restriction. And I denied that

motion, and I did so because it is important that the public

understand what arguments are made in order to understand what

sentence I impose.

Now, in the motion to restrict, there was reference to

a psychiatric examination. And that report and the information

considered by that witness is Exhibit B. And that is the one

thing that is subject to restriction here, and it is subject to

restriction because it contains personal medical information

about the defendant that is not pertinent to the determination

to be made as to sentencing.

I confirmed with counsel that they had -- they and the

defendant had had opportunity to review all the documents that

I referenced. I asked whether there were additional documents,

and counsel identified particular documents to be considered.

I have considered those. And in fact, I will make reference to

one of them.

I asked whether there were any objections to the most

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recent presentence report and the addenda attached; there were

none. I asked whether there was any dispute as to the

calculation of the sentence in the presentence report; there

was none.

Before we get to that calculation, let me note, there

were no motions for downward departure. There was a request

for a variance. Now, the place that we start for purposes of

analysis is the count of conviction.

This case was brought on an Indictment that had

multiple counts, charging all kinds of crimes associated with a

scheme devised by Ms. Weingart to obtain repetitive financing

on properties for which no consideration was given. This

financing was obtained based on false information supplied to

the government-backed lending institutions, and Ms. Weingart

was charged with a variety of crimes associated with that

scheme. Initially, so was Mr. Gallegos. But the Government

dismissed those charges against Mr. Gallegos, and he pled

guilty to a single charge, violation of 18 U.S.C. Section 1014,

making a false statement to a bank.

Now, the elements for that particular charge are set

out in the plea agreement, and that's why I am referring to the

plea agreement. First, that the institution was insured by the

Federal Deposit Insurance Corporation; secondly, that

Mr. Gallegos made a false statement to the institution; third,

that he knew that the statement was false when he made it; and,

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fourth, that he intended to influence the bank to loan him

money. This isn't about whether or not or why he didn't review

the loan application. It's about making a false statement.

And the false statement that he admitted to making is that he

had reviewed the documents when he knew he hadn't.

The significance of the information is that there was

information submitted to the institution that was false and

caused a loss to the institution, and we take that into account

in the calculation of restitution. But what Mr. Gallegos is

being sentenced for is not the scheme that his mother developed

or implemented, it's not all of the false representations in

the loan application, it's not for not reviewing the loan

application. It's for saying that he did when he didn't. A

lie. That's what he's being punished for. And that is the

count of conviction that was determined by the Government to be

the subject of the Information and to which Mr. Gallegos pled

guilty.

For that offense, the calculation of the sentence as

set forth in the presentence report, which the parties agree is

the correct calculation under the federal sentencing

guidelines, is as follows:

For violation of 18 U.S.C. Section 1014, sentencing

guideline Section 2B1.1(a)(1) sets the Base Offense Level at 7.

Because the loss that was suffered by virtue of the false

statement, the signing of the application and the

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representation that the information in it was true, accurate,

and correct, exceeds $400,000, there is a 14-level increase.

And the restitution amount here for the loss is $965,847.32.

That results in an Adjusted Offense Level of 21. Mr. Gallegos

gets the maximum reduction on the offense level for acceptance

of responsibility. That is a three-level reduction. It

results in a Total Offense Level of 18.

Now, he has no criminal history convictions, and he

has no juvenile adjudications. He has no criminal history

points whatsoever. That puts him in the lowest criminal

history under the guidelines.

For an offense level of 18 and a Criminal History

Category of I, the guidelines recommend incarceration of 27 to

33 months, supervised release of 2 to 5 years, a fine of $6,000

to $1 million, and a special assessment of $100 is required

because there is one count of conviction.

The Government asked for a sentence in the guideline

range. The defense asks for a downward variance to time

served, which is 1 day in jail. The argument for the variance

is as follows: That Mr. Gallegos had a relationship with his

mother in which he was unusually passive and trusting, that he

had cognitive deficits and therefore relied on her to make

certain decisions, and their relationship dynamics put her in

the position of controlling him. That's how I understand the

argument.

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That is not grounds for a variance. What we are

looking at here is the nature and circumstances of the offense.

We're not talking about the scheme, we're not talking about the

relationship between Mr. Gallegos and his mother, we're talking

about telling a lie, saying on a piece of paper, I read

documents and the information in them is true, accurate, and

correct, when he knew that he hadn't read them, and he couldn't

make that representation. I've not heard anything that

suggests that his mother forced him to do that, specifically

told him to do that, cajoled him to do that, or threatened him

to do that.

Now, there is a difference between being unable to

make another choice and have it be hard to make a choice. The

law recognizes that when someone is unable to make the correct

choice, they should not be held accountable. But when it's

simply hard to make the correct choice, they are held as

accountable as the person for whom it was easy to make the

correct choice. There is nothing before me that suggests that

Mr. Gallegos did not recognize that this was a false statement

or that he was forced into making it.

Now, I know that the nature of this case changed

during the course of prosecution, but I am troubled that

Mr. Gallegos in his allocution believes that what he did wrong

here was trusting his mother.

Mr. Gallegos, you're not being punished for trusting

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 8 of 18
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your mother; you're being punished for telling a lie. And

you're not being punished for not having looked at these

documents; you're being punished for saying that you did when

you knew that you didn't. Your obligation here was to refuse

to sign because you could not represent that the information in

the documents was true, accurate, and correct, because you

hadn't looked at it. And that's the basis of the offense for

which you're being punished.

So I am not persuaded by either the Government's

argument that you should have looked at all of this stuff and

you should have known that everything in the application was

false, and I'm not persuaded by the medical opinion that your

relationship with your mother and your dependence on her

somehow influenced the making of this false statement. That's

not grounds for a variance, in my view.

The second argument that's made is that Mr. Gallegos

has a positive HIV status and that that condition cannot be

adequately addressed in prison. I'm not persuaded by that

argument either. The burden to establish a medical condition

that prevents a sentence from being imposed is on the defense.

The evidence before the Court includes references in letters

from Bureau of Prisons officials that say that the HIV status

is not unique, there are lots of people in prison who have a

positive HIV status. The question is, can the Bureau of

Prisons adequately treat Mr. Gallegos if I send him to prison?

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And I have no evidence that says that they cannot, and I cannot

infer that they will be unable to appropriately treat him

simply because it's the Bureau of Prisons that's writing the

letters that are before me. So that is not grounds for a

variance. I'm not persuaded that I should vary on that basis.

The third argument that is made for a variance is that

Mr. Gallegos has come a long way in his recognition of

accountability for his own actions. And that is evidenced by

his voluntary cooperation with the Government in trying to

locate his mother and his stepfather after they absconded,

contrary to the restrictions imposed pretrial. I believe this

justifies a variance. That is something that is now a

characteristic of the defendant, that is not only notable, but

it is not taken into account by the guideline calculation,

because there was no 5K1.1 filed.

When I look at what kind of variance should be

imposed, I look at the sentencing objectives and the sentencing

factors. This was a very serious offense. It caused a

significant loss. The loss was caused by telling a lie. And I

am not concerned about the message that has been argued should

or should not be sent with regard to reviewing loan

applications. What I am concerned about are people who tell

lies on loan applications. And saying that you've reviewed

them and the information is true and accurate and complete when

it's not is a lie. And there has to be a punishment for lying

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 10 of 18
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on a loan application in order to deter others from lying on

loan applications.

I am also concerned that Mr. Gallegos has really

benefited from the big picture thinking here about, how did he

get in this position? And how does he avoid getting into this

position in the future? But his analysis and his attorney's

analysis has been, this position is making decisions in concert

with his mother. This crime is not about making decisions in

concert with mom. This crime is about telling the truth and

failing to tell the truth. And that is not the focus of what

Mr. Gallegos has said. So what I'm concerned about is making

sure that he tells the truth in the future.

Now, he is entitled to and I must provide for

educational or vocational training, medical care, or other

correctional treatment in the most effective manner. And I am

satisfied that the Bureau of Prisons can do that.

The sentence I intend to impose here is a variant

sentence. It is a variant sentence -- downward variance, and I

intend to impose a sentence of 12 months and 1 day

incarceration. I do not believe that one day in jail is a

sufficient sentence for the kind of lie that was told here or

for the consequences that resulted from that lie. But

similarly, I believe that Mr. Gallegos has engaged in behavior

that is to his credit in being truthful and forthcoming in

telling the government what he knew about where his mother and

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 11 of 18
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his stepfather were after they absconded. And it is in

deference to that kind of behavior, truthful, forthcoming,

honest behavior, that a variance is imposed here.

So the sentence I intend to impose is 12 months and 1

day of incarceration, to be followed by -- and here I am going

to impose a guideline range -- 3 years of supervised release.

I find that Mr. Gallegos lacks the ability to pay a fine, in

light of the restitution obligation that will be imposed of

$965,847.32, and therefore, I do not intend to impose a fine.

But I do intend to impose a number of conditions on supervised

release that are directed to facilitate the paying of the

restitution sum.

I make the restitution obligation joint and several

with the restitution obligation of Ms. Weingart, and I intend

to impose a special assessment of $100.

Is there any need for clarification, further

explanation, or request for a continuance?

MS. BAGLEY: May I have a minute?

No, Your Honor.

MS. KAUFMAN: I do have one thing, Your Honor. The

Court just indicated that the restitution would be ordered

joint and several with Ms. Weingart. In fact, the loss in this

case is entirely distinct, based on different property, that

being California Avenue, from any of the properties which are

the basis of restitution in Ms. Weingart's case, those

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 12 of 18
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properties being Lost Angel and Saxborough. So the loss caused

by the defendant in this crime and the relevant conduct is

totally distinct from the loss caused by her in that crime. So

it -- I would --

THE COURT: So you didn't include this loss in her

restitution?

MS. KAUFMAN: No, it's a different property

altogether. This property was in Seattle, Washington, and the

properties on which she was convicted were in Colorado.

THE COURT: All right.

Any comment by defense?

MS. BAGLEY: The only request that we would make, Your

Honor, is that the sentence to the Bureau of Prisons, if you

make a recommendation that it could be served in the state of

Washington. That's where Mr. Gallegos and his partner reside.

THE COURT: All right. I decline the request, and I

do so for several reasons. First of all, there is a myth that

if the Court makes a recommendation, the Bureau of Prisons is

going to follow the recommendation. It is a myth because in my

experience, they follow the recommendation less than half the

times I make the recommendation. And they are perfectly within

their rights. They have no obligation to follow the

recommendation by the Court at all. I may be doing

Mr. Gallegos a favor by not making a recommendation, given the

frequency with which the Bureau of Prisons follows such

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 13 of 18
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recommendations.

But the second reason is this: I am concerned about

Mr. Gallegos' safety in prison. And that should, in my view,

predominate over location. When the Bureau of Prisons makes a

determination of where to assign someone, they take into

account security and safety and bed space and need for

rehabilitative programs and for specialized medical care. And

to the extent that Mr. Gallegos needs special medical care or

there is a particular facility that will keep him safer than

somewhere else, I want the Bureau of Prisons to have the

discretion to do that, and I don't think that my determination

of locating him in Washington necessarily takes that into

account.

MS. BAGLEY: I guess the only other request would be

for a voluntary surrender, since Mr. Gallegos has appeared --

THE COURT: Any objection to that?

MS. KAUFMAN: No objection.

I have an additional request, Your Honor.

THE COURT: Okay.

MS. KAUFMAN: I apologize if the Court said this and I

missed it. I would ask that the Court specifically order that

the restitution be due and payable immediately.

THE COURT: I always do that. I did not make a

specific finding as to whether it will bear interest, however,

and the parties have not argued with regard to that. I find in

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 14 of 18
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light of the size of the restitution and the likely income,

future income of the defendant, that he lacks the ability to

pay interest on the restitution, amount, and therefore, I do

not intend for it to bear interest.

Pursuant to the Sentencing Reform Act of 1984, it is

the judgment of the Court that the defendant, John Phillip

Gallegos, be committed to the custody of the Bureau of Prisons

to be imprisoned for a term of 12 months and 1 day.

Upon release from imprisonment, he'll be placed on

supervised release for a term of 3 years. Within 72 hours of

release from the custody of the Bureau of Prisons, he'll report

in person to the probation office in the district to which he's

released. While he's on supervised release, he will not commit

another federal, state, or local crime; he'll not possess a

firearm as defined in 18 U.S.C. Section 921; and he'll comply

with the standard conditions that have been adopted by the

Court. I waive the mandatory drug testing provisions of 18

U.S.C. Section 3583(d) because the presentence report indicates

a low risk of future substance abuse by the defendant. The

defendant will cooperate in the collection of DNA as directed

by the probation officer.

I find that there are special conditions of

supervision that should be imposed because they're reasonably

related to the factors enumerated in 18 U.S.C. Section 3553(a)

and 3583(d).

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Part of the sentence includes a restitution

obligation, and that restitution sum will be due and payable

immediately. During the term of supervised release, the

defendant will make periodic payments on the restitution sum

based upon his income and expenses and ability to pay. Within

60 days of release from confinement, he'll meet with the

probation officer to develop a plan for the repayment of

restitution. And the plan will be based upon his income and

expenses. The plan will be forwarded to the Court for review

and approval. The plan will be reviewed on a quarterly basis

by Mr. Gallegos and the probation officer. And Mr. Gallegos

will submit to the probation officer all requested

documentation that pertains to his income and expenses so that

the plan can be adjusted in accordance therewith.

So long as there is a restitution obligation

outstanding, Mr. Gallegos will not incur new credit charges or

open additional lines of credit or obtain any loans of any type

without the approval of the probation officer. And that

approval will not be given unless he is in compliance with the

periodic payment obligation imposed in accordance with the

schedule submitted and approved by the Court.

As directed by the probation officer, Mr. Gallegos

will apply any moneys received from income tax refunds, lottery

winnings, inheritances, judgments, and any anticipated or

unexpected financial gains to the outstanding court-ordered

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 16 of 18
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financial obligation in this case. The payments will be made

to the registry of the Court. The account in the registry of

the Court will be maintained until a balance reaches $1,000.

Disbursement will be made on a pro rata basis to Bank of

America and JPMorgan Chase Bank in accordance with their pro

rata share of the restitution sum of $965,847.32. No interest

will be borne on the restitution amount. However, the

restitution obligation is due and payable immediately, as is a

special assessment of $100. No fine is imposed for the reasons

specified.

Mr. Gallegos, I advise you with regard to your right

to appeal your sentence that you may appeal to the extent you

have any rights remaining under the terms of your plea

agreement. In order to exercise any rights to appeal, you must

file a notice of appeal within 14 days after entry of the

judgment or you lose your requirement to appeal. Now,

ordinarily, Ms. Bagley and Mr. Taylor would file that notice of

appeal for you. But if for some reason they're unable or

unwilling to do so, and you wish to appeal, you may request and

I will direct the Clerk of Court to file a notice of appeal on

your behalf.

I recommend to the Bureau of Prisons that a medical

assessment be made of Mr. Gallegos and direct that the

probation officer ensure that the Bureau of Prisons has a copy

of the medical information provided by his doctor as to the

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 17 of 18
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treatment he is currently receiving, with the expectation that

the Bureau of Prisons will provide similar or the same

treatment to Mr. Gallegos while he is detained.

I find that he is not likely to flee or pose a danger

to the safety of any other person or the community. He will

surrender at the institution designated by the Bureau of

Prisons before noon within two weeks of receiving a designation

by the Bureau of Prisons. His bond will be exonerated at the

time of his voluntary surrender to the institution designated

by the Bureau of Prisons.

Is there anything further that we need to address?

MS. KAUFMAN: No, thank you, Your Honor.

MS. BAGLEY: I don't believe so.

THE COURT: Thank you.

Thank you, Ms. Kaufman; thank you, Ms. Paluch; thank

you, Ms. Bagley; thank you, Mr. Taylor; thank you to our

probation officer, our marshal staff, and our court staff.

That will conclude this hearing.

Good luck to you, Mr. Gallegos.

We'll stand in recess.

(Recess at 3:09 p.m.)

REPORTER'S CERTIFICATE 

 I certify that the foregoing is a correct transcript from 

the record of proceedings in the above-entitled matter. 

 Dated at Denver, Colorado, this 20th day of September, 

2013. 

s/Therese Lindblom 

 ______________________________ 

 Therese Lindblom,CSR,RMR,CRR 

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Case No. 1:11-cr-00355-MSK Document 338-1 filed 10/10/13 USDC Colorado pg 18 of 18