Exhibit A

Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 1 of 45
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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

Criminal Action No. 11-CR-00355-MSK 

UNITED STATES OF AMERICA, 

 Plaintiff, 

vs. 

JOHN PHILLIP GALLEGOS, 

 Defendant. 

_______________________________________________________________ 

REPORTER'S TRANSCRIPT

CHANGE OF PLEA 

_______________________________________________________________ 

Proceedings before the HONORABLE MARCIA S. KRIEGER,

Judge, United States District Court for the District of 

Colorado, commencing at 10:04 a.m., on the 11th day of 

February, 2013, in Courtroom A901, United States Courthouse, 

Denver, Colorado. 

APPEARANCES

LINDA KAUFMAN and MARTHA PALUCH, Assistant U.S. 

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

80202, appearing for the Government. 

WILLIAM TAYLOR and DARLENE BAGLEY, Attorneys at Law, 

303 16th Street, Denver, Colorado, 80202, appearing for the 

defendant. 

THERESE LINDBLOM, Official Reporter 

901 19th Street, Denver, Colorado 80294 

Proceedings Reported by Mechanical Stenography 

Transcription Produced via Computer 

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 2 of 45
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P R O C E E D I N G S

THE COURT: Court is convened today in Case No.

11-cr-355. This is encaptioned for purposes of today's hearing

as the United States of America v. John Phillip Gallegos. The

matter is set down for a change in plea.

Could I have entries of appearance, please.

MS. KAUFMAN: Good morning. Linda Kaufman for the

United States, and with me is co-counsel Martha Paluch.

THE COURT: Good morning and welcome.

MR. TAYLOR: Good morning, Your Honor. William Taylor

and Darlene Bagley on behalf of John Phillip Gallegos, who is

present. Good morning.

THE COURT: Good morning and welcome.

Are you all ready to proceed?

MR. TAYLOR: Yes, Your Honor.

THE COURT: Thank you.

And how about for the Government?

MS. KAUFMAN: We're prepared, Your Honor.

THE COURT: Who is going to be standing with

Mr. Gallegos?

MR. TAYLOR: I will.

THE COURT: All right. Mr. Taylor and Mr. Gallegos,

would you please approach the lectern.

This matter is before the Court for a change in the

defendant's plea, for rearraignment pursuant to Rule 10, and

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 3 of 45
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for consideration of and advisement with regard to the parties'

plea agreement in accordance with Rule 11 both of the Rules of

Criminal Procedure.

The record reflects that the defendant was first

charged on August 31, 2011 in an Indictment filed that date.

He was charged in Counts 1, 2, 5, 6, 12, 13, and 15 of the

Indictment. He entered a plea of not guilty to those charges.

I understand that pursuant to the terms of a written plea

agreement, he now intends to plead guilty to a single count in

an Information that charges violation of 18 U.S.C. Section

1014, and the Government intends to dismiss all of the counts

in the Indictment against him. Is that correct?

MS. KAUFMAN: That is correct, Your Honor.

MR. TAYLOR: Yes, Your Honor. That's correct.

THE COURT: Thank you.

Ms. Kaufman, would you please rearraign on the

Information.

MS. KAUFMAN: Yes, Your Honor.

We are in the United States District Court for the

District of Colorado in Case No. 11-cr-355-MSK, in the case of

United States of America v. John Phillip Gallegos.

Are you, sir, the John Phillip Gallegos named in the

Information?

THE DEFENDANT: Yes, ma'am.

MS. KAUFMAN: The Information reads as follows:

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 4 of 45
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United States Attorney charges, Count 1: On or about

October 10, 2007, in the District of Colorado and elsewhere,

the defendant, John Phillip Gallegos, for the purpose of

influencing Countrywide Bank FSB, an institution, the accounts

of which were insured by the Federal Deposit Insurance

Corporation, to loan him money, did knowingly make a false

statement to the bank, namely, by signing and submitting his

loan application to Countrywide Bank FSB, he made the false

statement that he intended for the institution to base its

determination as to whether to approve the loan on his

qualifications as set forth in the application on the premise

that he intended to repay the loan himself, when in fact he

knew that he was unable to repay the loan itself, but instead

intended to have his mother, W.W., repay it, all in violation

of Title 18 United States Code Section 1014.

How, sir, do you plead to this charge?

THE DEFENDANT: Guilty.

THE COURT: Thank you.

As of this moment, sir, you're not bound by your plea

of guilty. Indeed, you're not bound by this plea until I

accept it. You can change your mind at any point during the

hearing until I accept your plea.

In order to accept your plea, I have to be sure that

you understand the charges that have been brought against you,

you understand your choices and the consequences that flow from

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those choices. I have to be sure that your decision to plead

guilty is voluntary, and you haven't been pressured into it. I

have to find that there is a factual basis for your plea. And

because you are pleading guilty to an Information, I have to be

sure that you understand your right to be indicted and you are

voluntarily and knowingly waiving that right.

Throughout this hearing, I want you to let me know if

there is anything you don't understand or if you have any

questions. And if you'd like to talk with Mr. Taylor or

Ms. Bagley at any time to ask them a question, just let me

know, and we'll take a brief recess so you can confer

privately.

I begin by asking you a number of questions. The

questions are not intended to trap, embarrass, insult, or

offend you. The questions are important because your answers

are important. It's your answers that I assess in order to

determine whether I can accept your plea or not. Therefore,

you must answer my questions truthfully and completely.

Indeed, just like a witness, you take a solemn oath promising

to tell the truth; and if you don't, your answers can be used

against you if an action is brought against you for false

statement or perjury.

Do you understand?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you want to proceed?

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THE DEFENDANT: Yes.

THE COURT: Would you please administer the oath.

(Defendant sworn.)

Mr. Gallegos, how old are you?

THE DEFENDANT: 41 years old, Your Honor.

THE COURT: What level of school did you complete?

THE DEFENDANT: High school diploma and online degree.

THE COURT: Do you have any difficulty reading or

writing?

THE DEFENDANT: No, ma'am -- no, Your Honor.

THE COURT: Within the last 24 hours, have you taken

any medication?

THE DEFENDANT: No, Your Honor.

THE COURT: Within the last 24 hours, have you used

any drug or alcohol?

THE DEFENDANT: No, Your Honor.

THE COURT: To the best of your knowledge, have you

ever been diagnosed with a mental illness?

THE DEFENDANT: No, Your Honor.

THE COURT: Is there anything about the way you feel

today physically, emotionally, or mentally that makes it

difficult for you to understand what is happening?

THE DEFENDANT: No, Your Honor.

THE COURT: Have you read and do you understand the

charges against you in the Indictment?

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THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you discussed those with your

attorneys?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you asked them all the questions you

had about those charges?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have they answered all of your questions?

THE DEFENDANT: Yes, they have.

THE COURT: Are there any other questions you want to

ask them?

THE DEFENDANT: Not at this time, Your Honor.

THE COURT: Thank you.

Mr. Taylor, can you identify the Information for the

record, please.

MR. TAYLOR: Yes, Your Honor. The Information

charging one count is marked as Court's Exhibit 3.

THE COURT: Thank you.

Mr. Gallegos, would you please turn to Court Exhibit

3.

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you read this document?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you discussed it with your attorneys?

THE DEFENDANT: Yes, Your Honor.

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 8 of 45
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THE COURT: Have you asked them all the questions you

had about it?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have they answered all of your questions?

THE DEFENDANT: Yes.

THE COURT: Any other questions you want to ask them

about it?

THE DEFENDANT: No, no, Your Honor.

THE COURT: Now, this document is the document that

contains the charge that you just entered a plea of guilty to.

THE DEFENDANT: Yes.

THE COURT: And before I can accept that plea, I have

to be sure that you understand the difference between this

Information and an Indictment. Have you discussed your right

to be indicted with your attorneys?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you understand what it is?

THE DEFENDANT: Yes.

THE COURT: Just so that I'm sure you understand, let

me go over it with you.

THE DEFENDANT: Okay.

THE COURT: Under the United States Constitution, you

have a right to be indicted by a grand jury. Now, a grand jury

is composed of at least 16 and not more than 23 people. And in

order to charge you with a crime, at least 12 of those grand

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 9 of 45
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jurors must agree that there is probable cause to believe you

committed a crime. A grand jury might or might not indict you.

But an Information is a criminal charge that is brought against

you by the Government through the offices of the United States

Attorney, not through the grand jury. And as a consequence, it

is both prepared and signed only by the attorney or attorneys

in the United States Attorney's Office.

Because you have a right to be indicted, to proceed on

an Information, you must give up that right to Indictment. Do

you understand your right to be indicted?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you wish to waive that right and

proceed on the Information?

THE DEFENDANT: Yes, I wish to proceed on this.

THE COURT: That's Exhibit 3 in front of you.

THE DEFENDANT: Yes.

THE COURT: Do you understand that if we proceed on

the Information, it will be treated just as if you had been

indicted?

THE DEFENDANT: Yes.

THE COURT: All right. Mr. Taylor, have you discussed

and advised your client as to his right to be indicted?

MR. TAYLOR: Yes, Your Honor.

THE COURT: Are you satisfied he understands that

right?

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MR. TAYLOR: I am, Your Honor.

THE COURT: And are you satisfied that he's knowingly

and voluntarily waiving it?

MR. TAYLOR: I am, Your Honor.

THE COURT: Thank you very much.

MR. TAYLOR: You're welcome.

THE COURT: Can you identify the plea agreement for

the record, please.

MR. TAYLOR: The plea agreement of the parties is

identified as Court's Exhibit 1.

THE COURT: Thank you.

And, Mr. Gallegos, would you please turn to Court

Exhibit 1. Have you read this document?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you discussed it with your attorneys?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you asked them all the questions you

had about it?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have they answered all of your questions?

THE DEFENDANT: Yes, they have.

THE COURT: Are there any other questions you want to

ask them?

THE DEFENDANT: No, Your Honor.

THE COURT: Now, there is a lot of legal language in

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 11 of 45
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this document. Do you understand what it says and what it

means?

THE DEFENDANT: I've done my best to, yes, Your Honor.

THE COURT: Well, this is the time that I have to make

sure you understand it all. So if you have any reservations or

any questions, this is the time to bring them up with your

attorneys. Is there anything you are unsure about?

THE DEFENDANT: No, Your Honor.

THE COURT: Does this reflect all of your agreement

with the Government?

THE DEFENDANT: Yes.

THE COURT: All right. I'd like to bring two

particular provisions to your attention. Would you please look

at page 2. The third full paragraph on that page that starts

out, "the parties agree that the total restitution in this

case" -- do you see that paragraph?

THE DEFENDANT: Yes, I do, Your Honor.

THE COURT: Do you understand that you're agreeing

that the restitution here is approximately $984,618.35?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Okay. And would you go down two

paragraphs there that starts out -- still on page 2, "the

defendant is aware." Do you see that paragraph?

THE DEFENDANT: Yes.

THE COURT: And if you read through that entire

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 12 of 45
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paragraph, you'll note that you are giving up some very

important rights here. In particular, you're giving up your

right to appeal from the sentence that is imposed in this case

except under limited circumstances, very limited circumstances.

You will not be able to appeal from the sentence that is

imposed here unless it exceeds the maximum penalty provided in

the statute of conviction; or in imposing sentence, the

sentence is a result of a departure or a variance upward from

the applicable sentencing guideline range; or in determining

the sentence, I find that the guideline offense level is

greater than 18. Do you understand that?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Okay. And do you understand that you are

also giving up your right to bring a collateral attack against

this action, against the sentence, and against the judgment

that is entered?

THE DEFENDANT: Yes.

THE COURT: There are only three circumstances in

which you can do that, and that is where there is an explicitly

retroactive change in the applicable guidelines or sentencing

statute or if you contend that you were denied effective

assistance of counsel, or if you contend that there was

prosecutorial misconduct. Do you understand that?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Okay. Now, these limitations, however,

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 13 of 45
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are subject to another limitation, and that is, if the

Government appeals from the sentence that I impose, you no

longer have these waivers in place. Do you understand that?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Okay. Any questions about that?

THE DEFENDANT: No, Your Honor.

THE COURT: Did you sign this agreement?

THE DEFENDANT: Yes, I did, Your Honor.

THE COURT: Would you look at the last page. Is that

your signature there?

THE DEFENDANT: Yes, it is, Your Honor.

THE COURT: Thank you.

Mr. Taylor, does Exhibit 1 also bear your signature?

MR. TAYLOR: Yes, Your Honor.

THE COURT: Did you review the plea agreement with

Mr. Gallegos?

MR. TAYLOR: Yes, Your Honor.

THE COURT: Answer all of his questions?

MR. TAYLOR: Yes, Your Honor.

THE COURT: Are you satisfied that he understands the

contents of this document?

MR. TAYLOR: I am, Your Honor.

THE COURT: Thank you. Did you review the discovery

in this case?

MR. TAYLOR: Yes, Your Honor.

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THE COURT: And does it comport with the facts that

are recited in this plea agreement?

MR. TAYLOR: It does, Your Honor.

THE COURT: Thank you.

Ms. Kaufman, does this document bear your signature as

well?

MS. KAUFMAN: It does, Your Honor.

THE COURT: Thank you.

Mr. Gallegos, in this document is a recitation of

facts that the Government believes it could prove if this

matter were to go to trial. By entering into this agreement,

you are admitting that these facts are true. I'll treat them

as true, both for purposes of considering your plea and also

for purposes of sentencing. Therefore, I'm going to ask

Ms. Kaufman to recite the facts that you have agreed to. And

you must listen to what she says, because at the end of her

recitation, I'm going to confirm with you that these facts are

true. You must let me know if you have any disagreement with

the facts as recited by Ms. Kaufman. Do you understand?

THE DEFENDANT: Yes, Your Honor.

THE COURT: All right. Ms. Kaufman, would you please

recite the facts on which the parties agree.

MS. KAUFMAN: Yes.

First I'd like to begin by saying, the specific facts

are set forth in the plea agreement in its entirety as the

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 15 of 45
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factual basis section.

Generally, the defendant between the dates of

April 2005 and January 2008 refinanced property that he owned

which was located at 7603 California Avenue Southwest, Seattle,

Washington, three times. He obtained one line of credit. Each

time he did that, he signed a loan application to be submitted

to a financial institution for the purpose of influencing it to

loan the money he had requested and each time by signing his

application, intended for submission and thereafter actually

submitted to the financial institution, he implicitly stated to

the bank in sum and substance that he understood that the bank

would use his application to approve the loan, that he intended

for the bank to base its determination on whether to approve

the loan on that application, and that he intended to repay the

loan itself, when in fact at the time he knew that he was

unable to pay the loan himself, but he intended to have his

mother, Waunita Weingart, repay the loan.

The particular loan which is the subject of the one

count is the October 10, 2007 loan. He was the sole borrower

on that loan. He signed the application for a loan in the

amount of $465,500 to refinance his property at the California

Avenue address, intending that it be submitted to the bank. It

was, indeed, submitted to the bank, Countrywide Bank FSB, and

Countrywide was at the time an institution, the accounts of

which were insured by the Federal Deposit Insurance

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Corporation.

The application that he signed -- and he signed each

page, except one, he initialed that page -- was a 10-page

document.

Our position in this is that he had actual knowledge

of the contents of the loan application and each of the

applications described in this Statement of Facts that I'm

reciting because he signed each page of each application, and

he worked with his mother at the real estate title business in

Colorado since at least 2003. He stated in a sworn deposition

taken in January of 2009 that he typically reviewed documents

before he signed them.

It is the defendant's contention that he did not

actually read the loan application for this October 2007 loan

or any of the others and didn't know their contents. Rather,

he signed the loan applications discussed in this Statement of

Facts at his mother's request and pursuant to her advice. He

trusted her to give him such advice on the bases that she was

his mother, that she was a mortgage broker with decades of

experience in that field, and that she advised him that the

loan was for refinancing, done merely to obtain better loans

than the previous loan and that they were no income, no

verification loan applications.

If the Court finds that the defendant did not have

actual knowledge, it has been the Government's position that

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 17 of 45
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the defendant signed these applications without reading them.

If he did, he deliberately blinded himself to the fact that

there was a high probability that his actions contained false

statements about his income and assets, and he chose not to

read the applications or otherwise acquire knowledge of the

specific content in order to avoid having actual knowledge of

the falsehoods they contained. He was aware of the fact that

he was not able to pay even one outstanding mortgage for any of

his three properties.

The Government bases this position on the following:

At the time the defendant signed each loan -- each of the loan

applications described herein, one, he earned only

approximately $2,000 per month, which his annual income since

2002 had only been about 20,000 to 24,000 per year, and he had

no other income. He owned three properties, those being 430

East Sixth Avenue, Denver, the subject property at California

Avenue Southwest, Seattle, Washington, and 141 Lost Angel Road

in Boulder, Colorado, each of which was encumbered by at least

on 100 percent or nearly 100 percent loan.

Ms. Weingart or the company she controlled paid his

credit card bills, leased the jet airplane that he piloted,

paid the expenses associated with the plane, and leased the

vehicles he drove. He had worked in the mortgage brokerage

business and the title insurance company offices run by his

mother for years, and he had been a licensed real estate title

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 18 of 45
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producer in the state of Colorado since 1999.

The loan application which is the subject of this

Information stated among other things that he was employed at

TCS, or Transaction Coordination Services, in Broomfield,

Colorado as an investigator, that the type of business was real

estate, and that his monthly income was $31,500. That company

was organized in 1998 by Waun Weingart, his mother, as

president and him as vice president and was frequently referred

to as TCS.

It also stated that the application -- that his assets

included a CD account with the value of $97,357.86, located at

American National Bank, and that his total assets, including

real estate owned, had a value of $4,600,253.86.

The schedule of real estate portion of his application

listed the following portions of the -- parcels of real

estate -- and these are set forth in the document on page 8 in

a chart.

In fact, the defendant's monthly income was only about

$2,000 he earned working for his mother, Waun Weingart, in her

real estate company and mortgage brokerage office. He contends

that he did not know which of the business entities his mother

operated paid him for the work he did for her, and that he

believed he shared in the profits of the businesses she ran

because he was her son and had assisted her in setting up some

of the entities and also because he did clerical work for her.

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He agrees that his mother provided him about $2,000 a month.

In fact, despite what was stated on the application,

he had no CD account at American National Bank, and the total

of the balances in his personal bank accounts was approximately

$1,500 at the time. Of all of the properties listed as being

owned by him on this application, he owned only the California

Avenue property and the 430 East Sixth Avenue property. The

other ten properties, all of which were listed on the

application as rental properties, two per page, each page of

which he signed, either did not exist or existed, but were

never owned by the defendant as represented.

He in fact owned another property, that being Lost

Angel Road, Boulder, Colorado, which was encumbered but was not

listed on the schedule of real estate owned. He owned

virtually no other assets in fact, and the total value of his

assets was therefore substantially than the $4.6 million set

forth in the application.

Based on the information contained in his loan

application, the bank loaned him $465,500. He defaulted on the

loan on June 1, 2008; and as a result, the bank lost

approximately $464,814 as a result.

Also included in the factual basis are similar acts,

those being a loan that the defendant acquired on April 11,

2005, previous to the one which is the subject of the

Information. On this one, again, sole borrower. He signed an

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application for loan in the amount of $359,000 to refinance the

same property, that being California Avenue, which he intended

to be submitted and which was in fact submitted to a different

lender, that being Washington Mutual Bank. Washington Mutual

was an institution, the accounts of which were insured by the

Federal Deposit Insurance Corporation, and, therefore, a

financial institution.

The information on that loan application concerning

his employment, income, assets, real estate holdings was false

in ways very similar to those set forth in the October 2007

loan application. This particular application was a five-page

document. And, again, the defendant signed each page or

initialed each page.

Based on the information contained in his loan

application, the loan -- the bank loaned him $359,000. He

defaulted on this loan on June 1, 2008. And as a result, the

bank's successor in interest foreclosed on the property and

resold it, and the entity lost about 17,833.32. 

Similarly, on January 23, 2008, the defendant obtained

both a loan and a line of credit as sole borrower from the Bank

of America, deposits of which were insured by the Federal

Deposit Insurance Corporation of America -- Federal Deposit

Insurance Corporation, excuse me. The amount of the loan in

this instance was $383,200, and it was purported -- it was to

refinance his property at California Avenue. The application

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in this instance was a seven-page document, each page of which

the defendant signed and/or initialed. The information in that

application, again, concerning his employment, income, assets,

and real estate holdings was false in ways very similar to that

in the October 2007 loan application.

Based on the information contained in this loan

application, the Bank of America loaned him as sole borrower

$383,200. The bank issued a line of credit to him on the same

day in the amount of $100,000. It authorized a line of credit

on the basis of the same application which he had submitted for

the loan.

On February 19, he actually issued two drafts drawn

against the line of credit totaling $100,000. Both were

honored by the bank. One was payable to him, deposited to his

personal account at American National Bank; the other was

payable to Waun Weingart, was deposited to her personal account

at American National Bank. The defendant defaulted on both the

loan and the line of credit on June 13 -- excuse me, on June 1

and June 13, respectively. As a result, the Bank of America

lost approximately $398,012 on the loan and $103,949 --

$103,949.51 on the line of credit.

Thank you.

THE COURT: Thank you.

Mr. Gallegos, are these facts true?

THE DEFENDANT: Yes, Your Honor. Some -- I guess they

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agree to disagree about some of the facts.

THE COURT: I'm having a problem with that. I want to

know what the false statement is that's an element of this

charge. What is the false statement that was made in the loan

application?

MR. TAYLOR: Do you want me to answer the question,

Your Honor?

THE COURT: Please.

MR. TAYLOR: Your Honor, the false statement was an

implicit statement to the bank at the time that he signed it

and had it submitted to the bank that he was the borrower, that

it was his resources that were going to be relied upon by the

bank as set forth in the loan application, that when in truth

and in fact, it was his mother, Waun Weingart, that was going

to be repaying the loan. John, when he signed it, understood

that he was telling the bank that he was going to pay the loan

and be responsible for it. She was not listed as co-borrower.

He did not believe that the bank knew she was a co-borrower or

be responsible, and intended that the bank believed that he had

promised to repay it, when in fact she would.

THE COURT: Do you have case law for the proposition

that that constitutes a false statement? Ordinarily a false

statement is a statement as to fact, not as to a promise; and

that sounds to me like a statement as to a promise.

MR. TAYLOR: Your Honor, I don't have case law

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concerning statements as to future intentions, but I think it

is a present fact, a present statement of intent, that is a

present fact. He is representing himself as the borrower,

telling the bank that he understands that it is going to make

its decision based on this application which lists only him,

when in truth and in fact, he always intended that his mother

would repay, that she would be responsible, because he knew he

could not pay for any of it.

THE COURT: Ms. Kaufman.

MS. KAUFMAN: Your Honor, the parties discussed this

and referred and relied on the false statement to a bank

pattern criminal jury instruction, the case cited by the Tenth

Circuit in connection with that. Specifically, the portion of

the instruction upon which we relied was the part that I will

read now. It says, A statement may be spoken, written, or made

by other conduct that communicates a fact to another person.

And the case law that supports it is specifically set forth at

United States v. Copus, C-O-P-U-S, at 110 F.3d 1529, a Tenth

Circuit 1997 case. And also United States v. Bonnett, set

forth at 877 F.2d 1450, a Tenth Circuit 1989 case.

The -- and the cases cited within those cases go back

quite a long time to the 1800s, specifically, to a case called

Rex v. Barnard, cited at 173 Eng.Rep. 342, 1837. The principle

is that in the Old English case, started with the idea that a

person who, in that case, wearing a cap and gown of an Oxford

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student purposely produced the false impression to another

person that he was such a student when he was not, and on that

basis, obtained property on credit from the victim.

In this case, I think what we would focus on is the

fact that when the defendant signed the loan applications, when

he had them submitted to the lender, those acts, he was -- he

was making the verbal -- the statement to the bank, not through

words specifically or -- written or spoken words, but as the

instruction in this case has set forth, made by other conduct,

that communicates a fact to another person. And in this case,

by signing and submitting these loan applications to the bank,

he was making the statement that he understood that the bank

would use and rely on this application to approve the loan that

he intended to be repaying it himself, when he knew in fact he

was unable to repay it himself and intended that his mother

would repay it.

The Government's position is that he was also aware of

the false statements in the application, as cited in the

factual basis, whether it be by actual knowledge or by

deliberate ignoring.

THE COURT: I'm not satisfied.

The -- the case law that you just cited does, indeed,

stand for the proposition that you can make a statement as to

fact by a written or a verbal or a conduct type of statement.

I'm not satisfied that there is a statement here that the

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defendant knew was false that was made as to repayment, because

I don't believe that is a fact. It's a statement as to future

intent.

But I suspect that there is a statement at the end of

the loan application which reflects that the defendant

represented to the bank that he read the entirety of the loan

application and it was truthful and accurate information

contained in it. Is there such a statement at the end of the

application?

MR. TAYLOR: Yes, Your Honor, there is.

MS. KAUFMAN: Yes, Your Honor.

THE COURT: And is it the position of the defendant

that notwithstanding the statement that -- at the end of the

application, that he had read all of the information in the

application and that it was true and accurate, that it is his

position and statement today that he had not read all of the

information in the application and he had no idea whether it

was truthful and accurate?

MR. TAYLOR: That's correct, Your Honor.

THE COURT: Thank you. I find that that is a false

statement.

MR. TAYLOR: Very well.

THE COURT: Sufficient to support the element of a

false statement.

Let me make sure, Mr. Gallegos, you understand what

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your attorney just said. Do you admit that you did not read

this application, you did not know whether the information was

truthful and accurate, even though you signed an application

saying that you had?

THE DEFENDANT: That's correct, Your Honor.

THE COURT: Thank you. Let's talk, then, a little bit

about sentencing.

The maximum statutory penalty for a violation of 18

U.S.C. Section 1014 is 360 months of imprisonment, a $1 million

fine, both can be imposed. A term of imprisonment may be

followed by up to 5 years of supervised release. There is a

$100 special assessment fee which is mandated by statute, and

then there is an obligation to pay restitution. And you've

stipulated to restitution in the amount of $984,618.35.

In the federal system, we measure terms of

imprisonment in terms of months, not years. Unlike the state

system, there is no parole, and there is no automatic reduction

in a prison term. There are a limited number of ways to reduce

a sentence, and some of those you have given up by the terms of

this plea agreement.

First, a reduction can come as a result of a

successful motion filed shortly after judgment is entered.

Second, a reduction in sentence can occur as a result of a

successful appeal and resentencing. But, remember, you've

given up your right to appeal from the sentence imposed in this

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case except under very limited circumstances. Third, a

reduction in sentence can result from a successful collateral

attack against the action or the conviction or the judgment or

the sentence. But, remember, by the terms of this agreement,

you've waived those rights as well except under very limited

circumstances.

And finally, the Bureau of Prisons has the discretion

to give you some credit against a prison term up to 54 days per

year for good time served. It's their discretion. They

determine whether you serve good time, which means that you

follow all of their rules and regulations, and they determine

whether and what amount of good time credit should be given.

Now, after completion of a prison term, there is a

term of supervised release that can be imposed, and that can be

up to five years of supervised release. When you are on

supervised release, you are required to adhere to a number of

conditions that regulate your behavior, and a probation officer

is appointed to supervise you to make sure that you comply with

those conditions.

The conditions fall into two different groupings,

standard conditions and special conditions. Standard

conditions apply to all terms of supervised release, and

special conditions are unique to you and to your particular

circumstances. There are lots of standard conditions, as you

might guess; and I'm not going to recite all of the standard

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conditions. I'll bring three to your attention, but you should

understand that there are many more.

You cannot commit any new crimes, state, federal, or

local; you cannot use, sell, or possess any illegal substances;

and you cannot use, sell, or possess any prohibited firearms or

destructive devices.

With regard to special conditions, it's hard for me to

know at this juncture what special conditions might apply,

because I don't really know enough about you as a person and

what your needs are. Special conditions usually are imposed in

order to assist you in avoiding the conduct that caused the

conviction in the first place, but they can address other

issues as well. For example, if you have an issue with

alcohol, you may be required to go through alcohol

rehabilitation; if you have a mental health issue, you may be

required to go for mental health assessment and treatment; if

you have a drug issue, you may be required to go through

substance abuse treatment. There may be restrictions imposed

related to this particular crime that prevent you from engaging

in certain transactions or activities in order to prevent it

from occurring again.

What is important to know about the terms and

conditions of supervised release is, they're all mandatory.

They're not optional. That means you've got to follow all of

the conditions all of the time. It's not good enough to just

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try, and it's not good enough to follow some but not others.

What happens if you violate a condition, and if the violation

is significant enough, is that the probation officer, with the

U.S. attorney, can bring you back here to this courtroom or to

another courtroom and ask to have your supervised release term

revoked. If it's revoked, you can be sent back to prison for

another term.

Now, the penalty that will be imposed here is not just

a function of the statute of conviction. In deciding what

penalty is appropriate, I have to consider all of the factors

that are set out in another statute, 18 U.S.C. Section 3553.

That statute obligates me to impose a sentence that is

sufficient but not greater than necessary in order to satisfy

particular objectives. So your sentence, like all other

sentences, must be sufficient but not greater than necessary to

promote respect for the law; provide just punishment;

adequately deter criminal conduct; protect the public from

further crimes by you; and provide you with needed educational

or vocational training, medical care, or other correctional

treatment in the most effective manner.

In order to fashion a sentence that meets these

objectives, the same statute tells me to consider a number of

factors: The nature and circumstances of the offense; your

history and characteristics; the kinds of sentences that are

available; what the federal sentencing guidelines would

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require; 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.

I know that your attorney and the Government's

attorney have estimated the sentence that they believe will

apply here, and that estimate is contained in the plea

agreement, Exhibit 1. I think you'll find it beginning at the

beginning -- at page 11. It's entitled Advisory Guideline

Computation and Section 3553 Advisement.

There are several things that you need to know about

this portion of your plea agreement. First of all, it's not

binding on your sentence.

THE DEFENDANT: Yes, Your Honor.

THE COURT: There is no guaranteed sentence here.

Secondly, this is an estimate based upon what the attorneys

knew at the time you entered into this plea agreement. At the

time of sentencing, we will be working from a calculation under

the federal sentencing guidelines that is prepared by the

probation office of the Court. In fact, you and your attorneys

will meet with the probation officer before sentencing and

answer certain questions that are necessary for preparation of

the presentence report. You'll also have an opportunity to

review that report and advise the probation officer if you

think there is any error or mistake in it.

That report will contain a calculation under the

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sentencing guidelines, and sometimes that calculation differs

from what is in the plea agreement. Well, at the time of

sentencing, we won't be working from this agreement. We'll be

working from the presentence investigation report. So that is

why it is critically important for you to review that report

and discuss it with your attorney prior to sentencing.

THE DEFENDANT: Yes, Your Honor.

THE COURT: Finally, the federal sentencing guideline

calculation is only one factor that I consider in determining

your sentence. That's because, as I said a minute ago, I have

to impose a sentence that meets the statutory objectives. And

the calculation under the guidelines is only one factor that I

consider in making that determination. It's an important

factor, but it's not the only factor. It's a starting point,

but it's not necessarily the ending point.

If the calculation under the federal sentencing

guidelines doesn't yield a sentence that meets the sentencing

objectives, then I can impose a non-guideline sentence.

Sometimes people call that a variant sentence, sometimes they

call it a statutory sentence, but it all means the same thing.

It's a sentence outside the guideline range. And that sentence

can be higher than lower than the guideline range or lower than

the guideline range, whatever is necessary in order to impose a

sentence that meets the sentencing objectives.

Now, your sentencing hearing will occur a number of

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weeks from now. And as I said, before that hearing, you and

your attorneys will meet with the probation officer, and you'll

get an opportunity to review the report that is prepared by the

probation officer. Please don't be confused by the title

"probation officer." It doesn't have anything to do with the

penalty to be imposed; it's just the title of the person

preparing the report.

At the time of sentencing, the attorneys will make an

argument as to what sentence should be imposed. You'll have an

opportunity to make a statement, but no one else may make a

statement on your behalf. If there are other people you'd like

to have make a statement on your behalf, they may do so by

letter sent to the probation officer -- not to me, but to the

probation officer -- so that it can be attached to that

presentence investigation report which will be filed under

restricted access in CM/ECF.

Do you understand the objectives and factors that I'll

be evaluating in determining your sentence?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you understand the maximum sentence

that can be imposed?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you understand that you're pleading

guilty to a felony charge?

THE DEFENDANT: Yes, Your Honor.

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THE COURT: Do you understand that this has certain

consequences. It may result in you losing your civil rights,

your right to vote, hold public office, serve on a jury,

possess a firearm, or obtain -- or renew any number of

licenses.

THE DEFENDANT: I understand, Your Honor.

THE COURT: Do you understand that the sentence I

impose may be more severe than what is calculated in Exhibit 1?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you understand that no matter what

sentence I impose, if I accept your plea today, you won't be

able to withdraw it at the time of sentencing?

THE DEFENDANT: Yes, Your Honor.

THE COURT: And do you understand that by virtue of

this agreement, you've given up your right to appeal from that

sentence except under very limited circumstances?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you have any questions about

sentencing?

THE DEFENDANT: No, Your Honor.

THE COURT: All right. Mr. Taylor, could you identify

the statement in advance.

MR. TAYLOR: Yes, Your Honor, it is marked as Court's

Exhibit 2.

THE COURT: Thank you.

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Mr. Gallegos, would you turn to Exhibit 2. It should

be in front of you.

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you see it there?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you read this document?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you discussed it with your attorney?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you asked him all the questions that

you had about it?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Actually, I didn't include Ms. Bagley in

that, but maybe you talked with Ms. Bagley too. Hopefully you

talked to Ms. Bagley too.

MR. TAYLOR: He was outnumbered, Your Honor.

THE COURT: Let me ask you, are there any other

questions you'd like to have answered at this point?

THE DEFENDANT: No, Your Honor.

THE COURT: Did you sign this document?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Will you look at the end of the document,

please. Is your signature there?

THE DEFENDANT: Yes, I did sign it.

THE COURT: All right. Let's go over the

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constitutional rights you're giving up today by making your

plea of guilty.

First and foremost, the Constitution guarantees to you

that you have the right to be indicted. And we've discussed

that, and you've waived that right. The Constitution also

guarantees to you the right to have charges such as this tried

to a jury in a jury trial. And in a jury trial, which would

ordinarily take place in this courtroom, the jury sits over

there at my left. You and your attorneys and the Government

attorneys get to participate in the selection of the people who

would serve on the jury and to exclude anybody who has such

extreme views that they can't be fair and impartial or they're

unwilling or unable to follow the law.

In addition, you get to excuse ten people, and the

Government gets to excuse six people without giving any reason

whatsoever. Once the jurors are selected, they all take a

solemn oath promising to consider only the evidence presented

here in the courtroom and to follow the instructions that I

give them as to the law. One of the instructions that I give

them tells them that they must reach a unanimous decision in

order to find you guilty of the charges brought against you.

If any one of them has a reasonable doubt as to your guilt, you

cannot be convicted.

You have yet another constitutional right during the

trial process, and that is the right to remain silent. It

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means that no one can ask you questions against your will, and

you cannot be forced to testify. It means that the jury can't

consider the fact that you don't testify in determining whether

the Government has proven the charge or charges against you.

And it means that even though you remain silent, your attorneys

don't need to. They get to cross-examine any witness, put on

witnesses, and challenge evidence, and make arguments to me and

arguments to the jury.

And that takes us to the next constitutional right,

which is your right to waive your right to remain silent.

Because it's a right, you can change your mind. You can decide

to testify if you want to either before trial or during the

trial. In addition, you can put on evidence and call witnesses

if you want to. If there are witnesses that you would like to

have testify, and they're reluctant to come and testify, I

would compel them to do so. And you have the right to be

represented by an attorney. And where you can't afford an

attorney, one can be appointed for you without any cost to you.

Now, if you were to proceed to trial and you were to

be convicted, you could appeal from both your conviction and

your sentence. But by entering your plea of guilty today,

there will be no trial. You will not be able to appeal from

your conviction; and for the most part, you won't be able to

appeal from your sentence.

Do you understand that you're waiving your right to a

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jury trial and other constitutional rights associated with it

if you proceed with this plea of guilty?

THE DEFENDANT: Yes, Your Honor, I understand.

THE COURT: Is that what you want to do?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Has anybody pressured you to make this

plea today? And before you respond, let me define "anybody."

It has the broadest definition possible. It includes your

family, friends, neighbors, strangers, people you like, people

you don't like, people who like you, don't like you, people

here at the courthouse, law enforcement personnel, the

attorneys. It includes anybody. Has anybody pressured you to

enter this plea today?

THE DEFENDANT: No, Your Honor.

THE COURT: Has anybody promised you something that

isn't in the plea agreement?

THE DEFENDANT: No, Your Honor.

THE COURT: Have you had enough time to review and

consider and discuss your plea and plea agreement with your

attorneys?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Are you satisfied with their

representation of you?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you have any concerns, complaints, or

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criticism about the legal representation you've received?

THE DEFENDANT: No, Your Honor.

THE COURT: Do you want to ask your attorneys any

questions?

THE DEFENDANT: No, Your Honor.

THE COURT: Any questions for me?

THE DEFENDANT: No, Your Honor.

THE COURT: Well, then, now is the time to finalize

your decision. This plea agreement, the one you and I have

been discussing, Exhibit 1, do you still want to proceed with

it?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you still want to plead to guilty to

the charge in the Information?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Mr. Taylor, any reason not to accept the

plea and plea agreement?

MR. TAYLOR: No, Your Honor.

THE COURT: Ms. Kaufman.

MS. KAUFMAN: No, Your Honor.

May I also have a moment with defense counsel to

discuss a matter?

THE COURT: Sure.

MS. KAUFMAN: Thank you.

(Oft record discussion between counsel.)

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MS. KAUFMAN: Thank you, Your Honor.

THE COURT: You're welcome.

MS. KAUFMAN: No, Your Honor.

THE COURT: Do either of you desire to supplement the

record?

MR. TAYLOR: No, Your Honor. Thank you.

THE COURT: This plea agreement, Ms. Kaufman,

anticipates that the Government will move to dismiss all of the

counts in the Indictment against this defendant. Are you

prepared to make that motion?

MS. KAUFMAN: We are, Your Honor. It also anticipates

something that I hadn't mentioned, and that is that he is by

this plea, waiving his right to contest venue. And I think

that the case law would support by entering that plea that it's

true.

At this time I'd move to dismiss the following counts

in the Indictment against this defendant, those being Counts 1,

2, 5, 6, 12, 13, and 15, which are all of the counts against

the defendant in the Indictment.

THE COURT: Does the count in the Information reflect

the actual -- the seriousness of the actual offense behavior?

MS. KAUFMAN: It does, Your Honor.

THE COURT: And if I were to accept this agreement,

would the statutory purposes of sentencing be undermined in any

fashion?

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MS. KAUFMAN: We don't believe so, Your Honor.

THE COURT: Thank you.

Anything that you would like to add to that, Mr.

Taylor?

MR. TAYLOR: Only that as to venue, we explained that

concept to Mr. Gallegos. He understands objections based on

venue. I don't think there is a problem, but to the extent

that there were, he would waive such objections.

THE COURT: All right. Mr. Gallegos, do you

understand what the attorneys are talking about as far as venue

is concerned?

THE DEFENDANT: Yes, Your Honor.

THE COURT: That's which court this action is brought

in.

THE DEFENDANT: Yes.

THE COURT: Do you consent to have this action brought

here in this court?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Thank you.

Then based on the record made in open court today in

Case No. 11-cr-355, which is encaptioned for purposes of

today's hearing as the United States of America v. John Phillip

Gallegos, I hereby find that the defendant is fully competent

to enter an informed plea and to waive his right to be

indicted. He's been represented through the course of this

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 41 of 45
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case and this proceeding, and he has no objection, criticism or

complaint as to the representation he's received. He's aware

of the nature of the charges against him and the effects and

consequences of his plea of guilty. He has knowingly and

voluntarily waived fundamental constitutional rights, including

his right to be indicted and his right to a jury trial, and in

accordance with the terms of the plea agreement, severely

limited his right to appeal and his right to bring a collateral

attack. He understands that the penalty to be imposed by the

Court will be based in part on the facts stated in the plea

agreement and may exceed the sentence calculated in it. His

plea of guilty is voluntary and knowingly made, and the charge

and plea is supported by an independent basis in fact.

In accordance with the plea agreement, the Government

has orally moved to dismiss Counts 1, 2, 5, 6, 12, 13, and 15,

which are all of the counts brought against Mr. Gallegos in the

Indictment. I find based upon the representation of Government

counsel that the charge in the Information adequately reflects

the seriousness of the actual offense behavior and that the

agreement does not undermine the statutory purposes of

sentencing.

It's therefore ordered that Court Exhibits 1, 2, and 3

are received, the plea as made in open court today is accepted,

and the defendant is adjudged guilty as charged in the

Information.

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The motion to dismiss the counts in the Indictment is

granted, but the effect of this order is stayed until the time

of sentencing.

The Probation Department will conduct a presentence

investigation and submit a presentence report as required by

Rule 32. The defendant with the assistance of counsel will

participate in the investigation and cooperate fully with the

Probation Department.

It looks like you all have set sentencing for May 6 at

9 o'clock. Is that still going to work?

MR. TAYLOR: Correct, Your Honor.

MS. KAUFMAN: Yes, Your Honor. Thank you.

THE COURT: Okay. That will be our sentencing date.

The trial against Mr. Gallegos was vacated upon the

filing of the notice of disposition.

With regard to motions, there are several that need to

be cleaned up at this time.

Docket No. 148, a motion for disclosure of defendant's

proffer regarding methodology used and applied as well as facts

and data required and considered by Robert Kullman. That is a

motion actually brought by the defendant, even though it sort

of looks like it was brought by the Government, by the

docketing. And then we have a second motion for a Daubert

hearing, that's Docket No. 160. It's an amended joint motion

under Rule 702 that looks like it wasn't cleaned up at the time

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of our 702 hearing.

Your pleasure.

MR. TAYLOR: I would suggest they be denied at this

point as moot, Your Honor.

THE COURT: Any objection?

MS. KAUFMAN: No objection.

THE COURT: All right. Then both are denied as moot.

Any other matters that we need to take up?

MS. KAUFMAN: Not on behalf of the United States, Your

Honor.

MR. TAYLOR: Nor from the defendant, Your Honor.

THE COURT: Is there any objection to the defendant

remaining on bond subject to the conditions that have been

imposed?

MS. KAUFMAN: Based on the information available to

the United States, no.

THE COURT: Thank you. Then those conditions will

remain in effect. And I'll ask you, Mr. Gallegos, to please

check with your counsel shortly before the sentencing hearing.

It's really important that you be here for that sentencing

hearing. If you're not here, the Government can request that I

issue a warrant for your arrest. So confirm with them shortly

in advance of the hearing as to time and date. That right now

is set in May.

Any further business by the defendant?

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Case No. 1:11-cr-00355-MSK Document 253-1 filed 04/15/13 USDC Colorado pg 44 of 45
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MR. TAYLOR: No, thank you, Your Honor.

THE COURT: Thank you, Ms. Kaufman; thank you, Mr.

Taylor, Ms. Bagley. 

Mr. Gallegos, we'll see you in May. 

And that will conclude this hearing. We will stand in

recess.

(Recess at 11:01 a.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 7th day of March, 2013. 

s/Therese Lindblom 

 ______________________________ 

 Therese Lindblom,CSR,RMR,CRR 

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