Source: https://de.scribd.com/document/99604369/Kevin-Coleman-Government-Sentencing-Memo
Timestamp: 2020-08-08 09:52:34
Document Index: 613468967

Matched Legal Cases: ['§ 2', '§ 2', '§ 3', '§ 3553', '§ 3553', '§ 3663', '§ 3664', '§ 5']

Kevin Coleman Government Sentencing Memo | United States Federal Sentencing Guidelines | Sentence (Law)
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Case 3:12-cr-00035-SRU
Filed 07/09/12
Crim. No. 3:12cr35(SRU)
GOVERNMENT’S RESPONSE TO DEFENDANT’S MEMORANDUM IN AID OF SENTENCING
Kevin Coleman was the Chief Executive Officer of Latex International. He reached a
level of importance, prestige and income that very few people reach. But instead of fulfilling his
responsibilities and obligations to the company’s owners and employees, he pillaged Latex to
fund an absurdly extravagant lifestyle. Coleman also cheated the IRS and his fellow citizens out
of approximately $791,000 in taxes. He did not even file his tax returns for four years. His
crimes are egregious, and he should be sentenced to a lengthy period of incarceration to punish
him and to deter others from committing such crimes.
Coleman’s crimes were audacious. He fraudulently purchased hundreds of thousands of
dollars of jewelry for himself, his wife and his mistress in London. Indeed, he purchased – with
Latex’s money – an emerald cut diamond for a ring for himself valued at $56,900. He purchased
a Mercedes convertible for his mistress with Latex’s money. He fraudulently purchased
hundreds of thousands of dollars in merchandise at Frontgate, Bulgari, Christian Dior, Louis
Vuitton, Nordstrom and other merchants, all with Latex money. He spent Latex money on lavish
travel expenses for him and his family. Coleman engaged in a shocking and widespread crime
spree – all at the company’s expense, monetarily and otherwise.
Nothwithstanding the fact that he was earning wage income of between $359,000 and
$460,000 in the tax years 2007 to 2010, Coleman never filed a federal tax return in those years.
During that period, he directed Osmolik to minimize federal tax withholdings from his wage
income. The loss to the government in taxes was nearly $800,000.
Coleman must be sentenced to a lengthy period of imprisonment to pay for his crimes.
This Court sentenced Joanne Osmolik, a vice president and Coleman’s subordinate, to 48 months
of imprisonment for her embezzlement of approximately the same amount of money. Given that
sentence, the government respectfully requests that this Court sentence Coleman to a non-
guidelines sentence of substantially higher than 48 months in prison. Coleman not only
embezzled from Latex, but also evaded hundreds of thousands of dollars in taxes. Moreover,
Coleman was Osmolik’s superior and a CEO who led by example – the worst possible example.
While Osmolik was clearly responsible for what she embezzled, it seems clear that Osmolik was
following Coleman’s lead in pilfering from Latex to satisfy her own desire for material goods
that she could not otherwise legally obtain.
In sentencing Osmolik to four years of imprisonment, this Court stated the following
about the impact her crime had on the victim, Latex:
The sentence of imprisonment is a non-Guideline sentence that reflects the exceptionally adverse impact of Osmolik’s crime on the victims of her offense. Her former employer laid off 43 individuals, temporarily shut down a factory, lost sales, closed a plant in England, and suspended the 401(k) plan for employees, among other things, in an effort to survive the financial impact of this fraud. The financial and emotional toll from Osmolik’s conduct will be felt for a generation.
Judgment, United States v. Osmolik, 3:11cr248(SRU) [Doc. #25, 05/21/12]. Coleman’s crime,
of course, had the very same devasting impact, and his responsibility for that impact given his
position as CEO and his role in the offense as Osmolik’s supervisor is clearly greater than
Osmolik’s. Accordingly, he should be sent to prison for a substantially longer period than 48
II. THE OFFENSE CONDUCT
The PSR accurately summarizes the offense conduct at paragraphs 6 through paragraph
16 of the PSR.
From approximately October 2008 to approximately November 2010, Coleman engaged
in a scheme defraud Latex International. Coleman fraudulently enriched himself by converting
and embezzling corporate funds belonging to Latex International and using those funds for
substantial personal expeditures. The scheme included, but was not limited to, misusing
corporate credit cards and expense accounts and concealing their fraudulent use from others.
Coleman and Osmolik charged substantial personal expenditures on corporate credit
cards belonging to Latex International.
Coleman and Osmolik prepared, and cause to be prepared, expense reports in order to
obtain and use Latex International corporate funds to pay off the amount owed on the credit
cards for their personal expenditures and to use for other personal expenditures not charged to
Coleman and Osmolik affirmatively concealed from individuals at Latex International
and others, including representatives of Latex International’s owner, that they were using
corporate funds to pay for substantial personal expenditures.
Coleman made use of a credit card provided to Coleman by a United Kingdom subsidiary
of Latex International. Coleman used the credit card to charge hundreds of thousands of dollars
in diamond jewelry at Exclusively Diamonds in Minnesota. Coleman charged tens of thousands
of dollars in merchandise at Harrod’s in London, tens of thousands of dollars at Harley
Davidson, and hundreds of thousands of dollars at other merchants, such as Frontgate, Bulgari,
Christian Dior, Louis Vuitton and Nordstrom. Coleman also fraudulently obtained cash
advances from the card.
Coleman directed Osmolik to charge personal items to the Latex International AmEx
card of an employee working at Latex International (hereinafter referred to as “Employee #1”) in
order to conceal the expenses of Coleman and Osmolik, and the nature of those expenses from
the finance department at Latex International. Those expeneses included tens of thousands of
dollars in personal travel expenses for him and his family, including travel to St. Martin and to
Europe. The expenses also included a weekend at the Four Seasons in New York that cost
$14,964.
Coleman instructed Osmolik to destroy expense reports so as to conceal their fraudulent
nature from others at Latex International. Osmolik carried out those instructions and destroyed
Altogether, Coleman embezzled approximately $1,700,459 from Latex International,
which does not include an additional $1,777,791 in fraudulent personal expenditures incurred by
Osmolik. It is the defendant’s position that the fraudulent expenditures by Osmolik were not
undertaken at COLEMAN’s direction, and the Government has agreed not to argue otherwise.
Coleman and Osmolik used and caused the use of wire communications in interstate and
foreign commerce in furtherance of the scheme, including email, the internet, and interstate and
international telephone calls, and the use of wire communications in interstate and foreign
commerce in furtherance of the scheme was reasonably foreseeable to both of them.
On October 13, 2009, Latex International wired $100,000 USD to DMAD Marketing
Services LTD in the United Kingdom. This payment was a partial payment to settle the debt
from DMAD’s September 2009 invoice for services. Part of that invoice included $200,713
USD (124,000 GBP) worth of charges made on COLEMAN’s DMAD card, including $78,276
USD (48,502 GPB) for jewelry purchased and given to COLEMAN’s wife. The wire was sent
from Latex International’s Wachovia Account in the United States (Account #xxxxxxxxxx276)
to DMAD’s HSBC Bank in London (SWIFT/CHIPS Account #xxxxxxxBHX).
COLEMAN did not file a federal income tax return for the tax years 2007, 2008, 2009,
and 2010 when due. During that time period, COLEMAN directed Osmolik to minimize federal
tax withholdings from his wage income. The tax loss resulting from the offense is $741,029, as
set forth by relevant tax year in the following table:
$460,569
$1,585,128
$1,086,429
$1,700,459
Balance of Tax Due
$404,129
The PSR calculates Coleman’s guidelines range to be 46 to 57 months (total offense
level 23). PSR at ¶ 92. The guidelines are calculated at paragraphs 23 to 31 of the PSR.
The government and the defendant agreed to the following guidelines calculations in the
Base offense level (§ 2B1.1(a)(1)):
Loss of more than $1,000,000 (§ 2B1.1(b)(1)(I)):
Role in the offense (§ 3B1.1(c)):
Adjusted Offense Level:
Acceptance of Responsibility Total Offense Level:
= 22 (41 - 51 months)
The parties agreed that the defendant owes restitution to Latex International in the amount of
$1,700,459, and that the defendant owes restitution to the IRS in the amount of $1,375,627.83.
The latter number should be corrected to read $1,372,711.66, and the judgment should reflect as
much. 1
COLEMAN SHOULD BE SENTENCED ABOVE THE GUIDELINES RANGE.
A sentence above the guidelines range of 41-51 months agreed to by the parties is
warranted here and will promote the sentencing goals of 18 U.S.C. § 3553(a). 2
A. Application of the 3553(a) Factors
Section 3553(a) provides that the sentencing “court shall impose a sentence sufficient,
but not greater than necessary, to comply with the purposes set forth in paragraph (2) of this
subsection,” and then sets forth seven specific considerations:
1 Two other corrections should be noted for the record which will not be part of the Court’s order. First, in Count Two, Coleman’s taxable income for 2010 was $1,451,916 (not $1,457,358). Second, also in Count Two, the amount of income tax on that taxable income in 2010 was $478,479 (not $480,383).
2 The plea agreement makes clear that both parties reserved the right to advocate for a non-guidelines sentence: “The Government and the defendant reserve their rights to seek a departure or a non-[g]uidelines sentence, and both sides reserve their right to object to a departure or non-guidelines sentence.” Plea Agreement at 5.
characteristics of the defendant; the need for the sentence imposed—
to provide the defendant with needed educational or vocational
training, medical care, or other correctional treatment in the most effective manner; the kinds of sentences available;
the kinds of sentence and the sentencing range established [in the
Sentencing Guidelines]; any pertinent policy statement [issued by the Sentencing Commission];
the need to avoid unwarranted sentence disparities among defendants with
similar records who have been found guilty of similar conduct; and the need to provide restitution to any victims of the offense.
Here, a review of the § 3553(a) factors demonstrates that a sentence above the guidelines range,
either as calculated by the parties (41-51) or the PSR (46-57) is warranted.
As this Court well knows, the nature of the offense is serious: Coleman fraudulently
obtained over $1.7 million in Latex money and property for his personal benefit. The
circumstances of the offense are appalling: Coleman (and Osmolik) went about “secretly
siphoning off millions of dollars for their extravagant lifestyles, driving the company to the brink
of bankruptcy and concealing their theft from others.” Letter, James I. Glasser to Eric J. Glover,
dated April 24, 2012, at page 2 (hereinafter “Latex Victim Letter”) (attached as Exhibit A to the
government’s sentencing memorandum in Osmolik).
Coleman, like Osmolik, did not undertake his crime spree out of need. He undertook it
out of greed. His wage income as CEO was ranged between $359,000 and $460,000 in the years
in question. That was not enough for Coleman. And in fact, it is hard to purchase hundreds of
thousands of dollars in jewelry and to support a mistress in London with that salary. So
Coleman just stole the money he needed from Latex, and of course did not file a tax return and
pay the government almost $800,000 in taxes that were due and owing.
2. History and Characteristics of Coleman
Coleman’s personal history and characteristics not provide him with any mitigation from
the offenses he has committed. While many people have to cope with substance abuse issues,
very few of them end up committing the kinds of crimes on the scale of magnitude that Coleman
Most relevant from Coleman’s personal history is that the fact Coleman embezzled from
a previous employer, Progress Castings Group Incorporated, for whom he worked as Vice
President of Operations. PSR at ¶ 38-43. Coleman was arrested for this conduct in July 2002
and later pled guilty to the charge. Coleman’s manner in carrying out the embezzlement in that
case was similar to the manner in which he carried out the embezzlement at issue in this case,
albeit on a much larger scale. PSR at ¶ 40 (discussing how Coleman made sure that no one in
the company would see documents that would incriminate him). This prior criminal conduct
clearly gives the lie to Coleman’s notion that he was somehow enticed by the “corporate culture”
at Latex to embezzle from the company. Coleman Sent. Mem. at 2.
Coleman had no regard for complying with the law, either as CEO of Latex or as a
citizen with an obligation to file a tax return and pay taxes. In addition to his multiple
embezzlements, he engaged in tax evasion for many years. He failed to file a tax return for the
four years leading up to the detective of the current offense.
3. The Guidelines Sentence Would Satisfy the Goals of General Deterrence.
A sentence substantially in excess of 48 months would serve to advance the goal of
general deterrence. This Court’s sentence of 48 months for Joanne Osmolik made it clear that
anyone who steals significant sums of money from one’s employer will go to prison for a long
period of time. A sentence in excess of that for Coleman, which is warranted given his role and
his tax evasion, would do the same.
This Court can— and should— send a strong message that
persons like Osmolik and Coleman, who are handsomely compensated in corporate positions but
still decide to steal to fund a lavious lifestyle, will be punished by imprisonment for a
meaningful period of time.
4. The Need to Promote Respect for the Law and to Provide Just Punishment.
A sentence in excess of 48 months will promote respect for the law and provide just
punishment. Coleman’s crime calls out for a meaningful term of imprisonment, and a sentence
in excess of 48 months will provide that.
5. Full Restitution is Mandatory and Should Be Ordered.
Under the Mandatory Victim Restitution Act (“MVRA”), 18 U.S.C. § 3663A and 3664,
this Court is required to impose an order of restitution in this case in favor of Latex, the victim of
the defendant’s crime, for the full amount of its losses, without consideration of the defendant’s
ability to pay that amount. 18 U.S.C. § 3664(f)(1)(A) (“In each order of restitution, the court
shall order restitution to each victim in the full amount of each victim’s losses as determined by
the court and without consideration of the economic circumstances of the defendant.”); see
United States v. Ekanem, 383 F.3d 40, 44 (2d Cir. 2004); United States v. Johnson, 378 F.3d
230, 244-45 (2d Cir. 2004); see also U.S.S.G. § 5E1.1 (directing the sentencing court to enter a
restitution order if there is an identifiable victim).
Here, the Court should impose an order of restitution to Latex in an amount agreed to by
the parties of $1,700,459, and to the IRS in the amount of $1,372,711.66.
For the reasons set forth above, the Government respectfully requests that the defendant
be sentenced to a term of imprisonment substantially in excess of 48 months.
DAVID B. FEIN UNITED STATES ATTORNEY
ERIC J. GLOVER ASSISTANT UNITED STATES ATTORNEY Federal Bar No. Ct23923 eric.glover@usdoj.gov 157 Church Street New Haven, Connecticut 06510 Tel. (203) 821-3700
I hereby certify that on July 8, 2012, a copy of the foregoing was filed electronically.
Notice of this filing will be sent by e-mail to all parties by operation of the Court’s electronic
filing system. Parties may access this filing through the Court’s system.
ERIC J. GLOVER (CT23923) ASSISTANT U.S. ATTORNEY Connecticut Financial Center 157 Church Street, 23rd Floor New Haven, CT 06510 Phone: (203) 821-3735 Fax: (203) 773-5378 E-mail: eric.glover@usdoj.gov
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