Source: http://www.justice.gov/atr/cases/f3700/3778.htm
Timestamp: 2014-03-11 12:40:11
Document Index: 724389376

Matched Legal Cases: ['§2', '§2', '§2', '§2', '§2', '§3', '§3']

Adobe site. For an official signed copy, please contact the Antitrust Documents Group. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA UNITED STATES OF AMERICA, v. ATLAS IRON PROCESSORS, INC.; et al., Defendants. |
| Case No. 97-0853-CR-Middlebrooks RESPONSE OF THE UNITED STATES TO JOINT SENTENCING MEMORANDUM OF DEFENDANTS ATLAS IRON PROCESSORS, INC., ANTHONY J. GIORDANO, JR., ANTHONY J. GIORDANO, SR. AND DAVID GIORDANO I INTRODUCTION
The United States submits this Memorandum in response to the joint sentencing memorandum of
Atlas and the Giordano defendants. The United States has briefed most of these issues
extensively in its Sentencing Memorandum of the United States and in its responses to
their objections to the Presentence Investigation Report. Therefore, the responses contained in
this Memorandum will be brief, hitting only the highlights, in the order presented by the
defendants. II RELEVANT FACTS
The testimony and evidence offered at trial that the conspiracy lasted at least from October 24,
1992 (the date of the Sea Ranch meeting) at least through December 31, 1992. In its
case-in-chief, the United States introduced business records of Atlas covering the October
through December, 1992 time period. These business records included scale tickets, checks and
summary compilations for each scrap transaction affected by the Sea Ranch agreement. These
Atlas pricing documents unequivocally show the agreed-upon Sea Ranch pricing was used by
Atlas at least through December 31, 1992. Indeed, these business records provide the best proof
that the conspiracy lasted at least through December 31, 1992. The business records of Sunshine
corroborate the continuation of the conspiracy through December 31, 1992, as these records
unequivocally show Sunshine's pricing after Sea Ranch followed in lock step with the
agreed-upon pricing.
Also, in her testimony, Sheila McConnell, the chief car buyer for Atlas who was recruited into
the conspiracy, testified that she concocted a "secret" deal in buying scrap from M&L
Auto, a major car supplier. According to McConnell, she paid M&L Auto a price of $54/ton for
its scrap after Sea Ranch. In order to buy this scrap, however, McConnell agreed -- on the side --
that Atlas would pay M&L Auto an additional $6/ton beginning in January, 1993. This side deal
was cut by McConnell so as not to tip off the Giordanos that she was cheating on the Sea Ranch
agreement. If there was no agreement to cheat on, then M&L Auto's invoice would simply have
reflected a price of $60/ton.
Nor is the meeting at Don Shula's restaurant on November 23, 1992, proof of withdrawal from
the conspiracy. There is no evidence that anyone at this meeting said the deal was over. It was
simply a heated discussion aimed at policing the agreement and furthering the conspiracy. The
Atlas and Sunshine documents show this clearly. For example, after the Shula's meeting, the
pricing of Atlas and Sunshine does not change at all -- especially with respect to cars, the
principal focus of the illegal agreement.
The defendants use pricing to Bubba's to argue the conspiracy ended after Shula's. But they are
wrong. Bubba's pricing is nothing more than an example of McConnell's cheating on the
agreement. In fact, with the exception of Bubba's, all other car suppliers received the
same price from Atlas after the Shula's meeting as they did before the Shula's meeting. And that price was the agreed- upon Sea Ranch price. The defendants fail to mention this
fact. THE APPROPRIATE METHOD FOR DETERMINING THE
VOLUME OF COMMERCE AFFECTED BY THE CONSPIRACY IS PROVIDED IN
HAYTER OIL AND ITS PROGENY The United States has briefed this issue extensively in its Sentencing Recommendation and in its
responses to each of the defendant's objections to the Presentence Investigation Report.
The "delivered" versus "picked up" pricing spiel of the defendants is not
relevant to this sentencing. Consistent with U.S.S.G. §2R1.1 and United States v.
Hayter Oil, 51 F.3d 1265, 1273 (6th Cir. 1995), the method employed by the United States
in calculating volume of commerce simply uses the price actually paid to the suppliers
who were defrauded as the result of the agreement. Not surprisingly, the method employed by
the defendants relies on the disfavored approach used in SKW Metals & Alloys, Inc., 4.
Supp. 2d 166 (W.D.N.Y. 1997). See, e.g., United States v. Andreas, et
al., 1999 WL 51806 (N.D. Ill.); United States v. Mark Albert Maloof, Transcript
of proceedings before the Honorable Nancy F. Atlas at 61, Criminal No. H-97-93 (S.D. Texas,
Houston Div., December 1, 1998) (attached to Sentencing Recommendation of the United
States). Both Andreas and Maloof expressly rejected the disfavored
SKW Metals method, which the defendants urge this Court to use.
The defendants also are wrong in their critique of the rationale underlying Hayter Oil. For example, though the defendants correctly point out there is a minimum guideline fine for an
individual under U.S.S.G. §2R1.1(c), there is no such minimum fine for a
Nor are the defendants correct in arguing the rule of lenity applies in this case because of the
competing decisions of Hayter Oil and SKW Metals. The reasoning they
employ is tortured. The defendants seemingly argue that whenever two or more courts disagree,
the rule of lenity applies. This is ridiculous. The Eleventh Circuit has recognized that the rule of
lenity is "not an inexorable command to override common sense and evident statutory
purpose." United States v. Trout, 68 F.3d 1276, 1280 (11th Cir. 1995), quoting
United States v. Brame, 997 F.2d 1426, 1428 (11th Cir. 1993). Moreover, it is clear
that in relying on SKW Metals, the defendants are relying on an outlying data point. The United States has not found a single reported case citing SKW Metals, other than
Andreas, which expressly rejected the approach used by the district court in SKW
Metals. The rule of lenity has no application in this case. III DEFENDANTS' MISGUIDED RELIANCE ON SENTENCING DATA
PAST SENTENCING TRENDS The defendants' collection of data regarding past sentencing trends in criminal antitrust cases is
remarkable only in its unhelpfulness. The defendants have cobbled together data which they
claim represent sentences imposed in criminal antitrust cases against individuals in 1993, 1994
and 1995. Without even going to the accuracy or completeness of this information, the only
important fact that jumps out is that only one case involved the conviction of an individual. And
in that case, that individual (Jerry Bullis) was sentenced to 30 months of imprisonment. All of
the other cases relied on by the defendants in their spreadsheet involved plea
agreements. Of course, the sentences imposed against individuals who plead guilty will be
different (i.e., lower) than those convicted at trial. Accordingly, to the extent the
defendants data proves anything, it supports the goverment's position that convicted
individual defendants should be sentenced to imprisonment within the guideline range. Here, the
United States recommends only that each of the Giordano defendants be sentenced at the top-end
of their respective guideline ranges.
Similarly, the defendants' reliance on recent sentencing trends also is misguided. Again, most of
these cases involved plea agreements, distinguishing them from the present case. Nor
is it remarkable that some of the large plea agreements involving foreign-based companies
(e.g., F. Hoffman-Laroche) have not resulted in the imprisonment of individuals, who
are domiciled in a foreign country and generally not subject to personal jurisdiction in the United
States. The defendants also completely ignore the circumstances surrounding these large plea
agreements, which may have involved either the Antitrust Division's well-known amnesty
program and/or significant cooperation from the defendants (and their corporate officers) in
prosecuting others for violating the antitrust laws. The defendants' "apples" to
"oranges" comparisons are not only irrelevant, they are misleading.
The defendants' reliance on the sentences imposed in Andreas also is misplaced. There, the court stuck to the guideline imprisonment range, adding 7 levels to the base offense
level of 10 because the volume of commerce attributable to the ADM defendants (e.g.,
Michael Andreas) exceeded $100 million. U.S.S.G. §2R1.1(b)(2)(G). Michael Andreas
was sentenced to imprisonment of 24 months, which was within his guideline imprisonment
range of 24 to 30 months. The defendants also ignore the sentence recently imposed on Mark
Albert Maloof: 30 months imprisonment, which was within his guideline range. Both
Andreas and Maloof involved individual defendants convicted at
The defendants seemingly suggest that the Guidelines should be ignored and a sentence imposing
imprisonment is unwarranted here with respect to the Giordano defendants. They have to argue
this, since they are advocates. The Sentencing Commission, however, made a different decision. Indeed, the only "recent" trend seen in the sentencing of criminal antitrust defendants
is that individuals convicted a trial will be sentenced within the guideline imprisonment range,
absent a reason to depart. Here, as the United States Probation Office has already concluded,
there is no reason to depart from the Guidelines for any of the defendants in this case. IV THE APPROPRIATE SENTENCES FOR EACH OF THE GIORDANO DEFENDANTS IS PROVIDED IN THE SENTENCING RECOMMENTION OF THE UNITED
THE GOVERMENT'S SENTENCING
Though the defendants argue the conspiracy ended as the result of the meeting at Shula's on
November 23, 1992, the best proof as to when the conspiracy ended lies in the business records
of Atlas and Sunshine. With the exception of Bubba's, the prices paid by Atlas to its major car
suppliers (listed in McConnell's contemporaneously-made notes of the Sea Ranch meeting) after
the Shula's meeting were the same as the prices paid before the Shula's
The defendants' reliance on pricing to Bubba's is intended to mislead this Court. After Sea
Ranch, Bubba's sold a load of scrap to Atlas on October 26, 1992. From then until November 23,
1992, Bubba's sold no scrap to Atlas. Instead, Bubba's sold its scrap to Sunshine at the
agreed-upon price of $52 ($2.60/ hwt). When Atlas again began to buy scrap from Bubba's on
November 23, it did so at a price that was still $7 below its pre-Sea Ranch price to Bubba's. All
this proves is that Atlas cheated on the agreement. Nothing more. Atlas' prices to its other major
car carriers (all of which were listed in Sheila McConnell's notes) did not change at all as the
result of the Shula's meeting: (1) the agreed-upon price paid to Woodard continued through
January 22, 1993; (2) the agreed-upon price paid to All Parts continued through
January 28, 1993; (3) the agreed-upon price paid to Vern's Perine (Atlas cheated, paying $1
dollar more) continued through December 29, 1992; (4) the agreed-upon price paid to
Rafi Rastro -- Atlas' major car supplier -- continued through January 30, 1993; (5) the
agreed- upon price paid to M&L Auto continued through January 7, 1993; (6) the
agreed-upon price paid to Atlantic Auto (Atlas cheated, paying $1 more) continued through
January 7, 1993; and (7) the agreed-upon price to Bud's continued through
December 21, 1992. Moreover, the Sunshine business records show virtually no
change in prices following the Shula's meeting. Sunshine stuck to the agreement not only
after Sea Ranch, but also after Shula's.
It also is important to note that according to McConnell, after the Shula's meeting, Anthony
Giordano, Jr. and David Giordano began to become more involved in her pricing, directing her as
to what prices to pay and how much scrap to buy and at what price. McConnell testified that
after the Shula's meeting, she advised Anthony Giordano, Jr. and David Giordano that she had
not followed the Sea Ranch agreement to the letter. This infuriated them. What happened next
is clear. Anthony Giordano, Jr. and David Giordano became even more involved in monitoring
and running the conspiracy, diminishing McConnell's limited authority even further.
The United States Has Identified and Included In Its Volume of Commerce the Appropriate Grades of Scrap There is not much disagreement as to the products that are properly included in the volume of
commerce calculations. The United States agrees the following products are properly included in
the volume of commerce calculations: (1) flattened and whole (or tow) cars; (2) sheet metal; and
(3) shred. Logs also should be included, however. The defendants are flat wrong in stating they
did not characterize scrap as "logs/shred" on their scale tickets. See
Goverment Exhibit 103. Since logs were included as part of the Sea Ranch agreement -- with an
agreed-upon price of $35 -- the United States, too, has included this category of scrap.
The United States, however, seriously disagrees with the flawed method used by the defendants
in selecting (and de-selecting) scrap purchases covered under the Sea Ranch agreement and
included (or not included) as volume of commerce under U.S.S.G. §2R1.1. Fundamentally,
the defendants' reliance on SKW Metals -- and the notion that no scrap purchases
should be included as volume of commerce unless the "target" price was reached --
makes their calculations meaningless. In a word, the defendants seriously understate the volume
The defendants continue to misunderstand the difference between the illegal agreement
and the implementation of the illegal agreement. They also fail to understand that just
becuse a price change is not made, that does not mean scrap purchased at the unchanged price
falls outside the scope of a conspiracy for volume of commerce purposes. For example, if a
competitor agrees with another that they each will charge no more than 25 cents for a can of
coke, that agreement is illegal. It makes no difference that one of the competitors was already
charging 25 cents and, thus, did not need to change his price. In this example, under Hayter
Oil, Andreas, and Maloof, until that illegal agreement ends, all coke
sales made by the competitors is affected by the conspiracy and is volume of commerce under
U.S.S.G. §2R1.1.
There are other flaws with the defendants' volume of commerce calculations. Their figures are
wrong. For example, in reviewing the same Atlas materials (the "Bluebooks") used
by the defendants in arriving at their numbers, the United States came up with different
numbers. These materials show Rafi Rastro sold 492.37 tons to Atlas from Sea Ranch through
November 23, 1992, not the 433.50 tons shown by defendants. Likewise, the defendants totals
are wrong with respect to Bubba's (we calculated 29.25 tons); Vern's Perine (we calculated
304.94 tons); Joe Woodard (we calculated 50.74). Similarly, the defendants' totals for sheet,
shred and whole/tow cars also are wrong.
This issue has been extensively briefed and discussed in the Sentencing Recommendation of
the United States and in the government's responses to the objections raised with the
This issue has been extensively briefed. See, e.g.,Sentencing Recommendation of
This issue has been extensively briefed. SeeSentencing Recommendation of the
United States. The United States agrees with the U.S. Probation Office: a four-level
enhancement is justified for Anthony Giordano for his role as an organizer/leader in the criminal
The Giordano defendants make the interesting argument that no one deserves a role enhancment
because they each had equal decision-making authority. They miss the mark, however, in failing
to realize that U.S.S.G. §3B1.1 expressly contemplates there can be more than one person
who qualifies as a leader or organizer of a criminal activity. U.S.S.G. §3B1.1 comment.
The defendants' statement that there is no evidence showing Anthony Giordano, Jr. exercised any
more decision-making authority than his father or brother is patently wrong -- and contrary to the
evidence regarding the formation and continuation of this conspiracy. Giordano, Jr. amply
exhibited his decision- making authority at the Sea Ranch meeting, serving as Atlas' primary
negotiator in hammering out the illegal agreement with Weil. He also exhibited his leadership
role at the Shula's meeting, a conspiratorial meeting intended to police and further the Sea Ranch
agreement. Throughout the conspiracy, there was ample other evidence adduced at trial showing
Giordano, Jr. was a leader/organizer. Giordano, Jr. had numerous communications with Weil
concerning the conspiracy; he had numerous communications with his brother about the
conspiracy; and he had numerous communications with Sheila McConnell, insisting that she
follow the Sea Ranch agreement. When he found out McConnell was cheating on the agreement,
he exerted more control over her pricing and customer selection. This is all consistent with the
fact that he was the president and chief executive officer of Atlas.
These issues have been extensively briefed. See, e.g., Sentencing Recommendation
of the United States. Again, David Giordano confuses the factors to be considered in
evaluating whether one was a leader/organizer with that of a manager/supervisor role. David
Giordano clearly managed and supervised Sheila McConnell, in particular, and the entire Miami
shred operation generally. The evidence adduced at trial showed he had numerous
communications with McConnell about the Sea Ranch agreement, including his persistence in
ensuring that she had dropped prices. David Giordano also had numerous communications with
his brother -- and with Randy Weil -- related to the Sea Ranch agreement. After learning
McConnell had not followed the agreement to the letter, David Giordano became more involved
in her pricing and buying, the purpose of which was to ensure compliance with the Sea Ranch
agreement. Unquestionably, David Giordano was a manager/supervisor of the conspiracy and
deserved a three-level enhancement.
For the reasons discussed more fully in its Sentencing Recommendation, Anthony Giordano, Sr.
also was a manager/supervisor of the conspiracy and deserves a three-leval enhancement. He
participated in the price-fixing and market allocation meeting at Sea Ranch. His role at that
meeting was active, denying that Atlas and McConnell were overpaying for scrap in the market
and insisting that scale prices also be fixed. He was at the top of the chain at Atlas -- the
Chairman of the Board and the patriarch of the family. His role in the company and his approval
of the illegal agreement certainly diminished the inhibitions or scruples of his two sons. See,
e.g., United States v. DeRiggi, 72 F.3d 7 (2d cir. 1995) (Highest ranking authority
plus role in the offense justify leader/organizer role enhancement); cf.United States
v. Duncan, 42 F.3d 97, 105-06 (2d Cir. 1994) (Company's top officer properly assessed
four-level enhancement as leader/organizer where he knew of and implicitly approved of offense
conduct over which he had control, even though he may have been a "passive"
participant). The evidence at trial showed Giordano, Sr. clearly stamped his imprimatur on this
For the reasons discussed in its Sentencing Recommendation and in its responses to objections
filed by the defendants, the United States agrees there are no grounds to support a downward
departure either for Atlas or for any of the Giordano defendants. IV MISCELLANEOUS
The defendants raise other items in their sentencing memorandum concerning a variey of issues,
including volume of commerce calculations, restitution calculations and the methodology used,
calculation of the applicable fines for Atlas and each of the Giordano defendants, etc. The positions of the United States with respect to each of these issues have been treated fully in
its Sentencing Recommendation and in its responses to the objections of the defendants to the
Presentence Investigation Reports. Suffice it to say, the United States disputes the methodology
used by the defendants in calculating the volume of commerce attributable to them, restitution
owed to victims of the conspiracy, and in calculating any applicable fines for the company and
individuals. V CONCLUSION
The United States respectfully requests that this Court enter sentences consistent with the
WILLIAM J. OBERDICK Acting Chief Cleveland Field Office By: _____________________________
RICHARD T. HAMILTON, JR. Court I.D. No. A5500338 PAUL L. BINDER Court I.D. No.A5500339 IAN D. HOFFMAN Court I.D. No. A5500343 Trial Attorneys, U.S. Department of Justice Antitrust Division Plaza 9 Building 55 Erieview Plaza, Suite 700 Cleveland, OH 44114-1816 Phone:(216) 522-4107 FAX: (216) 522-8332