IN THE UNITED STATES DISTRICT
FOR THE DISTRICT OF NEW JERSEY
| UNITED STATES OF AMERICA,
Plaintiffs,
v. PAUL ANDRECOLA,
Defendants. |
CRIMINAL ACTION NO.:
1:22-cr-00397-RBK-1 |
BRIEF IN SUPPORT OF VICTIM’S RESTITUTION
COMES NOW, Michael Gordon, as chairman for PPE Catalog LLC, which is a victim in the instant case, and files this Brief in Support of Victim’s Restitution pursuant to 18 U.S.C. §3771(d)(3), to request the Court’s Restitution Order to reflect the true and ascertainable losses suffered by the victim as a result of Defendant’s crimes. In support thereof, victim states as follows:
BACKGROUND
Victim bought products from Defendant, which products were N-listed products. Defendant also promised that said products were EPA registered and approved (Tr. p. 19, lines 20-21). However, victim never got what he paid for. The product was also not N-listed as Defendant held it out to be (Tr. p. 20, lines 1-2), and was not registered or tested (Tr. 28, lines 9-14). As the Court rightly determined, the product never performed the work it was thought to perform.
As a result of Defendant’s fraud, victim suffered emotionally and financially. Notably, victim has been subjected to fractured relationships, lost clients, reduction in business revenues, problems with employee retention, disastrous marketplace gossips, threats of lawsuits against victim and his company (Tr. p. 16, p. 6-15). Victim’s revenues have gone down by more than 80% (Tr. p. 18, lines 9-10). Further, victim has suffered substantial loss of retirement, savings and/or investment Fund, and the ability to obtain credit. Defendant’s crimes also caused harm to victim’s wife to wit, reputational and financial damage to her SBA-certified-all-women-owned business (Tr. p. 16, lines 16-20).
It is also victim’s assertion that the liability for Defendant’s crimes is continuous and has a far reaching effect to businesses, schools, government entities, military, and first responders (Tr. p. 18, lines 1-2).
Defendant was therefore sentenced vide a hearing held on December 29, 2022. During the sentencing hearing, Defendant’s counsel argues that since victim did not reimburse the amounts he received from the end users of the product, he is not entitled to restitution (Tr. p. 23, lines 11-17). Attorney for the Department of Justice then clarified that victim indeed suffered as a result of cancelled deals, and distribution and license agreements, which created liability for victim (Tr. p. 24, lines 1-14).
It is notable that Defendant acquiesced to pay all restitution amounts from the sale of his properties (Tr. p. 35, lines 9-16). Besides, the Court directed the Defendant to provide the Probation Office with a full disclosure of his financial records (Tr. p. 40, lines 3-6). The Court further directed the Defendant not to encumber or liquidate any interest in his assets unless it is in service of the restitution obligation or upon the Court’s approval (Tr. p. 40, lines 21-24).
The victim therefore files this Brief to request this Honorable Court to grant a restitution order reflecting victim’s losses in full.
ARGUMENTS
- It is the Victim’s Right to receive full restitution.
It is trite law that a crime victim has the right to full and timely restitution as provided by law. See 18 U.S.C. § 3771(a). A victim also has the right to be treated with fairness and respect for the victim’s dignity. Id. 18 U.S.C. § 3664(f)(1)(A) also provides that in each order of restitution, the court shall order restitution to each victim in the full amount of each victim’s loss without regard to the economic circumstances of the defendant. Accordingly, the law places an obligation on officers of the Department of Justice to give careful consideration to the need to provide full restitution to the victims of the offenses. It follows; the officials should work to ensure that full and timely restitution is paid.
It is therefore a requirement that the wrongdoer should restore the victim “to the degree possible to restore the victim to his or her prior state of well-being.” S. Rep. No. 104-179, at 12, reprinted in 1996 U.S.C.C.A.N. 924, 925–26 (emphasis added). The Mandatory Victims Restitution Act of 1996 (MVRA) requires that restitution be imposed in a wide variety of circumstances and that the terms of payment “shall be the shortest time in which full payment can reasonably be made.” See 18 U.S.C. § 3572(d)(2) (emphasis added)).
The need to pay restitution in full is further buttressed by the requirement that if an incarcerated defendant who is obligated to pay restitution receives “substantial resources from any source,” the defendant is required to apply the value of the resources to any unpaid restitution. See 18 U.S.C. § 3664(n).
A court of equity ought to do justice completely, and not by halves. Decker v. Caskey, 1 N.J. Eq. 427,433; *552; see also Knight v. Knight, 2 Eq. Cas. Abr. 169, pl. 25; S.C., 24 Eng. Rep. 1088, 1089; Story Eq. Pl. §§ 72, 174. Also, the authority inherent in the equity powers guarantees complete rather than truncated justice. Camp. v. Boyd, 229 U.S. 530, 551 , 33 S.Ct. 785, 793, 57 L.Ed. 1317.
First, there is no contention on whether the victim is indeed a victim to be entitled to restitution. For the purposes of the MVRA, a victim is defined as:
[A] person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered including, in the case of an offense that involves as an element a scheme, conspiracy, or pattern of criminal activity, any person directly harmed by the defendant’s criminal conduct in the course of the scheme, conspiracy, or pattern.
18 U.S.C. § 3663A(a)(2). In this action, the victim is therefore a victim under the MVRA.
In United States v. Yeung, 672 F.3d 594 (9th Cir. 2012), the Court noted that the MVRA defines the word “victim” as “a person directly and proximately harmed as a result of the commission of an offense for which restitution may be ordered.” § 3663A(a)(2). Although a defendant’s conduct need not be the sole cause of the loss, “‘any subsequent action that contributes to the loss, such as an intervening cause, must be directly related to the defendant’s conduct. The causal chain may not extend so far, in terms of the facts or the time span, as to become unreasonable.’” United States v. Peterson, 538 F.3d 1064, 1074 (9th Cir.2008) (quoting United States v. Gamma Tech Indus., Inc., 265 F.3d 917, 928 (9th Cir.2001).
Victim understands that pursuant to 18 U.S.C. § 3664(e), the burden of demonstrating the amount of the loss sustained by a victim as a result of the offense is on the Government. However, the government should consult with the victims to make a determination of the losses. Accordingly, the victim specified the amount of restitution needed to recompense the victim for the harm it suffered. Notably, on March 17, 2023, victim filed a Declaration of Victim Losses. In the declaration, the victim requests a restitution amounting to $3,363,123.40, which is categorized as follows:
- $1,050,234.30- Unreimbursed paid purchases of fraudulent GClean products & loss of shareholder equity;
- $243,856.00- Unreimbursed lost profit on Guardsman related transactions;
- $186,316.10- Unreimbursed lost profit on VMPI / OCPS subsidy to offset fraudulent GClean product failures;
- $1,872,717- Unreimbursed direct financial loss of business valuation; and
- $10,000- Unreimbursed legal fees for GClean investigation suggested by Mt. Laurel PD and used by DOJ in plea filing.
In United States v. Fu Sheng Kuo 620 F.3d 1158 (9th Cir. 2010), the Court held that when imposing restitution under § 3663, the court must consider “the amount of the loss sustained by each victim as a result of the offense.” Id. § 3663(a)(1)(B)(i)(I). The Court emphasized that “the amount of restitution under [§ 3663] is limited to the victim’s actual losses.” United States v. Bussell, 504 F.3d 956, 964 (9th Cir. 2007), cert. denied, ___ U.S. ___, 129 S.Ct. 40, 172 L.Ed.2d 20 (2008). “[A]ctual loss for restitution purposes is determined by comparing what actually happened with what would have happened if the defendant had acted lawfully.” Id. (brackets and internal quotation marks omitted). The district court rejected the calculation method required by § 3663. It stated that, “due to the nature of the illegal business in which the victims were forced to participate, there is no way to calculate restitution here based on a comparison between what actually happened with what would have happened had [Defendants] acted lawfully.” Instead, the district court determined the amount of restitution by calculating Defendants’ ill-gotten gains via their exploitation of the victims. In that regard, “victim affidavits will generally provide sufficient, reliable evidence to support a restitution order.” United States v. Waknine, 543 F.3d 546, 557 (9th Cir. 2008).
The victim further asserts that it is entitled to damages for Defendant’s conduct. Damages are “the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong.” See Frank Gahan, “The Law of Damages,” 1 (1936), as noted in Black’s Law Dictionary. In that vein, victim has proof that the Defendant’s fraudulent conduct is the proximate cause of the victim’s lost profits. Upon realizing that the victim had sold them defective products from Defendant, the victim’s clients severed their relationships with the victim. The clients also engaged in marketplace gossips against the victim and his business, and threatened to sue the victim. The victim’s employees also terminated their employment with the victim. In the long run, the victim’s revenues plummeted by more than 80% from 2020. It follows; but for the Defendant’s conduct, the victim would not have suffered the lost profits and reduction of revenue.
The purpose of the MVRA is to make the victim whole again. United States v. Boccagna, 450 F.3d 107, 115 (2d Cir. 2006); see also United States v. James, 564 F.3d 1237, 1246 (10th Cir. 2009). In Paroline v. United States, 134 S. Ct. 1710, 1726 (2014), the Supreme Court explained that while criminal restitution “serves punitive purposes” by implicating the Government’s prosecutorial powers, its “primary goal” is “remedial or compensatory.” The court must therefore order restitution to each victim in the full amount of each victim’s losses as determined by the court. See 18 U.S.C. § 3664(f)(1)(A). A court has no discretion to order restitution for anything less than the full amount of the loss. United States v. Walker, 353 F.3d 130, 133 (2d Cir. 2003). In that light, the victim here asserts that central purpose of restitution is to determine the amount by which the wrongdoer has been unjustly enriched, and then to make him disgorge that amount. No proof is required that the plaintiff was damaged, much less the amount of any damage. *723 Restatement of Restitution, Sec. 1, Comment e (1937), cited in Sauder v. Doe, 648. F.2d. 1341 (TECA 1981).
The MVRA also provides guidance regarding the calculation of the restitution amount. 18 U.S.C. §3663A(b). The basic*601 rule is that the victim is entitled to be made whole. See Gordon, 393 F.3d at 1053 (“‘[T]he primary and overarching goal of [the MVRA] is to make victims of crime whole, to fully compensate these victims for their losses and to restore these victims to their original state of well-being.’”) (emphasis in original) (quoting United States v. Simmonds, 235 F.3d 826, 831 (3d Cir.2000)); see also Hughey v. United States, 495 U.S. 411, 416, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990) (observing that the “meaning of ‘restitution’ is restoring someone to a position he occupied before a particular event”).
“Therefore, a district court calculating the loss suffered by a victim who purchased a fraudulent loan may begin by determining how much the victim paid for the fraudulent loan (or the value of the loan when the victim acquired it), less the value of the real property collateral as of the date the victim took control of the collateral property.” Although district courts possess a “‘degree of flexibility in accounting for a victim’s complete losses,’” remand is appropriate where the restitution award lacks an adequate evidentiary basis and the district court failed to explain its reasoning. United States v. Waknine, 543 F.3d 546, 557 (9th Cir.2008) (quoting Gordon, 393 F.3d at 1053); see also United States v. Tsosie, 639 F.3d 1213, 1223 (9th Cir.2011); Peterson, 538 F.3d at 1077–78 (affirming restitution order notwithstanding lack of factual findings by the district court where it was clear the district court relied on expert’s declaration reporting specific loss to victims on each property).
In the instant action, the victim asserts that neither the Government nor the defendant has proposed restitution amounts sufficient to meet the foresaid requirements under the law. Further, neither of the said parties has proposed an amount that fully compensates victim for their losses (Letter- March 17, 2023). It is the victim’s assertion that the Government and Defendant underestimate the seriousness of the fraud offense and the resulting damage to its small business victims. Notably, in the middle of the Covid pandemic, the Defendant defrauded the victim, stole the victim’s money, and deceiving PPEC into partnering with him to deceive others and multiply his fraudulent scheme (Letter- March 17, 2023 page 2). As a result of Defendant’s fraud, the victim destroyed the victim’s business operation, and shattered the victim’s business relationships and reputation. Below, the victim describes in pertinent detail, the losses it has incurred as a result of Defendant’s fraud.
First, PPEC paid $1,050,234 for illegal GClean product. PPEC resold the product for $1,254,250, netting $204,025 (Letter- March 17, 2023 page 3). PPEC paid 83% of the money it collected to the Defendant. After the sale, the victim is now faced with a financial liability of $1,254,250 of unearned revenue since the Defendant did not provide products that were EPA compliant. The foregoing caused a direct reduction in shareholder equity of $1,050,225. This loss in shareholder equity plus the Unearned Revenue liability has directly reduced the business value of PPEC by $1,872,717. It follows; Martha E. Gordon, as owner of PPEC is due restitution (in conjunction with her company PPE Catalog LLC) for a direct financial loss of business valuation equal to $1,872,717 caused directly and solely by Defendant’s fraud (Letter- March 17, 2023 page 8).
The victim’s revenues plummeted by more than 80% from 2020 ($2.981M to $571k), while profits declined from $909,904 to -$189,788, and total year over year loss of $1,099,692 in cash income (Letter- March 17, 2023 page 12). It is also notable that PPEC is a preferred small business diversity program vendor with major accounts as well as with the Department of Homeland Security, Defense Logistics Agency, FEMA, and 48 states, all who expressed sincere interest when contacted by PPEC. PPEC also got interest from Cedars Sinai, Owens & Minor, Premier Medical, HeathTrust, and Vizient. However, under the agreement with Defendant, PPEC was required to exclusively sell Gclean products. Without a viable alternative product, PPEC had no options and no solution but to promote and sell the Defendant’s illegal products.
Next, PPEC is entitled to more than compensation for unearned revenue (Letter- March 17, 2023 page 4). Unearned revenue is never considered compensation. See 18 U.S.C. § 3663A. Unearned revenue is defined by the SEC, IRS, and FASB, as liability, thus not income, nor compensation and certainly not an asset. Besides, under §3664(f)(1)(B), the Procedure for issuance and enforcement of order of restitution provides that “In no case shall the fact that a victim has received or is entitled to receive compensation with respect to a loss from insurance or any other source be considered in determining the amount of restitution” When the victim purchased the illegal products from Defendant then resold them to the clients, an “Unearned Revenue” was created, thus creating a legal, financial, and accounting liability (Letter- March 17, 2023 page 10). The said liability was recorded in the victim’s financial records as a real liability as follows: i) debit to (cash less COGS) ii) credit to liability Unearned Revenue, and iii) negative shareholders. equity, which must be retired with the amount from restitution. The victim provides the following accounting reflecting a breakdown of the unearned revenue:
- Total revenue on GClean $1,254,250 – COGS $1,050,234.30 = $204,015.70
- Cash on Balance sheet: $204,015.70
- Liability for Unearned Revenue: $1,254,250
- Negative Shareholders equity: $1,050,234.30
It is also notable that PPEC had an approximately 17% gross margin on its GClean related revenue (Letter- March 17, 2023 page 10). Thus PPEC’s cost of goods sold equaled 83% of the revenue collected when selling the fraudulent GClean products. This now prevents PPEC from having the capital to fully and completely satisfy the condition of the sale it made to clients and thus retire the unearned revenue on its books. The victim therefore has to put personal savings and retirement account at risk when making large purchases of inventory to resell (Letter- March 17, 2023 page 11). Further, the victim is essentially precluded from selling the business and realizing any exit strategy for retirement because of the said liability and negative shareholders’ equity on the books It follows; this liability completely erodes PPEC’s business valuation and borrowing capability because it has no shareholder equity as a result of the loss. It is further notable that once the victim is paid restitution, it would be able to satisfy the conditions necessary to resolve the Unearned Revenue liability and meet its legal and financial responsibilities.
Further, PPEC paid $15.99 for 76,320 canisters of product estimated to be worth less than $2.00 per canister for non “N” listed wipes (Letter- March 17, 2023 page 14). PPEC earlier provided the government with these examples. Thus the loss is at least ($15.99- $.2.00=$13.99) x (76,320) = $1,067,716.80, and plus the Guardsman refund, ancillary GClean products and the legal fees. For this PPEC deserves full restitution of at least $1,294,990.80. By only requesting the said amount, PPEC has already subtracted its commission earned of $3- 4 per can from the requested restitution, and thus is seeking only its “Net Loss”, rather than a gross revenue reimbursement with profits included.
The said liability is also the cause of the victim’s 2021 operating loss (Letter- March 17, 2023 page 11). Defendant attempted to replace fraudulent, moldy GClean wipes with a new batch of fraudulent moldy wipes. This clearly did not satisfy the client, and PPEC ended having to solve the problem with its Florida agent via gross margin subsidies on 40 transactions to date totaling $621,054.10 in 2021-2023 YTD to offset the financial losses and the loss of the client. PPEC’s standard margin on those transactions would have yielded an additional revenue to PPEC of 30% gross margin (or $186,316).
It follows; denying PPEC restitution for its resulting liability and loss of equity and business value directly attributable to the fraudulent acts of the Defendant is wrong and does not measure up to the standard of the MVRA. PPE Catalog is now dependent on the court for the restitution money necessary to eliminate the liability caused by the fraud, and to make it whole. The Court must consider making PPEC whole to the full extent of all losses and return PPEC to its pre-crime position by restitution that includes two parts. The first, a full refund equal to the amount PPEC first paid to Andrecola for illegal products such that PPEC is made whole and receives the “benefit of its bargain”. Secondly, recompense for any resulting loss of revenue and equity value, direct expense, or financial or legal liability as a direct result of the fraud that has damaged PPEC in many ways (Letter- March 17, 2023 page 6). This meets the requirements of the statute under 18 U.S.C. §§ 3556, 3663(a)(1).
In Citronelle-Mobile Gathering, Inc. v. Edwards, 669 F.2d 717 (1982) at 722, the Court pointed out that the central purpose of restitution is to determine the amount by which the wrongdoer has been unjustly enriched and then to make him disgorge that amount. No proof is required that the plaintiff was damaged, much less the amount of any damage.
In United States v. Lundquist, 84 7 F. Supp. 2d 364 (2011) the Court stated that “[i]n any event, even if the amount of harm caused by Defendant must be quantified in order for a finding of proximate causation to be rendered, that harm need only be reasonably quantified”. Further, in United States v. Waknine, 543 F.3d 546 (2008) the Court stated that “As to the attorneys’ fees and investigation costs, “[generally, investigation costs – including attorneys’ fees – incurred by private parties as a ‘direct and foreseeable result’ of the defendant’s wrongful conduct ‘may be recoverable.”‘ United States v. Phillips, 367 F.3d 846, 863 (9th Cir.2004). The Court further stated that the Court affirms restitution orders for attorneys’ fees where the fees “were directly, not tangentially, related to” the offense conduct. United States v. DeGeorge, 380 F.3d 1203, 1221 (9th Cir.2004).
The said loss was foreseeable. Notably, the Defendant had knowledge of the contents of the products, and knew that the products were not tested and registered. See Hadley v. Baxendale (156 Eng. Rep. 145, 151 (Ex. 1854). The foregoing therefore shows that the Defendant was aware that he was selling defective products, which would occasion the victim financial losses if the products were found to be ineffective to deal with Covid. Hampton v. Federal Express Corp., 917 F. 2d 1119, 1125-26 (8th Cir. 1990). On the other hand, the victim could reasonably foresee the dangers of selling defective products to its clients. It is on this understanding that the victim reasonably relied on the holding out of the Defendant as an expert in chemistry whose products were legitimate.
In the upcoming hearing for restitution, victim intends to rely on expert opinion in support of the losses stated above. Damages for lost profits are recoverable if the plaintiff can prove that the damages related to lost profits are reasonable and that they have been calculated using reliable factors without undue speculation. In DSC Communications v. Next Level Communications, 107 F.3d 322, 329 (5th Cir. 1997), the Court upheld recovery of lost profits because plaintiff’s damage expert presented a damage model that included an assumption of future market share based on data obtained from respectable sources.
Further, the Federal Rules of Evidence provide the basis upon which a federal judge may (a) determine whether expert testimony meets the minimum standards, and (b) identify the bases of opinion testimony by experts. Under Rule 702, in the event the matter requires scientific, technical or specialized knowledge, an expert will be admitted to testify if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case. Also, under Rule 703, if the information upon which the expert bases their opinion is of a type reasonably relied upon by experts in the particular in forming opinions or inferences, the information need not be admissible in evidence in order for the opinion or inference to be admitted.
With reference to its accounting records, the victim has used the “before and after” method to explain the losses. Accordingly, the victim has compared its performance before the damaging acts of the Defendant, and the subsequent performance following said acts.
Victim further asserts that the expert it relies on to prove said losses has the requisite training and/or experience in accounting and tax rules and regulations, financial analysis and modeling, reconstructing financial data, and quantifying the impact of events.
- There was no benefit conferred on the victim to offset the restitution amount
In United States v. Rizk, 660 F.3d 1125 (2011), the Court stated that the Mandatory Victim Restitution Act (“MVRA”) requires a district court, in sentencing a defendant convicted of certain offenses, including an offense against property committed by fraud, see 18 U.S.C. § 3663A(c) (1) (A) (ii), to order restitution to each victim “in the full amount of each victim’s losses.” Id. § 3664(f)(l)(A); see id. § 3663A(a)(l); United States v. Edwards, 595 F.3d 1004, 1012- 13 (9th Cir.2010). The MVRA applies even where the victims have received compensation from another source: “In no case shall the fact that a victim has received or is entitled to receive compensation with respect to a loss from 113 7 insurance or any other source be considered in determining the amount of *1137 restitution.” 18 U.S.C. § 3664(f)(l)(B).
18 U.S.C. § 3664(e) places the burden of proof on the government on all issues relating to loss to the victim. Yet the burden section of the statute only requires the government to establish “the amount of loss sustained by [the] victim,” United States v. Razo-Leora, 961 F.2d 1140, 1146 (5th Cir.1992); it does not speak to any compensation later received by the victim for that loss.
The defendant should know the value of any compensation he has already provided to the victim in civil proceedings, so the burden should fall on him to argue for a reduction in his restitution order by that amount. United States v. Flanagan, 80 F.3d 143, 146 (5th Cir.1996) (“[A]s a general rule, the party seeking the adjustment in the sentence is the party that has the burden of proving the facts to support the adjustment.”). Therefore, justice requires that the burden of establishing any offset to a restitution order should fall on the defendant.
Further, precedent set in the third circuit provides that “the defendant bears the burden of proving an offset under § 3664(j)(2)” including “proving the value of any alleged offset”. See United States v. Bryant, 655 F.3d 232, 254 (3d Cir. 2011) (finding that, under § 3664(e), it was the defendant’s “burden to prove offsets for any legitimate services [the defendant] might have rendered”). It follows; as the Court has to ensure that the victim is made whole, it stands to reason that something more than a statement by the defendant and Government ought to be required to establish the amount of the offset. See U.S. v. Bryant, 655 F.3d 232 (3d Circ. 2011).
In United States v. Bane, 720 F.3d 818 (2013), the Court noted that when a party fraudulently procures payment for goods or services by representing that they were produced or provided according to certain specifications, it is not the task of a sentencing court to second-guess the victim’s judgment as to the necessity of those specifications.
The Defendant’s counsel in this case argues that the fact that the victim already sold the products to the end users means that he is not entitled to restitution (Tr. p. 22, lines 11-17). Defendant’s counsel further argued that the victim could only be entitled to restitution if the victim had reimbursed the end users (Tr. p. 22, lines 17-18). The victim vehemently opposes the Defendant’s averments. The nature of losses suffered by the victim make it necessary to be reimbursed. For instance, the victim had to cancel deals consequential and incidental to the Defendant’s conduct. The victim also breached distribution and license agreement (Tr. p. 24, lines 1-12). The victim also suffered immensely as a result of selling defective products. For instance, the victim lost its clients. The victim’s reputation was also damaged when information spread that it had sold defective products. Further, the victim experienced a high turnover of its staff. Cumulatively, the victim suffered lost profits in regard to the said factors, which follow the Defendant’s conduct.
The victim has recovered no compensation for her loss in business value directly attributable to Defendant’s fraud. Thus she seeks $1,872,717 for i) decreased shareholders’ equity and reduced business valuation ii) severely impacted access to necessary business credit and iii) altered and delayed retirement plans as a result of drastic decrease in business income and valuation.
The offset defendant seeks in lowering the restitution amount owed to PPEC is equivalent to the same amount as the illegal product sale he is now serving time for as a criminal (Letter- March 17, 2023 page 5). It cannot be a legal offset representing full and complete victim consideration that makes a victim like PPEC whole under 18 U.S.C. § 3663A and be a crime at the same time. There is no case law or definition where the creation of a liability on the books of an entity is defined as or could be construed as “compensation” or “award” in any form or manner. It is financially and legally impossible to categorize an act that creates a liability for a victim as compensation. It is therefore the victim’s contention that the defendant has no claim of an offset since his sale of illegal product simply launches a series of illegal sales creating nothing but legal and financial liabilities for the downstream victims. In other words, no sale has occurred because the EPA approved “N” listed product specified for purchase by PPEC was not delivered by defendant due to his intentional fraud and misrepresentation, and thus no sale occurred as PPEC did not have the benefit of their bargain. The sale was therefore illegal hence void from the start. It is further notable that the victim had no idea that what it was selling to its clients were defective and unapproved products from Defendant.
It is the victim’s contention that if the defendant and the Government take the position that the court must subtract the amount of any revenue received from the resale of illegal GClean products, then the court must also add to the full amount of any loss the liability created as a direct result of the illegal resale of fraudulent products (i.e. the resale of illegal goods creating a financial and legal liability in the form of Unearned Revenue due to the deliverance of illegal product not produced according to legally required standards and specifications) (Letter- March 17, 2023 page 6).
This Honorable Court should also note that the victim PPEC has to date refunded $430,172 to counterparties (Letter- March 17, 2023 page 10). There is therefore an unreasonable burden upon PPEC to continue to refund its customers without first having guaranteed access to the financial assistance made possible through restitution. It follows; it is only the victim who has since at least written a check to any victim. Defendant’s counsel asserting that PPEC is double dipping is therefore an attempt to smear victim’s character based upon an unsubstantiated assumption and accusation not supported by any fact.
Besides, it is a principle of natural justice that justice does not suffer a wrong to be without a right. It follows; letting Defendant go scot free without restitution would leave Defendant benefit from the harm done on the victim’s business. There is therefore no offset of the restitution amount, for the reasons discussed above.
- The restitution should be timely
18 U.S.C. § 3572(d)(1) mandates the attorney for the Government to advocate immediate payment of restitution. Further, if the court does not require immediate payment, the length of time over which scheduled payments are made shall be the shortest time in which full payment can reasonably be made. See 18 U.S.C. § 3572(d)(2))
Further, if payment in full cannot be made at the date of sentencing, prosecutors should seek to ensure that payment is made in the shortest time in which full payment can reasonably be made. See 18 U.S.C. § 3572(d)(2).
It is on the foregoing premise that the victim requests this Court grant an Order demanding prompt payment of the restitution amount.
- The Court should employ an aggressive means of effecting full restitution
Restitution owed to victims of crimes is a critical part of the criminal judgment.
For that reason, the U.S. Attorney’s Office should take all steps possible to help ensure that the money is collected and that the victim is fully compensated for his losses. Accordingly, the government is permitted to use aggressive efforts to enforce restitution.
In light of the foregoing, restitution orders create liens on the Defendant’s property. Notably, an order of restitution is a lien in favor of the United States on all property and rights to property of the person fined as if it were liability for unpaid taxes. See 18 U.S.C. § 3613(c). The government is also mandated to pursue discovery and conduct research on online property- locator services to ascertain the Defendant’s property.
The US Attorney’s Office is also mandated to conduct enforcement proceedings including inter alia, criminal actions for nonpayment, where the victim is entitled to notice and be heard in the proceedings. See 18 U.S.C. § 3771(a)(2) and (a)(4). The Government may also use the procedural provisions of the forfeiture statutes to preserve and recover forfeitable property and to apply such property toward satisfaction of the restitution order.
In Lytle v. State of Arkansas, 9 How. 314, 333, the U.S. Supreme Court said: “It is a well established principle, that where an individual in the prosecution of a right does everything which the law requires him to do, and he fails to attain his right by the misconduct or neglect of a public officer, the law will protect him.”
The victim therefore avers that the U.S. Attorney’s office should aggressively employ all means as foresaid above, to ensure the victim gets full restitution. The victim also requests the court to compel the Defendant to immediately pay all restitution within ten (10) business days of the restitution order or to forfeit the property located at 106 Gaither drive, Mt. Laurel NJ 08054 effective in the same time frame. It is notable that a real estate agent represented that Defendant Andrecola had received multiple offers in excess of $8,000,000 for the property but has yet to agree to a sale as of February 15, 2023. According to section H of the Department of Justice’s “Interaction Between Restitution and Asset Forfeiture”, if a defendant has sufficient assets to pay immediately the restitution order without using property forfeitable to the Government, the defendant must use those assets (not the forfeitable property) to satisfy the restitution order. If a defendant does not have sufficient assets to pay immediately the restitution order without using forfeitable property, however, the Government may use the procedural provisions of the forfeiture statutes to preserve and recover forfeitable property and to apply such property toward satisfaction of the restitution order.
CONCLUSION
For the said reason(s), the victim requests this Honorable Court to award/issue:
- Full restitution in the amount of $3,358,748. The victim further requests this Court issue the following orders:
- An abstract of judgment certifying that a judgment has been entered in favor of PPE Catalog LLC against the defendant Andrecola;
- Any other relief deemed fit and reasonable.
Dated: _________, 2023 Respectfully submitted,
______________________________
Michael Gordon,
as chairman for PPE Catalog LLC
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document was sent on the [ENTER DATE] by regular U.S. mail postage prepaid, to the following parties or attorneys of record:
[ENTER ADDRESS(ES)]
Dated this ____ day of _______, 2023.
Respectfully submitted,
______________________________
Michael Gordon,
as chairman for PPE Catalog LLC
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